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Business Conditions Seventh Federal Eugene M. Stevens, Chairman oj the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent Volume 17, No. 10 General Summary Reserve DISTRICT Harris G. Pett, Manager Division oj Research and Statistics MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO John H. Martin, Asst. Federal Reserve Agent, Detroit Branch George A. Prugh, Asst. Federal Reserve Agent September 30, 1934 The manufacture and distribution of Wisconsin cheese declined in the monthly comparison, although they gained CONTINUED declining trend characterized the over August 1933. The movement of wheat and oats major phases of Seventh district manufacturing ac during August totaled much below average for the month, tivity during August. Most merchandising groups, on but that of corn was heavy. Crop conditions showed the other hand, experienced somewhat greater than the little aggregate change on September 1 from a month usual seasonal expansion in sales over the preceding earlier. month, although in many instances the margin of gain The wholesale distribution of commodities during over last year’s volume was small. August improved more than seasonally for most report Output of automobiles was further curtailed during ing groups, the grocery, drug, dry goods, and hardware August, with that of passenger cars totaling under the trades sharing in the increased volume of business, al year-ago volume. Steel ingot production was very mod though electrical supply sales declined, contrary to trend. erate in the period and in the first week of September In retail phases, the department store and retail shoe dropped noticeably. Shipments of steel and malleable trades had larger than average sales gains for August, castings, however, increased in August over July, and while the expansion in the retail furniture trade was those of stoves and furnaces were seasonally greater. about seasonal. The increase over July in total sales of Furniture manufacturers likewise expanded shipments, in reporting chains was small. accordance with normal August trend. Building construc Credit extended by the Federal Reserve Bank of Chi tion fell off further during the month, but the movement cago to the Seventh district again showed a small gain of some building materials showed better than usual im between the middle of August and September 12. Re provement for the period. Although industrial employ porting member banks in the district increased their ment and payrolls remained above the year-ago level, the investments during the period, but loans on securities former recorded a contrary-to-seasonal recession from continued to decline and commercial loans gained very July, while for the latter a seasonal increase was shown. slightly; both time and demand deposits in these banks expanded in the four weeks. Dealer sales of commercial Owing to activities of the Federal Surplus Relief Cor paper and new financing by means of bankers’ accept poration, aggregate production of packing-house com ances decreased between July and August, although the modities increased in August over a month previous and former were considerably in excess of last year. a year ago, but commercial production declined in these comparisons; both the tonnage volume and the dollar Credit Conditions and Money Rates value of sales gained over July, while the former was lower than for last August and dollar sales increased be Total credit extended by the Federal Reserve Bank of cause of the higher prices prevailing this year. Butter Chicago increased from $427,334,000 to $429,293,000 dur production and sales expanded, contrary to trend for ing the four-week period ended September 12. The in August, and the former item was in excess of a year ago. crease, which was entirely in credit extended to the Seventh district, resulted from an advance in reserve bank “float”— FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF that is, the Reserve bank increased the amount of its CONDITION credit extended to banks by paying for collection items (Amounts in millions of dollars) Change From before receiving payment therefor. Sept. 12 Aug. 15 Sept. 13 1934 1934 1933 A continued net inflow of funds through commercial $ +33.4 Total Bills and Securities...................................... $429.5 $ +0.2 Bills Discounted....................................................... 0.5 +0.2 -6.6 and financial transactions with other districts added al Bills Bought............................................................... 0.7 0 -0.2 most 10 million dollars to'local banking reserves, and an U S. Government Securities................................ 428.3 +40.1 0 +196.0 Total Reserves........................................... '............. 1,132.8 +30.6 additional 6 millions was available in Treasury and Na +246.9 Total Deposits........................................................... 762.2 +30.1 +2.8 +25.3 Federal Reserve Notes in Circulation............... 772.4 tional bank currency. United States Treasury collections Ratio of Total Reserves to Deposit and Federal 73.8% Reserve Note Liabilities Combined............... +0.4* -0.4* through taxes and other means were 1 $y2 million dollars ♦Number of Points. in excess of local Treasury disbursements and together A with an increase in demand for currency and member bank reserve balances offset the gains in the supply of credit. Special and “all other” deposits declined 2)4 million dollars during the four weeks. Changes in the supply and demand of Seventh district banking reserves are presented in detail in the accom panying tabulation. Changes between August 15 and September 12 in Factors Affecting Use of Federal Reserve Bank Funds—Seventh District (Amounts in thousands of dollars) Reserve bank credit extended........................................................................ +1,960 Commercial operations through inter-district settlements................... +9,874 Treasury and National bank currency........................................................ +5,953 Total supply....................................................................................... +17,787 Demand for currency........................................................................................ Member bank reserve balances...................................................... Treasury cash and deposits at Federal Reserve Bank of Chicago... Special and “all other” deposits.................................................................... Other Federal Reserve accounts.................................................................... +1,787 +2,484 +15,551 —2,533 +498 Total demand..................................................................................... +17,787 Member Bank Credit A gain of 12 million dollars was recorded in aggregate loans and investments of reporting member banks in the Seventh Federal Reserve district on September 12 over the total shown on August 15, reflecting, as shown by the accompanying table, an increase of 40 millions in investments, a decline of 29 millions in loans on secur ities, and a rise of one million in “all other” (commercial) loans. Net demand and time deposits showed gains on September 12 over the corresponding reporting date in August, the former increasing 32 million and the latter 15 million dollars. As compared with September 13, 1933, total loans and investments on September 12 of this year were 343 million dollars greater, representing a gain of more than 500 millions in investments and declines of 103 and 56 millions, respectively, in loans on secur ities and “all other” (commercial) loans. Net demand deposits on September 12 increased by more than 500 million dollars over the corresponding reporting date in 1933, and time deposits by 35 millions. Down-town Chicago banks reported a range of 1)4 to 6 per cent as the prevailing rate on customers’ com mercial loans during the week ended September 15, as compared with a range of 1)4 to 5 per cent for the corre sponding week in August. The average rate earned on loans and discounts by down-town banks in Chicago dur ing the calendar month of August was 2.94 per cent, as against 3.19 per cent in July and 3.88 per cent in August 1933. In the city of Detroit, a range of 3)4 to 6 per cent was reported on customers’ commercial loans—un changed from the preceding month. Despite investor resistance in the last half of the month to a continuance of prevailing low rates, dealer sales of commercial paper in the Middle West declined only 5)4 per cent in August from July and were 122 per cent in excess of a year ago. Demand remained steady from city CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions of dollars) Sept. 12 Total Loans and Investments......................... . . Loans on Securities................. .......................... ... All Other Loans.................................................. ... Investments............................................................. . . 1934 *1,861 293 415 1,153 Net Demand Deposits........................................ . .. Time Deposits..................................................... . .. 1,692 502 Borrowings from Federal Reserve Bank... Page Change From Aug. 15 Sept.13 1934 1933 * +12 *+343 -103 -29 -56 +i +40 +502 +32 +15 +510 +35 0 0 banks but decreased from country banks. Borrowing by means of commercial paper expanded over July, though continuing considerably less than seasonal. Total sales, therefore, were 45 per cent below the 1924-33 August average. Selling rates in August ranged from )4 and per cent for prime short-term paper to 1 and 1)4 per cent for obligations less well known or of longer maturity; most transactions took place at )4 to 1 Per cent. Com mercial paper outstandings in the Middle West attained a level on August 31 higher than for any previous re porting date since the autumn of 1931. In the first half of September, borrowing declined to such an extent that sales aggregated 37)4 per cent less than for the corre sponding weeks of August. Rates were within a range of ji to 1)4 per cent. Market operations of Chicago bill dealers from August 16 to September 12 were extremely limited. The only activity comprised a small volume of sales to local and out-of-town banks, the supply for which came from East ern cities. Local purchases were nil during the period. Selling rates ranged from )4 to )4 per cent. New financing by means of bankers’ acceptances in the Seventh Federal Reserve district declined 12)4 per cent in August from a month earlier to a level 41)4 per cent under the 1924-33 average for the month. Further more, the direct discounting of these bills at the originat ing banks likewise decreased from July—contrary to trend—and the buying of other banks’ acceptances fell off instead of showing a seasonal gain. Total purchases, therefore, aggregated 61)4 per cent smaller than a year ago and 60)4 per cent less than the 1924-33 August aver age. Sales remained negligible, but maturities exceeded current purchases by more than 3)4 million dollars. In consequence of these trends, August 31 holdings were smaller than those of any reporting date since March 31, 1933. The liability for outstanding acceptances, on the other hand, increased slightly over July 31. A decline of 30)4 per cent took place in new financing by means of acceptance credits in the first half of September as com pared 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 1934 From July 1934 August 1933 Total value of bills accepted................. Purchases (including own bills discounted) Sales............................................................... Holdings*..................................................... Liability for outstandings*..................... —12.4 —38.6 —31.6 —61.6 -90.3 -91.9 —10.1 +2.0 —47.3 —34.9 *At end of month. Security Markets August, normally a month of reduced activity in the bond market, was noticeably dull this year. Since the decline in July, the market has remained somewhat un settled; prices recovered slightly in the early part of August, but subsequently declined, the drop being fol lowed, however, by another up-turn which brought the general price level back to approximately that prevailing during the first part of the month. High grade municipals and corporation bonds were in greatest demand and, of VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From Chicago.......................................................................... Detroit, Milwaukee, and Indianapolis............ Aug. 1934 July 1934 Aug. 1933 *2,170 -2.7 +1.1 —8.5 +31.7 Total four larger cities. 