The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY REVIEW Agricultural and Business Conditions TENTH FEDERAL RESER VE DISTRICT VoL. 31, No. 3 FEDERAL RESERVE BANK OF KANSAS CITY MARCH 31, 1946 INDUSTRIAL EMPLOYMENT The cessation of hostilities in 1945 brought to a close lower than in the highest employment period but 32 a period during which employment, stimulated by a per cent higher than in 1929. war economy, attained unprecedented levels. The The accompanying chart shows the trend of employaverage number of employees in nonagricultural es- ment in the Tenth District states from 1939 through tablishments in the United States in 1945 was only 7 1945, and the influence of the war upon this region is per cent below that of 1943, the year of highest em- apparent. The trends in the five areas are almost uniployment, and was 19 per cent above the boom year of form. There was an increase each year from 1939 to 1929. Manufacturing employment in 1945, although 1943, followed by a decline through 1944 and 1945, reduced sharply by the cancellation of war contracts except in Kansas where manufacturing employment and affected adversely by strikes, was 18 per cent reached its maximum in 1944. Among the states of EMPLOYEES IN NONAGRICULTURAL ESTABLISHMENTS TENTH DISTRICT, 1939-19451 Hundred thousands 10 8 6 2 0 '39 '39 '41 ~3 MISSOURI ~5 '39 ~I '43 ~5 •39 NEBRASKA •41 •43 OKLAHOMA '45 •39 '41 ~3 '45 COLORADO, WYOMNG, NEW t.£:XICO - MANUFACTURING D 1 Averages of midmonth estimates for states which lie wholly or partially within Tenth District. revised beginning January, 1948. SOURCE: Bureau of Labor Statistics. ALL OTHER INDUSTRIES Nebraska figures for manufacturing employment 2 REVIEW OF AGRICULTURAL AND BUSINESS · CONDlTIONS the District, Kansas and Missouri showed the greatest increases both in nonagricultural employment and in factory employment. Likewise, the drop in employment in 1944 and 1945 was greatest in these states. These two states were affected to the greatest extent because a large part of the war industries of the region and large military establishments were located there. Employment was most stable in the least industrialized states, New Mexico and Wyoming. Iri Wyoming there was a small but steady upward movement in nonagricultural employment which reached its highest level in 1945. The mass unemployment which was widely predicted for late in the year did not materialize. Despite large-scale layoffs in war industries and rapid demobilization of the armed forces, unemployment in the country as a whole was only about two million in December. This was 40 per cent higher than in December, 1942, the month in.which nonagricultural employment reached its wartime peak. Veterans constituted the principal source of growth in unemployment. Of the approximately six million separations from the armed forces in 1945, nearly five million were scheduled for the last quarter of the year. Because of the lag between the time of a veteran's separation and his entrance into the labor market, the greatest impetus to unemployment did not occur till after the end of 1945. Unemployment in the District continued to rise as is indicated by increases in all seven states in bo h initial and continued unemployment compensation claims. In December, continued claims reached the highest level ever reported in Kansas and in Missouri. Kansas was the only state of the District which reported a decline in initial claims from November to December. The ratio of claimants to the average monthly number of persons covered by unemployment insurance was below the national average, 6.2 per cent, in Colorado, Nebraska, New Mexico, and Wyoming and above the national average : in Kansas (7.5 per cent), Missouri (8.1 per cent), and Oklahoma (9.7 per cent). The increased percentages in Kansas, Missouri, and Oklahoma were the result of the filing of interstate claims by workers who returned to their homes after earning wage credits in other states. The ratio of 0.6 per cent in Wyoming was the lowest in the nation. By the end of the ·year, veterans constituted nea_rly 10 per cent of all manufacturing employees in the United States, as more than 40 per cent of all persons hireq. by manufacturing industries during De.~ember were veterans, and large numbers of women retired, at least temporarily, from the labor force. Among the returning veterans there were some difficulties in adjustment, as is indicated by the rate of turnover among them. In December, 57 out of every 1,000 veterans of World War II quit their jobs, while the rate for nonveterans was 37 out of every 1,000. Involuntary separations, however, were only half as large for veterans as for nonveterans.· Department of Labor estimates of employment: TOTAL NONAGRICULTURAL EMPLOYMENT Colorado............... . Kansas ................... Missouri.. ............... · Nebraska ............... New Mexico .......... . Oklahoma............. . Wyoming..........·.... . Seven states.......... United States........ Aver. Dec. 12 Mos. 1945 1945 -(Number)-266,000 260,500 333,000 370,900 872,000 915,100 246,000 253,600 84,300 81,300 341,000 360,100 72,400 63,300 2,214,700 36,319,000 Change from '44 Dec. 12 Mos. 7Percent) -2 -2 -18 -9 -10 -4 -8 -2 +5 +4 -11 -4 +15 +3 2,304,800 36,983,000 -9 -7 MANUFACTURING EMPLOYMENT Colorado............... . Kansas ................... Missouri. ................ Nebraska* ............ . New Mexico .......... . Oklahoma............. _ Wyoming.............. . Seven states.......... United States........ Aver. Dec. . 12 Mos. 1945 1945 -(Number)-44,000 45,900 63,700 98,900 243,000 312,400 45,100 56,800 · 6,100 5,200 43,200 70,000 4,600. 4,400 439,700 11,914,00.P 593,600 13,900,000 Change from '44 Dec. 12 Mos. (Percent) · -9 -6 -60 -28 -30 -10 -29 -8 +22 +4 -51 -19 -4 . 0 -36 -24 -14 -14 •Estimates for manufacturing have been revised and are not ·comparable to current estimates for to~al nonagricultural employment. BUSINESS AND AGRICULTURAL CONDITIONS FINANCE declined 49.0 million dollars, as the country banks The deposits of the District weekly report- reduced their deposits with the city banks, :particuBank ing member banks declined 108.2 million larly during the week ended March 20. The country Credit dollars during the four-week period ended banks had to meet a Treasury call on their war -loan March 20, as time deposits constituted the accounts during the week ended March 20, an_d they _only type of deposits that expanded. The class of de- also had to meet their customers' income tax payposits showing the largest contraction was that of ments. In the course of meeting these payments, the Government deposits which contracted 53.9 million country banks shifted funds from their accounts with dollars, chiefly as a result of Treasury withdrawals the city banks. The private demand deposits of the from war loan accounts. Deposits "due to" other banks reporting banks declined moderately, by 9.9 inillion Member FEDERAL RESERVE BANK OF KANSAS CITY dollars, chiefly because of income tax payments by their depositors. The decline in deposits was reflected in declines of 45.1 million dollars in loans and investments, 12.1 million in reserves with the Federal Reserve Bank, and 29.6 million in balances "due from" other banks, and an increase of 16.2 million in borrowing by the reporting banks. Total investments of the District weekly reporting banks showed a net decline of 39.3 million dollars as Government security holdings contracted 42.9 million and other securities expand.ed by 3.6 . million. A decrease of 27 .6 million dollars in Treasury bills resulted . largely from the action of several of the larger city banks. Treasury note holdings decreased 25.4 million dollars, as the Treasury redeemed for cash the Series A-1946 notes which matured on March 15. The certificates of indebtedness held by the -reporting banks increased 1.3 million dollars despite the cash redemption by the Treasury of about one fourth of the Series B-1946 certificates which matured March 1. The decline which occurred during the week of March 1 was more than offset by subsequent bank purchases. The Treasury cash redemptions of the Treasury bonds of 1946-56 on March 15 had little effect on the bank holdings of Treasury bonds, as only a minor proportion of BANK DEBITS Colo. Springs, Colo..... Denver, Colo................ Gr. Junction, Colo ....... Greeley, Colo............... Pueblo, Colo................. Atchison, Kans .......... Emporia, Kans ........... . Hutchinson, Kans ...... . Independence, Kans .. . Kansas City, Kans ...... Lawrence, Kans .......... Parsons, Kans ............ . Pittsburg, Kans .......... Salina, Kans .............. .. Topeka, Kans ............... Wichita, Kans ............ . Joplin, Mo .................... Kansas City, Mo ........ _ St. Joseph, Mo ............ . Fremont, Nebr........... . Grand Island, Nebr ... . Lincoln, Nebr............. . Omaha, Nebr .............. . Albuquerque, N. Mex .. Bartlesville, Okla....... .Enid, Okla.................. .. Guthrie, Okla.............. Muskogee, Okla.......... Okla. City, Okla.......... Okmulgee, Okla........ . Tulsa, Okla ................. . Casper, Wyo ............... . Cheyenne, Wyo .......... . Feb. 2 Mos. Change from '45 - 1946 1946 Feb. 2 Mos. (Thousand dollars) (Per cent) 27,861 56,960 +42 +32 315,889 669,073 +16 +18 8,729 18,547 +40 +34 11,919 26,123 +19 +24 21,630 47,925 +23 +22 6,339 20,073 +8 +58 8,118 16,211 +39 +26 32,743 75,774 +41 +37 5,252 10,807 +26 +17 38,549 87,817 -1 +10 6,983 14,837 -2 -3 5,160 11,083 0 -5 8,366 16,823 +32 +29 24,865 54,495 +43 +41 59,389 124,047 +13 +8 140,561 337,521 -26 -20 21,326 44,844 +47 +41 633,982 1,362,142 +8 +5 . 60,691 128,450 +19 +10 7,472 15,478 +17 +13 15,806 30,638 +17 +6 50,934 111,170 +22 +25 350,970 710,780 +16 +11 45,048 102,593 +47 +45 43,186 91,169 +6 +5 19,347 45,644 -9 -7 2,853 6,858 +14 +20 14,996 33,672 +1 +8 180,147 400,893 +8 +7 5,041 10,648 +38 +so 234,426 " 489,467 -10 -10 11,480 26,027 +17 +18 16,801 43,711 ·- 1 +11 District, 33 cities......... 2,436,858 5,241,990 U.S., 334 cities.. ;......... 