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MONTHLY
IN
-FED ERA L RESERVE BANK of CLEVELAND'
THIS
ISSUE
The Fall in the Rate of Personal Saving .
Key Items of City Finance,
70 Medium-Size Ohio Cities .
flu t y t $ 5 5
Although components of personal saving in the form of financial
assets and real property were maintained in 7954, an offsetting
rise in personal debt brought about a smaller volume of net saving.
Billions o f Dollars
OTHER**
HOME
PURCHASES
NET PERSONAL SAVING *
+20
INCREASE
IN
FINANCIAL
ASSETS
INCREASE
IN
DEBT
(Negative
Saving)
- 2 0 ------------------------------------------------------------------------------------------------1946
1948
1950
*Net savings not exactly equal to sum of components because
of statistical discrepancies in source materials.
**Net investment in unincorporated business and farms.
1952
1954
Source of data: See page 9.
3
10
Additional copies of the MONTHLY BUSINESS
REVIEW may be obtained from the Research De
partment, Federal Reserve Bank of Cleveland,
Geveland 1, Ohio. Permission is granted to repro
duce any material in this publication.
The Fall in the Rate of Personal Saving
p a s t y e a r , consumers have been
saving a smaller share of their income and
spending relatively more on goods and serv
ices. What lies behind the drop in the rate of
personal saving, and what is its significance?
During the first quarter of 1955, according
to preliminary estimates, personal saving
amounted to $18.7 billion, at an annual rate.
This represents a drop of more than $3 billion
from a year earlier, despite the rise in personal
income during the interval.
The discussion and charts which follow are
designed to throw some light on certain key
questions: Which of the components of saving
accounted for the recent decline in the share
of income saved ? Are consumers now in a less
liquid position ? Is personal saving a spendable
residual that can be tapped by aggressive sales
manship ? Has the drop in the rate of personal
saving reduced the flow of funds into savings
and other financial institutions? And finally,
what has been the role of personal saving in
total saving and capital accumulation?
or th e
F
ship is portrayed graphically in an accompany
ing chart, which covers the postwar period.
The chart shows that personal saving has
varied widely over the years and, during the
past year, has tended to decline.
Personal saving includes more than cash or
bank accounts. All uses of current personal
There have been m arked fluctuations in the amount
of personal saving during the postw ar period. O ve r
the past year, the share of personal income saved
has tended to decline.
Billions
of Dollars
250
NET PERSONAL
DISPOSABLE
PERSONAL INCOME
Content of Personal Saving
The content of “ personal saving” is some
what broader than might first appear. In
national income statistics published by the De
partment of Commerce, personal saving is ob
tained by subtracting personal consumption
expenditures from disposable personal income
(personal income after taxes)1. This relation
i Personal saving as thus measured is equal to the increase
in private non-corporate assets less the increase in liabilities
(debt), exclusive of capital gains or losses. National income
statistics also provide an alternative estimate of personal sav
ing, which is secured by deducting saving of corporations and
Government from total investment in capital goods. Although
both approaches for estimating personal saving as a residual
are open to errors in estimating the components from which
saving is derived, the possible errors in the one approach are
almost wholly distinct from those of the second. The independ
ent estimates serve as a check on each other.
PERSONAL SAVINGS AS PERCENT OF
1946
1948
1950
1952
1954
NOTE: Income, saving, and consumption expenditures are
plotted quarterly at seasonally adjusted annual rates.
Source of data: U. S. Department of Commerce.
3
income for purposes other than personal con
sumption expenditures tend to add to personal
saving. On the other hand, consumer spending
financed from sources other than current in
come tends to reduce personal saving.
Personal saving may take a variety of forms.
One form is a net increase in holdings of
financial assets, such as currency and bank
deposits, savings and loan shares, the cash
value of life insurance policies, and Govern
ment and corporate securities. Personal saving
also includes increases in private, non-corpo
rate holdings of real property, such as homes
and the inventories, buildings, and equipment
of unincorporated businesses and farms (less
depreciation on existing property). On the
other hand, increases in consumer debt, home
mortgage debt, and debt of unincorporated
business and farms are counted as negative
saving. Repayment of personal debt, corre
spondingly, is counted as personal saving.
Since personal income and consumption
refer to the entire private, non-corporate
sector of the economy, personal saving (as
measured by the difference between the two)
includes many items that some people might
not think of as “ personal” or “ saving” . Not
only are consumers included, but also unin
corporated business and farms, non-profit
organizations, private pension funds, and wel
fare and trust funds. The reason for including
the latter is the unavailability of data to make
a segregation.
In addition, the estimate of personal saving
is affected by items included or excluded from
disposable personal income and personal con
sumption expenditures. For example, the pur
chase of homes is not included in “ consump
tion” expenditures, but purchases of autos
and other consumer durable goods are in
cluded2. Thus, “ personal saving” is increased
by relatively greater expenditures on houses
(assuming no change in other saving) but
personal saving is reduced by greater spending
on cars (assuming no change in other con
sumption expenditures).
2 Another important point is that capital gains are not in
cluded in income and therefore not in saving. Also, estimated
depreciation on homes and property of unincorporated busi
ness is deducted from income before arriving at personal
saving.
Finally, it is important to note that since
saving is a relatively small residual between
disposable income and consumption expendi
tures, as brought out in the chart, a compara
tively small error in the estimates of income
or consumption will produce a relatively large
error in the estimate of personal saving. There
fore, any current data on personal saving must
be cautiously interpreted, since the figures are
subject to substantial revision as more com
plete information becomes available.
The complex nature of personal saving
explains why it is one of the least understood
concepts in national income statistics, and
why analysis of trends in personal saving re
quires special care. For example, since per
sonal saving includes that of unincorporated
business (as noted above), care must be
exercised not to interpret an increase in busi
ness inventories or property as an increase in
the potential spending power of consumers.
