Full text of Economic Review (Federal Reserve Bank of Cleveland) : August 1949, Vol. 31, No. 8

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MONTHLY

AUGUST 1949
CONTENTS

W h a t’s Happening in D airy Farming .

Seasonal Swings in Department
Store T r a d e ...................................................

District Statistical T a b l e s .............................

8-9

National Business Conditions .

F IN A N C E • IN D U STR Y • A G R ICU LTU R E • TRADE
FOURTH
Vol. 31— No. 8

FEDERAL

RESERVE

DISTRICT

Federal Reserve Bank of Cleveland

Cleveland 1, Ohio

What’s Happening in Dairy Farming
|-^A.RM ERS in the United States own about two
Jp percent fewer milk cows than a year ago, but
they are getting three percent more milk. The in
crease in yield per cow, as well as falling feed prices,
has reduced the cost of producing milk, but not
enough to offset the decline in the selling price of
milk. The annual cash receipts from dairy farming,
however, are still estimated at nearly $4,000 million
or double the prewar level. This figure represents a
seventh of the income from farm marketings and is
second only to receipts from meat animals, which,
incidentally, include large numbers of discarded dairy
cattle.
Developments such as these have great importance
for at least one of every two farm operators in the
Fourth District where the movement of milk from
farms to cities is much greater than average. Dairy
products are the leading source of income in over
half of the Ohio counties and in most of the Penn
sylvania counties.
In this region and others which supply much milk
for fluid consumption, the recent increase in pro
duction has been sharper than the over-all average
would suggest. Dwindling incomes have led farmers
to milk a larger proportion of their cows this year
than at any other time in eight years, but that
accounts for only a part of the high-level output.
Today’s situation is the result of a trend that has
been in progress since the war. The number of milk
cows on farms has tumbled twelve percent in the
postwar period, but production has held relatively
stable. Im portant causes of the higher rate of pro
duction per cow are the liberal feeding of rations
adapted for maximum production, and an increased
percentage of cows with inherited ability for high
production.

Better
Many milk cows are underfed. They reFeeding ceiye neither a large enough quantity of

feed nor a sufficient balance of nutrients
for the most profitable production of milk. U nder
feeding is most common on farms where dairying
is not a major enterprise, but it also occurs on some
well established dairy farms. Since there is much
room for improvement, it may be expected that any
general advance in feeding will raise noticeably the
yield of milk per cow. For instance, most of the up
turn in the past twelve months is probably due to a
record rate of grain feeding following the huge pro
duction of feed grains in 1948.
Certain other changes in feeding practices are of
a more perm anent nature. Grasses were once the only
widely used pasture and meadow crops, but today
grass is most commonly used in mixtures with
legumes, which have two or three times as much
digestible protein. Adoption of soil conservation
practices is partially responsible for increased pro
duction of pasture and hay and also for a higher
protein content of the roughages fed to livestock.
The growing use of soybean meal as a component
of the grain ration has further augmented the pro
tein intake.
Some practices by which dairy farmers improve
their production are so simple, inexpensive and
obvious that it is surprising they weren’t adopted
unanimously long ago. One of these is the provision
of drinking cups or other means of insuring an
ample supply of fresh, clean water for the cows.
For other practices the advantages are not always
so obvious. This is especially true of measures tend
ing to smooth seasonally the production of milk,
avoiding a high peak in May and June and a slump
in November and December. A study by the Ohio

P age 2

Monthly Business Review

Experiment Station indicates that herds with rela
tively heavy fall production produce more milk an
nually at a lower cost per hundredweight than those
with heavy spring production. To this advantage is
added that of selling more milk in the autum n when
prices are usually highest. A few farmers are taking a
step in that direction by breeding for fall freshening.
They are also learning that it pays to feed some silage
and an abundance of high-protein hay. Summer
pasture seasons are being lengthened by such crops
as alfalfa and ladino clover which thrive in hot
weather when bluegrass pastures are practically dor
mant. The Trum bull County experiment farm in
Ohio has had remarkable success in achieving an
even supply of milk at low feed costs. T he farm ’s
meadows of alfalfa, timothy and ladino clover fur
nish the three tons of hay per cow needed for winter
and supplement permanent pastures with all the
green feed the herd will eat. This requires about two
acres for each cow.
Better Cows j n recent years the principle of the

dairy herd improvement associations
has been greatly extended by cooperatives employing
owner-sampler testing. A farmer can now have the
tests without the expense of having them conducted
on his farm. He keeps individual records of milk
and butterfat production, which enable him to weed
out unprofitable cows, as well as to improve feeding
and breeding practices.
Artificial breeding cooperatives have come into
existence only recently, but this year 15 percent of
all dairy cows in Ohio are enrolled for artificial in
semination. The practice ultimately raises milk yields
because the cooperatives usually own higher quality
bulls than can be afforded by most individual dairy
men. Its popularity, however, stems mostly from a
more immediate profit aspect: for all except very
large herds artificial breeding lowers breeding costs.
Dispensing with the herd bull releases feed, labor and
buildings for additional cows or other enterprises.
Milk production is also affected by a gradual shift
which is occurring in the breeds of dairy cattle on
farms. In earlier days much milk was made into
farm butter or sold as cream for production of butter
by creameries. The consequent high premium on
butterfat led to extensive adoption of the high butterfat-producing breeds, Guernseys and Jerseys. Now
most milk is consumed in liquid form and the
demand for butterfat has shrunk. The rich creamproducing cows are still numerous, but in m ajor dairy
areas they are slowly being replaced by Holsteins,
which produce more milk.
High Yields for Changes in milk output reflect the
Best Profits
decisions of thousands of farmers

on the basis of their individual
profit and loss experiences. Most have learned that

August 1, 1949

the higher the production per cow, the lower is the
cost per hundred pounds of milk produced. Recent
investigations in Ohio and Pennsylvania indicate that
the one-third of the commercial milk producers who
have yields per cow of less than 6,000 pounds per
year are generally the - highest-cost third. There are
probably few in this group who would not be found
to be operating “in the red” if all costs were counted.
The low-cost third, on the other hand, generally
average over 7,000 pounds per cow, and those who
are most secure in profits from dairying approach
or pass the 8,000-pound mark. There are, of course,
several factors which enter into the determination
of profits, especially efficiency in the use of labor
and capital, but milk production per cow is one of
the most important.
High Prices
The most prominent economic conUntil Recently dition which has influenced the

decisions of dairy farmers in the
postwar era has been a rise in the general price level.
Farmers’ incomes from sales of dairy products rose
45 percent from the end of the war up to last year.
Since milk gallonage has changed relatively little it
is apparent that the rise in money income is due
almost entirely to price rises. Now that prices have
turned down, cash receipts have dropped despite
heavier marketings. Nationally, the cash receipts of
farmers from dairying will probably be down ten
to fifteen percent this year. The downtrend in prices
received by farmers for milk began in the late sum
mer of last year and completely eliminated the
annual peak which has usually occurred in November
or December. This year a more normal pattern will
probably appear.
The average price received by farmers for milk
has not yet fallen to the Government’s support level,
which is 90 percent of parity through 1949. Prices
of butterfat and milk for m anufacturing use, how
ever, have been at levels equivalent to their part of
the average “floor” . T o support those prices the
Commodity Credit Corporation has been buying
actively in the wholesale markets for several months.
Up to mid-June this year, 5.8 million pounds of
butter and 206 million pounds of dry skim milk had
been purchased both for price support and foreign
assistance programs. In addition E. C. A. funds have
been appropriated for about 125 million pounds of
cheese for Britain in 1949 and over half the amount
has been spent. Cheese was declared a surplus com
modity in June, automatically limiting E. C. A. cheese
purchases to U. S. production. The recent curtailment
of British purchases in this country, however, makes
future shipments uncertain.
One reason for the relative stability of fluid milk
prices during the recent general price decline is the
highly successful (from the farmers’ point of view)
operation of marketing orders issued by the Secretary

August 1, 1949

Page 3

Monthly Business Review

of Agriculture. Orders promulgated in the past four
years cover three large cities of the Fourth District
and numerous smaller places.

