MONTHLY REVIEW QF AGRICULTURAL AND BUSINESS CGNDITIGNS I1V TH E NINTH FEDERAL RESERVE DISTRICT

Val. 7 ( ~~ai5 ) Federal Reserve Bank, Mirrneapolia, Mine. March 28, 1941

Business volume continued to expand during Feb- employment index remained unchanged from Janu- ruary and was at the highest level since 1930. Bank ary and was at the highest February level in our loans increased during the month. Farmers' Bash eight-year records. income in February was the largest Far that month since 1930. Building and construction contracts awarded in this district as reported by the F. W. Dodge Cor- BUSINESS poration totalled $4.6 million in February and were February business volume in this district, aside nearly double t}te volume. Contracts from seasonal changes, continued tv expand and let far industrial building were larger than in Janu- was the largest for the month since 1930. During ary and were substantially larger than in any Feb- the last several years, business volume in agricultural ruary since 1930. Contracts for public utility and trade centers has been expanding somewhat more commercial building were the largest for February rapidly than in other cities. An indication of this since 1931 . Residential building was about ane- trend may be seen by comparing the third larger than in February 1940 and the largest indexes with those far in the table for that month since 192 7 . Hospital, public build- below. The index of bank debits at farming centers ing and social & recreational building contracts has advanced 33 points from 94 in February 1939 to were larger than in January and were the largest 132 in February 1941 while the 94 cities bank deb- February total since 193$ . The $i million of con- its index, which includes all the cities, farming cen- tracts awarded far public works construction in ters as well as other, has increased only 21 points February was nearly three times as large as one year from 99 to 1 20. The index of sales at country de- earlier but was smaller than in February of bath partment stores has advanced 23 points during the 1939 and 1938. period from 102 to 125 while sales at city depart- The valuation of building permits issued in sev- ment stores increased only 14 points from 97 to l 1 1 . enty-nine cities and fawns in this district in Febru- During February, the indexes of rural business--- ary was 2 ~a larger than during February 1940. Cities bank debits at farming centers, country check clear- from the Upper Peninsula of , Montana and ings and country department store sales advanced South Dakota reported substantially larger value. 7, 12, and 3 points respectively while the index of Lions than one year earlier. Minnesota cities reported lumber sales at country lumber yards declined a gain of 5 ~o but permits issued in reporting cities slightly from the unusually high January level. do in North Dakota and Northern Wisconsin averaged the other hand, the index of bank debits at 94 cities well below February 1940, The valuation of permits advanced only 4 points and city department store issued during the i'xrst two months of i 941 averaged sales declined more than seasonally. All of the 32 Iv larger than during the corresponding period above mentioned indexes were at the highest Feb- of 1940 with Montana and Minnesota cities record- xuary level since 1930 ox earlier. ing the largest gains. Department store sales in this district in February hlorthwestern Business Indexes were 3 ~o larger than in the same month one year ( i 935-39=100) earlier. City department stores reported a gain of Feh. tan. Fets. Feh. isat ts4t ts4a zees 4~o aver a year ago, and country store sales were Bank debits-94 cities ...... 120 ! 1 b 1 13 99 1 % larger. Sales at both groups of stores wexe the Bank de~its-farming center~ . . i 32 125 1 T 7 99 largest for the month since 1930. Sales for the two Country check clearings . . . . , . 137 125 121 102 months of January City department store sal~s . . . . i i T 1 15 107 97 and February showed the same City departme~it stare stocks . . . 11 :3 114 1 I 1 102 increase over the corresponding period last year as Country department store sales . 125 122 123 102 the month of February alone. Stores in Montana, Country lumber sales . . , , . . . , , 129 136 121 1 10 South Dakota and northern Wisconsin and Michi- Miace]laneaua carlvadinga . . . . . 122 133 103 95 gan reported sales Total carlvadings (cxcl. misccilancousl 300 95 95 87 gains over February 1940 but Employment-Mine. [ta3G-loGl 107 107 99 96 Minnesota and North Dakota stores reported de- Farm Pricc-Minn, [1924-2G-1001 T6 78 69 7D clines. CarIaadings of miscellaneous freight declined City department store inventories increased less more than seasonally during February but wexe the than seasonally fluxing February but were slightly highest for February since 1930, while the index larger than one year earlier on March 2$. Country of other carloadings advanced to the highest level department store inventories increased as usual dur- far the month since 1931 . Commercial and indus- ing February and were 3 °fv larger than one year trial employment as indicated by the Minnesota earlier.