Total personal saving does not represent a
spendable residual, since part of it may al
ready have been invested in homes and business
property, used to retire debt, placed in non
liquid assets, or absorbed by “ contractual”
obligations such as pension reserves.
Rate of Personal Saving
Personal saving, viewed as a share of per
sonal income, is a widely used measure of sav
ings trends. This latter relationship is por
trayed in the bottom strip of the chart, show
ing personal saving as a percent of disposable
personal income in the postwar period. The
ratio has shown marked fluctuations; during
the last three quarters of 1954 it was clearly on
the decline, and then leveled off in the first
quarter of 1955.
The extreme variation in the share of per
sonal income saved can be further illustrated
by reference to the experience of the past
quarter of a century. At the peak of the busi
ness boom in 1929, personal saving amounted
to 4y2 percent of disposable income. Following
the crash, the rate of saving declined sharply.
During the three depression years, 1932-34,
personal saving became negative, indicating
that current consumption expenditures were
larger than current income, with the gap
‘ ‘ financed ’ ’ by extension of debt and drawing
down past savings. As recovery from the de
pression progressed, the rate of personal sav
ing gradually rose to a level of nearly 5 percent
before the outbreak of World War II, thus
exceeding the 1929 level. During the war years,
because of shortages of available goods, price
controls, and patriotic appeals to save, per
sonal saving increased to the unprecedented
height of over 20 percent of disposable income.
Consumers thus emerged from the war with a
tremendous backlog of accumulated savings,
much of which was in highly liquid form.
With the removal of wartime controls, the
reappearance of a wide variety of consumer
goods, and the backlog of pent-up demands,
the rate of personal saving fell drastically in
the early postwar period, as brought out in the
chart. Consumers embarked on a buying spree
which brought personal saving down to only
0.2 percent of disposable income in the second
quarter of 1947. Although the rate of saving
then recovered somewhat, the backlog of de
mands induced by wartime shortages con
tinued to make itself felt in a relatively low
volume of personal saving through 1949.
In early 1950 the rate of personal saving
began to rise. The outbreak of the Korean War,
especially the military setbacks, produced a
drastic change in consumer expectations, how
ever. Fear of a third World War was aroused,
and there was vivid recollection of wartime
shortages and inflation. Two waves of panic
buying ensued, by business and consumers
alike, before heavy defense spending even got
under way. The results are shown on the chart
portraying personal saving as a share of in
come. There was a sharp decline in the rate
of saving in the third quarter of 1950, strong
recovery in the fourth quarter, and another
sharp drop in the first quarter of 1951, when
the effects of the Chinese intervention were
felt.
Starting with the second quarter of 1951, a
major increase occurred in the rate of personal
saving. By this time, apparently, the public no
longer considered the threat of general war to
be acute. However, the prospect of a long stale
mate, along with high prices and taxes, was
a matter of concern to consumers. Uncertainty
about the future and dissatisfaction with high
prices helped to produce a higher rate of per
sonal saving from 1951 to 1953. Other factors
working in the same direction were a reaction
from the earlier buying spree, along with con
trols over consumer credit and production of
consumer durable goods.
The increase in the rate of personal saving
during 1951 was an important factor in stem
ming inflationary pressures connected with
rising defense expenditures and business
spending on plant and equipment, which lasted
through the first half of 1953. In this period,
personal saving rose as high as 9 percent of
disposable income. The continuation of the
high rate of saving from mid-1953 through the
first quarter of 1954 was somewhat deflation
ary, however, in view of the downward trend
of defense and business spending.
The most recent phase of the personal sav
ing trend began with the second quarter of
1954, when the share of income saved began
to decline, with a larger share of income thus
devoted to consumption expenditures. From
the first quarter of 1954 to the first quarter of
1955 (the latest date for which figures are now
available), the rate of personal saving fell
from 8.6 percent to 7.2 percent of disposable
income. (See chart.) It is important to keep in
mind that disposable personal income was ris
ing in this whole period, so that a larger share
of an expanding personal income was spent
for consumption purposes. This development
was a major factor in offsetting the sharp de
cline in defense spending and inventory pur
chases during the latter phase of the recession
of 1953-54, thus helping to keep that recession
short and mild. If the savings rate of the first
quarter of 1954 had prevailed during the fol
lowing year, consumer expenditures would
have been over $3 billion smaller.
Changes in Composition
To throw more light on fluctuations in the
rate of personal saving, a closer examination
must be made of the components of personal
5
PERSONAL SAVING IN FORM OF INCREASED HOLDINGS OF FINANCIAL ASSETS*
Billions
of Dollars
PRIVATE INSURANCE AND
— PENSION R E S E R V E S
15—1
Personal saving in the
form of financial assets
during 7954 was main
tained at about the same
level as in the previous
tw o y e a r s , d e s p i t e a
change in com position.
10—
5—
_
GOVERNMENT AND
OTHER SECURITIES
_
SAVINGS AND LOAN
ACCOUNTS
CURRENCY AND BANK
D EPOSITS
1946
1948
1950
1952
1954
* Includes increase in all private, non-corporate holdings. Source of data: Securities and Exchange Commission.
saving mentioned earlier.3 As brought out in
the cover chart, the major components of per
sonal saving are increases in holdings of
financial assets, net purchases of homes, and
net investment in unincorporated business and
farms, offset by increases in personal debt.
Although components of personal saving in the
form of financial assets and real property were
maintained in 1954, an offsetting rise in per
sonal debt brought about a smaller volume of
net saving.
