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MONTHLY REVIEW Agricultural and Business Conditions TENTH FEDERAL RESERVE DISTRICT VoL. 23, No. 6 FEDER.AL RESEJt.VE BANIC OF KANSAS CITY JUNE 30, 1938 Business in the Tenth Federal Reserve District MAY 1938 COMPARED WITH MAY 1937 -·-•• • ·-·-••-• ·--• ,••-. % DECREASE ! -----1.--.. Denver• COL.O. I I •·---------: KANSA I I I I % INCREASE 40 30 20 10 }<A'NS. ·-·--·--··--·-··...,.-l __ _ 10 20 30 40 ■ Department store and wholesale inventories are 12% under last year. Lead and zinc ore shipments reflect the low state of business activity and crude petroleum production is down markedly from the _high level of last year. Construction activity has rece:ritly increased moderately, but for the year to date is disappointing. Bank loans ·and investments are lower. In particular, banks are selling Government securities. Demand deposits in the last few weelIB have been increasing. _ F. R. Bk. Clearing,_ ■ ....Mem. Bk. Loans __ ...Mem. Bk. Invest. _ ...Demand Deposits __ ■ are better. Financial ______Bank Debits _ I Little change in the general situation has occurred in recent weeks. Heavy rains have damaged wheat and delayed corn. Otherwise the farm outlook continues good with somewhat higher prices. Trade and industrial activity remains at a low level. Farm income is 18% µnder a year ago. Wholesale, retail, and life insurance sales continue greatly under last year although department store sales in recent weeks 5 MOS. 1938 COMPARED WITH 5 MOS. 1937 BUSINESS INDICATORS _ .. Life Ina. Salea ___ Trade ___ Wholesale Sales ___ • ····-·Retail Salea __ ...Dept. Store Sais_ ____ Lumber Sales ___ ltfurl,etirig• tl79 ______ Wheat __ _ ____ _Corn ____ I % INCREASE 10 20 30 40 •• ·-·-• I •• ·-··■ 7~ _____ oats _____ I _____ Cattle....- - .I ···-······· Calves _____.,_ ····--·-Hogs. _______ ---·--· Sheep _______ J•ro,luction I I ·····-······Flour.. ___ _ _Cattle Slaughter.. _ I• • % DECREASE 40 30 20 10 _ __ Calf Slaughter_ _ _Hog Slaughter___ ...Sheep Slaughter___ .. Crude Petroleum._ .. Bituminous Coal _ _ ••• I I ■ I ■ •• Zinc Ore Shipments Lead Ore Shipments I• Constr,iction ___ Total A wards._ _ ______ Res. A wards __ _ Value of Permits _ Miscellaneou• -tfOZ ______ Rainfall _____ Cash Farm Income.• ___Employment __ ______ Pay Rolls.___ •For prel'iom month ·- - • 1• 1• ' .,, 2 REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS Member Bank Operation& Volume of loans at reporting member banks in the Tenth District continued to decline from the middle of May to the middle of June, reflecting principally a small further decrease in commercial loans and a decrease in holdings of open market paper. Loans to security brokers and dealers increased and there was a slight further increase in real estate loans. Investments declined sharply during the four weeks, a large decrease in holdings .of Government obligations being offset in part by a small increase in holdings of other securities. Total loans are 7 and investments 16 per cent smaller than a year ago. Adjusted demand deposits rose somewhat from the middle of May to the middle of June and this increase, t ogether with the sale of securities held, was reflected in an increase in reserve balances carried at this bank and a large further gain in correspondent balances carried with other banks. Correspondent balances are now 40 per cent larger.t han a year ago, while adjusted demand deposits are 3 per cent lower and interbank dep6sits slightly lower than at this time last year. Principal items of condition of 51 member banks: Loans and investments-total.. __ ..... . Loa:ns-total __ ········ ........... .................. . Coml., indust., and agrid............ ... Open market paper·-················· .... . To security brokers and dealers... . Other to purchase or carry secur. Real estate ldans._ .......................... . Lqins to banks............................... All other loans._ .. ,............................ lnvestrn~nts;..total... ............................ U . S. Govt. direct obligatj.ons._ ..... Oblig. guar. by U.S. Govt.·-······ ··· Other securities............................... . Reserve with F. R. Bank. __ ··-·· ·· ....... Balances with domestic banks ..... .... . Demand de-posit s-adjusted .............. . Time deposits ..... ............... ................. U . S. Govt. deposits........................... . Intetbank deposits ....... .... ................ . Change from June 15 May 18 June 16 1938 1938 1937 (In thousand~ of dollars) 605,718 - 20,467 - 88,371 237,221 -3,188 - 16,428 143,384 - 2,392 - 10,157 17,012 - 1,166 -3,004 4,202 +811 +41 12,155 -35 -2,357 21,754 +174 +2,453 561 +26 - 693 38,153 -606 - 2, 711 368,497 - 17,279 - 71,943 213,943 - 16,686 - 45,638 39,697 -2,947 -7,566 114,857 + 2,354 -18;739 160,907 + 9,931 -1,825 290,698 + 22,051 + 82;814 484,072 + 12,779 - 15,111 144,194 -53 -1,299 17,890 -144 + 9,466 346,564 - 2,967 -4,772 Reserve Bank Operations Federal · Reserve note circulation of this bank declined somewhat from the middle of May to the middle of June. Circulation is now at the lowest level of this year and is very little larger than at this time last year when circulation was rising steadily. Tp.is'bank's holdings of Treasury bonds in the System's open market account were . reduced about 4¼ million dollars in the s~ond week of June, offset by an increase of nearly 3 million, in notes and slightly more than 1¼ million in bills. Volume of industrial loans again turned downward b~tween the middle of May and the middle of June, while commitments to make industrial advances showed little change. Principal items of condition of the Federal Reserve Bank of Kansas City and branches: Change from June 15 May 18 June 16 1938 1938 1937 (In thousands of dollars) 297,066 - 11,630 +455 243 +28 + 18 15 -1 - 99 437 -32 -193 366 -2 +238 124,627 Zero +499 462,388 -10,660 - 4,523 163,110 - 1,932 +1,061 228,780 +10,436 -9,567 Total reserves........ ...... ..................... Bills discounted. __................. .......... Bills purchased................................ Industrial advances........................ Commit. to make indust. adv....... U.S. Government securities.......... Total resources............................... F. R. notes in circulation·- - --····· . Member bank reserve deposits...... Dollar volume of check collections declined slightly further from April to May. Dollar volume for May and for the first five months of this year was about 13 per cent lower than in the same periods of last year. Check collections through this bank and branches: ITEMS 1938 MaY·--··-·········•········ . .. . April. .................. ........ . Five months.__ .... .. ..... . 5,864 5,937 28,803 AMOUNT 1937 1938 (In thousands) 6,886 $ 833,575 6,188 855,536 29,416 4,264,833 1937 $ 953,852 1,069,304 4,870,770 Battk Debit1 Debits to individual accounts, which usually show little change from April to May, declined more than 5 per cent, the volume of payments by check for May falling 16 per cent under the same month last year. In the first five months of this year, debits in this District were 13 and in the country as a whole about 20 per cent smaller than a year ago. Payments by check in thirty District cities: May 1938 (In Albuquerque, N. Mex ........ . Atchison, Kans.·- -······ ········· Bartlesville, Okla ..,... ........... Casper, Wyo ...·-··················· Cheyenne, Wyo ............. ..... . g~~!!~oJJi~~~:..~~~~~~::::: Emporia, 1'ans.·--····· ... ...... . 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, .................... District, 30 cities____....... .... United States, 141 cities.___ 13,419 2,661 26,479 5,155 7,801 11,716 135,903 3,060 10,088 2,391 3,195 1,556 9,604 2,611 8,576 14,491 214,051 3,112 25,136 7,202 91,126 2,699 125,883 3,271 1~,813 9i016 21,909 Change from Apr. t9S8 May 193!1 tho\tl!lands of dollars) -164 -1,329 -210 -690 -1,942 -3,460 +16 -380 +70 -70'1 -1;600 -1,998 -8,948 -33, 754 +180 -413 122,941 41,620 --584 +52 --138 -41 -620 -16 +182 -283 +2;13a -198 -1,515 -125 -11,536 -26 -7,4-61 -468 -4,670 +1;266 -1,998 - 1,597 -16,820 -1,S99 -16,514 -433 - 4, 133 + 854 -2,501 -1,051 -36,263 - 4,647 1,013,679 28,840,888 -57,916 - 2,328,~04 - 186,877 -5,575,401 14,792 +66 -224 -680 .... 113 - 3,162 -147 - 1,350 -525 -51,564 -371 -3,499 ---432 -16,886 -91 FEDERAL RESERVE BANK OF KANSAS CITY Trade DEPAKT¥ENT .STORE SALF.S Dollar volume of sales at reporting department stores in the District declined considerably during May and was 13 per cent lower than in the .s ame month a year ag-0~ while sales for the first five months of the year were about 7 per cent lower. However, sales in the first three weeks of June show a decrease of only 4 per cent from the corresponding period last year. Part of the decline in dollar volume represents the effect of lower retail prices which, according to the Fairchild Index, have declined about 7 per cent since early last fall and are about 6 per cent lower than .at this time last year. Stocks of merchandise declined more than seasonally during May and the value of inventories is now about 12 per cent smaller than a year ago. Collectioll$ on open accounts averaged 44.1 ·per cent in May as compared with 46.1 per cent last year, while installment coliections averaged 15.l and 14.5 per cent, respectively, Department store sates and stocks in leading cities: SALES STOCKS May'38 5 Mos.'38 May 81, '38 No•.of .comp.to cQIDp.t.o cQlllpared ,to Stores May'37 5 Mos.,'37 Apr.30,'38 May 31,'37 cent increase or decrease) Denver................... 4 -11.8 -6.7 -13.1 -19.2 Ka.n,as City.......... 4 -18.1 -11.3 -3.7 -13.2 Oklahoma City.... 3 +0.4 +0.9 -1.7 -3,8 Omaha .................. a -9.8 -4.4 -5.7 -5.9 Tulsa......... _.......... 4 -6.8 -0.7 -6.7 -6.0 -11.9 Wichita........·-······· 3 -25.8 -8.4 -3.9 -1-0.7 Other cities·--······· 20 -17.1 ~er District.... ....... ...... 41 -13.3 -6.8 -6:7 -11.9 RETAII. SALES Sales of independent retail stores in the District in May were 18 per cent lower and in the first five months of the year 12 per cent lower than in the same periods last year. Sales of independent retail stores reported by the Department of Commerce: May 1938 per cent change from May 1937 Cobt, K~, Mo. Nebr. ()Jda. AppareL.......... ....................... -19.6 -iu . . 1s.a -18.9 -14.1 Country general................... -13.6 -•20.4 -16.4 -16.1 -24.1 Department........................... -11.9 -17.9 -13.7 -11.8 -2.7 Drug.......... ·-······················.-··· ~5.-6 -1L2 -5.0 .... 6.7 -0.8 Furn. and appliances............ -22.7 -32.9 -26.5 -17.5 -15.6 Grocery·--······························· -10.9 -14.4 -13.7 -12.7 -10.l Hardware................................ ....26,4 -30.8 -19.6 -18.1 -14.1 Lbr. and bldg. mtls ............,... -20.1 -30.9 -29,7 -15.9 +30.8 Motor vehicle............. .......... ...37.0 -~., .....36.