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M
Busin
Covering financial, industrial
and agricu ltu ra l cond itions
Fourth Federal Reserve District
Federal Reserve Bank of Cleveland
Cleveland Ohio, September 30, 1944
V o l. 26
FINANCIAL
Demand Deposit A bank investment policy that is soundChanges
ly conceived involves a careful analysis
of the sources of available funds and
an estimate of the probable trend of demand deposits by
classes of owners. It is necessary for each individual
bank to weigh carefully the probabilities that (1) a fur
ther increase in demand liabilities may take place, (2)
a period of deposit shrinkage might set in, or (3) the
gross volume of deposits will stabilize near present levels.
These probabilities develop in response to economic
influences which are susceptible to some degree of an
alysis. The deposit ownership survey as of July 31, 1944,
in which the demand deposit structure of a carefully
selected group of fourth district banks was studied, pro
vides background material for such analysis.
This latest of a series of surveys reaffirms the principle
that the problem varies considerably in terms of size of
banks.
In the case of banks with demand deposits in excess
of $100,000,000— the largest banks in the district— the
problem of formulating an effective investment policy is
largely a matter of anticipating future trends in bank
balances maintained by manufacturing and mining en
terprises. A ten percent miscalculation with respect to
such funds might involve a larger sum and, therefore,
have a greater effect upon future cash reserves than a
100 percent error of judgment in nearly every other type
of account.
Manufacturing and mining accounts are likewise the
dominant factor in the deposit structure of banks in the
next smaller size group. The dollar volume of all ac
counts below $10,000 is also of rather significant pro
portions. In estimating the future volume of funds avail
able for investment, institutions in this category must
give principal consideration to these two types of de
posit accounts which, in combination, constitute nearly
two-thirds of total demand deposits.
Banks with demand deposits of under $10,000,000
may devote much less attention to manufacturing and min
ing balances. Whether such banks are to experience a
future increase— or decrease— in available funds will de
No. 9
pend largely upon the probable behavior of deposit ac
counts carried by retailers and wholesalers and by indi
viduals. The proportion of personal accounts above
$3,000 (35.6 percent) in the smallest banks seems especially
noteworthy.
Thus, a substantial transfer of funds from retail and
wholesale and from personal accounts, in response to post
war economic developments, into manufacturing balances
would tend to reduce the volume of funds in possession
of smaller banks and increase the aggregate of funds
available for investment or loans at the larger banks. Con
versely, if the flow should be in the opposite direction,
total demand deposits of larger city banks might decline,
relatively speaking, while the smaller banks’ problem of
putting idle funds to work might become intensified.
In evolving a sound investment policy, it is necessary
to estimate not only the probable future trend of de
posits in general, but also the potential shifts among the
various classes of deposits which might accompany any
assumed economic development such as a substantial in
crease in the production and sale of civilian goods. Even
under conditions of relative stability in the nation-wide
COMPOSITION OF DEMAND DEPOSITS
Fourth District
July 31, 1944
S elected banks having d e m a n d deposits of
individuals, p a rtn e rsh ip s, a n d c o rp o ra tio n s of—
(in millions)
Over
$ 1 0 to
$ 1 to
$100
$100
$10
100 %
22.4 %
38.7%
V//',
Manufacturing and Mining 52.6%
7.1%
17.4%
9.0%
8.5%
Financia
Personal
Public Utilities
Retail and Wholesale
All Other Nonflnancial
Nonprofit Organizations
A11 Unclassified Accounts
5.4%
8.8%
, . . < * 1 UNDER 1
1=s^liiaoool
y/
V/
2.9% MBiBiHig
13.1%
4.5%
□
2
THE MONTHLY BUSINESS REVIEW
deposit total, individual banks might experience substan
tial deposit fluctuations if their depositors consisted pre
dominantly of manufacturers, of individuals, or of some
other specific type of ownership.
The nature, volume, and direction of the shifts in the
recent past are reflected, in part, in the accompanying
table covering the year ended July 31, 1944. (Comparable
data for banks under $1,000,000 are not available.)
The year covered by this analysis was one of com
paratively small, but fairly general, increases in deposits.
Although each of the three size groups shows a net gain,
the causative factors vary greatly.