A wide variation from one year to another
is evident in the relative importance of the
components of saving. Changes in most com
ponents of saving result either from switches
in asset holdings, or opposite and offsetting
changes in debt and assets. When net pur
chases of homes increase, for example, there
is a partially offsetting rise in home mortgage
debt. None of the components of saving bears
a constant relation to net personal saving.
Thus, the various components must be studied
together in order to understand the behavior
of saving. Total personal saving is relatively
s Data
on the components of personal saving are based on
estimates made by the Securities and Exchange Commission.
As contrasted with the income approach used by the Depart
ment of Commerce in estimating net personal saving, the SE0
uses a balance sheet approach. In the latter approach, esti
mates are made of changes in holdings of specified types of
assets and liabilities of individuals between two given dates.
The components of personal saving, as measured by SEC, do
not add exactly to the net personal saying estimate of Com
merce. However, an annual reconciliation of SEC and Com
merce estimates is contained in the National Income Supple
ment of the Survey of Current Business.
more stable than any of its individual com
ponents.
Holding of Financial Assets. As brought out
in the cover chart, personal saving in the form
of increases in holdings of financial assets
generally represents over half of all positive
saving. The relative importance of financial
assets in current saving has varied widely in
the postwar period, however, ranging between
one-third and four-fifths of positive saving. In
each of the past three years, increases in per
sonal holdings of financial assets have exceeded
$18 billion, or more than 60 percent of positive
personal saving.
The composition of saving in the form of
financial assets is shown in greater detail in
an accompanying chart. During 1954, sharp
increases over the previous year in bank de
posits and savings and loan accounts offset the
much smaller gain in security holdings. Cur
rency and bank deposits have displayed the
greatest variation, ranging from two-thirds of
increases in personal holdings of financial
assets in 1946 to a negative position in 1948
and 1949.
Additions to personal holdings of Govern
ment and corporate securities have also varied
widely from one year to another. In 1954, the
increase in securities was only about onefourth as large as in the previous year. In
creases in personal holdings of U. S. savings
bonds and municipal and corporate securities
were largely offset by a decline in holdings of
marketable U. S. securities.
Increases in personal holdings of savings
and loan accounts have been steadily larger
since 1951, after showing slow growth from
1946 to 1950. Additions to private insurance
and pension reserves have shown constant
growth in the entire postwar period.
The sum of currency and bank deposits,
savings and loan shares, and securities con
stitutes the liquid saving of individuals. This
amount is ready purchasing power, since it
consists of cash or assets that can be readily
converted into cash. Liquid saving during
1954 amounted to over $13 billion, virtually
unchanged from the amount saved in liquid
form in the previous year.
Personal saving in the form of life insurance
and pension reserves, although it is a financial
asset, partakes of the nature of contractual
saving. Payments into such funds usually in
volve long-term contracts calling for regular
payment, tending to make this a stable com
ponent of personal saving. People hesitate to
draw upon the cash value of insurance or
annuity policies, except in case of emergency.
Thus, these funds are not generally regarded
by holders as a potential source of spending
on consumer goods.
Net Investment in Homes. Acquisition of
homes has been the second most important
form of personal saving in the postwar period.
As given on the cover chart, net purchases of
homes consist of personal expenditures on new
non-farm homes (plus a small amount of con
struction by nonprofit associations) less de
preciation on existing properties. This form of
personal saving in 1954 amounted to nearly
$10^2 billion, up sharply from the previous
year. Net investment in homes, as defined
above, does not take into account the increase
in home mortgage debt that accompanied the
acquisitions, however. If such debt is offset
against the net increase in housing assets, the
increase in homeowners’ equity is obtained.
Taking into account the record increase in
home mortgage debt, the increase in home
owners’ equity was not as large in 1954 as in
the previous year.
Net Investment in Business <md Farms. This
component of personal saving consists of in
creased holdings by unincorporated business
and farms of inventories, new construction,
and producers’ durable equipment, less depre
ciation on existing property. To obtain the in
crease in equity in unincorporated business
and farms, the value of the real property
INCREASE IN PERSONAL DEBT*
(Negative Saving)
Billions
Of
Total personal debt rose
much more in 7954 than
in the previous year. A l
though the increase in
consumer debt was small
in com parison with 1953,
there was a sharp jump
in home m ortgage debt
and in debt of unincorpo
rated enterprises.
DEBT OF
UNINCORPORATED
BUSINESS AND FARMS
CONSUMER DEBT
HOME MORTGAGE DEBT
1946
1948
1950
1952
1954
* Private non-corporate debt to corporations and financial institutions. (The change during
1953 in the debt of unincorporated enterprises was negligible, and is not shown on chart.)
Source of data: See note at end of article.
7
acquired must be reduced by an increase in
business and farm debt during the period.
As portrayed on the cover chart, net invest
ment in unincorporated enterprises generally
constitutes a small part of personal saving.
However, changes in this component since
World War II have been largely responsible
for radical fluctuations in the rate of personal
saving. The sharp rise in personal saving be
tween 1949 and 1950 can be traced mainly to
a jump in net investment in business and
farms. On the other hand, during 1954 a sharp
drop in the net investment in unincorporated
business and farms was a major factor in re
ducing the level of personal saving. This de
velopment clearly reflects the recession climate
of 1954.
Increases in Personal Debt. The final com
ponent of personal saving is negative saving
in the form of increases in personal debt.4
Such increases are an offset to positive saving
in the form of financial assets and real prop
erty in arriving at net personal saving.
A breakdown of the annual increases in per
sonal debt since 1946 is presented in an accom
panying chart. Home mortgage debt has gen
erally represented a growing share of the in
crease in total debt during this period. On the
other hand, there have been radical fluctua
tions in the rate of increase of consumer debt
and debt of unincorporated enterprises. Dur
ing 1954, a substantial rate of increase in total
personal debt was a principal factor in the net
decline in personal saving. Although the in
crease in consumer debt was slight compared
with the previous year, debt of unincorporated
enterprise jumped sharply. There was also a
larger addition to home mortgage debt in 1954
than in 1953.
