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MONTHLY JANUARY 1949 CONTENTS Review Banking Developments During 1948 . . 1 Reference Chronology of Financial Events During 1948 . . 3 Trends of Fourth District Construction Activity . 4 . District Statistical T a b le s ..............................7 FINANCE • INDUSTRY • AGRICULTURE • TRADE FOURTH Vol. 31—No. 1 FEDERAL RESERVE DISTRICT Federal Reserve Bank of Cleveland Cleveland 1, Ohio Banking Developments During 1948 W all expansion of around 80 percent during the four H A T may prove to have been one of the most wartime years. significant banking developments of 1948 was the fact that, for the first time in roughly a decade, The long-term growth in the “working capital” of there was no appreciable increase in the money sup individuals and corporations has levelled off— at least ply owned by the public in the form of demand de for the time being— partly because bank lending has posits. In some parts of the country the supply of this slowed down, and partly because of the further re type of money actually is smaller than a year ago at duction of holdings of United States Government this time. securities by commercial banks. In the Fourth District, the increase during 1948 was nominal in amount. Late last month, adjusted Changes The one type of lending in which the demand deposits of weekly reporting banks in leading m postwar upward trend was not intercities of the District were only 1 percent larger than Loans rupted was in the field of real estate loans. a year ago as against an increase of 7 percent in the The 1948 increment was virtually the preceding twelve months, and in contrast to an over same as in 1947, at least in this District. The dollar DEPOSITS OF REPORTING MEMBER BANKS (Fourth District) M IL L IO N S OF D O L L A R S OF 40001-------- M I L L IO N S D O LLA R S LOANS OF REPORTING MEMBER BANKS (Fourth District) M IL L IO N S OF U DU O LL LL A AR RS S L LLIO 0 F MDI O L ANR SS C O VER NME N T I ' I ' ' I I | ' . . . . time deposits continued to rise slowly during 1948, but the volume of demand deposits of individuals, part nerships, and corporations, shows very little net change for theforyear. Digitized FRASER . . . . the expansion in commercial loans during 1948 was extremely moderate in comparison with the two pre ceding years. Real estate loans continued upward, but other types of loans were unchanged or lower. ANNUAL TURNOVER RATE OF ADJUSTED DEMAND DEPOSITS (Weekly Reporting Member Banks—Fourth District) AN N UAL Ja n u a ry 1, 1949 Monthly Business Review Page 2 ANNUAL R A T E RATE “ /tf pt*/ a/D ----- \ r-’-JU'Z-- ^■»~rr94y -----------..... PL O TTED MONTHLY . . . . checking account balances changed hands more rapidly during most of 1948, but in recent weeks, the rate has been no higher than a year ago. amounts involved, however, are of relatively minor importance. Moreover, the rise in real estate loans was virtually offset by a concurrent shrinkage in loans for purchasing or carrying securities. Consumer and “all other” loans combined likewise contributed very little to loan or deposit expansion. The major difference between 1947 and 1948 was the slowing down in the rate of expansion of com mercial, industrial, and agricultural loans. Both in this area and elsewhere in the country, the extension of bank credit along these lines was much more mod erate than in the preceding year. This moderation can be attributed in some degree to reluctance on the part of borrowers, to caution on the part of lenders, to the funding (and therefore repayment) of short-term debt by corporations, and to other factors. The postwar decline in bank holdings of United States Government obligations continued throughout 1948, offsetting some of the deposit credit extended via real estate and commercial loans. The contraction in Federal obligations held by banks in leading cities of the District amounted to approximately 2 percent over the past year. Over the same interval, the m ar ketable portion of the Federal debt outstanding was reduced by more than 7 percent. From this it follows that, although banks in the aggregate replaced some of the m aturing obligations, the Treasury cash sur plus of the past twelve months resulted in the extinc tion of some deposit credit as the excess of income was used to pay off securities held by commercial banks and Federal Reserve banks. Money The probable significance of the levelling off Supply of the money supply in terms of any specific monetary or business cycle theory is not within the purview of this article. Conceivably the sidewise movement in the money supply was a con tributing factor in the somewhat similar trend in commodity prices, although extraordinary production records, particularly in agriculture, also must have played an important role in price determination