276 AGRICULTURAL AND BUSINESS CDNDITIQNS March 28 . 1941

Sales at Department Stores year earlier. During the year "Commercial, indus- Hum6eraf Stores Cumulative trial and Agricultural Loans" increased $12 million, Showing ~ Feh. 1941 % f941 "Real Estate Loans" $2 million and "Other Loans" Increase Decrease of Feh.fa4p of 194G which are primarily installment and other consumer Total District ...... 125 i 52 103 1D loans increased $12 million. Investments increased Mpls., 5t. Paul, .Dul.-sup, , . . . . 1 3 9 1 D4 104 Country Stores . . . ., ...... 112 143 101 f01 during February as hanks purchased the usual sup- Minnesota ...... 35 47 99 98 ply of Treasury bills and notes in anticipation of Central Minn...... 6 4 l06 99 their customers demand far those securities at this N~rtheastern Minn . . . , . . 5 4 99 97 season. Deposits increased slightly during the month Red River Valley Minn. . . 4 2 ! Q4 1D2 ~outh Central Minn. . . . . , 6 i 6 94 95 and at the end of February were shout $51 million Southeastern ll~inn. , . . . . 8 7 1 Q 1 lal larger than one year earlier and the largest vn rec- Southwestern Minn, . . . , , 6 14 97 95 ord for that date. Montana ., ...... , . . . . Z3 2Q 1Dfi ia7 Mountains ...... , . . . . , 8 5 1 I D lQ9 The reserve position of Ninth District member Plains ...... 15 15 1 D4 f06 by daily North Dakota , ...... 34 29 96 91 banks as indicated the average of deposits North Central No. Dak. . . 1 8 92 90 and reserves far the last half of February is shown Northwestern No. Dak., , . 4 2 102 9Z in the table below : Red River Valley Nn. Dak, 5 f 2 97 90 Southeastern Na. Dak. . . . 3 7 93 94 Member Bank ReQuire3 Sxcese Red River Valley--Minnesota Reserve 37e'poait;a Reserves Reserves and North Dakota...... 9 14 99 93 Cottnt~Y Iitcnka . ., . ., . ., ...... $ f,9,63(I,OpO $ 34,G4T,000 $24,9$3,OU0 South Dakota . . . 18 17 lU4 fD5 city Bank~ ...... , . ..., . ., 1tu,44s,poo Ts,zsa,ooo sz,214,000 RG2Southeastern 50, Dak. . : . 6 3 106 104 Total Ninth District (1941} . .$LG9,94G .000 $Ip7,7TB,000 . .197,ODp Other Eastern So. Dak. . . 9 9 104 104 Total Ninth District (1940) . . i45,58p,pD0 98,8G~S,000 AT .187,000 Western Sa, Dak...... 3 5 96 97 Wisconsin and Michigan . , . , 22 30 l0f l l} 1 Northern Wis. and Mieh. . 9 14 iD0 iuz AGRICULTi7RE West Central Wis, ...... 13 16 fD[ 1Q0 Farmers' cash income in this district from seven Manufacturing production in this district in Feb- important products, based on terminal receipts and ruary, as measured by the following indicators was prices, declined seasonally in February but was the at the highest level for the month in recent years. largest fox the month since 1931, income from dairy Electric power production declined seasonally but products increased tv the highest February level was the largest February output on record. The in- since 1929, and income from hogs declined much dex of Minnesota manufacturing employment ad- less than usual and was the largest for February vanced slightly from January tv a level of i 0°fo since 19 31 . As a result of a sharp increase in potato above a year earlier and the highest in our eight- marketings and a moderate increase in prices, in- year records. Shipments of linseed oil increased come from potatoes in February was the largest somewhat and were the largest for February in our since 1937. Marketings of both bread and durum 22-year records. Flour production declined season- wheat as well as rye were unusually small and in- ally to slightly below February 1940, when flour come from these items was well below one year production was the largest for that month since earlier but flax marketinga were large, resulting in 193b. More lumber was cut in this area in February the largest February flax income since 1929. than in January, and it was the largest February cut Agriculhtral product prices at terminal markets since 1931 . in this district declined slightly during February but