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MONTHLY R EV IE W Agricultural and B usiness Conditions TENTH FEDERAL RESERVE DISTRICT VoL. 24, No. 1 JANUARY FEDERAL RESERVE BAN K OF KANSAS C I T Y 31, 1939 Business in t he Tenth Federal Reserve District DECEMBE R 1938 COMPARE D WITH DECEMBER 1937 % i 1 ---------t---... Denver• COLO. DECREASE I I ·--------KANSA I INCRE~SE to 20 30 40 I I ·--------·-··-··-r-!--- ___Mem . Bk . I nvest._ I ._.Demand Deposits_ 1'rmle I ___Wholesale Sales ____ I ____ Retail Sa les ___ _.Dept. Stor e Sa]ea_ I ___ L umber Sa les _ Marketings _ __Wheat _ -52 ■ ., • • --• •• -■ I• ■ ,.to •• .F. R. Bk. Clearings. I ___ +73 _ _Corn _ __ _ _ oats _ __ __ __c attle _ __ __ __Calves _ _ _ _ __Hogs _ _ _________Sheep._____ Production ___ F lour _ _ ___c attle Sla ughter __ _ Calf Slau ghter ___ ___ .H og Sla ughter ___ __Sheep Slaughter__ . ·- Crude Petroleum ... _ Dituminous CoaL Zinc Ore Shipments Lead Ore Shipments Construction 5~___Total Awards __ If ____ R es. A wards __ 05 _ Value of Permits_ Miscellaneous ___ Rainfall _ _ I I I Cash Farm Income * __Employment __ ___ .Pay Roll1 _ _ •For previous month % DECREASE I • • •• . --.. ;--•• ·-I , ■ • ■ • I I• I ■ I N CREASE 10 20 30 40 ■ _Mem. Bk. Loans __ ___ Life Ins. Sa les_ A year ago it was pointed out that the Decemqer figures made a much poorer showing than the year as a whole on account of the very sharp decline in business then under way. The opposite is true this year. More than half of the items shown in the chart are above the December figure of a year ago but the year 1938 averaged much below 1937. Building activity is the strongest factor in the situation, public and residential construction being responsible. Life insurance sales are up sharply and trade figures are equal to a year ago. Bank loans, while much below a year ago, have risen since July. Holdings of United States Government securities have declined recently but other investments are rising. While rainfall in 1938 was nearly 25% above that of 1937, the fall was unusually dry and the farm situation is not good. Livestock numbers appear to be increasing and prices are firm. % 40 30 20 Financial I • l(ANS. YEAR 1938 .COMPARED WITH YEAR 1937 _____ Da nk Debits ____ I :' I % 40 30 20 to BUS INESS INDICATORS 2 REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS Member Bank Operations Loans at reporting member banks in the Tenth District continued to rise slowly from the middle of December to the third week of January, reflecting principally a further increase in commercial loans which have been gradually rising since early last October. Holdings of open market paper and loans to security brokers and dealers also increased during the five weeks. Holdings of Government obligations had increased somewhat at the end of the year but have since declined and in the third week of January are slightly lower than at the middle of December. Investments in other securities, however, continued to increase. Loans are 4 per cent smaller but" investments are slightly larger than a year ago. During 1938, loans had averaged about 6 and investments 11 per cent below 1937. Adjusted demand deposits increased further from the middle of December to the third week of January and there was a large increase in reserve balances carried at this bank. Deposits due to other banks and correspondent balances due from other banks continued to decline. Adjusted demand deposits, which in 1938 had averaged about 2 per cent lower than in 1937, are now about 5 per cent larger than a year ago, deposits due to banks are slightly larger, and balances due from banks are 23 per cent greater. Principal items of condition of 51 member banks: Loans and investments-total.... Loans-total... ................................. Coml., indust., and agric ......... Open market paper................... To security brokers and dlers... Other to purch. or carry secur.. Real estate loans....................... Loans to banks.......................... All other loans........................... Investments-total ......................... U.S. Govt. direct obligations ... Oblig. guar. by U.S. Govt......... Other securities.......................... Reserve with F. R. Bank.............. Balances with domestic banks... D~mand deposits-adjusted ......... Time deposits .................................. U.S. Govt. deposits........................ Interbank deposits ......................... Change from Jan.18 Dec. 14 Jan. 19 1938 1938 1939 (In thousands of dollars) 654,868 +5,494 -6,213 258,091 +3,802 -10,992 157,162 +2,869 -14,264 17,742 +976 -690 .4,901 +690 +1,025 11,463 -357 -965 22,502 -146 + 1,653 702 +59 +4 43,619 -289 +2,245 396,777 +1,692 +4,779 209,024 -5,129 -24 467 50,666 -942 +6:325 137,087 +7,763 +22 921 164,067 +6,062 -4'047 275,176 -9,664 +51,267 502,612 +4,736 +21:828 144,231 +2,398 -725 22,105 +1,449 +8 499 358,080 -8,862 +4:735 Reserve Bank Operations Note circulation of this bank rose to a new high level of 172¼ million dollars in the third week of December, when the seasonal demand for currency for Christmas shopping normally carries circulation to its highest point of the year. This amount compares with about 170 million at the same time in 1937 and about 163 million in 1936. Circulation in January is seasonally lower with the return flow of currency after the holiday period. Principal items of condition of the Federal Reserve Bank of Kansas City and branches: Total reserves ..........