Full text of Economic Review (Federal Reserve Bank of Cleveland) : April 1947, Vol. 29, No. 4

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ly
eview

Busin
F in a n ce, In d u stry
Agriculture, and Trade

Fourth Federal Reserve District
Federal Reserve Bank of Cleveland

Vol. 29

No. 4

Cleveland, Ohio, April 1, 1947

THE RUBBER SITUATION
E v er since J u ly 1940, w hen th e R u b b e r R eserve
C o m p an y w as form ed to acq u ire sto ck s o f t h a t
strate g ic co m m o d ity , ru b b e r h as been v ested w ith a
good deal o f p ublic in te re st.
T h e R u b b e r R eserve C o m p an y and its successor
agency, th e Office o f R u b b e r R eserve, h av e been th e
sole im p o rters o f n a tu ra l ru b b e r since before P earl
H arbor. T h a t a u th o rity w as originally scheduled to
be te rm in a te d a t th e close o f la st year, b u t ow ing to
th e strin g e n t su p p ly conditio n s th e deadline w as
extended to M arch 31.

to p e rm it co n tin u an c e o f th e a u th o rity to allocate
n a tu ra l ru b b e r am ong m a n u fa c tu re rs, and to control
in v en to ries and e n d -p ro d u c t use. M a n y aspects of th e
problem rem ain to be solved, and it is th e purpose of
th is article to review th e factors w hich e n te r in to th e
consideration o f a n a tio n a l ru b b e r policy.

A t th e tim e th is R eview w en t to press it ap p eared
to be th e in te n t o f C ongress to p erm it th e lapse of
th e G o v ern m en t im p o rt and p u rchase m onopoly b u t

In th e course o f th e public discussion
reg ard in g th e renew al o f b o th purchase
and allocation pow ers, th e ru b b e r in­
d u stry and G o v e rn m en t agencies w ere in general
ag reem en t as to th e necessity and d e sira b ility of
co n tin u in g , a t th is tim e, control o ver th e use of
ru b b e r by m a n u fa c tu rers. T h ree facto rs a p p e a r to
h av e influenced th is agreem ent. O ne w as th e need
to m a in ta in a stro n g sy n th e tic ru b b e r producing
in d u stry for n a tio n a l se cu rity reasons. A n o th er was
th e insufficiency o f n a tu ra l ru b b e r supplies in relatio n
to th e c o n tin u in g high ra te o f p ro d u ctio n in th e ru b b er
in d u stry . A th ird , an d longer te rm fa cto r, w as the
p ossibility th a t th e dom estic in d u stry m ig h t have to
cope w ith w ide flu ctu atio n s in crude ru b b e r prices
such as occurred in F a r E a ste rn m a rk e ts on occasions
d u rin g th e p a st tw o decades.

Total Rubber Consum ption

Total Rubber Stocks

N o t only th e im p o rta tio n o f ru b b e r, b u t also its
allocation am ong dom estic fab ricato rs, h as been u n d er
stric t F ed eral reg u latio n . F irs t th e W a r P ro d u ctio n
B oard and th e n th e Office o f R u b b e r R eserve o f th e
R eco n stru ctio n F in an ce C o rp o ratio n h av e h a d th e
pow er to allocate supplies, to co n tro l in v en to ries, and
to d eterm in e th e end-uses o f ru b b e r u n d e r th e provi­
sions o f th e Second W a r Pow ers A ct. T h a t a u th o rity
likewise expired on M arch 31.

A llo c a tio n

Control

Natural and Synthetic
(3 month intervals)

THOUSANDS OF
LONG TONS

THOUSANDS Of
LONG TONS

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MONTHLY BUSINESS REVIEW

2

I t is a p p a re n t from th e acco m p an y in g c h a rts th a t
th e su p p ly o f n a tu ra l ru b b e r is n o t y e t a d e q u a te to
m eet th e com bined d em an d for n a tu ra l and sy n th e tic
ru b b er. D esp ite some increase in im p o rts d u rin g
1946, by th e end o f th e y e a r it w as still req u ired th a t
in th e ag g reg ate o nly one to n o f n a tu ra l ru b b e r could
be used for each 1 ^ to n s o f sy n th e tic . D ev iatio n s
from th a t ra tio w ere p e rm itte d am ong d ifferent
p ro d u cts.
T h e p ro p o rtio n o f n a tu ra l ru b b e r co n tain ed in tires
has been ste a d ily increased. O n an over-all basis for
all tires (passenger, tru c k , bus, and ofF-the-road) th e
p ercentag e w as in creased from 18 p e rc e n t a t th e
beginning o f 1946 to 38 p e rc e n t b y th e end o f th e y ear.
H ow ever, th e a m o u n t p e rm itte d in d ifferent k in d s o f
tires varies w idely. P assenger c a r tire s up th ro u g h
th e 6:50 size m a y use up to 23 p ercen t n a tu ra l ru b b er,
larg er passenger sizes up to 67 p ercen t, large tru c k
tires up to 94 p e rc e n t, w hile tire s o f 11:00 inch cross
section and larg er m a y use a n y am o u n t. T h e use o f
n a tu ra l ru b b e r in such item s as soles, heels, b elts,
m ats, hose, etc., h as also been stric tly co ntrolled.

Stocks of
N a tu ra l stocks reached th e ir low
Natural Rubber p 0in t Gf 90,000 to n s in O cto b er
1944 an d th e n w ere b u ilt u p to
m ore th a n tw ice t h a t a m o u n t by th e end o f 1946 as
im p o rts increased an d co n su m p tio n w as re stric te d in
o rd er to re-estab lish a safe w orking reserve. T o ta l
stocks a t th e begin n in g o f 1947 w ere a b o u t eq u al to th e
am o u n ts in h a n d in e a rly 1941. I f im p o rts are re­
ceived as ex p ected (310,000 to n s) d u rin g th e first six
m o n th s o f th is y e a r and no im p o rta n t ch anges are
m ade in th e ra te o f co n su m p tio n , stocks o f n a tu ra l
ru b b e r should a p p ro x im a te th e 1938 level o f 300,000
to n s by m id -y ear. A reserve o f th is size should be
a d e q u a te to m eet s h o rt-te rm flu ctu atio n s in su p p ly.
T hese w ere som e o f th e m a jo r considerations w hich
w ere responsible for th e n e a rly u n anim ous ag reem ent
am ong m a n u fa c tu rers on th e d esirab ility o f e x te n d ­
ing F ed eral co n tro l o v er th e use of n a tu ra l ru b b er.
W ith o u t official control it w as believed t h a t com ­
p etitiv e forces, for exam ple in th e tire field, w ould
resu lt in an im m ed iate a tte m p t to re tu rn to th e p re­
w ar p ro d u c t since th e consum ing public seem s to
show som e preference for th e n a tu ra l hevea. In th e
struggle for su p p ly , some m a n u fa c tu rers w ould be
unable to o b ta in th e ir p ro p o rtio n a te share.

Continuation of W h ile s u b s t a n t i a l a g r e e m e n t
Government
existed reg ard in g th e d e sira b ility
Purchases
f
• • n
*■ «
or co n tin u in g G o v e rn m e n t alloca­
tio n o f supplies and co n tro l o f
end-uses, such ag reem en t did n o t exist w ith resp ect
to co n tin u a tio n o f p ublic p urchase. T h e sh o rtn ess
o f su p p ly o f n a tu ra l ru b b e r w as cited as a reason for
th e c o n tin u a tio n o f public pu rch ase o f foreign ru b b e r
for a t lea st six m ore m o n th s b y p erh ap s a m a jo rity o f

tire
m an u fa c tu rers. I t w as feared t h a t if each com ­


April 1, 1947

p an y should tr y to m axim ize its p urchases in F a r
E a ste rn m a rk e ts, prices w ould sk y -ro c k et w ith o u t
causing an y im m ed iate im p ro v em en t in over-all
supply. F u rth e r, it w as arg u ed t h a t G o v e rn m e n t
co n tro l o f ru b b e r use is in co m p atib le w ith p riv a te
purchase since such co n tro l w ould req u ire th e m ore
successful buyers to give up p a r t o f th e ir su p p ly to
co m p etito rs. F in a lly , it w as p o in ted o u t th a t in d i­
vidual b u y in g w ould req u ire a w hole new co n tro l
system to balance in d iv id u a l im p o rts w ith am o u n ts
allocated for p ro d u c t use.
T h e dem and for a fu rth e r ex ten sio n o f public p u r­
chase o f ru b b e r, how ever, w as b y no m ean s un an im o u s.
Several tire m a n u fa c tu rers w a n te d it d isco n tin u ed
and expressed a desire to re tu rn im m ed iately to com ­
petitiv e practices. R u b b e r im p o rters an d buyers,
largely in ac tiv e since 1942, offered th e opinion th a t
G o v ern m en t b u y in g w as n o t effective in securing for
th e U n ited S ta te s its fair share o f w orld su p p ly and
th a t only inferior g rades o f ru b b e r h a d been o b tain ed .
I t w as re p o rte d th a t rec en t G o v e rn m e n t b u y in g had
n o t been too successful. W h ereas p u rch ase goals h ad
been set a t 50,000 to n s a m o n th for th e first q u a r te r
o f 1947, unofficial estim a te s in d icate d th a t J a n u a ry
and F e b ru a ry acquisitions h ad am o u n te d to only
26,000 and 16,000 long to n s respectively.
T h e W a r D e p a rtm e n t w en t on record to th e effect
th a t n a tio n a l sec u rity w ould be served a d e q u a te ly b y
p riv a te tra d e . T h e S ta te D e p a rtm e n t opposed public
purchase o f ru b b e r on th e g ro u n d s t h a t it w as c o n tra ry
to th e ann o u n ced policy o f th e U n ite d S ta te s th a t
foreign tra d e should be co n d u cte d b y p riv a te e n te r­
prise. I t w ould leave th is c o u n try open to ch arges
t h a t it w as using w a r pow ers u n n ecessarily to influence
a w orld ru b b e r m a rk e t. R e ta lia tio n b y o th e r n a tio n s
w ould be in v ited th u s fo sterin g an und esirab le form
o f econom ic w arfare. T h e S ta te D e p a rtm e n t also
expressed th e belief th a t th e B ritish an d D u tc h
G o v ern m en ts, a c tin g e ith e r in c o n cert or se p a ra te ly ,
had n o t set up a c artel to co n tro l n a tu ra l ru b b e r sales.