Relation to Total Saving and Investment
Personal saving is only one part, and a
highly variable part, of total net saving. The
other components include corporate saving
and Government saving (if any). Corporate
saving consists of retained earnings — that
is, net profits not distributed as dividends. The
4 Includes only the increase in debt owed to corporations and
financial institntions by the private, non-corporate sector of
the economy. Intra-personal debt is cancelled out.
8
bulk of corporate saving is invested in real
assets by the corporations themselves. Re
tained earnings have, in fact, been the princi
pal source of new funds for corporations for
a number of years. Some corporate saving,
however, takes the form of increased holdings
of cash and other financial assets.
Government saving requires special ex
planation. In national income accounting, any
structures, roads, or equipment acquired by
Government are not counted in the capital
stock. All goods purchased by Government
units are treated as though they were con
sumed as soon as acquired. Thus, by definition,
Government units do not invest in real assets,
but they do save or dissave by operating with
a surplus or deficit. Government saving, if any,
is therefore equal to the surplus on income and
product transactions.
The relative importance of personal, corpo
rate, and Government saving varies markedly
from one period to another. Of the total net
saving in the U. S. since World War II, per
sonal saving accounted for 53 percent, corpo
rate saving, 33 percent, and Government sav
ing, 14 percent.5 On the other hand, from 1929
to 1941 as a whole, personal saving was con
siderably larger than total net saving, since
both corporations and Government units
showed negative saving. During the war years,
the huge deficits of the Federal Government
more than offset the unprecedented volume of
personal saving plus the small amount of
corporate saving. For the war period as a
whole, the net saving of the economy was nega
tive. These episodes highlight the difference
between personal saving and total saving.
For any individual or any group in the
economy, such as the private, non-corporate
sector, there is no necessary relationship be
tween amounts saved and amounts invested—
i.e., spent on capital goods. Total personal
saving is generally much larger than the part
used for net investment in homes and unin
corporated business and farms. The excess is
available to finance corporate expenditures on
plant and equipment or government deficits.
5 Almost the entire Government surplus occurred in the Fed
eral Government component, mainly as a result of the net
inflow of funds into the Social Security surplus and other
Federal trust funds.
This suggests that the decline in the rate of net
personal saving may soon be reversed.
2. Despite the drop in net personal saving
in 1954, saving in the form of financial assets
was maintained at about the same rate as the
previous two years. This component of saving
in 1954 amounted to more than $18 billion, of
which $13 billion was in liquid form (currency,
deposits, saving and loan shares, and securi
ties). Consequently, the flow of personal
saving into financial institutions was not im
paired. Most classes of financial institutions
recorded a record inflow of funds.
Liquid savings of the personal sector in
creased at about the same rate in 1954 as in
the previous two years. During 1954, liquid
personal saving amounted to nearly half of
positive personal saving and to about threefourths of net personal saving. Liquid saving
(except that part representing the liquid
assets
of unincorporated business) is the por
Summary
tion of personal saving which represents the
Having examined the nature, trends, and
“ discretionary” spending power of con
composition of personal saving, as well as its
sumers; this is the amount which might be
relation to total saving and capital formation,
tapped by better products, attractive prices,
what conclusions may be drawn with reference
or intensive sales efforts.
to the questions posed at the beginning of this
3. During 1954, as in most years, only a
article ?
part of personal saving was absorbed in
1.
The drop in the rate of personal saving in acquisition of physical assets by the personal
1954 was mainly a matter of a change in saving
sector of the economy. Thus, nearly two-fifths
in the form of real property, although positive
of net personal saving in 1954 was made avail
motives to maintain consumption purchases
able to other sectors of the economy. In this
probably played some role. During 1954 total
manner, personal saving helped to finance
equity in real property declined by an esti
corporate expenditures on plant and equip
mated $1.2 billion, compared with an increase
ment as well as government deficits.
of $4 billion in the previous year. Personal
saving in the form of equity in homes increased
in 1954, although at a lower rate than in 1953.
Note on Sources
This was more than offset, however, by a de
1. Net personal saving. Source o f data is the TT. S.
crease in equity of more than $3 billion in
Department o f Commerce. Since the 1954 figure is
subject to revision, the cover chart shows an
unincorporated business and farms. During
amount which is mid-way between the Commerce
1953, in contrast, personal saving in the form
estimate based on disposable personal income less
of equity in unincorporated enterprises had
personal consumption expenditures, and the alter
native Commerce estimate based on gross invest
risen by $2 billion.
ment less corporate and government saving. (See
The 1954 decline in net equity of unincorpo
footnote 1, page 3.)
rated enterprises is not a surprising develop
2. Components o f personal saving. Source o f data is
ment, considering the recession that occurred.
the Securities and Exchange Commission. For 1954,
however, components in the form of net investment
In view of the strong pace of business activity
in unincorporated enterprises and increases in per
in 1955, a recovery in this component of per
sonal debt were partly estimated by the Federal
sonal saving could reasonably be expected.
Reserve Bank o f Cleveland.
In the period from 1946-1954 as a whole, net
investment by the ‘ ‘ personal ’ ’ sector absorbed
only three-fourths of personal saving. This did
not occur in all years, however. In 1947, 1948,
and 1950, the personal sector obtained net
financing from other sectors—mainly from the
Federal Government. With regard to the
corporate sector in the postwar period, only
about three-fourths of expenditures on con
struction, equipment, and inventories were
financed from internal sources (depreciation
allowances and retained earnings). Personal
saving supplied most of the balance. The above
relationships are typical over long periods, i.e.,
an excess of investment over saving in the
corporate sector, with the reverse holding true
for the personal sector. The position of Govern
ment units, on the other hand, has changed
frequently and widely from surplus to deficit.