·----····· Bills discounted............................... Bills purchased................................ Industrial advances........................ Commit. to make indust. adv........ U.S. Government securities......... Total assets ...................................... F. R. notes in circulation.............. Member bank reserve deposits ....J Change from Jan.18 Dec.14 Jan.19 1939 1938 1938 \(In thousands of dollars) 310,017 -6,395 +18,603 986 +304 -6 16 Zero Zero 245 -24 -216 650 +98 +649 132,098 +18,849 -6 481,659 +5,837 +18,546 168,209 -2,055 +2,901 234,880 +6,142 -8,098 Dollar volume of check collections increased more than seasonally during December. Dollar volume in December was slightly larger than a year earlier but for the entire year was down 10 per cent. Check collections through this bank and branches: ITEMS 1938 December............... 6,476 November.............. 5,895 Year........................ 70,824 AMOUNT 1937 1938 1937 (In thousands) 6,316 $ 1,008,396 $ 1,002,096 5,845 921,143 948,665 72,117 10,822,414 12,062,546 Bank Debits Debits to individual accounts by banks in reporting centers of the District rose more than seasonally during December. Bank debits in December were only 3 per cent lower than a year earlier as compared with a decline of 12 per cent for the year. Payments by check for the years 1938 and 1937: Albuquerque, N. Mex .... Atchison, Kans •............... Bartlesville, Okla............ Casper, Wyo .................... Cheyenne, Wyo ....... ·-····Colorado Springs, Colo .. Denver, Colo .................... Emporia, Kans ................ Enid, Okla........................ Fremont, Nebr ................. Grand Junction, Colo ...... Guthrie, Okla................... Hutchinson, Kans .......... Independence, Kans ........ Joplin, Mo ....................... . Kansas City, Kans ......... . Kansas City, Mo .............. Lawrence, Kans ............... Lincoln, Nebr.................Muskogee, Okla ............... Oklahoma City, Okla •..... Okmulgee, Okla............... Omaha, Nebr.................... Pittsburg, Kans ............... Pueblo, Colo ..................... Salina, Kans ..................... St. Joseph, Mo ................ Topeka, Kans ................... Tulsa, Okla•...................... Wichita, Kans .................. 1938 ( In thousands 171,742 36,303 330,224 72,384 100,959 169,939 1,820,432 37,411 132,549 29,176 ,41,718 20,361 137,287 32,493 108,664 181,872 3,536,094 41,011 323,129 90,806 1,199,636 31,155 1,659,758 44,604 201,855 109,072 300,609 212,246 1,641,412 530,511 District, 30 cities, year .. . U.S., 141 cities, year..... . District, 30 cities, Dec .. _ U.S., 141 cities, Dec ...... . 13,345,412 373,399,040 1,283,204 39,929,600 J J 1937 of dollars) 180,997 45,118 369,615 74,989 106,229 189,988 2,098,408 42,283 150,199 31,350 46,747 22,785 170,943 34,521 123,286 182,665 4,184,085 46,321 344,564 99,594 1,341,131 34,275 1,861,005 48,763 230,106 135,440 330,551 211,247 1,899,317 605,526 Change 15,242,048 432,992,900 1,323,456 39,113,807 -12.4 -13.8 -3.0 (%) -5.1 -19.5 -10.7 -3.6 -5.0 -10.6 -13.2 -11.5 -11.8 -6.9 -10.8 -10.6 -19.7 -6.9 -11.9 -0.4 -15.5 -11.5 -6.2 -8.8 -10.6 -9.1 -10.8 -8.5 -12.3 -19.5 -9.1 +o.5 -13.6 -12.4 +2.1 3 FEDERAL RESERVE BANK OF KANSAS CITY Trade RETAIL SALES Dollar volume of sales at reporting department stores in the District in December and in the first two weeks of January was virtually unchanged from a year earlier. Total sales in 1938, however, were about 5 per cent lower than in 1937. A considerable part of this decrease was due to lower retail prices, which declined during the year and currently are about 5 per cent below a year ago. Dollar inventories declined seasonally during December and at the end of the year were 5½ per cent smaller than a year earlier. Collections on open accounts averaged 48.2 per cent in December as compared with 47.6 per cent last year, while installment collections averaged 16.2 and 15.2 per cent, respectively. Department store sales and s!ocks in leading cities : SALES STOCKS Dec.'38 Year '38 Dec. 31, '38 No. of comp.to comp. to compared to Stores Dec.'37 Year '37 Nov.30,'38 Dec.31,'37 - - ~ r cent increase or decrease) Denver_ ___. 3 +o.3 -5.5 -19.7 -3.5 Kansas City........ 4 +3.0 -6.5 -21.5 -14.2 Oklahoma City... 3 +4.7 -0.2 -24.0 +4.1 Omaha 3 -0.8 -2.4 -15.4 +1.7 Tulu 4 -2.3 -2.8 Wichita. 3 -4.6 -9.5 -19.7 Other cities......... 19 -4.9 -8.8 -10.7 District.............. - 39 -0.2 -5.3 -20.2 -5.5 Total retail sales in December were 2 per cent above a year ago but sales for the year were 10 per cent lower than in 1937, sales in Colorado declining 11, Kansas 13, Missouri 9, Nebraska 11, Oklahoma 7, and in Wyoming 14 per cent. Sales of independent retail stores reported by the Department of Commerce: Apparel .................... Country general.. ... Department........... _ Drug........................ . Furn. & appliances. Grocery......