Full text of Economic Review (Federal Reserve Bank of Cleveland) : May 1947, Vol. 29, No. 5

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eview

Busin
Finance, Industry
Agriculture, and Trade

Vol. 29

Fourth Federal Reserve District
Federal Reserve Bank of Cleveland

Cleveland, Ohio, M a y 1, 1947

No. 5

POSTWAR CHANGES IN DEPOSIT OWNERSHIP
The most recent survey o f deposit ownership in this
District disclosed that on February 26 total demand
deposits o f individuals, partnerships, and corporations*
at reporting banks were higher than on any previous
survey date. The aggregate figure, however, repre­
sented only a moderate gain over the total reported
seven months earlier.

Postwar Gains in At the 33 largest participating
banks, each with demand de­
Total Demand
posits in excess o f 310 million,
Deposits

total demand deposits on Feb­
ruary 26 were 5 percent higher than when the war
ended a year and a half ago, but only slightly above
last July. Total postwar gains at smaller banks have
been substantially greater. At 68 banks, with deposits
o f 31 to 310 million, the aggregate postwar gain
amounted to 17 percent by February o f this year, o f
which only 2 percent is attributable to the past seven
months.
Data derived from other recent reports from mem­
ber banks reveal that demand deposits in this District
have actually declined slightly since February, in part
* H e r e a fte r r e fe r r e d t o s im p ly a s d e m a n d d e p o s its .

because an excess of Treasury cash receipts over ex­
penditures has tended to shrink deposits to a slightly
greater degree than increases in loan and bond port­
folios have expanded deposit totals.
The 33 large banks experienced
only a moderate postwar gain
in demand deposits chiefly
because o f factors related to
manufacturing and mining accounts. On February 26
these accounts at the large banks were 20 percent below
the level which prevailed when the war ended, where­
as at the smaller banks the manufacturing and mining
accounts were actually 2 percent higher than at the
termination o f hostilities.

Effect of In­
dustrial Accounts
at Large Banks

Manufacturing and mining accounts constitute a
far larger portion o f total deposits at the large banks
than at the small. A t the 33 largest institutions which
participated in the latest survey, deposits o f manufac­
turing and mining concerns made up 35 percent of
total demand deposits, compared with a figure o f only
18 percent at the 68 smaller banks. Hence, the sharp
reduction in these accounts at the large banks re­
tarded deposit growth at those institutions.

POSTWAR CHANGES IN DEMAND DEPOSITS OF INDIVIDUALS, PARTNERSHIPS AND CORPORATIONS
R E L A T IV E S
JU L Y 1945 = 100




RELA71VLS
JULY 1945 = 100

2

MONTHLY BUSINESS REVIEW

May 1, 1947

POSTWAR CHANGES IN DEMAND DEPOSITS
of Individuals, Partnerships and Corporations
33 L A R G E B A N K S W IT H D E M A N D
D E P O SIT S O V E R 210 M IL L IO N
----- Relatives July *45 = 100----Jan.
FebT ype
July
July
31
31
31
26
°f
1946
1945
1946
1947
D eposit
92
98
100
Accounts o f $10,000 or m ore. . . . 100
100
117
133
144
Other Nonfinancial ............
113
100
126
141
N onprofit A ssoc......................
117
125
137
100
Personal A cco u n ts.................
108
100
120
133
Insurance C om panies...........
100
117
129
120
All Other F in ancial...............
108
114
115
Retail & Wholesale Trade. . . . 100
95
107
111
100
Public U tilities.......................
100
130
94
104
Trust Funds o f B anks..........
76
84
80
Manufacturing & M ining . . . . 100
109
126
132
All Accounts Under $10,000. . . . 100
95
104
105
100
T O T A L ..........................................

68 S M A L L E R B A N K S W I T H D E M A N D
D E PO SIT S O F 31 T O $10 M IL L IO N
----- Relatives July ’ 45 = 100-----Type
Jan.
Feb.
July
July
31
31
26
of
31
1947
1946
1946
Deposit
1945
116
112
Accounts o f $3,000 or m ore. . ,
103
100
122
135
111
Personal A ccou n ts .................
100
128
134
118
Nonprofit Assoc......................
100
137
131
Other N onfinancial................
100
118
127
117
121
Trust Funds o f B anks..........
100
116
105
104
Insurance C om panies...........
100
115
168
All Other Financial...............
100
110
113
108
Public U tilities........................
100
100
104
88
M anufacturing & M ining . . . . 100
86
101
108
Retail & W holesale T r a d e .. . . 100
106
121
122
All Accounts Under $3,000
100
119
T O T A L ..........................................
117
108
115
100

In spite o f the relatively small postwar gain in total
deposits at the large banks, their percentage increases
in most classes o f deposits, other than manufacturing
and mining accounts, slightly exceeded those o f the
smaller banks. In the postwar period as a whole,
large personal accounts were up 37 percent at the
large banks and 35 percent at the small. The cor­
responding figures for retail and wholesale trade
accounts were a 15 percent advance for the large
banks contrasted with a mere 1 percent gain at the
smaller banks. Unclassified accounts (under 310,000)
increased 26 percent in the postwar period at the large
banks, whereas the gain at the smaller banks in un­
classified accounts (under 33,000) amounted to 21
percent.
Every deposit classification was larger on February
26 than at the end o f the war, with the single exception
'o f manufacturing and mining accounts at the large
banks. The accompanying table discloses that manu­
facturing and mining accounts fell off sharply at
banks in both size groups during the first six months
after the war, but that those accounts advanced
somewhat in the following six-month interval. In the
seven-month period ending February 26, the recovery
o f manufacturing and mining accounts gained mo­
mentum at the smaller banks, but these accounts eased
off again at the large institutions.
A further breakdown o f the changes in manufactur­
ing and mining accounts at the large banks in the
recent seven-month interval indicates that at the
largest o f the banks, with demand deposits in excess
o f 3100 million, a decline o f 6 percent occurred, where­
as at banks with demand deposits ranging from 310
to 3100 million a gain o f 8 percent occurred. It is
probable, therefore, that accounts o f small manufac­
turing and mining companies advanced considerably
in the recent interval, while the declines may have
been concentrated in the accounts o f a few relatively
large companies.

banks during the first year after the war, but the latest
survey indicates a 7 percent drop below the July 1946
high. Public utilities accounts, which eased off
slightly in the months immediately following the end
o f the war, have posted gains in the last two surveys
and by February 26 were roughly 12 percent higher in
each size group than at the cessation o f hostilities,

Retail and wholesale trade bal­
ances at the large banks have
been greater in each successive
postwar survey, although the
gain during the last seven-month interval was nomi­
nal.
These accounts likewise increased at the smaller


Postwar Gains in
Other Business
Accounts



ft

Financial accounts, such as deposits o f insurance
companies, trust funds and “ all other financial” de­
posits (including those o f insurance agents, real estate
concerns, investment companies, building and loan
associations, credit unions, etc.) were all substantially
higher than at the end o f the war. “ All other nonfinancial accounts” have increased considerably since
the war, with substantial gains being reported on each
survey date. Deposits in this classification, which in­
cludes the funds o f construction firms, service estab­
lishments, entertainment concerns, and the business
accounts o f professional people, are now 40 percent
above war-end figures at the large institutions and 31
percent above at the smaller banks.

Substantial Gains
in Large NonBusiness Accounts

Non-profit organizations have
likewise shared in the postwar
expansion o f demand deposits.
This account category includes
deposit of clubs, hospitals, colleges, labor unions, com­
munity chest organizations, etc. Deposits accredited
to this type o f account have been larger in each suc­
ceeding postwar survey. The total postwar gain at
the large banks amounted to 41 percent by February,
while the increases at the smaller banks came to 34
percent.
Large personal accounts also have advanced
rapidly and continuously so that they now exceed
July 1945 totals by about 37 percent at the large
banks and 35 percent at the small. The rate o f ad­
vance in these personal holdings has been more rapid
in the postwar period than during the war. The latest
survey indicates no slackening in the rapid accumula­
tion o f funds in these accounts.

3

MONTHLY BUSINESS REVIEW

May 1. 1947

D cron t r w i in o e

Perhaps the most

significant

In Small Undassi- change during the seven-month
fled Accounts
interval ending February 26 was

the slight decline reported in
unclassified accounts. The large banks place all
accounts o f less than 310,000 in this classification,
while the smaller banks, with total demand deposits
o f 31 to 310 million, assign all accounts o f less than
$3,000 to this category.

