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MONTHLY
M AR CH 1950
CONTENTS
Instalment Credit During Three Peacetime
Booms
................................. 1
Ke view
Finished Steel Consumption
Statistical Tables
. .
6
11
F IN A N C E • IN D U S T R Y • A G R IC U L T U R E • T R A D E
FOURTH
Vol. 32— No. 3
FEDERAL
RESERVE
DISTRICT
Federal Reserve Bank of Cleveland
Cleveland 1, Ohio
Instalment Credit During Three Peacetime Booms
A
FTER an interval of temporary eclipse during
a level 307% of the same prewar base period.(1) If
the second World War, the rapid rise of instal comparison is made between instalment credit volume
ment credit has been a conspicuous feature of the and disposable personal income (income left over
postwar period. During the past year or so, the vol after taxes), the extent to which the instalment credit
ume of instalment credit outstanding has continued
rise has outstripped the income rise is appreciably
to rise sharply while business indicators in general greater.
have ceased to rise, or in some cases have turned
Furthermore, the rate at which instalment credit
has been rising during recent months suggests that,
downward. Has it been merely a belated catching-up
if the pace should continue, previous landmarks would
on the part of instalment credit, or has the latter been
reaching new and perhaps vulnerable ground? As a
be left far behind. During the second half of last year,
means of coping with this question, it seems desirable
as business was recovering somewhat from the slow
down of the first half, the volume of instalment credit
to measure in some detail the growth of instalment
credit against the course of significant business indi was rising at a monthly rate of 300 million dollars or
3 percent per month. At the same time, total personal
cators, not only during the very recent period but
income was practically stationary, or more exactly,
also during other periods of peacetime prosperity.
showed a tiny rate of downward drift.
Instalment Credit and
Total personal income in
Instalment Credit and
In order to Set a perspecPersonal Income
the United States provides Gross
National Product tive on the recent rise in
one convenient yardstick
instalment credit by means
against which to measure the pace of instalment
of a comparison with corresponding rises in previous
credit. This procedure has come to be familiar in the
boom periods, it is helpful to relate the dollar rise
postwar period. As an answer to uneasiness concern in instalment credit to the dollar rise in gross national
ing the growth of instalment credit, a commonly heard
product<2) during identical periods. Instalment credit,
reassurance has taken the form of asserting that instal of course, is not itself a part of the gross national
ment credit has not yet caught up with personal in
(i) The average of the years 1935-1939 is used here to represent
come in rate of gain from prewar levels. If annual
prewar levels on the assumption that those five years represent
averages are used in the comparison, this assertion
typical prewar conditions. Such an assumption, however, is not
the only one which is possible or defensible.
holds good through 1949, but if monthly trends are
*2 ) Gross national product is the market value of the output of
considered, it now appears that by the end of last
goods and services produced by the nation’s economy, before
year, instalment credit had outstripped personal in deduction
of depreciation charges or other allowances for con
come in the gain from prewar levels. (See the first
sumption of durable capital goods. T he value of raw materials
or other business products used up, however, is excluded. All
two of the accompanying charts). By December 1949,
gross national product data cited here are from the U. S. De
instalment credit outstanding had reached 327% of
partment of Commerce except for the period 1922-29, where
the 1935-39 average, while personal income was at
data are from Kuznets, as indicated in table footnote.
Page 2
Monthly Business*Review
INSTALMENT CREDIT OUTSTANDING
in relation to
PERSONAL INCOME
U. S. Annually, 1935-1949
(Annual average of month-end volume of instalment credit
outstanding)
1935- 39*100
1935- 39-100
March 1, 1950
INSTALMENT CREDIT OUTSTANDING
in relation to
PERSONAL INCOME
U. S. Monthly, 1946-1949
1935- 39-100
1935- 39*100
. . . after an interval of temporary eclipse during the war,
the volume of instalment credit rose rapidly, at a pace
much faster than the gain in personal income.
. . . the volume of instalment credit outstanding increased
rapidly month-by-month during most of 1949, and has now
outstripped personal income in gain over prewar levels.
product, but by expressing the rise in the former as
a percentage of the rise in the latter, a convenient
measure of relative importance is obtained. In addi
tion, parts of the gross national product, such as
consumer expenditures for durable goods, or value
of private construction, can also be used as bench
marks for gauging the significance of a given rise in
instalment credit. Since each boom has its peculiar
characteristics, the growth of instalment credit can
be better understood when it is considered within the
pattern of a particular period in recent business
history.
Three Boom During the boom period from 1946
Periods
through 1949 the volume of instalment
credit increased by 6.3 billion dollars(3)
as compared with a rise of 2.3 billion dollars during
the 1933-37 recovery-and-boom period, and an esti
mated rise of about 1.9 billion dollars during the
1922-29 boom period.(4) (See accompanying table.)
During the same periods, however, in the order
named, the gross national product rose by 46 billions,
34 billions, and 28 billions respectively. If the rise in
instalment credit is expressed as a percentage of the
rise in gross national product, the three percentages
become 14 percent, 7 percent, and 7 percent for the
periods 1946-49, 1933-37, and 1922-29, respectively.