-0 -30.3 .-21.5 TotaL ............, ...............,....... -19.,.J -27.3 -18.4 -16.2 -10.7 l \ ' l f ~ JIALES The value of wholesale sales in this District continues about 13 per cent under .a year ago. Sales of drugs and groceries in May were slightly larger than last year and have been w.ell maintained for the year to date, but sales of ot.ber ~ particularly hardware, are much lower. Total sales in May showed little change from the April level. Wholesale pri~ of nearly 3 all commodities except farm products and foods showed further wealmess in May and the forepart of June, with prices of industrial commodities averaging about 6 per cent lower than a year ago. Wholesale sales and stocks reported by the Department of Commerce for this District: SALES STOCKS May'38 5 Mos.'38 May 31,'38 No.of comp.to comp.to compared to Firms May'37 5 M~'37 Apr.30,'38 May 31,'37 - - ---(Per cent increase or decrease) Auto. supplies...... 5 -14.6 Drugs.................... 9 +2.3 -2.4 -7.1 +0.6 Dry goods............ 4 -9.5 - 16.3 -7.0 - 31.1 Electrical goods._. 14 - 18.1 - 5.2 -20.7 -7.3 Furniture.............. 4 -18.7 - 7.2 -7.8 +1.3 Groceries·----······· 24 +0.5 Hardware-total.... (19) -42.2 -33.6 - 2.1 -7.9 GeneraL........ ... 7 -18.3 -17.4 -2.9 -7.3 Industrial... ...... 7 -57.3 -0.8 -50.6 -8.5 Plbg. & htg....... 5 - 30.1 - 25.0 - 2.1 -9.7 Jwlry. & opt. gels. 3 -11.4 -4.3 -1.1 Surgical equip.·--· 3 - 14.8 -9.1 Paper..·-················· 3 -16.3 All other lines ..... 11 -16.3 - 13.3 - 4.2 -13.2 Total... .._................ 99 - 12.7 -12.2 - 4.1 -12.0 Crops The last official estimate before harvest indicated a winter wheat crop in this District of about 388 million bushels which would be about 20 per cent larger than a year ago and 50 per cent greater than the average production from 1927 to 1936. Damage during May from excessive precipitation, hail, wind, and orange leaf rust in some sections of the District was more than offset by improvement in other sections that were short of moisture. Since the first of June, however, prospects have been more uncertain. Injury to wheat from April frost:s is becoming more apparent as harvest progre~. Further heavy rains, accompanied by strong wind, have resulted in deterioration, and black stem rust, which up to June 1 had caused little damage, has developed extensively in Kansas since then and is present in Nebraska. Even so, production seems likely to be large because of the record acreage seeded to wheat last fall. Wheat estimates of the Department of Agriculture: Mo, ..................... . Nebr.·--······... ...... N.Mex ............... Okla................... . Wyo ..... ................ Indicated Final Final June 1 May 1 1937 1936 (In thousands of bushels) 11,628 11,151 5,915 13,082 192,777 192,777 158,040 120,198 38,610 41,097 31,290 33,462 71,660 65,145 45,654 45,539 1,785 1,904 2,829 750 72,400 69,719 65,462 27,520 2,380 1,870 1,392 639 9,672 133,463 21,576 46,400 2,277 44,015 1,273 7 States·--·· ........ U.S ....... ·-··········· 387,546 760,623 258,676 546,396 Colo.............. ...... . Kans.·----··••v••··· 381,663 754,153 325,625 685,102 231,851 519,874 Aver. '27-'36 Cotton planting in Oklahoma and delayed corn plantings throughout the District were practically completed by early June. Considerable cotton and com has had REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS 4 to be replanted because of the rains. Production of rye in the District is estimated at twice the average and the condition of spring wheat, oats, barley, and hay crops is average or above, but fruit crops will generally be light except in.Colorado because of frost damage last spring. Rainfall for May and for the three months March through May was substantially above normal in nearly all sections of the District except New Mexico where drought that developed in April has continued into June. Crops and pastures are thriving and restoration of subsoil moisture reserves has made excellent progress. Rainfall COLORADO Denver......................................... I,eadville____········ .......................... Pueblo·---···· ................................. I..amar._.. ······················-······-· ...... Gamett·--············-······················· Steamboat Springs...................... May 1938 6 Mos. 1938 Total Normal Total Normal (In inches) 4.88 2.21 6.24 10.86 2.46 1.30 7.38 9.49 1.77 1.60 6.04 4.28 4.37 2.28 7.11 6.71 .91 .57 3.61 1.87 3.11 2.20 12.21 11.07 KANSAS Topeka..... _...... ............................. 11.16 Iola .. ........ ...................................... 11.62 Concordia.-............. ...................... 7.76 Salina............................................ 7.90 Wichita·-······-······························· 8.14 Hays.............................................. 8.21 Goodland ..................... ................. 4.44 ~.rt~city.... ········-··--···-··-········-· 4.30 3.64 4.48 4.74 4.18 3.72 4.46 3.46 2.60 2.89 2.08 17.43 21.81 12.18 13.72 15.60 13.37 8.76 9.76 6.65 11.81 14.03 9.26 9.28 11.15 7.83 6.34 6.90 6.52 4.70 7.64 6.96 4.70 4.66 6.36 11.25 16.36 23.96 13.32 13.26 17.10 Omaha.......................................... 2.68 Lincoln .......................................... 6.64 Norfolk. .. ....................................... 4.40 Grand Island. ............................... 4.52 McCook....................................... 6.64 North Platte...................... ......... 