dur ing 1948. Moreover, in this connection, it is pertinent that the existing supply of purchasing power in the form of bank balances turned over more rapidly in 1948 than in any previous postwar year. Debits to demand deposits of weekly reporting banks through most of 1948, ran noticeably ahead of year-ago levels despite the extremely moderate increase in the balances against which such debits were charged. The extent to which deposit activity expanded during 1948 over the two preceding years is illustrated on an accom panying chart. It may be significant that the earlier year-to-year margin was not maintained in the closing weeks of 1948. W hether the protracted period of deposit expansion has been more than temporarily interrupted depends upon a number of unpredictable circumstances. A Treasury deficit next year might result in a renewed expansion of deposits, if such a deficit should necessi tate public financing and bank participation therein. On the other hand, a more rapid repayment of exist ing bank loans of all kinds could bring about an actual contraction of deposits owned by individuals and corporations. In either event, however, the ulti mate effect upon the economy would be modified by the turnover factor which can either nullify or ac centuate changes in dollar volume. In the more limited field of banking itself, the de celeration in demand deposit growth precipitated no new or unexpected problems. Ever since the close of the war, nearly every individual bank has been con ditioning itself, at least psychologically, for an actual contraction in deposits, perhaps mainly because of INVESTMENTS OF REPORTING MEMBER BANKS (Fourth District) M ILL IO N S OF D O L L A R S OF M IL L IO N S D O LLA RS 3,000 , 2 50C TREASURY BONDS 2,000 #» \ N 1,500 1,500 V ^TSY. B I L L ' , C E R T ’ S ., NOTES \ v \ \ \ ' V . ------------- r , i . 11 1 . 1 . 1! o t h e r s e c u r T IE S ............... 1 1 1 1 1 , 1, 1, 1. 1 . . . - - i- i . 1, 1, 1, i , . . . . the rise in short-term government securities is partly the result of switching out of Treasury bonds, and partly a reflection of Treasury policy of offering certificates of indebtedness to holders of maturing bond issues. Ja n u a ry 1, 1949 Monthly Business Review Page 3 Reference Chronology of Financial Events During 1948 January 12-19 ....Rediscount rates increased from 1 percent to 1 ]4 percent. January 23 ..........Reserve requirements increased from 20 percent to 22 percent against net de mand deposits of central reserve city banks—effective on February 27. January 25 .......... French franc devalued 44Vi percent, via multiple currency system. January 26 ...........Mr. Thomas B. McCabe nominated Chair man of Board of Governors. Confirmed by Senate April 12. (Term as Chair man expires April 15, 1952; as member of Board, February 1, 1956.) March 18 .............Upper limit on annual purchases of Series E United States Savings Bonds raised from $5,000 to $10,000. March 25 .............United States monetary gold stocks hit $23,000,000,000,new all-time high. April 2 ..............Foreign Assistance Act of 1948 passed ($5,050,000,000 for 12-15 months). April 2 ..............Revenue Act of 1948 reduced personal in come tax rates beginning May 1. April 30 ...............Interest-bearing public debt now below $250,000,000,000. May 19 ................. Federal Reserve credit outstanding at three-year low. June 2 ...............Reserve requirements increased from 22 percent to 24 percent against net de mand deposits of central reserve city banks (effective June 11). June 10 ...............Upper limit on annual purchases of Series F and G United States Savings Bonds temporarily (July 1-15) lifted from $100,000 to $1,000,000. August 7 ..........Anti-Inflation Act of 1948 passed—signed August 16. Conveyed authority to Board of Governors to reinstitute some consumer instalment credit restrictions and to increase reserve requirements another 4 percent and l^ i percent, re spectively, against demand and time deposits, in addition to existing statu tory limits. Expires June 30, 1949. August 9 ...........Certificate rate permitted to rise from lY s percent to U/4 percent with Sep tember 15 and October 1 refunding. August 13-23 ..... Rediscount rates increased to l i / 2 percent (see January 1948). August 16 ...........Yield on new Treasury bills rose above 1 percent. August 18 ..........Series D Tax Saving Notes to be put on tap beginning September 1 (yield to maturity 1.40 percent) in place of Series C Notes. August 19 ...........Consumer instalment credit controls an nounced, to be effective September 20. September 8 ....Third 1948 increase in reserve require ments announced: a. 1]/o percent on time deposits at all member banks beginning Septem ber 16. b. 2 percent on demand deposits at all country member banks begin ning