73,970,000 163,101,000 +8 +5 +7 . +7 3 the issue was held by banks. Treasury bond holdings of the reporting banks expanded 9.0 million dollars in the period under review. Loans of the District weekly reporting banks declined 5.8 million dollars between February 20 and March 20. "Commercial, industrial, and agricultural" loans declined 8.9 million dollars, with the liquidation of Commodity Credit Corporation loans on wheat a significant factor in the decline. The Commodity Credit Corporation wheat loans, which were to mature on April 30, were called as of March 1 in twenty-two states, including all the states of the Tenth District, in order to increase the supply of wheat on the market available for domestic millers and for export. To some extent, the decline in the banks' Commodity Credit wheat loans was offset by new wheat loans, however, as some owners of wheat obtained funds to pay the Commodity Credit loans by borrowing directly .f rom the banks instead of selling the wheat. Loans on both Government securities and other securities to brokers and dealers and to other borrowers expanded moderately. It is noteworthy that loans on Government securities increased in the third month following the Victory Loan Drive, when loans on Governments were still about 74 per cent of their peak figure at the close of the Victory Drive. Principal items of conditi(?n of 50 member banks: Change from Mar.20 Feb.20 Mar.21 1946 1946 1945 (In thousands of dollars) LE>ans and investments-total.. ... 2,466,307 -45,088 +487,011 Loans-total................................... 423,156 -5,791 +74,644 Coml., indust., agric..................... 239,847 -8,942 +17,747 To security brokers and dealers. 6,882 +535 +2,651 Othertopurchase or carrysecur. 60,497 + 1,073 + 34,154 Real estate loans.......................... 42,384 +761 +5,389 Loans to banks.............................. 678 -75 +137 All other loans.............................. 72,868 +857 +14,566 Investments-total. ....................... 2,043,151 -39,297 +412,367 U. S. Govt. securities-total... .... 1,891,025 -42,856 +389,851 Bills.............................................. 65,663 -27,607 -9,201 Certificates of indebtedness..... 575,765 + 1,349 + 187,090 Notes............................................ 352,802 -25,421 +40,655 Bonds............................................ 896,528 +9,014 +196,978 Guaranteed obligations............. 267 -191 -25,671 Other securities............................ 152,126 +3,559 +22,516 Reserves with F. R. Bank. ............. 430,384 -12,105 +46,692 Balances "due from"banks-net. 260,835 -29,630 -20,462 Demand deposits-adjusted ....... 1,398,288 -9,936 +132,023 Time deposits.................................. 300,313 +4,674 +59,482 U.S. Govt. deposits........................ 452,852 -53,946 +213,571 Depo~it~ "due to" banks-net...... 861,476 -48,978 +64,012 Borrowmgs...................................... 27,200 +16,200 +27,200 The semi-monthly average volume of reserves of the District Reserve city banks Reserves reached its maximum in the latter half of November, 1945, while the volume of District country banks' reserves continued to expand through the first half of March, 1946, the latest period for which data are available at this writing. The periods of peak volume for required reserves coincide Member Bank 4 REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS with those for total reserves, namely, the latter half of ~ ovember for the city banks and the first half of March for the country banks. The net result of the changes in total reserves and required reserves has been a decline during 1946 in the volume of excess reserves held by the District member banks. Currently, the ratios of excess reserves to required reserves of both the District Reserve city and the District country banks are lower than they have ever been. The District country bank ratio of excess reserves to required reserves, however, is about four times as large as the comparable ratio of the District Reserve city banks. Daily average member bank reserves: of March, sales were about 11 per cent larger than in the corresponding period last year. The smaller gain for March probably was due in part to the later Easter date in 1946 than in 1945, because of which pre-Easter buying that occurred in March in 1945 will be postponed until April in 1946. A very large part of the current gains in sales over last year reflects increased supplies of housewares and housefurnishings available for sale. Sales increased much more than is usual from January to February, and the seasonally adjusted index of daily average sales rose from 269 per cent of the 1935-39 average in January to 302 per cent in February, a new record high. Ratio Excess to Required (Per cent) INDUSTRIAL PRODUCTION Meat Hog slaughter in February, as indicated by Packing packers' purchases at leading District markets, was 70 per cent above the low level prevailing a year earlier and sheep slaughter in February was up 32 per cent from last year. However, cattle slaughter was down 16 per cent and calf slaughter 25 per cent, despite increased marketings of cattle and calves. Moreover, available data for March indicate a further sharp shrinkage in cattle slaughter. The sharp contraction in cattle slaughter in March has been attributed in part to difficulties of packers in buying only animals which meet the specifications for the new