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Busin Covering financial, industrial and a g r icu ltu ra l c o n d itio n s Fourth Federal Reserve District Federal Reserve Bank of Cleveland V ol. 27___________________ Cleveland, Ohio, March 31, 1945___________________ No. 3 T h e C iv ilia n E conom y I t would appear th a t the procurem ent program of the armed services, ini tiated early in the year, can be achieved only by a fu rth er curtailm ent o f goods available to civilians. In all areas, o u tp u t is lim ited by a shortage of m anpower. I t is highly doubtful th a t th e available labor force could produce a sufficient volume of essential civilian goods— even if m aterials were allocated to th eir production— and still accom m odate th e new m ilitary program . As y et, the hom e-front squeeze is not the result of a scarcity of goods in to tal, b u t is, rather, the result of a deficiency in certain types of goods. T his is evidenced by the fact th a t, since the first of th e year, retail dollar sales have averaged above both th e 1943 and 1944 com parable periods. An intriguing fact, too, is th a t this sales record was achieved while store dollar inventories actually were increased. T he new sales records m ight indicate: (1) absorption of past allocations of raw m aterials a t a rate faster th an new com m itm ents are being m ade; (2) th a t price increases are considerable, and th a t they are cloaked' both through upgrading of lines and quality deterioration; or (3) th a t in th e Am erican economy there still exists a high degree of “ uncontrollable” production flexi bility. However, in view of th e shortage of basic m aterials allocated to civilians, it is difficult to see how the dom estic economy can m uch longer postpone the realities of a draw n-out war. Supplies of steel, food, clothing, rubber, leather, and paper available for civilian consum ption have declined steadily for some tim e. Shortages on th e home front, to date, probably have n o t seriously interfered w ith th e m aintenance of high industrial production levels. T he current interest of Congress and the W ar Production Board, however, in the general problem indicates a growing concern over th e possibility of a w ar production decline due to progressive disappearance of civilian consum er goods, particularly of the durable type. T he q u an tity and high quality of the N a tio n ’s pre-w ar consum ers’ goods have been im p o rtan t assets in th e m aintenance of record w ar production levels during the past several years. D ue to the fact th a t replacem ents for m any item s were impossible to obtain, civilians discovered th a t the life span of m any com m odities— from autom obiles to alarm clocks, washing m achines, and toasters— far exceeded the pre-w ar ex pectation of service. However, definite signs now indicate th a t hom e-front supplies cannot continue indefinitely to defy ravages of tim e and use. How the gradual loss of these essentials will affect the m ain tenance of efficient industrial production is proble m atical. I f the shortages grow, however, the effect m ay be m easurable. T o tal dem and for steel, now m aterially in excess of production, has m eant fu rth e r curtailm ent of steel for civilian use. Both copper and steel allocations for “ spot” civilian goods m anufacture have been canceled for the second q u arte r of this year. T he shortage of paper, evident for some tim e, is aggravated by a lack? of mill m achinery due to cuts in allocation of steel for this use. Passenger car tire quotas for April have been cut 31)/2 percent below M arch, while carbon black supplies, currently determ ining operating schedules of rubber m anufacturing, are being conserved for in tensified use in urgent m ilitary production. A twelve percent cutback in civilian allocation of m eat for April, M ay, and June has been announced. C ertain textiles, especially cotton k n it goods, are destined to become more scarce, as are shoes, m en’s suits, and other item s of w earing apparel. Behind all these restrictions in supplies lie m anpow er and raw m aterial shortages which have reached the acute stage. T he m ost hopeful sign in the civilian production picture a t present is the favorable news from the fighting fronts. I t is difficult to believe th a t th e end of the G erm an w ar will n o t greatly alter m ilitary re quirem ents and relieve the strain on industrial production, in spite of A rm y-N avy discouragem ent of such a view. Im p o rta n t from a civilian supply angle is the tim ing involved. I t is to be hoped, all other considerations aside, th a t production of a sufficient volume of essential civilian goods will be authorized in tim e to prevent an actual interference w ith neces sary m ilitary production goals. 2 THE MONTHLY BUSINESS REVIEW THE COAL INDUSTRY OF THE FOURTH DISTRICT T h e future of th e bitum inous coal industry is of v ital concern to the F o u rth Federal Reserve D istrict and, indeed, to th e entire N ation. While the w artim e operating level of business has tended to push the long-term problems of coal into the background, the bitum inous coal in d ustry, following the war, again will face the fundam ental issues which have confronted it since W orld W ar I. In general, four m ajor factors create problem s for the post-w ar coal in d u stry : production capacity has increased greatly; m echanization has progressed ex tensively; em ploym ent has dropped despite production gains; and there has been a further absolute expansion of com petitive sources of energy, as well as advances in th e efficiency derived from a unit of coal. T he w artim e operating ra te of industry has tended to m agnify these problem s and will m ake the post-w ar ad ju stm en t more acute. B itum inous coal has contributed, as m uch as any o th er basic industry, to the industrial developm ent of the country. Because of the im portance of this in d ustry, it seems essential to examine some of the influences which m ay require the form ulation of a national policy on coal and related basic industries. Policy objectives to be sought are simple to state, b u t difficult to achieve. T hey include: a sufficient supply of coal for the N atio n ; a fair income to labor; a fair retu rn to owners; and a sound program of con servation of related national resources. T he a tta in m ent of these aims will call for broad statesm anship to offset the pressure of organized producer-labor interests. History o f D is tr ic t M in e s Discovery of bitum inous coal in W estern Pennsylvania and Ohio preceded the R evolutionary W ar, although the first com m ercial production in the area did not occur until 1803, when some 350 tons were shipped from P ittsb urgh by boat. M ines have been operating near F o rt P itt since*1760, and discovery of coal in Ohio and the Panhandle of W est Virginia m ust have occurred in approxim ately the same period, for m ention of deposits is m ade on maps dating from this tim e. Production of coal in the E astern K entucky field, however, started much later due to th e in accessibility of th e deposits. T he lack of tran sp o rta tio n limited m ining opera tions for commercial production to areas served by rivers. For this reason, developm ent of coal deposits occurred first in w hat is now the F ourth Federal Reserve D istrict, near the Allegheny, M onongahela, and Ohio rivers. These early mines supplied fuel for foundries, glass works, and domestic heating purposes. From these beginnings, the production and use of bitum inous coal expanded rapidly. T he coal industry was responsible, to a considerable extent, for the developm ent of tran sp o rtatio n by canal and railroad which occurred in the early decades of the nineteenth century. M uch of the developm ent of railroads occurred in response to the need for b etter coal move m ent to the growing industrial centers of the E ast. Im possible to m easure, b u t certainly a trem endous factor, was the influence of rich coal deposits on the grow th of the iron and steel industry in the district. R egular production of the famous Connellsville