September 16. c. 2 percent on demand deposits at reserve city member banks begin ning September 24. September 20 Consumer instalment credit controls be come effective. November 3 ....United States monetary gold stocks hit $24,000,000,000. November 10 ....Federal Reserve open market purchases (net) of Treasury bonds have totaled $10,500,000,000 d u r i n g past twelve months, but holdings of bills, certifi cates, and notes are nearly $9,500,000,000 below year ago. November 16 ....Retention of 1}4 percent certificate rate for December 15 and January 1 refund ings announced by Treasury. December 15 ....Commercial, industrial and agricultural loans of weekly reporting member banks established all-time high (to date), roughly 6 percent above a year earlier. recollections of what happened in 1920-21. It should be acknowledged, however, that since such a small proportion of existing deposits originated through lending to individuals and corporate enterprises, a drastic decline in aggregate deposits is quite improb able. while the balance represents outright liquidation of Treasury bonds. W hat is more significant, however, is that in effect about 80 percent of the proceeds of such sales or redemptions were reinvested in short term Treasury obligations. Holdings of this short-term type of asset have more than doubled within the past year. While the rate of return on bills and certificates is higher than it was a year ago, it is less than the rate of income earned on Treasury bonds which were relinquished through sale or redemption. Commercial banks and other investors apparently were willing to sacrifice some income in order to be able to take greater advantage of any potential change in prevail ing money rates. The past year also was characterized by the first in crease in statutory reserve requirements in nearly Shift in The striking change in the composition Investment of investment assets during the past year Holdings does not represent preparation for a loss in deposits so much as it does anticipa tion of an increase in money rates. In the past twelve months, banks in leading cities of this District reduced their holdings of United States Government securities somewhat, as indicated in the chart at left. Some of this is the result of a reduction of the Federal debt, (CONTINUED ON PAG E 8 Ja n u a ry 1, 1949 Monthly Business Review Page 4 Trends of Fourth District Construction Activity M ORE money was poured into building last year All metropolitan areas showed increases ranging from than at any other time in Fourth District his 78 percent to over 500 percent above 1939 figures. tory. It is estimated that construction activity, as Cleveland, Canton, and Wheeling were the only areas to score less than a 100 percent increase over 1939. measured by the valuation of permits issued, reached an all-time high of approximately $935 million*, 1948 TOTAL CONSTRUCTION representing a gain of 29 percent over the 1942 level Value of Contracts Awarded and 32 percent ahead of the peak of the previous Percentage Change building cycle recorded in 1925. From From The dollar value of residential contracts, totaling Metropolitan Area* 1947 1939 about $335 million, also set a new record last year, and was 11 percent ahead of the 1946 high, and 35 Erie.................................................... .........+ 92% +509% .........+ 85 + 95 percent higher than the 1925 peak. The accompany +169 Youngstown.................................... .........+ 84 ing chart shows the dollar value of contracts awarded + 48 +241 Cincinnati-Covington, K y ......... in the District for residential and total construction in the past 25 years, extending from the peak of one +296 .........+ 38 building cycle to what may prove to be the apex of +123 Toledo............................................... .........+ 38 the current cycle. Columbus......................................... .........+ 35 +176 Activity In Major Areas of District eleven major metropolitan areas of the Fourth District, the average increase in dollar value of all construc tion contracts awarded was 26 percent above the 1947 levels. The gain, however, was not uniform among the respective areas. The accompany ing table shows that the percentage changes ranged from a gain of 92 percent in Erie to a decline of 17 percent in Dayton. Wheeling, West Virginia, and Youngstown, Ohio, scored increases of about 85 per cent, while Pittsburgh, Columbus, Toledo, Akron, and Cincinnati-Covington, Kentucky areas registered gains over 1947 of 31 percent to 48 percent. In Cleve land, there was no change, and Canton recorded a drop of 14 percent compared with the previous year. * All 1948 figures are estim ated on basis of first 10 months. CONSTRUCTION ACTIVITY 1923-1948 Fourth District (Value of Contracts Awarded) . . . . the dollar volume of both residential and total construction reached a new all-time peak last year, sub stantially above the 1925 high. Pittsburgh........................................ .........+ 31 +236 AVERAGE for all cities.............. .........+ 26 Cleveland......................................... ........... — 0— ...........— 14 ...........— 17 +169 + 83 + 78 +150 * Ranked according to percentage gain over 1947. Source: F. W. Dodge Corporation. The average increase in the residential category for the eleven metropolitan areas was 13 percent. The metropolitan area around Wheeling scored the great est gain over the previous year, registering a 507 percent increase over w hat had been a comparatively inactive year. Youngstown, Akron, Cincinnati-Cov ington, Kentucky, and Toledo areas showed gains of 26 percent to 51 percent. O n the other hand, Canton, Cleveland, Dayton, and Erie registered declines rang ing from 3 to 27 percent. 1948 RESIDENTIAL CONSTRUCTION Value of Contracts Awarded Percentage Change From From Mettopolitan Area* 1947 1939 Wheeling.......................................... .........+507% +122% +237 Toledo............................................... .........+ 51 Cincinnati-Covington, Ky........... .........+ 43 +180 +456 Akron................................................ + 36 Youngstown.................................. ..........+ AVERAGE...................................... .........+ Pittsburgh........................................ .........+ Columbus......................................... .........+ 26 13 12 4 +187 +150 - +169 : + 85 ...........— Cleveland......................................... .........— ...........— ...........— 3 5 10 27 +135 +109 +125 +172 * Ranked according to percentage gain over 1947. Source: F. W. Dodge Corporation. Monthly Business Review Ja n u a ry 1, 1949 For the eleven cities covered, nonresidential con struction recorded an average increase of 40 percent over 1947. W ith the exception of Dayton, where a decline of 30 percent was registered, every major metropolitan area in the District scored a percentage gain over a year ago in nonresidential-contract valua tions. Four of the eleven areas covered showed in creases of 100 percent or more above 1947 levels, with Erie scoring a 225 percent increase. Although Cleve land and Pittsburgh registered gains of 25 percent and 2 percent, respectively, these gains were below the average increase of 40 percent for all areas of the District. In each area, however, dollar volume of non residential building was at least double the 1939 levels. 1948 NONRESIDENTIAL CONSTRUCTION Value of Contracts Awarded Percentage Change From From 1947 1939 Metropolitan Area* + 1418% • • • +225% + 379 . . . +147 + 197 Youngstown......................................... . . . +124 + 491 Columbus..................................................... + 107 Wheeling............................................... . . . + Toledo................................................... . . . + Cincinnati-Covington, Ky .................... . . . + . .. + 70 66 57 47 + + + + 387 227 364 112 AVERAGE............................................ . . . + .. + Pittsburgh ....................................................... . . . + Dayton...................................................... . . — 40 25 2 30 + + + + 318 281 332 110 * Ranked according to percentage gain over 1947. Source: F. W . D odge Corporation. Dwelling Units In spite of the record dollar expenditure, less floor space and fewer new dwellings were provided last year than in previous postwar years. The extraordinary dollar totals were largely the result of increased costs of building matrials and wage rates. T he adjoining chart shows that the num ber of dwelling units provided for in new residential building in the Cleveland-Cincinnati-Pittsburgh territories combined, an area which comprises the m ajor part of the Fourth District, declined 2 per cent from 1947, and was 16 percent below 1946. In the three years prior to 1942, when the United States became actively engaged in the war, over 114,000 dwelling units were provided in new resi dential building in the Pittsburgh-Cleveland-Cincinnati territories. In the three full years since the end of the war, 112,000 dwelling units have been con structed, or about 2 percent less than in the compar able prewar interval. Page 5 NUMBER OF DWELLING UNITS PROVIDED IN NEW RESIDENTIAL BUILDINGS AND DOLLAR VALUE PER UNIT Cleveland-Cincinnati-Pittsburgh Territories Combined 1938-1948 th o usan d s t h o usan d s . . . . the construction of new dwelling units declined while the average cost per unit increased. For 37 Eastern States, the F. W. Dodge Corpora tion forecasts that this year the physical volume of residential building will fall about 7 percent short of the 1948 levels. Applying that same ratio to the Fourth District, the number of new dwelling units to be constructed in 1949 will be back to the 1942 level when approximately 35,000 new units were con tracted for in the Pittsburgh-Cleveland-Cincinnati territories. The accompanying table shows that in 1939 the average value per dwelling unit was $5,469, while in 1948 the cost was $9,821, an increase of 80 percent for virtually the same amount of floor space. PITTSBURGH-CLEVELAND-CINCINNATI TERRITORIES COMBINED Floor Area Value per per New Dwelling Unit New Dwelling Unit ______ (sq- ft.)