NEW RUBBER CONTROL BILL
On M arch 29, th e P resid en t signed a new
R u b b e r C ontrol A ct. P rincipal provisions o f
th is new legislation are:
1. T h e purchase o f n a tu ra l crude ru b b e r is
retu rn e d to p riv a te enterp rise.
2. G o v ern m en t co n tro l o f crude ru b b e r con­
su m p tio n , in v en to ries, an d end-uses of
n a tu ra l ru b b e r is ex ten d ed to M a rc h 31,
1948.
3. G o v e rn m e n t o p e ra tio n o f sy n th e tic
ru b b e r p la n ts is to be c o n tin u e d u n til
such tim e as C ongress a d o p ts a p erm a­
n e n t ru b b e r policy, b u t in no e v e n t
beyond M arc h 31, 1948.

April 1, 1947

M O N T H L Y B U SIN E SS R EV IEW

In su m m ary , th e case for co n tin u ed G o v ern m en t
purchase actu a lly hinged u pon tw o assu m p tio n s: first,
th a t co m p etitio n w ould p u sh prices u p w ard to u n ­
reasonable levels and second, t h a t such h ig h er prices
w ould n o t brin g o u t a s u b sta n tia lly larg er supply
un d er p resen t ch ao tic co nditions in th e F a r E a st. T h e
v a lid ity of these assu m p tio n s can be te ste d only in
th e m a rk e t place. H ig h er prices w ith no increase in
supply w ould be ex trem ely costly to th e A m erican
ru b b e r consum er. On th e o th e r h an d , c o n tin u a tio n o f
public purchases and m ain ten an ce of a low price for
n a tu ra l ru b b e r m ig h t fo restall a re tu rn to hig h er grade
m erchandise if th e ru b b e r were available and p riv a te
buying w ould bring it out.

The Long-term
Problem

T h e problem of acquisitio n and
allocation o f n a tu ra l ru b b er, how ­
ever, is u n im p o rta n t in relatio n to
th e longer-term m a tte r o f m a in ta in in g an a d e q u a te
sy n th e tic ru b b e r pro d u cin g in d u stry in c o m p etitio n
w ith n a tu ra l ru b b er. T h a t q uestion should be m et
before th e su p p ly o f im p o rted ru b b e r becom es g re a t
enough to m eet to ta l dem an d .

T h e In ter-A g en cy Policy C o m m ittee on R u b b e r
was created in S ep tem b er 1945 to consider all aspects
of th e ru b b e r situ a tio n as it affected th e n a tio n a l
in te rest, and to m ake reco m m en d atio n s w hich w ould
serve as a guide in th e fo rm u latio n o f a n a tio n a l
ru b b er policy. T h e agencies w hich w ere rep resen ted
on th a t C o m m ittee w ere th e D e p a rtm e n ts o f S ta te ,
Justice, C om m erce, A g ricu ltu re, W ar, and N a v y ;
th e Surplus P ro p e rty B oard, th e R e c o n stru c tio n
F inance C o rp o ratio n , th e C ivilian P ro d u ctio n A dm in­
istra tio n , and th e T a riff Com m ission.
M r. W illiam A. B a tt, vice ch airm an o f th e W P B
was design ated as ch airm an o f th e R u b b e r C om ­
m ittee.
T h e lo n g -te rm re c o m m e n d a tio n s of t h a t C o m m it­
te e , published in J u ly 1946, m ay be sum m arized as
follows:
1. F o r purposes o f n a tio n a l secu rity , th e G ov­
e rn m e n t should ensure t h a t a m inim um
am o u n t o f general purpose sy n th e tic ru b b e r
is produced in th e U n ite d S ta te s. T h e m in i­
m um should be o n e-th ird o f to ta l ru b b e r con­
su m p tio n or n o t less th a n 250,000 long to n s
a year. P la n ts k e p t in p ro d u ctio n should be
th e m o st efficient and low est cost o f existing
facilities. C o n seq u en tly , p la n ts using alcohol
as a raw m a te ria l should n o t be included.
2. C o n tro ls sh o u ld be a v a ila b le to
th e dom estic use o f th e sy n th e tic
produced.

a s s u re
ru b b e r

3. T h e sy n th e tic ru b b e r in d u s try should be
p riv a te ly ow ned and o p e ra te d to assure com ­
p etitio n in research, d ev elo p m en t, and use.
T h e am o u n t o f p ro d u ctiv e c a p a c ity in p riv a te
h an d s should be g re a te r th a n th e g u a ra n te e d
Digitized for
m FRASER
a rk e t so as to stim u la te th is co m p etitio n .


3

4. Efficient general purpose sy n th e tic ru b b e r
facilities n o t purch ased by p riv a te ow ners
should be m ain ta in e d by th e G o v e rn m e n t in
a sta n d -b y co n d itio n , and n o t o p erated except
in n atio n a l em ergencies. In o rd er to avoid
com plete reliance upon p etro leu m as a raw
m ate ria l, a t le a st one p la n t using alcohol feed­
stocks should be included in th e sta n d -b y
reserve. T h e to ta l c a p a c ity o f th e in d u stry
k e p t o p e ra tin g or in sta n d -b y condition should
ap p ro x im ate 600,000 long to n s, or a b o u t 60
percen t of p re sen t existing cap acity .
5. P riv a te in d u stry and G o v e rn m e n t should con­
tin u e to sponsor broad ru b b e r research pro­
gram s to explore new e n d -p ro d u cts, th e field
o f new polym ers, processing tech n iq u es, and
dev elopm ent o f new sources o f n a tu ra l ru b b er.
6. T h e U n ited S ta te s should establish a revolv­
ing stock-pile o f n a tu ra l ru b b e r w holly a p a rt
from stocks in com m ercial channels.
7. W ith th e c e rta in p rospects o f a changing
ru b b e r situ a tio n , som e agency should be
created to review co n tin u o u sly th e ru b b er
program .
On th e w hole, th e reco m m en d atio n s o f th e C om ­
m ittee were well received, p a rtic u la rly its adm oni­
tio n th a t it is highly desirable th a t a coordinated
program should be carefully w orked o u t w hile th ere
is still a sh o rtag e o f n a tu ra l ru b b er. T h e sy n th e tic
in d u stry as it now sta n d s is com pletely in te g ra te d
and c en trally ad m in istered . T h e Office o f R u b b e r
R eserve o f th e R e co n stru ctio n F inance C o rp o ratio n
d istrib u te s th e o u tp u t o f G o v ern m en t ow ned b u tad ien e
and sty re n e p la n ts (source o f th e raw m a teria l) to
G o v e rn m en t ow ned copolym er p la n ts th a t produce
G R -S or general purpose sy n th e tic ru b b er. T h e
G o v ern m en t also in d ire c tly controls th e d istrib u tio n
o f th e sy n th e tic ru b b e r to p riv a te m a n u fa c tu re rs by
specifying th e p ro p o rtio n o f n a tu ra l ru b b e r th a t m ay
be used in end -p ro d u cts.
I f a sy n th e tic ru b b e r in d u stry is to be m a in ta in e d
for purposes o f n atio n a l se cu rity and is to go in to
p riv a te h an d s, steps m u st be ta k e n to provide a
reasonable assurance o f raw m ateria ls and o f a m a rk e t
for th e finished p ro d u ct. T h e a ttitu d e o f th e C om ­
m itte e w ith regard to devices for m a in ta in in g a
m a rk e t for sy n th e tic ru b b e r w hen th e n a tu ra l p ro d u c t
again is freely available m a y be sum m arized as
follow s:

1. Tariff on imports o f n a tu ra l ru b b er. W hile
th is is a fam iliar A m erican m eth o d o f p ro te c t­
ing dom estic in d u stries, it w ould conflict w ith
existing tra d e ag reem ents w hich g u a ra n te e
ru b b e r im p o rts free o f d u ty . C osts to th e
co nsum er w ould be p y ram id ed and th e re
w ould be no w ay o f en su rin g d iv ersity o f use
o f sy n th e tic ru b b er. Flexible ra te s w ould
be needed to m eet changes in price for w hich
ru b b e r is notorious.

4

MONTHLY BUSINESS REVIEW

2.

Import quotas to lim it su p p ly o f n a tu ra l
ru b b e r for forced consu m p tio n o f sy n th e tic
ru b b er. T h is m e th o d , too, w ould c u t across
p resen t tra d e p acts.
Q u o tas w ould keep o u t
n a tu ra l ru b b e r, b u t c e rta in m a n u fa c tu re rs
m ig h t o b ta in enough for all purposes while
co m p etito rs w ould h av e to use dom estically
pro d u ced ru b b e r. T h e q u o ta sy stem is in ­
flexible an d ru b b e r needs v a ry w idely from
y e a r to y e a r as well as seasonally. T h e ap ­
p o rtio n m e n t o f im p o rt q u o tas w ould be
ex trem ely com plex.

3.

4. Government monopoly in p u rch ase and
sale o f n a tu ra l ru b b er. T h is co n trav en es
n a tio n a l policy o f freedom o f tra d e and p ro ­
m o tio n o f p riv a te en terp rise.
5.

Certificate plan p e rm ittin g m a n u fa c tu rers
to im p o rt n a tu ra l ru b b e r in some p ro p o rtio n
to th e a m o u n t o f sy n th e tic ru b b e r purch ased .
T h is w ould create a need for seco n d ary m a rk e ts
for b o th s y n th e tic ru b b e r and certificates as
in d iv id u al m a n u fa c tu re rs tra d e d certificates
or sold ru b b e r to m eet th e ir in d iv id u al needs.
I t w ould be com plex as well as c o n tra ry to
p re se n t tra d e agreem ents.

6.

se cu rity problem should be se ttle d by public
action and n o t by p riv a te d e te rm in a tio n . I t
would also require public policing and enforce­
m en t o f p riv a te agreem ents.
7.

Industry code set up b y th e ru b b e r in d u stry
itself.