·-··········· Hardware ............... . Lbr. & bldg. mtls .... Motor vehicle......... . Total......................... Dec. 1938 per cent change from Dec. 1937 Colo. Kans. Mo. Nebr. Okla. -3.6 -8.9 +3.7 +3.4 -7.1 +o.3 -4.6 +6.o -4.5 +4.4 +3.2 -5.1 +1.7 -6.9 +3.8 -2.3 -0.2 +0.2 +3.1 -1.0 -0.6 +6.1 +14.0 -2.4 +0.1 -5.6 +o.9 -2.0 +1.3 +o.3 -8.7 -10.0 +11.1 +o.5 +8.5 -10.3 +8.6 +36.5 +8.5 -1.3 +19.4 +5.1 +37.4 +8.7 +2.7 +o.9 -2.3 +4.4 -1.0 +1.4 WHOLESALE SALES The value of wholesale sales in this District, which in November for the first month of the year had exceeded that in the corresponding month of 1937, in December continued above a year ago and increases were more general among reporting lines than in the preceding month. Due in part to the lower level of wholesale prices, however, total sales for the year _were about 8 per cent lower than. in 1937, following an increase of 7 per cent in 1937 over 1936. Wholesale stocks declined about 13 per cent during 1938. Col- lections in December averaged 84.3 per cent against 85.5 per cent a year earlier. Wholesale sales and stocks reported by the Department of Commerce for this District: SALES No. of Firms -Auto. supplies.... 4 Clothing.............. 3 Drugs................. 4 Electricalgoods., 5 Furniture............ 4 Groceries ........... ~ 24 Hardware-total.. (6) Industrial........ 3 Plbg. & htg..... 3 Jwlry.& opt.gds. 3 Paper................... 3 Tobacco & prod.. 5 All other lines .... 15 J Total... ................. 76 STOCKS Dec.'38 Year '38 Dec. 31, '38 comp.to comp. to compared to Dec.'37 Year '37 N ov.30,'38 Dec.31,'37 -u5er .cent increase or decrease) -30.3 -12.2 Zero -6.3 Zero -10.3 +2.1 -3.9 -0.9 -7.6 -38.6 -35.9 +5.4 -14.1 +1.6 -5.2 -7.0 -16.7 +23.8 -5.4 +14.6 -1.4 +42.5 -13.1 Zero -10.6 -23.8 -18.1 +3.7 -5.9 -7.5 -5.1 -1.6 -15.5 -4.2 -5.0 -8.1 +o.3 -6.0 -12.8 Rainfall COLORADO Denver............................. Leadville......................... Pueblo............................. Lamar.............................. Garnett............................ Steamboat Springs........ Year 1938 Dec.1938 Total Normal Total Normal --uninches_)_ 19.46 14.05 .62 .73 18.63 27.75 2.02 1.08 13.32 11.67 .50 .47 16.05 17.69 .21 .61 6.93 .12 .21 10.03 23.12 25.28 3.04 1.96 KANSAS Topeka ............................. .24 Iola................................... .24 Concordia........................ .02 Salina............................... .10 Wichita............................ .15 Hays ................................ Trace Goodland......................... .15 Dodge City...................... .06 Elkhart............................ .63 .98 1.30 .63 .77 1.00 .62 .56 .57 .64 29.01 43.02 27.27 27.03 32.81 22.11 17.06 18.96 17.85 33.55 38.08 26.55 27.27 30.11 23.69 18.70 20.51 17.51 .65 .55 1.03 1.29 1.33 2.16 26.98 36.97 39.43 35.66 37.11 43.99 .15 .26 .24 .03 .15 .16 .33 .06 .78 .54 .67 .72 .36 .37 .26 .65 30.87 28.35 22.94 20.57 19.10 21.81 20.19 18.10 27.79 27.38 28.60 27.03 19.49 18.04 15.97 18.88 .44 .45 .71 .42 .74 .44 14.80 15.58 7.29 16.16 14.27 9.23 .50 1.64 .38 .83 .16 .34 .22 1.98 2.67 1.50 1.66 1.34 1.18 .88 41.20 45.15 31.87 42.82 27.26 34.58 29.93 38.81 43.33 31.15 34.76 28.31 30.66 26.88 .97 .53 .44 .85 .55 .99 .68 .64 17.47 10.63 12.70 16.98 14.99 15.20 12.63 16.06 MISSOURI St. Joseph ....................... Kansas City.................... Joplin.............................NEBRASKA Omaha............................. Lincoln............................ Norfolk ............................ Grand Island................... McCook............................ North Platte ................... Bridgeport...................... Valentine........................ NEW MEXICO Clayton............................ Santa Fe.......................... Farmington.................... OKLAHOMA Tulsa................................ McAlester....................... Oklahoma City............... Pauls Valley................... Hobart............................. Enid ................................. Woodward ....................... WYOMING Cheyenne........................ Casper............................. Lander............................. Sheridan.......................... REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS 4 While rainfall for the year 1938 was about normal or above throughout the District, the distribution was bad, particularly in Nebraska, Kansas, and Oklahoma. For the three months, September through November, rainfall was only 83 per cent of normal in Nebraska, 64 per cent in Kansas, and 56 per cent in Oklahoma. In December, Nebraska and Kansas received only a fourth and Oklahoma little more than a third of normal precipitation. As a result of fall and winter drought, coupled with unusually mild temperatures, the condition of winter wheat in much of that area is decidedly poor. Early seeded wheat had made a good start but has deteriorated markedly while much late seeded wheat has not germinated or is just showing above the ground. Even in southwestern Kansas and in the northwestern and panhandle sections of Oklahoma, where wheat is in fairly good condition, wheat pastures are becoming very short and cattle and lambs are being moved rapidly to feed lots or to market. In Oklahoma, subsoil moisture is low over practically the entire state. General rains and snows in the first three weeks of January have brought about some improvement in winter wheat but the moisture in most areas has been sufficient to provide only temporary relief. Grain Marketing The District produced another large wheat crop in 1938 and marketings of wheat again were in heavy volume. Quality of the crop, however, was poor and prices were substantially lower than in 1937. Marketings of corn increased somewhat in 1938 but nevertheless were very light, falling about 30 per cent short of the average of the past ten years. Corn production in this District is still much below normal, the price is low, and a considerable part of the 1938 crop was stored on farms under Government loans. · Receipts of oats were about 20 per cent smaller than in 1937. Grain receipts for 1938 at five District markets: Wheat Corn Oats Rye Barley Kafir '(Ln thousands qf b u s h ~ - - Hutchinson.... Kansas City... Omaha............ St.Joseph...... Wichita.......... 22,757 12 99,531 12,320 23,698 15,352 10,545 5,214 22,659 103 Year 1938....... 179,190 33,001 Year1937 ....... 179,725 29,924 Dec. 1938........ 8,933 3,578 Nov.1938........ 7,986 4,965 Dec.1937........ 6,411 7,372 1 14 3,068 371 4,367 1,132 4,520 9 3 10 11,959 14,858 1,342 650 774 1,536 1,567 141 92 216 339 830 44 3 127 1,002 18 33 1,216 1,180 1,934 936 79 166 47 179 100 92 Farm reserves of corn in the District on January 1, 1939, were almost 40 per cent larger than a year ago although about 15 per cent below the average from 1928 to 1937. Farm stocks of wheat and oats.are large, being about 20 per cent greater than either a year ago or the average. Cash prices of wheat and corn, which by late October had fallen to the lowest level in about five years, lifted somewhat in the last two months of the year and were little changed during the forepart of January. The very poor condition of winter wheat, the small market supplies of corn, and improvement in the outlook for exports of both wheat and corn were favorable to stronger prices. The lower range of cash grain prices at Kansas City: No. 1 hd., dk. wheat, bu .. No. 2 mixed corn, bu....... No. 2 white oats, bu........ No. 2 rye, bu.......·-··········· No. 2 barley, bu............... No. 2 white kafir, cwt..... Jan.24 1939 $ .70¼ .47¾ .29½ .45 .42 .74 Dec. 31 1938 $ .70¾ .48½ .29¾ .46½ .40 .75 Nov. 30 1938 $ .63¾ .45 .26 .41 .37 .71 Dec. 31 1937 $ .94¾ .58 .31½ .68 .49 .97 Livestock MARKETINGS Marketings of cattle declined 11 and calves 16 per cent in 1938, cattle receipts falling 14 but calves only 4 per cent below the average of the past ten years. Cattle numbers in this District have been greatly reduced in recent years and a definite tendency during 1938 to hold back cattle to build up drought depleted herds as a result of the favorable feed situation further restricted market receipts. Hog marketings, although 54 per cent below the ten-year average, increased 10 per cent from the record low level of 1937. Hog production in the District in 1938 was nearly 30 per cent larger than a year earlier and is expected to increase sharply further in the spring of 1939. Receipts of sheep and lambs, while 8 per cent under the average, were the largest since 1934 and 4 per cent larger than in 1937, reflecting in part an increase of 5 per cent in the District's 1938 lamb crop. Livestock receipts at District markets in 1938: Denver................... Kansas City.......... Oklahoma City..... Omaha................... St.Joseph.............. Wichita..........·-····· Cattle 640,943 1,334,385 439,204 1,176,990 310,110 284,076 Year 1938.............. Year 193f............. Dec 1938................ Nov.1938 ............... Dec.1987................ 4,085,708 4,588,097 276,673 408,203 330,770 Calves Hogs Sheep 78,633 289,661 3,134,564 334,972 1,348,389 1,606,466 172,264 232,638 357,899 121,415 1,214,371 1,648,137 65,918 675,144 1,010,821 69,154 229,285 188,495 842,356 4,114,749 1,007,168 3,733,967 64,650 490,100 93,514 888,703 64,048 441,442 7,721,121 7,427,592 400,166 463,678 328,803 PRICES Following the drastic decline in livestock prices late in 1937 and early in 1938, prices throughout most of 1938 were appreciably lower than in 1937 when they had been at the highest level in many years. With feed costs relatively lower than livestock prices, however, feeding operations in 1938 were generally profitable, particularly for hogs. While top livestock prices for FEDERAL RESERVE BANK OF KANSAS ClTY 1938 were much below those in 1937, cattle and sheep and lamb prices recovered strongly from their early 1938 lows, cattle prices closing with substantial net gains and sheep and lamb prices with moderate gains over a year earlier. Hog prices were slightly lower at the close of the year. Top livestock prices at the Kansas City market: Jan. 24 Dec. Nov. Dec. Year Year 1939 1938 1938 1937 1938 1937 (In dollars per hundredweight)-Beef steers............. 12.50 13.50 11.85 11.25 13.50 17.25 9.75 9.50 9.25 7.66 9.50 10.00 Stocker cattle....... . 9.85 8.75 9.00 8.20 10.76 13.25 Feeder cattle........ . 9.50 10.00 12.00 Calves.................... . 