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BUSINESS CONDITIONS Monthly Review of Agriculture, Industry, Trade and Finance Released for Publication on Morning of October 31, 1939 FEDERAL RESERVE BANK OF luienty-ftfth Antttuersary Federal Reserve Bank of St♦ Louis Opened November 16, 1914. Above building occupied since June 1, 1925. ST* LOUIS S U M M A R Y OF EIGHTH DISTRICT Agriculture I Oct. 1,1939, comp, with 1938 Av. 1923-38 Estimated yield of 7 crops.................... — 0.4% — 4.1% Live stock: Sept., 1939, comp, with Aug., 1939 Sept., 1938 Receipts at National Stock Yards........ + 7.1 % + 9.1% Shipments from aforesaid Yards........... -j-10.9 + 1 3 . 1 Production and Distribution: Sales by mfrs. and wholesalers..............+12.8 Department store sales..........................+29.4 Car loadings........................................... + 12.7 + 13.3 + 5.2 + 13.6 Building and Construction: Bldg. permits, incl. repairs { C o S ^ - 5 ( U Value construction contracts awarded. . +11.0 - l l .8 + 1.9 Miscellaneous: r' •u m / Number............ —10 3 Commercial failures j Liabilities........._ 2 .0 Consumption of electricity.................... — 2.8 Debits to individual accounts............... +14.1 Life Insurance Sales........................... . —11.3 Member Banks (24): — + + + 31.6 52.2 7.6 13.5 1.4 Oct. 18, ’39, comp, with Sept. 20 , ’39 Oct. 19,'38 Gross deposits........................................ + 3.4% + 11.9% Loans...................................................... + 3.7 + 8.4 Investments............................................+ 11 — 2.0 HE upward trends in Eighth District trade and industry, which began last spring, con tinued at a greatly accelerated rate through September and the first half of October. While the war in Europe had the effect of stimulating buying of merchandise of all descriptions and was responsible for speculative purchasing of both raw materials and finished goods, the expanded volume of demand in many lines emanated largely from domestic sources. While inquiries from abroad were in considerable volume, both from neutral countries and those at war, relatively few orders for export have actually been placed. Buying in a large measure reflected efforts on the part of manu facturers and distributors to augment inventories and to provide for real and prospective require ments prior to anticipated price advances. T In point of incoming orders, September volumes booked in many important lines were the largest since the fall of 1937. While continuing substan tially greater than a year ago, the rate since Octo ber 1 has declined noticeably, and there has been a tendency in commodity prices to level off subse quent to the drastic advances which took place im mediately following the outbreak of hostilities on September 1. Declines were recorded in prices of foodstuffs and the general run of farm products in late September from the levels attained earlier in that month. On the other hand, prices of iron, steel and some other industrial commodities, which par ticipated in the general upward movement, have been maintained and in some instances, bettered. Page 2 Production of manufactured goods, both durable and nondurable, which rose sharply under impetus of the war in September, continued to increase dur ing the first half of October. The expansion was in response to heavily increased unfilled orders, and was accompanied by a corresponding advance in employment and payrolls, which in a number of industries were the highest in more than two years. Outstanding was the increase in activities in the iron and steel industry and in manufactures based largely on steel, such as machinery, railway equip ment, machine tools, engines, etc. Steel ingot pro duction at mid-October had advanced to 77 per cent of rated capacity, which compares with 66.5 per cent and 45.5 per cent, respectively, a month and a year earlier. At mines in this area, production of bituminous coal in September increased in considerably more than the seasonal amount, and was 10.7 per cent greater than in September, 1938. Reflecting prin cipally heavy production in the new Illinois oil fields, output of petroleum in September and early October continued the steady increases of earlier months this year. Activities at lead and zinc mines expanded noticeably in response to higher prices and broader demand, September output being about 12 per cent larger than in August, and the best since the fall of 1937. Production at textile mills increased, while output of flour at district mills was the highest for any month since August, 1936. Lumber production underwent sharp expansion, and orders booked in September were the highest for the month since 1929. Consumption of electric power by industrial users in the principal cities in September was greater by 7.6 per cent than for the same month last year. Despite the handicap of unseasonably high tem peratures throughout the month, retail trade in both the large urban centers and country during September carried further the gains recorded earlier in the year. Sales of department stores in the prin cipal cities in September were 29.4 per cent greater than in August and 5.2 per cent larger than in Sep tember, 1938; cumulative total for the first three quarters this year was larger by 6.1 per cent than for the comparable period a year ago. Commercial failures in the Eighth Federal Re serve District in September, according to Dun and Bradstreet, numbered 26, involving liabilities of $301,000, as against 29 defaults in August with liabilities of $307,000 and 38 defaults for a total of $630,000 in September, 1938. DETAILED SURVEY OF DISTRICT M A N U F A C T U R IN G AND Lines of Commodities Data furnished by Bureau of Census U. S. Dept, of Commerce. Automotive Supplies................................ Boots and Shoes....................................... Drugs and Chemicals............................... Dry Goods............................................... Electrical Supplies.................................... Furniture................................................... Groceries................................................... Hardware.................................................. Tobacco and its Products........................ Miscellaneous............................................ W H O L E S A L IN G Net Sales September, 1939 compared with Aug., ’39 Sept., ’38 +10.6% + 3.0 +11.4 + 3.6 +11.1 +48.4 +26.2 +16.4 — 0.4 +25.2 + 4.4% + 1.3 — 5.0 +12.4 +29.5 +49.0 +25.1 +14.7 + 5.8 +22.1 Stocks Sept. 30,1939 comp, with Sept. 30,1938 +20.8% — 8.5 — 2.3 +10.2 +13.2 +50.5 +13.9 , — 4.9 +14.0 Subsequent to the heavy rush of buying in vir tually all important lines resultant to the outbreak of war in Europe, wholesaling and jobbing trade in late September and the first three weeks of October assumed a more orderly and normal character. In the initial wave of purchasing requirements were fairly well covered and depleted inventories replen ished. While the activity largely reflected the sit uation abroad, a considerable part of it was ac counted for by expansion in domestic business, which had been consistently on the upgrade since last spring. While there has been a substantial volume of inquiries, actual orders received in this district from foreign Governments so far have been relatively light, but numerous interests have forti fied their reserves of raw and finished materials in anticipation of such business. With the single exception of drugs and chem icals, September sales of all lines whose statistics are available to this bank, were greater than a year earlier, and increases from August to September were in most instances measurably greater than the average during the past decade. For all groups combined, the September total was larger by 12.8 per cent and 13.3 per cent, respectively, than a month and a year earlier. Part of the increase in the comparison with a year ago is attributable to higher prices. Automobiles— Combined passenger car, truck and taxicab production in the United States in Septem ber totaled 188,751 as against 99,868 in August and 83,534 in September, 1938. Iron and Steel Products— Activities in the iron and steel industry continued to expand rapidly in late September and during the first half of Octo ber. The heavy buying movement, which com menced with the outbreak of hostilities in Europe, apparently reached its crest in the first week of October, and since that time mills, foundries, ma chine shops and other ferrous working establish ments have increased production in response to sharp customer pressure for delivery of commodi ties purchased. Certain mills and specialty makers have disposed of their capacity for balance of this year, and are accepting no new business calling for shipment prior to December 31. Ingot production at district mills at mid-October had advanced to 77 per cent of capacity, an increase of 11 per cent and 32 per cent, respectively, over a month and a year earlier, and, incidentally, the best rate since the first week of September, 1937. The movement of pig iron to district melters in September was approximately 80 per cent greater than in August and the highest for more than two years. Indications point to a total movement in October equal to that of the preceding month. New buying of pig iron has subsided since the recent advance of $2 per ton, users having pretty thor oughly covered their requirements before the rise. Despite the sharp advance in scrap iron and steel prices, sales during September and the first half of October represent the largest total since the peak of the buying movement in 1937. September production of pig iron for the entire country, according to the magazine “ Steel,” was 2,872,649 tons, the highest for any month since Oc tober, 1937, and comparing with 2,660,513 tons in August and 1,683,097 tons in September, 1938. Steel ingot production in the United States in September was 4,231,310 tons, against 3,763,418 tons in August and 2,647,129 tons in September, 1938. MINING AND O IL Coal— Reflecting marked improvement in indus trial and export demand and heavy deliveries to retail yards and public institutions, the trend of coal prices has been noticeably upward during the past six weeks. Consumption of heating sizes, however, was considerably curtailed by the almost