T h e basic o b jectio n is th a t a n a tio n a l

Government subsidy to e ith e r pro d u cers or
users, or b o th . T h is w ould tra n sfe r to th e
G o v e rn m en t th e financial b u rd en s o f th e com ­
p e titiv e d isad v an tag es o f d o m estically p ro ­
d u ced ru b b e r. S u b sid ies w ould p ro b a b ly
v itia te p riv a te incen tiv e for research, p ro d u c t
d ev elopm ent, and o p e ra tin g efficiency, b u t
w ould n o t ensure th a t th e necessary m inim um
o f sy n th e tic ru b b e r w ould be produced and
consum ed. T h e cost of m ain ta in in g a sy n ­
th e tic in d u stry , how ever, w ould be clearly
visible to th e public.

Excise tax on p ro d u c ts in p ro p o rtio n to
n a tu ra l ru b b e r c o n te n t. T h is creates th e p ro b ­
lem o f d e te rm in in g th e a m o u n t o f n a tu ra l
ru b b e r in v ario u s com m odities and p u ts th e
cost o f a n a tio n a l se c u rity program solely on
ru b b e r consum ers.

April 1, 1947

8.

Minimum quantity of sy n th e tic ru b b e r to
be included in an y given p ro d u ct. _ T h is w ould
be sim ilar to th e p re sen t plan o f co n tro l and
has th e v irtu e o f co n trolling th e to ta l a m o u n t
to be used and of chan n elin g it to a v a rie ty of
p roducts.

T h e C o m m ittee as a w hole w as inclined to fav o r
some so rt o f co m b in atio n o f th e la st tw o propositions.
T h is, in effect, w ould co n tin u e th e p re se n t p rogram
o f specifying m axim um q u a n titie s o f n a tu ra l ru b b e r
th a t could be used. T h e p resen t p rogram has h ad
an elem ent o f su b sid y in it, in asm uch as G R -S m ade
from alcohol cost a g re a t deal m ore th a n th e p e tro ­
leum p ro d u c t b u t w as sold a t th e sam e price. T h is
plan has th e fu rth e r a d v a n ta g e o f co n tin u in g a co n tro l
system w hich is a lre ad y o p e ra tin g and w ith w hich
producers are fam iliar.

N E W MEMBER B A N K
T h e C itizen s B an k in g C o m p an y o f C elina, O hio,
becam e a m em b er o f th e F ed eral R eserve System
on A pril 1. T h e new m em b er b an k is lo cated in an
area d ev o ted largely to d a iry farm ing, hog raising
an d general farm ing.
A fu rn itu re fa c to ry and a
stearic acid p la n t provide in d u stria l em p lo y m en t.
G ra n d L ak e, w hich is n e a rb y , is a fishing and v aca­
tio n reso rt. T h e p o p u la tio n o f C elina, w hich is th e
c o u n ty se a t o f M e rc e r C o u n ty , is ap p ro x im ately
5,000.




T h e C itizens B a n k in g C o m p an y w as in co rp o rated
in J a n u a ry 1897. A t p re sen t, deposits are approx­
im ately # 2 ,5 0 0 ,0 0 0 . C om bined c a p ita l and surplus
a m o u n t to # 1 4 2 ,5 0 0 .
Officers of th e b a n k are as follow s:
M r. A u g u st J. Spieler, ch a irm a n o f b o a rd and p resid en t
M r. Lee H eckler, first vice p resid en t
M r. Sam D ixon, second vice p resid en t
M r. N . F . O tey , cashier
M r. Ben H . C a rtw rig h t, a ssista n t cashier and se c re ta ry
M iss V ictoria L e n n a rtz , a ssista n t cashier

5

MONTHLY BUSINESS REVIEW

April 1, 1947

INTEREST RATES AND REPAYMENT METHODS ON
COMMERCIAL AND INDUSTRIAL LOANS
In N o vem b er, 1946, th is b a n k co n d u cted a su rv ey of
com m ercial and in d u stria l loans o u tsta n d in g a t m em ­
ber banks in th e F o u rth D istric t. D etailed in fo rm atio n
on a carefully selected sam ple o f loans w as p rovided by
165 m em ber b an k s holding a b o u t 80 p ercen t o f th e
loans o f all 724 m em b er b anks. T h e first re p o rt based
on th e surv ey ap p eared in th e M arch issue o f th e
M onthly B usin ess Review and d e a lt chiefly w ith th e
ch aracteristics o f th e lending in s titu tio n s and borrow ­
ers. T h e p re se n t article discusses th e su rv ey findings
regarding th e ra te s o f in te re st charged on th e loans
and th e m eth o d s o f re p ay m en t.

Summary
M o st of th e com m ercial and in d u stria l loans o u t­
sta n d in g la s t N o v e m b e r 20 w ere m ade a t ra te s o f 5
or 6 p ercen t. H ow ever, th e larg er loans w ere m ade
a t m uch low er ra te s, w ith th e consequence th a t alm ost
h a lf th e do llar volum e o f loans o u tsta n d in g bore an
in te re st ra te o f 2 percen t.
T h e m ost im p o rta n t facto r in ra te d e te rm in a tio n
was found to be th e size o f th e loan. In te r e s t ra te s
were som ew h at low er a t th e larg er b an k s and in
larg er cities for a given size o f loan.
T h e ten d e n c y o f th e sm aller loans to b ear h igher
rates o f in te re s t reflects th e fa c t th a t costs o f d raw ing
up and servicing sm all loans are u n d o u b te d ly g re a te r
per dollar loaned th a n is th e case w ith large loans.
T h e m eth o d o f re p a y m e n t and th e le n g th o f te rm
of a loan a p p a re n tly h av e little effect on th e sta te d
ra te of re tu rn . W ith th e exception o f com m ercial and
in d u strial loans secured b y stocks and bonds, th e
n a tu re o f th e secu rity pledged likewise seem s to hav e
little bearin g u pon th e ra te o f in terest.
A b o u t on e-h alf o f th e loan volum e w as in single
p a y m e n t form . R e p a y m e n t by reg u lar in sta lm e n ts
w as called for m o st fre q u e n tly in loans w ith th e
longer m atu ritie s.

Interest Rates
T h e ra te of in te re st charged on m o st of th e 52,000
business loans o u tsta n d in g la st N o v em b er w as 5 or 6
percent. T h e average ra te charged per loan w as 5.0
percent. H ow ever, large loans in general were m ade
a t m uch low er ra te s of in te re st, w ith th e resu lt th a t
th e average ra te o f re tu rn on th e aggregate dollar
volum e of loans o u tsta n d in g w as only 3.1 percen t.
An accom panying c h a rt shows th e dollar volum e of
loans m ade a t vario u s in te re st ra te s and also th e
n u m b er of loans m ade a t those rates. A lm ost h a lf
o f th e dollars loaned w ere earn in g ab o u t 2 p erce n t on
N o v em b er 20, w ith m ost o f th e rem ain d er o f th e loan
volum e a b o u t eq u ally divided am ong in te re st rates
o f 3, 4, and 5 percent. O nly seven p erce n t o f th e dollar
volum e o f loans w as bearin g an in te re st ra te of 6 per­
cent, w ith v irtu a lly no funds o u t a t an y higher rate .
A com pletely different p ictu re is presen ted by d a ta
based on th e n u m b er of loans a t th e v arious rates.
O nly th ree p ercen t o f th e to ta l n u m b er o f loans were
earn in g a b o u t a 2 p ercen t in te re st ra te on N o v em b er
20 and only six p erce n t o f th e to ta l w ere earn in g
3 p ercent. In ro u n d nu m b ers, tw e n ty p ercen t of
th e to ta l n u m b er o f loans specified a 4 p e rc en t ra te ,
th ir ty p ercen t called for 5 p erce n t p a y m e n ts and fo rty
p ercen t were m ade a t a 6 p e rc en t figure.
I n t e r e s t R a te s a n d
S ize o f L o a n s

T h e c h a rt presen tin g th e d o llar
volum e of loans and th e n u m ­
ber of loans a t th e v a rio u s in ­
te re st ra te s em phasizes th e w ide range of ra te s charged
by F o u rth D istric t banks.
A lthough m a n y facto rs m ay c o n trib u te to th is
flexibility o f th e ra te stru c tu re , th e d a ta su b m itte d in
th e loan surv ey in d ic ate th a t th e v a ria tio n s in in te re st
charges are m ore closely co rrelated w ith th e size of
loans th a n w ith any o th e r facto r. A n accom p an y in g

Percentage D istribution of Com m ercial and Industrial Loans by Interest R ate Charged
PERCENT OF
DISTRICT TO TA L

PERCENT OT
DISTRICT TOTAL
--------------------- |I00

DOLLAR VOLUME

NUMBER OF LOANS

60

42 % .

HEM



8BM

m amm7*'*

6

April 1, 1947

Mo n t h l y b u s i n e s s r e v i e w

Average Interest Rate by Size of Loan and Size of Bank

Size of Loan

--------- Banks with Deposits of--------Over
$2 to
Under
$10 to
All
$2
$100
$100
$10
Banks Million Million Million Million

All L oans.................. 3-1%

2.5%

4.3%

5.0%

5.3%

U nder $500...............
$500 to $999.............
$1,000 to $4,999. . . .
$5,000 to $9,999. . . .
$10,000 to $24,999. .
$25,000 to $49,999..
$50,000 to $99,999..
$100,000 to $499,999
$500,000 to $999,999
$1,000,000 and over.

5.7%
5.5
4.8
4.4
4.2
3.8
3.3
2.6
2.1
2.1

5.7%
5.4
5.0
4.9
4.6
4.4
3.9
3.5
3.3

5.7%
5.5
5.3
5.0
4.9
4.3
*

5.5%
5.7
5.4
5.1
5.4

5.6%
5.5
5.1
4.9
4.6
4.2
3.6
2.8
2.1
2.1

*Sample too small to justify an average figure.

