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APRIL, 1944 ^^gjpaWi^h *i; ■ *’«* « ‘*$s3k '^j * I .. ^'*f' ■,*: : m <& Z*& V'K % "->>* - ' *; »-% ; S i - . BUSIN A REVIEW BY THE FED E RAL j?E5&RVE BANK OF pHI; - Bank Earnings Highest Since 1930 Operating Ratios Reveal Sources of Income The flood of deposits which poured in on banks as a department earnings. In all other large cities of the dis result of large purchases of Government securities lifted trict, trust department earnings were relatively unimportant. 1943 earnings of Seventh District member banks to the The expense side of the picture presented equally im highest level since 1930. This remarkable showing was portant changes from a year ago. Salaries and wages amount made despite rising costs resulting from an expansion of ed to $66,699,000 or 8 per cent more than in 1942. While services and a decline in the volume of loans. Total earn actual data are not available to account for this increase, ings of the 953 member banks amounted to $232,968,000 it resulted principally from an increase in employment and last year. Although expenses increased they failed to keep partially from overtime pay and higher wage scales. Interest pace with earnings and the net amounted to $71,095,000, on time and savings deposits totaled $21,813,000, an in an increase of 19 per cent over the previous year. crease of six per cent over a year ago. Illinois with the largest number of member banks and The principal increase in earnings came from greatly expanded holdings of Government securities. Earnings from the largest volume of deposits had the highest total earn interest and dividends on securities totaled $120,307,000. ings of all five district states.1 The total for the 316 banks The gain in earnings from this source more than offset a in Illinois amounted to $126,630,000, but 83 per cent of decline of $10,260,000 in revenue from loans, total income this amount or $104,729,000, was earned by 48 banks lo from which amounted to $68,942,000 last year. cated in Chicago. Michigan reflected a similar situation with Gross earnings from trust departments increased slightly, $28,324,000 or 55 per cent having been earned by six De and were larger than income from service charges on troit banks, while 180 other banks earned only $22,647,000. deposit accounts. The former accounted for $11,868,000 Indiana was third in total earnings. The 168 member banks of earnings, whereas the latter brought in $11,509,000. Not in that state earned $21,169,000 with 31 per cent con all banks have trust departments, but service charges to centrated in four member banks in Indianapolis. Wiscon cover costs of handling checking accounts are quite general. sin’s 115 member banks earned $20,596,000 of which amount Of the $11,868,000 made by trust departments, $8,753,000 the ten Milwaukee banks earned $10,323,000, or 50 per was earned by banks in Chicago where there is a high con cent. Total earnings of the 159 Iowa members amounted (Continued on Page 3) centration of trust business. Even in a city the size of De troit, service charge income was more than three times trust ’Figures cover only member banks in the Seventh District portion of each state. Iowa is included wholly in the district. EARNINGS AND EXPENSES SEVENTH DISTRICT MEMRER BANKS (thousands of dollars) Items 1943 953 banks 1942 925 banks 1941 899 banks 1940 856 banks 1939 804 banks Per cent change 1943 from 1939 Earnings ........................................... Interest and dividends on securities ....................................... Earnings on loans*......................... Service charges on deposit accounts........................... Trust department earnings......... All other earnings........................... Expenses .......................................... Salaries and wages......................... Interest on time and savings deposits.................. All other expenses........................... Net current earnings.................... 232,968 200,569 183,699 163,255 158,581 +46.9 120,307 68,942 82,416 79,202 66,666 76,934 63,058 62,785 65,511 56,597 +83.6 +21.8 11,509 11,868 20,342 161,873 66,699 10,266 11,215 17,470 140,860 61,871 9,849 11,547 18,703 130,519 56,246 8,771 11,276 17,365 116,146 50,840 8,307 10,918 17,248 111,542 48,738 +38.5 + 8.7 + 17.9 +45.1 +36.9 21,813 73,361 71,095 20,586 58,403 59,709 21,304 52,969 53,180 20,450 44,856 47,109 21,488 41,316 47,039 + 1.5 +77.6 + 51.1 ♦Service charges and fees on loans were included in “All other earnings” in 1939, 1940, and 1941, but were included in “Earnings on loans” in 1942 and 1943. War Causes Population Shifts Many Industrial Areas Make Large Gains Since 1940 A significant effect of the war has been the marked shifts tion of members of the armed forces and others to prewar in population which have occurred in virtually every section residential communities. of the Seventh Federal Reserve District. Many industrial The Seventh Federal Reserve District, lying in the geo areas and communities with cantonment centers for the graphical center of the nation, has had millions of persons armed forces have grown at the expense of most rural and enter, leave, and travel through it in recent years, and a some urban regions. Urban decentralization has been ac large population flow is foreseen probably until well after centuated by the location of new industrial plants on the the demobilization of the armed forces. The current mass periphery of cities. Large numbers of civilians continue to movement of individuals which already far surpasses popu follow members of the armed forces, others are moving lation shifts during World War I has been caused largely between jobs, and for many war-inspired reasons temporary by public and private efforts to