34 smaller centers.... $3,038 505 868 -4.4 +1.4 +8.3 +25.6 Total 38 centers, *3,543 -3.7 +10.5 these classes, maturities up to ten years were most favored. The limited demand shown during August came largely from institutional buyers, principally insurance companies. The average price of twenty leading stocks* on the Chicago Stock Exchange, after strengthening somewhat during the latter part of August, declined stead ily in the first half of September and on September 17 amounted to $25.53 as compared with $27.27 on the corresponding date a month previous. •Chicago Journal of Commerce. Agricultural Products Crop prospects for the Seventh district on September 1 were not changed materially from a month earlier, with the exception of reductions of 71 million and 7 million bushels, respectively, in the corn and oats estimates. Most other crops showed slight to moderate improve ment, including a gain of 3 million bushels in the in dicated production of white potatoes and of nearly a million tons for hay. Weather conditions during the month, though not as destructive as in mid-summer, failed to improve conditions noticeably. Only a few areas had sufficient rainfall to break the drouth, and the district average was less than normal. Intensely hot weather in the first half of the month was followed by unseasonable coolness, with early frosts in many localities. The final production of feedstuffs will be influenced considerably by the emergency measures made necessary by the drouth. Fields seeded for hay have been grazed, due to the failure of pastures, while quantities of weeds are being cut for hay. Much more than the usual amount of corn has been cut for silos or shredded and baled. Chinch bugs, ear worms, and mold are damaging areas that survived the dry weather. Notwithstanding the small production of farm com modities this season for the entire country, it is estimated by the Department of Agriculture that cash income from the sale of farm products during the calendar year 1934, plus rental and benefit payments, will aggregate about 6 billion dollars, an increase of 19 per cent over 1933 and 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 1934 1933 1934 1933 1927-31 . .541,982 835,127 1,484,602 2,343,883 2,516,307 . .202,862 314,089 545,870 731,524 1,186.956 Winter Wheat... . 46,973 44,426 400,522 351,608 632,061 Spring Wheat. .. 1,708 2,316 92.763 176,370 254,298 Barley.............. . . 28.435(a) 35.401(a) 122.963 156,988 270,444 Rye................... .. 5.842(a) 5.629(a) 17,261 21,236 40,950 Buckwheat. .. . . 805(a) 803(a) 7,061 7,832 9,496 Flaxseed.......... . . 206(b) 236(b) 5,253 6,806 18,664 Potatoes (White) 46,712 39,752 337,141 320,353 365,556 Potatoes (Sweet) 1.151(c) 1.090(c) 64,176 65,073 62,386 Sugar Beets1. ... 1.125(d) 1.203(d) 7,468 11,030 7,854 Apples.................. 9.709(a) 15.033(a) 111,703 142,981 156,303 Peaches............... 972(e) 1.965(e) 45,687 44,692 56,282 Pears.................... 1.233(e) 1.010(e) 23,134 21,192 22,334 Cranberries2. .. . 58(f) 47(f) 507 705 563 Grapes1................ 69(a) 74(a) 1,690 1,910 2,277 Dry Beans8......... 2.440(d) 3.539(d) 9,094 12,280 11,594 Tobacco4............. 15,159 17.814 1,078,117 1,385,107 1,470,556 All Tame Hay1.. 9,215 13,289 50,727 65,983 72,250 Wild Hay1........... 445(a) 575(a) 5,287 8,633 11,368 Broom Corn1... . 13(g) 6(g) 29 32 47 Onions.................. 4.846(a) 4.860(a) 22,403 21,553 *23,789 Cabbage1............. '' 237(h) 112(h) 1,188 724 *1,010 Tomatoes for Table Use.... 1.445(e) 1.354(e) 19,085 15,838 *16,677 Canning Crops: Snap Beans1.. 60 17(h) 15(h) 65 *73 Sweet Corn1. . 222(a) 166(a) 461 396 *626 Tomatoes1.. .. 417(e) 268(e) 1,500 1,078 *1,293 lIn thousands of tons. 2In thousands of barrels. 8In thousands of 100-lb* bags. 4In thousands of pounds, (a) Five states including the Seventh Federal Reserve district, (b) Iowa and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Michigan and VVisconsin. (e) Illinois, Indiana, Iowa, and Michigan, (f) Wisconsin, (g) Illinois, (h) Indiana, Michigan, and Wisconsin. *1928-32 average. of 39 per cent over 1932 which was the low point of the decline in effect since 1929. Grain Marketing August trading in both wheat and feed grains reflected the short crops and sharply reduced supplies available for the 1934-35 season. Future prices at Chicago were strong and quotations for September delivery averaged higher than in July by 8 cents for wheat, 13 cents for corn, and 5 cents for oats. Wheat was above the dollar level throughout August, for the first entire month since May 1930 when prices were declining under pressure of burden some world supplies. Cash and future prices of all grains were firm during the first half of September. Wheat receipts at primary markets were the smallest for August in our records for fourteen years—declining more than seasonally from the preceding month. Reship ments also diminished, counter to trend for August, and the total movement was less than 40 per cent of the fiveyear average for the month. Very heavy receipts of corn were recorded, the volume being exceeded in only seven other months of the past fourteen years, and reshipments also were at a high level. This unusual movement repre sents further withdrawals of corn stored on farms under Government loans, to feed live stock in the drouth-stricken areas. The movement of oats, of which less than half a normal crop has been produced, was sharply below aver age, as in the case of wheat. Visible supplies of all grains remained fairly large, those of corn even exceeding a year ago, but it is evident that the surplus quantities of both wheat and feed grains have been largely eliminated during recent months. Movement of Live Stock Owing to increased activity of the Federal Surplus Re lief Corporation, the marketing of cattle and calves in the United States aggregated considerably greater during August than in any other month on record (from January 1921), and that of cattle was not only 162 per cent above a year ago but 135 per cent in excess of the 1924-33 August average. On the other hand, the Government pig reduc tion program of last autumn was reflected in August receipts of hogs, which were under any previous month on this bank’s records, 47y2 per cent less than a year ago, and 27J4 per cent below the 1924-33 August average. Lamb marketings failed to increase in the usual amount over July and were 6l/2 per cent smaller than in the cor responding period of 1933, but totaled \y2 per cent above the average for this season