10.50 10.00 10.00 7.55 7.55 8.00 8.40 10.06 13.20 Hogs....................... 7.76 7.70 8.00 7.60 8.00 11.50 Sheep (Yearlings) 8.90 9.15 9.50 9.25 10.15 13.75 Lambs..................... STOCKERS AND FEEDERS Countryward shipments of stocker and feeder cattle, calves, and sheep, which had increased markedly in 1937, were little changed in 1938 and hog shipments from public markets remained at a low level. The movement of cattle and calves was about equal to the average of the past ten years but shipments of hogs were 58 and sheep 18 per cent below average. December shipments of stockers and feeders were substantially heavier than in the preceding year. Shipments of stockers and feeders in 1938: Denver......................... Kansas City............... . Omaha......................... St. Joseph .................... Year 1938.................... Year 1937.................... Dec. 1938..................... Nov. 1938................... Dec.1937..................... Cattle 217,874 606,692 292,844 59,858 Calves 35,571 93,717 41,090 12,263 Hogs ~ 24,184 9,958 10,413 Sheep 755,029 279,553 358,557 140,172 1,177,268 182,641 1,158,455 172,526 88,619 21,504 161,618 35,382 69,545 9,479 45,554 46,870 4,222 3,995 3,109 1,533,311 1,500,673 ·61,059 187,700 38,324 Ranges in the District were generally open through December and were furnishing good feed except in western Kansas and Oklahoma where range feed is short, grain pastures poor, and supplemental feeding necessary. However, supplies of supplemental feeds are quite ample. Livestock is in good condition and stockmen are retaining cows and heifers to build up herds. Wool prices show recent improvement. At the start of 1939, cattle feeding operations in Kansas are 20, in Missouri 12, and in Nebraska 8 per cent larger than at the beginning of 1938. Since feeding operations in these states had been greatly reduced during drought years, however, the number on feed is still below the numbers fed in most years before 1934, the number on feed in Kansas being only a seventh, in Missouri a third, and in Nebraska about half what it was at this time in 1929. Cattle feeding shows a decrease of 13 per cent in Colorado, 19 per cent in Wyoming, and 7 per cent in Oklahoma, but in New Mexico it is nearly double a year ago. 5 Lamb feeding in the District as a whole, including lambs on wheat pastures, is slightly smaller than a year ago. Kansas operations show an increase of 10 per cent, Missouri 20, Oklahoma 15, and Wyoming 3 per cent, but New Mexico shows a decrease of 7 and the important feeding states of Colorado and Nebraska decreases of 8 and 5 per cent, respectively. Department of Agriculture estimates of sheep and lambs on feed January 1: 1939 Colorado ........................... Kansas ............................. . Missouri ............................ Nebraska ......................... . New Mexico ...................... Oklahoma......................... Wyoming......................... . 1938 1937 1936 1935 (In thousands of head) 1,090 1,185 1,030 1,250 1,085 286 260 215 220 460 144 120 115 140 110 555 585 450 780 530 65 70 66 39 38 98 85 55 45 175 245 238 260 180 155 Seven states..................... United States................. _ 2,483 5,700 2,543 5,997 2,181 5,537 2,654 2,653 5,631 5,611 Farm Income November cash farm income in the District was only 4 per cent below a year ago as compared with a decrease of 17 per cent for the first eleven months of the year. Income from livestock in November was 15 per cent lower than a year ago but there was an increase of 8 per cent in income from crops, including receipts from Commodity Credit Corporation loans on wheat, corn, and cotton, and Government payments were nearly nine times as large as in the corresponding month in 1937. For the first eleven months of the year, income from crops was 30 and from livestock 13 per cent under 1937 while Government payments showed a small increase. Department of Agriculture income estimates: Change from Nov.1938 Oct.1938 Nov. 1937 ( In thousands of dollars) 13,104 -4,164 -1,773 Colorado............................... _ 16,171 -1,685 -2,025 Kansas ................................... Missouli_ _ _ _ __ 26,480 + 1,217 +2,802 19,448 +590 -1,333 Nebraska ---····---· 8,314 +114 -2,687 New Mexico....................... _., Oklahoma.............................. 17,951 +69 +3,844 3,952 -3,874 -2,872 Wyoming............................... Seven states.......................... United States........................ 105,420 708,000 -7,733 -131,000 -4,044 -8,000 By states, farm income in the first eleven months of 1938 in Oklahoma was only 4 per cent less than in 1937, but in Missouri it was 10, in New Mexico 13, in Colorado, Wyoming, and Nebraska 21, and in Kansas 26 per cent lower. Although prices paid by farmers for articles they buy declined in 1938, the drop in prices received by farmers for farm products was so much greater that buying power was seriously affected. For the year, the ratio of prices received to prices paid was 77 per cent of the pre-war level as compared with 93 per cent in 1937. 6 REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS Meat Packing Packers' purchases of cattle, calves, and sheep in 1938 were about 15 per cent below the average of the past ten years and hog slaughter was little more than half of normal. The downward trend of cattle and calf slaughter in 1937 continued in 1938, cattle slaughter declining 7 and calves 29 per cent further. Hog slaughter, while lower than in 1936, was 10 per cent larger than in 1937 and sheep slaughter showed a further small increase. Packers' purchases in 1938 at District markets: Denver...................... Kansas City............. Oklahoma City........ Omaha...................... St. Joseph............... Wichita...................- Hogs Cattle Calves Sheep 249,026 189,523 36,655 438,902 583,211 158,014 1,275,118 1,031,890 124,007 234,302 119,173 259,517 78,220 1,038,805 1,051,076 710,800 223,411. 