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OCTOBER 1949 CONTENTS Recent Banking Trends , . . . . C hanges in O h io ’s Leading Industries1 9 3 9 to 1 9 4 7 K e v i e w 5 ..................... District Statistical Tables . . . 1 10-11 FIN A N C E • IN D U STR Y • AG RICULTURE • TRADE FOURTH Vol. 31— No. 10 FEDERAL R ES ERVE DI S TR I CT Federal Reserve Bank of Cleveland , Cleveland 1 Ohio Recent Banking Trends VER the past few months, the banking situa tion has continued to reflect both the character istic deflationary movements of the downswing in business activity, and the inflationary measures re cently adopted by the Treasury and the Board of Governors of the Federal Reserve System. O One t^ie most propitious features been the slowing down in the rate of contraction of commercial, agricul tural, and industrial loans since the end of May, though caution must be exercised not to underesti mate what may be largely a seasonal influence in this respect. In the thirteen weeks from the beginning of June to the end of August, the volume of com mercial loans outstanding at weekly reporting mem ber banks in the Fourth District dropped $40 million — a little under 5 percent— to a new low since late 1947. This represented an average decline of $3 million per week, whereas in the previous eleven weeks, these loans to business registered consecutive declines from the postwar peak in mid-March at an average weekly rate of over $ 8 ^ million. During September there was a moderate recovery, though it is too early to ascertain whether the trend has been definitely reversed, or whether the gain is only tem porary and largely seasonal in character. On Sep tember 28 (latest available date), the commercial loan total outstanding at reporting banks in this District was 12 percent below that on the compar able date last year. At weekly reporting member banks in leading cities* throughout the United States, the 1949 up turn came earlier in the summer and was more pro Commercial Loans * Weekly reporting banks in leading cities account for about 75 per cent of commercial, industrial, and agricultural loans outstanding at insured commercial banks. nounced. It is true that throughout June and July, outstanding commercial loans dropped almost 5 per cent, but from the low point established at the beginning of August, the volume of commercial indebtedness has expanded consistently, though at a relatively slow pace, to register a gain of 3*/2 percent in seven weeks as against a 1 percent decline in the Fourth District. A considerable part of the liqui dation of bank debt over the past year or so can undoubtedly be attributed to the reduction of inventories, particularly by retailers and wholesalers, during the first half of the year. (See previous dis cussion in the July issue of the Review). The recent retarding and reversal of the loan decline is due in some measure to restocking and replenishment of supplies and merchandise, as in many instances stocks probably had fallen too low for efficient operation. To these factors may be added the possibly further influence of some degree of stockpiling of steel and allied products as a precaution against labor disturb ances. In order to assess accurately the causes of recent and current trends in commercial loans, how ever, it is necessary to consider briefly the extremely rapid and extensive expansion in these loans in the postwar period. In addition to inventory borrowing, much of the debt incurred by businesses, especially since the fall of 1946, has been to provide new capital necessary for conversion and expansion programs. An amplitude of funds and the cheap money policy added to the attractiveness of debt financing, whereas equity money has tended to become increasingly scarce and expen sive. Consequently a considerably greater proportion of new capital has been provided by borrowing than Causes of Commercial Loan Contraction Page 2 Monthly Business Review in earlier periods of expanding economic activity. This kind of fixed-capital borrowing contributed to the expansion of so-called commercial loans, which increased over 150 percent at reporting Fourth Dis trict banks from the end of the war to the peak of March 1949. Such a large volume of debt was bound to be highly susceptible to changes in the busi ness outlook, and it seems probable that the uncer tainty which prevailed in business circles, particularly early in the year, led some companies to take advan tage of the high level of retained earnings to repay debt incurred for capital expansion programs, in addition to debt reduction made possible by inven tory liquidation. The industrial recovery which began to emerge late in the summer seems to reflect primarily the delayed opera tion of seasonal factors and a more stable inventory situation. The increase of $458 mil lion in seven weeks in commercial loans at banks in leading cities of the country, however, contrasts some what unfavorably with an increase of $574 million in the same period last year. While loans have ex panded since July at reporting banks in all Districts except Cleveland, almost two-thirds of this rise was in the New York, Kansas City and Dallas districts, while the others have reported only relatively moderate advances. Moreover, more of the increase this year may be accounted for by Commodity Credit Cor poration loans to farmers. As a result of the avail ability of more storage space, more grain is eligible for C. C. C. loans, and the lower yield on certificates and bills has made these loans at \l/ 2 percent more attractive to banks. An indication of this in the Fourth District is that loans and discounts at all country member banks in the District rose slightly during August, whereas at reserve city banks the de cline continued. The Outlook for Business Borrowing LOANS OF REPORTING MEMBER BANKS Fourth District . . . commercial loans hit a 20-month low early in July and then leveled off, while real estate loans have continued to expand, though at a slower rate than last year. October 1, 1949 Any estimation of the future trend of business bor rowing is hampered by various conflicting factors. Although the full extent of deficit financing has not yet become apparent, it will result in the injection of a certain volume of purchasing power into the economy. By mid-September, $2.8 billion had been raised through the cash sale of Treasury bills and tax-savings notes. Successive reductions in reserve requirements have been made by the Federal Reserve Board in order to provide member banks with ample funds for lending. And more specifically, recent weeks have evidenced a noticeable pickup in sales of household appliances, in prices of scrap and nonferrous metals, and in production of textiles— items which were either among the first to show a break in prices and production, or in which the decline was of marked severity. But it is as yet impossible to ascertain the effect of more plentiful banking funds on interest rates. Nor can it be determined to what extent anticipation of easier terms and charges is causing business bor rowing to be restrained. Two considerations are apparent, however. The dollar volume of new short term loans to business made by twelve Fourth Dis trict banks cooperating in a quarterly survey of interest rates was considerably lower in June than in any other survey period since the present series was inaugurated in June 1947, and was more than 34 percent below the volume recorded in March this year. It seems improbable that a further substantial drop in new loans has occurred since them. Further more, during August, a notable amount of new debt financing was undertaken by several large corpora tions at New York City banks. Counteracting these movements are the labor disturbances in the steel and coal industries, which are causing widespread repercussions, and the like lihood of shrinking exports and intensified price competition in segments of the domestic market as a result of the drastic devaluation of the pound ster ling and other European currencies. Although the present indications are that the national trend in commercial loans has picked up somewhat, whereas in this District it has only begun to level off, it should be borne in mind that in the country as a whole, the decline has been in progress since Decem ber of 1948, while in the Fourth District the peak volume of commercial indebtedness was not reached until the middle of March. From the postwar peaks to the 1949 lows to date, the respective commercial loan declines have been 18 percent nationally and 14 percent in the Fourth District. Real estate loans have been moving slowly but consistently upward since the beginning of May, reaching a record level of $285,000,000 at the 19 reporting Real Estate Loans October 1, 1949 Monthly Business Review banks at the end of September, 6 percent above the year-ago level. This expansion in the volume of bank-held mortgages is largely seasonal, however, and the $9 million increase in the five months from May 4th falls considerably short of the $22 million upsurge in the corresponding period of 1948, when the mortgage lending boom was in full swing. This showing is in close accord with the nationwide trend as indicated by weekly reporting banks in lead ing cities, and bears witness to the continued high level of construction and widespread demand for homes. Movements at lending agencies other than commercial banks, where mortgage indebtedness is also growing at a slower rate than last year, indicate that the gap between new loans and repayments is