unprecedented warm weather through September and early October. September output of bituminous coal at mines in this general area was 10,892,000 tons, 17.8 per cent and 10.7 per cent greater, respectively, than a month and a year earlier. For the entire country, production of soft coal in September totaled 37,695.000 tons, against 34,688,000 tons in August and 32.286.000 tons in September, 1938; output for the first nine months totaled 262,775,000 tons, as against 234.952.000 tons for the first three quarters of 1938. At Illinois mines production in September amounted to 3,476,518 tons, against 2,884,255 tons in August and 3,329,526 tons in September, 1938. There were 97 mines in operation in September, Page 3 with 27,003 men on payrolls, as against 84 active mines and 24,221 operatives in August. Stimulated by the sharp upturn in prices and demand, production of lead and zinc ore and ship ments of concentrates during the six weeks ended October 14 were the largest for any similar period since 1937. Petroleum— August output of crude oil in states of the Eighth District was 6.3 per cent more than in July and 170.0 per cent greater than in August, 1938. Cumulative total for the first eight months this year was 153.0 per cent in excess of the cor responding period in 1938. Stocks on September 1 were 2.4 per cent and 11.9 per cent greater, re spectively, than a month and a year earlier. De tailed production and stocks by states are given in the following table: fTn Ac of barrels) Arkansas..................... Illinois......................... Indiana........................ Kentucky.................... Totals...................... Production AuS*. July* Aug., 1939 1939 1938 1,419 1,881 1,718 9,852 8,737 2,062 136 115 92 539 503 553 11,946 11,236 4,425 Cumulative 1939 1938 13,064 11,706 52,304 11,560 653 623 3,794 3,711 69,815 27,600 Stocks Xug., Aug., 1939 1938 1,783 2,415 14,026 11,608 3,449 3,231 1,422 1,221 20,680 18,475 W H ISK E Y Reflecting seasonal activity, 18 of the 60 Ken tucky distilleries are in operation, an increase of 10 as compared with a month earlier. Owing to the European imbroglio, certain sections of the trade expect less competition from foreign whiskies. Older inspections, it is reported, have stiffened in price because of reduced inventories of Scotch whiskies. August output of Kentucky whiskey was reported considerably in excess of August, 1938, when production reached its lowest point since the repeal of the Prohibition Amendment. This is not necessarily significant because during August rela tively little liquor is manufactured. On the other hand, tax-paid withdrawals in Kentucky showed a 15 per cent gain in August this year over the same month in 1938, the gallonage represented being 1,610,000 compared with 1,400,155. TR A N SPO R TA TIO N According to officials of the reporting lines, freight traffic handled by railroads operating in this area during September showed considerably more than the usual seasonal increase. The movement during the first two weeks of October was measur ably greater than for the same period a year ago, and for the first time this year the volume exceeded that in 1937. The St. Louis Terminal Railway Association, which handles interchanges for 28 connecting lines, interchanged 86,729 loads in September, against 76,969 loads in August and 76,337 loads in Septem Page 4 ber, 1938. During the first nine days of October the interchange amounted to 27,102 loads, which compares with 22,991 loads during the correspond ing interval in September and 23,249 loads during the first nine days of October, 1938. Passenger traffic of the reporting lines in September showed a decrease of 6 per cent in number of passengers car ried and of 3 per cent in revenue, as compared with the same month in 1938. Estimated tonnage of the Federal Barge Line be tween St. Louis and New Orleans in September was 154,700 tons, as against 227,887 tons in Au gust and 227,654 tons in September, 1938; cumu lative tonnage for the first nine months this year was 1,398,160 tons, or 23.7 per cent less than for the like period in 1938. For the entire country, loadings of revenue freight for the first 40 weeks this year, or to October 7, totaled 25,260,361 cars, against 22,841,771 cars for the same period in 1938 and 29,958,208 cars in 1937. R E TA IL TRADE Department Stores— The trend of retail trade in the Eighth District, as reflected in statistics of de partment stores in the principal cities which report to this bank, is shown in the following comparative statement: Stocks on Hand Net Sales Stock Turnover September, 1939 9 mos. 1939 Sept. 30,1939 compared with to same com p, with Aug., 1939 Sept., 1938 period 1938 Sept. 30,1938 + 47 .2% + 3.2% - 0.6% - 1-8% Little R ock, A rk. + 6.0 + 31.9 + 7.9 + 3.6 Louisville, K y ___ + 16.2 + 6.1 + 5.8 — 0.03 Memphis, T e n n ... + 20.8 + 8.2 + 9.1 + 5.7 , + 4.2 + 18.7 +23.1 — 3.7 Quincy, 111. , + 5.9 + 11.0 — 4.4 + 8.8 . +34.1 + 4.1 + 5.1 — 3.2 , +18.1 + 6.5 + 6.4 + 3.5 , + 20 .0 +15.2 +13.9 + 8.9 _ 8th F. R . District_ . +29.4 + 5.2 + 6.1 — 0.5 Jan .1 ,to Sept. 30, 1938 1.97 1.98 2.31 2.08 3.03 2.71 2.52 2.24 2.12 1.61 2.83 2.22 3.34 2.96 2.35 2.11 2.36 2.07 3.02 2.69 of accounts and notes receivable outstanding September 1, 1939, collected during Sep tember, by cities: Installment Accounts Forth S m ith............ % Little R o c k _ 14.7 _ Louisville......... 14.1 Memphis..........23.3 Excl. Instal. Accounts 41.4% 36.2 47.8 42.8 Installment Accounts Quincy.......................... % St. Louis............. 18.5 Other C ities....... 14.6 8th F. R . D ist... 17.9 Excl. Instal. Accounts 47.6% 50.6 43.7 46.9 Specialty Stores— September results in men’s fur nishings and boot and shoe lines are shown in the following table: Stocks on Hand Net September, 1939 9 mos. 1939 compared with to same Aug., 1939 Sept., 1938 period 1938 - 4.0% + 3 .7 ^ Men’s Furnishings.. . +70.3* Boots and Shoes___ + 46.2 — 2.7 + 1.4 Stock Turnover Sept. 30,1939 Jan. 1, to com p, with Sept. 30, Sept., 30,1938 1939 1938 + 8.8% 1.86 1.69 + 5.3 5.40 5.28 Percentage of accounts and notes receivable out standing September 1, 1939, collected during Sep tember : Men’s Furnishings........................... 34.4% Boots and Shoes................ 34.7% AGRICULTURE Combined receipts from the sale of principal farm products and Government benefit payments to farmers in states including the Eighth District dur ing the period January-August, 1937, 1938 and 1939, and during August, 1938 and 1939, are given in the following table: Hn August of dollars) 1939 1938 $ 26,538 Indiana......... $ 21,941 Illinois.......... 35,547 41,195 Missouri........ 21,769 21,904 K en tu ck y.... 9,012 10,439 Tennessee.... 6,384 6,887 Mississippi... 5,248 4,140 A rkansas.. . . 4,152 4,469 Totals....... $104,053 $115,572 Cumulative for 8 months 1939 1938 1937 $159,886 $174,602 $198,003 305,662 305,285 332,025 150,845 152,850 172,644 87,568 106,492 108,515 70,602 74,854 78,389 55,662 55,372 66,347 47,225 50,953 57,349 $877,450 $920,408 $1,013,272 Farming Conditions— Weather conditions during September and early October in the Eighth Dis trict were varied in their effect on actual and pros pective crop production. Taken as a whole, how ever, there was relatively little change in the out look for yields as of October 1 as contrasted with a month earlier. In the case of the principal crops and many lesser ones, according to the U. S. De partment of Agriculture, agricultural departments of the several states and other informed sources, the year has been characterized by bountiful pro duction, fully ample for all normal food, feed, fibre, and other needs supplied by the soil. The abnormally high temperatures and dearth of rainfall in September resulted in some injury to field crops and tree fruits. Pastures suffered more or less severely, and prospects for pasturing wheat this fall and for winter wheat production next year also declined. Maturing of late crops was in ordinately rushed, but fortunately they were too far advanced to be seriously injured by the late season drought. Drying of pastures was reflected in a rather general drop in milk production from the high levels earlier in the year. In some sec tions progress of wheat seeding is the most back ward since 1925. Rains which fell over wide areas in early October improved the wheat situation. An offset to damage wrought by the hot, clear Septem ber weather, was the ideal conditions it furnished for harvesting late crops, and obviating the danger of killing frosts. Following the outbreak of war in Europe, prices of farm products advanced at a speedy rate. As of September 23, the farm products group of the U. S. Bureau of Labor Statistics index reached 69.5 per cent of the 1926 average, an advance of 8.4 points from the August 26 level. More recently restora tion of greater stability in all markets resulted in a loss of part of the increase, the recorded figure as of October 7 being 66.8 per cent of the 1926 average. Corn— With harvesting of the crop in progress at an unusually early date, and virtually no frost damage, Eighth District production of corn is esti mated by the U. S. Department of Agriculture in its October 1 report at 333,400,000 bushels, about equal to last year’s crop and comparing with the 16-year (1923-1938) average of 330,136,000 bushels. Quality is in the main good, with unusually low moisture tests reported for this early in the season. In states of this district the October 1 carryover of corn is the largest of record, 179,094,000 bushels, against 150,750,000 bushels last year and the 10year (1928-1937) average of 54,470,000 bushels, but about half of the total is sealed corn on which a Government loan has been made. Cotton — Eighth District cotton prospects de clined somewhat during September, the U. S. De partment of Agriculture in its report based on con ditions as of October 1 estimating the yield at 3.338.000 bales, a decrease of 141,000 bales under the September 1 forecast, and comparing with 3.386.000 bales harvested in 1938 and the 16-year (1923-1938) average of 2,924,000 bales. Deteriora tion was caused by the extremely hot and dry weather. Bolls opened prematurely and plants threw off practically all small fruit, with the result that there will be little or no top crop in many localities. It appears, also, that boll weevil