with the exception of January, were on the whole, EANKING the highest for any month since . Country member bank earning assets increased Prices of all classes of cattle declined moderately $5 million to $405 million between the latter half but were nevertheless at the highest February level of January and the latter half of February after since 1930 . Hog prices also declined somewhat but having declined slightly during December and Jan- were well above one year earlier. Lambs and ewes uary. During the last half of February, earning advanced slightly to the highest February level since assets averaged $22 million higher than during the 1930, Ail the grains declined during February and corresponding period of 1940. Investments at coun- with the exception of corn were well below one year try banks have declined during the past year ao the earlier. Prices of potatoes, butter and chickens ad- entire increase in country member bank credit has vanced moderately but eggs declined and wool resulted from a brisk upswing in loans. Deposits remained unchanged at 31 c, the highest it has been also increased about $5 million during the month since . and while being at the highest February level since 1931 were slightly lower than the $551 million The number of cattle and calves on farms and peak reached in . Balances at cor- ranches in our four states increased 520 thousand respondent banks continued to be at or near the all head during 1940 and nearly 3 million head in the reached last November. , completing the third year in the up- time high swing of the cattle production cycle. In spite of the City member bank Iaans increased $2 million sharp rise in livestock population, slaughterings during February. Loans at the end of February both in South St. Paul and in the nation were slight- totalled $214 million, $26 million larger than one ly larger in 1940 than in 1939 and this increase aver NINTH FEDERAL RESERVE DISTRICT 27 7 one year earlier continued during the first two 1940. Prices advanced sharply duxing January and months of 1941, indicating that the point in cattle in February hog prices at South St. Paul averaged numbers has been reached where cattle slaughter $7.30 per hundred, about $2 .5D higher than in can increase at the same time that numbers on farms February 1940. are also increasing . The increase in slaughterings resulted in cold storage holdings of beef vn March The outlook for hags as stated in l'1ze 1Jzt;estnc7c 1 being one-third larger than the five-year median afi.tuatiora is as follows : "It is certain that the num- and one-quarter larger than one year earlier. Also ber of hogs marketed in the first quarter (Dctober- on January i there were 1 1 °fo mare cattle being December} of the 1941-42 marketing year will be fattened for market in the United Skates than one smaller than in those months of 1944, and slaugh- year earlier. Beef cattle prices declined somewhat ter fox the entire calendar year of 1941 will he in February but in spite of the larger supplies than much smaller than in 1940. With the outlook for one year earlier, prices were about $1 .50 per hun- continued improvement in domestic consumer de- dred higher than in February 194D, chiefly because mand conditions in 1941 and smaller maxketings of the increase in consumer demand which has oc- of hags than in 1940, hog prices are expected tv curred during the last year as a result of the sharp average materially higher thia year than in 1940." increase in industrial activity. The number of stock sheep and lambs on farms The cattle outlook as reported by the USDA in and ranches in the United States on January i to- I'1t:e Ii.v~stock ~Sitttira,tian is as follows : "Cattle num- talled nearly 5 D million head, an increase of 2 °~o bers are expected to increase further duxing the next over one year earlier and the largest number since addition to the larger number of two years at least . . . The total live