PERCENTAGE CHANGES IN MILK COW NUMBERS
January 1, 1945 to January 1, 1949
Ohio and Fourth District Pennsylvania

Fewer Cows but
Larger Herds

After the war, meat animal
prices rose more rapidly than
dairy product prices. In conse
quence many dairy cows were sold for beef. For some
farmers it was advantageous to liquidate the entire
herd and shift to some other enterprise. O n the
other hand, many farmers having resources best
adapted for dairying have intensified their operations
in order to overcome rising costs. The result is that
there are fewer dairy heards but these are larger in
size. This is but a continuation of a trend revealed
by each census over a long period.
A recent sampling of Ohio herds with six or more
cows producing milk for fluid bottling plants re
vealed an average size of between 14 and 15 cows.
The high-cost herds were usually smaller than average
and the low-cost herds were most often larger. About
the average number is necessary to justify investment
in milking machines and otherwise to use labor and
capital most efficiently. Above-average sized herds,
however, do not appear to have any special cost
advantage.
The net effect of changes on individual farms has
been a steady drop in the total number of milk cows.
From the record peak reached during the war the
number has dropped to the lowest point in 18 years.
Recent estimates of calves and young heifers on
farms seem to indicate that the limit of contraction
has about been reached and that, nationally, dairy
cow numbers will stabilize late this fall, but that in
the Fourth District the stabilization will be delayed
another year.
Fourth District I n this District the decline in the
Above Average number of cows has been less

rapid than the national average.
Dairymen in the state of Pennsylvania have coun
tered the general trend by maintaining their wartime
total of milk cows. The number in Kentucky has
dropped only four percent. The m ap shows the post
war percentage changes in the District counties for
which data are available—those in Ohio and Penn
sylvania.
The smallest decrease occurred in western Penn
sylvania and parts of northeastern and central Ohio
— an area in which dairying has a great relative
advantage over alternative agricultural pursuits. Here
soils unsuited for the most part to intensive cropping
without heavy application of animal and green
manures, a rolling terrain and a moist climate have
best utilization in production of forage crops. These
in turn can be marketed to best advantage by
being converted into milk. The reason is that this
region has large and easily accessible markets for

Decrease
0

Increase

to 2%

3% to 7%
8% to 12%
13% to 17%
18% or more

. . . . milk cow numbers decreased most in the Ohio Corn
Belt and least in the milksheds of large cities.
Source:
Services.

Com puted from estim ates of Federal-State Crop R eporting

fluid milk. City people are the m ajor consumers of
milk, which, due to its bulkiness and perishability
and the necessity for inspecting its source, must be
produced fairly near the cities. In western Ohio, on
the other hand, grain and hogs are relatively the
most advantageous enterprises. In that section milk
cattle numbers have been sharply reduced.
Relatively large losses of milk cows indicated for
most metropolitan counties reflect a high level of
industrial employment in these communities. High
urban wage rates and short hours make it difficult
for a farm operator to obtain necessary labor.
Demand for residential or industrial sites often pro
vides a more profitable use for suburban farm land
and a prosperous community sometimes provides the
farm operator himself with opportunities for more
profitable employment. Although nearby cities are
necessary for extensive dairy farming, they must not
be too near.
Changed Uses During the war Ohio farmers infor Milk
creased their sales of milk by nearly

15 percent, and most of this gain
has been retained. The form in which milk was

Monthly Business Review

P age 4

sold, however, continued to change after the war
in accordance with long-term trends. As indicated
by the accompanying table farmers employed the
cream separator less than formerly and sold more
whole milk.
Percentage Distribution of Ohio M ilk Sales
(Selected Years)

1941

Sold to plants and dealers
Whole m ilk .........................• . 71.7%
C rea m ................................ ... 20.1
Milk and cream retailed by
farmers.................................. .. 7.1
Farm butter s o ld ................... . 1.1
Total sa les............ .100.0%
Total sales—million pounds .,.
Source:

4083

1945

1948

83.0%
11.3

86.1%
9. 5

5.1
.6

3.9
.5

100.0%

4676

4647

U. S. Departm ent of Agriculture.

These changes occurred largely in response to
changes in consumer demand. A part of the increase
in demand for whole milk and whole milk products
is due to the normal growth of population. A larger
part of it is due to a high level of consumer incomes.
Consumption of fluid milk and ice cream is far above
the prewar level although it has slipped from the
peak of three or four years ago. Consumers are buy
ing greater quantities of cheese, evaporated and con
densed milk, and dried whole milk, but they are
buying less butter per capita than at the war’s end
and much less than before the war. A part of the
drop in butter sales resulted from the shift of many
consumers to margarine while prices were high. Since
prices have dropped within the past year, some
families have shifted back to butter. The long-run
rise in demand for fluid milk has also been assisted
by the ever-increasing number of municipal Grade A
ordinances, which assure a high-quality product and
make milk more attractive to the consumer.
A related attitude— the general insistence on pas
teurized milk— explains part of a steady decrease in
the amount of milk that farmers sell direct to con
sumers. Health regulations, moreover, have become
so exacting that many farmers have discontinued
retail sales of raw milk.
Larger
Investments

Over a long period of time the average
amount of capital invested in dairy
farms has risen steadily. The trend
in size of herds has been mentioned. In addition the
average value of individual cows has risen due to
the improvement in quality resulting from better
breeding practices. The era of high prices brought
good profits, available for purchase of additional
equipment; it also brought high wage rates as an
added incentive to the purchase of labor-saving
machinery. Tractors, manure spreaders and mowers
were bought in mounting numbers through last year
at least. It appears, however, on the basis of m anu