narrowing from both sides; new loan volume is shrinking in comparison with 1948, while partial repayments and pay-offs, inevitably subject to a time lag, are gradually catching up. Consumer The sizeable “ all other loans” category, and All which includes consumer credit, slipped Other Loans back slightly during July and August, but early in September rose to a new postwar peak, 13 percent greater than at the begin ning of the year, and 18 percent above the year-ago amount. Based on data from a smaller sample of banks, the leveling off seems to have been due to a shrinkage in noninstalment debt, comprising such items as loans to building and loan associations, in surance companies, credit unions, clubs and similar associations, churches, hospitals, educational and charitable institutions. Following the seasonal con traction early this year, a very high volume of instalment debt has been incurred by individuals at 25 reporting banks in the District, while the volume of repayments and pay-offs, though still rising, con tinues to lag behind. As a result, outstanding instal ment credit at these banks has attained new record levels, with the main impetus for the rapid expansion coming from automobile loans, (including both direct loans and purchased paper), and from repair and modernization credits. With the exception of the commercial loan shrink age, none of the various categories of loans has shown evidence of any definite deflationary trend in recent months, and in consequence, the total volume of in debtedness to reporting banks at the end of Septem ber was only slightly below the end of May figure and 3 percent under the year-ago volume. Investment rpjie chief factor affecting bank investPolicies ment policies in recent months has been the reductions in required reserves made by the Board of Governors of the Federal Reserve System in order to ensure a plentiful supply of loan able funds and to increase the earning assets of mem ber banks. The first of these cuts in May reduced Page 3 INVESTMENTS OF REPORTING MEMBER BANKS Fourth District M IL L IO N S OF D O L LA R S M IL L IO N S OF D O L L A R S . . . under the combined stimulus of reduced reserve re quirements and the decline in loans, holdings of U. S. Government securities increased sharply during the sum mer, and by mid-September reached the highest point in over two years. reserve requirements $72 million, (about 5 /2 percent) for Fourth District member banks. Most of these released funds were rapidly absorbed by investment in Government securities. With the expiry on June 30th of the temporary authority granted by Congress for increased reserve requirements, reserves which member banks were required to maintain against both time deposits and net demand deposits auto matically dropped by 1 percent at country and reserve city banks, making available a further $91 million (or 7 percent) for the extension of credit on investment. After the lapse of several weeks, further and more extensive reductions were announced by the Board to become effective serially throughout August. The new reductions, in the nature of 2 per cent on net demand deposits and 1 percent on time deposits, released a further $146 million. Thus a total of around $310,000,000 or 24 percent was made available to member banks in this District in the four months May through August. As was to be expected, a rapid expansion in invest ments in United States Government securities fol lowed the lowering of reserve requirements. From the beginning of May to the middle of September, holdings of all classes of Government securities rose by $380 million (over 15 percent) at weekly report ing member banks of this District, to the highest point in over two years. Deposits at these banks rep resent almost three-fifths of all member bank deposits in the District. The remaining two-fifths of the banking resources in this District accounted for only a $60,000,000 increase in investments in United States Government obligations by the end of August. At the same time, interbank deposits of the weekly reporting banks rose substantially, by more than half the amount of funds released at country banks. Page 4 Monthly Business Review Treasury bonds paced this expansion with an in crease of $178 million, and by mid-September total holdings of this type of investment had increased by over 16 percent from the postwar low of last De cember. The major part of this expansion in bond holdings has occurred since the end of July, a period in which no bonds have been sold by the Open Mar ket Committee of the Federal Reserve System. It seems probable, therefore that most of the increase in Treasury bonds at Fourth District banks has come from purchases from nonbank investors. Immediately following the first of the series of reductions in required reserves, the decline in the short-term Government portfolio was arrested. In the following four months a sharp jump of 59 per cent in holdings of short-term Governments lifted the volume of these investments to the highest level since late 1946 and 28 percent above the year-ago volume. Initially the movement was concentrated in certifi cates of indebtedness, but in July and August the banks purchased a substantial quantity of bills, prob ably in anticipation of some rise in price following the decision of the Federal Open Market Committee to allow a greater measure of flexibility in the Gov ernment security market and because of the an nouncement in August of a reduction in the rate on one-year certificates from 1*4 percent to 1 percent. Further impetus to the expansion in bill holdings came from the Treasury’s issuance of new bills in excess of maturities as part of its deficit financing measures, by which $800 million was raised in six weeks from the beginning of August. Investment in corporate and municipal securities, which had shown little fluctuation for about a year, has been stimulated by the lower yields on medium-term se curities, to register an 8 percent increase since the beginning of May to a new postwar peak. Despite the over-all increases in investment port folios, excess reserves have risen somewhat, particu larly at country banks, though until some degree of stability is reached it would be unsafe to assume that any particular ratio of excess reserves is destined to be permanent. The combined factors of re duced reserve requirements and continued low excess reserves do not account for the whole of the increase in holdings of Governments. The shrinkage in com mercial loan volume and a rising volume of demand deposits have provided considerable additional impetus to investment programs. October 1, 1949 slightly in advance of year-ago levels, although they have evidenced considerable variation from week to week. At the end of August, these deposits estab lished a new all-time high, $240 million (almost 8 /2 percent) in excess of the April low. That demand deposits have held up during the recent period of very considerable tax-note purchases by corporate depositors is probaly due to liquidation of other types of government securities by the purchasers. At 58 banks in this District, time deposits have shown a slow but reg ular downtrend, declining for five consecutive months from the all-time high at the end of March at an average rate of $550,000 per week. This reduction in what are primarily the per sonal savings of individuals may represent in part a transfer to the more active category of demand de posits, but in the main is probably due to an increase in the rate of withdrawals relative to new savings, attributable in some degree to vacation expenditures and purchases of consumer durable goods such as automobiles and household appliances. Although the decline at reporting banks has been of considerable duration, at the end of August savings deposits at these banks were nominally above the volume at the beginning of the year, and more than 2 percent above the year-ago level. Reports from all member banks in the District indicate that while time deposits at reserve city banks have declined over a longer period and to a greater extent than at country banks, the movements at both classes of banks have been closely related. At reserve city banks the downtrend began in April, while at country banks, which account for Time Deposits Decline (Continued on Page 12) DEPOSITS OF REPORTING MEMBER BANKS Fourth District M IL L IO N S OF D O L L A R S M IL L IO N S OF D O L L A R S C H A N G E S A M O N G DEPOSIT C LA SSES Movements in deposits have shown divergent trends in the past several months. Demand deposits have con tinued in a slow and irregular general upward trend from the April low. Since the beginning of June, adjusted demand deposits at weekly reporting Fourth District banks have been almost without exception Demand Deposit Expansion . . . adjusted demand deposits have maintained their irregular expansion during recent months, reaching an all-time high early in September. Time deposits show a nominal net decrease for the year to date. October 1, 1949 Monthly Business Review Page 5 Changes In Ohio’s Leading Industries— 1939 to 1947 NALYSIS of the latest Census of Manufactures A . data drives home the fact that the economy of the State of Ohio is founded primarily upon iron and steel, and upon the fabricating industries that are directly dependent upon ferrous metal supply. In fact, the importance of these industries has grown considerably since the Census of 1939 was taken. The Census of Manufactures divides all manufac turing activity into 20 industry groups, as shown in the