3.70 Bridgeport................ .. ................ 3.23 Valentine.. .................................... 4.54 3.77 4.08 4.27 3.95 2.86 2.80 2.82 2.73 9.97 13.05 9.68 10.60 9.76 8.41 6.78 11.04 9.24 9.47 9.63 9.07 6.60 6.64 6.63 7.24 .81 .80 .14 2.44 1.26 .41 2.76 3.16 3.30 5.24 4.48 2.79 6.03 McAlester·- --·-··· ............ ............. 10.39 Oklahoma City............................ 6.92 t!~Jalley_____.......................... 8.38 8.99 Enid ................. ............................ 7.28 Woodward .................................... 9.17 6.23 6.97 4.88 6.20 4.64 4.34 3.61 21.66 29.88 19-07 28.61 16.58 15.20 17.75 15.96 18.71 12.45 14.27 11.04 11.44 9.11 2.43 2.47 2.26 2.65 6.40 5.03 7.10 10.50 6.60 7.18 6.70 7.28 MISSOURI St. Joseph·----······························ ~~. City.-............................... NEBRASKA NEW MEXICO Clayton.___···························· ....... Santa Fe·--····················· ............. Farmington .................................. OKLAHOMA Tulsa.--·-····· ································· WYOMING Cheyenne..................................... 2.31 Casper·--··-······························ .. ... 1.92 Lander.·-·········-·············· ............. 1.79 Sheridan ........................................ 6.82 Grain Marketing Country holders continued to market wheat liberally in May, receipts being 18 per cent above the May average for the past ten years, while marketings of com again were little more than a third and oats only 80 per cent of average. New crop wheat was arriving at Oklahoma markets in good volume by the middle of June, but comparatively little new wheat has reached Kansas City, the rainy and cool weather having set back to normal or later what looked two months ago to be an exceptionally early season. Receipts of grain at five markets. in the District: Wheat Corn Oats Rye Barley Kafir -10 13 48 6 (In thousands o!bushels) Hutchinson·--········· .. Kansas City.-··········· Omaha .... ................. . St. Joseph................. . Wichita._.............. .... . May 1938._............... Apr. 1938.... .............. May 1937.................. 5 Mos~ 1938.............. 5 Mos, 1937.............. 1,205 4,450 629 144 1,308 660 219 244 1 144 204 342 7,736 1,124 6,653 1,202 2,776 1,105 32,134 12,238 18,946 8,818 690 374 964 3,587 5,971 3 27 39 69 22 38 442 167 19 38 185 107 616 58 35 · 61 461 343 The cash price of wheat declined further in May to the lowest level in five years, but a sharp rise in the first two weeks of June fully erased that part of the decline that had taken place in the preceding two months. Early threshings revealed greater frost damage in April than was believed earlier and recent heavy rains have resulted in a widespread threat of rust damage. In the third week of June, wheat prices ·declined somewhat. Cash grain prices at the Kansas City market: 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................. June 22 May 31 Apr. 30 May29 1938 1938 1938 1937 $ T7 $Ji9 $ .80¼ $1.24½ .56 .51 .54,½ 1.34 ¾ .51 .26¾' .26½ .27½ .50 . .46 .55 .95 .46 .50 .51 .79 1.01 .86 .83 2.49 Livestock MARKETINGS Marketings of livestock increased seasonally during May. Receipts of sheep were heavy, being 9 per cent_ larger than a year ago and 6 per cent above the average during the past ten years. Large numbers of southwestern lambs were a factor in the heavy sheep marketings. Cattle· and calf receipts continue more than 10 per cent under the level of a year ago, with -May receipts of cattle 12 per cent below but calves 14 per cent above average. Hog marketings were considerably larger than in May of last year but even so were ·1ess than 40 per cent of the average volume. Livestock receipts at six markets in the District: Denver....... ..................... ... Kansas City...................... Oklahoma City................ Omaha.............................. St. Joseph__ __ ············· ...... Wichita._·············:············· Cattle . 34,786 89,316 34,437 90,433 21,944 20,991 Calves 4,189 24,734 12,338 6,123 6,475 3,732 Hogs 20,819 87,981 29,821 85,904 61,347 16,706 Sheep 212,924 198,744 36,673 139,420 82,776 33,830 292,578 May 1938.......................... 291,907 57,691 704,367 270,194 243,895 48,868 667,203 Apr. 1938 ....·- ······-··········· 217,943 647,489 May 1937.......................... 338,811 64,679 6 Mos.1938._ ................... 1,461,231 280,049 1,737,653 2,907,864 6 Mos. 1937........·-··········· . 1,676,916 319,500 1,767,368 3,000,246 FEDERAL RESERVE BANK OF KANSAS CITY PRICES After declining almost steadily for nearly two months, livestock prices rallied strongly about the middle of May. In the upturn, which carried into the second week of June, beef cattle reached $10.35 a hundredweight and lambs $10.15 to establish new tops for the year, while hogs recovered to $9.10, within 25 cents of the year's high in March. Cattle had previously sold up to $10.00 in January and lambs at that level in March when lamb prices are normally the highest of the year. Early June cattle prices showed a net recovery of more than $2.00 from their low point early in February, and lamb prices were up almost $2.00 and hogs $1.50 from the year's low early in May. In the third week of June, cattle prices held close to the year's high but hog and lamb prices were lower. Top livestock prices at the Kansas City market: June 22 May Apr. May May May 1938 1938 1938 1937 1936 1935 - (In dollarspcrhundredweight)Beef steers......................... . 