dam age was heavier than indicated earlier in the sea son. Picking in the southern counties has been completed, and only a small part of the crop re mains in fields of the northern stretches. Demand for raw cotton, both for domestic con sumption and export, continued active. Trade re ports indicate that domestic mill activity increased more than usual during late September and the first half of October. Prices of middling cotton for the week ended October 7 averaged 9.03^ per pound as compared with 8.99^ in the preceding week and 8.74^ a year ago. Combined receipts at Arkansas and Missouri compresses from August 1 to October 13 totaled 1,004,497 bales, as against 1,115,635 bales during the corresponding period last year. Shipments dur ing the same period amounted to 391,921 bales, against 236,201 bales for the same interval in 1938. Stocks on hand as of October 13 were 1,976,572 bales, which compares with 1,551,989 bales on Sep tember 15 and 1,686,022 bales on the corresponding date in 1938. This accumulation is causing no ap prehension, as practically all cotton reaching the compress points is purchased cotton, and heavy forwardings during the balance of October and in November are anticipated. Bureau of the Census report shows, for the entire country, 6,686,712 bales Page 5 ginned from the 1939 crop prior to October 1, com pared with 6,577,109 bales for 1938 and 8,260,071 bales for 1937. Livestock— Wholesale prices of beef, fresh pork and lamb declined rather sharply during the last three weeks of September and early October from the peak levels reached following the outbreak of the war in Europe. The decline was incident to the return of more normal supplies and orderly pur chasing by consumers. The movement to market in September was considerably greater than in the preceding month and a year ago. Generally throughout the district the condition of herds maintained the high average which marked the past eighteen months or more. There is a min imum of disease and for the most part all species are in good flesh. The drought in late August and September heavily reduced pasture efficiency, and in some areas, stock water was scarce. The droughty conditions caused a reduction in milk production from the record high levels of the pre ceding several months. Receipts and shipments at St. Louis as reported by the National Stock Yards were as follows: Sept., 1939 160,437 194,583 1.479 100,550 457,049 Horses and M ules. . . . Sheep ................................. T o t a ls ........................... . Receipts Aug., Sept., 1939 1938 134,071 153,385 203,260 185,305 2,729 2,885 86,673 77,418 426,733 418,993 Shipments Sept., Sept., Aug., 1939 1938 1939 112,858 87,228 98,596 119,841 130,926 110,698 2,880 1,520 2,629 32,536 36,231 46,803 248,405 281,022 253,319 sence of rain in September caused rapid drying of burley tobacco in barns, the ultimate effect of which is yet to be determined in the final curing. Owing to delay in sales of the eastern flue-cured crop, there has been talk of delaying opening of the burley markets until after the Christmas holidays. In the Green River and stemming district the crop has been harvested, but hot, dry w^eather has retarded curing. Harvesting has also been com pleted in the one sucker and dark fired districts. In all districts, as of mid-October, wet weather was needed to accomplish best curing results. BUILDING The dollar value of permits issued for new con struction in the five largest cities of the district in September was 52.3 per cent less than in August and 4.9 per cent under September, 1938. Accord ing to statistics compiled by the F. W . Dodge Cor poration, construction contracts let in the Eighth District in September amounted to $21,274,000, which compares with $19,163,000 in August and $20,880,000 in September, 1938. Building figures for September follow : New Construction (Cost in Permits Cost thousands 1939 1938 1939 1938 Evansville . 37 24 $ 118 I; 123 Little R o c k .... 34 24 95 160 134 103 248 552 241 496 279 318 St. Louis. 235 271 688 576 . 719 663 1,645 1,729 Aug. “ . 757 702 3,451 2,031 July “ . 668 573 2,777 1,360 Repairs, etc. Permits Cost 1939 1938 1939 1938 115 115 $ 62 $ 29 82 83 27 36 44 49 152 43 172 158 160 387 176 220 149 131 590 553 521 726 709 531 886 377 634 529 417 287 COM M ODITY PRICES CONSUMPTION OF ELECTRICITY Range of prices in the St. Louis market between September 15, 1939, and October 16, 1939, with closing quotations on the latter date and on Octo ber 15, 1938, follow s: Public utilities companies in six large cities of the district report consumption of electric current by selected industrial customers in September as being 2.8 per cent less than in August and 7.6 per cent greater than in September, 1938. Detailed figures follow : ______________ Close *July............ Oct. 15, 1938 $ .63^ • 64K • 63H .70K .66M .86 .85 .80 .78 .90 .86^ • 54^ • 573^ • 55^ .61H .64 • 46M • 48M .49H .49 .58 .49M .50^ .49^ .60 .47 .43^ .45 • 34K .35K .34 .39 .30^ • 31H .30 • 33H 6.70 6.55 .0885 8.00 5.85 6.15 .0810 5.75 MVS u a a .82K .9I K .90M * “ “ N o . 2 m ix e d . “ N o . 2 w h it e .. O ats * D e c ................... * M a y .................. i t *July.................. u N o . 