At the large institutions these accounts dropped 5
ercent during the past seven months whereas they
ad advanced 32 percent in the first year after the
war. At the smaller banks a drop o f only 1 percent
was reported but it contrasted sharply with the 22
percent gain reported in the first year o f peace.
Furthermore, an analysis o f banks with deposits o f
under $1 million, which are not included in the ac­
companying table, discloses that unclassified accounts
(less than $1,000) dropped 3 percent in the sevenmonth interval ending February 26.
It is probable that this recent decline in the un­
classified and relatively small accounts partly reflects
the rapid advance in living costs that occurred in the
seven-month interval between July 1946 and February
1947. Furthermore, the mounting production o f cars
and home appliances during this period undoubtedly
resulted in substantial reductions in many small
accounts.

Outlook for
Further Deposit
Growth

t^ie Past eighteen months total
demand deposits extended their
wartime rise, partly by virtue o f
a substantial expansion in com­
mercial loans. The postwar advance also resulted
from the conversion o f war loan deposits into demand
deposits of individuals and corporations through the
debt reduction program. An additional factor in the
early postwar period was an excess o f Treasury ex­
penditures over receipts.
V ir tu a lly all types o f accounts, with the exception of
manufacturing and mining deposits, shared to some
degree in the aggregate gains. Nearly all individual
banks likewise experienced increases in demand de-

COMPOSITION OF DEMAND DEPOSITS OF INDIVID­
UALS, PARTNERSHIPS AND CORPORATIONS
Fourth District—February 26, 1947
OVER

$10 TO

$1 TO

MILLION

MILLION

$100

$100

UNDER

$10

I M A N U F A C TU R IN G
AN D M ININ G

M ANUFACTURING
AND M INING

• O TH E R LARGE
^ ACCOUNTS
' f in a n c ia l
V TR A D E

personal

OTH ER LA R G E
ACCOUN TS
FIN AN C IA L
TR A D E
personal

SMALL UNCLASSIFIED
AC C OUN TS
UNDER
$10,000




UNDER
$3,000

INDER

.1,000

However, it is quite possible that in the months to
come total demand deposits will change very little.
The smaller personal accounts are perhaps most
likely to decline. I f full production and employment
continue, large sums probably will be spent on con­
sumer goods, cars, housing, and vacations. On the
other hand, if business were to recede from current
high levels to such a degree that sizable numbers o f
families would have to draw down bank balances to
maintain living standards, smaller personal accounts
could still experience a net decrease.
On the other hand, the coming months may see a
gradual rise in manufacturing and mining accounts,
particularly if no major work stoppages occur. These
accounts could also advance in the event o f a business
recession, since in periods o f declining business ac­
tivity the cash holdings o f industrial concerns ordi­
narily expand because o f gradual liquidation of
inventories and receivables, curtailment o f production,
and postponement o f construction and maintenance
work.

Deposit Ownership
by Size of Bank

The distribution o f the various
deposit classifications by size
o f bank is therefore o f interest
in any attempt to gauge the potential effects o f future
deposit shifts upon the individual bank. An accom­
panying chart presents the distribution o f deposit
ownership as o f February 26, for banks in four size
groups. Large banks have a relatively large proportion
o f their deposits in the form of manufacturing and
mining accounts, as well as financial deposits. On the
other hand, a relatively small share o f their deposits
are in the category o f large personal accounts or un­
classified accounts. Among the smaller banks, large
personal accounts and unclassified accounts dominate
the deposit picture.

NEW MEMBER BANK
The Corn City State Bank, Deshler, Ohio, became
a member o f the Federal Reserve System on April 14.
The new member bank is located in Henry County
in northwestern Ohio in an area devoted largely to
cattle feeding and general farming.

■BANKS WITH DEPOSITS O F -

MILLION

posits, although the extent o f a given bank’ s gain
depended upon whether its deposits consisted pri­
marily o f types that were advancing rapidly, or whether
the bulk o f its accounts were made up o f deposit
classifications that were failing to keep iup with the
rapid over-all increase o f total deposits.]

The population o f Deshler is approximately 1,800.
The Baltimore & Ohio Railroad provides local indus­
trial employment for about 200 people.
The Corn City State Bank was incorporated in
1911. Capital accounts at present total over $100,000
and total deposits are approximately $2,100,000.
Officers of
Mr. H. L.
Mr. T. B.
Mr. H. L.
Mr. B. C.

the new member bank are as follows:
House, President.
King, Vice President.
Challen, Cashier and Secretary.
King, Assistant Cashier.

4

MONTHLY BUSINESS REVIEW

May 1, 1947

INDUSTRIAL SUMMARY
Steel The steel industry operated at a record peace­
time rate o f 93 percent o f capacity in the first
quarter o f the year with an output o f nearly 21 million
tons o f ingots and steel for casting. Production in
March was about 7.3 million tons. Sustained opera­
tions at these levels would result in approximately 85
million tons for the year, or 19 million tons higher
than in 1946. Labor peace in the industry seems
assured with new contracts providing for a dollar a
day increase in wages. Principal remaining obstacles
to a year o f uninterrupted operation are the problems
o f moving the requisite quantities o f iron ore from the
head o f the lakes and obtaining sufficient fuel for the
furnaces.
District production rates at the end o f April accord­
ing to Steel were 100 percent at Pittsburgh, 93 percent
at Cleveland, 93.5 percent at Wheeling, 86 percent at
Youngstown and 85 percent at Cincinnati.
The effect o f the new wage rates on basic steel
prices was not immediately apparent but it is evident
that the increases in wage rates, which are close to 10
percent, will be an important addition to costs. Lead­
ing producers continued to revise their charges for
extras downward in early April to eliminate inequities
and to improve competitive positions. The revisions
covered hot-rolled wire rods, welded wire fabric and
certain types o f wires, galvanizing extras on standard
nails, cold-finished bars, carbon plates, shapes,
merchant and reinforcing bars, hot and cold-rolled
sheets, hot-rolled strip, long ternes, and alloyed bars.
Although mill order books are well filled on most
carbon steel products, steel salesmen are reported to
be seeking business more aggressively. Inquiries for
sheets, strip, plates, pipe and small bars are as strong
as ever, but alloys and certain specialties are definitely
easier to buy. The easing in pressure for steel deliver­
ies is attributed in part to more cautious buying
policies and to attempts to hold down inventories in
fabricating plants. Some manufacturers have can­
celled orders but this has not yet endangered the steel
industry’s production schedule for 1947.
Despite continued high rates o f operation and pro­
portionately heavy consumption o f raw materials,
the expected break in scrap prices developed at the
end o f March. High scrap prices resulted in a heavy
flow o f material to the furnaces and with reserves
replenished to safe operating levels, many mills with­
drew from the market. Number 1 heavy melting
scrap dropped from $38 to $35 a ton at Pittsburgh and
some observers expect a decline to around $30 before
the price stabilizes. Favorable weather conditions
have facilitated scrap collection and preparation and
increasing quantities have become available from
manufacturing plants and Government sources. Un­
certainty as to coal supplies around the beginning o f
the month also made buyers hesitant.
Several large District producers that are dependent
upon natural gas for open hearths and soaking pits
taken steps to avoid a repetition o f the past
Digitizedhave
for FRASER


winter’ s interruptions. One plant has successfully
converted its soaking pits to oil and another is re­
ported to be making plans for the use o f natural gas
in its open hearths during the summer, and fuel oil
next winter.
The Lake Superior Iron Ore Association reports
that furnaces in the United States consumed 6,700,000
tons o f iron ore in March. Stocks o f iron ore at fur­
naces and Lake Erie docks on April 1 totaled about
16,800,000 tons as compared to 26,900,000 tons the
previous year. At the end o f April, ice in the Upper
Lakes was rapidly breaking up and ore was moving
down the lakes in fair volume.

Ferrous
Shipments by ferrous metal working
Metal Shops shops were two-thirds larger in the
first two months o f 1947 than in the
same period last year. This high rate o f production is
the result o f improved raw material supplies, better
labor relations and unprecedented demand by metal
fabricators. The following table summarizes ship­
ments by type o f product and the percentage change
from 1946 to 1947.
Cumulative Shipments—January and February
(Short tons)
Percentage
Product
1946
1947
Change
2,050,000
+64%
G ray Iron C astings............... 1,250,000
380,000
+72
Steel Forgings......................... 225,000
Steel Castings.......................... 155,000
265,000
+69
M alleable Iron C a stin gs.. . .
95,000
150,000
+60
Source: Facts for Industry, Bureau o f the Census.

