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FEBRUARY 1964 IN T H IS IS S U E Inventories in Perspective................. 3 External Financing by Fourth District Industries, 1953-1963.. 8 FEDERAL RESERVE B A N K OF C L E V E L A N D Additional copies of the E C O N O M IC REVIEW m ay be obtained from the Research Department, Federal Reserve Bank of Cleveland, Cleveland, O hio 4 4 1 0 1 . Permission is granted to reproduce any material in this publication. FEBRUARY 1 9 6 4 INVENTORIES IN PERSPECTIVE HE BEHAVIOR of inventories held by This article examines specifically the in T business firms corresponds closely with ventories held by manufacturers of durable movements in econom ic activity. For ex goods and the behavior patterns that might ample, during the recessions of both 1953- be expected. The durable goods segment of 1954 and 1957-1958, a major portion of the total business inventories has been selected decline that occurred in the Gross National because it is the volatile portion of the total, Product was explained by a reduction in the accounting for virtually all of the cyclical level of business inventories. In the 1960- movement in the total business inventory 1961 recession, the small decline in GNP series. Briefly stated, the evidence presented was accom panied by an even larger net here suggests that inventory accumulation decline in business inventories. On the other will continue in the near term, and that this hand, during the early stages of econom ic will occur at a reasonably moderate pace. recovery, increases in the level of business inventories usually have provided impetus to S U R V E Y O F E X P E C T A T IO N S the thrust of the economy. A review of the business inventory situation year, inventory expectations of durable goods is appropriate at this time, not only because manufacturers suggest a moderate rate of inventories will be a principal factor in near- accumulation during early 1964.1 The table term performance of business activity, but shows both anticipated and actual changes in According to a survey conducted late last also because the econom y has now completed changes could be emerging in the area of 1 The survey is conducted quarterly by the U. S. Department of Commerce, and is based on a sample of nearly 1,400 manufacturing corporations whose inventories account for 55 percent of manufacturers' business inventories. inventories of durable goods. three years of expansion, and after so long a period of continued expansion, important 3 EC ON O M IC REVIEW inventories of durable goods for the rela of durable goods manufacturers grouped by tively short time period that this type of in stage of fabrication (see Chart I). The stages formation has been published. Unfortunately, are: (1) materials and supplies; (2) goods-in- data are not available to cover the duration of process; and (3) finished goods. a complete business cycle. Moreover, it is not possible to analyze anticipated and actual changes in inventories of durable goods during a complete period of econom ic ex pansion. Nevertheless, the information avail able indicates that the survey results have a reasonably accurate record of pointing to the direction of period-to-period inventory changes, as well as providing a reasonably accurate estimate of the magnitude of inventory accumulation. Inventories of m a teria ls and su pp lies declined moderately through December, after reaching their 1963 high in August. O n the other hand, inventories of g o o d s -in -p r o c e s s moved to new high ground in December. The nature of the recent performance of these two groupings of inventories, taken together, implies a reasonably moderate inventory policy of manufacturers of durable goods during early 1964. Contrary to a widely held view, the liquida S T A G E O F F A B R IC A T IO N tion of steel inventories during the late G IV E S C L U E S summer and fall of 1963 was not solely re Another indication of inventory perfor sponsible for the reduction in inventories of mance is found in the changes in inventories materials and supplies held by durable good A N T IC IP A T E D A N D A C T U A L NET C H A N G E S IN IN V E N T O R IE S O F D U R A B L E G O O D S M A N U F A C T U R E R S , SE A S O N A L L Y ADJU STED (B illio n s o f D o lla r s ) Six-Month Periods June 30, 1961 September 30, 1961 December 31, 1961 March 3 1 ,1 9 6 2 June 30, 1962 September 30, 1962 December 31,1 962 March 31,1 963 June 30, 1963 September 30, 1963 December 31, 1 9 6 1 ...................... ................... March 31,1 962 ...................... ................... June 30, 1962 .......................... ................... September 30, 1962 ................ ................... December 31,1 962 ................... ................... March 31,1 963 ...................... ................... June 30, 1963 .......................... ................... September 30, 1963 ................ ................... December 31,1 963 ................... ................... March 3 1 ,1 9 6 4 ...................... ................... 3 Based on change from reported level o f inventories at time of anticipation survey, b Based on revised data, as reported by Bureau of Census, Source: U. S. Department of Commerce 4 Anticipated Change"1 Actual Changeb + $ 1 .7 + 1 .2 + 1 .5 + 0 .4 + 0 .5 + 0 .5 + 1 .4 + 1 .2 + 0 .9 +0.6 + $1.2 + 1.6 + + + + + + + 1.2 0.7 0.5 0.5 0.9 0.9 0.8 FEBRUARY 1 9 6 4 i The recent inventory performance of durable go od s manufacturers grouped by stage of fabrication indicates a moderate rate of accumulation during the fourth quarter of 1963. GOODS-IN-PROCESS 10 M A T E R I A L S A N D S UP PL I E S F I N I S HE D G O O D S SEASONALLY ADJUSTED Source of data: U.S. Department of Commerce producers after August. There were also July to December 1963 than during any com reductions in other types of inventories held parable period of the current business ex by durable goods producers.2 Because the pansion. The strong advance of this grouping decline in inventories of raw materials has of inventories was primarily responsible for been broadly based, the current build-up in the net rise in total inventories held by pro steel inventories may not be sufficient to ducers of durable goods. offset the general decline in inventories of materials and supplies. Inventories of fin ish ed g ood s held by durable goods producers rose faster from The near-term significance of the rise in finished stocks for inventory policy is not clear. It should be pointed out, however, that in the past producers of durable goods 2 Raw materials inventories held by primary metals producers, which includes raw materials inventories held by the steel industry, advanced from $2,200 million in August 1963 to $2,230 million in December, seasonally adjusted. All other industry groupings of raw materials inventories held by durable goods pro ducers showed declines during the interval. have not reduced stocks of finished goods until the demand for such goods has declined for an extended period. For example, stocks of finished goods continued to rise for twothirds of the duration of the 1960-1961 reces sion, and for about one-half of the duration of 5 EC ON O M IC REVIEW the recessions of 1953-1954 and 1957-1958. 1.00, it is a signal to manufacturers that in Thus far in this recovery, no such decline has coming business is less than outgoing deliv begun. eries. Manufacturers may then prepare to pare inventories. Conversely, a rise in orders O THER S O U N D IN G S relative to shipments serves as an incentive There are three other soundings of the behavior of inventories of durable goods that to increase output and ultimately to increase inventories. are used widely. These include: (1) the ratio In the latter half of 1963, the ratio of new of inventories to shipments of producers to orders to shipments bobbed around the parity durable goods; (2) the ratio of new orders to mark. Although orders were lower than ship shipments; and (3) industrial prices. ments in four of the six months from July The in v e n to r y -s h ip m e n ts ratio (the top panel of Chart 2) reached a four-year low through December, the ratio was only slightly below parity. in July 1963. The recent small rise in the The recent tendency of the ratio to remain ratio is not significant, and it would seem that near parity may conceal certain factors that current levels