August 1, 1949

facturers’ shipments, that hay loaders, ensilage cutters
and forage blowers became sufficiently available to
satisfy the backlog of demand as much as two years
ago. Purchases of specialized dairy equipment,
moreover, appear to have reached the crest near the
end of the war.
With greater sales of whole milk it is necessary for
more producers to conform to the sanitary regulations
of communities where whole milk is consumed. A
farmer equipped only for production of sour cream
would have to spend a minimum of $700 to $1,000
on additional buildings and equipment before he
could ship to a fluid market. The capital outlay
would need to be even larger if he desired to equip
for more than a very small production or if he were
in the southern part of the District where mechanical
refrigeration is necessary. Whole milk for manufac
turing use does not require quite so much invest
ment, however. In the autumn of 1946 Ohio State
University questioned a number of farmers in north
western Ohio about the size of their investments in
milking machines and in equipment to cool milk and
wash utensils. Among those producing milk for
bottling the average was $61 per cow; among those
producing for condenseries it was $35 per cow.
Recent upward revisions of the ordinances in many
cities require water heaters and tanks and two-com
partment wash vats in milk houses. For some farm
ers this has also meant larger milk houses, and for
many it points up a need for a careful analysis of
the farm’s capital. It is difficult to make efficient
use of capital when the portion represented by land
and buildings is much over 60 percent. A Pennsyl
vania study disclosed that the most profitable onetenth of dairy farms had an average of about 55
percent of their capital tied up in real estate. In
addition, the operators of those farms practiced many
efficiency-promoting measures. Less than two years
were required for their gross receipts to equal total
assets. On the least efficient third of the farms about
70 percent of the investment was in real estate and
the turnover of assets required over three and a
half years.
Dealers also are conscious of milk quality. In the
flush spring season when more milk is produced
than the fluid market will take, they must cut down
on the amount they buy or drop some of it to m anu
facturing use. Unless they are tied to a producers’
cooperative which prohibits their doing so, they drop
the producers who are lowest on quality. Competition
to hold markets the year around induces some farm
ers to set their own standards above the legal minimums. T hat is responsible for much of the great
increase in mechanical refrigeration in milk houses.
Quality often gives the producer a choice of markets
and the equipment to achieve it reduces dairy chores.
Not many farmers would go back to the old ways.

(References on following page)

Page 5

Monthly Business Review

August 1, 1949

Seasonal Swings in Department Store Trade

U F F IC IE N T data have now been accumulated
since the end of the war to show that the present
seasonal pattern of department store trade is some
what different from that experienced during the war
years. It appears that December and May are more
im portant months for department store sales than
they were during the war, while the first four months
of the year, including Easter, are relatively less im
portant than they were in the previous pattern of
seasonal swings.
These conclusions are based on an analysis of
department store sales in the Fourth Federal Reserve
District covering the period from January 1938
through May 1949. The seasonal pattern previously
used in this district was based on experience from
1938 through the spring of 1946. Thus the revision
takes the form of adding to a previous foundation
the materials drawn from recent experience, rather
than an attempt to construct entirely separate pat
terns for prewar, war, or postwar periods. The
results, at least in broad outline, are similar to those
obtained by other Federal Reserve Banks which have
recently revised the seasonal outlines for their respec
tive districts.(1)
The first of the accompanying

Changes in Seasonal
charts shows the typical sea
Pattern of Sales

sonal pattern of Fourth Dis
trict department store sales, before and after the
(!) T h e m ethod used in revising Fourth D istrict seasonal patterns
is essentially the same as that em ployed in constructing the original
pattern and in earlier revisions. For a detailed description of the
m ethod see H . C. Barton, Jr., “ A djustm ent for Seasonal V ariation” ,
Federal R eserve B ulletin, June 1941, p. 518-528.
For sales indexes reflecting recent revisions of seasonal factors for
other districts and for the U nited States, see Federal R eserve B ulletin,
June 1949, p. 719.

latest revision. The solid line shows the latest pat
tern, based on experience from 1938 through May
1949, with sales for each month of the year expressed
as a percentage of the monthly average for the year.
The broken line shows the pattern before revision,
based on the experience from 1938 through part of
1946. Thus, the month of December now counts
for 164 percent of the monthly average of any given
year, while previously it had counted as 155 percent
of the monthly average.
One of the reasons for the greater importance of
December is probably the recent reversion to prewar
habits of last-minute Christmas buying. During the
war years, which counted heavily in the seasonal
pattern before revision, Christmas shopping was rela
tively earlier on account of overseas mailing, and
the entire Christmas bulge in trade appears to have
been less than in peacetime. The seasonal timing of
consumer buying during the war was affected con
siderably by the scarcities in certain types of consumer
goods.
The revision also resulted in raising the typical
May figure from 95 percent to 99 percent of the
monthly average. Conversely January, February, and
April were lowered by 2 or 3 percentage points
each, while M arch was lowered 5 points. October
was also lowered 1 point. The remaining five months
were unaffected by the change. The special adjust
ment to take account of the shifting date of Easter
was left unchanged.

TYPICAL PA T T E R N OF SEASONAL SWINGS
Fourth District Department Store Sales
Based on 1938-46 Experience and 1938-49 Experience
AVG. OF 12
M O NT HS= 100

DAIRY FARMING REFERENCES
O hio A gricultural E xperim ent Station, Costs of Producing M ilk in
Ohio, 1945-46, B ulletin 687, Decem ber 1948; T he O hio Farmer and
H is M ilk M arket, B u lletin 614, A ugust 1940. *
O hio Agricultural E xtension Service,
Check, B ulletin 284, A ugust 1947.

W ays to Increase Your M ilk

Pennsylvania Agricultural E xperim ent Station, A gricultural D evelop
m ent in the P ittsburgh D istrict (16 western Pennsylvania coun
ties), A pril 1949; Costs in K eeping a B ull Com pared w ith Artificial
B reeding, B ulletin 499, May 1948; O rganizing D airy Farms for
Efficient P roduction, B ulletin 478, A pril 1946.
U . S. Bureau of the Census, Farm M achines
for Industry, Series M35A, annually.

and E quipm ent,

Facts

U . S. Departm ent of Agriculture, Bureau of Agricultural Economics,
T he D airy Situation, monthly; Farm Production, D isposition and
Income From M ilk, annually.

* March and A pril in terms of 1949 Easter date.

. . . . revision of the typical seasonal sales pattern results
in higher May and December figures, offset by somewhat
lower levels for the first four months of the year.

Page 6

SEASONALLY ADJUSTED INDEX OF SALES
Fourth District Department Stores, 1946-49
19 3 5 -3 9 - 1 0 0

August 1, 1949

Monthly Business Review

1 9 3 5 -3 9 * 1 0 0

The all-time high in seasonally adjusted dollar sales
by Fourth District department stores under the old
index occurred in M ay 1948, with December of last
year running a very close second. After the revision
of the seasonal factors, it now appears that the peak
was in October 1948, with September 1948 running
a close second, as is shown in the second chart.
Postwar
Sales Trends

. . . . the new seasonally adjusted index of department
store sales reflects altered seasonal expectations by reduc
tion in May and December showings, and a relative
strengthening of the index during the early months of
the year.