accompanying table. In Ohio, 61 percent of all manufacturing production workers in 1947, or 601,000, were employed by only five industry groups, i. e., primary metals, machinery (excluding electrical), fabricated metals, transportation equipment, and electrical machinery. This represented a marked gain from 1939 when only 318,600 workers, or 53/ 2 per cent of the total were employed by these industries. Moreover, these five industries paid higher-thanaverage wages, since their production workers took home nearly 64 percent of manufacturing payrolls or about $1,741 million. The value added by manufacture by the five indus tries amounted to $3,700 million or 58 percent of the total as compared with $1,118 million in 1939 which was less than 53 percent of that year’s aggregate. Despite their larger than proportional contribution to the state’s economy, only 4,450 establishments or 36 percent of the total were engaged in the five manufacturing classes, but these 4,450 places repre sented a 71 percent gain over the number of estab lishments so occupied in 1939. This was far above the increase of 13 percent experienced by the other 15 industry groups put together. It appears then, from the 1939-1947 growth record, that Ohio manu facturers continued to concentrate and expand in those fields that afforded certain competitive advan tages that were derived from raw materials, location, low-cost power, management skill and experience, trained labor supply, financial resources, and nearness to markets. The value added by manufacture in Ohio in 1947 totaled $6,379 million as compared with $2,116 NOTE: Recent artides in the Monthly Business Review, based upon preliminary returns o f the 1947 Census o f Manufactures, have analyzed the importance o f manufacturing activity in Fourth District states and leading industrial counties in the Dis trict. These articles were concerned with the general over all importance o f all manufacturing combined as measured by value added, number o f employees, wages, and number of establishments, and they analyzed some o f the changes that have taken place since the previous Census o f 1939. Similar information has since become available with respect to 20 individual industries for the United States as a whole, and by individual states. These preliminary data make it possible to analyze the growth that has taken place in these individual groups of industries and to measure their importance to the economy o f individual states. This article deals with manufacturing in the State o f Ohio. million in 1939, or an increase of 201 percent. Ohio accounted for 8.6 percent of the value added by all manufacturers in the United States in both 1939 and 1947. “Value added by manufacture” is defined by the Bureau of Census to mean the amount by which the value of shipments exceeds the cost of materials and supplies. Machinery, The most important industry group in Except the state as measured by value added, is Electrical nonelectrical machinery. Value added by this group in 1947 amounted to $1,256 million and accounted for nearly 20 percent of the value added by all industries in the state. This represented an increase of 258 percent over the $351 million value added in 1939. Moreover, the indus try also gained in relative importance over 1939 when it accounted for only 16.6 percent of the value added by Ohio manufacturers. The machinery (except electrical) classification covers a wide group of products. It includes engines and turbines, agricultural machinery and tractors, construction and mining machines, machine tools, metal working equipment and special industry ma chinery such as food, textile, and printing trades equipment. Also included are general industrial machinery such as pumps, compressors, blowers, con veyors, and stokers as well as office and store machines, and such consumer goods as refrigerators, sewing machines, and washing machines. In 1947, there were 1,865 establishments produc ing these various products, an increase of 94 percent over 1939. This represented the greatest rate of growth of any group of industries in Ohio and may be compared with the statewide increase of 29 per cent for all manufacturing establishments. Machinery producing establishments, except elec trical, employed on the average 186,500 production workers in 1947 or 18.8 percent of the state’s factory employment. The number of production workers in creased nearly 120 percent over 1939. The average annual wage paid these workers amounted to $2,951 whereas the average rate of pay for all production workers engaged in manufacturing was $2,759. The second ranking industry group in Ohio in 1947 is the primary metals group with a value-added total of $857 million. About one-half of this output was produced by basic steel works and rolling mills. The primary metals group slipped somewhat in importance in the state’s economy between 1939 and 1947. In the earlier census year, value added by manufacture was 15.7 percent of the state’s total, whereas by 1947 it had declined to 13.4 percent. In all probability, most Primary Metals Manufacturing Acth Page 6 Value Added by Manufacture (in millions) INDUSTRY GROUP No. of Production Workers No. of Establishments 1947 1939 1947 1939 1947 1939 Wages Prodt Wor (in mi! 19 1. 2. 3. 4. 5. Machinery (ex. elec.)............. Primary metal industries....... Fabricated metal prod............ Transportation equip.............. Electrical machinery............... $1,256.4 856.8 631.7 483.4 471.6 $ 351.1 332.0 192.6 125.2 116.8 1,865 605 1,431 247 302 961 416 886 152 193 186,500 156,700 102,300 78,000 77,600 84,900 109,300 60,400 34,200 29,800 $ 5f 6. 7. 8. 9. 10. Food and kindred prod.......... Rubber prod........................... Chemicals and allied prod. . . . Printing and pub. industries. . Stone, clay, and glass prod. . . 425.2 381.2 347.2 322.2 293.2 182.2 141.1 110.5 147.2 112.4 1,875 134 641 1,555 871 2,253 100 527 1,409 582 48,100 68,200 26,700 33,000 53,400 41,500 37,000 15,800 25,200 40,300 11 IS n d 13 11. 12. 13. 14. 15. Paper and allied prod............ Misc. manufactures................. Apparel and rel. prod............. Furniture and fixtures............ Petroleum and coal prod........ 199.1 136.8 129.4 128.3 96.6 61.1 43.4 52.4 29.5 30.4 228 619 494 333 124 197 425 389 253 104 27,300 28,700 27,500 22,300 9,100 19,100 15,400 25,400 11,500 6,200 j ( C £f: 16. 17. 18. 19. 20. Leather and leather prod....... Textile mill prod..................... Instruments and rel. prod. . . . Lumber and prod. (ex. furn.). Tobacco mfrs........................... 68.3 58.2 41.4 37.5 14.5 34.0 23.8 10.2 14.9 5.8 117 82 134 595 47 108 79 74 390 45 16,200 9.800 6,200 8,600 2,400 18,400 9,000 2,400 6,200 3,400 \ TOTALS........................................ $6,379.2 $2,116.4 12,299 9,543 988,500 595,500 41 21 23 20 $2,7: Value Added by Ohio Percent of STATE Total P R O DUCT Machinery (ex. elec.) .. Primary metal industries Fabricated metal prod. . /////, zzzz— Transportation equip. .. Electrical machinery ... / / / / / / / / / / // /7/ // /'///^^ / / / / / / / / ’ / / / / / / 7~A '// ////////, ' / / / / / / / / / / //vr77~^ ■////////////\ ’///// \ ZZZZE 3H Z 3 Food & kindred prod. .. Rubber prod................. Chemicals & allied prod. ’/ / / / / / / / / / / / A // / / / / / / / / / / / / / / 1 Printing & pub. industries Stone, d a y, & glass prod. Paper & allied prod......... Misc. m an u factu re s........ Apparel & rel. prod......... Furniture & fix tu re s........ m m * H 23 Petroleum & coal prod. .. Leather & leather prod. .. Textile mill prod.............. Instruments & rel. prod. .. Lumber & prod. (ex. furn.) Tobacco mfrs.................. Source: BA £ a i 0 2% 4% 6% 1947 Census of Manufactures.------- PERCENTAGE 8% OF 10% 12 % STATE 14% 16% 18% T O T A L ------ 20 % . . . five leading industries produced 58 percent of the value added in Ohio, in 1947 as compared http://fraser.stlouisfed.org/ with 53 percent in 1939. Only primary metals lost ground. Federal Reserve Bank of St. Louis Ohio — 1947 and 1939 Pa g e 7 Value Added by Manufacture Percentage Change in No. of Establishments 1939-47 Percent of U. S. Total Percent of Ohio Total 1947 1939 1947 1939 19.7% 13.4 9.9 7.6 7.4 16.6% 15.7 9.1 5.9 5.5 16.1% 14.8 12.8 8.2 12.1 17.2% 15.3 13.7 7.1 12.4 6.7 6.0 5.4 5.1 4.6 8.6 6.7 5.2 7.0 5.3 4.7 29.3 6.5 7.5 12.7 3.1 2.1 2.0 2.0 2.0 2.9 2.1 2.5 1.4 1.4 1.1 .9 .6 .6 .2 1.6 1.1 .5 .7 .3 100.0% 100.0% No. of Production Workers per Establishment Average Wage per Production Worker 1947 1947 1939 +94% +45 +62 +63 +56 100 259 71 316 257 88 263 68 225 154 $2,951 3,027 2,694 3,031 2,631 5.2 34.8 6.1 8.3 13.1 — 17 +34 +22 + 10 + 50 26 509 42 21 61 18 370 30 18 69 2,341 2,902 2,775 2,915 2,487 6.9 6.5 2.9 9.3 4.8 6.9 6.9 3.8 7.0 4.4 + 16 +46 +27 +32 + 19 120 46 56 67 73 97 36 65 45 60 2,711 2,286 2,051 2,556 3,132 4.6 1.1 3.8 1.5 2.3 5.8 1.3 3.1 2.0 1.7 + 9 + 4 +81 + 53 + 4 138 120 46 14 51 170 114 32 16 76 1,932 2,306 2,452 2,151 1,792 8.6% 8.6% +29% 80 62 $2,759 hirers — 1947 and 1939 Percent of UNITED STATES Total | I I PRODUCT I I i" r 1.. r." I 1I i I I i i 1 i I 32 / / / / / / / / / / ■/ / / / / / / / Rubber p ro d ..................... M a c h in ery (ex. e l e c . ) ___ TT-T-1 am \ // / / / / / / / / /i Prim ary m etal industries .. F ab ricate d metal prod. . . . Stone, clay, & g la ss prod. * E le ctrica l m a c h in e r y ....... Furniture & f ix t u r e s ......... Transp o rtatio n equip........ Printing & pub. industries fig / / / S7S~// . P ap er & allied p ro d .......... C h em icals & allied prod. .. M isc. m a n u fa c t u r e s ......... ■ ■ ■ I . Il l ’/////;/ / / / /\ Petroleum & co a l prod. .. Food & kindred p ro d ........ Leather & leather prod. .. T/V // /Z7\ Instrum ents & rel. prod. .. A p p a re l & rel. p ro d ......... T o b a cc o m frs.................... fir m ggzi Lum ber & prod. (ex. furn.) Textile mill p ro d ............... T O T A L -A L L 2L MFG. 0% 1 I I I 5% 1 1 I i I i 1 10% -------P E R C E N T A G E 15% OF 20% U. S . 25 % 30 % T O T A L ------ 35 % . . . with respect to each of six important industries, value added in Ohio ranged from 12 percent to http://fraser.stlouisfed.org/ nearly 30 percent of the national total, but in most cases the percentage was smaller than in 1939. Federal Reserve Bank of St. Louis Page 8 Monthly Business Review of this relative shrinkage of dollar value was due to the failure of ferrous metal product prices to rise as rapidly as the general price level in the early post war period. Value added thus increased only 158 percent over 1939 as compared with an all-industry rise of 201 percent. There were 605 primary metal establishments in Ohio in 1947, a gain of 45 percent over 1939. These establishments employed 156,700 production work ers, a gain of 43 percent over 1939, and paid $474 million in wages. The average annual wage of pri mary metal workers was $3,027 and was exceeded only by two other classes of manufacturing wage earners, namely, transportation equipment, and petro leum and coal products. Fabricated The third ranking industry group in Metals Ohio is fabricated metal products (as distinguished f r o m primary metals) which had a total value added by manufacture of $632 million, or 9.9 percent of all industry. The gain over the $193 million total in 1939 amounted to 228 percent. The general stimulus of urgent demand for all kinds of metal products during the war and postwar period favored the creation of new establishments so that in 1947 there were 1,431 establishments engaged in this business as compared with 886 in 1939, or an increase of 62 percent. Hiring of production workers increased at an even greater rate so that employment rose from 60,400 to 102,300 or an advance of 69 percent. Total wages paid production workers in 1947 amounted to $276 million or an average wage of $2,694 per annum. Transportation The transportation equipment inEquipment dustry group ranked fourth in 1947 with value added by manu facture amounting to $483 million. This represented a gain of 286 percent over the $ 125-million total in 1939 when auto, truck, bus, airplane, railway equipment and parts producers were operating at considerably less than capacity. This industry group also forged ahead in general rank by virtue of ac counting for 7.6 percent of the state’s total value added by manufacture as compared with only 5.9 percent in 1939. The transportation equipment industry was one of the few industries in the state to gain a larger share of the national market during the inter-census period. The proportion of total United States value added by the industry rose from 7.1 percent to 8.2 percent. From the point of view of the number of estab lishments, the transportation equipment industry is one of the smallest in Ohio, with only 247 plants. This, however, represented a far-above-average in crease of 63 percent over 1939. The individual size of establishments in 1947 was very large; each em October 1, 1949 ployed on the average, 316 production workers, and was exceeded only by rubber product plants that had an average enrollment of 509 workers. The average manufacturing establishment in Ohio employed only 80 production workers. This industry’s employment swelled from 34,200 in 1939 to 78,000 in 1947, an advance of 128 per cent. Production payrolls in the last census year totaled $236 million, or an individual annual average of $3,031, the second highest among major industries in Ohio. Electrical The electrical machinery i n d u s t r y Machinery ranked a close fifth in Ohio in the last census period with value added by man ufacture of $472 million, a gain of 304 percent over 1939. Of the major industry groups, this represented the largest rate of increase. The electrical machinery group produces such varied goods as wiring devices and supplies, carbon electrodes, generating and dis tributing apparatus, electric household ranges, auto motive electric equipment, light bulbs, radios, and batteries. This industry likewise substantially increased its proportion of the total of value added by manufac ture, rising from 5.5 percent in 1939 to 7.4 percent in 1947. Part of this is attributable to the 56 percent growth in the number of establishments since there were 302 in 1947 as compared with only 193 places in the earlier period. The industry also exhibited the greatest percentage gain in the state in the addition of production workers, an increase of 160 percent, as enrollment shot up from 29,800 in 1939 to 77,600 in 1947. T h e average establishment in the latter year employed 257 production workers as compared with 154 in the prewar period. Ranked according to the value added by manu facture, the next five leading industry groups in 1947 were food and kindred products, rubber products, chemical and allied products, printing and publish ing, and stone, clay and glass products. These groups contained 5,076 establishments or 41 percent of Ohio’s total whereas in 1939 there were 4,871 such places or 51 percent of the total. These 5,076 establishments in 1947 contributed about 28 percent of the value added as compared with 33 percent in 1939. Food Although food and kindred products Processing manufacturing establishments are more numerous (1,875) than any other in dustry group, they are, on the average, very small places of business. The typical establishment em ployed only 26 production workers and paid average annual wages of $2,341 in 1947. Sheer weight of numbers, however, enabled the industry to pile up an aggregate value added by manufacture figure of $425 million, to rank sixth in the State. October 1, 1949 Monthly Business Review Food manufacturing as an industry lost ground between 1939 and 1947. In the former year, it con tributed 8.6 percent to the state’s value-added total, whereas in the latter period this had dropped to 6.7 percent. Further, there was a net decline of 378 in the number of such establishments or 17 percent. This was the only industry in the state in which the num ber of establishments declined during the inter-census period. Employment rose nominally from 41,500 to 48,100, or 16 percent. In this period, food process ing plants, which usually work on narrow margins, undoubtedly found it difficult to compete for labor with higher wage-paying industries. Rubber Ohio’s rubber products industry, the center of which is located in Akron, was the sev enth ranking industry in terms of value added, but sixth in terms of the number of production workers employed. Value added in 1947 amounted to $381 million, a gain of 170 percent over the $141 million total of 1939. Employment of production workers rose from 37,000 in 1939 to 68,200 in 1947, or a gain of 84 percent, well above the average all-industry gain of 66 percent. The rubber industry declined somewhat in im portance between the two periods as value added dropped from 6.7 percent of the state’s total to 6.0 percent. It is entirely possible, however, that this reflects the special price situation that has prevailed for rubber products, particularly automotive casings in the postwar period. Selling prices were advanced only nominally in relation to all other prices so that value added was not greatly inflated by the price factor. Of the top ten industry groups in Ohio, the rub ber products group with only 134 establishments had the smallest number. These 134 places, however, averaged 509 production workers per unit, the largest number by far of any industry. The average was boosted by the 11 establishments devoted prin cipally to tire and tube production. This handful of plants averaged 3,552 production workers per unit, and accounted for 61 percent of the value added by Ohio’s entire rubber products industry. Minor Among the 13 remaining industry groups, Industries only three (chemicals, printing and pub lishing, and stone, clay and glass) ac counted for as much as 5 percent each of the value added by manufacture in the state, while five groups each accounted for 1 percent or less of the total. Two of this latter group, i. e., leather and leather products, and tobacco manufactures, reduced the number of production workers employed by 12 per cent and 29 percent, respectively, and the number of establishments remained virtually the same. Several of the smaller manufacturing industries Page 9 forged ahead rapidly in the inter-census period. Furniture and fixtures, for example, increased value added from less than $30 million in 1939 to $128 million in 1947 while the number of production workers advanced 94 percent to 22,300. The national importance of these producers also gained, as Ohio manufacturers’ proportion of value added by all United States furniture establishments rose from 7 percent in 1939 to 9.3 percent in the latest census year. The small but highly important instrument prod ucts group also showed remarkable growth. Value added by manufacture shot up from $10 million to $41 million in the eight-year period while employment expanded from 2,400 production workers to 6,200. National Importance Although Ohio manufacturers of Ohio Industry as a whole turned out 8.6 per cent of the value added by manufacture