For example, with respect to the largest banks, the
$37,774,000 increase in demand deposits is due chiefly
to a continued inflow of funds from large mining and
manufacturing depositors. If, at some future time, manu
facturing and mining balances are drawn upon for cor
porate purposes, these large banks might show a net
decline in deposits, for their accounts are predominantly
of this type.
The next smaller class of banks shows a gain (2.1 per
cent) in total demand deposits almost identical with the
largest banks. In this instance, the gain can be credited
almost entirely to the unclassified miscellaneous accounts
with balances under $10,000 each. It should be noted
that a one percent increase in manufacturing accounts
involves nearly five times as many dollars as a one per
cent increase in personal balances. In the future, any
given percentage change will be more significant with
respect to cash reserves if it takes place in manufacturing
deposits than in any other type of account.
Banks in the $1,000,000-$10,000,000 demand deposit
range are exposed to a still different set of influences.
The 52 banks for which comparable data were available
had a considerably larger percentage increase (7.8 per
cent) in total demand deposits than did the larger banks.
This $16,414,000 inflow of funds was caused in large part
by the growth of personal balances, both above and be
low $3,000. Should individuals and small businesses
continue to accumulate funds, with or without converse
effect upon manufacturing balances, banks of this size
would almost inevitably acquire additional funds for in
vestment. On the other hand, a movement in the op
posite direction might reduce the volume of cash reserves
of country banks to considerably lower levels.
In summary, this analysis of deposit structure and re
cent deposit trends of fourth district banks seems to in
dicate that:
1. A mere shift of ownership of existing deposits could
engender marked changes in the volume of investment
funds available to any specific bank or group of banks.
2. Future changes in the cash resources of mining and
manufacturing enterprises are of utmost significance to the
largest banks. Investment policy should give major con
sideration to the source of such funds and the probable
magnitude and direction of future changes.
3. Smaller sized banks, especially those with demand
deposits of less than $10,000,000, should devote their at
tention chiefly to the problem of projecting probable fu
ture changes in aggregate cash resources of individuals
and small business establishments. It is the trend of
those accounts that largely determines the volume of
funds available for loans and investment by banks in
this group.
Recent Banking
Developments
At the end of September, Government
deposits at reporting member banks in
leading cities of the fourth district had
been reduced by nearly 40 percent from the high
point reached at the time of the Fifth War Loan Drive.
The contraction in these deposits has been somewhat more
rapid in recent weeks than in July. However, since
other deposit accounts increased as funds have been
transferred through the Government’s hands from reservefree accounts to those subject to reserve requirements,
total deposits at fourth district banks were down less
than two percent from the peak of late July.
Demand deposits have expanded by eleven percent
since the war loan drive, but they are still slightly be
low the peak reached just prior to the bond campaign.
The trend of time deposits continues uninterruptedly up
ward, but the increase in recent weeks has been some
what larger than earlier in the year. Time deposits are
up 18 percent from last year at this time. The increase
in time deposits and the accelerated rise in currency out
standing, in part, may reflect a slowing down in the rate
of war bond purchases, while redemptions remain at
recent high levels. A continued outflow of currency has
been partly responsible for retarding the increase in de
mand deposits. Circulation of this bank’s Federal re
serve notes increased over $9,000,000 per week in the
four latest weeks, compared with a year-to-date increase
of $6,500,000.
Changes in Types of Demand Deposits— Year Ended July 31, 1944
('000 o m itte d )
F o u r th d is tr ic t se le c te d b a n k s h a v in g d e m a n d d e p o s its o f in d iv id u a ls , p a r t n e r s h ip s , a n d c o r p o r a tio n s o f—
D e c re a s e
In c re ase
M a n u f a c tu r in g & M i n in g ..................
R e t a il & W h o le sa le T r a d e ................
N o n p r o fit A s s o c ia t i o n s ..........................
P u b lic U t i l i t i e s ...........................................
A ll O th e r N o n f in a n c ia l........................
A ll F in a n c i a l................................................
P e r s o n a l, in c lu d in g F a r m e r s .............
A ll U n d e r 3 1 0 ,0 0 0 ...................................
A ll U n d e r 3 3 ,0 0 0 ...................................
