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Busin Finance, Industry, Agriculture, and Trade ly eview Fourth Federal Reserve District Federal Reserve Bank of Cleveland Voi. 28_____________________ Cleveland, O hio, M a y 1# 1946___________________ No. 5 PORTLAND CEMENT INDUSTRY The portland cement industry provides one o f the basic ingredients for a large scale construction pro gram. Cement, mixed with water, sand, gravel or rock forms concrete which is an indispensable structural material used in virtually every type o f building. Cement, mixed with water and sand, forms mortar or the essential binder in all brick and structural tile work. It is estimated that about two cents out of every construction dollar is spent for portland cement and three and a half cents for concrete and concrete products. It is one o f the few building materials available today in ample quantities and at prices close to prewar levels. According to the Bureau o f Mines, 150 cement mills in the United States employing 25,000 people operated in 1939. Producing i t 48 percent o f capacity, these mills shipped 123 million barrels o f cement valued at 3181 million. In the same year, 15 mills in the District shipped 11.5 million barrels worth 315.7 million and employed about 3,000 persons. Fourth Federal Reserve District mills produce on the average about eight to ten percent o f the nation’ s portland cement. In 1945, eleven companies operating 14 mills in the District produced eight million barrels or about eight percent o f the national total o f 103 million barrels. Production in 1946 will be substantially larger as the tempo o f construction rises. Detailed production information concerning the cement industry is collected monthly by the United States Bureau o f Mines for individual states and principal producing areas. Bureau o f Mines’ data for the State o f Ohio, Western Pennsylvania and West Virginia includes all o f the cement manufacturers in the Fourth Federal Reserve District plus three mills in West Virginia with an annual rated capacity of 3,100,000 barrels which are outside the District. T o the extent o f the annual output o f these three West Virginia mills, production figures used in this dis cussion are overstated for the District. Census data on the other hand, are collected on a state basis and as a consequence it is not possible to allocate that part of Pennsylvania which belongs to the District. History The cement used so extensively today is a product o f the last century. It is a highly specialized material, produced with utmost care as to content and specifications. The complete history of cement is lost in antiquity. The Carthagenians in about 200 B. C. used a natural cement to build a 70 mile long aqueduct and many ancient Roman buildings were constructed with this material. Natural cement was made from a cement rock which contained the proper ingredients and when mixed with volcanic ash and water, became a strong cohesive material. The secret o f its manufacture was apparently lost until 1756 when John Smeaton, an Englishman, developed a natural cement to build a lighthouse in the rough waters off the British coast. An English bricklayer, Joseph Aspden, invented artificial cement in 1824. He burned ordinary rock and clay in a kiln and pulverized the resulting mass. When water was added, it became a hard binding material resembling in color the stone in the Isle o f Portland. He named it Portland Cement. A factory was established in 1825 to manufacture the product. The portland cement industry started slowly in the United States and the first plant was constructed in the Lehigh Valley o f Pennsylvania in 1872. Imported cement, however, was considered superior to the domestic product and high labor costs and lack of proper technical knowledge combined to retard rapid development. By 1890, United States production amounted to only 335,000 barrels. With improved technology and growing acceptance of the American product, annual output o f the 16 United States plants expanded to 8 million barrels by 1900 and to 176 million barrels by 1928. Despite these large increases in production, the United States has lost some of its share o f output. In 1924, the American industry produced over 50 percent of the world’ s supply as compared to about 23 percent in 1939. 2 THE MONTHLY BUSINESS REVIEW Growth in the The first Fourth District plant Fourth District commenced production in 1874 at Wampum, Pennsylvania, and has produced portland cement continuously since that date. On July 21, 1892, the Sandusky Cement Com pany began to manufacture the first portland cement produced in Ohio in a small plant at Bay Bridge. The initial capacity o f the mill was only 200 barrels a day, and the principal raw materials were marl and clay mined on the site. Cement is still being produced from the same type raw materials in a modern plant at that location. The third mill to open in the District was located in nearby Castalia in 1898. Reflecting the slow acceptance of American manu factured portland cement, no additional mills were constructed until 1909, when plants located in four widely separated towns began to function. Mills were erected in that year in Middlebranch, Ironton, and Superior, Ohio, and Universal, Pennsylvania. Twelve years then elapsed before another mill was built. Between 1921 and 1929, however, nine more mills were erected. Since that date, construction activity has been confined to modernization of old plants and abandonment o f several properties. The following table indicates the growth o f District capacity from 1920 to date. Fourth District Cement Capacity (in barrels) 1920.................................................. 14,171,000 1925......................................... ...2 1 ,9 7 1 ,0 0 0 1930.................................................. 24,504,000 1935.................................................. 23,504,000' 1940.................................................. 22,604,000 1945.................................................. 21,704,000 FOURTH DISTRICT CEMENT MILLS— 1946 May 1, 1946 One company in northwestern Ohio gave up the competitive struggle in 1932. Its operations were hampered by a heavy bonded indebtedness and in ability to raise new capital to modernize the plant. Fuel costs were high due to short, small diameter kilns and the use o f the wet process without benefit o f filters. Coal grinding equipment had become obsolete and lack o f facilities to utilize waste heat to produce power, added to purchased power costs. As a result, the mill could not meet the competition of more efficient competitors. Production o f cement at New Castle, Pennsylvania, began to decline in 1926 and was finally discontinued in 1940 due to the exhaustion o f limestone deposits in that area. The mill at this location employed the dry process. The location o f cement mills now in active production in the District is indicated on the accompanying map. Technological Technological development in the Developments industry has been as spectacular as capacity growth. From the hap hazard methods o f producing natural cement in make shift stationary ovens, the cement industry has reached the stage where it requires an extremely complicated factory and a relatively large capital investment. Eighty operations are necessary to produce portland cement meeting the specifications o f the United States Bureau o f Standards. The basic raw materials used are limestone, blast furnace slag or marl, and shale or clay. The chunks o f limestone are reduced to near powder in a series of crushing operations and then clay or shale is added in the correct proportion. From this point on, either the dry or wet process may be used. If the dry process is used, the raw materials are first put through a dryer and