The latter percentages are depicted on the left side
of the first of the three accompanying bar charts. This
comparison gives an indication of the outstanding im
portance of the instalment credit rise during the most
recent of the three booms. It should be realized, how
ever, that the comparison runs in terms of increases
in instalment credit, and that the end of the war
found instalment credit at an abnormally low ebb.
Hence a very substantial rise was to be expected in
any event, particularly because of the backlog of de
ferred demand for autos and other durable consumer
goods.
1946-49 A closer examination of the pattern of the
Period
1946-49 boom, as shown on the right side
of the first bar chart, indicates that the
rise of instalment credit during this period was almost
as important (in relation to the national product
gain) as were the rises in the value of private con
struction and in output of producers’ durable equip
ment, — two of the especially important hallmarks
of the postwar boom. (The three percentages were
14 percent, 15 percent and 16 percent in the order
named.) The instalment credit rise, as a percentage
of gross national product, was also not very far be
hind the percentage of national product represented
by increases in total consumer expenditures for dura
ble goods (17 percent). To state it differently, the
overwhelmingly preponderant part of the postwar
rise in consumer expenditures for hard goods was
reflected in a corresponding volume of new instalment
(3) Although the year 1949 might be considered a year of mild
recession, the economic magnitudes of the year as a whole were
sufficiently close to postwar boom levels to justify inclusion of
1949. At the other end of the period, all or part of the year
1945 might have been included, if it were not for the statistical
difficulties in pin-pointing the effects of the war’s end. The
postwar rise in instalment credit would show up as larger, both
absolutely and relatively, if 1945 rather than 1946 had been used
as the starting point.
(4) Annual averages are used th r o u g h o u t, unless otherwise
indicated.
Monthly Business Review
March 1, 1950
credit (or debt) operations. The rise in instalment
credit, during 1946-49, however, was overshadowed
by the increase in purchases of goods and services by
federal, state, and local governments; the rise in this
part of gross national product accounted for 27 per
cent of the rise in gross national product as a whole.
Taking together the various parts of national prod
uct under discussion (which accounted for threequarters of the total rise of gross national product
during the period), it is apparent that the postwar
rise in instalment credit occurred within a boom
which revolved primarily around the backlog of con
sumer demand for hard goods, around construction
and peacetime heavy-industry expansion, and around
government spending in which the emphasis was on
international aid and defense expenditures rather
than on the type of domestic pump-priming which
was so prominent in the middle ’Thirties.
It should be noted that the component of gross
national product called “government purchases of
goods and services” includes public construction but
does not include interest payments or transfer pay
ments such as unemployment insurance benefits. A
considerable part of the rise in this segment of gross
national product from 1946 to 1949 was due to a
growth in government payrolls, subsequent to the very
sharp reduction which had occurred immediately
Page 3
after the war. An alternative measure of the economic
role of government in the boom would be the net
change in the public debt between the beginning and
end of the period, although such a measure would
not be directly linked to gross national product. Such
a measure would show surplus financing by govern
ment during most of the period, giving way to deficit
financing during calendar 1949. Only the latter seg
ment of the period, therefore, would tend to show a
stimulating effect in the net flow of funds between the
federal, state and local governments and the economy
as a whole.
During the period of 1933-37, including
recovery and boom, the rise in instalment
credit was equal to 7 percent of the rise
in gross national product. This was about the same
percentage as recorded by the rise in private construc
tion, which is not generally regarded as an outstand
ing feature of the 1933-37 period. The percentage is
appreciably less than that for the rise in producers’
durable equipment (11 percent of the rise is gross
national product) which came to be important toward
the end of the period. Nevertheless, the role of instal
ment credit is considered to have been significant,
especially in the earlier phases of the recovery period,
before the boom in heavy industry took hold. The
1933-37
Period
C H A N G E S IN IN STALM EN T CREDIT A N D IN SELECTED PARTS
O F G R O S S N A T IO N A L PRODUCT
(Dollar figures are changes in millions of dollars; percentages are dollar changes expressed
as percentages of dollar changes in Gross National Product.)
Period
Consumer
Consumer
Instalment Expenditures Expenditures
Credit for Durable Goods for Autos
Private
Construction
Producers’
Durable
Equipment
Government
Purchases
+ $1,900*
7%
-$1 ,40 0
3%
+ $2,340
7%
- $ 270
5%
+ $6,320
14%
+ $2,500
9%
-$6 ,70 0
14%
+ $2,550
7%
- $ 380
7%
+ $6,940
15%
+ $3,000
11%
- $4,600
10%
+ $3,660
11%
-$1 ,46 0
26%
+ $7,510
16%
+ $ 300
1%
- $ 510
1%
+ $3,630
11%
+ $1,160
21%
+ $12,670
27%
Gross
National
Product
1922-29 + $28,200
1929-33 — $48,000
1933-37 + $34,450
1937-38 — $ 5,530
1946-49 + $46,120
+ $4,200
12%
-$5 ,90 0
12%
+ $3,500
10%
-$1,250
23%
+ $7,720
17%
+ $1,200
4%
— $1,800
4%
+ $1,210
4%
- $ 760
14%
+ $5,290
11%
Sources: For instalment credit, Federal Reserve System.