Despite this increase in shipments, unfilled orders
for sale to the trade are in all cases substantially higher
than twelve months earlier. New orders appear to be
keeping pace with shipments.
Unfilled Orders for Sale to Trade—February 28
(Short tons)
Percentage
Product
1946
1947
Change
G ray Iron Castings...............2,155,000
2,950,000
+37%
Steel Forgings......................... 530,000
670,000
+26
Steel Castings.......................... 390,000
430,000
+10
M alleable Iron C a stin g s.. . . 250,000
275,000
+10
Source: Facts for Industry, Bureau o f the Census.

Foundry equipment orders placed in March rose to
574 percent o f the 1937-1939 monthly average, accord­
ing to the Foundry Equipment Manufacturers Associa­
tion.
Coal

Production of bituminous coal in April dropped
sharply as a result o f action taken by the
United Mine Workers. The head o f the union ordered
a six-day “ mourning period” work stoppage beginning
April 1 as a memorial to the victims o f an Illinois mine
disaster. On April 3, the Secretary o f the Interior
classed 518 mines as too hazardous to operate and
ordered them closed until properly inspected and
certified. Union miners were then requested by the

MONTHLY BUSINESS REVIEW

May X, 1947

union to stay out o f the pits until all mines could be
Federally inspected. Despite this request, miners
began to drift back to work and production in the
week ending April 12 amounted to 7,000,000 tons as
compared to 4,000,000 tons in the week ending April
5. Production had been averaging about 12,500,000
tons a week prior to these events.
More than half o f the mines ordered closed by the
Secretary o f the Interior were located in Fourth
District states: 35 in Ohio, 13 in West Virginia, 68
in Kentucky, and 158 in western Pennsylvania. Shortly
before the Federal closing order was issued, Ohio’s chief
o f the State Division o f Mines had reported that Ohio
coal mines were in the safest condition in history.
Field reports indicate that mines are being inspected
more rapidly than at first thought possible and are
being reopened as they are certified to be “ safe.”
Bituminous coal production in the United States
from January 1 through March 29 totaled 162 million
tons or about the same as a year ago. District produc­
tion in March amounted to 21.2 million tons to bring
the total for the first quarter to 63 million tons.
Total industrial stocks o f bituminous coal at the
end of February amounted to 47.3 million tons, up
about 3 percent from the previous month. This stock
represented a 33-day supply at current rates o f con­
sumption.
The Bureau o f Mines has just released preliminary
operating figures for 1946 with respect to the bitumi­
nous coal industry. Changes in the mine price o f soft
coal are summarized as follows:
Bituminous Coal and Lignite
Average Value per Ton, F.O.B. Mines
Area
United States..........................
O h io ............................................
Pennsylvania...........................
W est V irginia..........................
K en tu ck y..................................

1945
33.06
2.79
3.29
3.20
3.00

1946 *
$3.40
3.06
3.63
3.66
3.24

Percentage
Increase
11.1%
9.7
10.0
14.4
8.0

•Preliminary.

The average value o f coal at all mines in 1946 rose
11 percent. The smallest rise among District states
took place in Kentucky with an 8 percent increase,
while West Virginia coal averaged more than 14 per­
cent higher.
The average railroad freight charge per net ton o f
bituminous coal rose from 32.20 to $2.26.
Total 1946 production is now estimated at 532
million tons, or a decrease o f 8 percent from the
previous year. The tonnage o f coal mechanically
loaded underground declined about 6 percent and o f
coal mechanically cleaned about 5 percent. Production
of stripped coal remained the same as in 1945.

Rubber Rubber consumption in February continued
at a record annual rate o f 1,200,000 tons.
On the basis o f the first two months’ operation, natural
rubber consumption accounted for 44 percent o f the




5

total o f natural and synthetic rubber used in all
rubber products.
Passenger car casing production amounted to
6,400,000 units in February according to the Rubber
Manufacturers Association. While this represents a
decrease of approximately 7 percent from the previous
month, it is due entirely to the shorter month. Daily
average production was higher than in January.
Truck and bus casing manufacture was about 1,500,000
units.
Manufacturers’ inventories o f passenger car casings
increased 19 percent during February and were just
short o f the 3,000,000 level at the end o f the month.
Tire producers point out that this inventory is much
below normal since the period of hot weather demand
is approaching. At this same season of the year in
1941, inventories totaled 8,000,000 units.
Shipments o f passenger car tires for original equip­
ment totaled 3,000,000 units for the first two months
of the year and reflect the rise in new car output.
There also appears to be some inventory accumulation
on the part o f motor car producers. Passenger car
production in this period totaled 510,000 units and
required, therefore, 2,550,000 casings at the rate of
five tires per car. From these figures it is evident that
motor car manufacturers added about 450,000 casings
to inventory in 60 days or enough for 90,000 new
vehicles.
With the return o f rubber importing to private trade
on April 1, spot prices o f natural rubber declined from
25.8 cents per pound to 24 cents per pound by the
third week in April. It was reported that major tire
producers had not yet entered the market and were
apparently waiting for the Office o f Temporary Con­
trols to revise the present 60-day inventory restriction.
Changes are also expected in the percentage o f natural
rubber permitted in various products.
On April 4 the Office of Temporary Controls re­
moved all restrictions against the production o f white
sidewall tires. Titanium oxide, which is used in white
sidewalls, is in very short supply so this action is not
likely to result in volume production o f these premium
tires.
More natural rubber may now be used in the manu­
facture of the 6:50 size passenger car tires. Until
recently, only 23 percent natural rubber (about three
pounds) was permitted in this size, but now producers
may use up to 8 pounds or 61 percent. The popular
6:00 size passenger tire is still restricted to 23 percent
natural rubber. Considerable misinformation, or lack
o f information, with regard to this fact appears to
exist at the retail level. A canvass o f local tire dealers
recently revealed that the vast majority were repre­
senting that their brands contain 100 percent natural
rubber. Producers of camelback for recapping truck
tires may now use as much natural rubber as they
wish.
( Continued on page 9)

MONTHLY BUSINESS REVIEW

6

May 1, 1947

WAR FINANCE UNDER REGULATION V
The Fourth District program for financing war
production and contract termination under the pro­
visions o f Regulation V has recently been completed.
The program was designed to insure that war produc­
tion would not suffer because o f a lack o f adequate
financing. It was highly successful in that prompt
financing o f unprecedented proportions was provided
for essential war work.
In all, 141 Fourth District institutions participated
in the program. In addition, 40 banks from outside
the District shared in the V loans negotiated in this
area. Credits totaling #704 million were arranged for
430 companies engaged in producing the weapons of
war. The net fees turned over to the guarantors, after
payment o f expenses (including the negligible losses)
o f the program amounted to 32,790,000. The experi­
ence derived from the program by borrowers, com­
mercial banks, Federal reserve banks and the armed
forces could prove highly useful in the event o f any
future emergency and should prove o f some value in
ordinary peacetime financing as well.