3 4 6 ,4 6 9
S ,6 8 0
3 ,3 0 9
1 ,3 5 6
922
T o t a l D e m a n d D e p o s i t s .....................
3 3 7 ,7 7 4
3 1 0 ,0 0 0 ,0 0 0 to
3 1 0 0 ,0 0 0 ,0 0 0
(2 5 b a n k s )
O v er
$ 1 0 0 ,0 0 0 ,0 0 0
(8 b a n k s)
T y p e o f D e p o s it o r
S .4 %
6.3
13.5
1.3
1:9
3 5 ,3 0 3
6 ,0 9 1
8 ,5 6 8
XXXX XXXX
2 .3 %
In c re ase
3 3 ,5 4 8
4 ,6 9 4
D e c re a s e
3 .4 %
4 .8
3.1
714
2 3 .9 9 7
3 1 9 ,0 9 8
909
3 ,563
4 .3 %
6 .7
3 .6
1 0 ,3 5 2
0 .9
12 .0
XXXX XXXX
2 .1 %
In c re ase
3
1 .0 %
6.1
3
969
3 1 ,0 0 0 ,0 0 0 to
3 1 0 ,0 0 0 ,0 0 0
(5 2 b a n k s )
621
1 ,1 9 6
D ecrease
1 .2 %
4.1
%438
1 ,025
1,8 8 2
11.2
7 ,0 6 8
5 ,1 3 0
3 1 6 ,4 1 4
7 .2 %
18.2
2 1 .6
70
22.1
XXXX XXXX
8 .2
7 .8 %
0 .4
THE MONTHLY BUSINESS REVIEW
The shift of funds out of reserve-exempt deposits into
accounts subject to reserve requirements and the con
tinued demand for currency absorbed a considerable quan
tity of excess reserves, the contraction at banks in this
district being about $60,000,000 since the end of the Fifth
Drive. To replenish their reserves, member banks have
resorted to discounting to a limited extent and to the
sale of Treasury bills under repurchase option in con
siderable volume in recent weeks. Bills discounted rose
from the nominal levels of recent years to $9,600,000 on
September 27. On that date, the quantity of optioned
bills held by the Cleveland bank was the largest since
late April. Member banks have shown little inclination
to sell other types of Treasury obligations; holdings of
certificates and bonds actually increased moderately to
new record-high levels during September. This apparent
preference for securities of greater than 90-day maturity,
and with better than .375 yield, has been evident for some
time.
Reflecting a liquidation of about 30 percent in loans
on Government securities to others than brokers and deal
ers negotiated dining the Fifth War Loan Drive, a slight
contraction in brokers’ loans on Governments, and a fur
ther contraction of “other loans” to new low levels, have
resulted in a $38,000,000 liquidation in total loans at
weekly reporting member banks since the end of the
Fifth War Loan Drive. While commercial loans have
shown little change in recent weeks, they are about five
percent below the level of last year at this time.
MANUFACTURING, MINING
Manufacturing employment in Ohio has paralleled
the national trend and recently has been running four per
cent below the same period of 1943. There was, how
ever, considerable variation in the employment picture
among leading district manufacturing centers. Cleve
land employment was down three percent in the first
six months of 1944 as compared with the same period of
1943. Comparable data for Pittsburgh and Cincinnati
reflected employment stability over the period, while
Akron and Dayton employment declined four percent.
Toledo employment for the first six months of 1944 was
eight percent above the 1943 comparable period, with
Youngstown and Columbus reporting fractional increases.
The reduction of total district manufacturing employ
ment does not indicate a current surplus of workmen,
but it does definitely emphasize that industrial employ
ment and production peaks have been passed. That
the manpower situation can change rapidly is implied in
the announcement of the War Manpower Commission that
many of its controls will be ended shortly after V-E Day.
The present period presents many contradictions in the
manpower picture, and the partial reconversion period,
in the face of continuing war with Japan, may tend to
accentuate them.
Although the reconversion period may be accompanied
by considerable unemployment, at least of a temporary
character, reports from fourth district business and finan
cial leaders indicate their belief that the number of per
sons presently employed should remain relatively con
stant, but that there will be a reduction in hours of
work. This is illustrated by the estimate that, at the end
of hostilities in Europe, coal production may drop 30 per
3
cent, but that employment should remain near present
levels on the basis of a return to the five-day week.