S iz e o f
B o rro w e r

Since large com panies usually borrow
larger sum s th a n do sm aller com panies,
it follows th a t large com panies p a y a
low er in te re st ra te th a n do th e sm aller firms. A n
accom panying tab le discloses th a t th e average ra te
paid la st N o v em b er 20 by borrow ers w ith assets
u n d er $50,000 w as 4.9 p ercen t, w hereas borrow ers
w ith assets over $5,000,000 o b ta in ed th e ir c re d it a t
an average figure of 2.1 percent. T h e o th e r borrow er
groups listed borrow ed a t in terv e n in g rates o f 4.4,
3.8, and 2.9 percen t respectively.
Average Interest Rate
By Size of Borrower and by Size of Bank
------ Banks with Deposits of'-----Over $10 to $2 to Under
$10
$2
All
$100
$100
Banks Million Million Million Million

Assets of
Borrower

ta b le lists an average ra te o f 5.6 p ercen t on loans of
less th a n $500, as ag a in st a ra te of 2.1 p ercen t on
loans o f over $1,000,000.* A verage charges on th e
te n loan sizes listed in th e ta b le declined stead ily as
th e loan sizes increased.
F u rth e rm o re , average ra te s on sm all loans actu ally
m ay h av e been som ew hat hig h er th a n th e acco m p an y ­
ing d a ta w ould in d icate. T h e su rv ey did n o t call for
th e am o u n t o f a loan as of th e d a te it w as o riginally
m ade, b u t ra th e r as o f N o v em b er 20. U n d o u b te d ly
th e re w ere m a n y loans b earin g a low in te re s t ra te
which were classified as sm all loans on N o v em b er 20
only because a s u b s ta n tia l p ro p o rtio n o f th e original
am o u n ts o f th e loans h a d been paid off b y th e d a te
of th e survey.
M oreover, th e effective ra te , as d is tin c t from th e
nom inal ra te , is u su ally hig h er on sm all d isco u n ted in­
sta lm e n t loans th a n on single p a y m e n t loans. T h e
discount ra te is applied to th e original a m o u n t o f th e
loan, w hereas th e average size o f th e loan from th e
tim e it is m ade u n til th e la s t in sta lm e n t is paid will
be app ro x im ately h a lf as large as th e original am o u n t.
T h u s th e actu al ra te is a b o u t double th e nom inal
d iscount ra te , unless som e provision is m ad e to re tu rn
to th e len d er a p a rt o f th e in itia l charge.

All Borrowers............... . 3.1%
Under $50,000.............
$50,000-$250,000___
$250,000-$750,000. . .
$750,000-$5,000,000..
Over $5,000,000.........

.
.
.
.
.

4.9%
4.4
3.8
2.9
2.1

2.5%

4.3%

5-0%

5.3%

4.5%
4.1
3.3
2.8
2.0

4.9%
4.5
4.3
3.6
2.2

5.2%
4.8
4.4
4.6
4.0

5.3%
5.1

T h e ten d en cy of th e sm aller loans to b e ar th e
higher rate s of in te re st reflects in p a rt th e influence
of o p eratin g costs on in te re st rates. I t is pro b ab le
th a t th e to ta l cost in dollars of m ak in g a sm all lo an is
nearly as m uch as th e cost o f a large loan. In m ost
cases in v estig atio n and accounting costs te n d to be
ap p ro x im ately th e sam e for each loan. I t is neces­
sary for th e lender to receive in te re st p a y m e n ts suffi­
cient to p a y those costs. As a consequence, ra te s are
generally hig h er w hen th e am o u n t loaned is sm all
th a n w hen th e am o u n t is large.

* A v erag e in te re s t ra te s re p o rte d in th is an d succeeding ta b le s and c h a rts
are av erag e charges per d o llar lo a n ed , r a th e r th a n th e av e ra g e r a te per lo an .

T h e surv ey disclosed th a t in te re st
rate s on loans of com p arab le size te n d
to be som ew hat low er in large cities
and a t large in stitu tio n s th a n in
sm aller cities and a t sm aller banks, a lth o u g h th e
correlation is n o t n early so pronounced as th a t evi­
denced by th e size o f th e loan and th e ra te o f in te re st.
T h is v aria tio n in ra te s by size of city and size o f b an k ,
w hich is described by accom panying tab les, ap p ears
g re ater in th e case of large loans th a n sm all loans.

Average Interest Rate by Size of Loan

Average Interest Rate by Size of Loan and Size of City

INTEREST RATE




INTEREST RATE

S iz e o f B a n k
and
S iz e o f C ity

-------------- Population of C ity ------------Size of
Under
5,00025,000- 100,000
Loan
5,000
25,000
100,000 and over
Under 310,000................. 5.3%
5.1%
4.9%
4.8%
$10,000-3100,000............. 5.0
4.3
4.3
4.0
$100,000 and over....................... ..........3j0______ 2^9_______2.3

T h e low er rates afforded borrow ers a t th e larg er
ban k s and in th e larger p o p u latio n centers in p a rt
reflects a ten d en cy am ong sm all b a n k s to charge a
flat ra te regardless of th e size of th e loan. I t will be
n o ted from th e accom panying d a ta th a t th e decline
in rates th a t accom panies th e increased size of loans
is m uch m ore ev id en t a t th e large ban k s th a n a t
th e sm all.

April 1, 1947

MONTHLY BUSINESS REVIEW

T h is g re a te r flexibility o f ra te s at th e large b an k s
m ay be p a rtly induced by th e ir experience w ith a
co m p arativ ely w ide range o f loan sizes. T h e rela­
tiv ely n arro w v a ria tio n in th e size o f loans a t th e
sm aller ban k s p ro b ab ly te n d s to encourage a policy
of charging a flat ra te regardless of th e size o f th e
loan. A n o th e r possib ility is th a t th e lack o f flexi­
bility in ra te s m ay be c o u n ter-b alan ced in m a n y cases
by concessions o th e r th a n reduced in te re st charges.

Method of Repayment,
Security, and Maturity

T h e lo a n s u r v e y p r e sented no conclusive evi­
dence of co rrelatio n be­
tw een th e ra te charged on loans in a given size range
and th e secu rity , m a tu rity , or m eth o d o f re p a y m e n t
on th e loans. F o r exam ple, th e m eth o d o f re p a y m e n t
a p p a re n tly h ad v ery little b earin g on th e ra te s charged
on loans in th e $5,000 to $9,999 size range. T h e
average ra te on sin g le-p ay m en t loans in th a t size
range w as 4.9 percen t. T h e sam e ra te w as charged
for loans to be repaid by eq u al in sta lm e n ts, w hereas
th e charge w hen re p a y m e n t w as scheduled in u n equal
in sta lm en ts w as only slightly higher a t 5.1 percent.
T h e secu rity pledged ag ain st th e loan likewise
appeared to be o f co m p a ra tiv e ly slight significance in
d eterm in in g th e in te re s t ra te . A gain using loans
ranging from $5,000 to $9,999 in size as a ty p ical
exam ple, th e average ra te on unsecured loans w as
5.0 percen t and t h a t sam e ra te applied to loans secured
by a co-signer or endorser. Business loans secured
by real e sta te averaged 4.9 p ercen t and tho se secured
by c h a tte l m ortgages, w arehouse receip ts, etc.,
averaged 5.1 percen t. T h e only significant d e p a rtu re
from th is p a tte rn w as th a t business loans secured by
stocks and bonds fe a tu re d an average ra te o f only
4.0 percent.
W ith reg ard to th e relatio n sh ip o f loan m a tu rity to
th e in te re st ra te , it w as found th a t loans o f less th a n
$10,000 in size carried an average in te re st ra te o f 5.0
percen t w ith a m a tu rity o f a y e a r o r less, 5.0 p ercen t
w ith a m a tu rity o f one to five y ears, and 4.7 p ercen t
w ith th e m a tu rity longer th a n five years. T h e corre­
sponding p ercen tag es for loans o f $ 1 0 ,0 0 0 -$ 9 9 ,9 9 9
were 4 .0 ,4 .3 , and 4.4 p ercen t, and for loans o f $100,000
and over th e ra te s for th e th re e m a tu ritie s w ere 2.4,
2.5, and 2.2 p ercen t. T h u s no clear relatio n sh ip be­
tw een th e loan m a tu rity and th e in te re st ra te could
be discerned.

7

Average Interest Rate by Industry and Size of Loan
Industry
R e ta il................................
W holesale.........................
Mfg. and M ining...........
Public U tilities................
Sales F inance..................

All
Loans
4.3%
3.3
2.8
2.4
2.3

------------ Size of Loan-----------Under
310,000- 3100,000
310,000 3100,000 and Over
5.1%
4.4%
2.5%
4.9
4.2
2.5
5.1
4.1
2.3
5.2
4.4
2.1
3.8
2.9
2.2

of th re e loan size ranges, m erely reaffirm s th e p o in t
expressed earlier— th a t th e size of th e loan and of the
borrow er a p p e ar to be th e d o m in a n t considerations in
determ in in g th e in te re st rate.

Interest Versus
Discount Basis

O n m ost of th e loans o u tsta n d in g
| ast N o v em b er 20, charges were
co m p u ted on an in te re st, ra th e r
th a n a d iscount, basis. A b o u t 78 p ercen t of th e dollar
volum e was on an in te re st basis, w hile 71 p ercen t of
th e to ta l n u m b er of loans w as on th a t a rran g em en t.
T h e v a ria tio n o f these tw o percen tag es m ay be
accounted for by th e fact th a t th e size o f th e average
loan on an in te re st basis w as $17,500, w hereas th e
com parable figure for th e d isco u n t m eth o d of p a y ­
m e n t w as $12,800.

T h e larg er ban k s utilized th e d isco u n t m eth o d in
m ore instances th a n did th e sm aller banks. F o r
exam ple, a fo u rth o f th e dollar volum e and alm ost
h a lf th e to ta l n u m b e r of loans a t th e larg est banks
w ere on a d isco u n t basis. By com parison, a t th e
sm allest banks only a b o u t one loan in tw e n ty called
for th e d iscount m eth o d o f co m p u tin g charges.
Dollar Volume of Loans on an Interest and
D iscount Basis by Size of Bank
--------- Banks with
Deposits of--Over
310 to 32 to
Under
3100
3100
310
32
Million
Million Million Million
78%
75%
75% 94%
96%
23
25
25
6
4

All
Banks
Interest Basis . . . .
Discount Basis.
T o ta l..............