Inadequacy of
In the months prior to and imEarly Expedients mediately following this country’s
entrance into the war, procure­
ment officers were urging producers o f military equip­
ment to expand their operations at rates beyond any
previous peacetime conception. This necessitated
substantial increases in working capital, increases
which in numerous cases greatly exceeded the amount
commercial banks could justifiably lend in view ;of
the relatively small net worth o f the borrowers.
A number o f these producers in need jof working
capital were undertaking the manufacture o f products
and materials quite beyond the realm o f previous
experience and new techniques had to be learned.
Under such circumstances it was deemed inadvisable
to risk depositors’ funds in ventures in which the
industrial “ know-how” o f the potential borrower was
an unknown quantity.
Another impediment to conventional bank lending
for war production purposes on a peacetime com­

mercial basis was the statutory limitations on the
amount any one bank might lend to a single borrower.
Some o f the war-born industries needed more funds
than legally could be supplied by customary banking
channels.
During the rearmament and early war period, the
services followed the practice o f advancing cash pay­
ments to contractors. This procedure worked well so
long as the Government was dealing with prime con­
tractors on a one-contract basis. But in the course o f
time it became clear that the policy o f direct advances
imposed burdens on both the armed services and the
producers— burdens which threatened to interfere with
the most effective prosecution o f the war.
Under the terms o f a direct advance, it was neces­
sary for the borrower to place the funds in a separate
account. When expenditures were made for war
materials, those materials had to be segregated from
other materials o f the contractor. Serious practical
difficulties therefore confronted the multi-contract
company, or even a single contract company also
engaged in some nonwar work. Furthermore, the
problems besetting companies dealing with subcon­
tractors were even greater. A prime contractor who
readvanced funds to subcontractors was obligated to
see that the funds were used only for purposes for
which advanced and that the funds were repaid.
Many contractors lacked the experience and the
competent personnel needed to act as custodians o f
Federal funds. For that matter the armed services
themselves were not equipped to handle financial
problems o f such magnitude. As a result o f these
difficulties the Regulation V program was developed
in the Spring o f 1942 by the armed services, the War
Production Board and the Board o f Governors o f the
Federal Reserve System.*
•The M arch 1946 Federal Reserve Bulletin contains a nine-page
article entitled “ Financing W ar Production and C ontract
Term ination Under Regulation V .” It presents a detailed dis­
cussion o f the origin o f Regulation V , operating procedures under
Regulation V , the extension o f the program to cover contract
termination loans, and a com prehensive statistical sum mary^of
system wide experience with the loans.

DISTRIBUTION OF REGULATION “ V” LOANS BY SIZE OF LOAN
Fourth District
NUMBER
OF LOANS

NUMBER OF LOANS

teoi-----------

80

|ii
ill! 11 n
$99

$249

 ------------- THOUSANDS


$499

OF

$999

DOLLARS —

$4,999

-----------------

J
n
MILLIONS OF
DOLLARS

DOLLAR VOLUME OF LOANS

$255

■

mm

$65
$40

- r 2—

H

H
i

i

OVER

TH O USA ND S

Of

DOLLARS

300

7

MONTHLY BUSINESS REVIEW

May 1, 1947

The V Loan
Procedure

Under the V loan arrangement, a bank
whose legal loan limitations prevented
consummation o f a loan, or who felt a
war contractor’ s balance sheet failed to justify a re­
quested loan, could apply to the Federal reserve bank
for a loan guarantee. The application would be
supported with financial data concerning the con­
tractor, a list o f principal contracts (either prime or
sub) and a brief description o f the product which it
had contracted to produce.
The commercial bank and the Federal reserve bank
would then negotiate acceptable loan terms, ordinarily
with the assistance o f the borrower. Liaison officers
o f the War Department were authorized to approve
loans o f 3100,000 or less (if the percent o f guarantee
was 90 or less) without referring the application to
Washington. Maritime Commission field representa­
tives had similar authority when the guaranteed share
o f the loan was not over 3100,000.
The larger War Department and Maritime Com­
mission guarantees, and all the Navy Department
guarantees, were forwarded to Washington for final
approval by the guaranteeing service. The armed
services usually authorized the guarantee within 48
hours and the Federal reserve bank then notified the
lending bank o f the availability and terms o f the
guarantee.

Advantages and The advantages o f the Regulation
Objectives
V procedure might be summarized
somewhat as follows:

3. The funds used came from private, rather than
public, sources. The armed services held only a
contingent liability unless called upon to pur­
chase the guaranteed portion o f the loan.
4. Banks, and thus their owners and depositors,
were largely protected from the risks entailed in
loans that would have been unjustified under
ordinary peacetime credit principles.
The Regulation V program became operative April
16, 1942, and from the beginning two factors were
stressed:
1. Speed in setting up credits so that there would
be no delay, o f financial origin, in the flow o f war
materials.
2. Subordination o f customary peacetime credit
standards wherever necessary to consideration of
ability to produce satisfactory war goods.
With regard to the latter objective, credit was
usually made available to contractors within a week
or ten days after they applied to their banks for loans.
In many cases it took a longer time to set up the final
terms o f the credit, particularly when there were a
number o f banks participating. However, once the
applying banks knew that a guarantee was available
and the terms under which it was authorized, they
ordinarily were willing to make temporary advances
to a borrower until such time as the credit was set up
in final form.

1. The practical difficulties which accompanied ad­
vance payments o f Government funds to com­
panies with several contracts or with subcontracts
were eliminated by the use o f a single line o f
private credit covering all the contracts or sub­
contracts o f a company.

Peacetime credit standards were undoubtedly re­
laxed, particularly in the case o f contracts placed by
the Army Air Forces which were obliged to create a
major supply industry almost over night. The older
divisions o f the armed services had been developing
sources o f supply over a period o f years and called
for more nearly standard articles, types, and methods
o f production.

2. The experience o f loan officers as well as o f
established loan and credit departments o f com­
mercial banks was utilized. The fact that
borrowers obtained their financing from banks
where they were known was a desirable aspect
o f the program.

Applications for guarantees were denied in only a
few cases, in most o f which the borrower was a prime
contractor and the requested percent o f guarantee
was excessively high. In such instances, the armed
services usually handled the financial needs o f the
contractor with a direct advance.

DISTRIBUTION OF REGULATION “ V” LOANS BY PERCENT OF GUARANTEE
Fourth District
NUMBER
LOANS

or

NUMBER OF LO ANS




DOLLAR VOLUME OF LOANS

MILLIONS OT
DOLLARS

----------------1$400

$3*76

300

*124

100

1

1

8

MONTHLY BUSINESS REVIEW

ANNUAL ADVANCES UNDER REGULATION
“ V ” PROGRAM
Fourth District—Millions of Dollars

were completed and as the borrower’s investment in
inventories and receivables declined.

MILLIONS
OF DOLLARS
1$250

100

1
[|[| *3^

1
1942

1943

194 4

1945

194 6

When the Regulation V program was launched in
1942, the armed services deemed it imperative that
the implements o f war be produced as rapidly as
possible by every available source of supply regardless
o f the financial strength o f the producer. As a result,
in the first 164 credits to be arranged in this District,
the aggregate amount loaned averaged 2.4 times the
contractor’s investment in his own business. O f the
total number o f loans to this group 38 percent were
to concerns having a net worth o f less than 350,000
and the average credit in these cases was 3.2 times the
invested capital o f the owners. However, as the pro­
gram advanced, the disproportionate relation o f bor­
rowing to invested capital gradually changed so that
in 1944 the average amount o f credit in use was 83
cents to each one dollar o f invested capital. In some
instances this indicated a shift from weak to stronger
suppliers made possible through experience gained in
earlier years by the various divisions o f the armed
services, whereas in other cases, this change in the
invested capital ratio was a reflection o f a steady
growth in the borrower’ s equity in his own business.

Safeguards

Despite the relaxation o f standards,
every possible precaution was taken to
see that funds were spent honestly and efficiently.
For example, an initial step in determining a ceiling
amount on a line o f credit was to work out a cash
budget which forecast the borrower’ s probable month­
ly cash requirements on the basis o f anticipated
receipts and expenditures. The goal was to set the
Ipan figure at a level equivalent to the difference
between a company’s maximum cash needs and the
amount o f its own funds.

An important part generally o f the loan agreement
between a borrower and a lending bank was a “ loan
formula,” which tied the amount o f credit in use to the
amount o f the firm’s uncompleted contracts, accounts
receivable, and inventories. The formula was always
geared to the particular requirements o f the individual
borrower. It provided a flexible control which would
determine the amount o f credit that could be used
and the rate o f repayment, as uncompleted contracts




May 1, 1947

A line o f credit arrangement was set up in most
of the V loans, and as a result there were 4051 separate
credit advances in this District on only 580 loans.
The aggregate dollar volume o f all the advances was
about 10 percent higher than the dollar volume o f the
credit lines used. In one instance o f a 32 million
credit, 125 separate advances were made thereunder
totaling 323 million.
Many loan agreements protected the lenders and
the guarantor services by providing for the assignment
to the banks o f receivables and contract claims, by
prohibiting the pledging o f the borrower’ s property,
by requiring adequate insurance on the borrower’ s
property, etc.
Because o f the presence of at least four parties in
every V loan arrangement, i.e., the borrower, the
commercial bank, the Federal reserve bank and the
guaranteeing service, it was inevitable that such
matters as the loan guarantee and the loan agreement
would be carefully drawn up in writing in order to
protect the interests o f all concerned and in order to
avoid misunderstandings. The experience gained from
such a procedure has led to improved peacetime
procedures in the granting o f credit.