beef subsidy without which the legitimate packer cannot operate. In part, it is attributed to increased diversion of cattle at above ceiling prices to the black market. As a consequence, many legitimate packers in this District have ceased processing beef altogether or have reduced their beef operations to only a fraction of normal. Black market operations, which received a tremendous impetus during the strike of packing-house workers at large plants last January, are reported to be flourishing. The new beef subsidy regulations allow fo:r~ very little margin of error in cattle purchases, so that if a packer should buy an animal as "choice" and a:fter slaughter the beef should grade lower than "choice," the packer has paid above ceiling prices for the live animal and is subject to penalties ranging up to the withholding of the entire subsidy if the cost exceeds the maximum by more than 2 per cent. In addition to the new beef subsidy, a price-increase also was authorized for packers, effective_April 1, to offset the wage increase of 16 cents an hour granted to packing-house workers. · Late in March, -the OP A restored wartime controls over custom slaughtering of livestock, because it is in this field that black market operations are most prominent. United States cold storage stoeks of beef declined cohtraseasonally during February, and stocks of pork Held Required Excess (In millions of dollars) Reserve city banks Feb. 16-28, 1946........ Feb. 1-15, 1946........ Jan. 16-31, 1946........ Feb. 16-28, 1945........ Country banks Feb. 16-28, 1946........ Feb. 1-15, 1946........ Jan. 16-31, 1946........ Feb. 16-28, 1945........ 488 482 484 419 452 448 455 389 36 34 29 29 8 8 7 8 285 283 286 227 225 223 222 173 60 60 65 53 27 27 29 31 DEPARTMENT STORE TRADE Department store inventories increased less than is usual during February, but month-end stocks still were about 6 per cent larger in value than those of a year earlier. Outstanding orders showed a further increase during February to a new record level. On February 28, the volume of merchandise on order was 29 per cent greater than a year ago, about two and one fifth times actual stocks on hand and in warehouses, and nearly four times average monthly sales in 1945. Normally, orders are only about one third as large as inventories and are equivalent to appreciably less than one month's sales. Department store sales and stocks in leading cities : SALES STOCKS Feb. 46 2 Mos.' 46 Feb. 28, '46 No. of comp.to comp. to comp. to Stores Feb. 45 2 Mos. '45 Feb. 28, '45 (Per cent increase or decrease) Denver................... 7 +24 +21 +8 Hutchinson............ 3 +15 +12 +1 Topeka................... 3 +16 +9 * Wichita.................. 4 +14 +10 +13 Joplin..................... 3 +39 +30 -2 Kansas City....... ~... 8 · +21 +17 +12 St. Joseph.............. 3 +30 +24 * Omaha.................... 4 +33 +26 * Oklahoma City...... 6 +20 +13 ~1 Tulsa...................... 4 +20 +11 +11 Other cities............ 31 +28 +21 +7 District................. - 76 +23 +17 *Not shown separately but included in District total. +6 Dollar volume of department store sales in this District in Ferbuary showecl an ·extraordinary increase of 23 per cent over a year ago. In the first three weeks FEDERAL RESERVE BANK OF KANSAS CITY 5 and lard increased much less than is usual during that beginning of the war. In its report to the Office of month. Beef stocks on March 1, which totaled 169 mil- Price Administration, the Industry Producing Advilion pounds as compared with 133 million a year ago, sory Committee recommended a 35-cent increase bewere the second largest for that date since 1920. Pork cause of higher replacement costs which in 1944 are holdings, at 428 million pounds as compared with 366 claimed to have exceeded gross income per barrel by million last year, showed the first increase over a year 35 cents. earlier since August, 1944, but were otherwise the The American Petroleum Institute is officially taksmallest on record for the March 1 date. Lard stocks, ing part in the controversy for the first time, and the at 91 million pounds this year as compared with 65 combined forces of the industry are working for commillion last year, also showed an appreciable increase plete removal of oil from price control. A further over a year ago. study is to be made by the Office of Price Administration to determine the necessity of additional price inFlour Southwestern flour milling operations drop- creases. Milling ped from a record level of 111 per cent of Increases in ceiling prices of industrial and Navy normal capacity in the third week of Febru- grades of residual fuel oils and of asphalt became efary to 66 per cent in the first week of March when fective March 18. The new ceilings are 15 cents per plants were closed part of the week for the change- barrel higher in the Pacific area and 21 cents higher in over to the new 80 per cent wheat extraction rate. all other areas of the country. The price of tractor Operations subsequently increased, but the current 'f uels was increased ½ cent per gallon, and the temlevel of mill activity, only around 90 per cent of capac- porary increases