Business Conditions: July 31, 1922, Volume 5, Number 7
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EASONAL activities in the Seventh Fed market Government securities showed the chief S eral Reserve District are becoming more strength. pronounced with a cautious tendency on the The continuance of present activities in part of business on account of the coal strike manufacturing depends upon further develop and the threatened railroad tie-up. Banking ments in the coal strike. A shortage of coal conditions continue to improve, and seasonal for the present winter seems probable. The demands for money are beginning to assert production of automobiles and trucks showed themselves. The labor demands of agriculture a marked increase in June. Although the and work on the roads have relieved the un manufacture of wholesale clothing is more ac employment situation. The demand for build tive than a month ago, it is still less than for ing materials exceeds the supply, showing its the corresponding season last year. Revenue principal strength in city markets. The move freight carloadings during June increased. The ment of merchandise has improved, especially demand for cars to move the crops is just be in wholesale groceries. Shoe sales for the ginning to be felt. month show the first gains since January, 1922, and the demand for hardware is good. Money and Banking All merchandising shows a general tendency to The seasonal demand from trade and in bring inventories up to last year. dustry for accommodation is slowly beginning Crops generally are below expectations of a to assert itself in some sections of the district, month ago; the corn crop promises to be up although reductions through liquidation con to the preceding five-year average. Threshing tinue to more than offset the increased require reports on winter wheat show returns from ments. As an outlet for surplus funds, in all parts of the district lighter than expected. dividual banks are not only increasing their The export demand for grain is very good, investments in bonds, but are also coming into and new wheat is just beginning to move to the market for commercial paper, especially in market. The pea-canning pack is considerably the larger centers. larger than last year. Live stock held up well The gradual working out of less desirable during June; production and receipts of butter, paper in the banks of the district has been cheese, and poultry continued to increase. made possible by higher prices for farm prod The extent to which the volume of business ucts and generally better conditions. This has has improved in this district is reflected in the resulted in a marked improvement in the debits by member banks which are larger than character of the paper held. Proceeds from for any month since January, 1921. The rates the marketing of crops and live stock have on bankers’ acceptances ranged from to $4 lessened the strain in the agricultural sections, per cent lower than in May. In the bond and, together with the favorable outlook, have Compiled July 26, 1922 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis contributed to a general feeling of confidence and Purchase rates ranged from 3 to 3 % per cent, optimism. Evidence of improved conditions is compared with 3 % to 3 ^ per cent in May. Matur given in repayments to the Wa’r Finance Corpor ities of bills purchased were divided as follows: ation of advances for agricultural and live stock 30-day, 19.5 per cent; 60-day, 16.8 per cent; 90-day, purposes in this district. Up to July 15, approx 62.7 per cent; and 180-day, 1.0 per cent. Bills were imately 20 per cent of all such advances had been reported drawn against meats and provisions, repaid. coffee, grain, tobacco, hides, and sugar. Money rates reported by Chicago banks showed Operations of six bill dealers in bankers’ accept a further easing tendency in the period from June 15 ances were approximately at the same rate in the to July 15, customary discount rates for prime- five-week pe'riod, June 12 to July 15, as in the pre commercial paper ranging from 5 to 5 per cent, ceding four weeks. Weekly purchases averaged although some loans were made at 4 per cent, $3,239,000, compared with $3,002,000 in the pre as compared with a low of 4J4 in the preceding ceding period, and sales $5,122,000, compared with 30-day period. Customary rates for time paper $4,992,000. Sales to the Federal Reserve bank and secured by prime stock exchange of other current to out-of-town banks increased, while those to local collateral dropped one-half of one per cent and banks decreased. ranged from 4J^ to 5 per cent, with a