Guarantee Policy Slightly over half the total num­
of Armed Forces ber o f loans and the total dollar
volume o f loans in the Fourth
District had a 90 percent guarantee by one or another
o f the services. Somewhat over a third o f the number
as well as the dollar volume had guarantees o f from
70 to 85 percent. A 100 percent guarantee applied
to about 3 percent o f the number and dollar volume
of loans. The banks were given an incentive to ask as
small a guarantee as possible by a policy o f exacting
a comparatively low guarantee fee on loans protected
by relatively small guarantee percentages. In the
later years o f the program, the guarantee fee equalled
half the interest payments on the guaranteed portion
when the guarantee was from 95 to 100 percent. A
guarantee of 90 percent called for a fee o f only 20
percent, while a guarantee o f 80 percent or less in­
volved a fee o f only 10 percent.
The total amount of fees collected in the Fourth
District was 33,330,000, o f which some 84 percent
ultimately constituted net income to the services after
deducting losses, Federal reserve bank expenses, etc.
The services were called upon to purchase their share
of loans in only five cases, aggregating 3200,000, o f
which all but $60,000 was eventually collected.
The relaxation o f standards and the guarantor’ s
risk, were mitigated by the fact that the guarantor
was the buyer who, in effect, guaranteed that he
would pay for the goods he took. The major risk was
not in merchandising ability but in industrial “ know­
how.”

May I. 1947

MONTHLY BUSINESS REVIEW

Interest Rates Interest rates on small loans were
and Size of
generally on a 4 or 5 percent basis,
Borrowers
whereas large borrowers were ordi­
narily charged 2 or 3 percent. Most
o f the loans were to small borrowers, although a
majority of all dollars loaned were extended to large
borrowers. Only one-fifth o f the total number o f
loans were for a million dollars or more, but these
loans involved four-fifths o f the total amount loaned
under the program.

Contract Termina- Toward the close o f the Regution Loans
lation V program, increasing
attention was devoted to the
financial requirements o f borrowers upon the termina­
tion of their war contracts. It was feared that rapid
cancellation o f contracts at the conclusion o f the war
might make reconversion difficult, if the working
capital o f borrowers were tied up in inventories and
goods in process while waiting for the Government to
make final payments on the termination contracts.
As a result, V loans, for financing war production
only, were supplanted in 1943 by V T loans which
were designed to finance war production and also to
provide protection for contractors in the event all
or a part o f their contracts were terminated. Then
in 1944 the Contract Settlement Act was passed,
providing for guarantees o f Termination loans which
offered financial assistance to companies during
contract termination periods.

Relatively Small
Volume of T Loans

Termination loans in the
Fourth District amounted
to only about 6 percent o f
the total amount o f funds involved in the Regulation
V program as a whole, partly because o f certain other
important provisions in the Contract Settlement Act.
For one thing, officials responsible for the determina­
tion o f the amount to be paid on contract termination
claims were relieved o f personal liability on the pay­
ments in the absence o f fraud on their part. This
removed what was perhaps the greatest obstacle to
prompt settlements. Also a provision for payment
o f interest by the Government on unpaid termination
claims furnished an additional incentive for early
payment o f claims. Furthermore, the armed services
had wisely devoted considerable effort to acquaint
contractors with termination precedures well in
advance o f the time when cancellations became at all
numerous.
The demand for T loans was likewise small because
o f the highly liquid position o f many companies at
the conclusion o f the war. Plant expansion during
the war was frequently financed by the Government.
In cases where expansion was financed out o f a com­
pany’s own funds, the cost generally had been fully
amortized by September 29, 1945, under the terms o f
a Presidential Proclamation, thus freeing funds for
reconversion purposes either by way o f reduction in
tax liabilities or by refund o f taxes paid. The tax
law changes which made postwar refund bonds re­
deemable on January 1, 1945, and which permitted
>ostwar refunds o f excess profits taxes to be deducted
rom current tax liabilities, also assisted in making
funds available for reconversion.

f




9

Furthermore, at the end o f the war many corpora­
tions had large reserves o f Federal income and excess
profits taxes not immediately due and payable. They
were able to utilize these reserves temporarily for
.reconversion and production purposes. Payment o f
a portion o f the tax liability was further deferrable
if an operating loss carryback was anticipated for the
year 1946.

Conclusion The Regulation V program facilitated
war production by relegating financial
considerations to a position secondary to the allimportant goal o f maximum war production. Never­
theless, the program helped to minimize waste o f
money and misdirection o f production effort by
utilizing the existing financial institutions and the
experience o f trained credit men. The lessons learned
in setting up the various V loan arrangements will
prove invaluable in the event o f a future emergency.
They may prove o f considerable use in peacetime
lending operations as well.

INDUSTRIAL SUMMARY
{Continued from Page 5)
£|lay

.

The shortage o f brick and structural

Construction tjjie in the East-North-Central disProducts
trict o f the United States appears to

be over. Comparison o f production,
shipments, and inventories o f unglazed standard brick
and unglazed structural tile for February 1947 with
the same month in 1946 reveals some interesting de­
velopments.

Clay Products, East-North-Central United States
Unglazed Brick
(1,000’ s o f standard brick)
February
1946
1947
P rodu ction ................................
88,500
82,500
Shipm ents.................................
86,000
60,800
59,500
157,500
Stocks— end o f m on th ..........

Percentage
Change
+ 164

Unglazed Structural Tile
(Short tons)
P rodu ction ................................
16,000
Shipm ents.................................
15,000
Stocks— end o f m on th ..........
12,500

23,000
13,000
37,000

+ 41%
12
+ 199

Source: Facts for Industry, Bureau o f the Census.

On a year-to-year comparison, production o f un­
glazed brick was off 7 percent and shipments dropped
29 percent. Inventories, however, were 164 percent
greater than a 'year ago. At the February rate of
shipment, inventories were equal to about two and
one-half months’ supply in 1947 as compared to less
than one month’ s supply a year ago. The decline in
production and shipments combined with the rise in
inventories seems to indicate that, barring interrup­
tions in production, contractors will be able to obtain
all the common brick needed during the coming con­
struction season.
Production o f unglazed structural tile in February
was 41 percent above the same month a year ago, but
shipments declined 12 percent. Inventories, on the
other hand, were 199 percent o f the 1946 level and
equal to about three months’ supply at the 1947 rate
o f shipment as compared to less than one month’ s
supply in 1946.

MONTHLY BUSINESS REVIEW

10

May 1, 1947

DEPARTMENT STORE TRADE STATISTICS
Sales by Departments—March, 1947

Inventories by Departments—March 31, 1947

(As compared with a year ago)
(Compiled April 25, and released for publication April 26)
M ajor Household Appliances......................................................................... + 2 1 3 %
M en’s C lothing.................................................................................................. + 37
Silks and Velvets (W oolen Dress G ood s).................................................... + 29
G loves.................................................................................................................. + 26
Furs....................................................................................................................... 4* 25
Boys’ Clothing and Furnishings.................................................................... + 25
M en’s and Boys’ Shoes.................................................................................... + 21
Books and Stationery....................................................................................... + 20
Cotton Wash G ood s..........................................................................................4* 20
Restaurants.........................................................................................................+ 19
Art Needlework and Art G ood s .................................................................... + 18
Infants' W ear..................................................................................................... + 18
N otions................................................................................................................ 4* 18
Sport goods (including Cam eras)................................................................... + 1 7
Domestic Floor Coverings...............................................................................+ 17
Shoes (W omen’s and Children’s ) .................................................................. + 13
Housewares......................................................................................................... +
9
M A IN STORE T O T A L ................................................................................ +
9
Corsets and Brassieres..................................................................................... +
8
Domestics and Blankets.................................................................................. +
8
Silverware and Jewelry....................................................................................+
7
uniors’ and Girls’ W ear................................................................................. +
7
len ’s Furnishings (Hats and C ap s)............................................................ +
5
China and Glassware....................................................................................... +
|
Millinery............................................................................................................. +
5
Neckwear and Scarfs........................................................................................+ 4
Laces and Trim mings.......................................................................................+ 4
Leather Goods (Sm all).................................................................................... +
4
L u g g a g e . ......................................................................................................... +
2
Handkerchiefs.................................................................................................... +
2
Toilet Articles and Drug Sundries................................................................ —0 1
Women’s Underwear.
3
Hosiery (W om en’ s and Children’s ) .........
4
Lamps and Shades.......................................
5
T oys and Gam es...........................................