2 w h it e .. Flour Soft p atent___ per b b l . . Spring “ ___ M iddling Cott< . per l b . . . . per cw t. . H ogs on H o o f. *N om in al quotations. $ .7 7 % .77Vs .75Vs bo o per b u .. .$ .83^ O ct. 16, 193 Oct. 16, 1939 \i -~ W heat * D e c ............... * M a y ............. *J u ly.............. N o . 2 red winter. N o . 2 hard “ Corn * D e c ................... * M a y .................. Low L ow 4*9 High H ig h AQVs A2Vs A5% .33^ • 32^ .22H .22% .SOU .2 2 H 5.85 @ 6.15 6.15 @ 6.45 .0870 6.35 @ 7.15 3.45 @ 3.75 5.15 @ 5.45 .0805 7.40 @ 7.55 .35H .27 Tobacco— Eighth District tobacco prospects de clined slightly in September, the October 1 estimate of the U. S. Department of Agriculture being 257,902.000 pounds, which is 2,241,000 pounds less than the September 1 forecast, and compares with 241,254.000 pounds harvested in 1938 and the 16-year (1923-1938) average of 285,704,000 pounds. A b Page 6 N o. of (K .W .H . Customki thous.) ^ers Evansville .. 40 Little R o ck .. ... . 34 Louisville .. 82 Memphis. .. 31 Pine Bluff .. 20 St. Louis. .. 214 . 421 Sept., 1939 K.W .H . 2,455 2,443 10,279 2,470 689 27,672 46,008 Aug., 1939 K.W .H . 3,233 2,467 9,725 2,462 658 28,782 47,327 Sept., 1938 K.W .H . 2,116 2,355 8,886 2,552 910 25,947 42,766 September, 1939 compared with Aug.,1939 Sept., 1938 —24.1% + 16 .0% — 1.0 + 3.7 + 5.7 + 15 .7 + 0.3 — 3.2 + 4.7 —24.3 — 3.9 + 6.6 — 2.8 + 7.6 PO STA L RECEIPTS Returns from the five largest cities of the district show an increase of 2.8 per cent in combined postal receipts for the third quarter this year over the cor responding period in 1938 and a decrease of 5.6 per cent under the quarter ended June 30, 1939. De tailed figures follow : Quarter Ending;: Sept. 30, 1939 $ 175,268 216,560 687,714 Louisville....................... 648,666 Memphis........................ St. Louis......................... 2.526,044 T otals.......................... 14,254,252 June 30, 1939 $ 178,941 244,701 720,030 676,685 2,687,797 $4,508,154 Sept. 30, 1938 1 151,988 219,883 658,114 624,890 2,482,005 $4,136,880 Comp. 3rd Qtrs. 1939 and 1938 + 15.3% — 1.5 + 4.5 + 3.8 + 1.8 + 2.8 B A N K IN G A N D F IN A N C E Seasonal requirements of commercial interests and for financing agricultural operations, plus stimulation resulting from the impact of war in Europe, were reflected in a noticeable expansion in demand for credit in the Eighth District through September and the first half of October. Accord ing to officials of banks, both in the large cities and country, demands are more diversified as to classes of borrowers and purposes for which funds will be used than has been the case in a number of years. The upturn in purchasing of commodities for advance requirements and to augment inven tories has resulted in the increasing of their credit lines by numerous merchants and manufacturers. On the other hand, loanable resources of the com mercial banks continued the upward trend of re cent months, and no appreciable change in interest rates was in evidence, though a slightly firmer tone was noted in certain quarters. Routine liquidation of commercial and industrial loans was in consid erable volume, reflecting generally good collections, particularly in industries with wT hich October is an important settlement month. Member Banks— In the four-week interval, Sep tember 20-0ctober 18, total loans and investments of reporting member banks in the principal cities increased 2.4 per cent, loans reaching the highest point since the spring of 1932. Gross deposits con tinued to mount and at $1,088,773,000 on October 18 established an all time high record. Reserve bal ances also moved further upward and at the end of the period were 23.5 per cent over last year. Statement of the principal resource and liability items of the reporting member banks follows: Oct. 18, (In thousands of dollars) 1939 Commercial, industrial, and agricultural loans. . $199,502 Open market paper............................................... 7,307 Loans to brokers and dealers.............................. 4,399 Other loans to purchase and carry securities. . . . 13,429 Real estate loans.................................................. 51,564 Loans to banks...................................................... 2,735 Other loans........................................................... 52,768 Treasury bills....................................................... 8,496 Treasury notes...................................................... 52,076 U. S. bonds........................................................... 139,923 Obligations guaranteed by U. S. Government... 