____ ______($)______ 1948........................... 1947............................. 1946............................. 1945............................. 1944............................. 1943............................. 1942............................. 1941............................. 1940............................. 1939............................. 1938............................. 1,264 1,275 1,149 1,315 956 1,034 944 1,179 1,206 1,266 1,412 $9,821 8,597 7,226 6,694 4,072 4,802 4,417 5,173 5,292 5,469 6,043 Source: F. W. Dodge Corporation. Throughout the District, the only type of residential building to show an increase over 1947 was the con struction of one-family, owner-occupied houses. In 1948, in the Pittsburgh-Cleveland-Cincinnati terri tories, the num ber of one-family, owner-occupied dwelling units increased 31 percent over a year earlier, Page 6 Monthly Business Review Ja n u a ry 1, 1949 FLOOR AREA-ALL CONSTRUCTION Cleveland-Cincinnati-Pittsburgh Territories Combined 1938-1948 FLOOR AREA-MANUFACTURING BUILDINGS Cleveland-Cincinnati-Pittsburgh Territories Combined 1938 1948 . . . . floor area of all District construction last year was 9 percent over 1947, but below postwar peak established in 1946. . . . . floor area of new manufacturing buildings declined for the third consecutive year and was only moderately above the 1940 level. while construction of one-family houses for sale or rent declined 18 percent in the past year. In the Pitts burgh territory, t h e f o r m e r classification almost doubled; in Cleveland and Cincinnati, increases were from 20 and 24 percent, respectively. Primarily because of lagging activity around Cleve land, the num ber of dwelling units provided by new apartm ent buildings in the District fell behind 1947 by about 27 percent. For the first eleven months of last year, contracts were awarded for only 213 new apartm ent dwelling units in the Cleveland territory, compared with 1,888 the previous year. Apartment building declined 17 percent in Cincinnati, but in the Pittsburgh territory an increase of 38 percent was re corded. A number of uncertainties seem to have contrib uted to the decline in building of new apartments. First, there has been great difficulty in estimating in advance the exact cost of construction. In some cases final costs have been almost double earlier estimated costs. The cost of wages and material rose to an alltime peak, which of itself was an important deterrent in undertaking the construction of multi-unit rental projects. Secondly, most builders have been aware of the possibility that if construction costs should decline appreciably from present peak levels, subsequent builders of lower-priced rental units could offer severe competition to the 1948-49 a p a r t m e n t builder. Finally, the potential rental unit builder has been ap prehensive about future legislation concerning rent controls and public housing. To some extent, these same factors apply to the decline in the construction of new two-family houses. In prewar times, many people who had accumulated a moderate amount of savings acquired two-family houses both as a source of income and as a place to live. At the present time, with personal savings at record levels, the num ber of new dwelling units pro vided by two-family houses throughout the District declined 7 percent from 1947. In this case, uncer tainty as to future economic conditions as well as final costs of construction have tightened up this outlet for savings. The small-scale investor is reluctant to invest savings where he cannot determine in advance his probable outlay, and where the gross income may be affected by Federal regulations. A further factor in this connection is that not all potential two-family house builders are aware of rent control relaxations on new construction. Total Floor Space In the Pittsburgh-Cleveland-Cincinnati territories, the floor area for all con struction totaled about 98 million square feet, up 9 percent from 1947. This amount, however, was exceeded in 1941 by 7 percent, in 1942 by 49 percent, and in 1946 by 10 percent. The value per square foot of floor space was about $ 11.90 last year compared with $9.65 in 1947, and increase of 23 percent. As evidenced in the adjoining chart, a noticeable decline in floor space was