coke began in 1841; and, by 1850, coke was exertingjpn appreciable influence upon the production of pig iron. While coal aided in the developm ent of the railroad netw ork, serving not only as fuel b u t also as chief cargo, and figured prom inently in the rapid develop m ent of the iron and steel industries, it became of even g reater im portance in the late nineteenth century to industries which form erly depended on wood as fuel. A great p art of the enormous grow th in coal production was due to its increasing use for generating industrial power. Sim ilarly, a great p art of th e rapid rise of m anufacturing w ithin the district can be a ttrib u te d to location in respect to supplies of coal. According to the U nited States Geological Survey, supplies of coal in the fourth district are a p a rt of th e m ost im p o rtan t coal region in the U nited States, as far as present production is concerned. T his region is known as the A ppalachian region of the E astern coal province. I t lies west of the m ountains, startin g in the central p art of P ennsylvania and E astern Ohio, and runs in a northeast-southw est direction through W est Virginia, K entucky, Tennessee, A labam a, and W estern Georgia. Since the coal beds of the A ppalachian region have been associated w ith the uplift of the e a rth ’s crust which formed the A ppalachian m ountains, folding of the coal m easures decrease as they progress w est ward into Ohio and K entucky. T he coal beds, likewise, decrease in num ber and thickness as does the percentage of fixed carbon in the coals, while th e per centage of volatile m a tte r increases. A lthough production of coal w ithin the boundaries of the district consistently leads the rest of the N ation, the deposits of the area— in tonnage ra th e r th an value— represent b u t a small percentage of national coal resources. T he S tates of W est Virginia, Pennsylvania, K entucky, and Ohio rank 8, 9, 10, and 11, respectively, in a list of com parative tonnages of coal resources of the various states. E stim ates of the original deposits of coal underlying the fourth district indicate a to tal in excess of 200 billion tons. F u tu re rates of depletion are difficult to estim ate due to th e existence of enormous reserves of coal in other sections of the country, as well as increased use of com petitive fuels, which m ay be utilized to m eet national dem and. BITU M IN O U S COAL UNI T C D P R O D U C T IO N STATES THE MONTHLY BUSINESS REVIEW Production Production of coal in the fourth dis tric t has varied between 33.4 and 35.0 percent of the national to tal since 1939, indicating th a t the mines of the district have kept abreast of the trem endous w artim e expansion of the coal industry. D istrict production, totaling 131.9 million tons in 1939, rose to 197.3 million tons in 1943, an increase of 50 percent, which corresponds to the increase of national o u tp u t during the same period. G reater m echanization, increased production from stripping operations, the opening of m arginal mines, and in creases in hours per day and days per work week account for the greater production, despite a decline in num ber of employees during the war years. W ithin the district, there have been significant trends in production since the last w ar which, although they have been in terru p ted by the necessity for in creased production during this war, m ay prevail again w ith the return of peace. Long-term trends in the industry indicate declining im portance for the Penn sylvania and Ohio fields which, to date, largely has been offset districtwise by increased production in the fields of Southeastern K entucky. Production in Pennsylvania and Ohio reached all-tim e peaks in 1918 and 1920, w ith the record o u tp u t of 178.5 and 45.8 million tons, respectively. High o u tp u t for these two States during the present w ar period occurred in 1942, w ith the production of 144 million tons in Penn sylvania and 32.7 million tons in Ohio. In contrast, production for K entucky totaled 31.5 and 62.0 million tons in 1918 and 1942, respectively. Since 1942, there has been a slight decline in over-all district production, b u t this has been more th an balanced nationally by expansion in other regions. Goal Production by Counties Fourth Federal Reserve District 3 On shipm ents sent to tidew ater and distributed by vessel to E ast C oast ports, the fields of Southw estern Pennsylvania have lost to the ever-increasing volume of Southern A ppalachian producers flowing through H am pton Roads. In shipm ents sent to ports on the G reat Lakes, Pennsylvania and Ohio fields have lost considerable m arket to the expanding fields of South ern W est Virginia and K entucky. T he introduction and rapid grow th of by-product coking has perm itted a wide latitu d e in the use of coals for this m arket and has been a factor in the decline of P ennsylvania coals for this use. Form erly, Pennsylvania practically supplied the N a tio n ’s steel industry w ith beehive coke. Principal producing counties in th e district in recent years are shown on the accom panying map. From 1939 to 1943, Ohio has increased production by 58 percent. F ourth district counties of Pennsylvania, K entucky, and W est Virginia have shown increases of 52, 40, and 39 percent, respectively. N ational produc tion increased approxim ately 50 percent in this period. Among fourth district counties, in relation to total reserves, production probably has been m ost intensive in Allegheny C ounty, Pennsylvania, w here approxi m ately one-third of all recoverable coal has been mined. Recoverable reserves rem aining to tal 1.2 billion tons in this county. Greene C ounty, Pennsyl vania, by w ay of contrast, possibly has had the least intensive m ining in relation to reserves in all the S tate of Pennsylvania. These reserves to tal in excess of six billion tons. W estm oreland C ounty, Pennsyl vania, although it has produced more coal th a n any other county in the district, has recoverable reserves of alm ost three billion tons remaining. Com pared w ith the supply of coal originally con tained in Ohio fields, the rate of exhaustion has been greater th a n th a t fo ran y other state in the A ppalachian System w ith the exception of M aryland. However, coal resources of Ohio still to tal over 87 billion tons. Resources o f K entucky, w ithin the district, to tal in excess of 67 billion tons. These com putations utilize all seams of coal over 14 inches. E stim ates of coal deposits for fourth district counties of Pennsylvania, utilizing only seams over 18 inches in thickness, place the to ta l reserves a t approxim ately 64 billion tons. The principal deposits of coal in W est Virginia occur outside the district. Employment H istorically, coal production shows a close relationship to the num ber of employees. However, in recent years the correlation has dim inished, largely because of increased m echani zation. T he present w ar period has em phasized this, inasm uch as the enormously increased coal production of the past few years has been accomplished by aHabor force th a t in 1943 was 1.2 percent under average em ploym ent in bitum inous mines in 1939. W ithin the fourth district, th e decline has been greatest in Ohio, where em ploym ent fell seven percent. In the fourth district counties of Pennsylvania, the decline has been 2 percent, while in E astern K entucky and the Panhandle of W est Virginia em ploym ent has increased by 3 and 14 percent, respectively. T o tal em ploym ent in the coal mines of the district has declined a little less th an one percent. Increased hours per^day and THE MONTHLY BUSINESS REVIEW i days per work week have been significant factors in achieving and m aintaining high production during the w ar years. Closely allied w ith the shortage of m anpow er in th e m ining in d u stry is the increased ou tp u t from stripping operations and the intensified use of m echanical aids in deep mines during the past few years. B oth of these factors have m ade im p o rtan t contributions to the 50 percent increase in o u tp u t since 1939, and indications