100%

100%

100%

100%

100%

Num ber of Loans on an Interest Versus a Discount
Basis, by Size of Bank
IN T E R E 5 T 8 A SIS
DEPOSITS o f :

D IS CO UN T BASIS

52%

48?s

Industry of W ith th e possible exception o f sales
Borrower
finance com panies, no evidence ap ­
peared th a t any one ty p e o f in d u stry
co n sisten tly p ay s a low er ra te th a n o th e r ty p es. T h e
accom panying ta b le , w hich lists th e average rates
paid for
byFRASER
th e v ario u s in d u stry g roups on loans in each
Digitized


0

1

20

I

40

I

60

I

80

I

100

|

MONTHLY BUSINESS REVIEW

8

Method of Loan Repayment
A b o u t 48 p ercen t o r alm o st h a lf o f th e dollar
volum e o f loans o u tsta n d in g on N o v em b er 20 p ro­
vided th a t th e loans w ere to be repaid in one p a y m e n t.
R e p a y m e n t by equal in sta lm e n ts was called for in
23 p e rce n t o f th e to ta l d o llar volum e of loans, while
th e rem ain in g 29 p e rc e n t o f th e volum e w as a b o u t
eq u ally d iv id ed betw een serial note re p a y m e n t and
re p a y m e n t th ro u g h u n eq u al in stalm en ts.
S iz e o f
B ank

A n an aly sis o f re p a y m e n t m eth o d s by size
of b a n k discloses t h a t th e single p a y m e n t
m e th o d is th e p ro ced u re m o st relied upon
by b a n k s o f all size groups. T h e sm allest b an ks
specified th e single p a y m e n t m eth o d on 59 p ercen t
o f th e d o llar volum e o f th e ir loans, w hich is th e
h ig h est p ercen tag e re p o rte d for any b an k size group.
T h e equal in sta lm e n t m eth o d w as relied upon m ore
b y ban k s in th e $2 to #10 m illion size g roup th a n by
b an k s in o th e r size gro u p s, w hile serial n o tes as a
m e th o d o f re p a y m e n t w ere used chiefly by th e larg est
in stitu tio n s.
M ethod of Loan R epaym ent by Size of Bank
--------- Banks with Deposits of--------32 to
Under
Over
310 to
.32
All
3100
MOO
310
M ethod of
Banks Million Million Million Million
R epaym ent
49%
49%
43%
One Paym ent. . . . 48%
59%
27
34
21
28
23
Equal In stal........
1
3
15
20
2
Serial N o tes.........
22
22
10
10
Unequal In s ta l.. . . 14
T o ta l............ .

100%

100%

100%

100%

T h e m ere size o f loans a p p a re n tly has
little effect upon th e choice o f a m eth o d
of Loans o f re p a y m e n t. F o r exam ple, in th ree
m a jo r loan size ranges o f 0 — #9,999,
#10,000— #99,999, and #100,000 and over, single p a y ­
m en ts w ere called for in loans consisting o f 47, 44 and
50 percen t o f th e dollar volum e in th e th re e respective
size classifications.
H ow ever, th e len g th o f tim e to m a tu rity does in ­
fluence th e m eth o d o f re p a y m e n t. In general th e re is
a g re a te r insistence on re p a y m e n t in in sta lm e n ts in
th e case of loans o f long m a tu rity th a n in loans of
sh o rt m a tu rity .




A b o u t 84 p e rc en t o f th e d o llar volum e o f single
p a y m e n t loans m a tu re d in a y e a r or less, 13 p erc en t
m a tu re d in one to five y ears and o nly 4 p erc en t
m a tu re d in o ver five y ears. In sh a rp c o n tra s t, only
27 p ercent of th e equal in sta lm e n t loans m a tu re d in
a y e a r or less, 30 p erc en t m a tu re d in one to five
years, and 43 p e rce n t m a tu re d in o v er five years.
O n th e longer m a tu ritie s th e b an k s usu ally req u ired
re p a y m e n t th ro u g h o u t th e life o f th e loan ra th e r th a n
ju s t one p a y m e n t on th e te rm in a tio n d a te .
In d u s try

of

A nalysis o f re p a y m e n t m e th o d s by th e
in d u stry o f th e borrow er in gen eral
confirm s th e above finding reg ard in g
th e relatio n sh ip o f loan m a tu rity ' to th e m e th o d of
rep ay m e n t. In a given in d u stry , th e p ro p o rtio n of
loans to be rep aid in a single p a y m e n t te n d s to be
large w hen th e p ro p o rtio n o f loans m a tu rin g w ith in
a y e a r is large, and vice versa. In la st m o n th ’s
Review, it w as p o in te d o u t th a t th e sales finance
in d u stry h ad th e larg est p ro p o rtio n o f loans m a tu rin g
w ith in a one-year period, i. e. 90 p e rce n t, w hile public
utilities had th e sm allest p ro p o rtio n , 16 p ercen t. T h e
accom panying c h a rt in d icates th a t 84 p e rc e n t o f th e
loans to sales finance com panies w ere scheduled to
be paid off in one p a y m e n t, w hile th e co rresponding
p ercentage for th e public u tilitie s w as only 19 p e rc en t.

Borrower

R atio of th e Dollar Volum e of
Single Paym ent Loans to
All Loans, by Industry
of Borrower

100%

S iz e a n d
M a tu rity

April 1, 1947

P ER CENT O r
A L L LOANS

P ER C EN T OF
A L L LO AN S

IOOi----------------

---------- II00

20

II II ■
I
I
I
l
l
I I I ! ■n

April 1, 1947

MONTHLY BUSINESS REVIEW

9

INDUSTRIAL SUMMARY
Iro n a n d
S te e l

P ro d u ctio n o f ingots and steel for castin g
co n tin u ed a t a v e ry high ra te in F e b ru ­
ary w ith an o u tp u t o f 6.4 m illion to n s,
o r ab o u t 92 p ercen t o f in d u s try cap acity . T h e de­
crease o f one p e rc e n t from th e preceding m o n th w as
due to fuel and scrap sh o rtag es in c ertain areas. T h e
tre n d w as reversed in M a rc h , how ever, w ith w eekly
o u tp u t rising to new highs since 1945 w hen th e
n a tio n w as engaged in a tw o -fro n t w ar.
D istric t
cording to
percen t in
p ercen t in

p ro d u c tio n ra te s a t th e end o f M arch ac­
Steel were 1 0 1 per cent in P itts b u rg h , 94
C leveland, 91 p ercen t in Y ou n g sto w n , 87
C in c in n a ti, and 933^ p ercen t in W heeling.

T h e d o m in a n t fa c to r in th e in d u stry co n tin u ed to
be th e u n p reced en ted b u o y an cy o f th e scrap m a rk e t.
W ith th e exception o f a few in stan ces in W orld W a r I,
w hen isolated sales above 350 a to n w ere recorded,
th e m a rk e t w as a t an all-tim e high in m id -M arch .
Steel’s com posite price on steelm ak in g scrap was
336.58 a to n as co m pared to 319.17 a y e a r ago. In
P ittsb u rg h , th e price for h e a v y m eltin g grad es o f
scrap rose to 338.00 a to n w ith som e sales rep o rted
above th is figure. T h e p rin cip al cause o f these
prices ap p ears to be th e d isru p tio n in th e n o rm al flow
o f scrap from dealers to m ills. M a n y m e ta l fa b ri­
cators and o th e rs o u tsid e th e scrap in d u s try hav e
been co m p etin g for scrap on th e open m a rk e t in
o rder to deliver to n n ag es to th e ir finished steel
suppliers. E xcessive cross-hauling and p u rchases
outside o f n o rm al areas h av e resu lted in costs far in
excess o f re p o rte d prices.
T h e m o n th ly co n su m p tio n o f pu rch ased scrap in
th e first q u a rte r has been e stim a te d a t a b o u t tw o
m illion to n s, o r n e a rly eq u al to th e all-tim e high
established in M a rc h 1945. S tren u o u s efforts are
being m ade to increase th e flow o f scrap. S h ip -b reak ing activ ities are e stim a te d to be y ield in g a b o u t
50.000 to n s a m o n th . T h e W a r A ssets A d m in istra ­
tio n hopes to lo cate and dispose o f a t le a st 300,000
to n s o f scrap w ith in th e n e x t 60 days. T h e A rm y is
also plan n in g to ex p ed ite th e re tu rn o f scrap from
E u ro p ean w ar th e a tre s and 150,000 to n s m a y be
available from th is source. A n early re tu rn o f m ild
w eath er could m a te ria lly increase c o u n try scrap
collection.
H igh scrap prices h av e caused steel m ills to use
larger p ro p o rtio n s o f pig iron in th e ir furnaces and
fu rth e r reduced th e su p p ly o f iron av ailab le to
foundries. Pig iron prices a d v an ced from 32.50 to
34.00 per to n a t m ost basin g p o in ts due to th e tig h t
supp ly co n d itio n .
E vidence o f th e in ten se d em an d for
found, n o t only in steel m ill backlogs,
re p o rts o f a w idening “ g ra y ” m a rk e t

brokers. Sm all m etalw o rk in g shops in


steel can be
b u t in tra d e
o p e ra te d by
need o f steel

to finish w ork in process are said to be p ay in g fa n ta stic
prices.
T h e freig h t car bu ild in g p rogram w as expanded
from th e original 7,000 cars a m o n th goal to 10,000
cars. C u rre n t p ro d u c tio n is a b o u t 3,000 cars a
m o n th , and it is e stim a te d th a t th e enlarged schedule
ca n n o t be a tta in e d before th e th ird q u a rte r o f th e
year. Steel p roducers h av e agreed to provide th e
needed to n n ag e as it is required.
Effective M arc h 31, G o v ern m en t allocation of pig
iron w as disco n tin u ed for all item s ex cept cast iron
soil pipe and fittings. T hese item s still c o n stitu te a
m ajo r b o ttle n ec k for th e building in d u stry . T h is
action is expected to increase th e su p p ly o f iron for
non-housing in d u stries.
C on su m p tio n o f L ake S uperior Iro n O re am o u n ted
to 6 )4 m illion to n s in F e b ru a ry according to th e L ake
S uperior Iro n O re A ssociation. Stocks of iron ore
a t docks and furnaces declined to 24.3 m illion gross
to n s by M arch 1 as com pared to 33.6 m illion gross
to n s on th e corresponding d a te la st year.
Iro n
F o u n d r ie s