53,189 609,069 839,809 136,944 149,918 50,510 205,621 Year 1938................. 2,078,191 495,761 3,637,156 3,635,602 Year 1937................. 2,244,632 698,366 3,293,168 3,525,484 Dec.1938................... 137,824 33,711 433,439 259,030 Nov.1938 .................. 180,133 39,667 343,288 239,654 Dec.1937................._ 188,977 44,791 219,629 383,200 Cold Storage Holdings After allowing for usual seasonal influences, United States cold storage holdings of nearly all commodities except pork and lard declined during December. January 1 total stocks of meat, although 6 per cent larger than a year ago, were 27 per cent below and shell eggs less than half the average of the past five years. Stocks of poultry were 5, lard 9, and cheese 27 per cent above and butter more than double the average. United States cold storage holdings: Beef, lbs ............................. ~ Pork, lbs ............................ _ Lamb and mutton, lbs....... Poultry, lbs ......................... Miscellaneous meats, lbs .. Lard, lbs ......... _ _ __ Eggs, shell, cases............... Eggs, frozen ( case equiv.) Butter, creamery, lbs ......_ Cheese, all varieties, lbs •.• Jan. 1 Dec.1 Jan.1 Jan.1 1939 1938 1938 5-Yr.Av. -(In thousands of units) 58,350 52,637 60,970 112,602 426,058 299,142 398,565 560,355 3,619 3,171 2,895 4,918 139,188 118,088 123,600 132,485 72,137 54,261 67,225 88,164 107,109 74,499 53,693 98,046 300 1,439 831 631 1,792 2,231 . 3,120 1,732 127,805 169,254 42,963 66,364 119,690 127,440 103,935 94,571 Flour Milling Southwestern flour production in 1938 was 5 per cent less than in 1937 but was otherwise the largest since 1930 and was fractionally above the average of the past ten years. Output in December, however, was 3 per cent larger than a year earlier and 7 per cent above average. A conspicuous feature of the year's flour trade was the small volunie offorward buying of new crop flour, due largely to the declining trend of wheat and flour prices. As a result, most mills at the close of the year had unfilled orders equal to only 30 to 60 days' production, with current output being :maintained by hand-to-mouth buying. Despite the Federal subsidy, flour exports were about 7 per cent smaller than in the preceding year. Flour output reported by the Northwestern Miller: Dec. Nov. Dec. Year Year 1938 1938 1937 1938 1937 - - ( In thousands of barrels) 586 686 607 7,480 7,333 235 214 188 . 2,349 2,257 175 155 185 1,927 2,396 1,087 1,074 1,040 12,757 13,870 Kansas City...................... Salina .................. Wichita............................ . Other cities....................... Southwes----··· 2,083 2,029 2,020 24,513 26,856 United States*................. 5,479 5,588 5,231 66,260 63,369 *Represents about 60 per cent of total output in United States. Petroleum Crude oil production in 1938 declined about 19 per cent from the record level of 1937 and was 6 per cent smaller than in 1936 but even so it exceeded slightly the average of the past ten years. December output also was 19 per cent less than a year earlier but was slightly under average. Notwithstanding the decline in production, the year was important in discoveries, large additions to proved reserves occurring in Kansas, Wyoming, Colorado, and New Mexico. Oil production reported by the· American Petroleum Institute and the Bureau of Mines: Dec. 1938 Colo ................ Kans ............... N.Mex ..........• Okla................ Wyo ................ 118 4,697 3,076 13,251 1,613 5 States.......... 22,755 U.S................. 101,879 Nov. Dec. Year 1938 1937 1938 ( In thousands of barrels) 104 133 1,420 4,724 5,629 59,468 3,103 3,370 35,796 13,228 17,653 174,317 1,582 1,538 19,066 22,741 98,567 28,223 106,829 290,047 1,212,846 Year 1937 1,605 70,761 38,854 228,839 19,166 369,225 1,279,160 Stocks of crude petroleum produced in this District, which had been at a high level early in 1938, declined nearly 20 per cent during the year. Weakness in prices of refined products, however, finally resulted in a cut in crude prices early in October, carrying crude prices back to the average level of 1934 and 1935. Coal Bituminous coal production declined about 19 per cent during 1938. Output was the smallest for any year since 1934 and was 13 per cent less than the average of the past ten years. December production was 15 per cent smaller than in the preceding year. Coal output estimated from reports of the Nat~onal Bituminous Coal Commission: Dec. 1938 Colo •......................• Kans. and Mo ........ N.Mex ................... Okla........................ Wyo ..........._............ 718 701 135 206 · ,602 6 States.................. U.S ....................... - 2,362 36,230 Nov. nee. Year 1938 1937 1938 (In thousands of tons) 738 847 5,529 580 872 5,985 153 i44 1,317 205 276 1,481 '628 ·626 5,104 _' 2,304 36,110 .- -.- 2,765 37,122 .. 19,416 342,518 Year 1937 7,163 7,044 1,795 1,920 5,_930 -- 23;842 442,455 7 FEDERAL RESERVE BANK OF KANSAS CITY Zinc and Lead Production and shipments of zinc and lead from the Tri-State mining district declined about 20 per cent in 1938. Reflecting the lowest ore prices since 1935, the value of shipments was more than 40 per cent lower than in the previous year. Shipments from the Tri-State district in 1938: ZINC ORE LEAD ORE Kansas .................. . Missouri ................. Oklahoma....