of the year. The movement of animals to inspected slaughter (inclusive of those that did not pass through public stock yards) followed the LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, August 1934................................. Federally Inspected Slaughter, United States Cattle 378 1,576 1,192 840 August 1933. Hogs Lambs and Sheep 502 2,641 3,323 3,477* Calves 291 190 1,523 1.294 1,532 970 770 416 for the A. A. A. AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Native Beef Steers (average) Fat Cows and Heifers........... Calves.......................................... Hogs (bulk of sales)............... Yearling Sheep......................... Lambs.......................................... Week Ended Sept. 15 1934 .... $8.15 ----5.25 ___ 6.70 Months Aug. 1934 $7.20 4.95 6.10 5.85 5.75 6.50 July 1934 $7.25 4.50 5.15 4.50 5.75 7.05 of Sept. 1933 $6.00 4.40 6.35 4.05 5.35 7.25 Page 3 general trend of market receipts, except that there have been several other months in which the supply of hogs was lower than in August this year. An exceptionally large volume of cattle moved to feed lots during August. Purchases of feeder calves were in excess of any month since November 1933. Reshipments of lambs to feed lots also increased sharply over July, but were considerably below the 1929-33 average for the month. Meat Packing The commercial production of packing-house com modities at slaughtering establishments in the United States declined 7]/2 per cent in August from July, was 14 per cent smaller than a year ago, and 2 per cent under the 1924-33 average for the month. If, however, the beef and veal processed for the Federal Surplus Relief Corpora tion is added to the regular market tonnage, production during the month totals 3 >4 per cent heavier than in July, 7 per cent above last August, and 22)4 per cent greater than the ten-year average. The sales tonnage ex panded 9]/2 per cent in August over the preceding period, but was Yz per cent below the usual volume for the month and 8)4 per cent under August 1933. Prices continued to advance sharply; quotations, therefore, remained con siderably firmer than those of last year, although they were decidedly lower than the 1924-33 August average. As a result of these trends, the total value of sales billed to domestic and foreign customers rose 10 per cent over July to a level higher than for any month since October 1931, 28)4 per cent above a year ago, and within 24 per cent of the seasonal average. Inventories of packing-house commodities in the United States decreased as usual on September 1 from the beginning of August and were 13,138,000 pounds lighter than the 1929-33 average for the date. If, however, the Government stocks of beef and veal were added to these commercial stocks, total inven tories probably would somewhat exceed those of a year ago and total considerably above this five-year average for September 1. Payrolls at the close of August con tinued to reflect a marked improvement over 1933; the number of employes and hours worked increased more than 3 per cent over July, though wage payments de creased )4 per cent. August shipments for export expanded slightly over July, but the major portion of the tonnage still consisted of lard forwarded to the United Kingdom. Germany had not yet permitted a resumption of importations from the United States. The demand for American lard continued fair in British markets and remained negligible on the Continent. Moreover, European trade in United States meats consisted largely of purchases of hams by the United Kingdom. As many exporters began to insist upon values equal to present production costs, owing to declin ing stocks of pork products in the United States, the price of American lard in the United Kingdom tended to move closer to Chicago parity. Quotations for hams, on the other hand, weakened somewhat but were still above the United States parity. September 1 inventories of United States packing-house commodities in foreign markets (inclusive of stocks in transit) were reported as smaller than those of August 1. the preceding period and exceeded the 1924-33 August average by 2)4 per cent, though aggregating )4 per cent less than for last August. On the other hand, manufacture of the commodity in the United States showed a seasonal decline of 10 per cent in August from a month earlier and was 13 per cent smaller than a year ago. Inventories of creamery butter in the United States gained more than a seasonal amount on September 1 over the beginning of August, but were 19,456,000 pounds below the 1929-33 average and 55,041,000 pounds under the corresponding date of last year. Prices advanced. y2 cheese Wisconsin fell off 8the perAmerican cent in the fourmanufacture weeks endedin September 1 from preceding period, but totaled 6)4 per cent in excess of a year ago and 10)4 per cent greater than the 1929-33 aver age for the period. Furthermore, production showed a larger excess over current consumption than is usual for early autumn. Owing to the sharp rise in prices over July, distribution of the commodity from Wisconsin primary markets decreased more than ordinarily is the case at this time of the year, being 12 per cent less than in the preceding four weeks and 1)4 per cent below the five-year average, though aggregating 31)4 per cent larger than a year ago. Total inventories of cheese in the United States showed a slightly greater accumulation on September 1 over the beginning of August than usually takes place, and were 21,911,000 pounds heavier than the 1929-33 average for that date. The Agricultural Adjust ment Administration has announced that it will divert some of these trading stocks of cheese and of butter to relief of the unemployed. Industrial Employment Conditions Reports by Seventh district industries for August in dicate a seasonal increase of 2 per cent in payrolls but a decrease of 1)4 per cent in employment, the latter con trary to the slightly upward trend generally shown at this season. Gains in August are partially a reaction to cur tailments during July, in which month inventory lay-offs and vacation periods result in sharp declines for payrolls as well as in some loss of employment. Such increases were apparent in the current August figures for the vehicles group in which wage payments increased 6 per cent after a curtailment of 17 per cent in July; for the wood products and chemical industries in which wage payments rose 8)4 and 4)4 per cent, respectively, following earlier losses of EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group Report of Aug. 15, 1934 Firms No. Wage Earners No. Textiles and Products.... Food and Products............. Stone, Clay, and Glass.... Wood Products............... Chemical Products............. Leather Products................ Rubber Products2............... Paper and Printing............. 1,287 224 301 614 171 404 162 109 8 561 213,437 259,652 42,940 104,753 10,885 29,355 19,562 21,030 6,372 63,676 ing Metals and Products1........ Earnings (000 Omitted) $ Change From July 15, 1934 Wage Earn ers Earn ings % % 4,310 5,991 719 2,217 200 433 435 375 133 1,477 -3.4 -5.3 +4.2 +3.2 +0.0 +1.3 +0.2 +0.7 -12.5 +0.9 -3.4 +6.3 +14.4 +0.6 -5.9 +8.7 +4.5 -0.6 +3.2 +3.7 Total Mfg., 10 Groups... . 3,841 771,662 16,290 -2.2 +2.5 Dairy Products Merchandising3.................... Seventh district production of creamery butter ex panded y2 per cent in August over July—contrary to the usual trend—and was 3 )4 per cent larger than a year ago as well as 2)4 per cent above the 1924-33 average for the month. The sales tonnage increased 5)4 per cent over Coal Mining.......................... Construction........................ 1,677 80 15 315 77,086 83,694 3,340 11,892 1,558 2,470 58 244 -1.0 +0.7 +25.0 -2.1 -3.1 +1.9 +25.8 -1.9 Total Non-Mfg., 4 Groups. 2,087 176,012 4,330 +0.1 +0.1 Page 4 -1.7 +2.0 947,674 20,620 Total, 14 Groups.................. 5,928 1 Other than Vehicles. 2 Michigan and Wisconsin. 3 Illinois and Wisconsin 12 and 6^2 per cent; and lor the textiles industries in which a 14^2 per cent gain more than counteracted the 12 per cent decrease of the preceding month. Several industry groups—food products, rubber products, public utilities, and coal mining—which showed larger payrolls for July, continued this expansion in August. The coal mining industry which has shown the heaviest percentage increases in payrolls during the past two months—21 per cent in July and 26 per cent in August—is still operating at far below normal activity. The metal industries registered decreases in both em ployment and payrolls during August, for the third con secutive month. The declines, amounting to 31/2 per cent in each item, were considerably smaller, however, than those reported for the preceding month. Merchandising and the construction industries also registered losses in both number of workers and in wage payments, while leather products and stone, clay, and glass products showed decreases in the latter item but slight gains in employment. The present level of industrial employment in the district as a whole is 11 per cent higher than at the same time a year ago and 32 per cent over the August 1932 level. Payrolls have increased 18 per cent dur ing the past year and more than 50 per cent since . August 1932. Manufacturing Automobile Production and Distribution A decline of 18 per cent from July in August production of passenger automobiles by United States manufacturers reduced output to 4 per cent below the corresponding month of 1933 when August schedules were maintained at the same rate as a month previous. Truck production, on the other hand, showed a 20 per cent expansion during the month this year and exceeded output for last August by 24 per cent. The 183,500 passenger vehicles and the 51,309 trucks manufactured this August brought aggregate output for the year to date to 15 and 18 per cent, re spectively, in excess of the totals for the entire year 1933. Substantial recessions took place during August in mid west distribution of automobiles to dealers and to users. The decline of 9 per cent in sales at wholesale followed an even sharper drop in July from June, while the 15 per cent decrease in retail sales was only a little less than that shown in the preceding month. Wholesale distribu tion lacked 18 per cent of equaling that of August a year ago, and sales by dealers were 20 per cent smaller in number—the latter representing the first decline since January in the yearly comparison. Stocks of new cars again were reduced during August, but continued to total substantially larger than last year. Used car sales, though somewhat less in number in August than a month previous, July 1934 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.......................................... Aug. 1933 Included -18.1 -7.3 23 23 -14.7 -14.8 -20 0 -23.6 56 56 -14.6 -10.9 +30.5 +49.6 56 56 -2.5 -20.2 56 +13.9 + 14.4 and Steel Products Furniture Although a moderate recession in orders booked is sea sonal for August, furniture manufacturers in the Seventh district reported new orders this August little changed LUMBER AND BUILDING MATERIALS TRADE of Trade August 1934: Per Cent Change From July 1934 Companies -9.1 -9.1 +1.3 +2.4 Iron Conditions in the steel industry of the Chicago district showed little improvement in August over July, and activ ity was considerably under that prevailing in the earlier months of this year. Steel ingot production at no time during August exceeded 30 per cent of capacity and by the middle of September averaged only 22 per cent of capacity. A further moderate recession was recorded for August in daily average pig iron production of the Illinois and Indiana district. Price quotations for finished steel products have not been changed, nor have those for pig iron, but scrap iron and steel prices have been declining steadily since the last part of August. The volume of orders booked for steel castings in the Seventh district showed a 21 per cent decrease in August, marking the fifth consecutive monthly decline in this item, while shipments increased 10 per cent and production re mained at practically the same level as in the preceding month. The current volume of business continued to compare favorably with that of a year ago, increases totaling 25 per cent in orders, 59 per cent in production, and 115 per cent in shipments. Malleable casting foundries registered gains in all items during August, orders rising 40 per cent, shipments 9 per cent, and production 19 per cent over the corresponding July volume. Reversing the position held during the preceding two months, orders were heavier in the year-ago comparison and shipments somewhat lighter. Production continued at a level about 17 per cent lower than last year. Seasonal trends were apparent during August in the manufacture of stoves and furnaces, molding-room opera tions increasing 84 per cent over the volume of the preced ing month; orders accepted totaled 59 per cent and ship ments 30 per cent larger than in July. The prevailing level of activity, however, was below that of last year in August, and inventories showed a heavy accumulation, amounting to more than twice those of a year ago. Class MIDWEST DISTRIBUTION OF AUTOMOBILES Changes in August 1934 From Previous Months Per Cent Change From did not record the heavy drop shown in new car sales; stocks, on the other hand, increased slightly at the end of August over July, in contrast to the recession in new car stocks. The ratio of deferred payment sales to total retail sales of dealers reporting the item amounted to 51 per cent in the current period, comparing with 53 per cent for July and with 46 per cent for last August. 