of stocks are not burdensome actually suggest strength in the series. For and that inventories have sufficient room to example, the swell of durable goods orders rise before manufacturers becom e concerned. in the early part of 1963, which was associ Although this particular ratio is followed ated with the threat of a steel strike, probably closely by many observers, it is unstable, and included orders that would have been placed later in the year. a drop in sales can quickly reverse a re assuring ratio. During the postwar period P rices represent another factor that has a there has been a downtrend in the ratio, bearing on the performance of inventories reflecting of held by durable goods manufacturers. In methods of inventory control by business the increased effectiveness dustrial prices have usually moved upward firms. during the later phases of business expan The n ew o r d e r -sh ip m e n ts ratio also points sions. In marked contrast, the current ex toward a period of continued mild expansion pansion in business activity has been charac in inventories of durable goods producers terized by stability in the industrial price (bottom panel of Chart 2). Manufacturers level. This steadiness, particularly during the need to anticipate demand in order to main past year, has probably acted as a restraint to tain an adequate level of inventories. The acquisitions of additional inventories by pro ratio of new orders to shipments of durable ducers of durable goods. goods manufacturers is helpful in this respect. If current price stability were to give way W hen monthly orders continually run less to an upsurge in prices, this could provide a than shipments, i.e., the ratio drops below strong stimulus to inventory accumulation. 6 FEBRUARY 1 9 6 4 2 Although the current RA T IO 2.50 2.40 v a lu e of the inventory-shipments ratio indicates that durable 2.30 2.20 2.10 2.00 goods p r o d u c e r s’ 1.90 stocks are com para 1.80 tively 1.70 month low, should care be taken '57 in ’58 B i l l i o n s of d o l l a r s i nterpreti ng thi s + 20 NET C H A N G E IN IN VE N T OR IE S ^H EL D B Y D U R A B L E G O O D S P R O D U C E R S series. S EA SO N A l LY ADJU STED A N N U A L HATES The new order-shipments ratio points to w a rd a period co n tin u e d m ild of quarterly a v e ra g e ____ :_____ i__i__ _ R A TIO 1.30 1.20 ex pansion in inventor ies of durable go od s 0.90 0.80 0.70 producers. Source of data: U.S. Department of Commerce 7 EC ON O M IC REVIEW EXTERNAL FINANCING BY FOURTH DISTRICT INDUSTRIES, 1953-1963 I NDUSTRIAL activity in the Fourth Federal determine the volume of securities issued. Reserve District ranges from the produc (See Chart 1.) In addition, the study was in tion of chemicals and paint to that of machine tended to provide information on the type of tools and fabricated steel products. In an securities issued, method of issue, quality, effort to learn more about an important aspect and yield. of this activity, the Research Department of Data were obtained from the Securities and the Federal Reserve Bank of Cleveland re Exchange Commission (SEC), through the cently conducted a study of large offerings of Board of Governors of the Federal Reserve new securities by companies that maintain System, in the form of individual listings for their principal offices in the Fourth District.1 all large public offerings registered with the The study was designed to provide informa SEC and for private placements that are tion on the industries that issued new securi not subject to registration but were reported. ties from 1953 through mid-1963 and to S U M M A R Y O F F IN D IN G S 1 Based on the volume of net sales in 1962, sixty-three of the nation's 500 largest industrial firms maintain their principal offices in the Fourth District. Large security offerings include public offerings with gross proceeds of $15 million or more and private placements with net proceeds of $14.5 million or more. 8 The principal findings of the study indicate that nearly 6 percent of total net proceeds from all large offerings reported by the SEC from 1953 through the first half of 1963 was received by firms with principal offices in the FEBRUARY 1 9 6 4 1 