experienced in m anufac turing buildings. Floor space in this category reached a peak in 1942 when it totaled 54 million square feet, due to the impetus of wartime production. Each year since the war the am ount of new floor space in m an ufacturing buildings has declined, and is currently tending toward the 1940 level. In 1948 this category totaled about 17 million square feet, a decline of 9 percent from 1947, and 47 percent from 1946. The mechanical building category, which includes automobile, aircraft, iron and steel, lumber and wood working and similar mechanical buildings, showed a 40 percent drop from 1947. O n the other hand, processing buildings, those used for precessing of chemicals, food products, paper and pulp, textiles, rubber and similar industries, increased about 23 per cent throughout the District. (CONTINUED O N PA G E 8) Ja n u a ry 1, 1949 Page 7 Monthly Business Review FINANCIAL AND OTHER BUSINESS STATISTICS Time Deposits— 12 Fourth District Cities Bank Debits*— November 1948 (Compiled December 3, and released for publication December 4) City and Number of Banks Average Weekly Change During: N ov. Previous Year 1948 Month Ago Time Deposits N ov. 24, 1948 Cleveland (4)................. $ 874,063,000 Pittsburgh (12)............. 453,388,000 180,461,000 Cincinnati (8)................ Akron (3)....................... 101,992,000 (In thousands of dollars) (Compiled December 9, and released for publication December 10)______ —$140,000 — 101,000 — 735,000 + 40,000 25,000 97,000 57,000 67,000 +$126,000 — 66,000 + 142,000 — 18,000 +*431,000 — 28,000 — 623,000 — 85,000 + + + + 24,000 105,000 71,000 15,000 — 5,000 + 23,000 + 117,000 — 79,000 —f t 83,000 29,000 7,000 Toledo (4)...................... ........ 97,236,000 Columbus (3)................ ........ 81.018.000H Youngstown (3 ) ....----- ----- 62.689.000H Dayton (3)............................. 47,211,000 — + + — Canton (5)...................... ....... 43,380,000 Erie (4)...................................39.808.000H Wheeling (6).......................... 28,396,000 Lexington (5)................. ........10,434,000 — 13,000 + 78,000 — 114,000 — 41,000 + + + TOTAL—12 C ities.. . . $2,020,076,000 —$964,000 +$518,000 — — — + 85.000 14,000 87,000 6,000 -$429,000 H denotes new all-time high. During the four weeks ended November 24, tim e deposits at the 60 reporting banks declined approximately $4,000,000 which reduced the total about 0.2 percent below the all-time high reached at the close of October. Some of this shrinkage can be attributed to seasonal influences such as, for example, the maturity of special-purpose savings accounts. The decline this Novem ber, however, was larger than the one which occurred in the same month last year. Despite the normal downtrend at this tim e of year, tim e deposits actually in creased in four of the twelve reporting cities. Individual Cities In Columbus, tim e deposits increased nearly $390,000 in four weeks, and went over $81,000,000 for the first tim e. The increase for the past twelve months is estimated at approximately $4,000,000. In Youngstown, tim e deposits grew by $230,000 during the four-week period and established a new all-time high. Time deposits at the close of October also reached a new record high in Erie where the average weekly increase during November was $78,000 or $312,000 for four weeks. Changes in Consumer Instalment Credit November 1948 25 Fourth District Member Banks (Compiled December 28, and released for publication December 29) New Loans Made Mo. Ago Yr. Ago + 31.2% + 5.7 + 10.4 + 43.1% + 1.0 + 41.6 + + 5.7 7.1 + 21.5 — 20.4 +338.1 7.7 +523.4 + 2.9 Outstanding At End of Mo. Type of Credit Mo. Ago Total consumer instalment credit + 3.6% Personal instalment cash loans — 1.2 Repair and modernization loans + 2.7 Direct retail instalment loans (a) Automobile + 1.4 (b) Other — 1.5 Retail instalment paper purchased (a) Automobile +43.0 (b) Other — 2.8 Yr. Ago + 49.0% + 12.4 + 61.9 + 59.3 + 14.6 +221.9 + 63.4 New Loans Made % Change N ov. from _________________________________1948_____ Year Ago ALL 31 C IT IES........................... $7,400,014 10 LARG EST CITIES: Akron.................................. Ohio 229,442 Canton................................ Ohio 118,123 Cincinnati...........................Ohio 917,647 Cleveland...........................Ohio 1,910,379 Columbus...........................Ohio 625.407H Dayton................................Ohio 235,611 Toledo.................................Ohio 353,615 Youngstown....................... Ohio 166,654 Erie.................................. Penna. 91,051 Pittsburgh...................... Penna. 