S hortages o f high grad e coke, pig iron,
and steel scrap h av e o p erated to hold
dow n p ro d u ctio n in ferrous foundries.
M e rc h a n t iron deficiencies are due d irectly to th e
scrap sh o rtag e as steel pro d u cers d iv e rt an increasing
q u a n tity o f h o t m e ta l to th e open h e a rth s. Low
q u a lity coke has also reduced o u tp u t. O rd e r b a ck ­
logs are re p o rted to be increasing and now a m o u n t to
th re e m o n th s p ro d u ctio n . Im p ro v ed lab o r su p p ly
and reduced tu rn o v e r are th e b rig h t sp o ts in th e
in d u stry .
T h e fo u n d ry e q u ip m e n t and re p a ir o rd e r index
which is com piled by th e F o u n d ry E q u ip m e n t M a n u ­
fa ctu rers A ssociation ad v an ced to 513 in J a n u a ry , a
rise o f 30 p e rc en t ov er J a n u a ry 1946. T h e base period
o f th is index is th e 1937—39 m o n th ly average. T h e
increase o f 400 p e rce n t m a y be ta k e n as a m easure
o f f o u n d r y e f f o r ts to m o d e rn iz e a n d in c re a s e
p ro d u ctio n .
C oal

P rese n t ind icatio n s p o in t to u n in te rru p te d
coal p ro d u ctio n , a t le ast u n til Ju n e 30,
w hen b itu m in o u s m ines are scheduled to be re tu rn e d
to p riv a te ow nership. O n M a rch 6, th e U n ited
S ta te s Suprem e C o u rt o rd ered th e head o f th e U n ited
M ine W orkers to w ith d ra w th e official notice to local
unions w hich set M a rc h 31 as th e ex p iratio n d a te of
th e p re sen t c o n tra c t. C om pliance w as m ade on M arch
19.
U n ite d S ta te s b itu m in o u s coal p ro d u ctio n for th e
first tw o m o n th s o f th is y e a r to ta le d 109.5 m illion
to n s. D aily average p ro d u c tio n is four and a h a lf
p ercen t above la st y e a r and w ould be even g re a te r if
th e car sh o rtag e could be overcom e. In d u stria l
stocks o f coal rose slig h tly in J a n u a r y to ap p roxi­
m a te ly 46 m illion to n s and w ere e q u iv a le n t to a
33-day supply.

10

MONTHLY BUSINESS REVIEW

F e b ru a ry p ro d u c tio n o f b itu m in o u s coal in th e
D istric t am o u n ted to 19.3 m illion to n s to b rin g th e
y e a r’s to ta l to 41.8 m illion tons. P ro d u ctio n for th e
first tw o m o n th s w as six p ercen t g re a te r th a n la st
y ear. C a r sho rtag es in th e n o rth e rn areas are m ore
severe th a n in th e so u th , and as m uch as a d a y and a
h a lf’s p ro d u ctio n a w eek is being lost because of
th is facto r.

Ceramics

T h e lack o f gas co n tin u ed to h a m p e r in d u strial
p ro d u ctio n ea rly in M a rc h in th e C leveland, W heel­
ing, and P itts b u rg h areas. Several large fuel users,
as a consequence, h av e co n v erted to fuel oil. F u rth e r
conversion to gas b u rn in g eq u ip m en t has been h alted
in b o th C leveland and C in c in n a ti for a t le a st a n o th e r
y e a r w hich h as im p ro v ed th e p rospects for th e sale
of sto k ers an d solid fuels.

Soap

P ro d u c tio n o f P e n n sy lv a n ia a n th ra c ite coal in th e
first tw o m o n th s o f 1947 fell six p ercen t below last
y ear. C a r shortag es and m in o r lab o r d isp u tes were
th e p rin cip al causes.
B eehive coke p ro d u c tio n in th e U n ite d S tates
to ta le d one m illion to n s th ro u g h M arch 1, up 36 per­
cen t from th e previous year.

Cement

D istric t cem en t m a n u fa c tu re rs a n tic i­
p a te a su b s ta n tia l rise in o u tp u t over
1946 and th e g re a te s t volum e since 1929. S everal mills
are proceeding w ith extensive m o d ern izatio n and
expansion pro g ram s. P ro d u c tio n plan s are con­
tin g e n t upon an a d e q u a te su p p ly of fuel and railroad
cars in w hich to m ove th e finished m a te ria l in th e
h ea v y ship p in g m o n th s from M a y th ro u g h O ctober.
T h e price o u tlo o k is stab le, alth o u g h charges for
p a p er and cloth co n ta in e rs m a y v a ry w ith th e cost
o f these item s.

Shoes

Shoe facto ries have begun to feel consum er
price resistan ce a t th e retail level. D ollar
shoe sales in O hio, as reflected by sales ta x collec­
tions, are slig h tly below 1946 for th e first te n weeks
o f th is y ear. W ith due co n sid eratio n f o r ' price
increases, th is w ould in d icate a decline o f a t least
15 p erce n t in u n it sales.
F acto ries re p o rt t h a t raw m a te ria l prices are still
rising. As a re su lt, co m m itm en ts hav e been reduced
and inven to ries are being held to a p ra c tic a l m inim um




April 1, 1947

w orking basis. T a n n e rs also h av e becom e cau tio u s
and in some instances hav e w ith d raw n a lto g e th e r
from th e hide m a rk e t. L ab o r has becom e m ore
q u iet and th is condition is believed to reflect th e
closing o f some e astern shoe factories and p a rt-tim e
o p eratio n s in o th e r shops.
D istric t din n erw are p ro d u ctio n con­
tin u es a t m axim um rates. P o tte rie s
w ere n o t seriously affected by th e gas sh o rtag es in
F e b ru a ry and M arch since m ost kilns are eq u ip p ed
w ith oil sta n d -b y facilities. O rd er backlogs rem ain
a t v ery high levels and cancellations are a b o u t
norm al. Im p o rts o f foreign w are hav e n o t been large
enough to affect dom estic o p eratio n s.
Soap p ro d u ctio n has a tta in e d a level su b ­
sta n tia lly above a y e a r ago. T h e in d u stry
is chiefly concerned o ver th e adv an ce in raw m a te ria l
costs. O ne large pro d u cer re p o rted th a t F e b ru a ry
prices advanced sh arp ly ; crude co tto n seed oil 21
percent, soybean oil 30 p e rc en t, co conut oil 16 p e r­
cent, and inedible tallo w 17 percen t. P rin cip a l soap
producers ad vanced m o st selling prices five p ercen t
in m id-M arch. D istrib u to rs’ stocks o f soap are low
b u t increasing steadily.

Rubber

A u to m o tiv e p n e u m atic casing p ro d u ctio n
in J a n u a ry co n tin u ed a t a v ery high level
according to th e R u b b e r M a n u fa c tu re rs A ssociation.
T ire p lan ts tu rn e d o u t a b o u t 6.9 m illion passenger
casings and 1.6 m illion tru c k and bus tires. F a c to ry
in v en to ries of these classifications rose 40 p erce n t and
24 percen t, resp ectively, d uring th e m onth.
D ealer stocks of passenger casings are ra p id ly
re tu rn in g to norm al and d istrib u to rs h av e resum ed
th e prew ar practice o f offering tra d e -in allow ances for
old tires and free m o u n tin g service for custom ers.
Shortly before th e p re se n t lab o r c o n tra c t expired
a t m id n ig h t M arch 23, th e U n ite d R u b b e r W orkers
U nion signed a new c o n tra c t w ith th e four larg est
ru b b er m an u fac tu rers. T h e agreem ent, re tro a c tiv e
to F e b ru a ry 2, provided for a 113^ cen t h o u rly wage
increase and will raise average ho u rly earn in g s to
ab o u t $1.45. T hese term s will u n d o u b te d ly set th e
p a tte rn for th e en tire ru b b e r in d u stry . T ire m a n u ­
factu rers in d icated th a t p resen t selling prices will
n o t be increased.

11

MONTHLY BUSINESS REVIEW

April 1, 1947

Indexes of DepartmentStore Sales and Stocks
Daily Average for 1935-1939 ■» 100
A d ju s te d
W ith o u t
for S easo n al V a ria tio n S easo n al A d ju s tm e n t
F eb .
Jan.
F eb .
F eb.
Jan.
1947
1947
1946
1947
1947
SALES:
A k ro n ( 6 ) .....................
C a n to n ( S ) ...................
C in c in n a ti ( 9 ) .............
C le v ela n d ( 1 0 ) ...........
C o lu m b u s ( 5 ) .............
Erie ( 3 ) .........................
P ittsb u rg h ( 8 ) ............
S pringfield ( 3 ) . . . . . .
T o led o ( 6 ) ....................
W h eeling ( 6 ) ...............
Y o u n g sto w n ( 3 ) . . . .
D is tric t ( 9 6 ) ____
STO CKSD is tr ic t........................