then pass to a group o f ball and tube mills and reduced to a powder. In the wet process, water is added to the limestone and mixed with the clay which is in the form of a “ slurry” and the materials are ground in the wet state. Filters remove all but 20 percent o f the water before the mixture is introduced into the kiln. Burning is the next step, and takes place in in clined rotary kilns from 6 to 12 feet in diameter and up to 400 feet long. The fuel is usually powdered coal and it is blown into the lower end o f the kiln under pressure. As the mixture is heated, the moisture and several gases are driven off. Between 2500° and 2700° F. a point o f incipient fusion is reached and a chemical reaction takes place. The materials combine to form a “ clinker” about the size o f a small marble. The clinker pours out of the lower end o f the kiln and after cooling is ready for grinding. Since the clinker is not affected by weather it is sometimes stored in this form until finished cement is needed. During the final grinding in tube and ball mills, a small amount o f gypsum is added to regulate the hardening period when cement is mixed with water. The end product will pass through a screen con taining 40,000 openings to the square inch, or so fine it would hold water. May 1, 1946 High early strength cements are now receiving greater attention and are manufactured by additional grinding to further pulverize the product. Fineness is now measured by the turbidity o f a liquid in which cement is suspended, since screens are not fine enough. Interest in air-entraining cement (air content increased through use o f organic agents) continues to grow as a result o f its superior durability and resistance to scaling. Raw Materials Comparison o f the production pro cesses and facilities o f the 14 Fourth District cement mills with the industry as a whole reveals some interesting differences and likenesses. Production o f cement in 1944 according to raw materials used was distributed as follows: processing mills. In the Fourth District, 56.3 percent o f total capacity utilizes the wet process or about 5 percent more than the national average. Fuel Cement mills use impressive quantities o f fuel in converting the raw materials to clinker. In 1944, the mills consumed 3.7 million tons o f coal, 2.5 million barrels o f fuel oil, and 35.5 billion cubic feet o f natural gas. It takes approximately 126 pounds o f coal, or .2 barrels o f oil, or 1,500 cubic feet o f gas to produce a barrel o f cement. Classification o f plants according to kind o f fuel used is shown in the ac companying table. Type of Fuel Used by Portland Cement Plants 1944 Percentate of Output According to Raw Materials, 1944 140 Mills 14 Mills in United in Fourth States* District** Limestone and Clay or Shale....................... 72.0% 62.4% 19.4% 5.3% Cem ent R ock and Pure L im eston e............ Blast furnace Slag and L im eston e.............. 6 .3 % 27.0% Marl and C la y .................................................. 2 .3 % 5.3 % Source: * United States Bureau o f Mines. ** On basis o f capacity since individual current opera tions are not available. The relative importance o f cement rock and pure limestone as the principal raw material in the manu facture of portland cement has steadily diminished. In 1898, it was used to produce about 75 percent of the total. By 1944, only 19 percent o f production came from this material. Only one producer in the District uses this raw material. On the other hand, the use o f limestone and clay has steadily increased in importance, rising from about 10 percent to 72 per cent in the same period. Present District capacity o f 62.4 percent using limestone and clay is therefore not far from the national average. Blast furnace slag is a comparative newcomer as a raw material. None was used in 1898, but by 1912 about 13 percent o f the cement manufactured in that year involved the use o f slag. This proportion fell to 6 percent in 1944. The fact that 27 percent of District capacity uses blast furnace slag, reflects the importance o f the District’ s iron and steel industry which is the chief source of this waste material. It is relatively cheap and eliminates investment in quarries and equipment and reduces crushing costs. Since it takes about 650 pounds of raw materials to produce a 376 pound barrel o f cement, closeness to raw materials is an important factor in locating plants. Wet and The “ wet” and “ dry” processes are Dry Processes the two methods used to manufac ture cement and the terms refer to the condition o f the raw material when it is introduced into the rotary kilns for burning. About 51.5 percent o f plant capacity in the United States uses the wet process. In 1944, wet processing plants operated at 42 percent o f capacity and produced 57.4 percent of the finished cement manufactured that year as com pared to 33 percent o f capacity operation by dry 3 THE MONTHLY BUSINESS REVIEW C o a l...................................................................... O il.......................................................................... Natural G a s....................................................... Coal and O il....................................................... Coal and Natural G a s.................................... Oil and Natural Gas. . ................................... Coal, Oil and Natural G a s............................ Coal and B y-product G a s............................. Source: T o t a l............................................... *United States Bureau o f Mines. 143 Mills 14 Mills In United In Fourth States* District Percent Percent 60 79 8 8 6 14 10 4 4 0 7 100 100 In the Fourth District, coal is the dominant form of fuel and is used by 79 percent of the plants which have 81 percent o f the District’ s capacity. This compares to 60 percent of the nation’ s plants that used coal and which produced 54 percent o f finished cement in 1944. That coal is the principal fuel in the District is not surprising in view o f the abundant supply of low cost bituminous coal available. Oil and natural gas are important fuels in mid-western, southwestern, and western cement plants which are relatively new in the industry. Rotary Kilns Rotary kilns have steadily increased in size since 1900. In that year, the average kiln was 70 feet long and had an annual capacity of about 35,000 barrels. By 1935, the aver age length had increased to 146 feet with a capacity of around 300,000 barrels. The diameter o f kilns has had a corresponding increase. Whereas 6 feet was common at the beginning o f the century, many are now 10 and 12 feet in diameter. Individual kilns with lengths up to 400 feet have been constructed recently. An analysis o f the size of all cement kilns in the United States as compared to District kilns is shown in the accompanying table: Number and Length of Rotary Kilns Aver 100126150Less 200' age than 125' and 149' 199' Length 100' up U. S.* (’ 35) 146' 10.3% 4 5.5% 8 .4 % 21.4% 14.4% District (’ 45) 141' 63.4 26.8 9.8 0.0 0.0 *Source: M echanization in the Cement Industry, W .P .A ., National Research Project. 