point to the continuing im portance of both w ith the return of peace. In the coal industry, approxim ately 60 percent of the cost of production is attrib u tab le to wages, and both m echanization and strip-m ining presum ably have taken place to enable coal producing companies to m eet com petition on a cost basis by an increase in tonnage o u tp u t per employee. O u tp u t from district stripping operations more th an tripled between 1939 and 1943, rising from a little over 7 to 25 million tons. In Ohip, such operations accounted for alm ost 30 percent of all coal m ined in 1943, while in fourth district W est Virginia, Pennsyl vania, and K entucky, percentages totaled 27.0, 20.0, and 0.3, respectively, in th a t year. T he percentage of to tal em ploym ent in coal m ining engaged in stripping operations in 1943 for the several sections of the district were: Ohio, 10.0 percent; W est Virginia, 8.0 percent; Pennsylvania, 5.0 percent; and K entucky, 0.1 percent. Increased m echanization of deep mines has char acterized the coal in dustry for m any years. A lthough the w ar has lim ited production of mine m achinery in term s of requirem ents, the utilization of loaders and m echanical cutters has increased, ju st as the percent age of to tal o u tp u t th a t is hand-m ined (the tim e honored pick-and-shovel m ethod) has decreased. A lthough district figures are unavailable, these d ata are available by states. Changes in Mining Method and Handling of Underground Output Percentage Mechanically Percentage Mined by Hand Loaded 1943 1939 1943 1939 15.1 12.0 35.0 20.0 Pennsylvania... 0.5 0.6 67.0 34.0 Ohio..................... 3.6 4.4 49 0 28.0 West Virginia. . 3.6 3.2 32.0 12.0 Kentucky........... Trends in Consumption N ationw ide, the consum ption of coal approxim ates annual produc tion, except for a fluctuating export tonnage. However, the flow of coal in and out of storage introduces a small dom estic variation which m ay differentiate production from consum ption in a single year. F or instance, in 1926 and 1942, a con siderable p a rt of the enlarged production w ent to stockpiles, while in 1943-1944, there was a serious reduction of available stocks despite record produc tion. Because coal moves from producers to consumers w ith o ut extensive storage, it m ight be more accurate to say th a t consum ption determ ines production. In any event, there is a nicety of balance between these tw o factors th a t is very delicate. An exam ination of production data indicates th a t, since 1900, rapid grow th in the consum ption of coal continued until the end of the W orld W ar I, and then entered upon a generally downward drift th a t lasted until the middle 1930’s. T here were, of course, shortcycle upsurges in production, but the depressed condition of the coal industry was not relieved to a m arked degree until W orld W ar II raised production to unprecedented levels. Consumption of Bituminous Coal and Lignite (in thousands of tons) 1939 1943 Railroads Class 1................ 79,072 130,283 61, ^16 90,019 Byproduct Ovens............... Electric Power..................... 43,979 76,403 2,298 12,441 Beehive Coke....................... Steel & Rolling Mills......... 9,808 11,238 5,274 5,851 Cement Mills....................... Colliery Fuel........................ 2,565 2,702 Coal Gas................................ 1,614 1,605 Other Industries.................. 98,900 141,211 Retail Deliveries.................. 71,570 122,764 * TOTAL..................... 376,296 594,517 % Change + 64.8 + 47.1 + 73.7 +441.4 + 14.6 + 10.9 + 5.3 - 0.6 + 42.8 + 71.5 , + 58.0 M arked differences among industries and areas of consum ption have occurred during the upswing in coal consum ption. Since 1939, the greatest tonnage rise has occurred among railroads, while the greatest percentage gain, among m ajor consumers, was oc casioned by the revival of beehive coking to m eet the dem ands of the steel industry. W ith the return of peace, the la tte r wasteful use m ay drop to new lows. Consum ption of bitum inous coal by the Class I railroads in 1943 totaled 130,283,000 tons. N o tw ith standing the enormous size of this m arket and the 65 percent increase in use th a t has occurred since 1939, the long-time trend in railroad consum ption has been downward. In 1917, deliveries to Class I railroads tdtaled over 150 million tons. Increased efficiency and economy in the use of coal and a rise in the use of fuel oil and electrical energy contributed to the decline in this m arket prior to the war. T he second largest increase in consum ption, both actual and relative, occurred in the use of coal for the production of electric power. This industry has been of growing im portance as a m arket for bitum inous coal, in spite of the fact th a t the am ount of fuel necessary per unit of electrical energy has declined steadily from 3.2 pounds of coal per kilow att hour of o u tp u t in 1919 to 1.3 pounds in 1943. A wide range of coals can be used in the production of electric power; but, in the main, the heat value of coal de term ines the distance which coal m ay move to this m arket. Problems of the Industry Post-w ar, the problems of coal resemble those of m any other industries in the district. On the basis of pre war use, the coal producing capacity of the N ation m ay far exceed probable need for the fuel. Unlike industry, however, there will be no reconversion or re-tooling of facilities required in the mines. The problems the industry will face, for the m ost p art, are the same difficulties w ith which th ey have attem pted to deal since World W ar I. There is over-capacity of THE MONTHLY BUSINESS REVIEW existing mines and trem endous latitude for opening new ones, due to the huge resources existing over broad areas of the country. As a result, there is a decentralization of the industry, which has been stim ulated even fu rth er by the war, th a t does not facilitate lim itation of o u tp u t. From this over-expanded productive capacity, the coal in d u stry looks tow ard post-w ar m arkets th a t promise continually varying dem and. By and large, the w ar has decentralized industry; i.e., new areas of the South, Southw est, and the Pacific C oast have risen to some industrial im portance. M any of these new industrial centers are in areas where com petitive fuels enjoy a p articu lar regional advantage and they th reaten to retain th eir industries, post-war, partly a t the expense of m anufacturing in the older industrial section of the N ation, where coal has long supplied the driving power of industry. In the Pacific and Southeastern States, hydro-electric power is available in considerable abundance. In the States of the Southw est, electrical energy is produced, predom i nately, from oil and n atu ra l gas. • Since the last war, petroleum and natu ral gas have played an increasingly im portant p art in the energy supply of the N ation. In 1900, bitum inous coal pro vided approxim ately 75 percent of the to tal supply of energy. Since th a t date, the percentage decline has been fairly consistent w ith the rise in im portance of oil and gas. All this decline cannot be attrib u ted directly to interfuel com petition. In m ost applications, coal could not com pete w ith oil and gas a t prevailing price levels. M uch of the supply of oil and gas is used in regions where coal is available only a t unusually high cost due to tran sp o rtatio n charges. M ore than half the oil produced is used in refined products for which purposes coal cannot com pete at present. In reference to the interfuel com petition between oil and coal, a national program of conservation of oil resources would seem to be an im m ediate necessity in view of the oil resources. T he m ost optim istic esti m ates of reserves of petroleum and oil shales indicate th a t th ey to tal no more th an 1.1 percent of the total energy reserves of the country. In view of the tre m endous per capita consum ption of oil, national reserves are being drawn upon at a higher rate than those of any oth er oil-producing nation in the world. From a long range point-of-view and from