by all producers in the United States in 1947, only six industry groups in the state turned out as much as this average. A seventh industry, furniture and fixtures, fell just short of the average. The bar chart shows Ohio industry groups ranked in descending order according to the percent of total United States value added by manufacture. The shaded bars represent 1947, while the 1939 percent ages are indicated with solid bars. From the point of view of national importance, the six leading industries in the state are rubber, machinery (except electrical), primary metals, fab ricated metal products, stone-clay-glass products, and electrical machinery. Without exception, however, each of these industries failed to contribute as great a share to value added by manufacture in 1947 as it did in 1939. The sharpest drop occurred in rubber manufac turing. This industry’s share of national value added by manufacture dropped from 34.8 percent in 1939 to 29.3 percent in 1947. Most of this decline is undoubtedly explained by the tremendous wartime expansion of rubber manufacturing facilities in areas outside of Ohio. Most of these new plants were financed by the Government and many of them have since been sold to industrial concerns. Among the other major industries, the loss in the proportion of national value added was less than one percentage point in all cases except machinery where it was 1.1 percent. This stability is rather noteworthy in the face of the westward shift of population and the increase in western and southern industrialization. As shown by the chart, six Ohio industries in creased somewhat their share of value added by manufacture. These were: furniture and fixtures, transportation equipment, c h e m i c a l s and allied products, petroleum and coal products, instruments, and tobacco products. Page 10 Monthly Business Review October 1, 1949 DEPARTMENT STORE TRADE STATISTICS Sales by Departments— August 1949 Department Store Inventories— August 31, 1949 Percentage Changes from a Y e a r A g o (F ourth D istrict R eporting Stores) (C om p iled Septem ber 23, and released for publication Septem ber 26) R a d ios, Phonographs and T e le v is io n ............................................................................ .+ 3 3 B ook s and S ta tion ery ............................................................................................................+ 1 1 T o y s and G a m e s ................................................................................................................... ..+ 7 G ift S h o p ................................................................................................................................. ..+ 6 G irls’ W e a r .............................................................................................................................. ..+ 3 Percentage Changes from a Y ea r A g o (Fourth D is trict R eporting Stores) (C om piled Septem ber 29, and released for publication Septem ber 30) C ostum e J e w e lr y .................................................................................................................. China and G lassw are.......................................................................................................... G ift S h o p ................................................................................................................................. Shoes (W om en’s and C h ildren’s ) .................................................................................... C o a ts and Suits (W om en 's and M isses’ ) ....................................................................... Shoes (W om en 's and C h ildren’s ) .................................................................................... + 3 M illin e r y ................................................................................................................................. + 3 T oilet A rticles and D rug Sundries................................................................................. + 2 D raperies, Curtains, e t c ...................................................................................................... + 1 Aprons, H ousedresses and U n iform s.............................................................................. —0— Luggage.................................................................................................................................... — 1 Silverw are and C lo c k s ........................................................................................................ — 2 B o o k s and S ta tio n e ry .......................................................................................................... — 2 A r t N eed lew ork ..................................................................................................................... — 4 N o tio n s ..................................................................................................................................... — 4 Corsets and Brassieres........................................................................................................ —0— H an dkerch iefs........................................................................................................................ — 2 D om estics, M uslins and Sheetings.................................................................................. — 2 A rt N eed lew ork .................................................................................................................... — 2 N o tio n s ..................................................................................................................................... — 2 S hoes (M en 's and B o y s ') .................................................................................................... — 4 T o ile t A rticles and D rug Sundries.................................................................................. — 4 Fine Jew elry and W a t c h e s ................................................................................................. — 4 M en ’s C lo th in g ....................................................................................................................... — 7 H andbags and Sm all L eath er G o o d s ............................................................................ — 8 N eck w ear and S ca rfs........................................................................................................... Blouses, Skirts and Sportsw ear....................................................................................... Infants’ W e a r.......................................................................................................................... C ostum e J e w e lr y ................................................................................................................... M en ’ s Furnishings and H a ts ............................................................................................. Corsets and Brassieres........................................................................................................ R a d ios, Phonographs and T e le v isio n ............................................................................ Laces and T rim m in gs.......................................................................................................... Juniors’ C oats, Suits and D resses.................................................................................... B o y s 'W e a r .............................................................................................................................. — — — — — 3 3 3 4 4 + + + + + 7 5 4 4 4 — 8 — 9 — 9 — 9 — 10 H andbags and Sm all L eath er G o o d s ............................................................................ — 4 Linens and T o w e ls................................................................................................................ — 4 Shoes (M en’ s and B o y s ’ ) .................................................................................................... — 5 H ou sew ares............................................................................................................................. — 6 China and G lassw are........................................................................................................... — 6 Silks, V elv ets and S y n th etics.......................................................................................... — 10 T o y s and G a m e s................................................................................................................... — 10 Sporting G ood s and C a m era s........................................................................................... — 10 G irls’ W e a r.............................................................................................................................. — 11 W oolen Dress G o o d s ............................................................................................................ — 11 B o y s ’ W e a r .............................................................................................................................. — 6 Luggage.................................................................................................................................... — 6 U nderw ear, Slips and N egligees.......... _........................................................................... — 7 Inexpensive D resses (W om en ’ s and M isses’ ) ...............................................................