recruit labor, attractive wages residences are being continually established and given up and salaries in war production centers, the general level throughout the district and the nation. So long as hos of business activity, and the size and activities of the armed tilities persist, and after peace ultimately is restored, further forces. population adjustments appear certain with the strong prob Measuring population shifts, a difficult problem in peace ability that many war production centers will experience time, becomes much more difficult under war conditions. substantial out-migration. Some depleted areas will have The last decennial census in 1940, however, provides a base their populations restored, at least in part, by return migra against which to measure subsequent population changes, PERCENTAGE CHANGE IN ESTIMATED SEVENTH APRIL CIVILIAN POPULATION, BY FEDERAL RESERVE 1940 NOVEMBER 1943 TO COUNTIES DISTRICT MILWAUKEE •SIOUX CITYf HICAGO MOINES i.fl.DES Ml p22 1 PER CENT - 10 AND OVER I I -0.1 TO 9.9 + 0.1 TO 4.9 KZH + 5 ■■ AND OVER OUTH^BEND DENSITIES SHOW POPULATION CONCENTRATION and recent estimates are available based upon the number of ration books issued. Accuracy of ration book registration Population densities in the Seventh District which vary data has been questioned, however, particularly when used widely with the pattern of economic activities indicate the precisely to measure the population of any city or small area. basic distribution of the inhabitants and reveal where the Certain shortcomings in the method are apparent: many civilian population is now concentrated. The Seventh Dis individuals for numerous reasons have not registered for trict, comprising a land area of 190,000 square miles, had some or all of the ration books; others have not registered an average population density in 1943 of 100 persons per in the communities which normally constitute their resi square mile compared with a density of 42 persons in the dence; and difficulties arise because of the changing status nation. Among the district states average population den of civilians regarding service with the armed forces. Current sities were: Illinois, 181; Michigan, 126; Indiana, 103; Wis United States Bureau of the Census population estimates are only for civilians, excluding persons in the armed services. consin, 77; and Iowa, 42 persons per square mile. When In April, 1940 the Seventh Federal Reserve District, which for each state the county having the principal city is ex includes most of Illinois, Indiana, Michigan, and Wisconsin, cluded, the civilian population densities fall to: Illinois, 73; and all of Iowa, had 19.4 million civilians or 14.8 per cent Michigan, 60; Indiana, 84; Wisconsin, 44; and Iowa, 41 of the national total according to the United States Bureau per square mile, revealing the sharp difference in population of the Census. Recent estimates from the same source based distribution between metropolitan and other areas. Extreme variations obviously occur in population densities upon Ration Book 4 place the number of persons in the district in November 1943 at 19 million, a decline of 2.2 among district counties. Cook County, Illinois, with a popu per cent but an increase to 14.9 per cent of the United lation density of 4,160 persons per square mile includes States total. Information on persons entering the armed Chicago, the district’s largest city, and has the most con forces from this district is not available, but the number centrated group of inhabitants among all counties in the is probably near 2 million men and women. (.Continued on Page 89 DENSITY OF ESTIMATED SEVENTH APRIL FEDERAL 1940 CIVILIAN POPULATION, RESERVE TO NOVEMBER DISTRICT BY COUNTIES I---------- [* WIS. 1943 IOWA MILWAUKEE IX CITY DUBUQUE® ■-L , IES MOINES PERSONS PER SQUARE 0 MILE: TO 49 50 TO 99 I0O TO 499 500 AND Page 2 OVER V////S COMPOSITION OF EARNINGS AND EXPENSES MEMBER BANKS IN SEVENTH FEDERAL RESERVE DISTRICT—1943** (thousands of dollars) Illinois 316 Banks Indiana 168 Banks Iowa 159 Banks Michigan 186 Banks Wisconsin 115 Banks Earnings ............................................. Interest and dividends on securities ........................................ Earnings on loans*-........................ Service charges on deposit accounts............................. Trust department earnings.......... All other earnings............................. 126,630 21,169 14,195 50,971 20,596 68,185 34,270 10,598 6,716 5,826 5,891 24,824 18,111 11,178 6,434 5,663 9,565 8,947 1,367 1,054 235 1,189 2,736 986 4,314 849 415 2,073 420 1,715 Expenses ............................................. Salaries and wages.......................... 85,620 15,144 9,498 37,195 14,894 34,825 5,996 4,180 15,445 6,447 8,660 42,135 2,233 6,915 1,377 6,901 All other expenses............................. 3,941 14,849 2,718 5,729 Net earnings ...................................... 