56 56 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................. Number of Firms or Yards Aug. 1933 +3.6 +16.4 -7.7 +9.4 +3.9 +1.9 10 10 10 +29.4 +26.7 +46.5 +2.9 +8.5 +13.1 +8.7 -3.2 169 51 62 165 Ratio of Accounts Outstanding1 to dollar sales during month Wholesale Trade................................. Retail Trade............................ Aug. 1934 July 1934 Aug. 1933 187.9 305.8 210.9 387.2 201.8 345.0 1 End of month. Page 5 from the July peak, though 11 per cent under the yearago volume. Shipments were expanded 46 per cent over those of the preceding month, and totaled 5 per cent lower than in August 1933. The volume of unfilled orders out standing at the close of August was 2 per cent greater than a month previous and 2 points higher in the ratio to current orders booked. The rate of operations was increased to 55 per cent of capacity, 6 points higher than in July, though 9 points under that obtaining a year ago. Shoe Manufacturing, Tanning, and Building Construction Building contracts awarded in the Seventh district continued to decline during August, the aggregate volume totaling 17 per cent less than in July and only 6 per cent more than in August last year. Residential contracts were 5 per cent smaller than a month previous and 7 per cent below last year’s volume. Total contracts for the year through August, however, were twice as heavy as those of the corresponding period in 1933. Hides Preliminary reports on shoe production in the Seventh district indicate an expansion in operations from July to August in line with the marked increase normal at this season. Latest available figures on shoe production during July show it was 6 per cent lighter than in June, 14y2 per cent smaller than in July a year ago, and 6J4 per cent below the ten-year average for the month. In the tanning industry purchases of green hides and the conversion of these into leather increased during August, while sales continued to lag, the monthly volume falling not only below that of June but also below the corresponding month a year ago. Trading in packer green hides and skins was heavy in the Chicago market, stimulated by the an nouncement that the Government would keep hides of drought cattle slaughtered after September 5 out of regular commercial channels. Price quotations had advanced from to 1J-2 cents by the close of August over the low point reached the second week of the month. Building Materials, Construction Work Reporting wholesale lumber yards and retail dealers in this district experienced seasonal or greater expansion in August, following the dullness prevailing in the preceding two months. The volume of lumber sold by wholesale yards showed an increase of 16 per cent over July, but the gain in dollar value for the same firms amounted to only 4 per cent. The average gain for the month in the preceding five years amounted to less than 3 per cent in both items. Favorable comparisons with a year ago were recorded for the first time since May in dollar sales and since April in board feet. Despite the increased sales, accounts outstanding were lowered by 8 per cent. At retail yards, the volume of lumber sold recorded a gain of 47 per cent over July, which was accompanied by a 27 per cent increase in dollar value. Total dollar sales of all materials gained 29 per cent, as compared with an average August expansion of only 9 per cent in the 1928-32 period. A further reduction took place in stocks during the month, which, however, were larger than a year ago at most yards. Prices averaged steady to slightly lower. Collections were good and consequently the accounts-tosales ratio declined sharply to the lowest level since 1931. Demand for both clay products and cement in August continued at approximately the level of the preceding month and registered no improvement over a year ago. BUILDING CONTRACTS AWARDED SEVENTH FEDERAL RESERVE DISTRICT Period August 1934.................................................... Change from August 1933..................... Per Cent Change From Same Month Last Year Electrical Supplies........... Collec +14.7 +19.4 +35.2 +8.3 -0.8 +22.9 +38.6 +2.1 -5.6 +19 -8.3 -9.6 +15.1 +18.8 +9.5 +1.4 90.4 p 204.9 199.5 188.2 J +5.9 +10.5 -0.2 + 11.1 195.5 DigitizedPage for FRASER 6 tions $ 15,749,387 -17% $ 1,944,437 -5% -7% $18,750,952 +34% +6% $171,028,855 +105% , Merchandising Following two months of diminishing activity, most reporting groups of wholesale trade in the Seventh district experienced greater than seasonal improvement in sales during August. The grocery trade expanded 16 per cent over the preceding month, dry goods 49 per cent, and A drugs 20 per cent, as against gains in the 1924-33 average for the period of but one, 18, and 4 per cent. Further more, these current increases were larger than in August of any of the ten years. A gain of 6 per cent in the wholesale hardware trade compared with an average de cline for August of 2 per cent from the preceding month. The electrical supply trade furnished an exception to the general trend of sales by declining 9 per cent from July, whereas the seasonal average shows an increase of one per cent for the month. In the comparison with August , DEPARTMENT STORE TRADE IN AUGUST 1934 Locality Stocks Residential Contracts The Seventh district trend in estimated cost of pro posed construction, according to building permit figures in 101 cities, declined somewhat during August. The de crease from July amounted to 14 per