Revision of District
Sales Index

Because of the changes in the
seasonal pattern, the season
ally adjusted index of depart
ment store sales has been correspondingly revised.
Wherever the seasonal expectation has been raised,
as in the case of December, the seasonally adjusted
index of actual department store sales correspondingly
falls, since the seasonal percentages are used as
divisors or “adjustment factors” applied to the ordi
nary unadjusted index of department store sales. The
effect on the seasonally adjusted sales index for the
Fourth District is shown in the second chart, cover
ing the period from 1946 through May 1949. Thus
the adjusted sales index for any given December or
May is lowered, while the indexes for January
through April, as well as October, for any given year
are raised.
Valleys
and Peaks

Some slight reinterpretation of what
has been going on in department store
trade during the past three or four
years emerges from the revision described above.
Business comments have given much emphasis to a
dip in trade in the first quarter of each of the three
years, 1947, 1948 and 1949. The revised seasonally
adjusted index for the Fourth District shows this
occurrence to have been less marked than had pre
viously been thought. In other words, part, although
not all, of the first quarter weakness during the years
in question appears to be seasonal in character, and
consequently the picture for those months becomes
somewhat more favorable when a more accurate
allowance for seasonal factors is made.
By the same token, the high points in May and
December sales become reduced or eliminated when
allowance is made for seasonal expectations.
Digitized forbetter
FRASER

Any seasonally adjusted index of departm ent store sales, when charted
over a period of time as in the second
chart, appears to run a somewhat choppy course, due
to the nature of trade itself as well as the unavoid
able imperfections of the seasonal adjustment factors.
In order to see the short-term trends more clearly, a
moderate smoothing of the curve may be effected by
the use of a three-months’ moving average as is done
in the third chart. Thus, the seasonally adjusted
sales index for Fourth District department stores,
when smoothed by the moving-average device, shows
a slight hesitation in the early parts 1947 and 1948
followed in each case by new high levels especially
in the middle part of the year 1948. The peak in
the early fall of last year was followed by a decline
which lasted through the latter part of the year and
well into this year. Some leveling or slight improve
ment on a seasonally adjusted basis occurred in the
second quarter of this year, although the significance
of this recent development is obscured by the current
uncertainties of the general business situation.
Revision of
The seasonal pattern of end-of-month
Stocks Index inventories held by Fourth District

department stores has also been re
calculated in the light of available postwar data. The
revision assigns a slightly higher value of stocks to

(Continued on Page 11)

SEASONALLY ADJUSTED IN D EX OF SALES
AND STOCKS (REVISED)
Fourth District Department Stores, 1946-49
(Smoothed by Three-Months’ Moving Average)
1 9 3 5 -3 9 -1 0 0

1 9 3 5 -3 9 - 1 0 0

. . . . postwar department store sales rose steadily until
the fall of 1948, while the inventory trend included two
periods of marked contraction.

Page 7

Revised Seasonally Adjusted Indexes of Department Store Sales
1935-39 =

100

FOURTH DISTRICT

Jan.

Feb.

Mar.

Apr.

1946......................
1947......................
1948......................
1949......................

226
263
291
311

242
263
291
284

260
270
284
279

251
280
305
301

245
286
307
295

1946......................
1947......................
1948......................
1949......................

265
282
306
310

252
263
299
296

285
266
293
296

256
309
295
308

278
299
328
307

1946......................
1947......................
1948......................
1949......................

253
322
342
361

290
328
346
342

313
328
357
374

282
344
379
376

1946.................... n
1947......................
1948......................
1949......................

229
273
304
310

270
285
309
297

280
291
313
292

269
302
315
305

1946......................
1947......................
1948......................
1949......................

210
241
276
292

227
243
269
260

244
248
263
256

231
254
275
271

1946......................
1947......................
1948......................
1949......................

257
287
321
360

277
290
326
324

300
304
317
318

277
311
347
346

290
322
360
353

1946......................
1947......................
1948......................
1949......................

238
256
295
336

239
265
298
317

277
277
305
320

240
292
335
352

251
309
333
334

1946......................
1947......................
1948......................
1949......................

207
247
259
293

217
246
269
264

253
257
263
260

229
255
282
284

1946......................
1947......................
1948......................
1949......................

250
269
291
284

271
265
286
276

299
271
279
266

255
288
295
259

254
294
302
283

1946......................
1947......................
1948......................
1949......................

214
246
286
296

238
260
280
263

252
266
271
268

231
258
292
297

236
272
294
286

1946......................
1947......................
1948......................
1949......................

211
224
242
273

238
232
245
245

261
225
253
238

225
239
243
261

1946......................
1947......................
1948......................
1949......................

241
286
318
348

246
294
320
325

297
281
302
349

261
313
358
346

May

Aug.

Oct.

Nov.

Dec.

249
290
316

250
273
319

266
296
293

262
292
300

304
298
318

283
293
334

268
284
326

276
313
295

283
308
327

314
325
405

345
329
380

317
336
415

315
334
396

314
361
368

317
348
376

283
309
341

309
292
337

288
308
336

281
288
331

279
323
309

278
308
316

233
258
282

265
247
279

249
266
287

241
248
291

250
284
275

250
277
284

300
307
334

302
308
368

344
312
372

314
326
378

287
304
366

306
338
332

315
330
349

278
296
336

270
294
347

297
301
338

261
305
335

254
289
353

262
304
335

271
319
336

254
261
284

281
262
303

200
284
299

218
267
308

255
255
272

250
278
279

268
282
307

301
295
303

266
302
309

271
292
324

268
305
284

264
299
298

250
273
311

294
278
305

251
282
323

256
261
316

251
285
285

254
285
302

242
249
270

270
246
266

237
259
283

233
226
265

234
250
234

229
252
253

291
310
349

320
311
343

288
325
376

280
305
358

282
330
333

280
318
349

June

July

272
284
306

260
281
313

286
273
308

270
299
330

Sept.

AKRON
301
299
314

CANTON
299
350
390
366

314
344
366

CINCINNATI
261
309
326
314

291
304
321

CLEVELAND
234
266
284
281

243
262
279

COLUMBUS

ERIE

PITTSBURGH
228
269
292
275

261
259
290

SPRINGFIELD
272
295
295

TOLEDO
260
272
280

WHEELING
230
253
276
253

257
240
266

YOUNGSTOWN
274
325
350
336

298
307
338

Revised Seasonally Adjusted Index of Department Store Stocks— Fourth District
1946......................
1947......................
1948......................
1949......................