·-······· Tons Value Tons 136,234 $ 3,792,610 20,170 21,066 586,369 4,556 227,126 6,321,083 27,391 Value $1,036,225 231,394 1,422,441 Year 1938............... Year 1937.............. Dec. 1938................ Nov.1938............... Dec. 1937................ 384,426 473,895 38,333 37,419 36,916 $2,690,060 4,658,512 282,030 254,136 410,309 $10,700,062 18,860,558 1,035,491 1,136,798 1,082,670 52,117 67,204 5,298 4,495 7,763 Zinc concentrate stocks declined about 20 per cent but lead stocks increased more than 30 per cent during the year. Stocks of both concentrates, however, are low. Zinc prices averaged about $30 a ton in 1938 as against $42 in 1937, while lead prices averaged about $53 against $70. Employment and Pay Rolls Employment in the District at the middle of December was only 2 and pay rolls 1 per cent lower than a year ago as compared with an average decline of about 9 per cent for the entire year 1938. In 1937, employment had averaged 4 and pay rolls 7 per cent higher than in 1936. Preliminary figures of the Department of Labor: December 1938 Year 1938 Employment Pay Rolls Employment Pay Rolls (Per cent change from a year ago) Colo .................. . -9.5 -20.5 -14.4 -16.9 Kans .................. -4.0 +3.7 -8.3 -2.5 Mo .................... . -0.1 +6.8 -9.4 -10.2 Nebr................. . +9.1 +2.8 +0.1 -3.7 N.Mex ............. . -12.4 -6.9 -10.1 -14.0 Okla.................. -7.1 -10.0 -8.9 -9.4 Wyo ................... -9.3 -9.4 -6.5 -8.1 7 States............. -2.3 -1.0 -8.9 -9.3 Building Construction activity in the District increased about 11 per cent during 1938, rising to the highest level since 1931 as a result of the substantial improvement that occurred in the closing months of the year, the value of December awards being the largest of record for that month. Residential awards were 3 and awards for other building 14 per cent larger than in 1937. Construction figures, F. W. Dodge Corporation: 37 EASTERN STATES Total Residential Total (In thousands of dollars) 137,006 985,787 3,200,262 123,271 905,555 2,918,455 21,746 91,539 389,439 13,392 95,253 301,679 8,554 43,480 209,451 TENTH DISTRICT Residential Year 1938. ....... . Yearl937........ . Dec.1938......... . Nov.1938 ........ . Dec.1937......... . 34,651 33,546 3,529 2,990 1,226 The value of building permits issued in reporting District cities in 1938 declined 11 per cent, following an increase of 7 per cent in 1937 over 1936. The value of December permits, however, was more than double that for the corresponding month in 1937. Building permits for the years 1938 and 1937: PERMITS Albuquerque, N. Mex... Cheyenne, Wyo ............_ Colorado Springs, Colo. Denver, Colo•...........- .... Hutchinson, Kans......... Joplin, Mo...................... Kansas City, Kans ........ Kansas City, Mo .......... .. Lincoln, Nebr................. Oklahoma City, Okla.... Omaha, Nebr.·---·····-····· Pueblo, Colo................... Salina, Kans •................. Shawnee, Okla............... St. Joseph, Mo .............. . Topeka, Kans ............... . Tulsa, Okla ................... . Wichita, Kans ............... 1938 . 814 673 615 6,412 760 201 374 1,728 1,990 2,010 1,601 793 188 166 226 756 1,503 2,980 ESTIMATED COST 1937 1938 1937 1,038 $ 1,924,000 $ 1,937,000 597 1,190,000 1,263,000 731 507,000 627,000 5,949 7,603,000 8,817,000 1,095 740,000 709,000 219 479,000 401,000 416 1,988,000 642,000 2,189 3,446,000 3,476,000 1,570 1,419,000 1,599,000 2,201 5,5771000 5,773,000 1,459 1,939,000 3,860,000 528,000 647,000 776 390,000 360,000 175 161 93,000 149,000 275 282,000 195,000 1,854,000 2,125,000 830 1,159 3,262,000 6,016,000 2,283 3,176,000 2,306,000 Year................................ 23,780 23,123 December....................... 1,392 1,057 November..................... - 1,763 1,507 $36,397,000 $40,902,000 3,262,000 1,591,000 3,753,000 2,095,000 Lumber Board feet sales of lumber at reporting retail yards in the District were sharply lower than a year ago during the first half of 1938 but the substantial improvement of the last half resulted in a net increase for the year of about 3 per cent over 1937, December sales showing a gain of 43 per cent over a year earlier. In 1937, sales had declined 7 per cent from 1936. Lumber stocks declined 9 per cent during the year. Collections in December averaged 36.9 per cent as compared with 34.5 per cent a year ago. Lumber trade at 154 retail yards in the District: Dec.1938 per cent change from Nov. 1938 Dec. 1937 Sales of lumber, board feet..................... . -19.0 +43.0 Sales of all materials, dollars._. _ __ -16.8 +22.1 -2.3 -9.1 Stocks of lumber, board feet.......... ·-·····Outstandings, dollars... _ __ -13.6 +10.9 Life Insurance Life insurance sales in the District in 1938 were 8 per cent lower than in 1937. December sales, however, were 34 per cent larger than a year ago. The Life Insurance Sales Research Bureau report: Dec. 1938 Colo ............ _ Kans ............ Mo ................ Nebr............ N.Mex ......... Okla ............. Wyo ............. 7,811 12,041 28,638 9,570 1,856 13t728 1,474 Nov. Dec. Year 1938 1937 1938 (In thousands of dollars) 4,825 7,173 61,275 6,631 8,821 82,463 17,548 19,565 204,234 5,290 7,464 65,136 1,264 974 13,668 8,072 10,403 104,783 1,296 1,418 13,229 Year 1937 71,389 93,435 225,814 71,881 14,123 103,629 13,672 7 States....... 