— 7 G lov es (W om en ’ s and C h ildren ’s ) .................................................................................. — 7 Lam ps and S h a d es............................................................................................................... — 12 Fu rs........... ................................................................................................................................ — 12 Blouses, Skirts and Sportsw ear........................................................................................ — 13 C a n d y ....................................................................................................................................... — 13 D raperies, Curtains, e t c ...................................................................................................... — 13 B lankets and C o m fo r te rs ................................................................................................... Sporting G o o d s and C a m era s........................................................................................... Furniture and B e d d in g ........................................................................................................ Lam ps and S h a d es ............................................................................................................... H o s ie r y ..................................................................................................................................... — 8 — 8 — 8 — 9 — 11 B etter Dresses (W om en’ s and M isses’ ) ......................................................................... — 14 M en 's Furnishings and H a ts ..............................................................................................— 14 M illin e ry .................................................................................................................................. — 14 G lo v e s (W om en’s and C h ildren’ s ) .................................................................................. — 15 N eck w ear and S carfs........................................................................................................... — 16 C a n d y ........................................................................................................................................— 12 Silverw are and C lo c k s ........................................................................................................ — 13 Fine Jew elry and W a t c h e s ................................................................................................. — 13 B etter D resses (W om en ’ s and M isses’ ) ......................................................................... — 14 M en ’s C lo th in g ...................................................................................................................... — 17 H ousew ares............................................................................................................................. — 16 Linens and T o w e ls ................................................................................................................ — 16 Furniture and B e d d in g ........................................................................................................ — 17 H an dkerch iefs........................................................................................................................ — 17 In fa n ts'W e a r........................................................................................................................... — 17 C otton W a sh G o o d s . ........................................................................................................... D om es tic F loor C ov erin g s. .............................................................................................. Silks, V elv ets and S y n th e tics .......................................................................................... W oolen D ress G o o d s ............................................................................................................ R e cord s, Sheet M usic and P ia n os................................................................................... U nderw ear, Slips and N egligees...................................................................................... — 18 Inexpensive D resses (W om en ’s and M isses’ ) ............................................................... — 19 Aprons, H ousedresses and U n iform s.............................................................................. — 19 B lankets and C o m fo rte rs ................................................................................................... — 19 C otton W ash G o o d s ............................................................................................................. — 19 — 18 — 20 — 21 — 21 — 23 Laces and T rim m in g s.......................................................................................................... — 23 Juniors’ C oa ts, Suits and D re sse s................................................................................... — 24 C oa ts and Suits (W om en 's and M isses’ ) .......................................................................— 28 M a jor H ou seh old A ppliances............................................................................................ — 31 F u rs............................................................................................................................................ — 35 GRO U P TOTALS Sm all W a re s............................................................................................................................ — 1 B A S E M E N T S T O R E T O T A L . .................................................................................. — 5 M iscellaneous M erch andise D ep t’s ..................................................................... ............— 7 M en ’s and B o y s ’ W e a r ......................................................................................................... — 9 G R A N D T O T A L (reporting s to r e s)............................................................................ — 9 P iece G o o d s and H ou seh old T ex tiles............................................................................ — 9 M A I N S T O R E T O T A L ........ .......................................................................................... — 10 W om en ’ s Apparel and A cces s o rie s .................................................................................. — 11 Housefurnishings................................................................................................................... — 11 Sales b y F ou rth D istr ic t departm ent stores during August m a d e less than sea sonal gains from Ju ly, w ith m o s t departm ents at substantially low er levels than a year ago in spite o f th e pickup to w a rd s th e end o f the m onth. Since August had one m ore trading d a y than la st y e a r’ s m o n th , th e percentage declines in dollar sales from last year fail t o re fle ct fully th e low er level 9f average d a ily sales. A m on g th e few departm ents w h ich sh ow ed a m ark ed im provem en t in sales were several in th e housefurnishings group. Sales o f radios, phonographs and television, for exam ple, scored large gains for th e second successive m on th . Sales o f th is d e partm ent w ere up 33% from a year ago (w ithout adjustm ent for trading d a y s) and w ere nearly tw ice as h igh as in June o f th is y ear. Sales of furniture and bedding, and of domestic floor coverings responded w ell t o th e usual August clearances and m ade m ore than seasonal gains from July, although th e y w ere 8% and 20% respec tiv e ly below a year ago. R ep o rts on major household appliances, how ever, w ere less favorable. August sales of appliances w ere practically unchanged from J uly in th e face of th e usual August pickup, and w ere 31% below th e record h igh o f a y ear ago. Sales b y th e w om en 's apparel and accessories group were up seasonally from July, bu t averaged 11% below last y ear’s level. Accessories fared b etter than th e apparel lines. Sales of w om en 's and ch ildren ’ s shoes and of millinery sh ow ed m ore than seasonal gains from J u ly , and in each case w ere up 3 % from a year ag o. A m on g th e apparel departm ents w om en ’ s and m isses’ coats and suits posted greater than seasonal gains from th e previous m o n th , but due t o previous declines w ere 28f ( b elow year-ago levels. Sales of dresses declined seasonally from July and w ere 10°, below last year. E a ch of th e four departm ents in th e m en’s and b o y s ’ w ear group posted a fouryear low for th e m on th , and sales of th e group as a w h ole w ere 9 % below a year ago. Boys’ wear w as th e only departm ent in th e group w here July sales levels were m aintained, but even in th a t instance sales w ere dow n 6% from a year ago. T h e m ost favorable year-to-year show ing am ong the m ajor departm ental groups was reported b y small wares, w here sales w ere only 1% b elow a year ago. T h e latter included books and stationery, up 11%, and toilet articles and drug sundries, up 2% from a year ago. A t th e opposite extrem e, sales b y th e piece gcods depart m ents were 20% below last year. A ll com parisons refer t o dolla r v olum e w ith ou t adjustm ent for price changes. R e co rd s, Sheet M usic and P ia n o s................................................................................... D o m e s tic F lo o r C o v e rin gs................................................................................................ D om estics, M uslins, Sheetings......................................................................................... H o s ie r y .................................................................................................................................... M a jo r H ou seh old A ppliances............................................................................................ — 21 — 21 — 26 — 26 — 30 G RO U P TOTALS Sm all W a re s......................_..................................................................................................... — 3 M iscellaneous M erchandise D e p t’ s .................................................................................. — 9 B A S E M E N T S T O R E T O T A L S .................................................................................. — 9 W o m e n ’s Apparel and A cce sso rie s................................................................................... — 10 M en ’s and B o y s ’ W e a r ......................................................................................................... — 10 M A I N S T O R E T O T A L .................................................................................................. - 1 1 G R A N D T O T A L (reporting s t o r e s )........................................................................... — 11 H ousefurnishings................................................................................................................... — 16 Piece G o o d s and H ou seh old T e x tile s............................................................................ — 16 T h e decline in inventories reported b y F ou rth D istrict departm ent stores for a num ber of m on th s previously w as ste m m e d during August, as s to ck s rose a t th e norm al seasonal rate. A t th e close o f th e m o n th , how ever, s to ck s averaged 11% b e lo w a year ago. M en’ s w ear and w om en ’s wear shared in th e in ven tory increases during th e m on th , w hile sto ck s of housefurnishings declined for th e fourth succes siv e m on th . S to ck s in all departm ents o f th e w om en ’s w ear group increased during August, although at m o n th end th e y averaged 10% b elow a year ago. M a rk ed increases occurred in sto ck s o f w om en ’ s and m isses’ coats and suits and o f w om en ’s and ch ildren ’s shoes, each o f w h ich w ere 4% a b o v e a year ago at th e end o f August. B o th of these departm ents reported favorable sales during th e m o n th . S tock s of dresses and of hosiery, how ev er, rose m oderately and clo se d t h e m o n th a t levels 16% and 26% respectiv ely be lo w a year ago. A ll four departm ents in th e m en ’s and b o y s ’ w ear group reported in ven tory rises during th e m on th , along w ith rather slow sales. A t th e end of th e m o n th , h ow ever, stock s in th is group w ere be lo w year-ago levels b y percentages ranging from 4% in th e case of men’ s and boys’ shoes t o 14% for m en’ s furnishings and hats. S tock s in th e latter departm ent w ere a t a four-year lo w for th e m on th . A m ong th e housefurnishings departm ents s to ck s o f major household appliances declined for th e fifth consecutive m o n th and closed a t a level 30% b elow a year ago. Likew ise a ll o th er housefurnishings departm ents reported declines from th e previous m on th as w ell as from a year ago, w ith th e exception o f draperies and cur tains w here sto ck s w ere up s lig h tly from July, and china and glassware w here stock s were 5% a b o v e a year ago. A s in recent m on th s, s to ck s of sm all w ares sh ow ed th e sm allest year-to-year decline of any group. Included am ong th e la tte r w as costume jewelry w h ich posted a 7% rise in sto ck s from a year ago. A t th e oth er extrem e, s to ck s of piece goods and household textiles, dow n 16% from a year ago, sh ow ed th e largest year-to-year decline o f any group. A ll com parisons refer t o dolla r value o f in ven tory a t retail, w ith ou t adjustm ent for price changes. Page 11 Monthly Business Review October 1, 1949 FIN A N C IA L AND OTHER BU SIN ESS STATISTICS Time Deposits at 58 Banks in 12 Fourth District Cities Bank Debits*— August 1949 In 31 Fourth District Cities (C om p iled Septem ber 15, and released for publication Septem ber 16) (In thousands o f dollars) _ (C om piled Septem ber 14, and released for publication Septem ber 15) C it y and N um ber o f Banks A v era g e W e e k ly C hange During: A ug. J u ly A ug. 1949 1949 1948 T im e D eposits A ug. 31, 1949 Cleveland ( 4 )................ $ P ittsburgh (11)............. C incinnati (8 )................ A k ron (3 )........................ .. 891,265,000 459.788.000 182.130.000 102,827,000 T o le d o (4 )...................... Colum bus ( 3 )................ Y oungstow n (3 )............ D a y ton ( 3 ) ..................... 103,487,000 82.914.000 63.792.000 45.744.000 Canton (5 )...................... E rie (4 )............................ W heeling ( 5 ).................. Lexington ( 5 ) ................. 42.799.000 40.187.000 27.671.000 10.690.000 T O T A L — 12 C it ie s .. ..$2,053,294,000 -$ + + + 191 855.000 40.000 152.000 98.000 — $452,000 — 5,000 — 152,000 + 42,000 + $ 98,000 + 5,000 + 243,000 + 24,000 86,000 29.000 96.000 77.000 — 48,000 — 112,000 — 82,000 — 100,000 + 25,000 + 101,000 + 129,000 + 13,000 56.000 11.000 24,000 4,000 — + — — + + + — — $1,254,000 32,000 24,000 67,000 4,000 — $988,000 18,000 8,000 55,000 18,000 +$701,000 T im e deposits a t 58 Fou rth D is trict banks declined 0.3 percent during August, for th e fifth successive m on th of contraction. T h e shrinkage w as a t th e rate of 11,254,000 per w eek in th e fiv e w eek period, a slig h tly m ore rapid rate o f decline than in J uly, and in contrast to th e expansion of August last year. In spite o f the continued reductions, tim e deposits are m ore than 2 percent greater than a year ago, and only 0.6 percent below the all-tim e high record ed a t the end of M arch th is year. T h e contraction w as fairly general, w ith 36 banks reporting decreases during t h e m onth. A t th e sam e tim e, m ost of th e banks record ed an increase o v e r th e yeara go level. Individual Cities O f th e tw elv e reporting centers, Pittsburgh, Toledo, Erie and Lexington were th e only cities in w h ich th e trend o f tim e deposits w as positive in relation t o August 1948, when nearly all cities registered increases o v er th e previous m onth. Gains during last m on th w ere sufficient in Erie and Toledo t o establish new all tim e highs in tota l tim e deposits. In Cleveland, Akron, and Youngstown, th e rate o f decline w as n o ticea bly greater than in any previous m on th of contraction this year, w hile in C olum bus, Dayton and Wheeling, th e w eek ly shrinkage w as considerably sm aller than in July. Changes in Consumer Instalment Credit August 1949 25 F ou rth D istrict M e m b e r Banks (C om p iled Septem ber 27, and released for publication Septem ber 28) N ew Loans M a d e C om pa red W ith M o. Ago Y r. Ago + 9.0% + 0.9 + 41.3 + 1 7 .0 % — 7.7 + 33.1 + 5.2 + 3.7 +29.3 — 10.5 — 3.1 + 5.2 + 40.4 + 2 4 .4 T y p e o f C redit Outstanding at E n d o f M o . C om pared W ith M o. A go Y r. Ago T o ta l consum er instalm ent credit Personal instalm ent cash loans R epair and m odernization loans D irect retail instalm ent loans (a) A u to m o b ile (b ) O ther R eta il instalm ent paper purchased (a) A u to m o b ile (b ) O ther + 2 .2 % — 0.1 + 4 .4 + 2 0 .2 % + 2.7 + 21 .6 + 3 .5 — 2.1 +38.2 — 8.7 + 1 .5 + 2 .0 + 66.3 + 14.4 During August, an increase of o v e r 2 percent brought th e to ta l volum e o f con sumer instalm ent credit outstanding a t th e 25 reporting m em ber banks o f th is D is tr ic t t o a new peak, m ore than 20 percent a b o v e th e year-ago lev el. T h e volum e of new repair and m odernization cred its was th e largest on record , and lifted th e to ta l of these loans outstanding t o a new high a lm ost 22 percent greater than at th e end o f August last year. T h e continued h igh level of autom obile sales was reflected b y an increase of o v e r 3 percent from th e previous m on th in th e am ount o f these loans outstanding (b o th direct and paper purchased). T h e volum e of personal instalm ent loans, and direct loans used for th e purchase o f household appliances, furniture, and oth er nonautom otive products, w as sm aller than in th e com parable m on th last year, though it w as sligh tly in excess of th e July am ount. Outstanding loans t o consum ers for nonautom otive purchases were again th e only category in w h ich a year-to-year decline (8.7%) w as evident. T h e total volum e o f new loans m ade during th e m onth rose sharply, (9.0% ) a b o v e th e July level, bu t w as som ew h a t below th e record M a y figure. T h e rate of repaym ent o f existing loans also rose t o slig h tly o v e r 11}4 percent, equalling th e rate m aintained consistently during th e second quarter o f the year. N o . of R eporting Banks 5 5 16 10 7 4 6 4 6 51 August 1949 A L L 31 C E N T E R S ............ $6,545,869 10 L A R G E S T C E N T E R S ............ O h io $ 222,333 C a n ton .............. ............ O h io 96,860 828,081 1,686,212 572,116 211,809 309,321 139,842 Y o u n g s to w n ... 81,370 1,811,964 T O T A L ........ $5,959,908 21 O T H E R C E N T E R S : 9 C o v in gto n -N e w p o rt___ K y . $ 34,565 .............. K y . 49,981 6 3 16,597 37,154 3 43,633 2 17,445 5 36,266 4 2 M id d le t o w n .. . 30,469 17,712 3 P o rts m o u th . . . 3 44,339 21,571 4 S teu ben ville. . . 33,706 2 25,026 3 3 28,159 6,362 1 Fran klin............ 20,492 2 G reensburg___ ........ Penna. 9,098 4 13,031 3 17,278 4 O il C i t y ............ 23,565 5 59,512 ........ W . V a . 6 113 78 $ 585,961 T O T A L ........ % Change from Y ear A go - 5.0% 3 M onths % Change E n ded from August, 1949 Y ea r A g o $20,486,936 - + 2.1% — 13.9 — 1.7 — 5.2 + 4.3 — 1.9 — 12.3 — 8.2 — 10.8 — 6.6 $ — 4.3% — 16.3 — 8.3 — 5.0 — 1.6 — 8.0 — 7.5 — 12.3 — 11.1 + 3.0 - 4.7% 668,737 296,213 2,472,154 5,295,649 1,676,544 637,565 1,009,839 428,751 247,940 5,961,181 3.9% $18,694,573 - - 8.3% — 16.7 — 17.2 — 7.9 — 0.8 — 9.9 — 12.7 — 7.2 — 15.4 — 0.6 — 7.7 — 8.4 — 5.5 — 13.4 — 1.8 — 5.4 — 19.9 + 8.5 — 8.1 — 16.6 — 0.6 $ — 7.2% — 10.3 — 17.9 — 6.7 — 6.3 — 11.5 — 9.3 — 9.4 — 14.3 — 2.8 — 13.1 — 8.7 — 9.8 — 14.6 — 9.2 — 7.7 — 14.5 — 4.7 — 11.6 — 8.4 — 1.1 - $ 1,792,363 8.3% 114,163 157,301 50,494 111,494 128,493 51,990 110,270 89,919 56,321 135,205 64,235 104,667 74,600 83,282 19,420 62,266 29,270 35,992 54,436 77,920 180,625 - 3.5% 8.5% ♦ D ebits t o all deposit accounts except interbank balances. D e b its t o deposit accounts (oth er than interbank accounts) in 31 F ou rth D istrict cities declined during August t o $6,546,000,000, recording th e low est volum e since F e b ru a ry , when there w ere th ree fewer banking d a y s, and 5 % less than in August last y ear. T h is w as th e th ird successive m on th th a t d e b its failed t o equal th e year-ago level. W h ile th e shrinkage w as qu ite general it continued t o be m ore m ark ed in th e 21 sm aller centers, w h ich registered th e fifth consecutive year-toyear decline w ith a drop o f o v e r 8% . In th e ten largest centers th e v olum e of m oney transfers w as below th e com parable 1948 figure for th e second straigh t m on th , and w as nearly 5% less than in August last year. D eposits at th e sam e reporting banks, how ev er, increased t o a le v e l alm ost equalling th e postwar high establish ed last D e ce m b e r, and slig h tly in excess o f th e year-ago figure. A s a result, th e rate o f turnover o f deposits w as slow er than in August last y ear, and than in June and July th is year. TEN LA RG EST CEN TERS Y ea r-to-yea r declines ranged from 2% in Cincinnati and Dayton t o 14% in Canton. Erie and T oled o, dow n 11% and 12% respectiv ely h a ve failed t o re co rd in any m o n th th is year an increase o v e r th e com parable m on th o f 1948. T h e 4% gain registered at C olum bus is due alm ost entirely to a high volu m e o f transfers in public accounts, rather than in th o se o f individuals. T W E N T Y -O N E SM ALLER C EN TE R S A ll but one o f th e sm aller centers reported sm aller d e b it to ta ls than in August last year. W h ile Kittanning and Elyria record ed declines o f 20% and 17% respective ly , th e y ear-to-year contraction a t m o s t of th e centers w as less than 10%. Lima, Springfield, and Wheeling registered declines o f less than 1% . Indexes of Department Store Sales and Stocks D a ily A v era ge for 1935-1939 = 100 A d ju sted for W ith o u t Seasonal V ariation Seasonal A djustm ent A ug. Aug. Aug. July July A ug. 1949 1949 1948 1949 1949 1948 SALES: A k ron (6 )....................... Canton (5 )..................... Cincinnati (8 )............... C leveland (10).............. Colum bus (5 )................ ............ 281 .............. 305 ............ 298 ............ 248 ............ 327 P ittsburgh (8 ).............. ............ Springfield (3 ).............. ............ T o le d o (6 )...................... ............ W heeling (6 ).................. ............ Youngstow n (3 )............ ............ D istrict (96).................. ............ STOCKS: ............ 259 282 279 223 297 269 294 333 299 247 331 302 253 283 280 229 295 274 318 380 337 279 372r 338 303 303 305 266 343 308 239 268 248 218 274 242 220 234 235 179 258 234 247 280 230 200 265 236 182 229 215 174 224 214 270 335 280 245 313 280 258 251 256 212 298 268 229 228 261r 242 228 275 r— R e v is e d . B a ck figures: R e v is e d index series for period from January 1946 through M a y 1949 are show n on page 7 o f th e August 1949 issue, (F ebruary 1949 index for T o le d o , as show n in th a t issue, should be corrected t o read 273 instead of 263.) Page 12 October 1, 1949 Monthly Business Review (Continued from Page 4) rather more than half of the time deposits of all member banks in the District, the first evidence of a shrinkage emerged about a month later. The close relationship between the trends negatives any propo sition that some particular factor peculiar to either agriculture or industry is the major cause of the fall ing off from the peak levels recorded a few months ago. During August the rate of decline at the 58 reporting banks was higher than in any of the pre vious four months of contraction. ANNUAL TURNOVER RATE OF ADJUSTED DEMAND DEPOSITS (Weekly Reporting Member Banks—Fourth District) ANNUAL RA TE A N N U A L RATE 1 i9w ? e> LY t *\— it TH LY^ A -a v l Ah ! 1948 — \A f i n ^ ^1947 k ... 1946 fV Government Since late July, Government deposits Deposits have jumped sharply by almost $160 million at reporting banks in this District, and at the end of September recorded a new high since late 1946. The primary cause of this expansion has been corporate purchases of tax-savings notes. Such purchases throughout the country totaled $2 billion during July and August, largely as a by-product of the recent change in credit policy. In view of the current rate on bills of approximately 1.00 percent to 1.05 percent, these savings notes with their fixed yield were an attractive investment for additional corporate funds. Possibly because the recent decision of the Treasury to include accrued interest in the price of these notes has reduced their attractiveness somewhat, and possibly because of the sheer magnitude of the conversion movement in July and August, the rate of sale has slowed down some what recently. Decline in While that part of the money supply in Rate of the form of demand deposits has been Deposit growing slightly in recent months, the Turnover volume of debits to these accounts has shrunk noticeably. In June debits to all accounts (except interbank) at 192 banks in this District were less than in the corresponding month a year ago for the first time in the postwar period. The decline then was only nominal, but in July, a year-to-year reduction of over 6 percent was appar ent, and in August a shrinkage of over 5 percent from the year-ago level was recorded. The fall in debit volume has been general throughout the Fourth District, and not confined to any particular locality or group of localities, although certain centers have displayed considerable resistance to the general trend. In the main the reduction in drawings on deposit accounts have been more marked in the smaller cities and towns than in the large metropolitan districts. As a result of the expansion of deposits and decline in debits, the velocity of circulation of the money supply as measured by the turnover of demand de posits at weekly reporting banks in the District has slowed down considerably in the past few months, falling from an annual rate of 20.8 in March to 17.5 in August. The moderate rise to a rate of 17.9 in J F M A M J J A S O K I D 0 . . . the rate of turnover of demand deposits has been falling further behind the year-ago levels during the last three months, and in August was only nominally higher than in August 1947. September, however, was insufficient to prevent the September rate from falling nominally below the corresponding 1947 figure. This movement is in com plete accord with the trend of deposit turnover at reporting banks in leading cities throughout the country (excluding New York). Below-year-ago levels were first recorded in May, and as in the Fourth District, the gap has become progressively wider. At New York city banks, however, turnover of checking account balances in August (latest avail able date) was still running well ahead of com parable 1948 levels due in part to increasing activity in the money market. On a seasonally adjusted basis, the rate of turn over of checking account balances at reporting Fourth District banks has been slipping for seven consecutive months, from a rate of 20.8 in January to 18.0 in August, a decline of over 13 percent. This decelera tion is somewhat less severe than that which occurred during the first seven months of well defined decline in the 1937-38 recession, when the rate of demand deposit turnover skidded from 22.6 to 18.7, a drop of more than 17 percent. This was followed by a further drop for seven months with only one break, though the subsequent decline was at a considerably slower rate. The two movements, however, differ in several respects. The sharp downturn in deposit turnover in 1937 did not come until the peak rate of turnover had been passed and a gentle easing off and appar ent stabilization had progressed for five months. Moreover, the rise in the years immediately preceding was moderate in character, whereas in 1948 the rate of turnover was still increasing at a relatively rapid pace, and there was no period of leveling off from the peak. The postwar record was immediately fol lowed by six successive months of decline.
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