9
Key Items of City Finance
7 0 Medium-Size Ohio Cities
ing in size from Springfield, with 78,508,
d a t a
on expenditures, reve
down to Chillicothe with 20,133. A second
nue, debt, and other significant items of
municipal finance for all Ohio cities, as of thegroup comprises Ohio cities from 10,000 to
year 1953, have recently been made available
20,000, exclusive of suburban cities; these
number 28, ranging in size from Tiffin, with
by the State government.(1) The 139 cities em
18,952, down to Conneaut, with 10,230. The
braced by the compilation have populations
ranging from 5,000 up to close to a million.
third group includes all the suburban cities
Total financial outlays covered by the report
that have been excluded from the first two
add up to about $700 million for the year 1953.
groups, ranging in size from Lakewood, with
68,071, down to Girard with 10,113. The reason
As one among many possible ways of utiliz
for the separate listing of the suburban cities
ing this abundant source material, it may be
in the illustrative materials which follow lies
of interest to focus attention momentarily on
in the fact that such cities, because of their
the medium-size cities of the State, and to
connection with the larger urban areas to
arrange the financial data according to groups
which they are related, are subject to special
of cities of broadly comparable population
factors affecting both needs and resources.(3)
brackets. Included in the material selected for
The year 1953 is the latest for which com
exhibit below are data bearing on 70 Ohio
parable
information for the various cities is
cities, the populations of which range from
available. Despite the numerous special fac
10,000 to less than 100,000, according to the
tors which may have been in operation during
1950 Census count.(2) Such middle-size cities
that year, the outlines of the variations among
are, as is well known, unusually numerous in
cities in respect to selected items of municipal
Ohio; they provide a significant share of the
finance are thought to be broadly indicative of
economic sinews of both state and nation.
the present-day differences among the cities.
Within the medium-size group of cities,
o m p a r a t iv e
C
three sub-groups are distinguished below. One
is the size-group of 20,000 to 100,000, exclusive
of “ suburban” cities; these number 20, rang
Cities of 20,000 to 100,000
(1) Comparative Statistics, Cities of Ohio, 1953, by the
Auditor of State, Columbus, 1955.
General expenditures by the 20 Ohio cities
of 20,000 to 100,000 population (excluding
suburban cities) averaged $32.20 per capita
( 2) The eight largest cities of Ohio, data for which are
available in the State auditor’s compilation, are not included
in the cities selected for special treatment here. They are:
Cleveland, Cincinnati, Columbus, Toledo, Akron, Dayton,
Youngstown and Canton. Financial outlays of these cities (for
the year 1952) were discussed in “ Outlays by Municipal Gov
ernments” , published in the May 1954 issue of this Review.
(3)
Suburban cities, for this purpose, are those which are
included by the Bureau of Census as parts of the “ urbanized
areas” of Ohio, where the central city is of 100,000 or more
population. (An exception is made in the case of Warren,
which is not shown here as a “ suburban” city, although it
might be so considered under a strict application of the
criterion.)
10
LOCATIONS OF THE 70 OHIO CITIES
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Philadelphia
1
I
Steubenville
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•
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© T ijay--------------1
~r‘
I □ r^-Jt , Salem
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Ih
_L LivftWfi
V New^----*' 1.
------- 1--------- - I - . ,
----- 1
i Girard
^ S l^ irjh
Massillon
'
/S M?niiew
i—
t I
r ^
L im a
ijtUfis f l- g -
I Kent
Fin?lo jjJ ------ ■n _ © 3 « L ' L - J j
V o n W e rk
I Warren
'CuvoHogo
Falls _
I
m □
,
:
, Washington C.HJ
1J ©f )------'
I
tu l
j
Ti
Marietta
C h i l l ic o t ^ e
1r~V’/
Portsmouth
•
2 0 ,0 0 0 to 100,000
© 1 0 ,0 0 0 to 2 0 ,0 0 0
Ironton
□
Suburban
NOTE: The following suburban cities of Cuyahoga County are indicated, but not named, on
the map: Lakewood, Cleveland Heights, Euclid, East Cleveland, Parma, Shaker Heights,
Garfield Heights, Maple Heights, South Euclid, Berea, University Heights, and Rocky River.
11
during 1953. Such expenditures include all
outlays for current operating expenses of the
city governments, except outlays for munici
pally operated public utilities or city-oper
ated hospitals. Per-capita general expendi
tures, as well as other financial data, for each
of the 20 cities in the group are shown on the
accompanying table. The table also shows for
each city the number of manufacturing em
ployees per 1,000 population, a figure which is
useful as background on degree of industrial
development. (4)
For individual cities within the 20,000 to
100,000 size group, per-capita general expendi
(4)
The number of manufacturing employees in establish
ments located in each city was obtained from the Directory of
Ohio Manufacturers, Department of Industrial Relations,
State of Ohio, Columbus, 1954. The data are for the year
1953, and are compared with U. S. Bureau of the Census
population data for the year 1950.
tures during 1953 ranged from $39.79 in
Middletown to $22.97 in Zanesville, as shown
by the accompanying chart. These expendi
tures pertain to the city governments only,
and do not include outlays by overlapping tax
ing bodies such as county governments and
school districts.
Almost all of the cities in the group allo
cated a larger share of their general expendi
tures to protection (fire, police, traffic lights,
etc.) than to any of the other three major
functions listed separately on the table.
Middletown, which had the highest per-capita
expenditures of the cities in its size-class,
spent a larger proportion of its 1953 budget
on protection than did any of the other listed
cities.