For gross national product and its parts, U. S. Department of Commerce, except for period
1922-29 for which data are drawn from Simon Kuznets: National Product Since 1869, and National
Income and Its Composition, 1919-1938.
* Based on estimate that the average volume of instalment credit during 1922 was approximately
one billion dollars.
Page 4
Monthly Business Review
March 1, 1950
C H A N G E S IN IN STALM EN T CREDIT A N D IN SELECTED PARTS
OF G R O S S N A T IO N A L PRODUCT
(Expressed as Percentages of Dollar Changes in Gross National Product,
U. S., During Three Peace-Time Booms and Two Depressions)
$
J lN C R E A S E AS %
OF GNP $ IN C R E A SE
INCREASE AS %
OF GNP $ INCREASE
60%r
60?S
1946-49
INSTALMENT C RED IT*
THREE BOOM P E R IO D S
IN S T A L M E N T CREDIT AND
PARTS O f G N P
50
50
40
GOVERNMENT
PURCHASES
30
-
20
-
10
CONSUMER
EXPENDITURES
FOR DURABLE
GOODS
1946-49
1922-29
4
1933-37
-
1
m _____ m .
i
30
PRODUCERS
DURABLE
EQUIPMENT
PRIVATE
CONSTRUCTION
20
\
II
1
. . . the rise in instalment credit during 1946-49, expressed as a percentage
of the rise in gross national product, was much greater than in either of
the two previous peace-time booms; the instalment credit rise during 1946-49
counted nearly as heavily, for example, as the rise in the value of private
construction.
1937-38
19 33-3 7
D U R ABLE GOODS
tNSjA^M^NT
-iASt
'fui*
i
( p j g & s
v
FOR
DURABLE GOOOS hi•gaM 'rW Jnp,
. . . the rise in instalment credit during the 1933-37 recovery
was not as large as the increases in several major compon
ents of gross national product; during the subsequent re
cession the decline in instalment credit was equal to 5%
of the shrinkage in gross national product.
. . . during the earlier boom of 1922-29, the expansion of
instalment credit played a more influential role in the
boom than did “government purchases”; in the ensuing
depression the drop in instalment credit was relatively
larger than the drop in the value of government purchases.
role of government in the 1933-37 period, of course,
had many ramifications. The full role of pump-prim
ing in all its phases, and the impact of deficit financ
ing, is probably not revealed in the rise in “govern
ment purchase of goods and services” which amounted
to 11 percent of the total rise in gross national prod
uct during the period, as shown in the chart.
From the fall of 1937 through mid-1938
there was a sharp but brief business re
cession. Concurrently, the average volume
of instalment credit outstanding for the year 1938 was
270 million dollars less than that for 1937, a decline
which equalled 5 percent of the decline in gross
national produce from 1937 to 1938. Here, the use
1937-38
Recession
March 1, 1950
Monthly Business Review
of annual averages obscures somewhat the extent of
the dollar drops. From mid-1937 to mid-1938 the
dollar drops would be sharper than that shown in the
table, but this would apply to total national product
as well as to the parts, so that the percentage relation
ships would probably not differ widely from those
shown here. (Annual figures are used here in order
to make possible a comparison with the NineteenTwenties for which quarterly or monthly data for the
series here presented are not available.)
As contrasted with instalment credit, the declines
during 1937-38 in producers’ durable equipment and
in consumers’ expenditures for durable goods con
tributed heavily to the fall of gross national product,
26 percent and 23 percent respectively. The drop in
private construction (7 percent of the fall in gross
national product) was less significant; it paralleled
the relatively slow rise in private construction during
the previous upswing. Government purchases of goods
and services, as a part of gross national product, con
tinued to rise during 1937-38; this category rose by
1.16 billion dollars while gross national product was
falling 5.53 billion, and was probably a factor in stem
ming the recession. The latter development shows up
on the chart as a rise in “government purchases”
during 1937-38 amounting to 21 percent of the
amount by which gross national product decreased.
To round out the comparison and to provide a better perspective for the present
situation, it is helpful to turn back to the
period of the Nineteen-Twenties, when instalment
credit for the first time played a significant role in
a business boom. The essential pattern of the long
boom of 1922-29 (omitting consideration of the very
minor recessions of 1924 and 1927) can be seen in
the final chart. Government purchases were of negligi
ble importance. It was overwhelmingly a “private”
boom, with private construction playing a relatively
more important part than in the ’Thirties.(5)
During the period 1922-29 the field of instalment
selling was extended as a considerable variety of new
household appliances came into common use, and as
the practice of instalment selling was applied to types
of goods where it had previously been of minor im
portance. The rise in the volume of instalment credit
during the period was equal to 7 percent of the rise
in gross national product, — which was about the
same percentage as in the recovery-boom period of
the ’Thirties, but only half as large (expressed as a
percentage of the rise in national product) as occurred
in the ’Forties.