t

6
Beauty Salon.................................... ............
9
Coats and Suits (W om en’ s and Misses’) .
9
Dresses (W om en’ s and Misses’) ...............
9
Draperies and Curtains..............................
9
Furniture and B eds.....................................
10
Blouses, Skirts and Knit G ood s...............
13
Photographic Studio....................................
20
Aprons and Housedresses...........................
Gains in h o u se fu r n ish in g s and in m e n ’s -a n d -b o y s ’ w ea r contributed
the bulk o f the 9% increase over a year ago in sales o f Fourth District report­
ing department stores.
M a jo r h o u s e h o ld a p p lia n c e sales, while somewhat short o f the Decem­
ber peak, were more than twice as large as the previous high for the month
established in 1942. H ou sew ares, as well as b la n k e ts, lin e n s , e t c ., set
new record highs for this time o f year, while d o m e s tic flo o r c o v e r in g s were
the highest on record tor any month.
.
.
.
,
By way o f contrast, sales o f fu r n itu r e a n d b ed s, d ra p e rie s, e t c ., and
la m p s a n d sh a d es have failed to show the usual seasonal improvement.
For the second month in succession these departments have fallen behind
]\fen’s c lo t h in g sales were unprecedented for the season, as were totals
recorded in the m e n ’ s a n d b o y s ’ sh o e s and m e n ’ s fu r n ish in g s departments.
Volume in the latter was roughly three times the prewar (March 1941) level
for the month.
„
,
.
,
Other items showing the greatest March volume on record were c o t t o n
w a sh g o o d s and s p o r t g o o d s . Sales o f co r se ts a n d brassieres and silk
a n d velv et p ie c e g o o d s were at an all-time high for any month.
Many articles o f feminine apparel, however, moved out more slowly.^ Sales
were the lowest in three years (for this particular month) in w o m e n s a n d
m is s e s ’ c o a ts a n d s u its , dresses, u n d erw ea r, and a p ro n s , hou sed resses,
e t c ., departments. H osiery sales were the smallest for the month since 1943.
What may be a significant exception among women’s wear items is the
volume o f f u r sales which was 25% ahead o f a year ago and the highest for
the month since March 1944, on the eve o f the final increase in excise taxes.
Using March 1941 as 100, the sale o f furs has varied in each successive March
as follows: 100, 97, 151, 211, 96, 94, 116
.
.
N o allowances have been made in any o f the figures contained in this
release for changes in the price level.

Indexes of Department Store Sales and Stocks
Daily Average for 1935-1939 = 100
Without
Adjusted
for Seasonal Variation
Mar.
Feb.
Mar.
1946
1947
1947

SALES:

266
343
294
254
314
286
273
268
269
242
287
257

260
315
300
250
318
250
227
275
267
224
302
256

285r
329
284
250
308
287
271
296
255
284r
304
246

247
302
285
238
307
260
259
260
258
225
276
262

232
239
225
195
239
212
204
215
211
181
244
210

244r
256
252
220
274
239
233
260
225
225r
255
237

264

261

174

254

242

168

STOCKS:
-Revised.

Seasonal Adjustment
Feb.
Mar*
Mar.
1946
1947
1947




(As compared with a year ago)
(Compiled April 29 and released for publication M ay 1)
Major Household Appliances......................................................................... + 3 9 7 %
Men’ s Clothing..................................................................................................
+255
Hosiery (W omen’ s and Children’s ) ...............................................................
+128
Cotton Wash G oods..........................................................................................
+125
Men’ s and B oy’ s Shoes....................................................................................
+120
Domestic Floor Coverings...............................................................................
+ 11 4
Men’s Furnishings (Including Hats and C aps).........................................
+105
Furniture, Beds, Mattresses and Springs....................................................
+100
Shoes (W omen’s and Children’s ) ...................................................................
+ 99
Sport Goods (Including Cameras) ...............................................................
+98
Domestics, Blankets and T ow els..................................................................
+ 89
Draperies and Curtains...................................................................................
+ 75
Silks and V elvets...............................................................................................
+ 71
Corsets and Brassieres.....................................................................................
-j- 71
Coats and Suits (W omen’ s and Misses’) .....................................................
+68
Aprons, Housedresses and U niform s............................................................
+67
China and Glassware........................................................................................
+ 62
W omen’s Underwear........................................................................................
+ 57
M A IN STORE T O T A L ................................................................................
+54
+52
Housewares................ ........................................................................................
Luggage. . ._........................................................................................................
+ 45
Boys’ Clothing and Furnishings....................................................................
+ 43
Dresses (W omen’ s and Misses’) ....................................................................
+ 40
G loves..................................................................................................................
+ 38
Silverware and Jewelry....................................................................................
+ 26
Lamps and Shades............................................................................................
+ 25
Toys and Gam es................................................................................................
+ 22
Infants’ W ear.....................................................................................................
+ 15
Notions................................................................................................................
+ 12
Neckwear and Scarfs........................................................................................
+
7
Art Needlework and Art G oods.....................................................................
+
5
Books and Stationery.......................................................................................
+
2
Toilet Articles and Drug Sundries................................................................
+
1
Blouses, Skirts and Knitgoods.......................................................................
—0 Handkerchiefs....................................................................................................
— 1
uniors’ and Girls’ W ear.................................................................................
— 5
aces and Trimmings.......................................................................................
— 5
M illinery.............................................................................................................
— 8
Leather Goods (Sm all).....................................................................................
— 10
Furs.......................................................................................................................
— 10
The increase in Fourth District department store inventories during March
was about in line with the usual seasonal pattern, but in nearly every instance
stocks were the highest on record for this time o f year.
In fifteen o f the forty lines o f merchandise, however, end-of-M arch inventories
were the highest on record for any month.
M a jo r h o u s e h o ld a p p lia n c e inventories established a new record high
for the fourth successive month. Other departments whose stocks stood at
an all-time high were d o m e s t ic flo o r co v e rin g s, up 114% for the year, f u r n i­
tu re , b ed s, e t c ., up 100% , d o m e s tic s , b la n k e ts , e t c ., d r a p e r ie s ,c h in a
a n d glassw are, and h ou sew a res.
Other items in which March 31 supplies-on-hand were the highest in history
included m e n ’s c lo t h in g and m e n ’s a n d b o y s ’ sh oes.
Three types o f women’s ready-to-wear accessories were in record supply at
the end o f March. Stocks o f h o s ie r y were 128% above a year ago, and in­
ventories o f c o r se ts and w o m e n ’ s a n d c h ild r e n ’s sh o e s were at unprece­
dented levels at the close o f March.
Inventories o f w o m e n ’s a n d m is s e s ’ d resses were greater than ever
before, as were stocks o f c o t t o n w ash g o o d s and s p o r t g o o d s .
A t the opposite end o f the range, inventories o f fu r s were the lowest for the
month in three years. M illin e r y stocks showed a year-to-year decline for
the fourth successive month.
Any assumptions regarding changes in physical volume must take into con­
sideration price fluctuations during the past year.