Expenditures for sanitation (street clean
ing, sewers, and garbage and refuse disposal)
OHIO CITIES OF 2 0 ,0 0 0 to 100,000*
Municipal Expenditures, Revenue, and Debt, 1953
Population
1950
Manufacturing
Employees in
1953 per 1000
Population
Total per
Capita
Springfield...........
Hamilton.............
Lorain.................
Lim a....................
78,508
57,951
51,202
50,246
235
339
289
298
$36.94
37.15
36.07
33.54
Warren................
Mansfield............
Zanesville............
Portsmouth.........
49,856
43,564
40,517
36,798
494
439
259
174
Steubenville........
Newark...............
Marion.................
Middletown........
35,872
34,275
33,817
33,695
Elyria...................
Sandusky.............
Alliance................
East Liverpool...
Lancaster............
Findlay................
Ashtabula...........
Chilli co the...........
CITY
Average for Group
GENERAL EXPENDITURES 2
% for
% for High
% for
Protection ways & Bridges Sanitation
Property Tax
as % of Tax
Revenue
% for Health
& Welfare*
33.9%
36.3
33.8
30.4
15.1%
9.1
14.6
20.5
10.9%
9.5
10.7
21.5
H .2 %
10.0
9.4
5.1
38.40
30.52
22.97
30.15
32.4
34.6
30.8
37.1
20.4
16.6
30.9
15.5
11.8
14.1
10.0
9.6
1 1 .0
194
277
203
413
36.47
24.62
28.13
39.79
28.4
38.4
34.7
38.9
23.5
22.2
17.4
15.2
30,307
29,375
26,161
24,217
461
335
303
84
37.89
29.17
25.40
26.52
31.4
38.8
32.7
32.8
24,180
23,845
23,696
20,133
314
217
229
198
26.85
24.62
30.76
25.25
296
32.20
$31.85
22.73
21.43
24.34
5.0
7.7
35.1
50.3
44.2
63.7
21.03
.16
6.47
10.69
7.3
8.8
13.6
1.6
7.1
3.4
9.7
8.4
71.3
48.9
49.7
69.8
5.87
1.71
19.71
30.69
20.8
14.5
18.4
19.1
13.0
8.7
7.9
10.5
2.5
5.7
10.4
65.2
59.3
54.6
55.4
33.44
6.08
13.70
5.54
28.0
29.7
38.0
35.5
17.5
18.8
19.9
23.4
15.7
39.6
60.6
62.4
49.6
9.03
23.12
12.8
9.5
3.2
2.6
2.3
1.9
33.9
17.8
11.1
7.2
52.2
16.87
1 1 .0
2.2
36.4%
40.5
71.6
45.4
General Bonded
Debt per
$1,000
Property
Valuation
1 1 .0
4.76
1Excludes “ suburban” cities which are shown separately on another table.
2Excludes public utility expenditures and expenditures for municipally operated hospitals.
includes expenditures for Board of Health Administration, treatment and prevention of disease, regulations and
inspections, poor and outdoor relief, workhouse, detention home, etc.
12
Per-capita general expenditures ranged from $40
in M iddletown to $23 in Zanesville (sixe-group
20 .000 - 100,000 ).
Per Capita General Expenditures *
5 0 —-------------------------------------------------------------------------------------*—
MIDDLETOWN
* Excludes expenditures for public utilities and municipallyoperated hospitals.
accounted on the average for 11 percent of
general expenditures by the 20 Ohio cities in
the 20,000 to 100,000 size-group. Lima spent
a larger share of its general budget for sani
tation than did any other city in its group,
with 21.5 percent of total expenditures going
for this purpose. Middletown, at the other
extreme, spent only 1.6 percent of its budget
on sanitation.
Less than half of all revenue made avail
able to municipal governments in Ohio is ob
tained from taxes. Non-tax revenues are col
lected by cities from such sources as state and
federal grants, sale of services such as sewer
rental and safety inspections, court fines, and
parking meters. The major source of tax rev
enue for municipalities is the property tax,
with lesser amounts being collected from sales
taxes, license fees, admission taxes, and income
taxes. The importance of property taxes to
total tax revenue varies from city to city as
the data in the accompanying table show. In
Lorain, for example, property taxes provided
71.6 percent of total tax revenue, while
Warren obtained only 35.1 percent of its tax
revenue from the property tax. A city income
tax in Warren, however, provided almost as
much revenue as the property tax there.
Springfield and Lancaster were the only other
cities of the size-class to obtain revenue from
income taxes during 1953; in each of those
cities, property taxes represented a lower
proportion of tax revenue than for the other
cities in the group.
General bonded indebtedness for each city
has been shown on the accompanying table in
terms of debt per $1,000 taxable property
valuation. Admittedly, methods of property
valuation for purposes of taxation are subject
to considerable variation among individual
cities. Nevertheless, state legislation is based
on this criterion. Ohio law regulates the extent
of indebtedness which may be incurred by
cities, limiting such debt to 5 percent of prop
erty valuation with the approval of the
electors. (The exemption of certain types of
bonds from this rule, however, makes possible
a total indebtedness for a city which may ex
ceed the 5 percent limit.)
For the cities listed above, bonded debt
ranged from $33.44 per $1,000 property valu
ation in Elyria to $.16 in Mansfield. Ashta
bula was the only city in this group to be
without any general debt at the end of 1953.
In addition to the general debt subject to the
5 percent limit described above, most cities
had outstanding, self-supporting public utility
bonds (general obligation or mortgage reve
nue), special assessment bonds payable pri
marily from taxes on benefited property, and
certificates of indebtedness. As an offset to
total indebtedness, however, each city main
tained bond retirement funds in the form of
cash and investments, which have not been
taken into account in the above computations.
