Full text of Basic Business News : April 2, 1957 to April 8, 1957

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Published Weekly by the FEDERAL RESERVE BANK of CLEVELAND
April 2. 1957

to

April

8, 195 7

INSTALMENT CREDIT
FELL $65 MILLION

Consumer on-the-cuff buying decreased by $65 million during February, the Federal Reserve Board
has reported. The decline contrasts with · increases
in the like month of 1955 and 1956. At the end of February, consumer
instalment credit outstanding totaled $31.2 billion, or $2.3 bill ion
more than a year earlier. The Board said the decline from January
instalmen~credit stemmed from a $133 million decrease in credit extended for the purchase of goods otner than autos and a $13 million
decline in repair and modernization loans. Seasonally adjusted, however, instalment credit increased $282 million during February, about
$60 million above the monthly average increase in last year's final
quarter, but nearly $49 million below the monthly average rise in the
first quarter of 1956. (Wall St. J., 4/4 p.'5)
EMPLOYMENT HITS
HIGH FOR MARCH

Employment rose to 63.9 million last month, setting
a record for March, the Commerce Department has reported. Unemployment declined to 2.9 million. It
is customary for employment to increase in March and to keep climbing
to a summer peak. Employment last month-was 971,000 greater than in
March 1956. The number of jobless was 134,000 less than in March 1956.
The Government is reporting employment and unemployment by a new
method which reduces employment totals and adds to the unemployed figure . ( N. Y. Times, 4 / 6 p .1 )
Larger payrolls pushed personal income to a record
seasonally adjusted annual rate of $336.7 billion in
February, the Department of Commerce has reported.
This was a climb of $1.7 billion over the January rate, the previous
high, and $21.6 billion above the rate in February last year. Much of
this increase came from higher payrolls in non-manufacturing industries.
(Wall St. J., 4/5 p.4)

PERSONAL INCOME
AT RECORD RATE

Selection of these items does not imply this bank's guaranty of their accuracy,


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nor agreement with th e views expressed.

MARKET LIVENS UP

The stock market ushered in the new month on a somewhat firmer tone for prices and a marked improvement in volume of trading. A more hopeful outlook in Middle Eastern
affairs and growing prospects of a reduction in Government spending
buoyed sentiment. lt is too early, however, to determine whether the
firmer price trend is likely to prove more than a technical recovery
from the sharp decline earlier this year. Nevertheless, spirited trading last Tuesday lifted volume on the Big Board above 2 million shares
for the first time since mid-February. The increased activity helped
push prices nearly a point above the March top, and did much to dispel
some of the gloom. (Forrest. N. Y. Times, 4/7 III p.1-)
FHA APPLICATIONS UP

The Federal Housing Administration received applications to insure mortgages covering 12,102
new homes in February. This was an increase over January's 10,549 applications, but considerably below the 18,507 received in February 1956.
Along with seasonal factors, the uptrend was aided, some officials feel,
by the December increase in the maximum interest rate on insured mortgages to 5% from 4-l/2{o. (Wall St. J., 4/2 p.5~
BRITAIN CUTS
DEFENSE BUDGET

Britain aims to slash the equivalent of $607.6 million from its defense costs in the fiscal year that
started April 1 by "streamlining" its armed forces,
it was disclosed in a Government White Paper. Defense Minister Duncan
Sandys described the fiscal 1958 defense program as "the biggest change
in defense policy ever made in normal times". He said it provides for
a trimming of armed forces during the year to 625,000 men from 690,000.
Stressing that "the on~y existing safeguard against major aggression
is the power to threaten retaliation with nuclear weapons", the White
Paper said Britain's present force of atom-carrying bombers eventually
will be supplemented by ballistic weapons. An "agreement in principle
has recently been reached with the U.S. Government for a supply of
some medium-range missiles of this type". (Wall St. J., 4/5 p.4)
AEC WILL ATTEMPT
FUSION REACTIONS

The Atomic Energy Commission took its biggest step
so far in the hunt to harness the fusion power of
the hydrogen bomb to produce electricity. AEC Chairman Strauss announced that the Agency will build a multi-million dollar
experimental device at Princeton University in which it hopes to be
able to produce fusion reactions. The device will not be a pilot plant
or a prototype of a fusion power plant, but it will make possible experimental work in the fusion field that can't be done with the smaller
devices being used now. (Wall St. J., 4/2 p.10)