low of 4 This reserve bank bought bills amounting to per cent. Rates on demand paper did not show a thirty-six millions during June, compared with corresponding reduction. twenty-eight millions the previous month. Sales from holdings were over fourteen millions, an in Commercial Paper and Acceptances crease of six millions over May. Bills held at the Sales of commercial paper in this district in June close of the month show no change from the pre decreased from those of May but increased over ceding month. June last year, as reported to this bank by eight Member Banks in the Seventh Reserve District dealers; four, however, show increased sales from The weekly average of loans and discounts at the preceding month. Most buying originated in reporting member banks for June decreased from the larger centers with a moderate demand from that of May in Chicago, Detroit, and other selected banks. Country banks still show a tendency to cities of this district. Loans on stocks and bonds, hold off because of low rates and many are buying Government securities rather than paper. The de REPORTING MEMBER BANKS, SEVENTH DISTRICT COMPARATIVE POSITION mand for paper still exceeds the supply, but several dealers report fair inquiry for funds from their cus M il l io n s 4F(Do l l a r s Ch ic a g o 1600 tomers. Choice names sold readily at 4 per cent, although rates as high as 5J4 are reported. 1500 Transactions in bankers’ acceptances show large LcAM!?} liscouITS A!io ImvE 5 T M JITS MOO decreases in both bills accepted and bills sold dur 5__ ing June, compared with May, while bills pur 1300 chased continued the increase which started' in J sp. /*■% ’ April. Bills held at the close of the month were 1200 almost double the amount held the same time last L □ A N ! ANO li ISCDUHTS 1100 month. The increase in bills purchased is traceable - ■**v • * • > f to purchases made by four banks, which had done 1000 no buying in May. One especially large buyer in □ e t r d it 500 tmesi-t June had not purchased acceptances since last G i t IS, 5 AHC [hVC3 i j December. Of the twenty-seven banks in the dis 400 ' ^ 1 - D e p c SITS trict reporting di’rect to this bank, twelve show no 300 dealings in bankers’ acceptances during the month. AK 5A aa On icpurr ‘5 ........... *•••» >• 200 BANK TRANSACTIONS IN BANKERS’ ACCEPTANCES 100 Ht h e r S e l e c t e d C it ie s 600 1 500 Lo AMS, Tlstr Imve; T M E N T 5 400 — ••••• ■re.; • — mm* • O e p DSITS X 300 A«ScK s 2 0 0 AM J,JA5DNQ,JFMAM^.J A 51iriiD,i f m A m ,J J une Juy 1320 192.1 1 9 2 2 Monthly Da t a WbemyOata Note—Monthly data are averages of weekly figures. Page 2 July Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis other than Government securities increased, while That the first week in July did not show larger other classes of loans were reduced. Investments debits is partially accounted for by the holiday continued to increase, with Government securities period. proportionately larger than other classes. The The number of business failures in this district increase in time deposits at Chicago member banks in June shows practically no change, as compared was more than offset by the larger decrease in with the month of May, but the liabilities involved demand deposits, while at Detroit member banks were somewhat greater, owing to the failure of one there was marked increase in both time and demand or more large firms having excessive indebtedness. deposits. Deposits in all groups of cities June 21 In the country as a whole, however, both insolvencies decreased partly because of Government withdraw and indebtedness were considerably reduced. als; recovery was made the weeks following, al Position of the Federal Reserve Bank of Chicago though Government deposits continued to decline, The principal changes in the position of the Fed Debits by Banks to Individual Accounts eral Reserve Bank of Chicago, as given by daily The volume of business as measured by the aver averages for June, were increased reserves and age of weekly debits to individual accounts at clear decreased total earning assets, together with a ing' house banks in twenty-four leading centers steady increase through the month in the tatio of of the seventh district was larger in June than in total reserves to deposit and Federal Reserve note any month since January, 1921'. This improvement liabilities combined. The reserve ratio rose from is not confined to the largest cities since debits for 76.8 on June 7, to 88.1 on July 19. Although irregu the twenty smaller clearing house centers were the lar, the loans to member banks did not change largest of any month since April, 1921.