weight of cattle about 1$85 . In there were about b°Jo more sheep and marketed for slaughter during 1941 as a whole is stock sheep one year earlier. Sheep slaugh- expected to be greater than in 1940, but the effect lambs on feed than larger in 1940 than in 1939 of this increase upon the average price received by terings were slightly de- farmers for cattle will be more than offset by Gut because of the improvement in consumer stronger domestic demand conditions this year than mand, cold storage holdings of lamb and mutton about 2 smaller vn March l than an that last , . . Present indications are that cattle prices were afo . The effect of larger sheep numbers will not advance as much throughout the year as date last year slaughterings prices, however, has been they did in 1940, and that they will be higher rela- and on stronger demand for meats and tive tv a year earlier in the first half than in the last more than offset by . half of the year." higher wool prices than one year earlier Lamb pr"aces were favorable throughout 194D and ad- January and February to $10 .5 D per ~N vanced during NUMBER OF CATTLE ON FARivtS ON JAN. l - hundred, $1 .D0 higher than in February 194D . IN UNITED STATES-1870 TO DATE Bo Wool production in 194D in the United States w ~. ~o totaled 454 million pounds, was slightly larger than in 1939, and the largest on record. Apparel wool im- ao ports for consumption in 1940 totalled 223 million sa pounds, 125 million pounds larger than in 1939 and the largest since 1923 . In spite of these larger sup- glies, total wool stocks {excluding wool afloat) an 0 December 31, 1940 were about equal to those of a xa year earlier and were much smaller than the I]ecem- ber 31 stocks in the years 1935-193$ . Beginning in the spring of 1940, wool consumption increased final quarter of 194D was larger ~~~~~ ~i9ao lava isofl- is~o is2o vsso isao .~ ~~--~i sharply and in the than at any time since 191$ and thus in spite of the small consumption during the first part of 194D, the The number of hogs raised in the United States total far the year was larger than in 1939. During during 1940 was 7 7 million head compared to January 194 l , wool consumption was 360 larger about 86 million in 1939. As a result of the srrxaller than in . As a result of this heavy de" crop and the unusually heavy fall slaughterings the mood, which arises in part from rearmament con hags farms on January 1 was only number of on tracts, wool prices have been strong and averaged year 53 million head compared with GD million one 31c far February in this area. earlier. The hog-corn price ratio was unfavorable to hog producers throughout 1940 and in conse- The outlook for wool included in 'l'1z.e iV'nnb S'i.~u- quence the breeding intentions reported by farm- r~tinrz is as follows : "The relatively small carry-aver ers about December 1 indicated that in 1941 the of wool in this country and prospects for a large spring pig crop would again be reduced. Cold stor- mill consumption of wool in 144 i will be strong age holdings of park on March 1 reflected the heavy supporting factors tv domestic wool prates, but wool fall slaughterings and were more than one-third supplies available for shipment from foreign coun- larger than usual. Since December, however, hog tries tv the United States are relatively large, and marketings have declined more than seasonally and any advance in domestic prices from present levels were smaller than in the corresponding period of is likely to be moderate."

278 ~c~~vi.TUx~u. Axn BusuvESS coNnrr~onts March 28, 1443

urousrro~u. PsooucrKia National Summary of Business Conditions COMPILED 8Y THE BOARD DF GDVERNORS OF THE FEbERAL RESERVE SYSTEM, MARCH 19, 1941 Industrial activity and employment increased further in February and the first half of March. Buying by producers and consumers continued in Iarge volume and wholesale commodity prices, particularly of imports, advanced.