in kerosene and distillate fuel oils ity, is still far below the late February peak of 111 per which were granted earlier were made permanent and cent, chiefly because of a growing lack of wheat. uniform throughout the country. Demand for flour, especially for export, continues In February, the daily average rate of crude oil almost insatiable. The current volume of flour sales, production in the United States was 4,702,000 barhowever, is extremely light. Late in March, unfilled rels, somewhat above that in January but practically orders on mills' books still averaged about 50 days' the same as in February, 1945. Total output for the production, with wheat stocks limited by War Food month was 1 per cent lower than a year ago and for Order 144, effective since February 18, to 45 days' the first two months of the year was 2 per cent lower production and indications that the wheat inventory than in the corresponding period in 1945. limit would soon be further reduced to 30 days' proThe daily average production of oil in the Tenth duction. The "oversold" position of mills resulting District in February was 865,000 barrels, 1 per cent from the action of WFO 144 in cancelling wheat pur- above January, 1946, and 3 per cent above February, chase contracts in excess of a 45-day inventory limit, 1945. Colorado, Oklahoma, and Wyoming increased although much less serious in March than in Febru- their total output in February from the same month ary, nevertheless was still forcing mills to turn away the year before, resulting in a 3 per cent rise for the new flour business in an effort to bring their unfilled District. Colorado again showed a rise of over 150 per orders into balance with wheat stocks on hand. More- cent as a result of increased activity, especially in the over, mills were experiencing some difficulty in March Rangely Field. The decline of 22 per cent in Nebraska in securing supply certificates allowing them to re- had little effect upon total District output because of plenish wheat stocks within the prescribed inventory the small quantity supplied. The supply of fuel oils had improved by the last of limit, and even then they were faced with the difficulty of finding the wheat.In addition, the milling sub- February, as yield and production increased at East sidy rate for March was reported to be inadequate, and Gulf Coast refineries, and stocks rose in the East. following the 3-cent advance in wheat prices, with The first significant drop in the nation's gasoline mills incr~asingly being squeezed between wheat stocks occurred in the latter part of February as reprices and flour ceilings. However, the April subsidy fineries curtailed production because of weakening rate, announced at the end of March, was unchanged prices of motor fuel throughout the country. Stocks of crude oil and of gasoline were higher in comparison for hard wheat ground into flour in this area. with those a year ago, whereas fuel oil inventories Petroleum Price control of crude petroleum has be- were smaller and refinery runs were practically the come an increasingly controversial issue, same. stimulated rather than allayed by a ceiling increase of In the last quarter of 1945, exports of oil to non10 cents per barrel. This advance, effective March 29, contiguous territories amounted to 33.1 million barwas the first break in crude oil price ceilings since the rels, about 400,000 barrels more than were imported. REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS 6 Crude oil and motor fuel constituted the principal exports, and crude oil and fuel oils accounted for 98 per cent of the imports. Data for gross crude oil production as reported by the Bureau of Mines and the American Petroleum Institute follow: ewMexico............... . Oklahoma .................. _ Wyoming................... . F.eb. 2 Mos. 1946 1946 (Thousand barrels) 661 1,449 7,015 14,599 22 45 2,756 5,805 10,902 23,032 2,857 5,885 Six states.................... United States............. 24,213 131,648 ·a. k •. 50,815 · 274,109 AGRICULTURE Change from '45 Feb. 2 Mos. (Per cent) +155 +168 -5 -7 -22 -15 -6 -6 +7 +8 +3 +3 +3 -1 +2 -2 also some supplies are being held from the market because farmers anticipate further increases in the price of grains. Early in March the ceilings on principal cereal grains were raised by amounts varying from 2 to 4 cents a bushel, but there are indications that these small increases have confirmed expectations of more substantial increases and hence had little tendency to increase the volume of marketings. New control measures have been introduced in rapid succession. Early in March regulations were issued requiring processors and dealers to offer to Commodity Credit Corporation their "excess" stocks of wheat and corn above the amounts required to meet approved types of demand and permissible inventories. This puts all grain that has left farmers' hands under direct or permissive control of the Government, but the amount thus made available for export has been disappointingly small. On March 26 the Chicago Board of Trade ordered all May wheat futures contracts set- The inadequacy of current supplies of bread grains to meet heavy domestic demand plus the export commitments of Government authorities, which has been evident since the turn of the year, beRAINFALL came steadily worse during the month of March. It is 2 Mos.1946 Feb.1946 becoming evident that the world faces famine condiTotal Normal Total Normal tions without parallel in the memory of living men, COLORADO (In inchesr- - - while at the same time food consumption in this coun0.93 0.61 0.16 0.53 Denver......................... 