4 THE MONTHLY BUSINESS REVIEW It is apparent that kilns in the Fourth District are smaller on the average than for the nation as a whole. The average length is five feet less, and nearly twothirds o f the kilns are between 100 and 125 feet long as compared to less than half o f this size for the entire country. The largest kiln in the District measures 10 x 240 and has an annual rated capacity o f about 750,000 barrels. Generally considered, large kilns are more efficient producers o f cement than small kilns. The capacity is proportional to the square o f the diameter and related only in a minor degree to the length. Whether or not waste heat is to be utilized is the prime con sideration in determining kiln length. When purchased power costs are low, it is more economical to build a very long kiln to utilize as much o f the heat as possible that is put into the kiln and curtail heat losses through the stack. Burning costs per barrel are thus reduced and the longer units do not require additional labor for their operation. I f purchased power costs are high, it may be more economical to use shorter kilns coupled with waste heat boilers to generate the plant’ s power needs. The outstanding new cement plant completed in 1943 has four kilns 250 feet long. Output per Some indications of change in labor Man Hour productivity can be obtained from measuring output o f finished portland cement in barrels per man. The Bureau o f Mines reports annually on this subject and provides produc tivity information on the basis o f per man hour, per man shift, for all employees, or only for cement mill employees. Since work shifts are o f various lengths in different sections o f the country, it is felt that productivity per man per hour is o f greater significance. Likewise, use o f all employees seems a better basis than only mill employees since this also reflects differences in output o f quarry and crusher workers as well as differences in types o f raw materials processed. The chart presented herein shows output in barrels o f finished cement on a per man per hour basis for the industry as a whole from 1928 to 1942 as compared to Ohio, Western Pennsylvania, and West Virginia. CEMENT PRODUCTION PER MAN HOUR May 1, 1946 Two significant features should be noted. The first is that productivity per worker has increased over this 15 year period and reflects better material preparation machinery, growth in kiln size, and better mechanical equipment as well as changes in rates of operation. In 1942, cement mills produced 183 million barrels of cement, the greatest quantity on record. The second is that productivity for the District consistently ranges below the national average by as much as a half barrel per man hour. It is o f special interest that while national productivity rose from 1940 through 1942, it declined in this area; however, the rate o f increase in productivity in both areas has been about the same over the entire 15 year period. The use o f smaller kilns in the Fourth District accounts for a minor part o f this difference since labor and power expended at the kiln account for about 20 percent o f total labor and power costs. Another factor is that many o f the plants are relatively old and as a consequence do not have as efficient quarry ma chinery, crushing and grinding equipment, and ma terial handling methods as may be found in the newer far-western mills. For example, per man hour output in 1942 for California mills was 3.24 barrels and in Texas, 2.93 barrels, or one-third greater than in this area. Rates of Another indication as to the general Operation condition o f the cement industry is to be found in a study of the percent of capacity utilization o f mills. The accompanying chart depicts the rate of operation for all mills as compared to District mills. O f significance is the fact that even in the very best production years, the industry has not exceeded a rate o f 73.5 percent o f capacity. Apparently there is sufficient existing capacity to handle any forseeable future construction needs. O f chief interest, however, is the unfavorable trend in local plant utilization. During the last three years o f the 1920 decade. District operations were at a higher level than for the nation. Thereafter production slumped below the national average and never again equalled it. The CEMENT PRODUCTION AS A PERCENTAGE OF CAPACITY P ER CENT I A L L M IL L S U S M IL L S m D IS T R IC T THE MONTHLY BUSINESS REVIEW May 1, 1946 peak year o f 1942 saw District production rise to 59 percent o f capacity as compared to 73.5 percent for the country as a whole. Two years later, operations had slumped to 30 percent and 43 percent respectively. Since cement mill activity is closely related to the construction industry, it is apparent that one or two things have happened. From 1928 to 1931, District capacity increased 17 percent as compared to an expansion o f only 11 percent in the entire in dustry. It would appear that local companies were too optimistic in appraising the future demand for cement so that rates o f operations have suffered. The other possibility is that relative rates o f construction activity have changed and the Fourth District has not shared equally in the recovery o f building activity since the depression. Effect of The shipment o f finished portland Construction cement from mills corresponds rather Activity closely to total construction activity. The indexes for total construction contracts awarded in the Fourth Federal Reserve District and District cement shipments for the past 20 years have been plotted on the accompanying chart. At the beginning o f the period, cement output lagged behind construction contracts and then rose as the volume o f construction declined. Thereafter, the two indexes declined, but cement shipments did not drop as far or as rapidly as building. From 1933 to 1942, the correlation is closer, although cement output did not expand as much as building did during 1941-42. This may be a reflection of the temporary nature of much o f the war construction as well as its inflated cost. In the decline that followed the war peak, cement shipments again held up better than building activity. A condition not reflected in this chart, is the fact that on the average for the past 20 years, Ohio has consumed more cement than was produced in the state. In the late 1920’ s, the excess o f consumption over production averaged about 1.5 million barrels. In 1942 and 1943, however, the difference had shrunk to about one-quarter million barrels, and in the years immediately preceding, there was actually a surplus o f production over consumption. This may indicate that local mills have succeeded in capturing a greater share o f the market within the state. CEMENT SHIPMENTS AND TOTAL CONSTRUCTION CONTRACTS AWARDED Fourth District — Average 1935-1939=100 PERCENT 1925 sources or 1930 1935 .W DOUCE CORPORATION Digitized for FFRASER bureau m in e s & 1940 5 The principal uses of portland cement in the normal construction years just before the war has been esti mated by the Portland Cement Association as follows: Classification Percent Structural (building, bridges, railroad s)....................................29 Paving (roads, streets, a irports)................................................ ..24 Housing and miscellaneous uses...................................................20 Conservation (reclam ation, water supply, sew erage)......... ..17 F arm ......................................................................................................10 T o t a l................................................................................100 If total new construction in 1946 approximates $7.5 billion as has been estimated by the Department o f Commerce, cement consumption should range be tween 126 and 131 million barrels, or 25 to 30 percent more than in 1945. About 22 million barrels will be needed to carry out the W yatt housing program which contemplates the beginning of construction on 1,000,000 housing units. The elimination o f socalled non-essential commercial and industrial con struction may substantially modify predicted cement consumption. Production should keep pace with the increase in construction activity. In fact, the shortage o f lumber may increase the use of cement and concrete products in place o f wood and steel. One company has invented a monster machine which lays the concrete shell of a house like an egg. Increasing use of concrete, cinder, and aggregate blocks instead o f hollow tile has pro vided a rapidly expanding market for cement in this field. Marketing Problems For many years, cement manufacturers have tried to maintain a stabilized market for their product. Two devices are used to attain this goal. First, all cement prices are quoted on an F.O.B. delivered basis with prices computed from a multiple basing point system. The price o f cement in a given community will therefore be the sum o f the lowest combination base price plus rail freight to the given market, no matter where the cement is manufactured or the actual means o f trans portation used. The result is that the cement prices o f different mills will be quoted on a uniform basis n any given market, but each mill will actually receive a different net-to-mill-equivalent price, the differences depending upon the actual amount o f transportation cost in making delivery. The second device used to stabilize markets is the uniform practice o f only selling cement through, or to, recognized dealers. Contractors must buy their requirements through the specified dealer in that area and not directly from a mill. On large jobs, however, the cement may be shipped directly from the plant to the construction site, but the dealer will receive his customary allowance and may handle the financial end of the transaction even though he does not see the cement. There are some exceptions to this general 6 THE MONTHLY BUSINESS REVIEW sales policy. Direct sales are made to railroads and concrete products manufacturers for use and not for resale. Direct sales are also made to states and the Federal Government and to public highway con tractors for use on projects located outside of given metropolitan areas. The price, in these cases, is usually that which the dealer would have paid. Bulk Shipments A minor revolution, caused in part by the wartime shortages, has been taking place in the shipment o f cement. Bulk cement shipments have risen from about 20 percent in 1939 to 35 percent o f the total in 1944. Trucks have enjoyed a 100 percent increase in this type o f business while the amount shipped by railroad has declined about 12 percent. The proportion o f bagged cement shipped in cloth has declined 43 percent while the use of paper containers has increased 8 percent. Shortages o f textiles has made the procurement of new cloth bags practically impossible. Most cement mills would like to see these trends continue. Cement is handled in bulk more economi cally and eliminates the troublesome problem o f bag deposits, cleaning and repair o f old sacks, and disputes with dealers as to the condition o f returned sacks. Further expansion may take place in bulk shipments when transportation agencies can procure additional equipment and dealers and contractors the proper facilities for storage. Paper bags are also preferred in the industry over cloth sacks since they are thrown away after use. Paper shortages have slowed develop ments in this direction. The relative use of trucks, rail, and water trans portation for both bulk and bagged cement has re mained about the same over the past five years with rails handling 80 percent, and trucks 17 percent of the total. INDUSTRIAL SUMMARY Labor disputes in a few key industries are again slowing the pace o f industrial activity in the Fourth District as well as the entire nation. In the fourth week o f April, a major electrical equipment manufac turer continued strike-bound thus reducing the flow o f motors and other indispensable components o f in dustrial tools and a wide variety of consumer durable goods. Widespread copper and brass strikes are affecting not only the entire radio and electrical in dustries but are also curtailing materials needed for the construction industry. The work stoppage at the bituminous mines which began on April 1, and which at this writing offers no prospect o f early termination, was promptly reflected in curtailment o f steel operations. The national steel production rate which after a four week shutdown had attained 89.5 percent o f capacity in the final week o f March, dropped to about 75 percent by the third week of April. Mills continue to operate at the best rates possible and are closing only when remaining coal supplies are estimated sufficient to keep furnaces and coke ovens properly banked until such time as new fuel supplies become available. As a result o f the coal shortage, pig iron output was restricted far below the March level when it was insufficient to meet foundry needs. The supply of foundry labor has improved, but the shortages o f iron and coke have prevented an expansion o f casting pro duction. * Automobile, truck, and automotive parts manu facturers began to reduce their rate o f operations at the end o f the month primarily because o f the lack of steel sheets. Passenger car and truck production had reached nearly 50,000 per week early in April. Other suppliers o f consumer durable goods are also feeling the shortage o f iron and steel products. Tin plate producers are worried about the supply o f steel to meet the demands o f seasonal food packing. general, District cement plants had sufficient Digitized forIn FRASER May 1, 1946 coal supplies at the end of the month, but present rates o f production cannot long continue. - Brick and structural tile producers are also concerned over coal supplies since the majority had only enough for four or five weeks o f operation at the beginning o f the strike. Clay sewer pipe production has been at a standstill since February 4 and supplies o f pipe are exhausted. Although the companies and men have agreed on a new wage schedule resumption o f produc tion appears to be contingent upon some degree of price relief. ANNOUNCEMENT A new weekly statement o f condition, covering eleven large member banks in the Fourth District, has been inaugurated by the Research Department. The report is comparable to the weekly statements issued by the Federal Reserve Banks of New York and Chicago covering metropolitan banks in their respective areas. O f the eleven banks, three are located in Cleveland, three in Cincinnati, and five in Pittsburgh. In terms of total resources, these banks represent approxi mately 42 percent o f all member banks in the Fourth District. This new series is not intended to supplant the “ Weekly Report o f Member Banks in 101 Cities” published by the Board o f Governors and which in cludes 41 member banks o f this District. That older series will continue to be compiled and released as in the past. The new three-city series is based on a smaller sample but is available several days in advance of the more comprehensive series. The statement as o f the close o f Wednesday is prepared each Friday and is available to anyone who may be interested in current changes in loans, invest ments, deposits, and other bank balance sheet items in the Fourth District. Requests to be placed on the mailing list should be addressed to the Researci Department.—Editor. THE MONTHLY BUSINESS REVIEW May 1, 1946 7 RECENT BANKING DEVELOPMENTS Early in April total loans o f the 41 weekly report ing member banks in this District reached $1,141 million, a new record high and up 3180 million from the end-of-war level. Four types o f bank loans are primarily responsible for this postwar expansion o f bank credit: Increase Aug. 15, 1945 to Apr. 17, 1946 Loans to Others than Brokers on U. S. Govern ment Securities.......................................................... 