Cities of 10,000 to 20,000
The 28 Ohio cities of 10,000 to 20,000
population (exclusive of suburban cities) re
ported general expenditures during 1953
amounting to an average of $30.15. Although
this represented a slightly smaller per-capita
expenditure for the group than the 20,000 to
100,000 size-class, previously discussed, the
difference is probably not statistically signifi
cant. The range of per-capita general expendi
tures by individual cities within the 10,000 to
13
OHIO CITIES OF 1 0 ,0 0 0 TO 20,000*
Municipal Expenditures, Revenue, and Debt, 1953
Population
1950
Manufacturing
Employees in
1953 per 1000
Population
Total per
Capita
Tiffin....................
Piqua....................
Fremont..............
Ironton................
18,952
17,447
16,537
16,333
189
205
266
179
$25.80
35.13
34.47
22.90
Marietta..............
Cambridge..........
Painesville...........
Fostoria...............
16,006
14,739
14,432
14,351
247
141
496
205
Ashland................
Wooster...............
Martins Ferry . . .
New Philadelphia.
14,287
14,005
13,220
12,948
Xenia...................
Salem...................
Bellaire................
Mt. Vernon.........
CITY
GENERAL EXPENDITURES 1
% for
% for High
% for
Protection ways & Bridges Sanitation
Property Tax
as % of Tax
96 for Health
Revenue
& Welfare*
General Bonded
Debt per
$1,000
Property
Valuation
38.2%
29.0
27.7
32.1
25.7%
11.2
21.8
18.3
7.8%
16.1
13.6
8.0
25.06
22.76
38.00
28.18
27.6
33.9
32.0
28.0
22.6
25.1
16.8
22.4
21.1
2.3
13.1
15.2
2.3
1.6
1.5
5.4
33.3
49.0
59.7
47.5
4.61
5.47
17.88
24.62
280
226
171
110
27.32
28.75
17.53
23.90
28.2
29.3
29.0
33.6
22.4
25.4
24.9
26.8
6.7
0.1
7.1
10.8
3.6
2.7
5.0
2.4
54.1
56.3
38.2
48.9
12.76
14.98
12.68
11.53
12,877
12,754
12,573
12,185
68
451
95
304
28.48
27.82
16.23
29.74
32.7
25.7
39.9
34.7
18.9
21.9
30.2
21.9
23.0
8.7
4.0
8.1
3.0
5.9
4.7
0.9
40.5
55.3
31.4
75.2
.61
12.32
.02
8.84
Bowling Green. . .
Delaware.............
Coshocton............
Athens.................
12,005
11,804
11,675
11,660
10
148
282
95
25.82
29.88
27.25
29.31
28.5
24.7
32.8
18.1
18.7
23.2
4.1
28.3
16.3
21.7
4.4
15.2
0.8
3.6
35.1
2.5
44.3
52.4
45.1
52.5
.74
22.07
1.32
.11
Sidney.................
Defiance..............
T roy.....................
Washington
Court House...
11,491
11,265
10,661
465
476
384
34.86
79.85
47.33
30.9
10.0
19.9
27.1
12.6
19.9
21.4
—0—
15.5
1.8
1.0
2.5
70.7
59.1
58.4
7.38
34.77
12.00
10,560
85
24.39
40.7
26.2
10.0
3.0
31.3
3.59
Van W ert............
Bucyrus...............
Beliefontaine.......
Conneaut.............
10,364
10,327
10,232
10,230
202
300
161
144
29.59
35.45
35.68
24.61
34.1
29.1
22.8
39.4
22.2
17.7
15.6
29.6
13.9
19.2
22.4
6.2
2.3
1.7
1.8
2.5
53.9
53.9
32.5
55.6
2.19
1.52
12.28
—° ~
228
30.15
28.4
20.6
12.9
4.3
50.0
9.62
Average for Group
4 .2 %
11.0
7.6
3.1
41.7%
47.5
49.9
61.0
$ 1.29
1.95
19.50
21.79
'Excludes “ suburban” cities which are shown separately on another table.
2Excludes public utility expenditures and expenditures for municipally operated hospitals.
3Includes expenditures for Board of Health Administration, treatment and prevention of disease, regulations and
inspections, poor and outdoor relief, workhouse, detention home, etc.
20,000 group was wider than was the case for
the larger size-class. Defiance had the largest
per-capita general expenditures in 1953 of any
city in its group, as seen from the accom
panying table. The amount for the city was
$79.85, although about half of general expendi
tures was attributable to a special item in con
nection with waterworks expansion. The
second highest per-capita expenditure for the
14
10,000 to 20,000 size-group was reported for
Troy, with a per-capita outlay of $47.33, while
Bellaire had the smallest amount at $16.23 per
capita.
As was the case with the cities of the larger
size-class, cities in the 10,000 to 20,000 group
spent a larger share of general expenditures
for protection than for the other functions
shown on the table. Among the smaller cities,
Washington Court House used the largest
share of general expenditures (40.7 percent)
for protection.
The smaller cities spent a somewhat greater
proportion of general expenditures on high
ways and bridges than did the larger cities.
Highway and bridge expenditures accounted
for 20.6 percent of general expenditures by
cities in the 10,000 to 20,000 class compared
with only 17.8 percent of expenditures by
cities of 20,000 to 100,000. Bellaire allotted a
larger share of its expenditures for highways
and bridges than did any other city in its
group, while Coshocton, at the other extreme,
used only 4.1 percent of its budget for high
ways and bridges.
Mount Vernon and Sidney had the highest
ratios of property tax revenue to total tax
revenue of the 28 cities in the 10,000 to 20,000 group, as shown by the accompanying
chart. At the other extreme, Bellaire and
Washington Court House obtained, respec
tively, 31.4 percent and 31.3 percent of their
total tax revenues from property taxes. Since
none of the cities in this size class had income
taxes, the property tax was the largest single
source of tax revenue for each city in the
group.