Fourth District firms have also used the NET PROCEEDS FR O M LARGE ISSUES OF SECURITIES BY FOURTH DISTRICT C O R P O R A T IO N S private placement method of issuing securi ties. The data reveal that approximately onequarter of all securities issued were privately placed and that public utilities were the principal users of this method of issue. The quality of the securities issued by Fourth District firms compared favorably with total U. S. issues. Nearly two-thirds of the publicly offered notes and bonds carried a Moody's rating of Aa (the second highest rating), and no reported issue by a District company was rated lower than Baa. The high quality of offerings by District firms also is suggested by the fact that the average yield on notes and bonds at the time of issue was usually lower than the average reported for the nation. The reoffering yield on Fourth District debt offerings exceeded * 1 963 total estimated Source of data: Securities and Exchange Commission T a b le I L a r g e Is s u e s o f S e c u ritie s b y F o u rth D istric t C o r p o r a t io n s (m illio n s o f d o lla r s ) Fourth District (see Table I).2 The proportion was no doubt higher in specific industries such as primary metals, rubber, and glass. Public utilities and producers of primary metals accounted for more than 60 percent of total issues by District firms during the 1953-63 period. The study also indicates that over 90 per cent of the dollar volume of securities issued by District companies during the 1953-1963 period were debt securities, with debentures (unsecured bonds) accounting for the largest share. Volume of Issues Percent of U. S. Total 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963* $ 107.2 381.2 356.9 347.0 422.5 397.8 292.7 354.2 227.9 433.2 198.7 2.2% 9.4 6.7 5.6 5.3 5.7 5.6 6.9 3.4 8.0 7.6 Total $3,519.3 5.8% 2 One company located outside the Fourth District is included because it is a joint venture by two Ohio * First six companies which guarantee its obligations. Source of data: Securities and Exchange Commission months 9 EC ON O M IC REVIEW T a b le II N e t P r o c e e d s From L a r g e Is s u e s o f S e c u r itie s B y Fo u rth D istric t C o r p o r a t io n s a C la s s ifie d b y In d u s t r y (m illio n s o f d o lla r s ) Industry Classification 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 $226.7 $204.7 $ 99.5 $137.1 $125.4 $ 80.5 $ 74.9 $ 30.1 $ 91.4 1 14.6 19.1 70.0 182.7 143.0 152.2 180.6 86.1 39.4 $51.0 Public Utilities $ 72.2 Primary Metals Machinery & Trans. Equip. — Rubber 35.0 _ 20.0 27.7 38.3 — — 95.6 17.0 — Petroleum — — 14.9 Chemicals — — Mining — — G lass — 39.9 — Paper. — — — Finance & Insurance _ _ Real Estate — TOTAL $107.2 $381.2 17.5 1963b — $1,142.5 1,038.7 37.7 — 39.4 48.8 79.7 — — 25.4 59.3 — 26.0 73.6 296.9 24.6 — — — — 113.8 59.1 212.4 84.4 — 29.2 14.9 — — — — 128.5 — — 21.3 — — 38.6 23.1 — 100.5 24.2 — — — — — 24.3 — — 15.5 94.6 80.7 59.8 — 73.6 — — 17.0 _ 13.8 _ _ _ _ — — — 24.3 — — — — $397.8 $292.7 $354.2 $227.9 $433.2 $198.7 $422.5 326.6 — — $347.0 19.7 15.0 19.7 $356.9 Total 24.3 $3,519.3 a Proceeds from sale less issuing costs b First six months Source of data: Securities and Exchange Commission the average yield on all large offerings re Ten electric utility companies and one ported by the SEC in only two of the 103^ telephone company each reported at least years included in the study. two separate offerings of securities during the period under review.3 The largest volume of IN D U S T R Y C L A S S IF IC A T IO N public utility issues occurred in 1954 in re As shown in Table II, eleven industry sponse to declining interest rates. High grade groups in the Fourth District issued new debt instruments were issued in that year securities during the 1953-63 period. Five with an approximate reoffering yield of 3.0 of the industry classifications (public utilities, percent. The proceeds were used, in large primary metals, machinery and transporta part, to repay bank loans. tion, rubber, and petroleum) accounted for more than 85 percent of the total volume of new issues. Public utilities, which are heavy users of borrowed capital, accounted for the largest volume of new issues. Utility issues declined, however, from about two-thirds of the total in 1953 to no new issues in the first half of 1963. 