F eb.
1946

260
315
300
250
318
250
227
275
267
224
302
256

27S
310
260
224
277
253
247
265
236
214
279
256

249
279
285
233
301
225
200
281
244
229
252
236

232
239
225
195
239
212
204
215
211
181
244
210

209
238
213
186
225
197
186
193
175
150
215
194

222
212
214
182
226
191
180
219
192
185
204
194

261

257

163

242

225

151

Bank Debits — February, 1947

(29 F o u r t h

D is tr ic t C itie s )
B an k d e b its d u rin g F e b r u a ry a t 29 F o u r th D is tric t c itie s exceeded th e
F e b r u a r y 1946 t o t a l b y 26 p e rc e n t. T h is w as th e la rg e s t p e rc e n ta g e gain
r e p o r te d o v e r y ea r-a g o figures sin ce S e p te m b e r 1946, w h en th e id e n tic a l per­
c e n ta g e in c re a se w as re c o rd e d . T h e a v e ra g e c o m p a ra b le p e rc e n ta g e for th e
p a s t fo u r m o n th s w as 20 p e rc e n t.
A g g reg ate b a n k d eb its o f 3 5 ,2 7 0 ,0 0 0 ,0 0 0 fo r F e b ru a ry w ere c o n sid e ra b ly
below th e $ 5 ,9 50,000,000 figure for J a n u a r y , chiefly b ec au se F e b ru a ry is a
s h o r t m o n th . H o w ev er, th e F e b r u a ry d e c lin e a m o u n te d to o n ly 11 p erce n t
th is y e a r, co m p ared w ith 17 p e rc e n t in 1946 a n d 13 p e rc e n t in 1945.
T E N L A R G E S T C IT IE S
F o r th e s e v e n th successive m o n th , th e la rg e s t p e rc e n ta g e g ain o v e r y ea r-a g o
figures o cc u rre d in T o l e d o . T h e T o le d o p erc e n ta g e o f 42 p e rc e n t w as far
a b o v e th e a v e ra g e o f 26 p e rc e n t fo r all th e la rg e citie s. O th e r citie s w ith
in creases ab o v e th e a v e ra g e w ere C a n t o n , D a y t o n , P i t t s b u r g h a n d C i n ­
c i n n a t i w ith p e rc e n ta g e s o f 31, 30, 29 a n d 27 p e rc e n t re s p e c tiv e ly .
N IN E T E E N S M A L L E R C IT IE S
W a r r e n led th e sm a lle r c e n te rs in p e rc e n ta g e gains o v e r th e figures o f la s t
y ea r w ith a m a rk o f 47 p e rc e n t. S h a r o n a n a L e x i n g t o n likew ise exceeded
y ea r-a g o figures b y a w ide m a rg in , w ith p e rc e n ta g e gains o f 45 p e rc e n t. L e x ­
i n g t o n d e b its exceeded $ 3 0 0,000,00 0 fo r th e firs t tim e in a n y th re e -m o n th
p eriod. O th e r c itie s ex c eed in g th e D is tr ic t a v e ra g e o f 26 p e rc e n t for sm aller
c e n te rs w ere L o r a i n an d M a n s f ie l d w ith 36 p e rc e n t a n d P o r t s m o u t h w ith
33 p e rc e n t.
T h e ac c o m p a n y in g ta b le show s th e v o lu m e o f d e b its to all d e p o s it a c c o u n ts
(ex ce p t in te r b a n k balances) in 29 cities o f t h e F o u r th D is tric t. M o st o f th e
d e b its re p re s e n t tra n s fe rs o f fu n d s by check a lth o u g h d e b its to (w ith d ra w als
from ) sav in g s d ep o sits an d U . S. T r e a s u ry d ep o sits a t r e p o rtin g b an k s are
also in c lu d ed .
(I n th o u s a n d s o f dollars)
% C hange
3 M o n th s % C h an g e
F e b r u a ry
fro m
Ended
from
1947
y e a r ago
F e b ., 1947
y e a r ago
A L L 29 C E N T E R S ................$5,270,236 + 2 5 .9 %
$17,848,425
+ 1 8 .7 %
10 L A R G E S T C E N T E R S :
A k ro n ........................... O hio
199,741 + 1 5 .2 %
682,700
+ 2 2 .9 %
C a n t o n .........................O hio
85,425 + 3 0 . 7
283,946
+ 2 5 .9
C in c in n a ti.................. O hio
733,811 + 2 6 . 9
2,404,432
+ 1 8 .6
C le v e la n d ................... O hio
1,339,573 + 2 5 . 0
4,593,922
+ 1 2 .0
C o lu m b u s ................... O hio
355,023 + 9 .5
1,215,490
+ 6 .9
D a y to n ........................ O hio
186,812 + 2 9 . 8
598,807
+ 2 6 .9
318,682 + 4 3 . 6
1,065,982
+ 4 2 .0
T o le d o .......................... O hio
Y o u n g sto w n .............. O hio
96,466 + 2 4 . 1
331,598
+ 2 3 .6
E r ie ............................... P e n n a .
64,359 + 1 5 . 1
224,237
+ 1 5 .8
4,768,953
+ 2 1 .4
P itts b u r g h ..................P e n n a . 1,393,134 + 2 9 . 2
T o t a l ...................................... $4,773,026
19 O T H E R C E N T E R S :
C o v in g to n -N e w p o rt. K y.
L e x in g to n ................... K y . 93 ,1 5 0
H a m ilto n .................... O hio
L im a ............................. O hio 33,260
L o ra in .......................... O hio
M a n s fie ld ....................O hio
M id d le to w n ...............O hio
P o r ts m o u th ................O hio
S p rin g fie ld .................. O hio 37,220
S te u b e n v ille ...............O hio 16,700
W a rr e n ........................ O hio
Z a n e s v ille ................... O hio
B u tle r ...........................P en n a.
F r a n k lin ......................P e n n a .
G re e n s b u rg ................ P e n n a .
H o m e s te a d .................P e n n a .
Oil C i t y ....................... P en n a.
S h a r o n ....................... P e n n a .
W h e e lin g .....................W . V a.

30,706
+ 4 4 .7
26,479
+ 2 7 .6
13,195
30,399
24,612
15,904
+ 2 3 .8
+ 1 0 .9
28,391
19,508
22,508
5,355
14,259
5,940
16,407
19,632
43,585

T o t a l ...................................... $ 497,210

+ 2 5 .9 %
+ 1 2 .9 %
+ 2 1 .8
+ 3 6 .2
+ 3 5 .8
+ 1 4 .9
+ 3 3 .2
+ 4 7 .2
+ 1 5 .4
+ 2 2 .7
—1 0 .6
+ 1 6 .6
+ 1 6 .7
+ 1 4 .2
+ 4 4 .8
+ 1 0 .4
+ 2 5 .8 %

$16,170,067
104,047
307.502H
86,098
112,487
43,718
99,455
83,527
53,458
120,069
57,973
94,543
64,498
79,074
18,341
51,092
19,965
56,876
63,425
162,210
$ 1,678,358

H d en o tes new all-tim e high fo r o ne m o n th o r q u a rte r-y e a r.
Digitized
for toFRASER
* D ebits
all d ep o sit ac c o u n ts ex c ep t in te rb a n k b alan ces.



+ 1 8 .4 %
+ 1 4 .0 %
+ 2 1 .5
+ 2 3 .1
+ 2 9 .0
+ 2 8 .1
+ 3 4 .3
+ 2 2 .7
+ 2 8 .9
+ 2 1 .2
+ 1 6 .0
+ 3 6 .7
+ 2 3 .2
+ 3 3 .2
— 4 .3
+ 2 3 .0
+ 2 4 .3
+24 1
+30 3
+ 5 .8
+ 2 2 .2 %

Fourth District Business Statistics
%
F e b ru a ry
F o u rth D istric t U nless
1947
O th erw ise Specified
R e ta il Sales:
47,571
D e p a rtm e n t Store*—96 firm s ................. $
1,666
W earing A p p arel— 14 firm s ..................... $
2,457
F u rn itu re — 59 firm s.................................... f
59,307
B uilding C o n tra c ts— T o t a l ........................... $
31,499
— R e s id e n tia l............... $
1,190
C o m m ercial F ailu res— L ia b ilitie s ...............
16
— A c tu a l N u m b e r .
P ro d u ctio n :
4,550
Pig Iro n — U . S............................ N e t to n s
6,431
S teel In g o t— U. S....................... N e t to n s
B itu m in o u s C o al—
19,313
O ., W. P a ., E. K y ................... N e t to n s
1,158a
C e m e n t— O ., W. P a.. W. V a . . . . Bbls.
a— J a n u a ry ,
b— D ecem b er.

ch a n g e
from
1946

Ja n u a ry
1947
47,622
1,692
2,623
48,256
25,915
150
9

+ 9
- 8
+ 7
+ 19
+ 174
+ 1 ,6 0 0
+129

5,071
7,213

+296
+361

22,482
1,217b

+81

Time Deposits*—12 Fourth District Cities
(59 B an k s)
F o u rth
T im e
Q u a rte r
C ity a n d N u m b e r
D ep o sits
1946
o f B an k s
F eb . 26, 1947
C le v ela n d (4 ). . .$ 8 55,390,000 + $ 1 ,1 2 6 ,0 0 0
513,000
P itts b u r g h ( 1 3 ).
329,585,000 +
83,000
C in c in n a ti (8) . .
181,021,000 +
122,000
A k ro n ( 3 ) ............
99,7 6 8 ,0 0 0 +
120,000
9 0 ,2 2 3 ,0 0 0 +
T o le d o ( 3 ) ...........
158,000
C o lu m b u s ( 3 ) . . .
71,034,000 +
32,000
Y o u n g sto w n (3).
53,059,000 +
22,000
D a y to n ( 3 ) .........
49,49 7 ,0 0 0
10,000
C a n to n ( 4 ) ..........
3 9,540,000 +
11,000
E rie ( 4 ).................
3 6,642,000
26,000
W h eelin g ( 6 ) . . .
2 8,579,000
4,000
L ex in g to n ( 5 ) . . .
10,503,000

5 W eeks
Ended
J a n . 29, 1947
+ $ 2 ,2 7 4 ,0 0 0
655,000
229,000
+
204,000
+
281,000
+
116,000
54,000
31,000
+
—
8,000
98,000
+
56,000
+
50,000
+

4 W eek s
E nded
F eb . 2 6 ,1 9 4 7
+ $ 551,000
177,000
225,000
+
191,000
+
143,000
+
150,000
18,000
+
39,000
+
16,000
+
47,000
+
49 ,0 0 0
+
3 3,000
+

T o ta l— 12 C i t i e s . . $1,844,841,000 + $ 2 ,1 0 1 ,0 0 0 + $ 3 ,8 0 8 ,0 0 0
*of In d iv id u a ls , P a rtn e rs h ip s , an d C o rp o ra tio n s .