Pro perty taxes accounted fo r 7 5 % of total tax
revenue in Mount Vernon, a la rg er share than fa
any of the other O hio citie s o f the size group
110.000-20.0001.
Property Tax as Percent of Tax Revenue
80
MT. VERNON
SIDNEY
60
40 —
20
—
General bonded debt outstandings of the 28
non-suburban Ohio cities in the 10,000 to 20,000 size class averaged $9.62 per $1,000 prop
erty valuation, a considerably smaller sum
than was the case for cities in the 20,000 to
100,000 group. The largest debt in relation to
property valuation was reported by Defiance,
with $34.77 outstanding per $1,000 valuation.
Bellaire, Athens, Xenia, and Bowling Green
each had bonded indebtedness of less than one
dollar per thousand valuation, while Conneaut
was the only city in the group with no general
debt.
Suburban Cities
The 22 Ohio suburban cities with popula
tions ranging from 10,000 to 100,000 had
Larger per-capita general expenditures on the
average than did the cities of either of the
two classes previously discussed. For indi
vidual suburban cities, per-capita general ex
penditures ranged from $62.02 in Shaker
Heights to $19.04 in Kent. The average for
the group was $34.81 as indicated on the
following table.
As was the case with the other cities, pro
tection expenditures accounted for the largest
share of the suburban cities’ consolidated
budget. Outlays for protection averaged about
one-third of general expenditures, while for
individual suburban cities, the proportion
ranged from 44.3 percent in University
Heights to 25.5 percent in Maple Heights.
Outlays by suburban cities for highways and
bridges were less as a percentage of total ex
penditures than was found to be the case for
the non-suburban cities.
The suburban cities tended to obtain a rela
tively large proportion of tax revenue from
property taxes. In Parma, 80.8 percent of tax
revenue was collected from property taxes, the
largest ratio for any of the cities shown on
the table. Both Euclid and South Euclid ob
tained 79.6 percent of tax revenues from
property taxes. At the other extreme, Struthers collected only 29.9 percent of its revenue
from property taxes. An income tax in that
city provided a substantial portion of total
15
OHIO SUBURBAN CITIES OF 1 0 ,0 0 0 TO 1 0 0 ,0 0 0
Municipal Expenditures, Revenue, and Debt, 1953
Population
1950
Manufacturing
Employees in
1953 per 1000
Population
Total per
Capita
Lakewood...........
Cleveland Heights
Euclid..................
East Cleveland...
68,071
59,141
41,396
40,047
50
8
135
12
$35.03
43.79
38.73
30.08
Norwood..............
Massillon.............
Cuyahoga Falls. .
Parma..................
35,001
29,594
29,195
28,897
357
163
87
2
Shaker Heights... 28,222
Barberton........... 27,820
Garfield Heights.. 21,662
Niles..................... 16,773
CITY
GENERAL EXPENDITURES 1
% for
% for High
% for
Protection ways & Bridges Sanitation
Property Tax
as % of Tax
%for Health Revenue
& Welfare1
General Bonded
Debt per
$1,000
Property
Valuation
31.1%
30.5
34.9
40.3
10.6%
17.3
16.9
11.4
22.1%
22.7
17.0
18.4
3 .5 %
2.2
1.4
3.4
65.3%
67.1
79.6
58.3
35.73
27.35
30.98
33.44
40.4
35.2
32.4
35.2
12.4
12.5
12.6
13.9
21.8
16.5
24.7
15.3
1.5
9.5
3.7
5.7
71.3
51.4
60.4
80.8
30.84
2.99
3.02
9.74
1
492
21
270
62.02
34.37
24.84
23.94
34.9
31.5
41.7
38.9
13.9
19.4
24.1
16.7
19.7
16.3
10.4
1.4
1.4
9.8
2.7
2.9
78.2
68.8
61.9
55.6
9.12
29.42
29.06
11.82
$26.54
15.88
11.68
4.00
Maple Heights...
South Euclid.......
Campbell.............
Kent.....................
Bexley.................
15,586
15,432
12,882
12,418
12,378
29
9
18
307
—0—
30.53
33.14
25.44
19.04
31.66
25.5
35.8
31.8
37.5
29.2
20.6
16.4
20.5
23.9
23.2
23.5
16.8
7.8
6.0
20.5
2.1
2.6
3.7
1.3
1.3
73.8
79.6
37.6
64.5
32.2
6.02
10.01
14.87
3.70
1.67
Berea...................
Struthers..............
University Hghts.
Rocky River........
Girard.................
12,051
11,941
11,566
11,237
10,113
42
7
—0—
23
155
35.46
23.02
34.68
47.79
25.08
29.5
39.9
44.3
34.3
29.6
17.1
20.7
16.3
15.7
28.4
24.6
1.9
16.4
25.8
10.4
1.5
3.9
1.4
1.0
3.8
71.0
29.9
75.4
74.2
52.7
13.98
2.10
10.93
27.85
5.07
101
34.81
34.3
15.6
18.8
3.2
68.1
14.25
Average for Group
1Excludes public utility expenditures and expenditures for municipally operated hospitals.
2Includes expenditures for Board of Health Administration, treatment and prevention of disease, regulations and
inspections, poor and outdoor relief, workhouse, detention home, etc.
tax revenue. Campbell was the only other sub
urban city of its size-group to have an income
tax.
Each of the suburban cities listed above had
16
some general bonded indebtedness, the
amounts ranging from $30.84 per $1,000 prop
erty valuation in Norwood to $1.67 per $1,000
in Bexley.
@FedFRASER