64,731 98,816 185,687 Demand deposits475,247 190,016 19,787 339,494 Borrowings................................................... Sept. 20, 1939 +10,837 + 1,149 — 711 — 298 + 74 + 51 + 806 + 5,990 ) + 1,841 } — 1,265 ) — 1,136 — 1,357 + 8,887 + 7,018 + 250 — 1,077 +20,734 Oct. 19, 1938 + 4,347 + 3,439 — 1,655 + 780 + 3,318 — 2,456 +17,813 — 9,069 + 2,021 — 307 +50,705 +40,400 + 3,597 + 1,882 +59,108 *Other than inter-bank and Government deposits, less cash items on hand or in process of collection. Above figures are for 24 member banks in St. Louis, Louisville, Memphis, Little Rock and Evansville. Their resources comprise approximately 62.0% of the resources of all member banks in this district. The aggregate amount of savings deposits held by selected member banks on October 4 was a shade less than on September 6, but 2.7 per cent greater than on October 5, 1938. As of the week ended October 15, interest rates charged at downtown St. Louis banks were as fol lows : Customers’ prime commercial paper, 1% to 5% per cent; collateral loans, 2y2 to 6 per cent; loans secured by warehouse receipts, 2 to 5y2 per cent and interbank loans, 2y2 to 5% per cent. Federal Reserve Operations—The volume of the major operations of the Federal Reserve Bank of St. Louis, during September, 1939, is indicated be low : (Incl. Louisville, Memphis, Little Rock branches) Checks (cash items) handled...................................... Collections (non-cash items) handled......................... Transfers of funds......................................................... Currency received and counted.................................... Coin received and counted........................................... Rediscounts, advances and commitments.................. New issues, redemptions, and exchanges of securi ties as fiscal agent of U. S. Gov’t., etc.................... Bills and securities in custody—coupons clipped........ ________ Pieces 5,216,723 “ 142,772 4,738 8,027,664 9,725,629 17 Amounts $1,149,937,086 33,543,277 298,734,119 25,510,797 1,387,607 759,000 15,034 22,341 20,184,128 Changes in the principal assets and liabilities of this bank appear in the following table: Oct. 19, 1939 $ 22 206 (In thousands of dollars) Industrial advances under Sec. 13b. . .. Other advances and rediscounts.......... Bills bought (including participations). U. S. securities...................................... 92,002 Total earning assets., 92,230 Total reserves. Total deposits. 426,919 328,440 187,210 Industrial commitments under Sec. 13b.. Ratio of reserve to deposit and F. R. Note liabilities............................... 415 82.8% Change from Sept. 19, Oct. 19, 1939 1938 — 36 + 4 + 37 — 49 — 2 — 2 —33,101 —14,789 —33,062 —14,876 +24,661 —12,686 + 4,256 +71,244 +52,106 + 6,740 — — 9 6.0% 209 + 4.9% Following are the rates of this bank for accom modations'under the Federal Reserve A ct: Advances to banks, secured by direct obligations of the United States, under paragraph 13 of Section 13....................1 % per annum Advances to member banks, under paragraph 8 of Section 13, secured by direct obligations of the United States or by such Government guaranteed obligations as are eligible for collateral thereunder......................................................... 1 % per annum Rediscounts and other advances to member banks under Sections 13 and 13a.............................................................. 1M% Per annum Advances to member banks under Section 10b...................... 2 % per annum Advances to individuals, firms, and corporations, other than banks, secured by direct obligations of the United States, under paragraph 13 of Section 13.................................4 % per annum Rediscounts, purchases, and advances to member banks, nonmember banks, and other financing institutions, under Section 13b: (a) On portion for which such institution is obligated.......3%% per annum (b) On remaining portion..................................................... 4 % per annum Commitments, not exceeding 6 months, to member banks, nonmember banks, and other financing institutions, to re discount, purchase, or make advances, under Section 13b... Yi% flat Advances to established industrial or commercial businesses (4 % to under Section 13b................................................................ 15H% per annum Debits to Individual Accounts—The following comparative table of debits to individual accounts reflects spending trends in this district: (In thousands of dollars) Sept., 1939 Aug., 1939 ; 41,103 $ 36,170 $: 5,055 5,469 28,303 30,907 10,721 12,575 3,736 6,173 2,412 1,478 38,096 40,396 143,696 154,517 105,381 161,911 8,501 8,943 6,217 10,599 7,631 8,218 569,110 528,573 St. Louis, Mo............. 1,910 2,167 13,592 15,276 Springfield, Mo.......... 8,393 6,191 Texarkana, Ark.-Tex.. i & Totals..................... $1,078,169 \ 945,251 S Stock Yards, 111..... El Dorado, Ark......... Evansville, Ind.......... Fort Smith, Ark........ Greenville, Miss......... Helena, Ark............... Little Rock, Ark. Louisville, K y ............ Memphis, Tenn.......... Owensboro, K y .......... Pine Bluff, Ark.......... (Completed October 23, 1939) $ Sept., 1938 36,407 5,962 25,135 12,606 5,024 2,158 35,061 143,092 124,315 5,984 11,173 7,382 502,100 1,872 13,766 7,616 939,653 Sept.,1939, comp.with Aug.,1939 Sept.,1938 +13.6% + 8.2 + 9.2 +17.3 +65.2 +63.2 + 6.0 + 7.5 +53.6 + 5.2 +70.5 + 7.7 + 7.7 . +13.5 +12.4 +34.0 +14.1 +12.9% — 8.3 +23.0 — 0.2 +22.9 +11.8 +15.2 + 8.0 +30.2 +49.4 — 5.9 +11.3 +13.3 +15.8 +11.0 + 8.9 +13.5 Page 7 NATIONAL SUM M ARY OF BUSINESS CONDITIONS BY BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM IN D U S T R IA L P R O D U C T IO N PERCENT PERCENT Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January, 1934, to September, 1939. Latest figure 110. FREIGHT-CAR LOADINGS Index of total loadings of revenue freight, adjusted for seasonal variation, 1923-1925 average = 100. By months, January, 1934, to September, 1939. Latest figure 77. WHOLESALE PRICES Volume of industrial production, which had turned up sharply last summer, advanced still more rapidly in the six weeks after the outbreak of war. Employment also increased but at a less rapid rate. Consumption of goods by industry and by individuals has not ex panded so rapidly as production and orders. Buying of basic com modities, after a burst of activity in early September, has slackened considerably, but orders for many semi-finished goods and for finished products, particularly machinery and railroad equipment, have con tinued in large volume. Most orders have come from domestic sources. Prices of basic commodities advanced sharply in the early part of September, but in recent weeks prices of foodstuffs have declined while prices of industrial materials in most instances have been main tained. Prices of finished goods have shown a much smaller advance. Production—In September the Board's seasonally adjusted index of industrial production advanced to 110 per cent of the 1923-1925 aver age as compared with 103 in August and 92 last spring. Increases in output of iron and steel, flour, sugar, meat products, and petroleum were particularly marked in September. In the steel industry ingot production rose from an average rate of 61 per cent of capacity in Au gust to 71 in September. In the first three weeks of October the rate advanced further to 90 per cent and actual volume of output was at the highest level on record. Flour production rose to near record levels and at meat-packing establishments activity was at the highest rate reached in several years. The sharp increase in output of crude petroleum followed a considerable reduction in the previous month and currently production is at about the high rate prevailing before wells were closed in the latter half of August. In other industries increases in activity, though quite general, were not so marked. Automobile production showed a sharp seasonal rise as volume production of new model cars was begun at most plants, and in related lines, such as plate glass, activity also increased. Textile production increased somewhat further from the high level reached earlier. Shoe production, however, which had been in large volume in the first eight months of the year, decreased in September. Mineral production advanced generally and iron ore shipment schedules were expanded to build up stocks at lower lake ports before the close of the shipping season. Value of construction contracts, as reported by the F. W. Dodge Corporation, rose further in September, reflecting a contraseasonal increase in private residential building. Other private construction showed little change and there was some reduction in the volume of new public projects, both residential and nonresidential. Distribution—In September and the early part of October depart ment store sales increased considerably. Freight-car loadings also advanced sharply, with the most marked increases reported in ship ments of coal and of miscellaneous freight, which includes most manufactured products. Indexes compiled by the United States Bureau of Labor Statistics, 1926 = 100. By weeks, 1934 to week ending October 14, 1939. MEMBER BANKS IN 101 LEADING CITIES Commodity Prices—Wholesale prices of foodstuffs declined after the middle of September, following sharp advances earlier in the month. Prices of industrial commodities, which rose considerably until the third week in September, subsequently were generally main tained, although prices of some materials, such as steel scrap, hides, and rubber, declined from earlier peak levels. Bank Credit—Following reductions during the early part of Septem ber, Government security holdings by member banks in 101 leading cities increased somewhat during the three weeks ending October 11, reflecting largely the purchase of Treasury bills. Commercial loans continued to increase, but at a less rapid rate than in late August and early September. The volume of demand deposits at city banks also increased further. Excess reserves, which had increased sharply at member banks during the first half of September, showed further mod erate increases during the four weeks ending October 11. Wednesday figures for reporting member banks in 101 leading cities, September 5, 1934, to October 11, 1939. Commercial loans, which include industrial and agricultural loans, represent prior to May 19,1937, so-called “ Other loans” as then reported. Page 8 Money Rates and Bond Yields—Prices of United States Govern ment securities increased in the latter part of September and the first half of October, following sharp declines early in September. Average yields on long-term Treasury bonds declined from 2.79 per cent on September 21 to 2.62 per cent on October 16. Yields on Treasury notes declined to 0.78 per cent from 1.30 per cent early in September.