75,118 44,636 56,108 644,788 593,943 U.S ............ _ 897,886 670,648 634,470 6,358,006 7,238,894 8 REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS NATIONAL SUMMARY OF BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System INDUSTRIAL PRODUCTION PERCENT PERCENT 140 140 130 130 120 120 110 110 100 100 90 90 80 80 10 10 60 60 1934 1935 1936 1937 1938 1939 Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average=l00. By months, January, 1934, through December, 1938. FACTORY EMPLOYMENT l'ERC[NT PERCENT 120 120 110 110 100 100 90 90 80 80 10 70 60 60 1934 1935 1936 1937 1938 1939 Index of number employed, adjusted for seasonal variation, 1923-1925 average=l00. By months, January, 1934, through December, 1938. P£RCCNT 110 110 100 100 90 80 ~ 70 ... - - - r'\ 90 .J 80 ~ 70 60 60 50 50 1934 1935 1936 1937 1938 1939 Index compiled by the United States Bureau of Labor Statistics, 1926=100. By weeks, 1934 through week ending January 14, 1939. 81lLIOfl5 01' DOLLARS 5 Employment and pay rolls rose further between the middle of November and the middle of December. In most manufacturing lines the number employed continued to increase, when allowance is made for the usual seasonal changes, and in the automobile and machinery industries the rise was considerable. Employment and pay rolls in trade increased more than is usual in the holiday season and in the construction industry employment showed much less than the usual seasonal decline . DISTRIBUTION ' Distribution of commodities increased more than seasonally in December. Sales at department stores showed the usual sharp expansion prior to Christmas and sales at variety stores and mail-order sales showed a more than seasonal rise. Freight carloadings declined seasonally from November to December, re_. fleeting largely the customary decrease at this time of year in shipments of miscellaneous freight. BANK CREDIT EXCESS RESERVES OF MEMBER BANKS INLUONS OI' DOLLARS PRODUCTION In December volume of industrial production declined by about the usual seasonal amount and the Board's adjusted index was at 104 per cent of the 19231925 average, about the level reached in November following an exceptionally rapid advance after the middle of the year. Changes in output in most lines in December were largely seasonal. In the steel industry, however, production showed a greater than seasonal decline, and averaged 54 per cent of capacity in December as compared with 61 per cent in November. Lumber production showed little change from November to December, although usually there is a decline, and at textile mills and shoe factories activity declined less than seasonally. At meat-packing establishments there was a reduction in output. Automobile production increased somewhat further in December. In the fourth quarter of 1938 production and sales of the new model cars were in about the same volume as in 1937; dealers' stocks of new cars increased seasonally in this period but at the year end were much below the high level of a year earlier. Value of construction contracts awarded increased considerably from November to December, according to F. W. Dodge Corporation figures for 37 Eastern States. The increase reflected principally a further rise in contracts awarded for Public Works Administration projects, which accounted for most of the sharp increase in awards that occurred in the last half of 1938. Contracts for private residential building decreased less than seasonally in December, while other private construction showed little change and remained at a low level. EMPLOYMENT WHOLESALE PRICES PERCENT Volume of industrial production declined seasonally in December and showed little change in the first three weeks of January, when an increase is usual. Wholesale commodity prices were steady. Employment and pay rolls increased further in December, and retail sales showed more than the usual seasonal rise. 5 4 1-----1----+---+----+----+----! 4 3 3 2 2 0 0 As the result of the post-holiday return of money from circulation, together with Treasury disbursements from its balances with the Reserve banks, and gold imports, excess reserves of member banks increased nearly $600,000,000 in the four weeks ending January 18 to a new high level of $3,560,000,000. A large part of the increase occurred at New York City banks. Total loans and investments of reporting member banks in 101 leading cities, which increased substantially in the first ~hree weeks of December, declined in the following four weeks. There was some decline in loans and a reduction in holdings of United States Government obligations, reflecting in part distribution to the public of new securities purchased by banks in December. Deposits declined somewhat in the latter part of December but increased in January. MONEY RATES AND BOND YIELDS 1934 1935 1936 1937 1938 1939 Wednesday figures of estimated excess reserves for all member banks and for selected New York City banks, January 3, 1934, through January 18, 1939. Average yields on United States Government securities declined slightly in December and the first three weeks of January. For three consecutive weeks the entire new issue of 91-day Treasury bills sold on or slightly above a no-yield basis. Commercial paper rates declined slightly in January while other openmarket money rates continued unchanged.
@FedFRASER