2.65 1.45 1.47 Leadville...................... 0.38 try is greater than ever before. Former President 0.78 0.44 0.12 0.47 Pueblo.......................... Hoover has stated that half a billion persons are 0.83 0.52 0.97 0.72 Lamar.......................... 0.43 0.04 0.15 Alamosa ...................... 0.01 threatened with actual famine. Shipping facilities are 4.76 3.21 1.81 2.47 Steamboat Springs .... probably inadequate to prevent widespread suffering KANSAS 2.21 2.50 0.52 1.30 Topeka......................... even if abundant grain were available in exporting 3.00 4.06 1.61 1.55 Iola ............................... countries. At the same time world stocks of wheat in 1.38 0.67 0.09 0.89 Concordia..................... 1.70 1.04 1.08 Salina........................... 0.40 exporting countries are reported as 25 per cent less 1.95 3.44 1.24 Wichita........................ 1.23 than a year ago and the lowest since 1940. In 1945 -t he 1.11 0.64 Hays ............................. 0.29 0.77 0.17 0.82 Goodland...................... 0.05 0.56 crops were large in the United States and Canada but 1.66 1.15 Dodge City.................. 0.89 0.78 much below average in Australia and Argentina be1.34 1.05 1.28 0.75 Elkhart........................ cause of drought, and in Europe and North Africa MISSOURI 2.95 2.63 0.28 1.67 St. Joseph ................: ... because of both drought and disturbed social condi4.34 2.73 0.94 1.49 Kansas City................. 3.84 6.17 3.11 1.68 Joplin ........................... tions affecting production. NEBRASKA All the past winter the flow of grain to market in 1.59 0.19 0.89 0.78 Omaha.......................... 1.59 1.07 Lincoln ......................... 0.14 0.95 this country was much below what was anticipated 1.48 0.25 0.87 0.35 Norfolk. ....................... in the fall, partly because of car shortages. Recently 1.41 0.42 Grand Island ............... 0.11 0.85 0.19 1.08 McCook........................ 0.04 0.67 marketings have been affected adversely by spring 0.14 0.o7 0.53 0.92 North Platte................ planting oper~tions, and by the bad condition of roads 0.74 0.51 Bridgeport................... 0.30 0.35 Valentine ..................... 0.25 0.28 1.03 0.55 in northern territory where frost has been going out NEW MEXICO of the ground. The relationship between feed prices 0.09 0.65 Clayton......................... 0.09 0.40 1.42 Santa Fe...................... 0.68 0.80 1.12 and livestock prices in recent years has made it profitFarmington ................. 0.17 0.24 1.25 0.71 able to feed livestock at a heavy rate. These livestock OKLAHOMA 3.17 Tulsa ............................ 2.09 1.49 5.52 -feed ratios were established during the war when a McAlester.................... 4.50 2.27 7.99 4.88 large livestock output was especially needed. The fa1.92 1.11 Oklahoma City........... 5.23 .. 2~30 Pauls Valley................ 1.86 1.62 5.98 3.08 vorable ratio of feed and livestock prices and the fact Hobart......................... · l.04 1.00 2.25 1.86 that much of the corn produced last fall would not Enid.............................. 2.26 3.66 2.25 J.15 Woodward ................... 2.25 1.05 2.86 1.80 keep in storage resulted in a rapid disappearance of WYOMING grain during the fall and winter months, much of · Cheyenne..................... 0.49 0.64 1.06 0.80 Casper.......................... 0.57 0.71 1.00 1.31 which would have served more vital needs if it had 0.04 Lander......................... 0.63 0.35 1.19 remained in the market for breadstuffs. Apparently Sheridan...................... · 0.53 0.70 1.48 1.55 Crops FEDERAL RESERVE BANK OF KANSAS CITY tled at ceiling price because the War Food Order referred to made it impossible to accumulate supplies for delivery on contracts. On the next day the same action was taken by the Kansas City Board of Trade. President Truman has appealed to the country to reduce its consumption of wheat food by 40 per cent and fats and oils by 20 per cent, and a beginning of control at the farm has been made by prohibiting farmers to buy grain in order to feed hogs to above 225 pounds, to feed cattle to above Grade A, or to feed poultry in excess of 80 per cent of the number fed during the corresponding period of last year. So long, however, as the farmer at one end of the market chain is free to sell or to hold, and the consumer at the other end of the chain is free to cooperate or not, the amount of relief to be squeezed out by depleting the "pipelines" has obvious limits. The one bright feature in the situation is the crop outlook. Wheat has made very satisfactory progress during the past two months, as a result of late winter rains and snows in the northwestern part of the winter wheat belt. The soil moisture situation is reported as satisfactory in Kansas and Nebraska, and the same is true in Oklahoma except in the Panhandle area and in scattered.spots in the west central area. The weather has been unseasonably warm, with the result that winter crops and spring pastures are two to three weeks ahead of normal. According to present forecasts the wheat acreage will be the largest since 1938, and a crop of over a billion bushels is expected. This compares with the record crop of 1,123 million bushels harvested in 1945. 