3 75,000,000 Com mercial, Industrial, and Agricultural Loans 65,000,000 “ All Other” L oa n s........................................................ 28,000,000 Real Estate L oa n s........................................................ 13,000,000 3181,000,000 Between V-J Day and the Eighth War Loan, there was considerable liquidation o f loans to others than brokers for carrying U. S. Government securities. But from early November to the end of January, in cluding the period o f the Drive, such loans increased nearly $150 million. Liquidation since then has been o f only nominal proportions with the result that this type o f credit still shows a large net increase over last August. The postwar rise in commercial loans, depicted on an adjoining chart, has extended into the sixth con secutive month. In establishing a new four-year high on April 10, commercial loans were nearly 25 percent above the 1945 low which constitutes one of the sharpest increases on record. Notwithstanding the large volume of bank deposits held by individuals and corporations, many commercial and industrial concerns apparently have found it necessary or de sirable to supplement their existing cash resources through bank borrowing. Such borrowings from the 41 weekly reporting banks since V-J Day total $65 million, after allowing for concurrent repayments by other borrowers. A third type of bank lending that has contributed to the postwar loan expansion is the category entitled, “ All Other” loans most o f which were made to conPOSTWAR FLUCTUATIONS IN LOANS Fourth District Weekly Reporting Member Banka (Cumulative from August 15, 1945) MILLIONS OF DOLLARS Digitized FRASER L A Sfor T DATE P L O T T E D -A P R 17. 1946 sumers rather than to business enterprises. These loans in the aggregate are up some 20 percent since last August. Dollarwise the increase is considerably smaller than that o f commercial or collateral loans discussed earlier, but the rise has been steadier (see chart) and is generally expected to show a further substantial growth despite unprecedented currency and deposit holdings of individuals. Real estate loans, the fourth factor contributing to postwar loan expansion, have recently shown a relatively rapid rise. Most o f the $11 million gain since V-J Day has occurred since the turn o f the year, and by April 17, the volume outstanding was $106,500 for each $100,000 outstanding on January 2 in the face of steady amortization of principal o f most mortgages held. Investments The effect o f the series of cash re demptions o f Treasury obligations beginning on March 1 upon security portfolios of weekly reporting banks is clearly visible on the ac companying chart o f postwar changes in investments. From mid-February to mid-April, holdings of certificates o f indebtedness and Treasury notes dropped $107 million, to the lowest in nearly a year. This contraction in certificates and notes was virtually offset, however, by a comparable increase in Treasury bond holdings and a moderate increase in holdings of corporate and municipal securities with the net result that total investments are still slightly higher than on V-J Day. The relative changes in the several kinds o f investments have been as follows for the eight months since the close of the war: Increases Decreases Treasury B on ds..................................... 3175,000,000 Corporate and M unicipal Securities 33,000,000 91-D ay Treasury B ills........................ 3 46,000,000 Certificates o f Indebtedness and 142,000,000 Treasury n otes................................ Net In crease...................... 3 20,000,000 POSTWAR FLUCTUATIONS IN INVESTMENTS Fourth District Weekly Reporting Member Banks (Cumulative from August 15, 1945) MILLIONS OF DOLLARS A last S BATE O N -1945- PLOTTED-APR 17, IM S 0 J F M A - 1946- M J J 8 THE MONTHLY BUSINESS REVIEW Gash Late in March, cash reserves o f the 41 Reserves weekly reporting banks dipped to the lowest in about two years. The decline was not very pronounced in legal reserves, but balances on deposit at other banks reached a long time low around the first o f April. Some o f this reduction in interbank balances may be attributable to transfers o f funds out o f the District by depositors, and to the purchase o f securities by reporting banks. The major cause, however, is believed to be the trans fer o f funds from correspondent banks to the reserve banks, as war loan calls and income tax payments by depositors tended to deplete legal reserves. In many areas cash redemptions o f certificates held by banks and their depositors were o f insufficient volume to balance the concurrent withdrawal o f Treasurydeposits with the result that many banks shifted a portion o f their interbank deposits to their reserve accounts. MILLIONS OF DOLLARS POSTWAR FLUCTUATIONS IN DEPOSITS Fourth District Weekly Reporting Member Banks (Cumulative from August 15, 1945) - A 1946 - May 1, 1946 D eposits Total deposits o f the 41 weekly reporting banks show very little net change during the first eight months o f postwar conditions. There has been considerable variation, however, in the various categories o f deposits. Demand deposits of individuals and corporations have been in a slow and irregular decline since October or even earlier. Income tax payments, war loan subscriptions, and reconversion costs have been instrumental in varying degrees in this recent con traction and the postholiday return o f currency was an offsetting factor o f only minor consequence. U. S. Government deposits in late April were still some 3100 million higher than on V-J Day, by virtue o f a nearly 3600 million increase during the Eighth War Loan. However, since March 1, war loan de posits have declined noticeably as calls were made in connection with the Treasury’ s cash redemptions of maturing and called issues. Since the redeemed securities were held largely by banks, the redemption process had but little expansive effect upon demand deposits o f nonbank enterprises and individuals. Time deposits of the 41 reporting banks are approxi mately 3125 million higher than at the close o f the war. The eight-month rise was at an annual rate of about 3190 million which is almost identical with the yearly increments during 1944 and 1945. Thus neither the volume o f savings deposits nor their trend of growth appears to have been noticeably affected thus far by the economic changes entailed in reconversion to peace. DEPARTMENT STORE SALES The upward surge o f department store sales which set in last October has lost none o f its momentum. If anything, the pace was accelerated during March and the first three weeks o f April. If department store trade is indicative o f the attitude o f consumers in general, goods o f all kinds will be taken off the market as rapidly as they can be produced for some time to come. Although some o f the record dollar volume is the result o f higher prices, there is not much evidence of effective consumer resistance to such higher prices. Nor is it likely that such hesitation will manifest itself as long as huge war-accumulated needs persist, and individuals have the means to buy, either out o f current income or wartime savings, and by the use of instalment credit. In the Fourth District the seasonally adjusted index of sales jumped 29 index points to 271, a new all-time high, and held near that level during the first three weeks o f April. In the course o f that spurt, the volume o f sales in three District cities, Canton, Columbus, and Youngstown, attained a level better than 200 percent above the 1935-9 average. In all but one major city, sales reached unprecedented proportions. This postwar expansion o f department store trade has not been peculiar to the Fourth District. Yearto-year increases have been slightly smaller in this area than in some other Districts in the past six months, but in March the index for the Fourth District pulled abreast the national figure with both showing a gain o f roughly 170 percent over the base period. That stores are making every effort to capitalize on the current strong consumer demand is attested by the fact that outstanding orders o f nearly 300 large department stores throughout the country rose about 3100 million during February and at the close o f that month stood at nearly 31 billion or approximately double the commitments o f two years earlier. While distribution o f merchandise through depart ment store outlets is only a small segment o f the national economy, it is an important element and an easily measurable one. Its postwar behavior can hardly be viewed with alarm unless it proves to have been merely the beginning o f a genuinely extravagant spending spree. The trend o f sales in the coming months should provide more specific evidence as to the basic nature o f this buying movement. 