considera ANNUAL SUPPLY OF ENERGY 100 . Bl UMINOlIS CO L \\N> | n\ \ > \ \ \ \ W N 'XPETF OLEUM A NAI URAL GAS \ \ v *1 '40 | WATER POW 1900 '05 ‘10 '15 '20 *25 ’30 '35 45 5 tions of national defense, it would seem advisable to m ake a concerted effort to discourage needless con sum ption of the N a tio n ’s oil resources in applications th a t could be serviced adequately and w ith fair efficiency by coal. H ydro-electric installations constitute still another com petitor of coal. A t present, however, this source only accounts for some ten percent of to tal energy consum ption. T he grow th in the use of w ater power for the generation of electricity has been continuous and a t a fairly steady rate, and will unquestionably increase in sections of the country where w ater power resources are abundant. However, the N ational Re sources C om m ittee estim ates th a t the to tal potential w ater power developm ent could only supply energy equivalent to some one-fourth to one-fifth of the largest past annual energy consum ption. The coal industry long has been reconciled to dealing with the wide swings of dem and arising from the level of industrial production, as well as technological changes which affect dem and in the types, as well as the am ounts, of coal. T o help m eet these problems, the industry has been engaged actively in product im provem ent research, as well as in new uses for coal outside conventional m arkets, in order to increase the consum ption potential. Im proved stoves and heaters as well as a new fully autom atic stoker have resulted, all with great post-w ar promise. In addition, coal has been utilized in m any nonfuel processed industrially and chemically. C ontinued research should im prove the position of the coal industry in planning for its post-w ar future and, it is hoped, m ay prevent a return of the chaotic conditions which followed the last war, when coal became the “ sick in d u stry ” of the N ation. However, since there is such a m arked sim ilarity in conditions during the two w ar periods, a high degree of intelligent industry and governm ent leadership is required, if stab ility is to be achieved in the years following W orld W ar II. FINANCIAL Demand Deposit I t is generally expected th a t, in Survey the transition back to a peace tim e economy, there will be noticeable shifts of cash balances from one kind of depositors to another. I f th a t assum ption is valid, the qualitative com position of deposits should have some bearing upon w hether a given bank or locality is apt to gain— or lose— funds more rapidly than other banks or geographical areas. D eposits payable upon dem and are owned by in dustrial concerns of all sizes, by distributive enter prises both wholesale and retail, by service establish m ents, by insurance and other financial firms, by a variety of nonprofit organizations, by farm ers for business purposes^ and by individuals largely as per sonal funds. T he creditors of a commercial bank are quite a heterogeneous group which does not respond in unison to specific economic developm ents. U nder any given set of conditions, the cash assets (dem and deposits) of some of these types of depositors m ight fluctuate in decided contrast to the holdings of 6 THE MONTHLY BUSINESS REVIEW other depositors. T hus, banks whose deposit structure is su b stantially a t variance w ith the general stratifica tion of the average m ay experience deposit changes which are not typical. able for investm ent by banks of this size, it is necessary to make certain assum ptions regarding the ability— or inclination—of large industrial depositors to ac cum ulate larger deposit balances. For example, during the past five years when total dem and deposits! of fourth district m em ber banks in creased approxim ately 150 percent, some banks showed much larger gains in dem and balances, and some considerably smaller. Population shifts were un questionably a contributing factor in m any cases. In otHers, changes in th e volume of industrial activity, in relation to national levels, affected the volume of deposits in a locality. M ore difficult to assay, perhaps, is the extent to which deposit changes were caused by the fact th a t not all types of depositors accum ulated cash assets a t the same rate. This last-m entioned factor seems to have been a t least partly responsible for the fact th a t th e largest banks of the district have shown the sm allest percentage gain in dem and de posits in the past year or so. W ith respect to the next lower size group of banks, in the 310,000,000 to 3100,000,000 range, 18 m onths ago m ining and m anufacturing deposits were nearly as predom inant in these banks as in the largest banks, am ounting to nearly 40 percent of dem and deposits. However, such industrial balances have rem ained vir tually unchanged, while all other deposits in the aggregate grew by more th an 20 percent. T he System ’s fourth sem i-annual deposit ownership survey, as of Jan u a ry 31, 1945, reveals th a t balances owned by m ining and m anufacturing concerns con tinue to represent by far the m ost im portant elem ent in the deposit stru cture of the largest banks in this district. D uring the past 18 m onths, however, such deposits increased only 8 percent, while deposits owned by retail and wholesale enterprises and by non profit organizations increased nearly 30 percent a t the largest banks. N evertheless, these la tte r accounts were a m inor source o f funds, despite the substantial percentage increase. T he com paratively slow growth in deposits of the largest banks during the past year or so can be explained chiefly by the alm ost sidewise m ovem ent of mining and m anufacturing deposits. T he deposit structure of banks in the 310,000,000 to 3100,000,000 fan g e appears, on the whole, to be more evenly balanced, as between distributors and consumers on the one hand and m anufacturing en ter prises on the other, th an is true of either larger or sm aller banks. A ra th e r striking change has taken place in the com position of dem and deposits of banks in the 31,000,000 to 310,000,000 group. Unclassified de posits (accounts under 33,000) consistently have constituted the largest single elem ent (about 30 per cent). N ext in im portance have been m ining and m anufacturing accounts. However, a third category, personal accounts of over-33,000, has been gaining ground rapidly on industrial deposits. In estim ating the probable volume of funds avail- As is indicated in the accom panying table, in July 1943 nine percentage points separated industrial deposits from large#personal accounts, b u t in the m ost Banks in this size classification report increasing expansion in nonm anufacturing deposits, especially accounts w ith balances of less-than-310,000. D uring the past six m onths, well over half of th e dem and deposit grow th (9.0 percent) of banks of this size occurred in this category of miscellaneous small busi ness and personal accounts. f In this discussion, dem and d eposits refer on ly to those owned b y in d ivid u als, partnerships, and corporations. Composition of Demand Deposits - - July 1943 and January 1945 (Fourth District) 119 Participating Banks Having Demand Deposits of Individuals, Partnerships, and Corporations o f— ^ Over 3100,000,000 7-31-43 1-31-45 Mining and Manufacturing. . ............. 51.0% All Financial Enterprises...................... 9.3 Personal..................................................... 7.6 5.4 Retail and Wholesale Trade................ Public Utilities........................................ 6.1 All Other Nonfinancial.......................... 2.9 Nonprofit Associations.......................... 1.5 All Accounts Under 310,000................ 16.2 All Accounts Under 3 3,000................ XXX All Accounts Under 3 1,000................ XXX Total Demand Deposits.............. 100.0% Total Demand Deposits (000,000 omitted).................. 31,677 * Data not available. 