157
256
277
274

163
260
285
275

170
257
290
285

180
249
290
260

192
238
277
267

202
226
267

214
217
258

213
224
261

225
225
266

236
241
269

244
262
296

256
270
293

Page 8

Monthly Business Review

August 1, 1949

DEPARTMENT STORE TRADE STATISTICS
Sales by Departments— June 1949
Percentage Changes from a Y ear Ago
(Fourth D istrict Reporting Stores)
(Compiled Ju ly 25, and released for publication Ju ly 26)
Fine Jew elry and W atch es........................................................................................... +16
Toys and G am es..................... ..................................................................................... + 4
Aprons, Housedresses and U niforms......................................................................... + 1
Neckwear and Scarfs.................................................................................................... + 1
Men’s Furnishings and H a ts ....................................................................................... —0—
Toilet Articles and Drug Sundries............................................................................ — 2
Blouses, Skirts and Sportsw ear..................................................................................— 2
Gift Shop......................................................................................................................... — 2
G irls’W ear...................................................................................................................... — 3
Corsets and Brassieres................................................................................................. — 3
Books and S tatio n ery ...................................................................................................— 3
H andbags and Small L eather G oods....................................................................... — 3
Inexpensive Dresses (Women’s and Misses’) .......................................................... — 4
Gloves (Women’s and Children’s )............................................................................ — 5
N otions............................................................................................................................ — 5
Draperies, Curtains, e tc ............................................................................................... — 6
Juniors’ Coats, Suits and Dresses.............................................................................. — 6
Shoes (Women’s and C hildren's).............................................................................. — 7
Costume Jew elry ........................................................................................................... — 7
B etter Dresses (Women’s and Misses’) ....................................................................— 8
Shoes (Men’s and B oys’) ............................................................................................. — 8
Underwear, Slips and Negligees................................................................................ — 8
Housewares..................................................................................................................... — 9
M illinery.......................................................................................................................... — 9
Luggage............................................................................................................................ — 9
Sporting Goods and C am eras..................................................................................... — 9
H osiery............................................................................................................................ —JO
Infants' W e ar..................................................................................................................
11
A rt N eedlew ork.............................................................................................................—11
Silverware and Clocks................................................................................................. —11
China and G lassw are................................................................................................... —11
Men’s C lothing...............................................................................................................
11
Records, Sheet Music and Pianos............................................................................. —11
Boys’W ear......................................................................................................................
12
Lamps and Shades........................................................................................................
12
Linens and Tow els......................................................................................................... —14
H andkerchiefs....... .......................................................................................................
14
Furniture and Bedding.................................................................................................
15
Blankets and C om forters............................................................................................ —15
C an d y .............................................................................................................................. —15
Domestics, Muslins and Sheetings............................................................................ —17
C otton W ash G oods............. ....................................................................................... —i .
Radios, Phonographs and Television.......................................................................
ji
F u rs................................. . • ■ ........................................................................................
"jj
Silks, V elvets and S y n th etics.................................................................................... —2d
D om estic Floor Coverings.......................................................................................... —25
Laces and T rim m ings................................................................................................... —30
M ajor Household Appliances...................................................................................... —o2
Coats and Suits (Women’s and Misses ) .................................................................. —34
Woolen Dress G oods.....................................................................................................
49
G R O U P TOTALS
B A SEM EN T ST O R E T O T A L ................................................................................ — 3
Small W ares....................................................................................................................
“
Men’s and Boys’ W ear............. ...................................................................................
*>
W omen’s Apparel and Accessories.............................................................................
7
G R A N D TO TA L (reporting sto re s)....................................................................... — 9
Miscellaneous M erchandise D ept’s ............................................................................ — 9
M A IN ST O R E T O T A L ............................................................................................. —10
Housefurnishings..........................................................................................................
|‘
Piece Goods and Household Textiles....................................................................... —u
Sales b y Fourth D istrict departm ent stores during June failed to m atch yearago volume in all but five departm ents. T he decline from M ay, however, was m od
erate for m ost departm ents, and a number showed gains from M ay levels. Total
sales in June, seasonally adjusted, were 5% below M ay.
. . . .
Sales of th e men’s and boys’ wear group of departm ents were relatively favor
able. Although 6% below a year ago, sales of th is group to taled higher th an in
M ay and th e gain was approximately in line w ith seasonal expectations. Sales
of men’s furnishings, for example, showed th e usual strong pick-up from M ay, and
were unchanged from year-ago levels. Sales of men’s clothing, down 11% from a
year-ago, also increased seasonally from M ay. _
In th e women’s w ear group, w here June sales in m ost departm ents are normally
lower th an in M ay, th e showing was uneven. Sales of the group as a whole were 7%
below a year ago, and substantially down from M ay. Certain departm ents, how
ever held up well. Sales of aprons, housedresses and uniforms, for example, were
a t a new high for th e m onth, 1% above a year ago. Sales of neckwear and scarfs
were also 1% above a year ago. M ost departm ents in th e group showed m oderate
sales declines, less th an 10%, from year-ago levels. Sales of women s and misses
coats and suits, however, were more th an seasonally down from M ay, and were
34% below a year ago, representing a five-year low for th e m onth.
Sales in th e housefurnishings group of departm ents averaged 17% below a year
ago, and 6% below two years ago. More th an seasonal declines from M ay were
shown in sales of domestic floor coverings and of furniture and bedding, where the
year-to-year declines were 25% and 15% respectively. Sales of major household
appliances, down 32% from a year ago, were off slightly from M ay on a seasonally
adjusted basis, b u t nevertheless were b e tte r th a n in several of th e earlier m onths
th is year. Sales b y th e radio, phonographs and television departm ent were 23%
below a year ago, and were off from th e previous m onth for th e th ir d successive
report.
,
Among other departm ents, sales of jewelry and fine watches topped la st year by
16%, w ith a high dollar volume reflecting th e traditional June season as well as
special sales promotions. Sales of piece goods and household textiles, however,
were 17% below a y ear ago.
.
All comparisons refer to dollar volume w ithout adjustm ent for price changes.

Department Store Inventories— June 30, 1949
Percentage Changes from a Y ear Ago
(Fourth D istrict Reporting Stores)
(Compiled July 27, and released for publication July 28)
China and G lassw are.................................................................................................... +11
Woolen Dress Goods..................................................................................................... + 6
B etter Dresses (Women’s and Misses’) .................................................................... + 6
Inexpensive Dresses (Women’s and Misses’) ........................................................... + 6
Juniors’ Coats, Suits and D resses.............................................................................. + 6
Radios, Phonographs and Television....................................................................... + 5
Gift Shop......................................................................................................................... + 3
Coats and Suits (Women's and M isses’) ................................................................... + 3
Laces and Trim m ings................................................................................................... + 2
Blouses, Skirts and Sportsw ear.................................................................................. + 1
Shoes (Women’s and Children’s ) ............................................................................... —0—
Handbags and Small Leather G oods........................................................................—0—
Silverware and Clocks..................................................................................................—0—
Toys and G am es............................................................................................................ — 2
Shoes (Men’s and Boys’) .............................................................................................. — 2
Books and Stationery................................................................................................... — 2
Costume Jew elry ........................................................................................................... — 3
Sporting Goods and C am eras..................................................................................... — 4
N otions............................................................................................................................ — 4
A rt Needlework............................................................................................................. — 5
Corsets and B rassieres................................................................................................. — 5
Luggage......................................... .................................................................................. — 6
Toilet Articles and Drug Sundries............................................................................. — 7
M en’s C lothing............................................................................................................... — 7
Lamps and S hades........................................................................................................ — 7
U nderwear, Slips and Negligees................................................................................. — 7
Boys’ W ear...................................................................................................................... — 8
Fine Jew elry and W atches........................................................................................... — 8
D om estic Floor Coverings.......................................................................................... — 8
Housewares..................................................................................................................... — 9
Draperies, Curtains, e tc ............................................................................................... —10
G irls’W ear...................................................................................................................... —10
F u rs................................................................................................................................... —11
Men’s Furnishings and H a ts ........................................................................................ —11
Gloves (Women’s and Children’s )............................................................................. —11
Silks, V elvets and Synthetics..................................................................................... —11
Furniture and Bedding................................................................................................. —12
B lankets and C om forters............................................................................................. —12
Neckwear and Scarfs.................................................................................................... —13
H andkerchiefs................................................................................................................ —13
M illinery.......................................................................................................................... —13
C otton W ash G o o d s..................................................................................................... —14
M ajor Household Appliances....................................................................................... —15
Aprons, Housedresses and Uniforms......................................................................... —15
Linens and Towels......................................................................................................... —15
Infants'W ear........... .............. ........................................................................................ —
Records, Sheet Music and Pianos.............................................................................. —16
C an d y ............................................................................................................................... —1?
Domestics, Muslins, Sheetings................................................................................... —23
H osiery............................................................................................................................
29
G R O U P TO TA LS
Sm all W ares............................... ...................................................................................
4
W omen’s Apparel and Accessories............................................................................. — Jj
G R A N D TOTAL (reporting sto re s)........................................................................ — 7
B A SEM EN T ST O R E T O T A L ............................................................................... — 7
Men’s and Boys’W ear..................................................................................................
jj
M A IN ST O R E T O T A L............................................................................................ — 8
Housefurnishings............ ..............................................................................................
°
Miscellaneous M erchandise D e p t's............................................................................
jj
Piece Goods and Household Textiles....................................................................... —14
Inventories of Fourth D istrict departm ent stores resumed a downward trend
during June. Reduction during th e m onth am ounted to 7% on a seasonally adjusted
basis, and a t m onth end stocks were below year-ago levels, also b y 7%.
Stocks of piece goods and household textiles as a group were down 14% from a
year ago, w ith th e trim m ing of inventory accompanying lagging sales. Stocks of
domestics, muslins and sheetings, for example were off 23% from a year ago, and
stocks of linens, and towels were down 15%. However, inventories of woolen dress
goods, where sales have been very slow, were up 6%.
In th e housefurnishings group of departm ents, stocks a t th e end of June aver
aged 8% below a year ago. Here, too, sales for th e m ost part have been a t reduced
levels. Stocks of records, sheet m usic and pianos were down 16%, and stocks of
major household appliances were off 15%. The only housefurnishings lines which
showed evidence of recent inventory accumulation were china and glassware, where
stocks on June 30 were 11% above a year ago, and radios, phonographs and television,
where stocks were up 5% from a year ago.
T he men’s and boys’ wear group of departm ents, w here June sales reports were
favorable, closed th e m onth w ith stocks som ew hat reduced from M ay and 8%
below a year ago. Stocks of men’s furnishings and hats, for example, were 11%
below a year ago, and a t a three-year low for th e m onth. ^
W ide variation among departm ents occurred in th e women s w ear group, where
th e to ta l inventory a t m onth end was 6% below a year ago. Nine departm ents in
th e women’s wear group registered year-to-year declines in stocks amounting to
10% or more. Stocks of hosiery, for example, were down 29%, and stocks of neck
wear and scarfs, down 13%, were a t a six-year low for th e m onth.
.
At th e other extreme stocks of women’s and misses dresses and of juniors coats,
suits and dresses were up 6% from a year ago in each case, and stocks of women s
and m isses’ coats and suits were up 3%.
,
„
The decline from a year ago in stocks of small wares, amounting to only 4 /0,
was th e sm allest registered b y any departm ental group. Sm all wares as a group
also showed th e sm allest June sales decline from a year ago.
All comparisons refer to dollar value of inventory a t retail, w ithout adjustm ent
for price changes.