K36 ,PN isJ7 Iv3e I9]9 Igp ~I PRDI?UCTIDN: In February volume of industrial output, an a daily average basis, rose mare than seasonally, and the $card's adjusted index advanced from x'ederal Reserve index of physical volume !39 to !4! per cent of the 1935-39 average, of production, adiusted for seasonal varia- tion, 1985-39 averase~100 . 8ubscroups Increases in February, as in other recent months, were largest in the durable goods industries where a large proportion of defense program orders have been shown are expressed in terms of paints in continued the total index. ~y months, fanuary 1936 to plated. Activity to rise sharply at machinery plants, aircraft factories, February 1941 . shipyards, and in the railroad equipment industries, Steel production fluctuated around 96 per cent of capacity in fanuary and February and rose to 49 per cent in the first half of March. New orders for steel continued large and, despite the high 1rf10LE5ALF ARIGES OF auSIC COAIYOprI[9 rate of output, unfilled orders increased further. Many orders have been placed for delivery in the second half of this year, reflecting the prospect of heavy consump- tion and some uncertainty on the part of steel users rcgard9ng future availability of supplies. output of pig iron, coke, and nonferrous metals was likewise at near capacity rates in February and unfilled orders far these products, too, were aL exceptionally high levels . Demand for lumber continued large owing to a high rate of construction activity and output was sustained in large vo~lume far this time of year. Automobile production increased in February and the rlrat half aF March to about the peak rate attained last 1tiIovcmber, Retai! sales of new and used cars advanced to unusually high levels. In industries manufacturing nondura6le goods, activity continued at the record levels reached in the latter part of 1940 . There were further increases in the cotton textile, rubber, and chemical industries and activity at woolen mills also increased, Hureau of Labor Stat[atiea' indexes based following a temporary reduction in ]anuary. In most other lines activity was main- on 12 foodstuffs and 18 industrial materials, tained at the big}, levels of other resent months . August 19aS-100, Thursday figures, Jan- uary 8, 1935 to March 13, 1941 . Coal production rose less than seasonally in February but increased consider- ably in the first half of March when, according to trade reports, there was some inventory accumulation in anticipation of a possible shutdown nn April 1 at the

IAOKEY RMES K1 NEW TORK pTY expiration of the present contract between the mine operators and the miners union. Copper and xinc production increased in February and recently domestic supplies of copper have begun to be supplemented by imports from South America. output of crude petroleum continued at about the rate that had prevailed during the three preceding months. Value of construction contract awards in February declined somewhat more than seasonally, reflecting decreases in bath public and private work, according to reports of the F. W. badge Corporation. Awards for public construction, although sharply reduced Fram the high levels reached in the latter half of 1940, were some- what shove those Qf a year ago, and awards For private construction were nearly half again as large as in February of last year. DISTRISUTiDN : Distribution of commodities to consumers increased more stores Vfeekly averages of daily yields of 3- to than seasonally from fanuary to February. Sales at variety and by mail-order houses were the largest on record, making allowance for usual seasonal changes, 5-year tax-exempt Treasury notes, Tresa- and department stare sales also ury bonds callable after 12 years, and aver- were at a high level. age discount on new issues of Treasury hills Freight-ear loadinga increased by about the usual seasonal amoixnt. Shipments offered within week, For weeks ending Sa~i- of miscellaneous freight, consisting mostly of manufactured products, showed an uary 5, 1935 to March 15, 1941. increase while lvadings of Forest products rose leas than seasonally and grain ship- ments declined. WHOLESALE COMMODITY PRICES : Prices of a number of basic imports race sharply From the early part of February tv the middle of March. Cotton yarns and gray goods and nonferrous metal scrap showed further increases in this period and there were also advances in prises of same other domestic commodities, includ- ing lead, wheat, cotton, and oils and fats. SANK CREDIT: Commercial loans continued to increase at member banks in !Q! leading cities in February and the first half of March and these banks also purchased additional Treasury notes and bills issued in connection with the defense program. As a result of the increase in loans and investments, hank deposits showed a furt}xer marked advance. UNITED STATFS GDVERNMENT SECURITY PRICES: Prices of Government securities increased after , following a sharp decline in the preceding tiVedneaday figures, fanuary 2, 1936 to ten weeks. The 1960-65 bonds on March l5 were about 3%g paints above their March 12, 194I . Commercial loans, which price on 5 and about 1 ~ points below the all-time peak of December 1 D . include industrial and agricultural loans, The yield on this issue, which increased from 2,D3 per cent at Lhe peak in prices reprexent hrinr tar hiay 19, 1987 ao-called on December 10 to 2.30 per cent an February l5, had declined to 2 .14 per cent "Other loans" as then rehartcd . vn h'larrh 15.