1922-29
Boom
(») Resurgent construction was especially important in the early
phases of the period. The role of private construction would
appear as even more important than shown in the table and on
the chart, if the year 1921 had been taken as the start of the
period.
P age 5
During the severe depression of 1929-33
t^ie decline in private construction was
especially heavy (14 percent of the drop
in gross national product) while the instalment credit
decline amounted to only 3 percent of the decline in
gross national product. These percentage drops, of
course, are not as impressive as the dollar declines
(see table) because they are expressed as percentages
of the very heavy drop in gross national product,
which fell by 48 billion dollars between the year 1929
and the year 1933.
1929-33
Depression
f°Uowing the course of instalment credit in comparison with
that of consumer expenditures for
durable goods throughout the three boom periods de
scribed above, it is important to note that the rise
in instalment credit has somewhat more than kept
pace with the total of consumers’ outlays for durable
goods. This facet may be summarized as follows:
Consumer
Durable Goods
RISE AS PERCENT OF RISE IN GROSS
NATIONAL PRODUCT
1922-29
1933-37
1946-49
Instalment
Credit
7%
7%
14%
Consumer Expenditures
For Durable Goods
12%
10%
17%
A comparison of the two sets of percentages gives
an indication of the long-run growth in the relative
importance of instalment credit. Thus, from 1922 to
1929 the rise in instalment credit (expressed as a
percentage of the national product rise) was scarcely
more than half the comparable figure for consumer
expenditures for durable goods, while for 1946-49 the
two percentages were 14 percent and 17 percent re
spectively.
It may be noted, too, that during the most recent
boom, consumer expenditures for autos accounted for
a larger share of total consumer expenditures for dur
ables than was previously the case. This factor is
probably interconnected with the greater importance
of instalment credit, although the significance of
growth in instalment credit in the household appli
ance field should not be minimized.
The above analysis has made no reference t0 vexec^ question of the desira
bility or undesirability of governmental
regulation of the terms of instalment credit. While
there is no intention here to go into the merits of that
question, it is essential to note that government regula
tion was an important factor in the situation during
most of the period of the recent boom, but was en
tirely absent during the two previous booms discussed
above. Such regulation, of course, was in a sense a
heritage of the war period. It was carried over into
the postwar years mainly as a measure, supplementary
Effects of
Reg ulation
( c o n t i n u e d ON P A G E 10
Page 6
Monthly Business Review
March 1, 1950
Finished Steel Consumption
T
HE Bureau of the Census has compiled, for the
first time, geographical consumption data for nine
broad groups of steel mill shapes and forms by metal
fabricating plants. The information was obtained
from the 1947 census reports by manufacturing plants
and should be of wide interest to marketing men and
others responsible for sales planning.
According to the American Iron and Steel Institute,
steel ingot production in 1947 totaled 84.9 million
tons and steel mill shipments of rolled steel products
in that year totaled 63 million net tons. The Bureau
of the Census analyzes the consumption of 39.4 mil
lion tons of steel mill shapes and forms by metal
fabricating plants and another 3.8 million tons by
metal producing establishments, or a total of 43.2
million tons.
The difference between these two totals of 63 and
43.2 million tons is largely explained by the fact that
the census data represent only consumption in manu
facturing industries and so exclude metal mill shapes
and castings used in construction, mining, farms, con
struction and maintenance of power lines, export, and
other areas considered as nonmanufacturing by the
Bureau.
The accompanying map shows the nine states in
each of which metal fabricating plants consumed
more than a million tons of steel mill shapes and forms
in 1947. These nine states consumed 80 percent of
the 39.4 million tons covered by this tabulation. Seven
of the states, i.e., Michigan, Pennsylvania, Ohio,
Illinois, Indiana, New York, and Wisconsin touch
one of the Great Lakes and this group accounted for
73 percent of the total. California and New Jersey,
the remaining states in the exclusive million-ton-orover group, are located on tidewater. Evidently access
to low cost water transportation is important to both
the steel producing and steel consuming industries.
Also shown on the map is the percentage of total con
sumption of each of these states.
The five heaviest consuming industrial states are
clustered in a solid block around the Great Lakes.
These states are Michigan, Pennsylvania, Ohio,
Illinois, and Indiana which are all in the East North
Central group, except Pennsylvania which is treated
as a part of the Middle Atlantic division by the Cen
sus. Rolled steel product consumption by manufac
turers in the five states amounted to 63 percent of the
United States total. In this connection it should be
noted that the Pittsburgh-Youngstown, Cleveland-Detroit, and Chicago districts5 steel producing capacity
amounts to about 70 percent of the United States
total.
The Fourth Federal Reserve District, as reported in
a special study in the May 1, 1949 Monthly Business
Review, contains about 47 percent of the total United
States steelmaking capacity. The Fourth District
includes all of Ohio, 19 counties in western Pennsyl
vania, the Panhandle of West Virginia and 56 coun
ties in eastern Kentucky. On the other hand, rolled
steel consumption by manufacturers in the states of
Ohio and Pennsylvania amounts to 27 percent of
national consumption. This includes heavy steel con
suming centers in Pennsylvania such as Philadelphia,
Lancaster, and Reading which are outside the Fourth
District environ. These figures thus point up the fact
that the District, and particularly Pittsburgh, pro
duces more steel than is, or can be, currently con
sumed by customers close at hand.