41,010 6,025 4,697 13,776 5,702 Item Interest on time and savings deposits............................. ♦Earnings on loans includes service charges and other fees on loans. ♦♦The five state totals do not add to the aggregate for 953 banks because detailed data for nine banks are not available. BANK EARNINGS — member banks increased from 25.1 in 1942 to 42.1 in 1943. The highest ratios were found among the group of largest to $14,195,000. There was a much wider distribution of banks. Wisconsin banks with more than ten million dollars earnings throughout Iowa than in the rest of the district, of deposits had the highest average ratio of governments and with the result that the four members in Des Moines ac total assets. As might be expected, there was widespread counted for only 21 per cent of the total for the state. deviation from the average in all groups with a tendency The earnings and expense figures were taken from indi for the ratios of individual banks to cluster in the higher vidual bank reports for the calendar year. The balance sheet items were computed from the statements of condition sent ranges as the deposit size of the group increased. The ratio of loans to total assets averaged 27.9 in 1942 in for December 31, 1942, June 30, 1943, and October 18, and only 17.4 in 1943, again emphasizing the shift to in 1943. Ratios were prepared for each of the 944 member banks vestments in order to employ funds. Here there was an whose figures were complete for the full year, and then inverse relationship. As deposit size increased the ratio of averages were computed for each group. This method elim loans to total assets decreased. Those banks in the less than inated the influence of size which would have been present $500,000 deposit size group had an average ratio of 20.7. if averages of dollar aggregates had been used. Neverthe Banks in the $500,000 to $1,000,000 group had a ratio of less, there were wide dispersions from the average. Accord 19.2. In the succeeding size groups the ratio dropped from ingly, the range of the middle two-thirds of each group is 18.5 to 17.4 to 16.0 to 14.3. The lowest average ratio, 10.5, also shown. Deviations from the average reflect local con was in the largest size group in Illinois, and the highest loan ditions. ratio, 27.2, was in the smallest size groups in Iowa. That the year 1943 was profitable for banks is shown The rapid increase in deposits during wartime has caused by the increase in the average ratio of net current earnings a decline in the ratio of capital accounts to total deposits, to total capital accounts from 8.5 in 1942 to 9.7 in 1943. but it should be remembered that banks generally hold a This ratio is an average of ratios for all member banks in higher percentage of cash and Government securities than the district regardless of size or location. they formerly did. Those banks with the largest volume of Earnings were affected by a variation in the composition deposits fall generally into the groups with the lowest equity of assets. Portfolios of banks generally increased and the ratio. The average for all banks in the district was 7.8 in holdings of governments in relation to other assets showed a substantial upward movement while the volume of com 1943. In 1939 the ratio was 12.5 and in 1942 it was 10.1. Here again the dispersion from the average was pro mercial and industrial loans declined. The increase in hold ings of governments was pronounced among the larger nounced, particularly among the smaller banks. As the banks. Consequently, earnings from interest and dividends deposit size of the groups increased, the average moved on securities assumed a larger proportion of total earnings. lower, but there was also a tendency for the individual banks The ratio of Government securities to total assets for all to group more nearly around that average. QContimied from Inside Cover) Page 3 AVERAGE OPERATING RATIOS OF MEMBER BANKS*! Groups with Total Deposits of.............................. (in thousands of dollars) Number of Banks in Each Group.......................... Under 600 500 to 1,000 1,000 to 2,000 35 174 248 Aver age Range of middle two-thirds RATIOS TO TOTAL EARNINGS Interest and dividends on securities............... Earnings on loans*................................................ Servicecharges on deposit accounts................. All other earnings................... ............................... Total earnings..................................................... Trust department earnings**............................ Salaries and wages................................................ Interest on time and savings deposits............ All other expanses................................................... Total expenses....................................................... Net current earnings.............................................. Net charge-offs (or net recoveries (-)-) )...... Taxes on net income................................................ Net profits after taxes.......................................... 31.3 51.7 5.8 11.2 100.0 3.9 34.0 11.8 26.1 71.9 28.1 +7.5 3.6 32.0 19.341.23.6- RATIOS TO TOTAL CAPITAL ACCOUNTS Net current earnings............................................ Profits before income taxes................................. Net profits after taxes.......................................... Cash dividends declared....................................... 7.0 8.7 7.8 2.2 RATIOS TO TOTAL ASSETS Total earnings............................................................ 2.5 Net current earnings.......................................... .7 Net profits after taxes....................................... .8 Government securities............................................ 35.1 Other securities....................................................... 5.3 Loans ............................................................................ 20.7 Cash assets.................................................................. 38.1 Real estate assets..................................................... .8 All other assets.......................................................... .0 Total assets............................................................ 100.0 CAPITAL AND DEPOSIT RATIOS Capital accounts to total assets........................ Capital accounts to total assets less Govt, securities and cash assets................. Capital accounts to total deposits..................... Time deposits to total deposits.......................... Interest on time to time deposits........................ RATIOS TO SECURITIES Interest and dividends on securities................. Net charge-offs (or net recoveries ( + ) ) on securities............................................................ Net return on securities................................... RATIOS TO LOANS Earnings on loans................................................... Net charge-offs (or net recoveries ( + ) ) on loans..................................................................... Net return on loans.......................................... 45.7 61.9 10.2 X X X X 1.726.8 2.920.5 58.3- 4.5 40.7 17.8 31.4 83.4 X X 1.8- + 9.9 2.07.6 18.6- 40.3 Aver age 33.7 46.9 8.8 10.6 100.0 2.5 33.3 12.7 25.9 71.9 28.1 + 5.9 3.1 30.9 Range of middle two-thirds 20.8 31.73.1 - 48.8 63.5 14.4 X X X X .326.1 6.219.9 62.4- 3.1 39.4 19.9 31.2 81.2 X X 22.0 - +14.0 1.56.5 19.2 - 40.4 Aver age 37.9 44.3 8.6 9.2 100.0 2.0 31.0 12.6 24.5 68.1 31.9 +3.7 3.3 32.3 Range of middle two-thirds 25.232.1 3.9- 51.0 57?3 31.1 X X X X 3.8 36.6 19.9 29.5 77.6 .324.35.818.359.3 X X .5- + 11*9 1.66.6 20.6- 40.9 3.34.64.1 1.8- 9.8 11.5 10.2 3.8 8.4 9.8 8.9 2.3 5.05.85.31.8- 12.2 13.8 12.5 3.7 10.2 11.2 10.1 2.6 6.36.86.3 1.6- 12.9 15.6 13.4 4.1 2.0.4.422.91.013.425.2.4- 2.9 1.1 1.1 46.3 10.1 27.9 48.2 1.4 2.3 1.8.4.426.4.6 10.4 25.8.4.1 - 2.8 1.0 1.1 50.8 12.5 28.6 45.8 1.4 .5 2.3 1.8.5.530.91.611.1 24.1 .4.1 - 2.f. 1.0 1.0 50.3 15.6 25.1 37.1 1.5 .1 X X X X X X .7 .7 38.4 6.1 19.2 35.4 .9 .0 100.0 .7 .7 40.6 8.6 18.5 31.4 .9 .0 100.0 X X 4 10.6 8.3- 13.7 8.2 43.0 11.9 30.8 1.2 30.39.1 11.2 .9- 55.9 15.8 56.4 1.6 1.9 1.3- 2.2 .2 2.1 •1- + 6.5 + .6 7.1 X 5.7- + - 9.9 7.3 5.8- 8.7 38.5 9.0 30.6 1.1 21.36.713.5.8- 50.7 11.0 50.0 1.5 30.6 7.9 30.9 1.0 18.96.1 15.8 .8- 39.9 9.8 47.8 1.5 1.7 1.3- 2.1 1.7 1.2- 2.1 .1 1.8 .2- .5 X X X +.0 1.7 7.1 5.9 4.9- 6.9 5.5 -5 6.4 .1- + 1.3 X +.4 5.9 1.0 + .1- + 1.0 X 6.2 X + + + X .2X 4.7- + X 6.3 .5- + LI X X * Earning's on loans includes service charges and other fees on loans. **Average covers only those banks reporting trust department earnings and is shown only where there are at least three such ban! xNo range shown. Page 4 [HE SEVENTH FEDERAL RESERVE DISTRICT IN 1943 2,000 to 3,000 3,000 to 5,000 5,000 to 10,000 10,000 and over 127 126 93 141 l ver. ag 40.1 h.7 9.1 9.1 100.0 1.2 31.1 11.8 25.1 68.0 32.0 -M8.2 3.3 31.9 Range of middle two-thirds Averaee 8 5.2 - + 11.2 1.56.1 22.2 - 41.1 44.2 37.8 8.3 9.7 100.0 2.9 32.0 13.7 25.4 71.1 28.9 +5.5 2.5 31.9 27.1 25.6 4.5- 52.7 55.2 14.3 X X X X .325.76.2 19.458.7- 1.8 36.5 19.0 30.4 76.1 X X Avpr Av®r‘ aK Range of midd,e two-thirds 32.423.43.6- 55.9 52.0 13.2 X X X X .526.25.320.0 60.2 - 6.3 36.9 20.3 31.6 79.2 X X 4.5 - + 13.9 .35.5 21.2- 40.3 Range of middle two-thirds 43.0 35.5 9.2 12.3 100.0 3.5 32.3 11.4 26.6 70.3 29.7 +2.5 3.1 29.1 27.1 25.55.1 X X X X .827.1 6.3 21.362.7- 3.5 37.1 17.0 32.0 77.2 X X 923 944 Range of middle two-thirds 1942 1943 47.4 30.9 8.7 13.0 100.0 5.4 31.8 11.4 26.7 69.9 30.1 +3.7 3.8 30.0 34.1 19.83.9- 60.6 41.3 11.9 X X X X 29.3 52.7 7.3 10.7 100.0 3.6 32.1 14.4 26.6 73.1 26.9 +■4 3.2 24.1 39.9 41.0 8.6 10.5 100.0 3.4 31.9 12.3 25.6 69.8 30.2 +4.3 3.2 31.3 10.8 11.5 10.0 2.4 6.77.76.91.5- 14.3 15.3 14.2 3.5 8.5 8.7 7.4 2.4 9.7 10.8 9.7 2.6 1.9 .6 .6 48.1 8.5 14.3 27.9 1.0 .2 100.0 1.5 .4 .339.42.08.322.0.2.1- 2.4 .8 .7 57.0 14.5 19.7 33.9 1.8 .4 2.7 .7 .7 25.1 10.7 27.9 34.9' 1.3 2.2 .7 .7 42.1 8.5 17.4 31.0 .9 Aver age 56.7 45.8 13.6 4.3- + 11.6 .86.7 19.5- 38.7 1.7 27.46.021.959.5- 14.5 15.3 13.8 4.0 9.5 11.0 10.1 2.8 5.66.55.91.6 - 13.2 14.2 13.4 3.4 10.1 10.7 9.5 2.5 6.47.36.2 1.7- •2.2 .7 .7 41.4 9.7 17.4 30.6 .9 .0 100.0 1.7 .5 .531.32.2 9.8 23.9.6.1- 2.5 .9 .9 44.8 16.4 25.3 38.0 1.5 .4 1.8 .4 .432.72.79.422.8 .4.1- 2.3 .8 .9 53.3 17.8 21.8 31.9 1.5 .3 X 2.1 .6 .6 46.5 9.7 16.0 27.7 1.0 .1 100.0 1.7 .4 .432.2 2.2 8.321.0.4.2 - X 2.1 .6 .7 43.9 10.6 16.0 28.5 .9 .1 100.0 7.1 5.7- 8.5 6.8 5.4- 8.2 6.7 4.9 - 8.1 5.6 4.0- 28.9 7.7 29.9 .9 18.35.917.1 .8- 36.7 9.4 45.5 1.2 29.8 7.3 35.7 17.25.819.5.7- 39.1 8.1 49.5 1.0 29.7 7.4 33.2 .8 16.95.2 19.3 .5- 41.1 8.8 46.4 .9 28.2 6.0 27.9 .8 1.6 1.3- 2.0 1.7 1.4- 2.0 1.6 1.2- 1.9 1.5 U 1.7 5.4 +.3 5.7 .2 - + X 4.6- -3 X +.1 1.8 6.1 5.1 .6 +.3 5.4 .1- + X .8 X i a group. X .2- + X + .0 1.6 1.4- + 5.8 4.9 4.3- .1 - + 1.0 +.5 5.4 X 4.5- X .4 X X X X -2 X 5.6 4.3 .9 +.4 4.7 .8- + X +.1 1.6 X X X 6.47.06.6 1.7 - 2.6 .8 .8 57.7 15.0 21.3 34.0 1.6 .2 8.3 38.2 18.5 31.5 79.5 5.5- +11.1 1.48.4 15.7- 38.9 10.3 11.1 9.9 3.0 X 14.3 ■ 15.0 13.2 3.3 All Banks .1 .1 100.0 100.0 7.0 9.0 7.2 15.34.211.9.7- 41.5 7.6 41.9 1.0 25.2 10.1 36.2 1.2 31.7 7.8 31.1 .9 1.2- 1.9 2.1 1.6 X .1 2.0 +.1 4.9 5.2 5.3 .1 - + 1.1 +.3 5.5 +.4 5.7 X X .2- + X 3.5- X -3 X 1.7 States and Cities Plan for Postwar Problems Legislatures Create New Commissions The role of state and local governments in the economic readjustments from war to peace is largely overshadowed by activities and policies of the Federal Government. The states can do little and the localities less to determine and effectu ate demobilization policies, contract termination, and dis posal of production facilities or stocks of surplus goods— current problems of national interest and discussion. Many governments are concerned, however, with the impact of alternative policies dealing with these problems. The city with a large war plant and the attendant expansion of municipal services, new housing, and a sharply accelerated tempo of business activity will be vitally affected in its postwar readjustments by what the Federal Government does with production facilities in that area. The states generally are apprehensive concerning their position relative to the Federal Government in the postwar era and are evidencing a desire to be ready with plans and proposals involving state or local action on matters within their traditional scope