10 The primary metals industry accounted for the second largest volume of new issues during the 10^ -year period; however, only eight metal producers reported offerings. 3 One electric company is owned by ten other electric companies. Five Fourth District companies own 38.7 percent of the common stock of this company. FEBRUARY 1 9 6 4 T a b le III N e t P r o c e e d s fr o m L a r g e Is s u e s o f S e c u ritie s B y Fourth D istric t C o r p o r a t io n s B y T y p e o f S e c u r ity (m illio n s o f d o lla r s ) Type of Security TOTAL DEBT 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963* Total $ 74.9 $362.3 $295.6 $318.0 $302.3 $376.5 $292.7 $354.2 $227.9 $402.2 $198.7 $3,205.3 39.9 207.8 206.5 153.6 134.7 120.2 158.7 113.3 68.7 133.9 236.4 240.9 1 12.6 182.5 M o rtga g e Bonds Debentures Convertible Debentures Notes 35.0 100.0 _ _ 132.5 167.6 19.1 43.6 19.4 _ 1 19.1 19.7 19.9 _ 34.5 136.3 — 46.6 85.8 66.0 369.6 31.9 $ 18.9 $ 61.3 $ 29.0 $120.2 $ 21.3 — — — $ 31.0 — _ _ _ _ _ _ _ _ — — — 31.0 — Preferred Stock 15.4 Common Stock 16.9 18.9 61.3 29.0 120.2 21.3 TOTAL ISSUES $107.2 $381.2 $356.9 $347.0 $422.5 $397.8 14.9 $292.7 1,498.4 _ 50.0 — 1,337.3 _ 54.5 — TOTAL EQUITY $ 32.3 39.1 _ 132.7 $354.2 $227.9 $433.2 $198.7 $ 314.0 15.4 298.6 $3,519.3 * First six months Source of data: Securities and Exchange Commission Primary metal firms accounted for more than From 1953 through 1956, first mortgage half of all District issues in 1959 and 1960, bonds accounted for the largest part of debt but less than 10 percent in 1955 and 1962. The largest volume of securities issued by financing. Since that time, with the exception of 1959, debentures have been the most im the primary metals industry occurred in 1957, portant type of debt security issued. The rela and may have been associated with a sub tive decline in the issuance of mortgage stantial volume of plant and equipment spend bonds in recent years is explained by an ing in that year. accompanying decline in issues of securities by public utilities. As the principal users of TYPE O F IS S U E Over 90 percent of the volume of large issues by Fourth District firms during 1953-63 mortgage bonds, public utilities accounted for nearly three-fourths of the volume issued in the District during the 1953-1963 period. was in the form of notes or bonds as compared The reliance on mortgage bonds by public with 83 percent for the entire nation (see utilities reflects the characteristics of utility Table III). Nearly half of the debt securities operation. issued by District firms were debentures (un public utilities provide a nearly stable income secured bonds) while 40 percent were mort and rate of return on investments; therefore, gage bonds (secured bonds). the assets provide excellent collateral for The nature and regulation of 11 EC ON O M IC REVIEW mortgage bonds. In addition, public utilities Only one issue of preferred stock was are often able to reduce interest costs on a reported during the entire period. This single bond issue was by a public utility in 1953. issue by pledging their assets as collateral. In addition to the issuance of equity securi In contrast, other industries have relied ties, nearly 10 percent of the debentures heavily on the use of debentures as a means of issued by manufacturing firms in the Fourth borrowing. For example, the primary metals District were classified as convertible deben industries accounted for more than 40 per tures. A convertible debenture holder is cent of the volume of debentures offered by given the privilege of exchanging a debenture firms located in the Fourth District in the for shares of common stock of the issuing period under review. The reliance on deben corporation at a predetermined price per tures by concerns other than public utilities share. The conversion price is set well above is explained, in part, by the unwillingness of the existing market price at the time the many organizations to accept the limitations debentures are issued. The holder usually placed on the use and disposition of assets has the right to exercise