2,105,066 TOTAL.................................... $6,752,995 +17.8% +18.6% 21 OTH ER CENTER S: Covington-Newport...........K y. $ 37,344 + 2.0% Lexington............................. K y. 60,355 +12.6 Elyria..................................Ohio 20,335 + 6.5 Hamilton............................Ohio 40,145 +14.8 Lima....................................Ohio 43,714 + 4.4 Lorain..................................Ohio 20,410 +16.7 Mansfield............................ Ohio 44.562H +18.9 Middletown........................Ohio 33,446 + 5.1 Portsmouth....................... Ohio 20,737 — 1.0 Springfield..........................Ohio 44,131 + 4.8 Steubenville.......................Ohio 23,132 + 7.0 Warren..............................O h io 41.377H +13.4 Zanesville...........................Ohio 27,620 +19.4 Butler...............................Penna. 31,459 +12.4 Franklin...........................Penna. 7,493 +20.4 Greensburg..................... Penna. 21,585 +15.0 n.a. ----------Kittanning...................... Penna. M eadville........................ Penna. 11,288 + 4.7 Oil C ity........................... Penna. 19,514 + 5.7 Sharon..............................Penna. 28,717 +13.0 Wheeling....................... .W. Va. 58,443 + 6.9 $19,974,219 +13.9% $ + 4.4% +13.2 + 1.4 + 7.4 + 3.9 +11.6 +15.5 + 6.5 + 7.1 + 5.0 +15.2 + 7 .3 +16.6 +12.3 +10.4 +12.9 -------+10.8 + 2.8 +12.8 + 5.6 116,783 185,733 60,670 115,556 129,624 60.565H 132.260H 100,872 67,090 135,668 74,457 116.636H 83,319 97,190 22.633H 66,692 n.a. 38,803 61,129 86.847H 179,622 Indexes of Department Store Sales and Stocks D aily Average for 1935-39=100 SALES: Akron (6)................................. ...295 Canton (5)...................................368 Cincinnati (8).......................... ...309 Cleveland (10)........................ ...275 Columbus (6).......................... ...332 Erie (3)......................... iife,... 333 Pittsburgh (8)............................272 Springfield (3)............................284 Toledo (6)................................... 285 Wheeling (6)............................ ...234 Youngstown (3)...................... ...333 D istrict (98)............................ ... 293 STOCKS* District’. .................................. ... 302 Repayments were somewhat larger in the aggregate than in several recent months, averaging about 11Y i percent of the outstandings at the beginning of the +22.8 + 3.8 — 1.6 + 7.1 + 9.7 TWENTY-ONE SMALLER CITIES In five of the smaller centers, November debits were 15 percent or more above last year’s figure. The largest gain, amounting to 20.4 percent, occurred in Franklin. Zanesville was second with an increase of 19.4 percent. In Mansfield, debits went over $44,000,000 for the first tim e, and were 18.9 percent larger than in th e same month a year ago. Debits in Warren went over $41,000,000 for the first tim e, for a gain of 13.4%. New personal instalment cash loans during November were nominally in excess of a year ago, while direct automobile instalment loans were 21J4 percent ahead of a year ago. month.for FRASER Digitized + 0.3% +15.3 +10.1 TOTAL.................................... $ 647,019 + 9.8% $ 1,967,418 + 8.9% ♦Debits to all deposit accounts except interbank balances. H Denotes new all-time high for one month or quarter year, n.a. N ot available. Bank debits in 31 Fourth District cities during November totaled $7,400,000,000, which is 17.8 percent above the year-ago figure, and represents a new all-time high for the month. A substantial portion of this wide margin m ay be ascribed to the fact that November contained more business days this year. Deposits (exclusive of interbank) at the reporting banks at the close of November were larger than a year ago by about 3:7 percent. The fact th at the^debit increase was considerably larger than the deposit expansion, even after allowing for changes in business days, suggests th at in some localities the rate of turnover was faster than a year ago. TEN LARGEST CITIES Cclumbus led the ten largest cities with a 41.8 percent increase over last year. It is believed, however, that a considerable part of the $185,000,000 gain in that city represents transfers (of funds) which are of no particular significance to general business activity. In Cleveland, debits reached $1,910,000,000, or 23.4 percent more than a year ago, for the second-largest gain. The increase was general among reporting banks. D ebits in Canton were 19.9 percent larger than in November of last year. In Akron and Toledo, debits were only nominally above year-ago levels. Adjusted for Seasonal Variation N ov. Oct. N ov. _____________________________1948 1948 1947 Chiefly as a result of the exceptional increase in one or two types of new loans made, the volume of loans outstanding at the close of November was the highest on record, 49 percent above a year ago. Three categories of consumer credit de clined, however, from the preceding month in total amount outstanding. % Change from Year Ago $21,941,637 +13.5% + 1.7% 711,590 +19.9 356,862 +11.7 2,752,174 +23.4 5.729.557H +16.8 +41.8 1,694,530 + 7.7 696,162 + 1.4 1,106,003 +14-3 472,809 +14.7 277,855 +19.1 6.176.677H +17.9 During the month of November, the volume of new consumer instalment loans made was the largest on record for one month, and 31 percent greater than the October figure. Although most of this increase occurred at one or two banks, a moderate expansion was reported by about one half of the reporting institutions. Outstandings 3 Months Ended Nov. 1948 Without Seasonal Adjustment N ov. Oct. N ov. 1948 1948 1947 326 392 331 291 366 353 308 324 316 260 358 316 313 361 323 284 338 302 255 305 285 250 330 296 363 457 399 339 421 429 346 343 361 297 416 366 342 416 347 306 388 368 326 331 338 278 380 338 385 447 417 349 430 390 324 369 362 318 412 371 265 268 366 338 371 Page 8 Ja n u a ry 1, 1949 Monthly Business Review (CONTINUED FROM PAGE 6) 1949 In its recent forecast for the new year, Outlook the F. W. Dodge Corporation estimated that the dollar volume of all construction activity in 37 Eastern States will be about 6 percent below 1948 levels, and that physical volume will be down 2 percent. According to this estimate, nonresidential building will be down 5 percent compared with last year. Private nonresidential construction, particularly in commercial, manufacturing, religious, and social and recreational buildings will probably show the greatest declines. This anticipated reduction was based on the fact that buying resistance is already being felt, and equity financing and mortgage credit are tightening. O n the other hand, educational build ings, hospitals and institutions, together with public works and utilities may show an increase over 1948 levels in view of the num ber of authorized programs and appropriation commitments. In 1948 these classi fications represented 35 percent of the value of all construction throughout the country. Buyer resistance will also affect the volume of resi dential building, which the Dodge Corporation esti mated will be about 7 percent below 1948 both in terms of dollars and new dwelling units. T he D epart ments of Commerce and Labor recently estimated that construction will be started in 1949 on about 875,000 new permanent non-farm dwelling units, compared with a 1948 volume of about 925,000 units. This anticipated reduction does not mean that the housing problem is near solution, but rather that the public is increasingly reluctant, for example, to pay $14,500* for a “standard six-room frame house” in the Cleveland area. Any appreciable reduction in prices of houses for moderate income families may be difficult in 1949 as long as material prices and build ing wage scales remain at current levels. In making their 1949 estimate of construction activity, however, the Departments of Commerce and Labor based their forecast on the assumption that construction costs during 1949 will average about 5 percent above the average for the entire year of 1948. * Estim ated by independent survey. (C O N T IN U E D F R O M P A G E 3) seven years, for banks in this District. T hat increase, which was applicable to all reserve city and country banks throughout the System, was instituted during September, at a time when short-term interest rates were rising, when rediscount rates had just been in creased again, and when some restrictions on the use of consumer credit had been reimposed. In short, the rise in reserve requirements represented one phase of a broader anti-inflationary program. The relative magnitude of the additional 1/ 2 per cent and 2 percent required, respectively, against time and demand deposits is illustrated in the charts below. For the two classes of banks combined, the increase in requirements involved a sum in the neighborhood of $150,000,000 for this District divided nearly equally between country and reserve city banks. This need for additional reserves presumably was a factor of some import in restraining the growth in loans. It also appears to have had some effect in re tarding the acquisition of investments. Another con sequence was the withdrawal of balances from city correspondent banks. This latter development, of course, merely shifted part of the upward adjustment problem to the larger banks. RESERVE POSITION OF FOURTH DISTRICT MEMBER BANKS M IL L IO N S $1,200 C O U N TR Y BANKS 1,000 ■> * CESS - --- « E QU 200 B E D --- , , ----- I 3 4 7- ---- I 9 4 8 ----- . . . . reserve requirements of both reserve city and country banks were increased by official action in September. Country banks continue to carry a larger volume of excess reserves than do the city banks. The more persistent upward trend in required reserves of city banks is partly the result of absorption of country banks by reserve city banks, especially in the Pittsburgh area.
@FedFRASER