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The new quarterly survey of capital appropriations being conducted among the 1,000 largest
manufacturing firms is the latest method for
gauging trends before they show up in statistics. The importance of
this new development for appraising the "always unknown and uncertain
future" was explained by Morris Cohen, senior analyst of the National
Industrial Conference Board. Addressing the Cleveland Business Statistics Section of the American Statistical Association, Mr. Cohen pointed
out that the focus of the appropriations approach is on the decision
to spend at -the time it is made. All recent surveys suggest a slowdown in the capital goods boom. "They also indicate, however, that
the contribution of the manufacturing sector to capital goods spending
will remain high in the months immediately ahead. But capital outlay
by manufacturing concerns will not provide the explosive impact to the
economy that it did last year," Mr. Cohen said. (Bryan. Cleve. Plain
Dealer, 4/3 p.17)

COHEN EXPLAINS
NEW N.I.C.B. SURVEY

Inquiries by industries for new plant sites
are still running at a high level. But,
approximately one-third of all area development groups are currently finding that tight money or business uncertainties are having a noticeable effect on industrial expansion plans,
according to a survey by the Journal of Commerce. Forty-nine area development groups, or about 45% of the total replying to the survey, reported an increase in inquiries. A decrease was reported by l&{o, and
3% reported that the number of incoming inquiries was unchanged. The
survey also showed that l&;o of the 108 area development groups replying
to the survey reported that plans tq build manufacturing plants in
their region had been postponed since last November; &fa reported that
projects had been cancelled; and some · said that plans whiGh had never
been announced had been droppe·d or quietly shelved. (Fish. J. of
Comm. , 4 / 2 p .1)
NEW PLANT SITE QUEST
LEVELS OFF, SURVEY SHOWS

A House of Representatives education subconrrnittee has approved a compromise $2-billion program to help build public schools over the next five years. It voted to allot
half of each year's appropriation, $200 million, to the states on the
basis of their school-age population. The other half would be allocated on the basis of need, giving poorer states more per child than
richer states. The measure will be brought before the full Education
Committee April 11. (N. Y. Herald Trib., 4/6 p.8)

SCHOOL AID
APPROVED

The Banking Committee of the House
approved an omnibus housing bill.
liberalization of the down payment
mortgages; a special preference for veterans

HOUSING
BILL


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of Representatives has
The bill provides for the
schedule of FHA-insured
within the new FHA program;

and authorizat i on fo r use of up to $1 billion of the Veterans Life
Insurance Trust Fund for the direct purchase by the Government of veterans' mortgages. For the Federal National Mortgage Association, the
bill provides $1 billion additional f or its regul ar secondary mortgage
market operation ; $250 mill i on for slum clearance ; and $250 million
for so-called "special as s istance" mortgages. The new FHA down payment s che dule established in the bill woul d be 4% on the fi r st $10,000
of home value, 2a{o on the next $6,000, and 3Cl{o on all in excess of
t hat . Veterans would be required to pay only half of the new rates in
e ach step. (J. of Comm., 4/5 p.1)
In the Pittsburgh area, No. 1 heavy melting scrap steel
dropped about $9 per ton to $43. The new range of $43
to $44 per ton is the lowest price for the grade since
the summer of 1955, and represents a drop of $24 per ton from the recent high set in January. (J. of Comm., 4/4 p.1)

SCRAP STEEL
PRICES DROP

Strikes in key mining areas and the low level of fabricator inventories of copper have spurred fairly active demand in the world markets and brought the first round of
price increases since last fall. On the domestic market, custom smelters raised their price 1/2¢ per pound to 32¢, equal to the price quoted by the major producers since February. This is the first rally in
prices since last fall, when smelters temporarily reversed their long
down trend as a result of the Suez crisis. (J. of Comm., 4/3 p.1)

COPPER
PRICE RISE

Opening of the iron ore shipping season on
Lake Superior is being delayed by ice above
the navigation locks at Sault Sainte Marie.
A large steamship company moved nine of its vessels out of winter
berths at lower lake ports. They were headed for the Duluth area to
pick up the season's first cargo of iron ore. All nine boats were
ordered to drop anchor below the Sao locks. (Wall St. J., 4/4 p.11)
ICE PREVENTS OPENING
OF GREAT LAKES SHIPPING

Reports of leading banks, for the three months ended
MarGh 31, revealed new record gross and net earnings,
the improvement in net ranging from lafo to more than
l&fo as compared with the corresponding 1956 months. Contributing
mainly to the rise, both in gross and net, was substantial fur~her improvement in interest from loans, along with a pickup in income derived from fees, commissions, and miscellaneous sources, some of which
arises from a higher level of statutory trust fees. (J. of Comm. , 4/2
p.1)

BANK PROFITS
AT NEW HIGHS


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