7 stock sheep in the principal sheep-raising states of Wyoming, Colorado, and New Mexico has dropped to the lowest level in twenty years or more. Cash income from wool in 1945 decreased proportionally to production, as local market prices averaged about the same in 1945 as in 1944, when prices had reached their highest point since 1920. A continued decline in wool production in 1946 is indicated by the fact that sheep numbers in this District at the beginning of this year were 9 per cent lower than at the beginning of 1945. The critical shortage of both feed grains and commercial feedstuffs is evident in recent trends toward lighter marketing weights of cattle and hogs. The shortage of feed is especially acute so far as livestock producers in deficit feed areas are concerned, as smaller quantities of grain than last year are available for shipment from surplus-producing areas. Moreover, intensive competition for available market supplies has led to development of unusual trading practices, including barter, which in turn have contributed to the tight situation by causing uneven distribution. Supplies of by-product feeds are substantially reduced frqm last year. This is particularly true of wheat millf eeds, the output of which since .March 1 has been reduced by about one third by the higher extraction rate for wheat flour specified in War Food Order 144. However, the heavy winter feeding season has passed its peak. Winter wheat pastures in many areas now afford excellent grazing. Grass pastures in most feeding areas, aided by generous rains in March and unseasonably warm weather, have developed unusually early and will become an increasingly important facLivestock The production of shorn wool in this Dis- tor in the feed situation. By early March, a large protrict in 1945 was 6 per cent smaller than portion of the best pasture sections of Kansas and that in 1944, following an earlier decrease of 16 per Oklahoma already was under lease for summer grazcent from 1943 to 1944. All of the decrease in the ing, despite higher feeder cattle prices than those 1945 wool clip was due to a further reduction in the which prevailed a year ago and indications that, benumber of sheep shorn, as fleece weights in 1945 aver- cause of higher costs, profits in the 1946 grass cattle aged somewhat higher than in 1944 and generally season will be less than those in recent wartime years. were unusually heavy. Sheep numbers have been de- Although the gap between feed supplies and demand clining now for four or five years, and the number of is still very wide, increased pasturing and liquidation of livestock and poultry currently are serving tolessen to some extent the demand for prepared feeds. SHORN WOOL PRODUCTION, PRICE, AND INCOME (Estimated by Department of Agriculture) Present Government efforts to reduce livestock PRODUCTION PRICE INCOME feeding, and especially the feeding of wheat to live1945 1944 1945 1944 1945 1944 ( 000 pounds) (cents per lb.) ( 000 dollars) stock, are based in part upon the thesis that, because Colo ............ 13,372 13,259 40 41 5,349 5,436 of the urgent need to ship large quantities of food to Kans ........... 5,131 5,148 37 37 1,898 1,905 combat serious malnutrition in liberated countries Mo .............. 8,619 9,596 43 43 3,706 4,126 Nebr........... 2,724 3,149 39 38 1,062 1,197 abroad, grain is better utilized by feeding it to the peoN.Mex ....... 13,797 14,574 36 37 4,967 5,392 ple than to livestock. This thesis is supported by the Okla ........... 1,851 2,203 38 34 703 749 Wyo .......... _ 25,631 27,591 39 40 9,996 11,036 fact that grain will go much farther as cereal than as meat, because of the conversion loss involved in meat 7 states...... 71,125 75,520 39 40 27,681 29,841 U. S ............ 321,017 347,094 42 42 134,621 147,206 production. REVIEW OF AGRICULTURAL AND BUSINESS CONDITIONS 8 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION P£11CO<T PH'YSICAL YOLUME SEASONALLY AO,AJST[~ 1935-39•100 FOR TOTAL POINTS IN TOTAL 260 140 240 r fl .. Production and employment _at factories declined in February but advanced in the first three weeks of March, reflecting mainly the influence of the steel .strike. The value of retail trade reached new record levels. Wholesale prices of a number of commodities increased. \,." 220 /roTAJ.. 200 I 180 160 120 100 INDUSTRIAL PRODUCTION I ~ \ J 140 ,J JV . 80 1940 1942 "1944 i940 1942 1944 Federal Reserve indexes. Groups are expressed in terms of points in the total index. Monthly •figures ; latest shown are for February, 1946. DEPARTMENT STORE SALES AND STOCKS 60 80 .