the option at any when pledged as collateral. More important, time between the date of issue and the the highly specialized nature of their assets redemption date. Many firms have adopted and fluctuations in income usually subject the use of convertible debentures as a means their assets to a sharp decline in value in case of improving the attractiveness of fixed- of default. Therefore, such assets often do not provide the type of protection require for collateral purposes. creditors Nearly all of the equity financing by District firms occurred from 1953 through 1958, and T a b le IV N e t P r o c e e d s From P r iv a te P la c e m e n t s o f S e c u r itie s b y F o u rth D istric t C o r p o r a t io n s (m illio n s o f d o lla r s ) nearly 80 percent of the issues were a c counted for by public utilities, primary metals producers, machinery and Volume of Issues transportation Percent of Total District Issues firms, and the rubber industry. The largest that interest costs moved up sharply between 1953 1954 1955 1956 1957 1958 1959 1960 196 1 1962 1 9 6 3 * ................ $ 17.9 161.3 209.5 83.4 — 72.6 40.3 — 85.2 148.3 66.0 16.7% 42.3 58.7 24.0 — 18.3 13.8 — 37.4 34.2 33.2 mid-1956 and the fourth quarter of 1957, and T o t a l ................ $884.5 25 .1 % amount of common stock issued by Fourth District firms was in 1957. In that year the volume of new equity issues amounted to nearly $120 million, or approximately 40 per cent of the common stock issued during the entire period. O ne explanation for the con centration of offerings in 1957 is the fact thereby encouraged the issuance of common stock as opposed to debt securities. 12 * First six months Source of data: Securities and Exchange Commission. FEBRUARY 1 9 6 4 income securities. From a annual volume of private issues during the corporation's standpoint, use of a convertible debenture entire 10^ -year period. may widen the market for its securities, per All private placements reported in this mit a lower cost of capital, and, in the event study were debt securities, with nearly 28 of conversion, the corporation normally re percent of all issues of notes and bonds ceives a higher price for its common stock classified as private placements. Moreover, than would have been received at the time nearly all of these issues were either mortgage the debentures were issued. Furthermore, bonds or notes, as only 5 percent of total conversion relieves the management of the debenture problem of refunding at the time the deben Approximately tures mature. placement of securities; however, two public placement of were privately placed. 18 firms reported private utilities accounted for 40 percent of the P R IV A T E P L A C E M E N T S Private issues securities total volume. occurs when one large investor, usually a financial Q U A L IT Y R A T IN G S institution, acquires an entire issue of new securities through direct negotiation with Approximately two-thirds of the $2.3 billion the issuing firm. Hence, the securities are of publicly offered debt securities during the not offered for sale on the securities markets, 1953-1963 period were rated Aa (see Table nor is the public given the opportunity to V). At the same time, less than 10 percent acquire any part of the issue. Approximately were rated Baa, the lowest rating achieved one-fourth of all issues of by any issue from a Fourth District corpora securities by District firms in the period under review tion. were classified as private placements (see Table IV). In 1955, nearly three-fifths of all Securities with the highest rating of Aaa, accounting for approximately 10 percent of new issues were privately placed, and the total volume, were all issued by 4 of the 11 dollar total of $210 million was the largest public utilities reported in the study. More T a b le V N e t P r o c e e d s From L a r g e Iss u e s o f D e b t S e c u r itie s B y Fourth D istric t C o r p o r a t io n s B y Q u a lit y R a tin g (m illio n s o f d o lla r s ) Quality Rating Aaa 1953 . . . . — A a .............. $ 22.0 A Baa .............. . . . . 