{

March Department Store Sales by Cities*
(Compiled April 24, and released for publication April 25)
Sales During March (March 1941 = 100)% Change From
1947 Mar.’46 Feb. ’4
1943
1945
1946
1941
+ 29
229
282
+12
100
139
251
272
+18
+26
100
238
231
171
+26
100
189
220
246
C in cinnati.............
124
+ 11
241
+27
216
P ittsb u rgh .............
100
119
181
+ 11
-0 209
235
236
+24
100
117
201
+22
100
231
+ 15
126
198
229
+24
188
206
F o u r th D is t r ic t .. . 100
128
+ 11
+ 23
100
207
207
226
142
+ 9
-0 218
+ 21
Springfield.............
100
221
218
156
200
217
+ 13
100
190
Youngstown...........
114
+ 8
208
+22
130
177
191
100
+ 9
200
203
204
+ 7
A kron...................... . 100
149
+ 2
* Based on daily average sales.
During March, sales o f Fourth District department stores were 24% greater
than in the preceding month and 11% ahead o f a year ago.
The improvement in March over February was most pronounced in C o lu m ­
b u s where the month-to-month gain was 29% . P it ts b u r g h was second with
a 27% rise.
In the comparison with March 1946, C a n to n stores reported an 18% ad­
vance. T o le d o sales were next with a 15% margin over last year. In the
two cities o f S p rin gfie ld and W h e e lin g sales this March were virtually the
same as a year ago.
In terms o f prewar volume, sales in C o lu m b u s show the largest increase
(182% ) over March 1941. C a n to n stores reported sales 172% over March
1941, and C in c in n a t i stores ranked thjrd in March with a gain o f 146% .
These percentage changes are not adjusted for changes in the level o f retail
prices.
C IT Y

M ay 1, 1947

MONTHLY BUSINESS REVIEW

11

FINANCIAL AND OTHER BUSINESS STATISTICS
Bank Debits* — March, 1947

T im e D eposits*— 12 F o u rth D istrict C ities

(In thousands o f dollars)
(Compiled April 10, and released for publication April 11)
% Change 3 Months % Change
March
from
ended
from
1947
year ago
Mar. 1947 year ago
A L L 29 C E N T E R S ................$5,920,664
+ 1 9 .4 % $17,140,158
+ 2 1 .0 %
10 LA R G E ST C E N TE R S :
A kron.............................. Ohio $ 229,043
96,067
C anton............................Ohio
Cincinnati...................... Ohio
828,728
Cleveland....................... Ohio
1,486,231
C olum bus....................... Ohio
436,574
D ayton............................Ohio
219,011H
T o le d o .............................Ohio
351,308
129.063H
Youngstown.................. Ohio
E rie..............................Penna.
78,986
Pittsburgh..................Penna.
1,535,781
T o ta l.................................... 25,390,792
19 O TH E R C E N T E R S:
C ovington-N ew port.. . . Ky. $
Lexington.........................Ky.
H am ilton........................ Ohio
L im a ................................ Ohio
Lorain............................. Ohio
M ansfield........................Ohio
M iddletow n................... Ohio
Portsm outh....................Ohio
Springfield......................Ohio
Steubenville................... Ohio
W arren............................Ohio
Zanesville....................... Ohio
Butler..........................Penna.
Franklin......................Penna.
Greensburg.................Penna.
Homestead................. Penna.
Oil C ity .......................Penna. 0
Sharon.........................Penna.
W heeling....................W. Va.

35,053
56,818
33,158H
39,120
15,254
34,022
31.177H
20,217H
41,911
19,587
33,185
21,844
25,789
5,985
16,435
6,593
18,677
22,309
52,738

+ 9 .2
+ 2 5 .9
+ 2 4 .2
+ 1 7 .3
+ 1 4 .0
+ 2 6 .0
+ 2 6 .8
+ 3 9 .7
+ 2 8 .1
+ 1 7 .9

656,948
276,375
2,378,080
4,364,975
1,195,017
611.776H
1,014,985
339,302
218,292
4,480,803

+ 1 5 .0
+ 2 6 .0
+ 2 1 .3
+ 1 7 .1
+ 1 1 .9
+ 2 8 .3
+ 3 6 .3
+ 2 9 .1
+ 2 1 .0
+ 2 3 .0

+ 1 9 .5 % 215,536,553

+ 2 0 .9 %

+ 8.2%$
+ 9 .8
+ 2 2 .2
+ 3 3 .3
+ 3 2 .9
+ 2 7 .9
+ 2 3 .4
+ 3 1 .4
+ 1 5 .6
+ 7 .4
+ 3 7 .5
+ 1 0 .5
+ 1 6 .3
-1 7 .1
+ 9 .6
+ 1 0 .1
+ 1 9 .4
+ 2 7 .9
+ 1 5 .0

+ 1 2 .3 %
+ 2 4 .5
+ 2 0 .7
+ 3 0 .5
+ 3 3 .9
+ 3 2 .6
+ 1 8 .6
+ 3 2 .1
+ 1 9 .6
+ 1 1 .7
+ 4 1 .1
+ 1 9 .1
+ 2 7 .1
-1 1 .9
+ 1 8 .2
+ 1 4 .4
+ 1 8 .3
+ 3 2 .8
+ 1 1 .0

101,979
258,715
88,012
112,198
43,221
98,124
84,145
54,178
120,102
56,202
95,006
63,698
76,354
17,328
48,238
18,911
54.085
63,144
149,965

(Compiled April 4, andreleased for publication April 7)
Average
Weekly Change During:
Fourth
4 Weeks
4 Weeks
Quarter
Ended
Ended
1946 Feb. 26,1947 Mar. 26, 1947
+$1,126,000 + $ 551,000 + $ 167 000
+
513,000 +
177,000 +
307,000
+
83,000 +
225,000 +
138,000
+
122,000 +
191,000 +
151,000
+
120,000 +
143,000 34,000
+
158,000 +
150,000 +
59,000
+
32,000 +
18,000 +
58,000
22,000 +
39,000 +
62,000
+
10,000 +
16,000 +
19,000
11,000 +
47,000 +
56,000
26,000 +
49,000 +
16,000
4,000 +
33,000 +
5,000

C ity and
Time
Number
Deposits
o f Banks
Mar. 26, 1947
Cleveland ( 4 ) .........$ 856,057,000
Pittsburgh (13) . . .
330,811,000
Cincinnati (8) . . . .
181,571,000
Akron ( 3 ) ...............
100,373,000
Toledo ( 3 ) ..............
90,088,000
71,269,000
Columbus ( 3 ) .........
Youngstown ( 3) . . .
53,290,000
Dayton ( 3 ) .............
49,475,000
Canton ( 4 ) .............
39,617,000
Erie ( 4 ) ...................
36,864,000
Wheeling ( 6 ) .........
28,642,000
L exington...............
10,521,000

T O T A L — 12Cities$l,848,848,000 +$2,101,000 +$1,639,000 +$1,002,000
* O f Individuals, Partnerships, and Corporations.
Savings deposits in 59 Fourth District banks increased less per week during
March than in any month since this series was first compiled in July 1946. The
March increase averaged $1,000,000 per week, compared with average weekly
gains o f $1,640,000 in February, $2,100,000 in the second half o f 1946, and an
estimated $3,500,000 in the first half o f 1946.
Incom e tax payments were probably an important causeof the comparatively
small March gain. Important factors affecting savings trends in the postwar
period as a whole have been the advance in living costs and the mounting
volume o f durable consumer goods and residential construction.
Despite the relatively small average gain for March, some increase was re­
corded in each o f the twelve reporting cities except T o le d o . The rate o f in­
crease in C le v e la n d was o ff sharply from the February figure, and this was the
primary factor in the small aggregate District gain for the month. P itts b u rg h ,
on the other hand, reported a substantial advance over February.
In Y o u n g s to w n , D a y to n , C a n to n , and E rie, savings accounts increased
more per week during March than in February or in the last quarter o f 1946.
In four other cities, C in c in n a t i, A k ro n , W h e e lin g and L e x in g to n , the March
gains exceeded the figures reported for the fourth quarter but lagged behind
those for February.
„ Savings accounts at the three A k ro n banks passed the $100,000,000 mark
during March and are now at an all-time high.

W holesale a n d R eta il T rad e
T o ta l.................................... $ 529,872
+ 1 8 .5 % $1,603,605
♦Debits to all deposit accounts except inter bank balances.
H denotes new all-time high for one month or quarter-year.

+ 2 2 .1 %

Bank debits in 29 Fourth District cities during the first quarter o f 1947
exceeded the year ago total by 21 percent.
During March, total debits were about 19 percent above the March 1946
aggregate, compared with year to year gains o f 26 percent in February and 19
percent in January.
The dollar volume o f debits in March was $5,920,000,000, some 12 percent
above the short February month but 11 percent below the all-time high o f
$6,630,000,000 established last December.
T E N L A R G E S T C IT IE S i
In the past month, Y o u n g s t o w n reported the largest increase with a
figure o f 40 percent, E rie was second with 28 percent, and T o le d o ranked
third with 27 percent. In quarterly gains over a year ago, Toledo led the
large cities with a figure o f 36 percent.
March and first-quarter debit totals in D a y to n and March figure in Y o u n g s ­
to w n established new all-time highs for those cities.
N IN E TE EN S M A L L E R C IT IE S
For the second successive month, W a rren reported the largest percentage
increase over year ago figures, this time with a mark o f 38 percent. That
city also led in the percentage increases for the first quarter with a 41 percent
gain. Other cities which exceeded by a substantial margin the average gain
o f 19 percent for the smaller centers were L im a , L o r a in , P o r t s m o u th ,
and M a n sfield .
New all-time highs were set during March at H a m ilto n , M id d le to w n ,
and P o r t s m o u th . In Portsmouth debits during March went over $20,000,000
for the first time.