9 THE MONTHLY BUSINESS REVIEW May 1, 1946 FARM LAND PRICES The rise in the market price o f farm land, which began at the end o f the agricultural depression in 1933, appears to be continuing unabated. On March 1, farm land values were 13 percent higher than a year ago, as reported by the Bureau o f Agri cultural Economics for the country as a whole. Over half o f this increase occurred in the final four months o f the period. Although farm prices appear to have developed a tendency recently to show more strength during the winter months, the fact remains that the general level has advanced to within striking distance o f the 1920 peak. As a matter o f fact, in one Fourth District state, quoted land values are already 10 percent higher than at the crest o f the World War I boom: Value per Acre March 1 (1910-14 = 100) % Increase in 1945 12 M onths 1946 17 221 189 K en tu ck y......... 121 16 140 O h io ................... 6 P en n sylva n ia .. 130 123 14 W est Virginia . 121 106 142 126 13 United S ta tes., Source: U. S. Departm ent o f Agriculture. 1946 as com pared to 1920 (P eak) 10% above 12% below 7 % below 2 1 % below 16% below Land values tend to reflect the current income producing possibilities o f the land. A succession of good yields, a strong demand, or a high price may lead prospective purchasers to adopt an abnormal view of the income prospects o f the land. An example o f how one commodity may influence prospective purchasers is found in the tobacco producing areas, where favorable returns from tobacco plus the im portance o f acquiring a farm with a sizable tobacco production base is reported to be a pertinent factor in lifting farm land values. Effect of Good Buildings Good buildings are exerting a relatively greater influence now than formerly because o f the difficulty involved in re modeling or making repairs to existing structures. This is indicated by the fact that land with good buildings was found to be increasing in price faster during the past year than land with poor buildings. Still another example o f the importance attached to buildings is the fact that small farms (with buildings) advanced in price relatively more rapidly in the past two years than larger farms since buildings represent a larger share o f the total value of small farms than they do o f large farms. From 1940 until a year ago land o f less than average productivity appeared to be increasing in price relatively faster than highly productive land. This tendency seems to be a fundamental characteristic of periods o f rapidly rising land prices. But during the past year this trend has become less noticeable, presumably because as a rule the best buildings are found on the most productive farms, and the condition o f the house, barn and other structures seems to have become an important consideration. Non-real estate capital requirements for farming have increased more than real estate requirements since the prewar period as shown below. There are some who believe that this tendency for non-real estate investment in farming to increase may have some restraining effect on land values although thus far this effect is not apparent. In those areas where agricultural production continues to be further mechanized it seems possible that the ratio o f nonreal estate capital to real estate investment may grow. Percentage Change in Non-Real Estate Capital and Real Estate Capital Requirement1 -1945N on-R eal Real Estate Estate % Increase % Increase over over Average Average 1937-40 1937-40 Ohio (N orth Central General Farm) 71% 37 % K entucky (T ob a cco, L ivestock). . . . 66 57 Modern farming requires a high investment in farm machinery and equipment most o f which is more intricate than was required when horses provided the principal power on a farm. The growing importance of livestock necessitates a larger investment in the animals themselves, as well as the facilities needed to care properly for them. A further claim on the capital required in farming is the increasing importance of maintenance and im provement of the soil. There are no new lands now to replace land worn out by improper care. A recent comparison o f farm account inventories in eleven North Central states1 including Kentucky and Ohio shows that the capital required for productive livestock such as cattle, hogs, sheep and poultry has increased by an average o f 77 percent; machinery and equipment by 101 percent; and feed, seed and supplies 89 percent over the average required for the four year period 1937-40. Meantime farm real estate values increased 46 percent and work stock (horses and mules) declined 35 percent. Another factor affecting farm real estate prices in farm sections adjacent to highly industrialized areas of the district is the desire on the part of these workers to live in the country. They will often bid a higher price for farm property for its suitable location than it would command for strictly agricultural use. Farm real estate prices during and following the present World War have closely paralleled those of World War I. A slightly lower level of prices still prevails currently, but the high volume o f sales at increasing prices now suggests that this difference may be narrowed. A study of farm land price trends after World War I reveals that prices continued to increase ‘North Central Regional Publication No. 5 ( C ontinued on Page 12) 10 THE MONTHLY BUSINESS REVIEW May 1, 1946 SUMMARY OF NATIONAL BUSINESS CONDITIONS By the Board of Governors of the Federal Reserve System (Released for Publication April 23, 1946) Industrial production advanced considerably in March and appears to have declined only moderately in the early part o f April notwithstanding a complete shutdown in the bituminous coal industry and some reduction in output at steel mills. The value o f retail trade has continued to set new records during this period; wholesale commodity prices have risen further. Industrial Production Production at factories and mines, according to the Board’ s seasonally adjusted index, rose from a level o f 153 percent o f the 1935-39 average in February to 169 in March. This is slightly above the level reached last November before production was reduced by strikes in the automobile, electrical equipment, and steel industries. In April the index will probably show a decline o f 3 or 4 points as decreases in coal and steel are only partly offset by continued increases in other industries. The large increase shown by the total index in March was due for the most part to a sharp recovery in steel ingot production following settlement o f the labor dispute. There were production gains also in industries manufacturing automobiles, machinery, stone, clay and glass products, furniture, textiles, paper and rubber products. These gains in steel and other industries were offset only in small part by declines in the nonferrous metal industries, some food industries, and crude petroleum. Steel ingot production for the month o f March averaged 84 percent o f capacity as compared with 20 percent in February and at the