August 1, 1949

Monthly Business Review

Page 9

FINANCIAL AND OTHER BUSINESS STATISTICS
Time Deposits— 12 Fourth District Cities

Bank Debits*— June 1949

(Compiled July 7, and released for publication July 8)

C ity and N um ber
of Banks

AverageW eekly Change During:
June
M ay
June
1949
1949
1948

Tim e Deposits
June 29,1949

Cleveland (4).............. $ 897,349,000
459,606,000
P ittsburgh (11)...........
Cincinnati (8)..............
183,499,000
Akron (3).....................
103,152,000

—$127,000
— 94,000
+ 128,000
— 73,000

Toledo (4)....................
Columbus (3)...............
Youngstown (3)...........
D ayton (3)...................

103,252,000H
83,506,000
64,597,000
46,536,000

+
—
—
—

12,000
19,000
32,000
27,000

Canton (5)...................
E rie (4).........................
W heeling (5)................
Lexington (5)...............

43,208,000
40,038,000
28.058,000
10,720,000

—
—
—
+

40,000
10,000
31,000
18,000

TO TA L—12 C ities.. $2,063,521,000

(In thousands of dollars
(Compiled June 14, and released for publication July 15)

—$295,000

-$
—
—
—

688,000
107,000
163,000
40,000

+
+

96,000
34,000
91,000
63,000

—

— —

57,000
7,000
2.000
8,000

—$1,080,000

+$1 ,325,000
— 231,000
— 110,000
4,000
—
+
+
—
+
—

+
—

100,000
252,000
30,000
73,000
112,000
97,000
86,000
1,000

+$1 ,329,000

H —Denotes new all-tim e high.
For th e second m onth in succession, th e tren d of tim e deposits has been adverse
in relation to th e sam e interval in 1948.
During th e five weeks ended June 29, tim e deposits a t 58 reporting banks in 12
Fourth D istrict cities declined a t th e ra te of $295,000 per week in contrast to a
gain of 11,329,000 per week in June 1948. Twenty-six banks reported gains during
la st m onth, while 32 experienced sm all decreases.
Individual Cities
In Canton, Cleveland, Columbus, and Wheeling th e trend during June was down
w ard in contrast to one of expansion in th e same m onth la st year.
In b o th Akron and Youngstown, th e contraction this June was som ew hat more
noticeable th a n a year ago.
T im e deposits in Toledo reached a new all-tim e high during June, b u t th e rise
was nominal in relation to th e increase in June 1948.

- 1.9%
+ 6.2
+18.9

+21.1%
— 0.3
+29.9

+ 6.0
— 4.4

+52.1
—27.1

— 1.2
—31.9

+55.1
+15.0

T o tal consumer in stalm ent credit
Personal in stalm en t cash loans
R epair and modernization loans
D irect retail instalm ent loans
(a) Autom obile
(b) O ther
R etail instalm ent paper purchased
(a) A utomobile
(b) O th er

+ 0.9%

— 3.6%
— 4.6
— 6.4
— 1.6
+ 5.1
— 5.3
— 7.4
— 2.5
— 6.5
+11.3

113

T O T A L ............................... $6,587,758
21 O ther Centers:
9Covington-Newport . . . K v. $ 42,061
6 Lexington........................ K y.
56,714
3 E ly ria .............................Ohio
17,801
3 H am ilton.......................Ohio 38,786
—
2 L im a ...............................Ohio
40,274
5 L orain............................ Ohio
18,195
4 M ansfield.......................Ohio
38,664
30,548
2 M iddletow n...................Ohio
3 P o rtsm outh ...................O hio
19,983
3 Springfield.....................Ohio
46,293
4 Steubenville.................. Ohio
21,955
2 W arren........................... Ohio
36,307
3 Zanesville...................... Ohio
25,275
3 B u tle r......................... Penna.
28,683
1 F ranklin..................... Penna.
6,518
2 Greensburg.................Penna.
22,352
4 K ittanning................. Penna.
11,239
3 M eadville...................Penna.
13,045
4 Oil C ity ...................... Penna.
19,322
5 Sharon........................ Penna.
26,963
6 W heeling....................W . Va.
61,579

T O T A L ............................... $ 622,557

—0—

673,491
321,646
2,466,284
5,274,102
1,673,415
643,118
963,291
445,383
248,806
6,108,339

$18,817,875

— 4.0%
$
— 5.5
— 9.5
5.2
—10.0
— 6.5
—11.1
—10.2
—12.8
+ 1.7
—13.6
— 4.1110,080
—12.1
—11.7
—13.0
— 1.3
— 3.0
—10.5
— 6.8
— 1.9
+ 1.9
— 6.2%