Fourth District Business Statistics

Percentage Changes
from Preceding Year
SALES SALES STOCKS
Mar.
first 3
Mar.
1947 months
1947

D E P A R T M E N T STORES (95)
A kron ........................................................................
+ 2
+ 5
C anton................................................... ...................
+18
+19
Cincinnati.................................................................
+ 11
+12
Cleveland..................................................................
+ 9
+10
Columbus..................................................................
+12
+10
E rie............................................................................
+ 9
+ 9
Pittsburgh................................................................
+ 11
+14
Springfield...................................................... ..........
-0 + 1
+15
+13
T o le d o ................................................................. ......
W heeling...................................................................
-0 + 1
Y oungstow n.........................................................
+ 8
+15
Other Cities..............................................................
+26
+20
District......................................................................
+ 11
+12
W E A R IN G A P P A R E L (13)
Cincinnati................................................ ................
—11
— 4
Cleveland..............................................................
— 3
— 4
Pittsburgh.................................................................
— 3
— 2
Other Cities..............................................................
— 2
— 5
D istrict......................................................................
— 4
— 4
F U R N IT U R E (63)
C an ton.................................................................. .. .
a
a
Cincinnati.................................................................
+16
+ 41
Cleveland..................................................................
+22
+14
Columbus..................................................................
+13
+21
D a y ton ......................................................................
+ 2
+14
Pittsburgh.................................................................
a
a
Allegheny C ou n ty...................................................
+18
+28
T o le d o ........................................................................
-0 +23
Other Cities..............................................................
+ 8
+27
District......................................................................
+13
+24
a N ot available.
Figures in parentheses indicate number o f firms reporting sales.

+60
a
+ 55
+52
+43
+47
+48
a
+ 35
+38
a
+46
+49
+ 53
+ 83
+38
+ 35
+55
a
+73
+ 53
+10
a
a
a
a
+68
+56

(000 omitted)
Fourth District Unless
Otherwise Specified
Retail Sales
Department Stores— 95 firm s...............
Wearing Apparel— 13 firms...................
Furniture— 63 firm s.................................
Building Contracts— T o ta l........................
— Residential.............
Commercial Failures— Liabilities.............
— Actual Num ber. .
Production:
Pig Iron— U. S.......................... Net tons
Steel Ingot— U. S..................... N et tons
Bituminous Coal—
O., W . Pa., E. K y................N et tons
Cement— O., W . Pa., W . Va........ Bbls.
a— February,
b— January.




March
1947

% change
from
1946

February
1947

63,921
2,317
3,226
65,458
28,900
590
14

+ 11
- 4
+13
-1 4
-1 1
+ 29 6
+ 600

47,402
1,530
2,612
61,083
34,022
1,190
16

5,123
7,285

+16
+12

4,550
6,422

21,200
1,164a

- 4
+82

19,313
1,158b

BUSINESS C O N D ITIO N S
(Continued from Page 12)

reserve position o f member banks was maintained in
this period by the reduction in Treasury balances at
Federal Reserve Banks.
Bank deposits and currency in circulation, which
had declined considerably in January and February,
showed some net increase in March and the first
half o f April. Commercial loans increased further in
March but declined in April. Real estate and con­
sumer loans increased moderately.

MONTHLY BUSINESS REVIEW

12

May 1, 1947

SUMMARY OF NATIONAL BUSINESS CONDITIONS
By the Board of Governors of the Federal Rzseroe System
(Released for Publication April 29, 1947)

Industrial output and factory employment were
unchanged in March. Value o f retail trade continued
to show little change, after allowing for holiday buy­
ing. The general level o f wholesale commodity
prices declined slightly in the first three weeks o f
April, following increases in February and the early
part o f March.

Industrial Production
The Board’ s seasonally adjusted index o f industrial
production in March was at a level o f 189 percent of
the 1935-39 average for the third consecutive month.
Output o f durable manufacturers continued to
show a very slight gain in March, reaching a level o f
223 percent o f thel935-39 average. Activity in the iron
and steel industries advanced in March after a slight
decline in February. Steel mill operations averaged
94 percent o f capacity in March, and they have been
maintained at about this rate during most o f April.
Activity in the machinery and transportation equip­
ment industries also showed a slight gain in March.
Output o f passenger cars totalled 303,000, and o f
trucks, 117,000. Lumber production continued to ad­
vance and, in March, was at the highest level for this
season in almost 20 years. Output o f most nonferrous
metals at smelters and refineries continued to expand,
following increases earlier in domestic mine pro­
duction.
The Board’s seasonally adjusted index o f output of
nondurable manufactures again declined by one
point in March to a level o f 175 percent o f the 1935-39
average. Production in most lines was at the Febru­
ary rate or declined very slightly. Output o f textilemill and leather products in February and March
remained somewhat below last year’ s peak rates.
Minerals production increased slightly in March
to a level o f 147 percent o f the 1935-39 average,
reflecting a continued advance in output o f crude
petroleum, and a slight increase in coal production.
Bituminous coal output dropped sharply during the
first two weeks o f April, as work was curtailed at
mines in a dispute over safety conditions, but sub­
sequently increased.

Employment
The number o f employees in most lines o f nonagricultural activity in March remained at about the
level o f other recent months, after allowance for usual
seasonal changes. Total nonagricultural employ­
ment o f about 42,500,000 persons was seven percent
higher than the level a year ago. The number of
persons unemployed showed a slight seasonal decline
in March to 2,330,000.

Construction
Total value o f construction contracts awarded, as
reported by the F. W. Dodge Corporation, was about
one-third larger in March than in February, reflect­
ing chiefly seasonal influences, but one-sixth smaller
than in March 1946. The reduction from a year ago
was in awards for private nonresidential construction,
which were exceptionally large at that time. Value




o f residential awards increased by about one-third
from February to March and was slightly larger than
in the same period last year. Since a year ago
building costs have increased considerably and the
number o f dwelling units contracted for in March was
somewhat less than the March 1946 volume. Con­
struction activity continued to decline after allow­
ance for seasonal variation.

Distribution
Value o f department store sales during the six
weeks preceding the Easter holiday was three per­
cent larger than during the corresponding number o f
weeks before Easter last year, reflecting chiefly a
sharply higher level o f sales o f household appliances
and men’s clothing. Value o f sales o f most other
goods sold at department stores was about the same
as a year ago, although prices were generally higher
than at that time. Retail sales o f automobiles,
radios, and office and farm equipment both in unit
and dollar volume continued far in excess o f last
year’ s levels.
Freight carloadings rose in March owing mainly to
increased shipments o f grain and miscellaneous
freight. Shipments o f coal dropped sharply at the
beginning o f April, and then recovered to the March
rate during the week ending April 19. Shipments o f
forest products declined considerably during the first
three weeks o f April, while loadings o f most other
classes o f freight showed little change.

Commodity Prices
Wholesale prices o f basic commodities generally
declined from the middle o f March to the latter part
o f April, with the largest decreases shown for hogs,
fats and oils, coffee, print cloths, and steel scrap.
Prices o f corn, cotton, and copper, on the other hand,
were at about the same level on April 24 as in the
middle o f March.
The Consumers’ Price Index o f the Bureau o f Labor
Statistics advanced two percent from February 15
to March 15, reflecting chiefly increases in food prices.
Since that time prices o f foods have declined some­
what, and price reductions have been announced for
certain other products by manufacturers and dis­
tributors.

Treasury Finance and Bank Credit
During March and April the Treasury continued
its program o f debt retirement, using an excess o f
tax receipts over budget expenditures and drawing
upon balances at commercial banks and Federal
Reserve Banks. Retirements, which aggregated about
4.8 billion dollars, included notes maturing on March
15, a portion o f certificates maturing March 1 and
April 1, and 200 million o f Treasury bills each on
April 17 and 24. A further reduction o f 200 million
was announced for the bill issue to mature M ay 1.
Federal Reserve holdings o f Government securities
declined by more than 2.2 billion dollars in the eight
weeks ending April 23, while holdings o f member
banks in leading cities showed little change. The
(Continued on Page 11)