1954 $ 36.0 165.0 35.0 — — — 1955 1956 1957 — $ 20.1 $ 24.6 $ 70.3 $ 47.0 151.2 — 39.1 1958 1959 $ 25.1 218.0 187.4 207.6 19.7 16.0 46.2 43.6 43.7 — 1960 $ 30.2 284.6 1961 — 1962 $ 45.4 $ 79.1 — 39.4 19.7 — 119.2 1963* — $ 73.6 Total $ 251.7 1,554.7 39.0 89.3 24.6 309.2 24.6 — 34.5 205.2 * F irst six m onths Source of data: Securities and Exchange Commission 13 EC ON O M IC REVIEW than half of the Aa rated securities were tered with the SEC and offered for sale offered by firms in the primary metals in throughout the U. S. dustry, with public utilities accounting for an Interest rates on both national and Fourth additional one-fourth of the total. The machin District offerings were responsive to changes ery and transportation equipment industry in econom ic activity. Business recessions accounted for 40 percent of the securities occurred in 1953-54, 1957-58, and 1960-61 rated A and more than 40 percent of those and are represented by the shaded areas in rated Baa. Chart 2. The decline in rates in 1954 and Y IE L D of funds in the capital market during those again in 1958 indicates a ready availability Chart 2 shows the average reoffering yield periods. The most recent recession, in 1960- of all large public offerings of debt securities 61, was also characterized by a ready availa by Fourth District corporations from 1953 bility of funds, although rates at first leveled through the first half of 1963. It represents an off in 1961 and declined in 1962, with average yield in that it includes all securities further declines in the first half of 1963. issued in the District regardless of quality The average yield on securities issued by rating. Also shown on the chart is the average Fourth reoffering yield for all large securities regis- weighted by securities that carried the Aa District corporations was heavily quality rating. Table VI compares yield rates 2 of District and total U. S. offerings by quality A V E R A G E REOFFERING YIELD OF LARGE ISSUES OF DEBT SECURITIES ratings. Comparisons of interest rate b e havior should be concentrated on the Aa and A ratings because they represent a major portion of all issues by Fourth District firms. A comparison of Aa offerings by Fourth District firms with total Aa offerings in the U .S. indicates generally lower yields on District securities. There have been too few offerings of securities by separate industries in the Dis trict to permit meaningful comparisons of the costs of borrowing among various industries; comparisons of yields on securities of similar quality ratings among industries present even greater obstacles. A very general comparison can be made, however, between Aa rated debt securities issued by public utilities and primary metals producers because of the Source of data: Securities and Exchange Commission 14 volume of securities issued by these firms FEBRUARY 1 9 6 4 T a b le V I R e o ff e r in g Y ie ld s o n L a r g e Is s u e s o f D e b t S e c u ritie s b y C o r p o r a t io n s in th e Fo u rth D istric t a n d th e U n ite d S t a t e s A aa 1953 . 1954 1955 . 1956 , 1957 . 1958 1959 1960 1961 . 1962 . 19 6 3 *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa A Baa Fourth District Total U. S. Fourth District Total U. S. Fourth District Total U. S. Fourth District Total U. S. — 2.98% — 3.40 4.17 3.97 4.29 4.88 — — — 3.56% 2.99 3.20 3.69 4.53 4.07 4.86 4.81 4.31 4.36 4.25 3.24% 3.04 3.27 3.99 4.61 3.92 4.49 4.74 4.60 4.40 4.30 3.54% 2.94 3.29 3.81 4.65 4.07 4.82 4.75 4.58 4.34 4.31 3.90% — — 3.75 4.41 4.44 — 4.75 4.68 4.41 4.35 3.88% 3.24 3.37 3.87 4.78 4.26 4.95 4.87 4.77 4.43 4.42 — — 3.63% 4.25 4.96 — 4.50 — 5.25 — 3.88 4 .0 8 % 3.95 3.64 4.26 5.15 4.86 5.03 5.31 4.94 4.69 4.58 * First six months Source of data: Securities and Exchange Commission. and the regularity of issue. Despite the fact primary metals producers. In addition, in that the cost of borrowing for both industries most years the Aa securities issued by public tended to reflect prevailing business con utilities in this District carried a higher yield ditions, yields on Aa issues of public utilities show a wider fluctuation than those by than those issued by primary metals pro ducers. 15 50 Y E A R S '^ FEDERAL RESERVE SYSTEM Fourth Federal Reserve District
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