of action. STATES URGE LOCAL PLANNING Local governments, for example, are being urged by the states to develop postwar public works projects. The original impetus to this movement has been the assumption that after conversion from war to peace there would be a slump in economic activity which could be moderated by a sub stantial program of public works. An enforced cessation of all public works, including the postponement of much nor mal maintenance during two years of war, has directed the attention of municipal officers to needed outlays entirely apart from the stimulus such construction might have on employment generally. Currently most local planning is aimed at making up for deferred maintenance, improving sewage and water systems, constructing such public buildings as schools and fire sta tions, building airports, and reconstructing streets and alleys. Other communities whose capital plant is in better condi tion are planning recreation facilities, larger park areas, and giving some attention to the possibilities of public housing. While planners are urging preparation of an extensive array of proposals for public expenditures, local officials generally are planning projects roughly within the limits of their financial capacity, at least to the extent that they are pre paring blueprints and specifications. Broader plans involv ing expenditures of substantial sums have been developed in some areas on the assumption that Federal and state funds would be made available. Planning at the state and local levels has typically been concerned with the accumulation or preparation of blue prints and specifications for a shelf of public works. In addition, many states have directed their planning agencies to catalog and advertise the state’s natural and human re sources, particularly those likely to attract industry, com merce, or new residents. Local planning agencies along with their public works programming have developed, and in some instances administered, zoning ordinances and build ing codes. These activities summarize the background of planning experience on which state and local governments have to build to meet postwar problems. PLANNING COMMISSION DUTIES Since the middle thirties almost every state has had a planning agency variously known as a “resources board” or a “planning commission.” These agencies typically' consist of a group of ten to twenty-five representative citizens, elect ed or appointed officials serving ex officio, and legislators. They have a small or moderate sized staff and appropriation to carry out the technical and clerical duties assigned them. There are great variations in the functions of such groups. Some have been delegated broad responsibilities for plan ning long-range expenditure programs. Others have been given only a limited assignment and a still more limited appropriation to carry it out. Generally these planning agencies have been instructed to maintain liaison with Fed eral officials concerned with postwar planning and to serve as a clearing house for information regarding the capital improvement programs of state and local governments. The latter directive ranges from cataloging projects to furnishing technical or engineering aids for local units and other state departments. In some jurisdictions the study of natural resources has been an important assignment; in a few, as sistance to policy-determining officers of the state on longrange plans has had a bearing on the utilization of the state resources. The legislative mandate of duties is well illustrated by the Illinois statutory provision creating the Illinois Post-War Planning Commission: “The duties of the Commission shall he as follows: “(A) To make a thorough study and investigation of the natural resources of the State; “(B) To keep records of the progress of designs of railroad grade crossing elimination, highways, parkways, building and other struc tures and housing projects, for which funds for detailed plans and specifications have heretofore been made available to various State Departments, so that the status, scope, cost, employment possibilities, materials, and equipment needed for the execution of such projects after the war may be promptly available to officials and the public; “(C) To keep records of the progress of the preparation of plans and specifications for all State projects in addition to the projects enumerated in Paragraph (B); “(D) To prepare and maintain current progress information on the design of the post-war projects of municipalities of the State; “(E) To maintain liaison with federal officials and agencies con cerned with post-war planning and to exchange information on this subject with State and local governments; “(F) To formulate plans and make recommendations for the further development of the State’s resources which will be helpful to agriculture, labor, the consuming public, mining, manufacturing, industry, transportation, conservation of forests, soil, streams, and other resources.”1 In 1943, the first war year in which the legislatures of most of the states met in regular session, there was wide spread recognition of the need for a state agency which could act as a clearing house for postwar plans. While much interest was evidenced in programs generally recog nized as primarily of national concern, such as veterans’ aids—bonuses, employment preference, vocational rehabilita tion, and educational programs—greater attention was given to the provision of a shelf of public works so that employ ment might be maintained during a possible postwar slump. To a very considerable extent the attitude of legislative bodies was conditioned by the completed work of established planning organizations. In states where the planning board was well organized and had