cent, although in the comparison with August 1933 a gain of 29 per cent was recorded. The number of permits issued during the month increased 13 and 8 per cent, respectively, over a month and a year previous. As compared with the preced ing month, Indianapolis and Des Moines recorded gains of 425 and 168 per cent, respectively, in estimated cost of permits issued, and were the only two of the five larger cities, which include Chicago, Detroit, and Milwaukee, to differ from the district trend. In a similar comparison with a year ago, Chicago showed a decline of 29 per cent, and was the only exception to trend. Ratio of Accts. Outstand Net Sales Total Contracts *Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN AUGUST 1934 Accts. OUTSTAND. - Per Cent Change Aug. 1934 From Aug. 1933 Net Sales Stocks End of Month Chicago................. Detroit.................. Indianapolis......... Milwaukee........... Other Cities......... + 18 +22.2 + 1.7 -2.3 +8.3 7th District......... +6.0 ing to Net Sales Per Cent Change First Eight Months 1934 From Same Period 1933 Ratio of Aug . Collections to Accounts Outstanding End of July Net Sales 1934 1933 -5.0 +3.9 +8.5 +7.1 +2.1 +13.0 +37.7 +15.6 +13.7 +29.3 28.8 38.3 36.4 34.8 29.0 25.2 30.6 35.7 31.8 26.6 +0.1 +20.4 32.9 28.8 a year ago, the gain shown in the table for the grocery trade compared with practically no change in volume in the yearly comparison for July, that in dry goods followed two successive months of declines from last year, the gain in hardware was greater and that in drugs about the same as a month previous, while the small increase in the electrical supply trade followed fifteen months of substantial gains in the comparison. For the first eight months of 1934, grocery sales totaled 16 per cent larger than in the same period of 1933, drug sales were 19 per cent greater, the dry goods trade was heavier by 29 per cent and the hardware trade by 37 per cent, while elec trical supplies aggregated 51 per cent more In sales vol ume. In all groups except electrical supplies, ratios of accounts outstanding to net sales during the month were lower than in July or a year ago. cent, respectively; stores in smaller cities had an aggregate sales volume 38 per cent in excess of that for July. Stocks on hand August 31 showed little change over the end of July or the corresponding date a year previous. The retail shoe trade in August recorded a considerably greater than seasonal gain over the preceding month, an increase of 32 per cent in the aggregate sales of reporting dealers and department stores comparing with one of only 2 per cent in the 1926-33 average for the month. The 30 per cent expansion over July in the retail furniture trade was about seasonal for August. The former line showed a sales increase of 16 per cent over last August— comparing with 7 per cent in the yearly comparison for July—while sales of furniture and house furnishings ex ceeded those of last year by only 2 per cent, as against a gain of 8 per cent in July sales over a year ago. The 31 ]/2 per cent expansion for August over July in Seventh district department store trade was considerably larger than average for the period; nevertheless, sales ex ceeded by only 6 per cent those of the corresponding month of 1933 when a similar heavy gain in sales was recorded. It will be noted in the table that sales by Milwaukee stores totaled slightly less than in the month last year, and that the increases for Chicago and Indian apolis were small. In the comparison with the preceding month, Detroit among the larger cities had the greatest expansion—41 per cent—with sales by Indianapolis, Chi cago, and Milwaukee firms gaining 37, 28, and 21 per Eleven reporting chains, operating 1,504 stores in August, had total sales 3 per cent larger than in the preceding month and 2 per cent above August 1933. However, with a smaller total number of units operated than a month previous or a year ago, average sales per store increased 6 and 3 per cent, respectively, in the monthly and yearly comparisons. All reporting groups except shoes had heavier sales than in July, while fiveand-ten-cent store, shoe, and musical instrument chains recorded declines from last August, drug, cigar, and men’s clothing chains effecting the gain shown in the total over a year ago. COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO otherwdsef indicate^!8 ^here fi*nS^Tt°f.Unit V°lume f°lthe months indicated- using ‘he monthly average for 1923-1924-1925 as a base, unless month. Data'refer'to^^&vmith FSera^ResTnredfeUdctunless otherwiseImjte!i<in ^ °f "tUn“ ‘° ^ ™nS Wil1 be ^ the Meat Packing—(U. S.)— Sales (in dollars)............................ Casting Foundries— Shipments: Steel—In Dollars................................. In Tons................................. Malleable—In Dollars............... In Tons............................ Stoves and Furnaces— Shipments (in dollars)............................ Furniture— Orders (in dollars).................................... Shipments (in dollars)............................ Flour— Production (in bbls.)........................ Output of Butter by Creameries Production............................................. Sales................................................. Wholesale Trade— Net Sales (in dollars): Groceries............................................ Hardware......................................... Dry Goods.................................. Drugs............................................ Retail Trade (Dept. Stores) — Net Sales (in dollars): Chicago................................................. Detroit................................... Indianapolis.................................... Milwaukee......................................... Other Cities.................................. Seventh District—Unadjusted........ —Adjusted............. Automobile Production—(U. S.)Passenger Cars............................. Trucks.......................................... Building Construction— Contracts Awarded (in dollars): Residential.................................... Total........................................ Iron and Steel— Pig Iron Production:* Illinois and Indiana............................ United States........................................ Steel Ingot Production—(U. S.)