+ $ 1 ,6 3 9 ,0 0 0

+

+

+

+

Wholesale and Retail Trade
P e rc e n ta g e C h an g es
fro m P reced in g Y e a r
SALES SALES S T O C K S
F eb .
first
F eb .
1947
2 mos.
1947
+64
+ 7
+ 6
a
+
2
0
+13
+69+ 12
+ 5
+
5
6
+ 11
+ 7
+53
+ 9
+ 6
+42
+ 9
+11
+57
+ 16
+14
a
- 2
+ 2
+12
+ 9
+
4
7
- 2
+ 2
a
+20
+ 19
+50
+ 16
+ 8
+57
+13
+ 9

D E P A R T M E N T S T O R E S (96)
A k ro n ...............................................................................
C a n to n ..............................................................................
C in c in n a ti......................................................................
C le v e la n d ............ ...........................................................
C o lu m b u s............ ............................................................
E r ie ....................................................................................
P itts b u r g h .......................................................................
S p rin g fie ld .......................................................................
T o le d o .................... .........................................................
W h e elin g ........................... ..............................................
Y o u n g sto w n ..................................................................
O th e r C itie s ....................................................................
D is tric t.............................................................................
W E A R IN G A P P A R E L (14)
+56
- 8
C in c in n a ti.......................................................................
+ 1
+88
- 4
- 4
C le v e la n d ........................................................................
+37
- 2
- 6
P itts b u r g h .......................................................................
+33
-1 3
- 5
O th e r C itie s ...................................................................
+55
- 4
- 8
D is tr ic t.............................................................................
F U R N I T U R E (59)
+75
- 3
+12
C a n to n ..............................................................................
+66
-1 1
- 4
C in c in n a ti.................................................. ............... ..
+65
+13
+15
C le v e la n d .......................................................... .............
+28
+
10
C o lu m b u s .......................................................................
+ 8
a.
+10
D a y to n .............................................................................
+ 1
a.
a
a
P itts b u r g h .......................................................................
a.
+23
+31
A llegheny C o u n t y ......................................................
a<
+33
T o le d o ..............................................................................
+ 7
+64
O th e r C itie s ....................................................................
+ 7
+11
+57
+12
D is tric t.............................................................................
+ 7
W H OLESALE TR A D E**
+
2
2
+30
+
1
8
A u to m o tiv e Supplies ( 5 ) ...........................................
-2 2
+100-3 1
Beer ( 5 ) ............... ............................................................
2
2
at
-3 1
C lo th in g an d F u rn ish in g s ( 3 ) .................................
at
+ 15
C o n fec tio n ery (3). ..... .................................................
+ 9
3
a
-1 7
D rugs and D ru g S undries ( 3 ) .................................
a
+94
D ry G o o d s ( 4 ) ...............................................................
+ 2
a
a
+43
E le c tric a l G oods ( 3 ) ....................................................
+17
-0 F resh F ru its and V egetables ( 1 2 ) .........................
+ 5
+44
+10
+ 9
G ro cery G ro u p ( 3 4 ) ....................................................
a
+53
+53
T o ta l H a rd w are G ro u p ( 1 9 ) ....................................
+69
+S3
G en eral H a rd w a re ( 7 ) ...........................................
+45
a
+33
+38
In d u s tria l S upplies ( 7 )..........................................
a
+76
+ 102
P lu m b in g an d H e a tin g S upplies ( 5 ) ................
a
-3 2
-2 8
Jew elry ( 7 ) .................. ................................................ ..
a
+57
+60
M a c h in e ry , E q u ip . & Sup. (exc. E lect.) (3 ). . .
+40
+46
M e a ts a n d M e a t P ro d u c ts ( 3 ) ...............................
+57
a
+56
+85
P a in ts an d V arn ish es ( 3 ) ..........................................
a
+41
+35
P a p e r an d I ts P ro d u c ts ( 5 ) ......................................
+29
+13
+17
T o b a cco a n d Its P ro d u c ts ( 1 4 ) ...............................
+
4
0
+
2
9
+
3
5
M iscellaneous ( 1 5 ) .......................................................
+52.
+23
+17
D is tric t— All W h olesale T ra d e ( 1 4 7 ) ..................
** W h o lesale d a ta com p iled b y U . S. D e p a rtm e n t o f C o m m erce, B u rea u o f
th e C ensus,
a N o t a v a ila b le .'
Figures in p a re n th e se s in d ic a te n u m b e r o f firm s rep o rtin g sales.

12

MONTHLY BUSINESS REVIEW

April 1, 1947

SUMMARY OF NATIONAL BUSINESS CONDITIONS
B y the Board of Governors of the Federal Reserve System
In d u s tria l o u tp u t and em p lo y m en t w ere m a in ­
ta in e d in F e b ru a ry and th e early p a rt o f M arch at
th e record p eacetim e levels reached in Ja n u a ry .
V alue o f d e p a rtm e n t sto re sales has co n tin u ed a t a
seasonally a d ju ste d ra te close to th e level prevailing
since early la s t sum m er. W holesale com m o d ity
prices have ad v an ced fu rth e r.

Industrial Production
In d u stria l p ro d u ctio n , as m easured by th e B o a rd ’s
seasonally ad ju ste d index, w as m a in ta in e d in F e b ru ­
ary a t th e J a n u a ry ra te o f 188 p ercen t o f th e 1935-39
average.
O u tp u t of d u rab le m a n u fa c tu rers w as slightly
above th e J a n u a ry ra te , ow ing m ainly to increased
a c tiv ity in th e auto m o b ile in d u s try an d to a som e­
w h a t g re a te r th a n seasonal gain in p ro d u c tio n of
lu m b e r and o th e r build in g m aterials. T h e n u m b er
of autom obiles and tru c k s assem bled reached a new
po stw ar peak w hich w as a b o u t th e sam e as th e 1941
average.
T h e B o ard ’s index o f steel p ro d u ctio n show ed a
slight gain in F e b ru a ry as a 9 p e rc e n t increase in
o u tp u t a t electric fu rn aces m ore th a n offset a 2
p ercen t decline in p ro d u c tio n a t open h e a rth furnaces.
In M arc h scheduled o p e ra tio n s co n tin u ed to adv an ce,
reaching a new p o stw a r high o f 97 p ercen t o f c a p a c ity
in th e la s t w eek o f th e m o n th .
O u tp u t o f m a n u fa c tu re d food p ro d u c ts declined
som ew hat in F e b ru a ry , a fte r allow ance for th e usual
seasonal changes, ow ing larg ely to a re d u c tio n in th e
processing o f fru its and vegetables. A c tiv ity show ed
little change a t tex tile m ills, an d also in in d u strie s
producin g chem icals, ru b b e r p ro d u c ts, an d m ost
o th e r no n d u rab le m a n u fa c tu rers.
M inerals p ro d u ctio n w as m a in ta in e d a t th e J a n u a ry
ra te , as a 6 p ercen t decline in coal o u tp u t w as offset
in th e to ta l b y increased p ro d u c tio n of c ru d e p etro leu m
and m etals.

Construction
V alue o f c o n stru c tio n c o n tra c ts aw ard ed in F e b ru ­
ary w as a b o u t th e sam e as in D ecem b er, according
to th e F. W . D odge C o rp o ratio n . A w ard s in J a n u a ry
h ad been a b o u t o n e-fo u rth higher, ow ing m ain ly to
several large public an d p riv a te p ro jects. V alue of
aw ards for p riv a te n o n re sid e n tia l c o n stru c tio n con­
tin u ed to show little ch ange from th e reduced levels
reached in N o v em b er. T h e m axim um a m o u n t of
th is general ty p e o f a c tiv ity p e rm itte d u n d e r F ed eral
orders w as raised su b sta n tia lly on J a n u a ry 10th.

Distribution
D e p a rtm e n t sto re sales in F e b ru a ry and th e first




h a lf of M arch showed a b o u t th e usual seasonal
advance, and th e B o ard ’s a d ju ste d index o f sales
du rin g th e first q u a rte r o f th e y e a r is likely to be a t
a b o u t th e sam e average level as d u rin g th e fo u rth
q u a rte r of la st y ear, w hen th e index w as close to 270
percen t of th e 1935-39 average. V alue of d e p a rtm e n t
store stocks showed a g re a te r th a n seasonal increase
in F e b ru a ry and th e prelim in ary a d ju ste d stocks
index reached a level o f 280 percen t o f th e 1935-39
average.
S hipm ents of coal and m ost o th e r classes of revenue
freight declined som ew hat in F e b ru a ry , ow ing in p a rt
to severe w ea th er co n d itions, and th e n advanced
during th e first tw o w eeks o f M arch . L oadings of
forest pro d u cts, how ever, w ere co n siderably above th e
J a n u a ry ra te th ro u g h o u t th is period.

Commodity Prices
W holesale co m m odity prices co n tin u ed to rise
during F e b ru a ry and th e first h a lf o f M arch . T h e
B ureau o f L a b o r S ta tistic s’ index o f w holesale prices
a t 149 (1926 = 100) w as o n e -th ird above th e level o f
last Ju n e. T h ere w ere sh a rp increases to a new high
level o f 184 in th e in dex for farm p ro d u cts an d th e
average o f prices o f com m odities o th e r th a n farm
p ro d u cts co n tin u ed to rise.

Bank Credit
D eposits o f businesses an d in d iv id u als a t com ­
m ercial b an k s declined sh a rp ly an d T re a su ry deposits
a t F ederal R eserve B an k s increased in F e b ru a ry as
a resu lt o f large ta x p a y m en ts. T h is sh ift o f funds
to T re a su ry acco u n ts a t th e R eserve B anks p u t a
drain on m em ber b a n k reserves, w hich w as offset in
p a rt by a decline in req u ired reserves an d in p a rt by
an increase in R eserve B ank holdings o f G o v ern m en t
securities. In th e first h a lf o f M a rc h , how ever, w hen
T re a su ry deposits a t th e R eserve B anks w ere draw n
dow n in connection w ith cash re tire m e n t o f a b o u t
3 billion dollars o f m a tu rin g securities, m em b er b an k
reserve positions w ere eased co n siderably an d R eserve
B ank holdings o f G o v ern m e n t securities declined
sharply. C o m p letio n o f th e U n ite d S ta te s p a y m e n t
to th e In te rn a tio n a l M o n e ta ry F u n d in F e b ru a ry
resu lted in a decline in th e to ta l m o n e ta ry gold stock
o f th e T re a su ry and in o ffsetting changes in o th e r
T re a s u ry and F ed eral R eserve accounts w ith o u t
affecting m em ber b a n k reserve balances.
C om m ercial and in d u stria l loans increased fu rth e r
a t banks in leading cities. R eal e sta te loans rose
m o d erately . H oldings o f G o v e rn m en t securities w ere
reduced fu rth e r in F e b ru a ry th ro u g h sales to m ain ­
ta in reserve position an d w ere increased som ew hat
early in M a rc h as p urchases o f T re a su ry bills and
certificates w ere larg er th a n th e a m o u n t o f re tired
issues held by th ese banks.