The adjacent tables show consumption of steel mill
shapes and forms by metal fabricating establishments
for the United States and the five leading states. The
tables show total consumption in 1000’s of tons as
well as breakdowns of the major product classes for
carbon steel, alloy, and stainless products.
Manufacturers in Michigan are the number one
consumers of carbon and alloy bars and shapes, sheet
and strip, and stainless steel. All of these products are
used primarily for the automotive and automotive
parts industry as well as the important machinery
group.
Ohio ranks first as the consumer of carbon wire,
and second in consumption of sheet and strip, miscel
laneous alloy steel products, and stainless steel. It is
the third largest user of both alloy and carbon bars
and shapes, structural shapes, and plates. These are
all basic raw materials for the state’s outpouring of
all kinds of machinery, transportation equipment and
parts, household appliances, screw machine products,
tools, fencing, and a wide variety of other metal fabri
cated products.
Pennsylvania is the largest consumer of structural
shapes, plates and miscellaneous alloy products, and
the second largest consumer of the miscellaneous car
bon mill shapes and forms. It ranks third in consump
tion of sheet and strip and stainless steel.
In addition to rolled steel consumption by metal
fabricating establishments of 39.4 million tons, steel
mills themselves consumed 3.8 million tons of steel in
their own metal fabricating shops, or nearly 10 per
cent of the total consumed by the fabricators.
As shown in an accompanying table, steel mills in
the three states of Pennsylvania, Illinois, and Ohio
accounted for 55 percent of total consumption of mill
shapes and forms by all United States steel mills.
More than half of the finished steel consumed was
in the form of wire and this was concentrated in the
states of Illinois and Pennsylvania. Wire is used prin
cipally in the production of nails and staples, barbed
and twisted wire, woven wire fences, and bale ties.
Monthly Business Review
March 1, 1950
Consumption of Metal Shapes and Forms
by Metal Producing Establishments
(thousands of net tons)
United States.... .
3 States.............. .
*Pennsylvania ...
Illinois................
*Ohio..................
Carbon
Steel
Wire
All
Other
Total
Percent
of U.S.
Total
2,084
1,158
1,679
908
3,763
2,066
100%
55
523
543
92
678
63
167
1,201
606
259
32
16
7
* Fourth District states.
Source: Census of Manufactures: 1947, SERIES: MC100-10.
Steel mill consumption of carbon steel wire by all
mills in the United States was nearly 2.1 million tons
compared with the 1.8 million tons consumed by all
independent fabricating shops.
For many studies of markets and market potentials,
a regional or state breakdown of consumption such as
provided by this Census report for 1947 is quite use
ful. It is frequently desirable, however, to pin-point
markets on a much finer basis, such as counties or
metropolitan areas. An aid in this direction is the
original research job performed by Iron Age, May
26, 1949 of steel consumption by states and principal
industrial centers in 1948.
By use of mail questionnaires and personal inter
views, Iron Age sampled steel using plants and then
made estimates of total rolled and drawn steel used
according to 10 product classifications. The results
are very close to those obtained by the Bureau of the
C O N S U M P T IO N O F STEEL BY METAL FA BRIC A TIN G PLANTS
Leading States— 1 9 4 7
(As Percent of U.S. Total)
. . . metal fabricators in the seven states bordering the Great Lakes used 73 percent
of the steel consumed by all manufacturers in the United States.
Source: Bureau of the Census, Census of Manufactures: 1947, SERIES: MC100-10.
P age 7
Monthly Business Review
P age 8
March 1, 1950
Consumption of Steel by M etal Fabricating Plants
(Thousands of Net Tons)
(Carbon Steel unless otherwise specified)
TOTAL
1000’s
of tons
United States....................... ................... 39,383
5 States.................................. ................... 24,700
M ichigan...............................
6,760
5,600
♦Pennsylvania........................ ...................
5,098
♦Ohio....................................... ...................
Illinois.................................... ................... 4,986
Indiana.................................. ................... 2,256
Bars and Shapes
Sheet and Strip
1000’s
of tons
Percent
United States. . . .
5 States......... . . .
5,729
3,738
100%
65
Michigan....... .. .
Illinois...........
♦Ohio..............
♦Pennsylvania..
Indiana.........
1,023
929
774
655
356
18
16
14
11
6
1000’s
of tons
United States. . . . 15,688
5 States............... 10,859
Michigan............
*Ohio...................
♦Pennsylvania......
Illinois................
Wisconsin...........
4,366
2,589
1,534
1,426
943
Structural Shapes
Percent
100%
69
28
17
10
9
6
Wire
Plates
1000’s
of tons
Percent
United States. . . .
5 States......... . . .
4,596
2,670
100%
58
♦Pennsylvania.. ...