50.4% 9.6 7.7 6.3 5.2 3.1 1.7 16.0 XXX XXX 310,000,000 to 3100,000,000 7-31-43 1-31-45 39.2% 10.3 8.6 8.5 5.9 3.0 2.3 22.2 XXX XXX 34.4% 9.4 8.9 8.9 5.3 3.1 2.9 27.1 XXX XXX 100.0% 100.0% 100.0% 31,828 3 902 31,005 31,000, 300 to 310,000,000 7-31-43 1-31-45 24.1% 21.2% 7.9 6.5 15.1 18.4 13.7 13.9 2.7 3.1 4.1 3.9 2.9 2.9 XXX XXX 29.5 30.1 XXX XXX 100.0% 100.0% 3 211 $ 260 s j j <&r «t i ii <f£ Under 31,000,000 7-31-43 1-31-45 * 6.3% * 4.0 * 40.3 * 15.3 * 2.0 * . 4.2 * 3.0 XXX XXX ' XXX XXX * 24.9 100.0% * 3 24.3 7 THE MONTHLY BUSINESS REVIEW recent survey the differential was less than three points. M anufacturing deposits increased slightly in the interval, b u t personal accounts provided a much larger supply of new funds for m ost banks in this group. These in stitutions have moved definitely tow ard a condition where th ey are more susceptible to economic influences affecting the general level of personal, small business, and farm er balances. As long as consumers, farm ers, and sim ilar economic units continue to ac cum ulate cash balances som ewhat faster th an other depositors, banks in this range should gain deposits more rapidly, in th e aggregate, th an larger banks As for banks whose dem and deposits to tal less than 31,000,000, the supply of available funds is de term ined to a large extent by the decisions and inclinations of nonindustrial depositors. Accounts of farm ers and other individuals with balances in excess of $1>000, plus all accounts below th a t am ount, represent nearly tw o-thirds of total dem and deposits. While this dependence upon one basic type of depositor is not a new developm ent, a broad m ovem ent of funds from consumers and distri butive enterprises to m anufacturing concerns probably would have a more noticeable effect upon these banks th an upon larger banking institutions. Recent Banking Developments D uring the first q u arter of 1945, of roughly the period since the Sixth W ar Loan, there has been very little change in the to tal resources and liabilities of weekly reporting banks. However, there have been sizeable m ovem ents in some of the components. G overnm ent deposits declined approxim ately 33 percent, which represents interdrive shrinkage on the custom ary scale. T he increase in adjusted dem and deposits of individuals, partnerships, and corporations was equal to about three-fourths of the concurrent decline in w ar loan deposits. T he increase in tim e deposits was equivalent to nearly one-fourth the drop in G overnm ent accounts. T hus, the decrease in Governm ent-owned balances was virtually offset by a com parable increase in privately-owned balances. There was some inflow of funds from other districts, as a consequence of routine commercial transactions; but a potential increase in deposits from this source was nullified by a resum ption in the outflow of cur rency into circulation in February. This drain on reserves through currency outflow was a factor in recent weeks in lifting borrowings by weekly reporting banks to the highest in more th an a decade. Some currency returned to the banking system around m id-M arch, presum ably in consequence of income tax paym ents. Income tax collections con sistently seem to have had a greater effect th an war loan drives upon the volume of currency in circulation. In the face of a ra th e r static deposit total, no striking change in to tal earning assets occurred. There was some liquidation of loans, however, and a cor responding increase in investm ents. M ost of the loan contraction took place in loans to others th an brokers secured by G overnm ent obligations. From the high of Jan u a ry 3, loans of this type have declined about one-third, b u t the volume outstanding is still consider ably above the level prevailing before the Sixth W ar Loan. Sim ilar loans to brokers and dealers have been reduced alm ost to the m id-N ovem ber figure. Both real estate loans and commercial loans currently show a year-to-year decline of about five percent. The expansion in investm ents, which accompanied the m oderate loan shrinkage of the first quarter, was confined alm ost exclusively to T reasury bonds. R eport ing banks reduced th eir T reasury bill holdings steadily during the first three m onths of 1945, but holdings of T reasury bonds increased seven percent. AGRICULTURE Greater Farm Income M aintenance of soil producThrough Maintenance tiv ity is not necessarily a of Soil Productivity philanthropic or an altruistic endeavor. I t can be con sidered strictly as a business proposition by the farm er who practices it. Research of the last few years has shown th a t productivity m aintenance does pay, not only in term s of decades and centuries, but in a period of tim e short enough to m ake it financially attractiv e to the operating farm er. T o the country banker, this finding is of much significance, for it m eans th a t soil m aintenance loans m ay be considered a profitable use of bank funds in addition to providing an unexcelled medium for establishing stable and prosperous farm communities. Recenjt investigations indicate clearly th a t lending m oney to farm ers for soil im provem ent and soil conservation purposes is a program involving no conflict between long-tim e social objectives and short-tim e self-interest m otivations. T he agricultural history of this country is filled with accounts of farm ers’ attem p ts to increase their incomes at the expense of the soil. H undreds of thousands of fertile acres have been “ m ined” of their fertility and left as liabilities to future generations. Although in dividual selfishness has been responsible for some of this waste, a large p a rt of it originated in the lack of com petent soil m anagem ent. In other words, although some individuals have drained the fertility from their soils consciously and willfully, the depletion caused by the m ajority has been a result of ignorance of appro priate land use and conservation m ethods. These two causes of soil misuse still prevail and cannot be considered as problems of the past. N ever theless, there have been significant developm ents in the last several decades which m aterially affect their influence. G reat strides have been m ade in the field of soil science— technological advances of such m agnitude as to assure adequate soil m aintenance if the m anagem ent practices developed through experi m ental research were followed generally. T he very existence of such inform ation is in itself im portant and significant, but the degree to which the available technical knowledge becomes an active force in the m aintenance of soil productivity depends upon the farm ers’ understanding of approved m ethods, and the extent to which farm ers adopt the recommended m ethods after they are acquainted w ith them . 8 THE MONTHLY BUSINESS REVIEW The problem of acquainting farmers with approved soil m anagem ent practices is not an easy one. How ever, it appears to be less difficult th an the task of securing widespread application of the desirable m ethods. T he former requires education in the physi cal properties and processes of the soil; the latter necessitates dem onstrations of the practical efficiency of spending tim e and money on soil conservation. Fortunately, recent investigations have shown th a t “ it pays to farm well.” T he D epartm ent of R ural Economics of the Ohio Agricultural Experim ent Sta tion sum m arized a study relating farm incomes to soil m aintenance w ith, “ Farm ers who were doing the best job of m aintaining their soils were m aking the best incom es.” T his conclusion was reached after a thorough study of 696 farm s in ten Ohio counties. In three counties, the average net farm income per acre was calculated for groups of farms w ith different soil m aintenance records. T he following table shows the results obtained and indicates clearly th a t there are operating com pensations for soil m aintenance expenditure. Relationship of Soil Maintenance to Net Farm Income Three Ohio Counties, 1935 Average Net Farm Income Per Acre C oun ty Ashtabula.......... Wood................... Wyandot............ Source: Farms M aintaining Farm s on w hich or Im provin g There W as M edium Soil P rod u ctivity Soil E xploitation 518.34 14.02 15.42 311.74 12.68 13.31 Farms on which T here Was Severe Soil E xploitation $6.48 6.79 10.63 Bulletin N o. 604, Ohio A gricultural Experim ent Station. T he income differences shown in the above table cannot all be credited to variations in soil m anagem ent practices. T he farm ers who were m aintaining or im proving the p ro d uctivity of their soils were gener ally the m ost efficient in all aspects of farm operation. N evertheless, the high correlation which existed between im proved practices and greater income left little doubt as to the im portance of soil m anagem ent in the to tal picture. T he use of lime in A shtabula C ounty m ay be cited as an example. Farm ers who were m aintaining or im proving soil productivity, and thus receiving the largest net incomes, were using, on the average, about four and one-half tim es as much lime per acre as farm ers who were severely exploiting th eir soils. T he trea tm e n t of soils with lime and fertilizers is only one phase of soil m anagem ent, but is w ithout doubt one of the m ost im portant. T he D epartm ent of Agronomy at the U niversity of K entucky states th a t, in the hill counties of Eastern K entucky and in the southern and western parts of the S tate, there is little op p o rtu n ity for profitable farming unless lime and phosphate are applied to the soils. T he increased yields shown in the following table are said to be typical of the excellent response which crops in those areas m ake to treatm ent. The phenom enal effect of lime and phosphate applications was also shown clearly in a study of the livestock-carrying capacities of K entucky pastures concluded in G rayson C ounty last year. On untreated Yield Changes with Lime and Phosphate Applications T.V.A. Demonstration Farms Grayson County, Kentucky 1944 ------------------- Yield Per Acre-------------------W ithout T reatm ent Crop Lespedeza.......... Red clover......... Redtop................ Wheat................. Barley................. Corn*.................. 600.0 lbs. 500.0 lbs. 390.0 lbs. 8.0 bu. 10.0 bu. 30.4 bu. Treated w ith Lim e Treated w ith L im e and Phosphate 1,300.0 lbs. 940.0 lbs. 480.0 lbs. 10.9 bu. 17.0 bu. 37.1 bu. 3,200.0 lbs. 3,100.0 lbs. 1,430.0 lbs. 21.5 bu. 34.6 bu. 43.6 bu. * Trigg C oun ty— A fter receiving lim e and phosphate ap plications, this land remained unplowed four years in grass and lespedeza before being planted to corn. Source: D ep artm en t o f A gronom y, U niversity o f K entucky. pastures, 5.3 acres were required to carry 1,000 pounds of livestock from M ay to N ovem ber 1, whereas on pastures treated w ith lime and phosphate it was necessary to use only 1.5 acres for the same am ount of grazing. In the portions of Pennsylvania and W est Virginia which are in the F ourth Federal Reserve D istrict, good pastures are especially im portant owing to the prominence of dairy and sheep husbandry. D uring the war, periods of feed shortages, especially proteins, have accentuated their im portance. In recognition of the value of good pastures, the Pennsylvania Agri cultural Experim ent S tation in cooperation with the U.S.D.A. Bureau of P lant In d u stry has conducted m any experim ents on pasture fertilization and now has available the findings of ten years of research. One of the purposes of the tests was to determ ine the net return from variously fertilized pastures; th a t is, return above the cost of fertilization. This was done (1) by com paring to tal digestible n u trien ts from the pastures with the costs of corresponding n u trien ts in alfalfa hay, and (2) by com paring the value of the milk from the pastures less the cost of the fertilizers and supplem entary feed. T he experim ents were con ducted on R ayne soil, a silt loam representative of a large part of the A ppalachian Plateau. T here can be only one conclusion from the results, which are given in the following table— pasture fertilization does pay. Pasture Fertilization On Rayne Soil in Pennsylvania Lime and Fertilizer T reatm ent Lime only................................ Lime and phosphate............ Lime, phosphate, and potash Lime, phosphate, potash, and nitrogen....................... Source: N et R eturn A bove Fertilizer C osts (B ased on alfalfa hay nutrients) $ 7.72 12.51 12.98 13.90 N et R eturn A bove F ertilizer C osts (B ased on milk produced) $14.58 31.58 33.51 38.88 “ Science for the Farm er,” March 1944, P ennsylvania S ta te C ollege, School o f A griculture and A gricultural E xperim ent Station. TRADE Retail A t t ^ e Start of this year, it was doubtful w hether d epartm ent stores would be able to surpass, or even duplicate, the all-tim e high in dollar sales experienced last year, especially since the heavy buying of O ctober, N ovem ber, and D ecem ber had THE MONTHLY BUSINESS REVIW - rr —— r - - n reduced stocks to the lowest level in over three years. M any m erchants were com pletely sold out of some item s and had only lim ited quantities of others. M oreover, there was little possibility of increased civilian production in the near future. Nevertheless, since the first of the year, stores have succeeded in obtaining enough m erchandise to perm it dollar sales during the first q u arte r to reach a record-high level for th a t period. In fact, receipts of m erchandise during th e first two m onths of the year exceeded sales, and inventories on F eb ruary 28, 1945, were up 14 percent from Jan u a ry 1, b u t down 6 percent from the end of F eb ru ary last year. T he accom panying ch art shows weekly sales during Jan u ary -M arch 1945 com pared w ith a year and two years ago. W ith the exception of the first week in Jan u ary , which had only five trading days this year, sales recently have been substantially larger th an they were in 1944, w ith year-to-year gains as high as 32 percent reported for certain weeks. There also has been im provem ent over 1943 sales, except during the second week of F ebruary, when sales reached an abnorm ally high level two years ago as a result of scare-buying of all types of clothing and accessories after th e announcem ent of shoe rationing. N everthe less, this decline was more th a n offset by the gains for th e rem ainder of F ebruary, and to tal sales last m onth were up 4 percent from two years ago and 18 percent com pared w ith F ebruary 1944. T he seasonally adjusted sales index advanced to 204 percent of the 1935-39 average, which equaled the all-tim e high of last Novem ber. In discussing d ep artm en t store sales during M arch and April, one m u st tak e into consideration the effect of th e changing d ate of E aster upon the p attern of weekly sales during these two m onths. W ith E aster this y ear and last occurring considerably earlier than in 1943, a large portion of the apparel business of April two years ago has been shifted to M arch. / PcKJ V\\ D E P A R TM E N T STORE SALES FOURTH DISTRICT 0 1 WEEKLY INC>EX 1935-39 * ICX 1945/ / / ' i \ / , ------19 4 3 I94 4 ^ * s' JAN FE B 9 y.. ■■ MAR APR N evertheless, during the week ended M arch 17, 1945, dollar sales were greater th an they were during the pre-E aster peaks of both 1943 and 1944, despite the fact th a t there were still two weeks before E aster this year in which stores could be expected to experience a large volume of apparel sales. D uring the two weeks ended M arch 17, sales were up 30 percent com pared w ith the corresponding period a year ago. Unusually favorable w eather this m onth has encouraged the purchase of spring clothing. T he greatest gains in February sales this year com pared with last were reported by ready-to-w ear de partm ents. Sales of wom en’s coats and suits were up 30 percent, dresses 23 percent, and juniors’ and girls’ wear 34 percent. M en’s clothing sales were 18 percent larger. Shoe business also was very active last m onth, with sales of wom en’s shoes up 43 percent from F ebruary 1944. Basem ent shoe departm ents experi enced a gain of only 26 percent in their sales, indicat ing th a t custom ers are continuing to use th eir ration coupons for better-quality footwear. Piece goods sales were substantially larger this year th an last, although the gain