end o f March was close to 90 percent. Subsequently, due to reduced coal supplies, steel output declined and by the fourth week o f April was down to a rate o f 74 percent of capacity. In the automobile and machinery industries production increased substantially during the latter part o f March and the early part o f April, reflecting improvement in steel supplies and settlement o f im portant wage disputes. Output o f stone, clay, and glass products continued to advance in March and production in the first quarter o f this year exceeded the previous peak levels reached at the beginning o f 1943. Output o f nondurable goods rose further in March to a level o f 168 percent o f the 1935-39 average, the highest level since last June. Production o f non durable goods for civilian use is now in larger volume than at any previous time. Activity at woolen mills has shown an exceptionally large advance since the end o f last year and, with marked increases in cotton consumption and rayon shipments, the Board’ s index o f textile production in March was at a level o f 162 percent o f the 1935-39 average. This equals the previous peak rate at the beginning o f 1943. Mineral production declined in March as a further advance in coal production was more than offset by a decline in crude petroleum output and by work stoppages at important metal mines. Activity at bituminous coal mines was suspended beginning April 1 owing to a labor-management dispute over a new wage contract. Employment Employment in nonagricultural establishments rose by about 600,000 in March after allowance for seasonal changes. This rise reflected increased employment in manufacturing— largely in the iron and steel group — and continued gains in trade and construction. There were further substantial releases from the armed forces. The total number o f persons unem ployed remained at a level o f about 2,700,000 in March. Distribution Department store sales rose sharply in March and continued at a high level in the first half o f April. Total sales during the Easter season are estimated to have been about one-fourth higher than last year. Freight carloadings during March were close to the record rate for that month reached last year. In the first three weeks o f April loadings declined, reflecting the stoppage o f bituminous coal production. . Ship ments o f most other classes o f revenue freight con tinued to increase. Commodity Prices Wholesale prices o f agricultural and industrial commodities continued to advance from the middle o f March to the third week of April. The general level o f wholesale prices is now higher than last September by something over four percent. In recent weeks ceiling prices for a number o f products have been raised considerably and where ceilings have been removed prices have generally risen. A bonus o f 30 cents a bushel has been granted on wheat delivered by M ay 25 under the certificate plan to help meet the critical food situation abroad, and a like payment has been offered for 50,000,000 bushels o f corn. Subsidy payments for some commodities have been increased to prevent further price advances. Bank Credit Member bank reserve positions tightened in the last half o f March as Treasury deposits at the Reserve Banks were increased by large income tax collections. Banks sold short-term Government securities largely to the Reserve Banks, and drew down their reserve balances to meet this loss of funds. Reserve positions were eased on April 1 in connection with the cash redemption of 2.0 billion dollars o f Treasury certificates on that date, and in the following weeks banks bought Government securities and reduced borrowings at Reserve Banks. Commercial and industrial loans at member banks in leading cities increased further. Loans to brokers and dealers rose at the end o f March in connection with Treasury security retirement operations and declined sharply in the week ending April 3. Deposits, other than those o f the Treasury, fluctuated consider ably, reflecting large income tax payments and the April 1 tax assessment date in Illinois. Yields on long-term Treasury bonds have remained relatively steady following a sharp decline in January and the first half o f February. May 1, 1946 11 THE MONTHLY BUSINESS REVIEW Indexes of Department Store Sales and Stocks Daily Average for 1935-1939 - SALES* Akron ( 6 ) ................... Canton ( 5 ) ................. Cincinnati ( 9 )______ Cleveland ( 1 0 ) ......... Columbus ( 5 ) ........... Erie ( 3 ) ....................... Pittsburgh ( 8 ) ........... Springfield ( 3 ) ........... Toledo ( 6 ) .................. Wheeling ( 6 ) .............. Youngstown (3 )____ District (9 7 ).............. S TO C K S District....................... (000 omitted) 100 Adjusted for Seasonal Variation Mar. Feb. Mar. 1946 1946 1945 W ithout Seasonal Adjustment Mar. Feb. Mar. 1946 1946 1945 289 329 284 250 308 287 271 296 255 283 304 271 261 294 221 212 248 257 199 263 226 206 242 222 247 256 252 220 274 239 233 260 225 224 255 237 222 212 214 182 226 191 180 219 192 185 204 194 248 264 219 203 250 239 195 263 221 199 242 214 149 168 151 144 249 279 285 233 301 225 200 281 244 229 252 242 174 163 Fourth District Business Statistics Bank Debits in 29 Fourth District Cities The smaller cities o f the Fourth District continue to show sizable increases over a year ago in the volume o f money transfers. During March such trans fers as measured in terms o f bank debits were 7.2% ahead o f last year, whereas among larger cities the volum e was running behind 1945, as shown in t^ie accompanying tabulation. Fourth District Unless March Otherwise Specified 1946 Savings Deposits— end o f month: 39 banks O. and W. Pa........................... $ 1,449 Retail Sales: 57,855 Department Stores— 97 fir m s ............. $ Wearing Apparel— 16 firms................... $ 2,767 Furniture— 7 l firms................................ $ 3,318 Building Contracts— T o t a l . .._................. $ a — Residential.............. $ a Commercial Failures— Liabilities............. $ 149 — N um ber................ 2 Production: Pig Iron— U. S..........................N et tons 4,424 Steel Ingot— U. S..................... Net tons 6,535 Bituminous Coal— 22,098 O., W . Pa., E. Ky....................Net tons Cement— O., Pa., W . Va...............Bbls. a Electric Power— 0.,P a., K y.......... Thousand K .W .H . a a Not available. % change from 1945 February 1946 +19 1,441 +6 -7 5 -6 7 43,682 2,033 3,106 50,019 11,605 70 7 -1 5 -1 5 1,147 1,392 + 13 19,066 639 - 2 + 35 2,320 Wholesale and Retail Trade (1946 compared with 1945) 10 Largest Centers: Bank debits reported by C o lu m b u s banks exceeded 31 billion during the March quarter, for the best first-quarter volume on record, representing a_ 21% increase over a year ago, or more than that o f any other major Fourth District city. D a y to n banks reported debits o f nearly $175 million in M arch, or about 13% in excess o f March 1945. The margin over a year_ ago for the entire first quarter (up 10.6% ) was also large in comparison with many other in dustrial centers in the Fourth District. During the March quarter debits in E rie ran better than 1 0% ahead of the comparable 1945 quarter, whereas the 10-city average declined slightly. In T o le d o , debits during the month o f March totaled over $275 million, or nearly 7% above a year ago, as compared with a 1% decline for the ten-city aggregate. 19 S m a lle r C e n ters: With debits mounting to nearly $20 million to a new all-time high for any month, Z a n esville again led the list o f smaller cities with a 4 2 % increase over March 1945. P o r t s m o u th bank debits reached a volume in excess o f $15 million during March or roughly 29% ahead o f the same month in 1945, in contrast to an average increase o f on ly about 7% among all other reporting centers in that group. (In thousands o f dollars) ALL 29 C E N T E R S . . 