Illinois...........
♦Ohio..............
California......
Indiana.........
1,273
443
438
265
251
28
10
10
6
5
Bars and Shapes— Alloy
United States. .. .
5 States............. .
♦Pennsylvania...
Illinois..............
♦Ohio.................
New York.........
California........
1000’s
of tons
Percent
3,429
1,948
100%
57
964
318
251
226
189
28
9
7
7
6
All Other Mill Shapes and Forms
1000’s
of tons
United States. . . . 1,757
5 States...............
1,154
♦Ohio...................
Illinois................
Michigan............
♦Pennsylvania......
Massachusetts___
Percent
100%
63
17
14
13
13
6
331
292
245
202
83
100%
66
19
17
14
12
5
All Other, etc.— Alloy
1000’s
of tons
1000’s
of tons
Percent
United States.. . .
5 States............. .
5,511
3,237
Percent
100%
59
,.
1,262
660
551
410
354
23
12
10
7
6
*Pennsylvania...
California........
Maryland........
♦Ohio.................
Stainless Steel
1000’s
of tons
1000’s
of tons
Percent
1,673
1,272
100%
76
United States.. . .
5 States...............
803
566
100%
70
United States..,
5 States.............
198
126
100%
64
33
13
11
10
9
♦Pennsylvania......
♦Ohio...................
Illinois................
Indiana...............
Wisconsin...........
143
137
129
90
68
18
17
16
11
8
Michigan..........
♦Ohio.................
♦Pennsylvania...
Illinois.............
New York....... .
37
33
25
16
16
18
17
13
8
8
United States. .. .
5 States......... . . .
Michigan......
Indiana.........
♦Ohio..............
Illinois...........
♦Pennsylvania..
544
222
191
170
144
Because of rounding, the sum of individual items may not equal totals.
• Fourth District states.
Source: Census of Manufactures: 1947, SERIES: MC100-10.
Percent
Percent
Monthly Business Review
March 1, 1950
Census. Bearing in mind that Iron Age’s data are for
1948, and that the Census’ data are for 1947, the two
are compared in the following tabulation. It is possi
ble, too, that small shifts took place during the year,
and further, that rounding of the percentages to whole
numbers makes the differences appear actually larger
than is the case for several of the areas.
Geographic Distribution of Consumption by
Manufacturers of Finished Steel
Percent of Total Leading States
Michigan.................................... ...............
Pennsylvania..................... ...............
Ohio................................... ...............
Illinois................................ ...............
Indiana.............................. ...............
New York.......................... ...............
Wisconsin................................... .................
California....................... ...........
New Jersey..................... ...........
Census
1947
Iron Age
1948
17%
14
13
13
6
5
5
15%
12
12
13
5
7
4
3
7
5
4
The principal steel consuming industrial areas in
the Fourth District, based upon the Iron Age study,
are shown in the accompanying table. Consumption
is expressed in terms of total steel used in each state.
Cleveland (Cuyahoga and Lorain counties) and
Pittsburgh (Allegheny, Beaver, Washington, and
Westmoreland counties) are the major consuming
centers in their respective states. Cincinnati, Dayton,
Page 9
and Toledo are also large takers of finished steel, but
their combined consumption does not equal that of
Cleveland alone. As a matter of fact, the consump
tion of steel in the Cleveland market exceeds that of
the entire six-state New England area.
The leading tonnage items consumed in Cleve
land are hot and cold rolled sheet and strip, hot
rolled bars, wire and wire rods, and plate. In the
Pittsburgh market, the major products consumed are
hot and cold rolled sheet and strip, hot rolled bars,
plates, and structural shapes.
Major Steel Consuming Areas
Fourth District
1948
Consumption as
Percent of State’s Total
O H IO ...................................................
Akron................................................
Canton..............................................
Cincinnati.........................................
Cleveland............................... /..........
Columbus..........................................
Dayton..............................................
Mansfield-Marion.............................
Toledo...............................................
Youngstown......................................
100%
3
7
10
34
5
10
4
9
PENNSYLVANIA...............................
Erie...................................................
Pittsburgh.........................................
Sharon-New Castle...........................
100%
6
32
5
Source: Iron Age, May 26, 1949.
Page 10
Monthly Business Review
March 1, 1950
INSTALMENT CREDIT
(CON TINU ED F R O M PA G E 5)
to the long-established techniques of general control
of credit, designed to shore up a weak spot in the dikes
which were being erected against postwar inflation.
It seems probable that government regulation of
instalment credit terms exercised some restraining in
fluence on the rapid postwar growth in the volume
of instalment credit. The consequence of this fact for
the statistical analysis presented above is simply this:
the postwar rise in instalment credit would un
doubtedly have been sharper in the absence of regu
lation. Therefore the charts would have shown a
greater over-all contrast between the various booms
in respect to instalment credit growth, or, alterna
tively, the postwar instalment-credit boom might
have spent itself before the end of 1949, thus pro
ducing a recessionary factor in the general business
situation.