functioned effectively legisla tures have referred most of the problems of postwar planning to an existing agency. In a few instances they have directed it to work with a specially created group composed prin cipally of persons responsible for legislative policy. In states where the prewar planning agency has had a relatively small program or has functioned ineffectively the 1943 legislation has substituted new authorities to deal particu larly with the problems of postwar planning. STATE PLANNING AGENCIES The five states of the Seventh Federal Reserve District have postwar planning agencies typical of the various types throughout the nation. Wisconsin has both a State Plan ning Board, consisting of heads of the various state depart ments, and a Joint Legislative Interim Committee on Post War Planning, consisting of seven members of the legis lature. The Wisconsin Planning Board has been established for well over a decade and has been active in giving assist ance to local governments. The Legislative Interim Com mittee is directed to make such surveys or studies as will be useful in effecting readjustments from war to peace condi tions, make some preliminary surveys of state and local plans for long-range public works, and in doing these things to use the personnel of various state departments. Michigan has a Planning Commission consisting of heads of state departments, legislators, and representative citizens. The Planning Commission there has been established since 1937. The 1943 legislature amended the original act creat ing the State Planning Commission, directing it to consider special problems of postwar adjustment. Michigan is one of the states where a planning commission has been given relatively generous support and broad powers of inquiry and recommendation. In March, 1944, Michigan appro priated five million dollars for preparation of blueprints and specifications of local public works. Local units can apply for a maximum of 50 per cent reimbursement out of this fund for survey and specification costs. Illinois replaced its State Planning Board with a Post-War Planning Commission consisting of twenty-four members: 1Illinois Session Laws 1948, p. 318. six representing the General Assembly, three members from the Governor’s Cabinet, and fifteen members from various citizen groups in the community. The commission is di rected to study the natural resources of the state, to record and classify public works plans of various state departments and local governments, and to maintain liaison with other planning agencies. Indiana has created the Indiana Economic Council to replace a State Planning Board which was abolished. This council consists of twenty-two members composed of state officials, members of the legislature, and representative citi zens. The council is directed to formulate plans and recom mendations for the use of natural resources of the state. Iowa has provided for postwar planning through the ap pointment of a Post-War Rehabilitation Commission to study economic and social problems of readjustment. This com mission consists of twenty-five persons who are representa tive of agriculture, labor, the construction industry, trans portation, education, and social welfare. It also includes four members of the legislature and is directed to recommend measures deemed feasible and expedient to carry out post war plans of economic and social adjustment. These state agencies, together with scores of local author ities, are developing projects which can be financed through state and local revenue resources or are within the limits of borrowing capacities. Most of the states and many localities are anticipating another era in which Federal grants will be made available for local improvements and with this in mind are also working up programs beyond their un supplemented fiscal abilities. They do not want to be unprepared, as many were in the thirties, to take advantage of Federal subsidies for important capital improvements. Regardless of Federal policy toward state and local public works expenditures, there is certain to be a large backlog of deferred maintenance to existing water, sewer, and street systems, which combined with normal outlays for new con struction will aggregate a substantial public investment. Plans for these improvements in some cities and states in clude more than blueprints and specifications. The timing of public works undertaken to alleviate un employment in time of depression is of paramount impor tance. Projects taken from the “shelf” at the wrong time will only serve to aggravate the intensity of cyclical move ments in economic conditions as indeed has much municipal and state expenditure in the past. Currently, insufficient emphasis or attention is being given the scheduling of public works by reference to economic conditions or to the perfection of arrangements that will minimize the time re quired to put a given project in operation. Actually one of the major stimuli to local planning activity has been a cul tivated anticipation of new facilities immediately after the war which, it is assumed, will be undertaken regardless of the level of economic activity and the competition of pri vate investors or consumers for labor and material. Govern ment expenditure programs—Federal, state and local—can and should he coordinated and timed so as to secure the maximum benefits in stabilized employment. Page 7 small losses. Detroit, with an increase of more than 200,000 persons, far outdistances the increases in any of the other district. In each of the other four states, the county having areas, the next largest gain occurring in Indianapolis with the principal city also has the densest population: Wayne 33.000 more inhabitants. County, Michigan, with Detroit, 