116,901
166,862
52,957
109,107
120,173
52,939
118,498
94,086
60,617
135,066
64,316
—0—
77,929
88,242
20,067
63,636
29,955
34,485
54,595
81,632
179,597

$ 1,831,740

+ 1.4%
— 2.8%
— 2.4
—10.5
— 6.7
— 6.7
— 6.4
— 7.4
— 6.1
— 3.4
— 0.8
—10.5
— 4.5
— 7.0
— 7.6
+ 0.5
+ 1.6
—15.5
—11.8
+ 4.3
+ 5.3
— 3.8%

+37.3
— 7.3

Indexes of Department Store Sales and Stocks

+2.0
+1.9

+80.3
+17.8

T he volume of consumer cred it extended during June by th e 25 reporting m em ber
banks of th is D istrict was only slig h tly less th a n th e record volume of la st m onth,
and was in excess of th e year-ago level for th e fourth successive m onth.
A new peak was reached in th e dollar amount of new direct automobile instal
m ent loans which was about 52 percent larger th a n in June 1948. T he volume of
repair and modernization loans m ade was also considerably greater th an a t any
tim e in th e postw ar period, and ran alm o st 30 percent above th e June to ta l la st
year. On th e o th er hand, to ta l a c tiv ity in th e form of new instalm ent loans on non
autom otive products, including b o th direct loans and purchased paper, and new
personal instalm ent cash loans, was virtually unchanged from a year ago.
Paced b y th e expansion in automobile loans, and in repair and modernization
credits, th e aggregate of consumer instalm ent credit outstanding a t th e end of
June reached a new postw ar high, and was about 20 percent above th e comparable
m onth of 1948.
Existing loans (exclusive of purchased paper) were being paid off a t a ra te of
slightly more th a n 1VA percent of th e am ount outstanding a t th e beginning of
th « m onth. T his ra te of repaym ent has been fairly constant for th e past three
m onths, and is virtu ally th e same as in June of la st year.

*20,649,615

— 7.9%
—10.9
— 9.6
— 6.4
+ 3.3
— 6.6
— 5.7
— 8.3
— 9.2
+14.7

+5.0
—2.0

O utstanding a t E nd of Mo.
Com pared W ith
Mo. Ago Y r. Ago

Type of C redit

— 0.6%

+19.7%
— 2.1
+22.5

25 Fo u rth D istric t M em ber Banks
(Compiled Ju ly 20, and released for publication Ju ly 21)

Y r. Ago

191 A LL 31 C E N T E R S ............87,210,315
10 L A R G E S T C E N T E R S :
5 A kron..............................Ohio $ 224,643
5 Canton........................... Ohio
101,852
16 Cincinnati...................... Ohio
864,277
10 C leveland...................... Ohio 1,821,128
7 Columbus.......................Ohio
555,254
4 D ayton...........................Ohio
214,304
6 Toledo............................Ohio
332,520
4 Youngstown...................Ohio
150,086
6 E rie .............................Penna.
83,105
51 P ittsb u rg h ................. Penna. 2,240,589

% Change
from
Year Ago

+3.0%
+2.4
+4.3

Changes in Consumer Instalment Credit
June 1949

New Loans M ade

3 M onths
Ended
June, 1949

♦D ebits to all deposit accounts except interbank balances.
D ebits to deposit accounts (other th a n interbank accounts) in 31 Fourth Dis
tric t cities rose more th a n seasonally during June to nearly $7,211,000,000, b u t were
nominally below th e year-ago level for th e first tim e in th e postw ar period. This
was due to th e fact th a t while th e shrinkage in debits a t th e 21 sm aller centers
continued for th e th ird successive m onth, d ebits a t th e 10 larger centers failed for
the first tim e to register a year-to-year im provem ent.
The volume of deposits was som ew hat in excess of June la st year, w ith th e result
th a t th e ra te of turnover of deposits was slower th a n in th e com parable m onth of
1948.
T E N LA R G EST C EN TER S
Declines from year-ago levels were reported b y eight of th e largest centers.
These ranged from 11% in Canton to 7% in Cleveland and 6% in Toledo, which in
dicates th a t th e falling off in th e volume of money transfers was b o th general and
fairly uniform in extent. H owever, a sharp rise of 15% in Pittsburgh, together w ith
a sm all upswing in Columbus, was sufficient to offset th e general downward trend,
and m aintain th e debit volume for all ten centers on a par w ith la st year.
TW ENTY -O N E SMALLER C EN TER S
In June, th e year-to-year decline in d ebit volume, w hich has become increas
ingly general in recent m onths, was apparent a t all th e sm aller centers except
Wheeling and Springfield, w hich recorded slightly higher levels th a n in th e corres
ponding m onth of 1948. Portsmouth and Steubenville showed th e m ost outstand
ing declines from th e all-tim e highs registered b y th e m a year ago. For th e past
three m onths combined, only four centers have exceeded year-ago levels and in
none of them has th e gain been appreciable.

On th e other hand, in Dayton, Erie, and Pittsburgh, th e shrinkage in tim e de
posits in June, was less pronounced th a n it was la st year. And in Cincinnati and
Lexington, tim e deposits actually expanded during June in contrast to a reduction
in th e sam e m onth of 1948.

Mo. Ago

No. of
% Change
Reporting
June
from
Banks_______ ___________________1949_____ Y ear Ago

D aily A verage for 1935-1939 = 100
A djusted for_
W ithout
Seasonal V ariation
Seasonal A djustm ent
June
M ay
June
June
M ay
June
1949
1949
1948
1949
1949
1948
SALES:
Akron (6)................................. 283
307
Canton (5)............................... 328
366
Cincinnati (8).......................... 290
314
Cleveland (10)........................ 263
281
Columbus (5).......................... 312
353r
Erie (3).................................... 312
334
P ittsburgh (8)........................ 266
275
Springfield (3)......................... 267
283
Toledo (6)................................ 270
286
Wheeling (6)............................ 228
253
Youngstown (3)...................... 305
336
D istrict (96)............................ 281
295
stocks*
D is tric t.................................... 249
267
r—R evised. B ack figures: Revised index series
through M ay 1949 are shown on p. 7 of th is issue.

314
366
321
279
334
336
290
295
280
266
338
313

266
315
270
250
300
284
258
259
251
210
287
265

298
363
314
272
336r
317
275
283
277
248
326
292

295
351
299
265
321
306
281
287
260
244
317
288

267r
244
269
262
for period from January 1946

Page 10

Monthly Business Review

August 1, 1949

SUMMARY OF NATIONAL BUSINESS CONDITIONS
By the Board of Governors of the Federal Reserve System
(Released for publication July 27, 1949)

In d u strial o u tp u t declined further in Ju n e. De
p artm en t store sales declined somewhat m ore than
usual in this period, while sales of autom obiles were
m aintained in record volume. Construction contract
awards increased fu rther. Prices of basic commodities
showed some recovery from m id-June to mid-July;
the average level of all wholesale commodity prices
showed little change.
Industrial production