____._ .,___._____,eo __.__ _ __,__ 1941 sales By the Board of Governors of the Federal Reserve System 1943 indexes. Monthl Febru ry, 1 46; 1944 1945 fig res ; latest or stocks, Janu- OLESALE PRICES Output of durable goods declined considerably further in February, while production of nondurable goods and minerals continued to increase. Production of steel, automobiles, and machinery has advanced sharply since the settlement of wage disputes in these industries, and the Board's index of industrial production, which declined from 160 in January to 154 per cent of the 1935-39 average in February, will show a considerable rise in March. Steel mill operations in February were at an average rate of 19 per cent of capacity as compared with 50 per cent in January. Output at steel mills has increased rapidly since the middle of February, and during the week ending March 23 fs scheduled at 89 per cent of capacity-the highest rate since V-J day. In February production of nonferrous metals, machinery, and transportation equipment also declined, · reflecting chiefly the direct or indirect effects of work stoppages. Lumber production, after advancing in January, showed little change in February. Plate glass production increased sharply to the highest level since November, 1941. Production of most nondurable goods continued to advance in February, partly reflecting increases in working forces. Output at textile mills rose further and was at a rate slightly above the lFel of a year ago. Activity in the meat-packing industry increased sharply in February following settlement of the wage dispute at major plants and was 20 per cent higher than a year ago. Flour production likewise showed a substantial gain for the month. In March a Federal program was instituted to reduce domestic consumption of wheat in order to increase exports for relief purposes. Output of automobile tires in February rose to the highest rate on record. Output of coal was maintained at exceptionally high levels in February and early March. Crude petroleum production showed a gain in February, but declined in March. EMPLOYMENT Employment continued to advance from the middle of January to the middle of February in most lines of activity except at manufacturing plants closed by industrial disputes. After February 15, with the settlement of the steel strike, there were large increases in employment in the durable goods industries and by the middle of March employment in private nonagricultural establishments is estimated to be about 2½ million larger than last September, after allowing for seasonal changes. Unemployment increased from January to February by about 400,000 to a level of 2,700,000 persons. DISTRIBUTION • ,. _ _ _ _ _ _ 40 COMMODITY PRICES 40 1939 1940 1941 1942 1943 1944 1945 Bureau of Labor Statistics' indexes. Weekly figures; latest shown are for week ending March 16, 1946. MEMBER BANK RESERVES AND. RELATED ITEMS IIUIONS Department store sales in February, after allowance for seasonal changes, were the largest on record by a considerable margin, and in the first half of March sales continued to show marked increases over a year ago. Total retail trade in February was probably close to one fourth higher than in the same month last year. Shipments of most classes of railroad freight increased from the middle of February to the middle of March and almost the same number of cars were being loaded in the first two weeks of March as during the same period last year, when shipments of war prbducts were at peak levels . o, DOLLARS 32 The general level of wholesale commodity prices advanced one per cent from the middle of February to the middle of March, . reflecting increases in most groups of agricultural and industrial products. Since last September wholesale prices have advanced 3.3 per cent, according to the Bureau of Labor Statistics' index. Price control regulations permit manufacturers and distributors to pass on to consumers only part of the recent advances granted in maximum wholesale prices. BANK CREDIT 1939 1940 1941 1942 1943 1944 1945 Wednesday figures; latest shown are for March 20, 1946. Retirement of 2.8 billion dollars of United States Government obligations during March was reflected in a decline of about the same amount in Treasury balances during the four weeks ending March 20. Holdings of Government securities by both Federal Reserve banks and member banks declined, accompanying reductions in Treasury deposits at these banks. Deposits, other than those of the Treasury, at member banks showed little change. Member banks required and excess reserves also changed little during the period. Member banks increased their borrowings at the Reserve banks to over 700 million dollars on March 13, but reduced them somewhat in the following week. Commercial and industrial l,oans at member banks in leading cities continued to increase between the middle of February and the middle of March. Loans on Government securities to broker.s and dealers :fluctuated considerably in connection with the Treasury retirement and refunding operations, while those to others continued to show a slow decline.
@FedFRASER