It should also be noted that, as matters turned out,
the sharp rise in instalment credit during the second
half of 1949 (shown on the second index chart)
came after the statutory lapse of controls.
The chief conclusions which may be
drawn from the above analysis of instalment-credit changes in relation to changes in gross
national product and its parts are:
1. Rises and falls in the volume of instalment credit
have been significant factors in at least three peace
time business cycles. The rises have contributed to
the booms; the falls have contributed to recessions.
2. The relative importance of the rise in instalment
credit during the postwar boom through 1949 has
been substantially greater than that which occurred
in previous peacetime booms. This has been a signi
ficant contribution to the support of the boom. But
on the basis of past experience, a drop in instalment
credit may be a factor in a recession yet to come.
Summary
3. In each peacetime boom, the rise of instalmen
credit may be interpreted in the light of the specific
pattern of the boom, the latter being derived in part
from the relative magnitudes of the chief sustaining
forces.
What is Close students of the instalment-credit field
Ahead? have long maintained that a downturn in
instalment credit is rarely the initial factor
inducing a general business recession, but that a drop
in instalment credit usually intensifies a recession
which has started elsewhere. The facts presented
above are at least consistent with this view, although
they do not necessarily prove its validity. If this be
the case, then what does it mean for 1950? It would
appear to mean that in case of a decline in general
business which stems from some other quarter, a
sharp reversal in the present trend of instalment credit
would not be far behind, and would lend an apprecia
ble added force to the downward pressures.
Another possibility, however, cannot be completely
excluded. That is the possibility that a downturn in
instalment credit might occur in the near future, and
because of its effect on consumer takings, might turn
out to be a factor which precipitates trouble elsewhere
in the economy. The chances of such an outcome,
although perhaps they are not very great, stem from
the very closely balanced set of forces which are play
ing on the general business situation at present, taken
in conjunction with the recent rapid rate of instal
ment-credit expansion.
A third possibility, quite in contrast to the other
two, is that the somewhat strained relationships which
have been outlined above may continue for some time
to come, without damage to the present high level of
business activity. The ability of the economy to with
stand substantial shocks and strains has indeed been
demonstrated more than once in recent years.
Monthly Business Review
March 1, 1950
F IN A N C IA L A N D
O T H E R B U S IN E S S S T A T IS T IC S
Time Deposits
at 58 Banks in 12 Fourth District Cities
(Compiled February 3, and released for publication February 4)
Average Weekly Change During:
Jan.
Dec.
Jan.
1950
1949
1949
City and Number Time Deposits
of Banks
Jan. 25,1950
Cleveland (4).......... $ 904,918,000
Pittsburgh (11)....... 464,443,000
Cincinnati (8).......... 179,012,000
Akron (3)................. 103,139,000
Toledo (4)................ 104.551,000
Columbus (3)..........
84,146,000
Youngstown (3)....... 62,487,000
Dayton (3)..............
45,244,000
41,515,000
Canton (5)...............
Erie (4).................... 39,146,000
Wheeling (5)............ 26,714.000
Lexington (5)........... 10,742,000
TOTAL-12 Cities $2,066,057,000
+$ 860,000
+ 1.747,000
+ 113,000
+ 55,000
+ 314,000
+ 66,000
+ 40,000
+ 76,000
_ 18,000
+ 88,000
—
134,000
+ 25,000
+$3 ,242,000
+$2,386,000
+ 138,000
98.000
+ 146,000
+ 375.000
+ 173,000
27,000
+ 24,000
_ 4,000
+ 66,000
+ 57,000
+ 2,000
+$3,238,000
P age 11
+$ 754,000
+ 557,000
+ 242.000
+ 330,000
+ 428,000
+ 54,000
+ 33,000
43,000
_ 46.000
+ 162,000
+ 105,000
+ 35,000
+$2,611,000
During the four weeks ended January 25, time deposits at leading banks in this
area expanded at the rate of $3,242,000 per week, or about $13,000,000 and totaled
approximately $2,066,000,000 at the close of the period.
The January gain was partly seasonal in nature since it included many year-end
interest credits. One year ago the average weekly increment was only $2,611,000,
or about $10,000,000 for the period.
In the four cities, Cleveland, Columbus, Pittsburgh, and Toledo, time deposits
reached a new all-time high, although in the case of Toledo, the weekly increases
were smaller than in the same month of 1949. In Akron, Cincinnati, Erie and Lexing
ton, the January expansion also was smaller than a year ago.
In Dayton, time deposits increased at a weekly rate of $76,000 during January
in contrast to a decline of $43,000 per week a year ago.