T h e B oard’s seasonally adjusted index of indus
trial production in Ju n e was 169 per cent of the
1935-39 average—3 p er cent lower than in May and
13 p er cent below the postwar peak level reached in
October and N ovem ber 1948. T h e decline in June
reflected m ainly fu rth er curtailm ent of o u tp u t in
most durable goods industries and a m arked decline
in activity in the coal m ining industry. Production
of nondurable goods as a group was m aintained at
the reduced levels prevailing in A pril and May.
Iro n and steel production decreased sharply in
Ju n e and declined fu rth er by mid-July. O u tp u t of
open h earth steel in Ju n e was at 85 per cent of ca
pacity, while electric steel output, following a decline
of one-third from the reduced May level, was at 39
per cent of capacity. Activity in most m achinery
industries was curtailed fu rth e r in June. Production
of lum ber and of stone, clay and glass products re
m ained about 11 per cent below last year’s level.
O u tp u t of passenger automobiles, which had been
reduced in May by a labor dispute at the plants of
a m ajor producer, increased considerably in Ju n e
and was at a new high rate in mid-July.
Activity in the textile industries increased some
w hat in Ju n e from the very low levels reached in
May. O u tp u t of apparel wool textiles showed a
fu rth er recovery from the A pril low point. Produc
tion of m anufactured foods rose slightly in June.
N ew sprint consum ption, however, decreased from the
record May rate, and activity at petroleum refineries
an d chemical plants also declined somewhat.
M inerals production decreased in Ju n e reflecting
largely a m arked reduction in coal o u tp u t as a result
of a work stoppage and the beginning of the annual
vacation period. Coal o u tp u t rem ained at a low level
in July w ith most mines operating three days a week.
Production of crude petroleum was curtailed slightly
in Ju n e and somewhat m ore in early July.
Construction

Value of construction contracts aw arded in June,
according to the F. W . Dodge Corporation, increased
fu rth e r to 946 m illion dollars as com pared w ith 880
m illion in May and 935 m illion in Ju n e 1948. T h e
increase reflected chiefly a fu rth e r rise in awards for
private residential work an d an expansion in awards
for public utility construction. T h e num ber of new
housing units started in Ju n e totaled 100,000, accord

ing to the B ureau of L abor Statistics. T his was 5,000
m ore than in May and equal to the postwar high
reached in May 1948.
Distribution

Value of departm ent store sales showed somewhat
more than the usual seasonal decline in Ju n e and
the B oard’s adjusted index was estim ated to be 284
per cent of the 1935-39 average, as com pared w ith
292 in May and 307 in Ju n e of last year. Sales in the
first half of July rem ained near the Ju n e level, after
allowing for the usual seasonal changes.
R ailroad revenue freight shipm ents decreased fu r
ther from May to m id-July. In addition to m arked
reductions in the volum e of coal loadings, shipm ents
of various other industrial goods were in sm aller
volum e than in earlier months.
Commodity prices

Prices of nonferrous metals and some other indus
trial m aterials advanced from m id-June to m id-July,
following sharp declines in recent months. Steel
scrap prices, however, decreased fu rth e r by 5 per
cent. Prices of hogs and pork showed m arked seasonal
increases in this period, while prices of worsted fab
rics, paints, and some other finished products were
reduced.
T h e average level of consumers’ prices increased
slightly in Ju n e as small advances in prices of foods
were partly offset by fu rth er declines in clothing and
housefurnishings.
Bank credit

R equired reserves of all m em ber banks were
reduced by about 800 m illion dollars on Ju n e 30
w ith the expiration of the tem porary reserve req u ire
m ent authority granted to the B oard of Governors
by Congress in A ugust 1948. Subsequently, du rin g
the first three weeks of July, G overnm ent security
holdings at the Reserve Banks declined by about one
billion dollars, reflecting sales of bills an d certificates
m ade in response to a strong m arket dem and for
these securities.
Business loans a t banks in leading cities were
reduced fu rth er during Ju n e and the first half of
July, b u t the declines were somewhat sm aller th an
in other recent months. H oldings of G overnm ent
securities increased by over one billion dollars in
the first half of July.
Security markets

Shortly before the reduction in reserve req u ire
ments, the System announced a change in open m ar
ket policy. These developm ents were reflected in
sharp declines in yields on G overnm ent securities
early in July. System sales of bills and certificates
checked this decline, b u t the resulting yields were
still substantially below previous levels.
Prices of other securities—bonds and common stocks
—advanced steadily in the first three weeks of July.

August 1, 1949

Monthly Business Review

Seasonal Swings in Department Store Trade

(Continued from Page 6)
the typical month-end inventory for M arch, June,
and November, and a slightly lower value of endof-month stocks to April, August, September, and
October. The changes, however, are not as large
as in the sales pattern.
Incorporating the revised seasonal pattern of
inventories into the seasonally adjusted index of
department store stocks for the Fourth District yields
the results shown by the red line of the third chart.
The trend of department store inventories over the
past three years may be seen from this revised stocks
index (smoothed by the moving-average device) and
may be compared with the sales trend depicted by
the same chart. Thus as sales rose in 1946, stocks
showed a steady and sharp rise from the previously
reduced levels of wartime. Marked reductions in
stocks, on a seasonally adjusted basis, occurred dur
ing the second quarter of 1947, reflecting in part
a fear of impending recession which, as matters
turned out, failed to materialize. A less marked
interruption in the upward trend of stocks occurred
in the spring of 1948, as the adjusted sales index
continued to rise. In response to the declining sales
trend which actually began in the latter part of 1948,
an orderly reduction in stocks occurred, although
apparently at a less steep rate than in the earlier
periods of reduction.
It is interesting to observe that at no time in the
postwar period has the index of stocks, in relation to
the prewar base period of 1935-39, risen as high as
the index of sales in relation to base-period sales. For
two brief periods, in the very early parts of 1947 and
1948, the stocks index almost reached prewar parity
with the sales index, only to back away in response

Page 11

to a cautious inventory policy on the part of store
management. (In this comparison, both stocks and
sales are being related to their respective prewar
levels. At the end of any given month, however, the
typical dollar value of department store stocks is
two to three times as large as the monthly volume
of dollar sales.)
Sales by A final phase of the general overhauling
Cities
of seasonal patterns is concerned with

the department store sales indexes for
each of eleven cities within the Fourth Federal
Reserve District. Here, too, the seasonal patterns
previously in use needed revision in order to give
maximum effect to postwar changes in the character
of seasonal swings. In the case of some of the
medium-size or smaller cities within the District, such
as Springfield, Ohio; Erie, Pennsylvania; and Wheel
ing, West Virginia, the sales assigned as typical to
the month of December were raised to levels as
high as 170 percent to 180 percent of the monthly
average, with corresponding reductions spread over
certain other months of the year. In each of the
three largest cities of the District, namely Cleveland,
Pittsburgh, and Cincinnati, the typical December
factor emerged slightly lower than the District aver
age of 164 for December, although even in these
cities the effect of the revision was to raise the Decem
ber seasonal factor from its previous level, and to
lower the factors for some of the early months of the
year.
The tables which appear on page 7 show the re
vised seasonally adjusted department store sales and
stock indexes for the Fourth District, as well as sales
for each of the eleven reporting cities of the District.
In each case the period covered is January 1946
through May 1949.

TOLEDO
AKRON •
CANTON •

COLUMBUS

d
j PITTSBURGI
/ *

i * W H E E L IN G

\ _______________

Fourth Federal
ReserveDistrict
■

M A IN OFFICE

★ BRANCH OFFICES