10.15 10.00 9.85 13.25 8.80 13.00 8.75 8.75 8.90 9.25 8.00 9.10 Stocker cattle·---····· .......... Feeder cattle...... ............... 9.00 9.00 8.35 11.00 8.25 10.25 Calves....... .............. ............ . 8.50 9.50 10.00 9.50 9.50 9.50 Hogs ................................. .. 8.90 8.65 8.60 11.76 10.10 9.80 5.50 5.75 6.00 8.00 8.00 6.15 Sheep.---······ ................... ..... 8.75 9.50 9.90 13.25 12.25 9.65 Larnbs·-- ·······--... ................. STOCKERS AND FEEDERS The movement of stocker and feeder livestock to the country increased considerably during May, with shipments of cattle and calves about equal to the May average of the past ten years but shipments of hogs 60 and sheep 25 per cent below average. With abundant supplies of feed, generally good range and pasture conditions, and only a small number of hogs to be fed, there has been a fairly strong demand for cattle. Feeders suffered severe losses on cattle and lambs placed in feedlots last year at too high prices, but feeding operations are now on a profitable basis. Stocker and feeder shipments from four markets: St. Joseph·-··-········· . ............... . Cattle 9,702 37,456 10,333 3,881 May 1938·-··········-··················· Apr. 1938.................................. May 193L............................... 5 Mos. 1938-............................ 5 Mos. 1937.............................. 61,372 50,549 72,577 291,394 302,188 Denver...................................... ~~': City·-··························· Calves ~ 4,448 2,200 714 8,183 6,888 8,342 40,218 40,595 Hogs 2,407 852 597 Sheep 1,168 24,802 15,166 9,103 3,943 3,343 3,655 19,023 16,238 50,239 30,046 58,209 197,394 228,970 -wr stock is generally in good condition with good calf and late lamb crops reported. Some restocking of ranges is taking place but the demand for stock sheep is very light and demand for stocker cattle is limited by relatively high prices. There has been practically no contracting of feeder cattle and lambs for fall delivery. Wool sales continue slow at prices more than a third lower than last year. Range and pasture conditions reported by the Department of Agriculture: June 1 1938 Colo............... Kans.·-- -······· Mo. ................ Nebr.·---·-····· N. Mex......... Okla............... Wyo............... 87 72 88 72 87 94 RANGES June 1 PASTURES '28-'37 June 1 June 1 '27-'36 1937 Aver. 1938 1937 Aver. (In perceiitages of 1()0as nonnal) - 77 84 86 65 78 47 75 72 51 76 87 85 76 65 84 75 57 79 85 84 55 66 71 69 81 79 60 75 83 84 93 76 82 The spring movement of cattle from the southwest to the Blue Stem pastures of Kansas and the Osage pastures of Oklahoma was about 18 per cent smaller than a year ago and 32 per cent under the average from 1928 to 1937. The Osage pastures, which are wellfilled, received about 69,000 head of cattle or 6 per cent more than last year, but the Blue Stem section, where many pastures are thin and weedy and are not fully stocked, received only 145,000 head, 24 per cent less than a year ago and the smal1est number in fifteen years of record. Farm Income April cash farm income in the District was about 18 per cent lower than a year ago, decreases of 39 per cent in receipts from the sale of crops and 22 per cent from the sale of livestock being offset in part by a substantially larger volume of Government payments. In Oklahoma, Government payments more than offset the loss in income from crops and livestock, and total income was somewhat higher than last year but in other states of the District it was much lower. In addition to lower receipts from livestock in all states, income in Colorado has been further reduced by lower receipts from potatoes and in Nebraska and Kansas by considerably smaller receipts from wheat. Income estimates of the Department of Agriculture: Change from Apr. 1938 RANGES AND PASTURES With continued favorable moisture conditions generally, ranges and pastures in the District improved markedly during May except in New Mexico where dry weather has damaged grass severely. The supply of early summer feed is the best in recent years although grass is thin and weedy in some sections. Oklahoma has the best ranges and pastures since 1929. Live- 5 Colorado.-................................... Kansas .............. ......... ................ . Missouri.. .................................. . Nebraska ................................... New Mexico·--··························· Oklahoma._................................ Wyoming ..................... ............. . Seven states................................ United States·-- -····················· .. Mar. 1938 Apr. 1937 (In thousands of dollars) 8,612 - 979 - 4,300 16,545 -1,309 - 5,258 16,763 +1,689 - 2,404 16,676 - 507 -5,610 2,432 + 420 -171 11,579 - 956 +1,840 2,717 + 523 - 234 75,324 549,000 - 1,119 -23,000 -16,137 - 97,000 6 REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS Meat Packing Operations at meat-packing plants jn the District during May lifted somewhat from the unusually low level of the preceding month although cattle and hog slaughter were about 12 and 58 per cent, respectively, below the May average of the past ten years. Calf slaughter was 4 per cent above and sheep slaughter only 5 per cent below average, The slaughter of cattle was only slightly lower than in May of last year while that of hogs was 32 and of sheep 6 per cent larger. Packers' purchases at six markets in the District: Cattle -Calves 16,970 .3,177 41,000 12,922 18,136 10,291 62,603 3,807 15,889 5,668 10,595 2,574 Denver............................... .. Kansas CitY·-··················· ... Oklahoma City ......... ........... Omaha.................................. St. Joseph·-···· ········· ·············· Wichita·-·············................. May 1938... ....... ............... ... Apr. 1938.......................... ... May 1937................ .............. 5 Mos. 1938................ .. ........ 5 Mos. 1937 ......................... Hogs 19,408 82,281 24,083 69,802 49,907 15,354 Sheep 32,522 130,667 16,540 91,922 71,987 .30,12.6 164,193 89,439 260,835 .373, 714 140,877 35,581 243,618 344,890 169,640 48,713 197,.189 351,512 837,342 195,125 1,585,546 1,659,992 882,610 251,320 1,.565,738 1,757,359 how the size of the wheat crop will affect flour prices. Flour production reported by the Northwestern Miller: f~:8. City·-·····-························· Wichita. __ ..................................... Other cities.----····· ··········· ··········· Southwest·--·············· ···········-···· 1,897,000 - 50,000 ...-74,000 United States•·--········-··············· 4,979,000 - 100,000 - 87,000 *Represents about 60 per cent of total output in United States. Petroleum Daily average crude oil production in the District showed a further decrease of about 6 per cent during May. Output fell slightly under the ten-year average for the month and is now about 25 per cent lower than it was during the spring and summer of last year and appreciably lower than at this time in 1936. Production for the year to date is 15 per cent less than last year. Oil production reported by the American Petroleum Institute and the Bureau of Mines: Cold Storage Holdings A larger than seasonal decrease in United States oold storage stocks of pork and less than the usual increase in stocks of lard, eggs, and butter occurred during May. Holdings of cheese increased more than seasonally and holdings of beef and poultry showed less than tbe usual decline. Stocks of beef, pork, Jard, and ..shell eggs on June 1 were much below the average of the past five years but holdings of frozen eggs, butter, and cheese were very large. United States cold storage holdings: June 1 May 1 June 1 June 1 1938 1938 1937 5-Yr.Av. Beef. lbs...·-··-····· ..................... . Pork, lbs .................................. . Lamb and mutton, lbs .......... . Poult ry, lbs ..-......················-· .. Miscellaneous meats, lbs.·--··· Lard, lbs .................................. . Eggs, shell, cases.-,................ .. Eggs, frozen (case equiv.) ..... . Butter, creamery, lbs ............. Cheese, all varieties, lbs......... (In thousands of units} 33,506 40~145 86,168 64,782 450,693 500,664 663,657 583,961 2,132 2,121 2,950 2,051 52,023 60,053 82,340 50,091 61,544 63,895 82,649 60,182 123,736 121,890 194,477 185,450 M91 8"204 7,300 7,051 3,738 3,311 3,804 2,806 54,.(()8 19,574 22,904 27,895 91,131 7~,289 Si,008 66,502 Flour Milling Operations at southwestern flour mills continued in May at about the same rate as in the preceding four months. However, output in May was only 4 per cent lower than a year ago, while production for the first five months of the year shows a decrease of 9 per cent. With a further steady decline in flour prices throughout the month, flour sales .continued in small volume and almost wholly on a hand-to-mouth basis up to early June when a sharp rally in the wheat market brought mills several large bookings. In contrast with a year ago, very little new crop flour has been contracted so far this year, pending more definite information on Change from Apr. 1938 May 1937 (In barrels) 593,000 -37,000 +16,000 181,.000 +17,000 +8,000 - 10,000 -25,000 153,000 970,000 - 20,000 - 73,000 May 1938 Co1o...... - ....... Kans.·---······· N. Mex ..... _.. Okla............... Wyo............... 5 States·---··· u. $ ............... May 1938 April 1938 May Gross D. Av. Gross D. Av. Gross --(In thousands of barre~ · 117 3.8 132 4.4 114 157 .1 5,104 170.1 6,388 4,869 3,055 98.5 2,925 97.5 3,463 14,499 467.7 15,137 504.6 20,618 1,569 50.6 1,468 48.9 1,603 1937 D. Av. 3.7 206.1 111.7 665.1 51.7 24,109 777.7 24,766 825.5 32,186 1,038.3 100,457 3,240.6 102,702 3,423.4 110,911 3,677.8 The further reduction in crude oil output, in liquidating excessive inventories and correlating crude production and refinery operations, has brought about a better feeling in both crude and refinery markets. The Mid-Continent tank-car price of gasoline advanced in the first week of June, the first increase in nine weeks. Stocks of crude petroleum produced in states of this District are now slightly under a year ago and stocks of gasoline in Oklahoma and Kansas are 12 per cent lower, but stocks of fuel oil are considerably higher. Coal Bituminous coal production in the District showed a further seasonal decrease in May. Output in May was 14 per rent lower than a year ago, while production for the year to date shows a decrease of 29 per cent. Coal output estimated from reports of the National Bituminous Coal Commission: May li38 Colorado.-............ ............ -·...... Kansas and Missouri .............. New Mexico.___ ··········- ··-······· Oklahoma._......... ................... ... Wyoming ............... ................. . 