10 L A R G E S T C E N T E R S : A kron ........................ .O hio .Ohio Cincinnati................ .Ohio .O hio Columbus................. .O hio D a yton ...................... .Ohio .Ohio .Ohio . Penna. Pittsburgh................ . Penna. T o ta l..................... 19 O T H E R C E N T E R S : Covington-Newport .K y . Lexington................. .K y . H am ilton.................. •Ohio .Ohio .O hio .Ohio .Ohio Portsm outh.............. .Ohio .Ohio Steubenville............. •Ohio W arren...................... •Ohio . Ohio Butler........................ . Penna. . Franklin.................... Penna. Greens burg................ , Penna. , Penna. Oil C ity ..................... . Penna. . Penna. W heeling.................... W. Va. March 1946 $4,957,189 $ 209,836 76,310 667,061 1,267,003 382,871 173,752 277,127 92,417 61,638 1,302,095 % change 3 months % change ended from from year ago Mar. 1946 year ago - 0 .3 $14,164,465 + 0 .1 571,234 219,291 1,959,913 3,726,939 1,067,550 476,730 744,484 262,877 180,411 3,642,098 - 0 .2 -1 3 .6 + 2.1 - 5.3 + 1 6 .0 + 1 2 .7 + 6 .8 + 3.1 + 1.0 - 5 .0 $12,851,527 - 32,410 51,755 27,126 29,347 11,478 26,601 25,264 15,385 36,240 18,245 24,131 19,772 22,184 7,221 14,997 5,988 15,643 17,447 45,845 + 2 8 .7 + 2 .6 + 1 7 .4 —11.5 + 2 5 .5 + 6 .0 + 2 0 .6 + 2 8 .8 - 1.7 + 1 1 .3 - 5.5 + 4 2 .0 - 5 .7 + 8 .0 + 1 8 .9 + 1 5 .4 -1 5 .7 + 1.5 + 1 0 .8 $ + 2 3 .0 - 0 .8 + 1 3 .5 - 5 ,7 + 2 4 .3 + 1 1 .9 + 2 2 .7 + 1 9 .6 + 3 .0 + 1 0 .9 - 7.3 + 4 0 .7 - 3.1 + 1 3 .0 + 1 6 .9 + 1 4 .4 - 7 .6 - 1.5 + 1 4 .4 $ 447,079 + 7.2 $ 1,312,938 4,510,110 $ - 1.0 - 1.8 -1 1 .0 + 2 .9 - 3 .0 + 1 8 .3 + 1 0 .6 + 3 .9 + 5 .8 + 1 0 .1 - 6 .5 90,836 207,875 72,946 85,977 32,284 74,026 70,938 41,028 100,398 50,332 67,349 53,483 60,060 19,664 40,810 16,527 45,730 47,536 135,139 + 0 .6 7.5 Percentage Increase or Decrease SALES SALES STOCKS March First 3 March 1946 months 1946 D E P A R T M E N T STORES (97) A kron........................................................................ ........- 4 C anton..............................................................................— 7 Cincinnati.........................................................................+ 11 Cleveland.................................................. ............ ......... + 4 Columbus................................................................. ........+ 6 Erie....................................................................................— 4 Pittsburgh................................................................ ........+ 1 5 Springfield........................................................................— 5 T oled o....................................................................... ........— 2 W heeling...........................................................................+ 8 Youngstown............................................................. ........+ 2 Other Cities............................................................. ........+ 6 District..............................................................................+ 6 W E A R IN G A PP A R E L (16) C anton...................................................................... ........—11 Cincinnati.........................................................................— 3 Cleveland................................................................. ........+ 6 Pittsburgh................................................................ ........— 1 Other Cities............................................................. ........ — 7 District..................................................................... ........— 2 F U R N IT U R E (71) C anton...................................................................... ........+ 4 0 C incinnati................................................................ ........+ 3 6 C leveland................................................................. ........+ 1 5 Colum bus................................................................. ........+ 4 3 D ayton..............................................................................+ 5 3 Pittsburgh................................................................ a Allegheny C o u n t y ................................................. ........+ 3 9 T oled o....................................................................... ........+ 7 4 Other Cities............................................................. ........+ 3 9 D istrict..............................................................................+ 3 5 W H O LE SA LE T R A D E * * Automotive Supplies ( 6 ) ....................................... ....... + 4 4 Beer ( 6 ) .............................................................................— 7 Clothing and Furnishings ( 3 ) .............................. ........—23 Confectionery ( 3 )......... ..................................................+ 4 5 Drugs and Drug Sundries ( 4 ) ......................................+ 1 4 Fresh Fruits and Vegetables (1 2 )...............................+ 9 Furniture and House Furnishings ( 3 ) ............... ....... + 3 5 Grocery Group (4 0 )............................................... ........+ 1 9 T otal Hardware Group (2 0 )........................' . . . . +20 General Hardware ( 5 ) ....................................... ........+ 2 6 Industrial Supplies ( 6 ) ... ._ .............................. ....... + 5 Plumbing and Heating Supplies ( 9 ) ...........................+ 2 0 Jewelry ( 6 ) ............................. . ............................... ........+ 6 4 Lumber and Building Materials ( 6 ) ...........................+ 4 1 Machinery, Equip. & Sup. (exc. Elect.) (3 ). . . —19 Meats and Meat Products ( 3 ) .....................................+ 3 8 Metals ( 3 ) .........................................................................+ 5 Paints and Varnishes (5 )...................................... ........+ 3 2 Paper and Its Products ( 6 ) .................................. ........+ 1 3 T obacco and its Products (1 5 )............................ ........+ 2 7 Miscellaneous (1 3 ;........................................... .............. + 2 3 District— All Wholesale Trade (1 60 ).........................+ 1 8 + 4 + 3 +17 + 11 +13 + 6 +18 + 4 + 4 + 15 + 7 +17 +12 + 8 a +12 +20 +17 +11 +14 a +19 +24 a +10 +15 — 7 — 4 +13 + 3 — 1 + 2 + 3 —18 — 7 +10 + 7 — 1 +43 +57 +37 +49 +76 a +53 +75 +65 +53 - 7 +16 +42 +21 a a a a +21 +20 +39 + 4 a +35 +17 +10 a +21 +18 +37 — 1 +13 +68 a a a a +31 + 9 +32 +15 +19 +15 —38 a a a + 8 a +19 + 4 + 4 a a a —45 a +106 a a a +50 +42 +27 ** Wholesale data compiled by U. S. Department o f Com m erce, Bureau o f the Census, a Not available. Figures in parentheses indicate number o f firms reporting sales. 12 THE MONTHLY BUSINESS REVIEW FA R M LAND PRICES (Continued from Page 9) for almost eighteen months after the close o f the War, and for about a year after cash farm income had reached its peak and had begun to decline. On that occasion farm land values did not respond quickly and directly to a change in the trend o f prices received for agricultural products. During the past year farmers were reported to be May 1, 1946 the purchasers in two-thirds o f the sales. O f the non farmer buyers 66 percent were nearby residents, many o f whom plan to operate the land acquired. Nearly 60 percent o f all sales in 1945 were for cash according to surveys made. Nevertheless heavy debts were being accumulated on some farms. About 14 percent o f all sales carried a debt o f three-fourths or more o f the purchase price, and 33 percent of the purchasers were indebted to the extent o f one-half the purchase price.
@FedFRASER