*. ... No. of Firms Aug. 1934 July 1934 June 1934 May 1934 Apr. 1934 Mar. 1934 Aug. 1933 July 1933 June 1933 May 1933 Apr. 1933 62 75 68 60 68 62 63 58 60 56 56 48 45 12 12 21 21 42 46 27 40 40 44 25 36 41 44 32 48 44 47 41 62 31 31 38 58 28 28 36 58 21 23 24 41 21 25 21 36 18 19 21 37 12 13 16 29 10 10 12 22 11 12 10 16 10 83 64 84 102 78 82 91 63 58 54 44 38 14 14 42 39 41 27 20 25 29 33 25 23 31 24 47 43 62 30 30 28 32 27 24 23 19 20 21 109 86 98 101 92 106 93 98 120 108 114 110 67 69 126 116 125 110 128 113 120 114 85 90 80 92 122 116 123 106 139 132 135 113 94 87 93 96 28 11 9 13 78 57 47 67 67 53 31 56 83 60 38 61 76 70 44 66 64 60 40 64 68 52 42 71 68 49 34 61 67 47 44 52 70 61 39 58 63 54 34 54 55 39 26 49 58 28 23 49 25 5 4 5 43 82 82 65 69 70 63 62 65 82 51 50 51 52 45 50 69 71 85 71 68 64 72 73 72 93 81 74 75 77 76 64 91 78 82 65 72 72 68 92 84 71 73 74 76 64 57 69 65 57 62 78 48 41 49 52 40 46 64 66 66 65 63 58 64 66 64 74 73 68 60 66 65 58 65 70 70 57 61 58 63 136 77 113 90 123 94 154 99 174 94 150 65 110 65 101 71 112 62 90 51 71 33 47 7 23 7 28 30 13 32 10 36 8 37 7 22 9 27 8 19 10 15 5 10 5 12 42 35 38 45 40 44 66 66 87 68 67 93 54 59 87 49 53 77 52 60 80 59 59 95 45 43 74 31 29 55 18 21 40 18 18 25 Mar. 1933 . 57 45 52 51 44 51 57 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Federal Reserve Board) INDUSTRIAL PRODUCTION OTAL output of industry, which usually increases at this season, showed little change in August. Factory employment and payrolls increased between the middle of July and the middle of August by about the usual seasonal amount. Dis tribution of commodities at department stores showed a more than seasonal growth. T ' Production and Employment Index number of industrial production, adjusted for seasonal variation. (1923-1925 average = 100.) PER CENT PCRCEHT DEPARTMENT STORE SALES With Seasonal Adjustment Without Seasonal Adjustment Indexes of daily average value of sales. 100.) (1923-1925 = .M Output of basic industrial products, as measured by the Board’s index which makes allowance for usual seasonal changes, declined from 75 per cent of the 1923 1925 average in July to 73 per cent in August. At steel mills production continued to decline during August and the early part of September, contrary to seasonal tendency; in the middle of September a slight increase in activity was reported. Output of ^ automobiles, which had been maintained at a relatively high rate during the spring and early summer, declined in August. Lumber production showed an increase. In the cotton textile industry, production was in larger volume in August than in July, but was retarded by the strike in the first three weeks of September. At meat-packing establishments, output in August was larger than in any other recent month, accom panying heavy marketings of cattle from drought areas. Factory employment showed a seasonal increase between the middle of July and the middle of August, reflecting considerable growth in employment in the wearing apparel, canning, and meat-packing industries, while employment in the iron and steel industries and at railroad repair shops declined. The value of construction contracts awarded, as reported by the F. W. Dodge Corporation, was about the same in August as in each of the four preceding months. Department of Agriculture estimates as of September 1 indicate a corn crop 40 per cent smaller than the average for the five years 1927-1931, and other feed crops also are expected to be unusually small. The condition of pastures on September 1 was poorer than in any other recent year, but some improvement has been reported in the early part of September. The spring wheat crop, estimated at 93,000,000 bushels, is about one-third of the five-year average, and the winter wheat crop is also small. The cotton crop is estimated at 9,300,000 bales, a sharp reduction from other recent years. Distribution Volume of freight carloadings, which usually increases at this season, showed little change in August. Shipments of miscellaneous freight showed no seasonal ex pansion, while shipments of live stock increased considerably. Department store sales increased by an amount substantially larger than is usual in August and were 2 per cent higher than a year ago. WHOLESALE PRICES Commodity Prices Farm Products Indexes of the United States Bureau of Labor Statistics. By months 1929 to 1931; by weeks 1932 to date. (1926 = 100.) BILLIONS or DOLLARS MEMBER BANK CREDIT U. 5. Govt Securities All Other Loans Loans on Securities Wednesday figures for reporting member banks in 91 lead ing cities. Latest figures are for September 19, 1934. Page 8 Wholesale prices of commodities increased in August and the first week of September, reflecting sharp advance in the prices of farm products and foods. Hog prices advanced rapidly during the month of August, and in the latter part of the ^ month cattle prices also showed a marked increase. Since the beginning of September, prices for both hogs and cattle have declined somewhat, and in the middle of the month there have also been decreases in the prices of wheat and cotton. In August, as in other recent months, there was little change in prices of commodities other than farm products and foods. Bank Credit A seasonal increase in demand for currency by the public and an increase in Government deposits at the Reserve banks were reflected in a decline in member bank reserve balances between the middle of August and the middle of September. On September 19, reserve balances were about $1,700,000,000 in excess of legal « requirements. There was little change in the volume of reserve bank credit during August and September. Total loans and investments of reporting member banks showed little change between August 15 and September 19; loans, other than security loans, increased by $170,000,000 and holdings of securities by $50,000,000, while security loans declined by $200,000,000. The increase in loans other than on securities occurred largely at banks in New York City and in the western districts and reflected chiefly a growth in direct loans to customers for ordinary commercial purposes and for financing the harvesting of crops. The banks’ holdings of acceptances and commercial paper, which also reflect current business financing, increased during the period. , Short-term money rates continued at low levels. Yields on both United States Governments and corporate bonds increased during August and the first half of September.
@FedFRASER