in sales of cotton wash goods was consider ably sm aller th a n th a t reported for rayons, silks, and woolens. Stores are having considerable difficulty in securing cotton piece goods, and stocks of these at the end of last m onth were down eleven percent from F ebruary 29, 1944. T he joint program of the W ar Production Board and Office of Price A dm inistration to reduce clothing prices by increasing production of popular-priced item s was discussed in the F ebruary issue of the M onthly Business Review. In order th a t consumers m ay benefit from this program , OPA during the la tte r part of this m onth issued an order which froze the price m ark-ups of approxim ately 300,000 retailers selling clothing, dry goods, and housefurnishings. The regulation forbids a retailer from using a greater m ark-up on any item th an he did on M arch 19, 1945. W hile this order will not change present price levels, it does require retailers to reduce th eir prices to cus tom ers whenever wholesale prices decline. T he order includes m ost types of rayon and woolen clothing, all types of cotton clothing except those under specific price ceilings, shoes, domestics, and certain house furnishings. Wholesale According to Department of Commerce reports, sales a t 169 fourth district wholesale firms during F ebruary were two percent sm aller th an in the same m onth a year ago. Sales of autom otive supplies, housefurnishings, confectionery products, and paints and varnishes were substantially larger this F ebruary th an last, b u t these gains were slightly more th a n offset by the decreases reported by firms selling building m aterials, paper, and tobacco products. 10 THE MONTHLY BUSINESS REVIEW Indexes of Department Store Sales and Stocks Fourth District Business Statistics D aily A verage for 1935-39 —100 (000 om itted ) „. „ SA L E S: Akron ( 6 ) ..................... C anton ( 5 ) ................... C in cin n ati ( 9 ) ............. C leveland (1 0 )............ Colum bus ( 5 ) ............. Erie ( 3 ) ......................... Pittsburgh ( 8 ) ............ Springfield ( 3 ) ............ T oledo ( 6 ) .................... ' W heeling ( 6 ) ............... Y oungstow n ( 3 ) ____ D istrict ( 9 7 ) ................ STO C K S: D istrict ( 5 1 ) ................ W ithout Seasonal A d ju stm en t Feb. Jan. Feb. 194S 1945 1944 A djusted for Seasonal V ariation Feb. Jan. Feb. 1945 1945 1944 204 196 167 153 186 179 150 194 168 151 187 163 179 167 155 142 172 151 129 168 146 121 161 145 167 168 131 128 152 157 120 172 139 116 142 133 229 258 223 197 248 210 166 249 213 186 231 204 236 217 189 172 213 194 172 230 197 173 210 186 188 221 174 164 203 184 133 220 176 144 176 166 142 132* 151 148 149* 157 * R evised. Fourth D istrict Unless Otherwise Specified Feb. 1945 % change Jan.-Feb. % change from 1944 1945 from 1944 Bank D ebits— 24 c itie s ....................34,181,000 S avings D ep o sits— end o f m onth: 39 banks O. and W . Pa............... 31,1 9 8 ,7 6 0 Life Insurance Sales: Ohio and Pa...................................... 3 91,509 R etail Sales: D ept. Stores— 97 firm s................ 3 36,793 Furniture— 71 firm s...................... 3 2,023 Building C ontracts— T o t a l............ 3 11,779 ” — R esid en tia l. 3 1,541 C om m ercial Failures— L ia b ilities.......................................... 3 91 N u m b er.............................................. 5 Production: Pig Iron— U . S...............N et ton s 4,563 Steel Ingot— U . S......... N et ton s 6,658 B itum inous Coal-— 0 . , W . Pa., E. K y......... N et ton s 17,011 C em ent— 0 „ W. Pa., W . V a...............Bbls. 353a E lectric Power— O., Pa., K y .. .T h o u s. K .W .H . 3,219a S h o es.........................................Pairs b - 6 9,018,000 - 2 +24 3 < 184,670 +18 + 4 +98 —46 - 72,273 3,716 21,402 2,915 + +16 + 2 + 3 —54 2 +34 —17 120 7 —25 —50 —10 — 7 9,508 13,862 — 9 — 6 -1 3 35,688 - 9 -2 9 + 3 — 6 b — 5 b a January, C onfidential. Fourth District Business Indexes Wholesale and Retail Trade (1935-39 = 100) (1945 compared with 1944) Percentage Increase or Decrease SALES SA LES STO C K S Feb. first 2 Feb. 1945 m onths 1945 D E P A R T M E N T ST O R E S (97) A k ro n ................................................................................ C a n t o n ............................................................................ C in cin n a ti....................................................................... C lev e la n d ........................................................................ C olu m bu s........................................................................ E r ie ................................................... ................................ P ittsb u rg h ...................................................................... Springfield....................................................................... T o le d o .............................................................................. W h eelin g......................................................................... Y o u n g sto w n ................................................................... O ther C itie s................................................................... D istric t............................................................................. +17 +11+ 9 +22 +15 +17 +10 +20 + 9 + 8 +17 +25 +26+24 +15 +18 +16 F U R N IT U R E (7 1 ) C a n to n .............................................................................. C in cin n a ti....................................................................... C lev e la n d ........................................................................ C olum bus........................................................................ D a y to n ............................................................................. P ittsb u rg h ....................................................................... T o le d o ............................................................................... O ther C itie s........................: ......................................... D istr ic t......... ........................... ...................................... — 1 +23 —3 — 7 + 1 — 3 +16 — 5+ 3 + 1 + 4 -0 +16 — 3 — 7 C H A IN S T O R E S * Drugs— D istrict ( 5 ) .................................................... Groceries— D istrict ( 4 ) .............................................. + 3 + 4 + 10+13 W H O L E SA L E T R A D E * * A utom otive Supplies ( 8 ) ........................................... Beer ( 5 ) ........................................................................... C lothing and Furnishings ( 3 ) ................................. C onfectionery ( 4 ) ......................................................... Drugs and Drug Sundries ( 5 ) ................................. E lectrical Goods (9) ................................................. Fresh Fruits and V egetables ( 7 ) ........................... Furniture and House Furnishings (3 ) .............. Grocery Group (3 9 ) .................................................... T o ta l Hardware Group ( 2 5 ) ................................... General Hardware ( 7 ) ........................................... Industrial Supplies ( 9 ) .......................................... Plum bing and H eating Supplies ( 9 ) ................ Jew elry ( 8 ) ..................................................................... Lumber and Building M aterials (5)..................... M achinery, Equip. & Sup. (E xcep t E lect.) (3) Paints and V arnishes ( 4 ) .......................................... Paper and its Products ( 6 ) ...................................... T obacco and Its Products ( 1 4 ) .............................. M iscellaneous ( 1 4 ) ...................................................... D istrict— All W holesale Trade (1 6 9 ).................. +24+26 -1 0 +12+ 14 +26+17 + 2 — 2 + 4 +26a — 1 + 4 — 3 +10 +12 + 9 — 8 + 24+15 +11a —10 — 6 —13 — 9 — 2 - 2 a — 6 -1 0 — 3 - 4 - 3 a - 9 -1 3 a — 8 — 6 +20 +15 +17 + 6 +17 +16 +21 + 8 +16 + 3 + 9 —16 —19 a — 1 a — 1 — 6 + 8 -0 + 2 Bank D eb its (2 4 c itie s )........................................... C om m ercial Failures (N u m b e r ).......................... ” (L ia b ilitie s)....................... Sales— L ife Insurance (O. and P a .) ................... ” — D ep artm en t Stores (97 firm s)............... ” — W holesale D rugs (5 firm s)...................... ” — ” Groceries (39 firm s)............. ” — ” Hardware (25 firm s)............ ” — ” A ll (69 fir m s).......................... ” — Chain D rugs (5 firm s)*............................ ” — Chain Groceries (4 firm s)........................ Building C ontracts (T o t a l)................................... ” (R e s id e n tia l)........................ Production— Coal (O ., W. Pa., E. K y .)......... — C em ent (O ., W . Pa., E. K y .)* * — Elec. Power (O ., Pa., K y .) * * .. . ” ' — Petroleum (O., Pa., K y . ) * * . . . . ” — S h o e s.................................................... a -4 0 a a —14 — 7 + 1 + 4 + 8 + 9 a — 2 +17 + 7 — 7 —19 +13 +19 —19 +15 + 8 —12 a a — 4 — 6 + 3 a —59 —19 —14 Feb. 1942 Feb. 1941 188 7 6 108 163 164 150 170 162 166 162 48 20 136 43 211 a 84 200 9 5 112 133 161 152 163 161 161 147 24 37 156 60 206 97 89 157 40 28 89 157 137 139 151 147 162 152 67 114 147 121 186 96 83 138 61 28 103 121 120 127 170 141 140 138 135 238 131 119 167 96 88 111 100 80 94 99 106 96 121 106 121 111 115 133 127 73 143 95 114 (Thousands of Dollars) C a n to n ........................... C o v in g to n -N ew p o rt. G reensburg.................. M id d leto w n ................. P ortsm ou th ................. S teu b en v ille................. * Per ind ivid u al u n it operated. **W holesale data com piled by U . S. D epartm ent o f C om m erce, Bureau of th e C ensus. ' a N o t available. Figures in parentheses in d icate num ber o f firms reporting sales. Feb. 1943 Debits to Individual Accounts a + 5 + 6 Feb. 1944 * Per ind ivid u al unit operated. ♦♦January, a N o t available. a a - 4 Feb. 1945 Y o u n g sto w n ................ Feb. 1945 % change Jan .-F eb . from 1944 1945 Jan .-F eb . 1944 % change from 1944 176,352 17,995 74,335 592,385 1,119,890 266,522 22,045 128,586 50,454 5,025 10,624 19,411 4,513 73,304 26,868 7,422 20,682 17,372 13,530 1,177,644 10,223 15,320 28,654 13,735 220,930 23,278 34,881 76,530 11,161 4,259,671 + 4.5 371,668 + 4.9 38,465 - 2.5 157,986 1,250,836 \ + 4.7 2,505,931 - 7 .6 - 3 0 . 1 \ . 572,485 - 7.1 v 48,679 - 7.6 276,781 - 1 3 .3 102,764 - 8.4 10,719 22,281 -1 2 .2 41,143 - 1.6 - 6.6 9,258 159,039 + 7 5 .6 58,038 + 7.3 -1 2 .3 16,832 + 1 6 .4 41,041 - 1 1 .0 36,887 - 8.8 30,936 2 ,524,376 - 4.5 + 2.0 22,347 31,067 - 1.7 - 9.9 60,582 29,001 + 1 3 .5 456,976 - 1 5 .1 47,095 - 0 .4 76,802 - 4.2 158,912 - 4.4 24,080 - 1 3 .5 - 5.9 9,183,007 347,947 35,103 151,243 1,197,757 2,486,795 688,096 49,285 294,253 122,345 11,727 2 4 ,4 2 2 'x 39,066 ' 9,684 121,385 51,137 17,895 37,633 40,327 29,375 2,607,662 21,333 32,375 65,243 25,163 527,934 45,538 81,517 165,815 25,967 9,354,022 + 6.8 + 9.6 + 4.5 + 4.4 + 0.8 - 1 6 .8 - 1.2 - 5.9 - 1 6 .0 - 8.6 - 8.8 + 5.3 - 4.4 + 3 1 .0 + 1 3 .5 - 5.9 + 9.1 - 8.5 + 5.3 - 3.2 + 4.8 - 4 .0 - 7.1 + 1 5 .3 - 1 3 .4 + 3.4 - 5.8 - 4.2 - 7.3 - 1.8 11 THE MONTHLY BUSINESS REVIEW SUMMARY OF NATIONAL BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System Ind u strial activ ity continued to increase slightly in F ebru ary and the early p a rt of M arch. Value of de p artm e n t store sales was one-fifth greater th an in the same period last year. W holesale com m odity prices generally showed little change. Industrial Production T he B oard’s seasonally adjusted index of industrial production was 235 percent of the 1935-39 average in F ebruary, as com pared w ith 234 in Jan u a ry and 232 in the last q u arte r of 1944. Steel production, which declined further in the first p art of F eb ru ary as a result of continued severe w eather conditions, showed a substantial increase at the end of the m onth and in the first three weeks of M arch. Average o u tp u t of open hearth steel during F ebru ary was 2 percent above the Jan u a ry rate, while electric steel production increased 7 percent. O u tp u t of nonferrous m etals continued to rise slightly in F ebruary, largely reflecting increased m ilitary de m ands. A ctivity in the m achinery and tran sp o rtatio n equipm ent industries was m aintained a t the level of the preceding m o n th ; a decline in shipbuilding offset a slight increase in o u tp u t of m ost other m unitions industries. Production of lum ber and stone, clay, and glass products in F eb ru ary was a t about the Jan u a ry level. Production of m ost nondurable goods showed little change in February. O u tp u t of cotton goods and • shoes, however, rose 5 percent from the preceding m onth to a level slightly above th a t of a year ago. O u tp u t of explosives and sm all-arms am m unition showed fu rth er large gains. A ctivity at m eat packing establishm ents continued to decline, as pork and lard production dropped fu rth er and was 50 percent below the peak level reached a year ago. In M arch it was announced th a t supplies of m eat available for civilians in the second q u arter of 1945 would be 12 percent less th an in the first q uarter. A ctivity in rubber products industries in Jan u a ry and F ebruary was 6 percent above last autum n, reflecting chiefly a sharp increase in production of m ilitary tru ck tires. M inerals o u tp u t rose slightly in F ebruary, reflecting increased o u tp u t of an th racite and a further gain in crude petroleum production. A nthracite production recovered in F eb ru ary and the first two weeks of M arch from a large decline during Jan u ary . B itum i nous coal production showed little change in F ebruary from the Jan u a ry level and declined slightly in the early p a rt of M arch. Distribution D epartm ent store sales in F ebruary, which usually show little change from Jan u a ry , increased consider ably this year. Value of sales in F eb ru ary and the first half of M arch was 22 percent larger th a n in the corresponding period a year ago, reflecting the earlier d ate of E aster this year and continuation of the freer spending in evidence since the m iddle of 1944. Freight carloadings, which had declined a t the end of Jan u a ry and the early p art of F eb ru ary owing to severe w eather conditions, have increased since th a t tim e. Shipm ents of m iscellaneous freight were in larger volume in the 5-week period ending M arch 17 th an in the corresponding period of 1944, while load ings of m ost other classes of freight were less. Bank Credit T reasury expenditures during F eb ru ary and the first half of M arch continued to increase the to tal volume of deposits and currency held by th e public. A djusted dem and deposits a t weekly reporting banks in 101 cities increased 1.4 billion dollars and tim e deposits rose about 200 million dollars during the four-week period ended M arch 14. C urrency in circulation increased 350 million dollars over the same period, b u t declined som ew hat in the week following. To m eet the resulting increase in required reserves as well as the currency drain, Federal Reserve B ank holdings of U nited States G overnm ent securities in creased 395 million dollars in the four weeks ended M arch 14, while reductions in non-m em ber and in T reasury deposits a t the Reserve Banks supplied 450 millions of reserve funds to m em ber banks. Excess reserves have rem ained a t an average level of about a billion dollars. T he increase in Federal Reserve holdings of Govern m ent securities roughly paralleled the decline in commercial bank holdings. R eporting banks reduced th eir portfolios by 260 million dollars in th e four weeks. Holdings of T reasury notes declined by 1.7 billion dollars while certificate holdings increased by 1.4 billion dollarsv reflecting the M arch 1 T reasury exchange offer. Bill holdings were reduced by 210 million dollars. Bond holdings, however, continued to increase. T o tal loans for purchasing and carrying G overnm ent securities declined by 230 million dollars and commercial loans by 185 million.
@FedFRASER