238,000 27~,000 84,000 31,000 303,000 Six states...·--············· ··············· 935,000 United States. __······················· 21,995,000 Change from Apr. 1938 May 1937 (In tons) -108,000 - 125,000 -96,000 -28,000 -1,000 -37,000 -4,000 +3,000 -9,000 +36,000 - 218,000 -'385,000 -151,000 -8,082,000 FEDERAL RESERVE BANK OF KANSAS CITY Zinc and Lead Production and shipments of zinc and lead in the Tri-State district show a further substantial decline. Shipments in May were little more tha:n two-thirds as large as a year ago and by the second week of June had dropped to the lowest weekly rate for zinc in three years and lead in a year and a half. Several major producing properties have been closed indefinitely and others are down temporarily or are operating only parttime because of low ore prices. Shipments estimated from Joplin News Herald reports: Kansas ................. . Missouri ................ Oklahoma............. . Tons 8,973 1,199 13,999 Value $ 228,272 30,491 356,094 LEAD ORE Tons Value 2,083 $ 99,255 380 17,967 1,839 86,996 May 1938·-····· ······ Apr. 1938............ .. May 193L........... 5 Mos. 1938.......... 5 Mos. 1937.......... 24,171 29,953 36,520 153,544 199,589 $ 614,857 778,545 1,503,287 4,188,267 8,204,706 4,302 $ 204,218 5,191 249',275 5,401 368,783 24,583 1,210,396 27,134 2,041,073 ZINC ORE Zinc prices are steady at $27.50 a ton but lead dropped to $42.14 in the last week of May., A year ago zinc sold at $44.50 and lead at $70.31 a ton. 7 The value of building permits issued in reporting District cities in May was 15 per cent larger than in the preceding month but 24 per cent smaller than in the same month a year ago. So far this year the value of permits is 31 per cent under last year. Building permits issued by eighteen District cities: ESTIMATED COST 1938 1937 105 $ 123,000 $ 179,000 97,000 74,000 61 104,000 37,000 86 1,015,000 1,284,000 565 31,000 148,000 137 29,000 40,000 23 67,000 21,000 60 423,000 299 263,000 423,000 122,000 165 690,000 283,000 230 269,000 239,000 191 31,000 83 66,000 36,000 15 19,000 14,000 14 7,000 21,000 7,000 24 186,000 100,000 120 438,000 348,000 127 301,000 258 336,000 PERMITS 1938 1937 Albuquerque, N. Mex ......... Cheyenne, Wyo ............ ...... Colorado Spring8, 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.................... T~ka, Kans ...................... . T a, Okla.·-······················· Wichita, Kans ....... ............. --"f5 65 64 636 77 25 37 217 206 168 176 104 11 12 22 83 131 350 ---- MaY --- ································· 2,449 2,563 $ 3,412,000 April ..................................... . 2,242 2,827 2,956,000 13,977,000 Five months..·-··· ········ ......... 9,174 9,665 $ 4,459,000 5,939,000 20,127,000 Employment and Pay Rolls Lumber Employment in the District, which had increased slightly in the preceding two months, declined somewhat from the middle of April to the middle of May and pay rolls showed a further small decrease. Employment is now 11 and pay rolls are 13 per cent lower than a year ago. Preliminary figures of the Department of Labor: Board feet sales of lumber at reporting retail yards in the District showed a further seasonal expansion during May but continue much below the level of a year ago. As compared with last year, the decrease for May measures 13 per cent and that for the first five months of the year 11 per cent. Collections on amounts outstanding averaged 33.6 per cent in May as compared with 32.6 per cent in April and 37.4 per cent in May of last year. Lumber trade at 155 retail yards in the District: Colorado. __ .................... ............. Kansas ............................. - ......... . Missouri ........................................ Nebraska ........ ................ .............. New 1\1:exico..._............... ............. . Oklahoma.-................................. . Wyoming ...... ............................... May 1938 per cent change from April 1938 Employment Pay Rolls -4~ - 3.4 - 0.8 +2.6 - 2~ +1.0 - 4.6 - 1.6 -2~ +3.6 -0.4 +0.6 -1.7 +2.5 Building The value of construction contracts awarded in this District rose 24 per cent in May and was 44 per cent larger than in the same month a year ago, reflecting chiefly a gain in awards for non-residential building which for the year to date is now as large as last year. Residential building has declined about 30 per . cent this year. Construction figures of the F. W. Dodge Corporation: DISTRICT 37 EASTEltN STATES Residential Total Residential Total (In t housands of dollars) 3,502 12,686 83,153 283,156 2,782 10,205 74,577 222,016 3,298 8,815 83,937 244,113 12,278 46,878 313,356 1,046,600 53,062 423,528 17,474 1,176,653 TENTH May 1938.-............ . Apr. 1938............... . May 1937.............. . 5 Mos. 1933.......... . 5 Mos. 1937........... . Sales of lumber, board feeL ................. Sales of all materials, dollars·--············· Stocks of lumber, board feet._ ...... ......... Outstandings, dollars.. .......................... .. May 1938 per cent change from April 1938 May 1937 +12.0 - 13.4 +8.9 •-7.8 -1.8 - 6.8 +8.6 +7.8 Life Insurance Life insurance sales in the District in May were 17 per cent lower and in the first five months of the year 13 per cent lower than in the same periods last year. The Life Insurance Sales Research Bureau report: Colorado......... .......... ... .... . ~i~:~;c::::.::::::::::::::::::::: Nebraska .. .. .................. . New Mexico·--··· ····· ·······. Oklahoma._ ..................... . Wyoming........ ........... ..... . Seven states................... . United States................... . Change from May 1938 Apr. 1938 May 1937 (In thousands of dollars) 4,579 -596 -1,560 6,376 -240 - 1,348 15,486 - 215 - 4,012 5,024 - 16 - 1,416 1,019 - 34 - 49 9,013 +959 -195 951 + 26 - 113 42,448 490,658 - 116 - 8,998 -8,693 - H0,032 REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS 8 NATIONAL SUMMARY OF BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System INDUSTRIAL PRODUCTION Pt • C( Nf PClltC[NT 140 140 130 130 120 120 110 110 100 100 90 90 80 80 70 70 6 0 -- 1934 - - - ' - - - - - ' - - - - ' - - - - - - - - ' -- - 6 0 193' 1936 1937 1938 Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average 100. By months, .January, 1934, through May, 1938. = FREIGHT CARLOADINGS P[-.C[NT IF.AC[Nl 110 110 100 100 90 90 00 80 70 70 60 60 50 50 40 - - - - - ' - - 1934 - -~ - - - ' - - - - - ' ' - - - - ' " ' 40 1935 1936 1937 1938 In May and the first three weeks of June industrial activity showed little change from the April level. Wholesale commodity prices generally declined further, but in June wheat and cotton prices advanced and at the end of the period some other staple commodities showed increases. PRODUCTION In May the Board's seasonally adjusted index of industrial production was at 76 per cent of the 1923-1925 average as compared with 77 in April and an average of 79 in the first quarter of the year. Steel ingot production, which in March and April had been at a rate of 33 per cent of capacity, averaged about 31 per cent in May, and automobile output also showed a decrease. Textile production increased in May. Activity at woolen mills rose sharply and there was some increase at cotton mills, while silk mills showed a decline. Changes in output in most other manufacturing industries were largely seasonal in character. Output of crude petroleum was curtailed sharply in May, and bituminous coal production declined somewhat, while anthracite production increased considerably. Lake shipments of iron ore were in very small volume, reflecting both the low rate of activity in the iron and steel industry and the large supply of ore remaining from the previous season. In the first three weeks of June output of steel and petroleum increased somewhat, but the rate of activity in these industries remained below the average for May. Automobile production showed a further decline and continued below sales, so that stocks of new cars were further reduced. Value of construction contracts awarded, as reported by the F. W. Dodge Corporation, showed a substantial increase in May, reflecting chiefly a marked rise in awards for publicly-financed projects. Contracts for residential building increased moderately and were in about the same amount as in May a year ago. Other privately-financed work remained in small volume. EMPLOYMENT Factory employment and pay rolls continued to decline from the middle of April to the middle of May. There were further decreases in employment in the machinery, steel, and automobile industries and a sharp decrease in the number employed in the men's clothing industry. In most other manufacturing lines changes in employment were small in amount. The number employed at mines and on the railroads continued to decline. Index of total loadings of revenue freight, adjusted for seas onal variation, 1923-1925 average 100. By months, .January, 1934, through May, 1938. = WHOLESALE PRICES DISTRIBUTION Department store sales declined considerably in May and the Board's seasonally adjusted index was at 79 per cent of the 1923-1925 average as compared v.rith 83 in April. Sales at variety stores and by mail-order houses also decreased from April to May. Reports for the first half of June indicate about the usual seasonal decline in department store sales. The volume of railroad freight traffic showed little change in May following sharp declines in previous months. 50 - - - ~- - -' - - - - - ' -1934 1935 1936 - - - ' - - - 10 1937 1131 Indexes compiled by the United States Bureau of Labor Statistics, 1926 100. By weeks, 1934 through .June 18, 1938. = COMMODITY PRICES Prices of both agricultural and industrial commodities decreased in the latter part of May. In the first three weeks of June wheat and cotton prices advanced, while prices of industrial products generally continued to decline. MEMBER BANK RESERVES AND RELATED ITEMS BIWCNS OF DOLLARS BILUONS OF DOU.ARS 14 14 BANK CREDIT Reserves of member banks continued to increase in May and June, largely as the result of Treasury disbursements from its deposits with the Reserve banks. Excess reserves increased chiefly at city banks, reflecting retirement of Treasury bills and further expansion of bankers' balances. Demand deposits at reporting member banks in 101 leading cities increased further during the first half of June, and total loans and investments, which had declined in May, also increased, reflecting substantial purchases of United States Government obligations by New York City banks. MONEY RATES 2 1934 1935 1936 1937 1938 Wednesday figures, .January 3, 1934, through .June 15, 1938. Yields on Treasury bonds declined further in the four weeks ending June 18, and those on Treasury notes reached new low levels. Rates on open-market commercial paper declined somewhat about the middle of June .