3,584 persons per square The Chicago industrial area has had the most severe loss mile; Milwaukee County, Wisconsin, with the city of Mil in civilian population in the district, with a decline of nearly waukee, 3,189 persons; Marion County, Indiana, with In 65.000 persons since 1940, a loss almost entirely attributable dianapolis, 1,222 persons; and Polk County, Iowa, with Des to Cook County. Chicago’s decrease is to be explained, at Moines, 318 persons. least in part, by a substantial exodus of persons during the With few exceptions the nineteen industrial areas in the early stages of defense preparations and war and before Seventh District designated by the War Production Board Chicago manufacturers had received their heaviest volume include the counties with the heaviest population densities. of war contracts for facilities and supplies. Population losses Not all sections of the counties, however, are necessarily in other industrial and metropolitan centers can be traced industrialized. The Indianapolis industrial area, coextensive to special factors such as the generally unadaptable nature with Marion County, Indiana, has the heaviest concentra of peacetime industries to war production and the building tion of population, 1,222 persons per square mile, among of certain war plants beyond the limits of the industrial areas. district industrial areas. The Manitowoc industrial area Selective Service deferment rulings have also contributed to in Wisconsin has the smallest population density, 107 per some movement of men from industrial cities to farms. sons per square mile. Michigan has the largest number of Cut-backs and cancellations in war contracts have caused industrial areas in the district states: Battle Creek, Detroit, an exodus from some industrial communities and a continu Flint, Grand Rapids, Muskegon, and Saginaw-Bay City. ance of such movement is to be expected as more of the Illinois has four industrial areas, Chicago, Peoria, Rockford, war needs of the nation are fulfilled. Intermingled with the and Rock Island; and Indiana, also four industrial areas, Anderson-Muncie, Fort Wayne, Indianapolis, and South wartime population shifts has been an important natural in Bend-La Porte, all with heavy population concentrations. crease in population which has minimized in some areas the Iowa industrial areas, at Cedar Rapids, Des Moines, and net losses in inhabitants attributable to Selective Service Waterloo, similarly have the state’s largest population den withdrawals and other out-migration. sities. Wisconsin’s two industrial areas, at Manitowoc and MANY WORKERS MIGRATE SHORT DISTANCES Milwaukee, have relatively light population densities com pared with the other industrial areas in the district. Incomplete information indicates that many wartime pop ulation gains in the Seventh District represent mainly shifts CIVILIAN POPULATION DECLINES of persons from nearby areas, that is, war workers have Because of the steady growth of the armed forces, the commonly traveled relatively short distances from former Seventh District as well as the nation as a whole has lost residences on farms or in cities to reach their current places civilian population during the past four years. Between of employment. These same migrants, however, may have April, 1940 and November, 1943, the civilian population moved considerable distances during the past decade and decline in the Seventh District, however, has been smaller before the war, making moderately short successive trips to than in the United States generally, 2.2 and 3.1 per cent centers of new job opportunities. Both whites and Negroes respectively. District industrial areas have shown a con have entered the district from the southern states, frequently trasting trend, gaining 1.5 per cent in civilian population coming first to Indianapolis and other cities in the southern during the same period. Indicating the shift in population portion of the district and then proceeding north to Detroit, from rural to urban centers, Seventh District civilian popu Chicago, and adjoining areas. While figures are not avail lation, excluding persons in the industrial areas, has de able to indicate the numbers involved, there is evidence that many residents of the Mid-West have continued to migrate clined 7.1 per cent. Only Michigan within the district states has shown a net to the Far West during the war. In these instances such gain in civilian population since 1940, with an increase of out-migration has involved considerable distances. 2.4 per cent. Among the other four states losses in per It seems probable that some communities, including those cent were: Iowa, 10.2; Wisconsin, 6.1; Illinois, 4; and In with numerous industries, have made gains during the war diana, 1.2. Michigan also has had the largest number of which, under normal rural-urban migration conditions, counties experiencing gains in civilian population, and Iowa would have required a decade or more to achieve. To what the fewest with increases. In the district, only 46 out of extent these increases will be retained in postwar years is 338 counties added to their civilian populations between difficult to predict, but some preliminary surveys suggest April, 1940 and November, 1943. that perhaps from 40 to 60 per cent of industrial migrants The gains which have been made in industrial areas, may return, at least temporarily, to their former peacetime however, have been by no means consistent. Ten, or slightly residences after the major war production program is com more than one-half of the district’s industrial areas, have had pleted. Postwar job opportunities in present employment increases in civilian population since 1940. The remaining areas obviously will determine to an important extent how nine industrial areas in general have shown comparatively many war workers will again migrate after the war. POPULATION SHIFTS — (Continued from Page 2) Page 8 INDUSTRIAL PRODUCTION NATIONAL SUMMARY OF CONDITIONS BY BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM Industrial activity was maintained at a high level in February and the early part of March. Commodity prices and retail sales showed little change. Industrial production — Output at factories and mines was at about the same rate in February as in January and the Board’s seasonally adjusted index advanced 1 point to 243 per cent of the 1935-39 average. 