Adjusted Weekly Index
of Department Store Sales*
Fourth District
(Weeks ending on dates shown. 1935-39 average—100)
Bank Debits*— January 1950
in 31 Fourth District Cities
(In thousands of dollars)
(Compiled February 9, and released for publication February 10)
No. of
% Change 3 Months % Change
Reporting
from
Jan.
from
Ended
Banks
Year Ago Jan. 1950 Year Ago
1950
191 ALL 31 CENTERS......... $6,939,182 - 2.7% $20,861,317 - 9.3%
10 LARGEST CENTERS
5
$ 224,214 - 2.8% $ 705,474 - 1.5%
5
103,877 —13.3
304,163 —18.3
16 Cincinnati.......
2,660,470 — 5.5
876,696 — 1.5
10 Cleveland........
5,372,422 —10.3
1,799,084 — 1.7
7 Columbus........
1,669,255 — 4.4
528,987 + 2.5
4
703,394 — 2.9
236,759 + 2.1
6
327,457 — 7.3
1,040,986 — 7.6
4 Youngstown...
436,745 —12.2
151,063 — 2.2
6
253,997 — 8.8
81,967 — 6.2
51 Pittsburgh.......
5,740,854 —12.6
1,919,605 — 5.3
113 TOTAL.......
$6,249,709 - 3.0% $18,887,760 — 9.3
21 OTHER CENTERS:
9 Covington-Newport__ Ky. $ 40,107 + 2.6% $ 120,186 + 0.5%
263,080 —21.2
6 Lexington........ .............Ky. 125,055 + 8.1
57,660 — 9.9
18,098 — 5.7
3
120,883 + 0.1
3
41,733 + 5.1
126,705 — 4.8
2
43,955 + 1.2
50,712 —16.8
16,813 — 8.8
5
127,328 — 3.6
41,145 + 1.8
4
110.669 + 6.5
37.571 +16.1
2 Middletown__
18,922 —10.5
59,599 —10.1
3 Portsmouth__
136,019 — 2.7
44,958 — 1.0
3 Springfield.......
63.671 —13.2
21,592 — 5.7
4 Steubenville...
108,094 —13.6
35,284 — 9.3
2
76.809 — 5.9
24,587 — 2.4
3 Zanesville.......
85,926 —12.2
29,377 — 4.3
3
5,836 —21.0
19,403 —18.1
1
57,613 —13.6
18,966 — 7.7
2 Greenburg.......
n. a.
n. a.
4 Kittanning.......
37,146 — 3.7
11,687 — 5.5
3 Meadville.........
54,440 — 8.6
17,191 — 5.5
4
75,244 —16.3
25,952 — 8.5
5
194,286 + 0.5
.......W. Va. 61,086 + 0.3
6
$ 689,473 - 0.2% $ 1,973,557 - 8.5%
78 TOTAL.......
* Debits to all deposit accounts except interbank balances,
n. a.—not available.
During the first month of 1950, debits to deposit accounts (except inter-bank)
in 31 Fourth District cities were only 2.7 percent smaller than in the same month
of 1949. This was the narrowest year-to-year margin since last June, when debits
for the first time in the postwar period fell below a year ago.
In the case of the smaller cities, the January figure was only 0.2 percent short
of a year ago, or the smallest year-to-year decline since March 1949.
At the largest cities where debits were still 3.0 percent short of a year ago, total
deposits (not shown in table) at the end of January were 4M percent larger than
a year earlier, indicating that the turnover of existing balances in metropolitan
areas is still running behind the rate that prevailed early last year.
TEN LARGEST CENTERS
Among the ten largest cities only Columbus and Dayton reported debits in excess
of a year ago. Debits in Canton were reported 13 percent below last year’s figure
for the month.
TWENTY-ONE SMALLER CENTERS
Middletown led the list with a 16 percent gain in debits over January 1949. Five
other cities also reported gains for the month over a year ago.
Indexes of Department Store Sales and Stocks
Daily Average for 1935-1939 = 100
Adjusted for
Without
Seasonal Variation
Seasonal Adjustment
Jan. Dec. Jan. Jan. Dec. Jan.
1950 1949 1949 1950 1949 1949
* Adjusted for seasonal variation and number of trading days. Based on sample
of weakly reporting atores which differs slightly from sample reporting monthly.
SALES:
229
Akron (6).................. ........ 286
212
485
299
310
243
361
595
267
Canton (5)................. ....... 328
350
242
Cincinnati (8).................... 316
310
247
501
307
292
424
Cleveland (10)................... 283
263
218
225
Columbus (6)............. .... 336
562
274
345
360
255
242
259
Erie (3)....................... ....... 314
327
336
579
Pittsburgh (8)................... 261
293
423
220
268
195
Springfield (3)................... 267
294
284
193
508
205
210
Toledo (6).......................... 268
277
296
474
191
Wheeling (6)............... ....... 235
273
157
183
236
427
261
321
348
229
527
Youngstown (3)................. 305
230
283
311
District (98)............... ....... 290
215
465
STOCKS:
240
....... 224
262
274
256
219
Back figures for year 1949 are shown in the February issue. For year 1946-48,
see August 1949 issue, page 7.
CLEVELANDI
TOLEDO
AKRON •
CANTON •
• COLUMBUS
★ CINCINNATI
• |YOUNGSTO>
I
{1 ★
^PITTSBURGH
O H IO
DAYTON
PA.
t WHEELING
W .V A .
s
LEXINGTON
KY.
Fourth Federal
ReserveDistrict
■ M AIN OFFICE
★ BRANCH OFFICES
@FedFRASER