1940 1942 1944 1940 1942 1944 Federal Reserve indexes. Groups are expressed in terms of points in the total index. Monthly figures, latest shown are for February, 1944. INCOME PAYMENTS TO INDIVIDUALS Steel production continued to advance in February and in the first three weeks of March. Output of nonferrous metals showed little change as curtailment of aluminum production offset increases in output of other metals. Magnesium production was ordered curtailed, beginning in March, by approximately 3,000,000 pounds per month or 7 per cent of January out put. Activity in the machinery, transportation equipment and other durable goods industries showed little change from January to February. Output of textile products was maintained at the January level and pro duction of most manufactured food products declined less than is usual at this season. Buttej and cheese production continued to increase seasonally in February. The volume of hogs slaughtered under Federal inspection declined 6 per cent from the exceptionally high January level; a much larger decline is usual in this month. Chemical production continued to decline as output of small arms ammunition and explosives was further curtailed. Fuel production rose slightly in February to a level 10 per cent above the same month last year. Output of bituminous coal and crude petroleum was maintained at a high level, and anthracite coal production increased 19 per cent as a result of a seven-day work week in effect for the month of February. 1940 1942 1944 1940 1942 1944 Based on Department of Commerce estimates. Wages and salaries include military pay. Monthly figures raised to annual rates, latest shown are for January, 1944. GOVERNMENT SECURITY HOLDINGS OF BANKS IN LEADING CITIES Distribution — Total retail sales in F'ebruary continued about as large as in January and exceeded somewhat the volume of a year ago. At depart ment' stores sales in February were about 10 per cent smaller than last year when there was a buying wave in clothing. During the first three weeks of March department store sales exceeded the volume of a year ago, reflecting in part the earlier date of Easter this year. Freight carloadings, after allowance for seasonal changes, were main tained during February and the first two weeks in March in the unusually large volume reached in December and January. Commodity prices — Prices of cotton and livestock increased somewhat from the middle of February to the middle of March while most other wholesale commodity prices showed little change. Retail food prices declined 1 per cent from mid-January to mid-February owing chiefly to seasonal decreases in prices of eggs and citrus fruit. Retail prices of most other goods and service advanced slightly. Excludes guaranteed securities. Data not available prior to February 8, 1939; certificates first reported on April 15, 1942. Wednesday figures, latest shown are for March 15, 1944. MEMBER BANKS IN LEADING CITIES Bank credit — During the latter part of February and the first half of March the average level of excess reserves at all member banks fluctuated around one billion dollars. Member bank reserve requirements increased by about 400 million dollars as the result of private deposit expansion which, in turn, was the result of Treasury disbursements from war loan accounts which require no reserves. Money in circulation increased ‘400 millions and the gold stock declined by 130 millions. Funds to meet these demands were supplied by additions to Reserve Bank Security holdings and a temporary decline in Treasury deposits at the Reserve Banks. In the four weeks ended March 15, Government security holdings of the Federal Reserve Banks rose by 720 million dollars, reflecting mainly substantial increases in bill holdings under repurchase option; note and certificate holdings also increased. At reporting member banks in 101 leading cities Government security holdings declined by 540 million dollars during the four weeks ended March 15. Holdings of notes rose 1.5 billion dollars while bonds and guaranteed obligations declined as the result of an exchange of maturing and redeem able issues for a new \]/z per cent note issue. Holdings of bills also de clined, reflecting principally sales to the Reserve Banks. Loans to brokers, dealers, and others for purchasing or carrying Government securities, which had increased moderately during the Fourth War Loan Drive, fell by 340 million dollars in the following four weeks. Commercial loans also declined somewhat. Demand deposits (adjusted) exclude U. S. Government and interbank deposits and collection items. Government securities include direct and guaranteed issues. .Wednes day figures, latest shown are for March 15, 1944. Adjusted demand deposits rose by 1.9 billion dollars during the four weeks ending March 15, representing a gain of more than half of the funds with drawn from such accounts during the drive. Government deposits at these banks fell by 2.6 billion dollars in the month following the drive. SEVENTH FEDERAL V IOWA RESERVE DISTRICT , ^ : -IV /\) €>} •£s , >7 ^ vD ir >e
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