Steel
The iron and steel market continues to reflect prog
ress of the war as new orders fall behind shipments
and manufacturing companies examine their inventories
more closely. According to the American Iron and Steel
Institute, national production of steel ingots fluctuated
between 94 and 95 percent of capacity during August,
when production of 7,469,800 tons of steel was reported.
August production was slightly below that of the previ
ous month and also below that of August last year. How
ever, output so far this year totaled 60,005,971 tons, as
compared with 58,880,791 tons for the first eight months
of 1943.
Fourth district mills show considerable variation in
operating rates from week to week. However, through
the first three weeks of September, Pittsburgh and Youngs
town district mills have operated at approximately 90
percent capacity, while Cleveland, Cincinnati, and Wheel
ing mills have varied up to seven points higher.
The industry still has a heavy backlog of orders. In
the case of products booked to the end of the year, ci
vilian orders are being placed on file, but not scheduled.
In mid-September, the War Production Board an
nounced allocation of 100,000 tons of carbon steel and
25,000 tons of alloy steel to be used primarily in con
nection with the “spot order” reconversion program dur
ing the fourth quarter. In addition to this amount, 37,000 tons of carbon steel were allocated for manufacturers
in carrying out a number of “contingent” programs for
production of civilian goods. This tonnage will supple
ment the 220,000 tons of carbon steel already allocated
to civilian production in the fourth quarter. Plants will
be permitted to start production only if they have avail
able war-free facilities, manpower, and material. The
continuation of cutbacks will be a factor in determining
the extent to which the program will be carried out.
Several mills in the Youngstown district are reported
to be curtailing operations due to a shortage of coal. “In
ventories of coal are being used now and will have to
be replaced soon to assure fuel supplies during the win
ter.” Some blast furnaces are operating on a “slow” blast
due to the tight coal situation. These reports are dif
ficult to reconcile with releases from the Bureau of Mines
which show stocks of coal held by steel and rolling mills
on August 1 totaling 806,000 tons, an increase of 2.7 per
cent over stocks for the previous month. This is ap
proximately 32 days’ supply for the industry.
Shipments of ore on the Great Lakes amounted to
12,288,253 tons during August, a slight decrease from
the total shipped during the previous month. Cumula
tive shipments for the season are 54,574,155 tons. Con
sumption of ore during the month reached 7,341,964
tons. Stocks of ore at furnaces and on docks were 37,243,322 tons on September 1, a decline of over 1,000,000
tons from the same date last year.
Steel and iron scrap move slowly with some grades
selling below ceiling prices. Consumers evince little de
sire to add to inventory under present market conditions.
The present scrap situation is a fulfillment of the normal
expectancy wherein there is a shortage of scrap until peak
steel production is achieved and thereafter an increasingly
plentiful supply.
4
Coal
THE MONTHLY BUSINESS REVIEW
August production of bituminous coal totaled 54,delayed with the expectation that the deluge of Govern
200,000
net tons. Production in the fourth dis
ment-owned tools will force prices of new tools down.
trict for the same period amounted to 20,355,000 net
Paper manufacturers expect an enormous demand for
tons, an increase above the previous month of 1,622,civilian production when war orders are filled. Production
000 tons. This is an increase of 3.6 percent over pro
currently is restricted by lack of manpower and difficulty
duction for the same period last year.
in securing raw materials. Post-war advertising plus the
necessity of restocking civilian inventories of wrapping
Stocks of coal in the hands of consumers were reported
and packaging materials should maintain production at
at 61,429,000 net tons on August 1, an increase of 2.9
high levels.
percent over the previous month. One of the largest op
erators in the district estimates this inventory to be 25
TRADE
million tons above normal, and that “production is prob
ably slightly above consumption.” Consensus of operators
Retail The index of department store sales in the fourth
seems to be that the coal situation will remain tight un
district was revised recently to reflect the changes
til January and that there will be shortages of some grades,
in total department store business in the district from
but over-all adequate supplies.
1929 to 1939, as measured by Census data for these two
years, and to reflect changed buying habits since the
Considerable interest has been evidenced lately in the pro
war began. The first adjustment was considered desir
posed development of new coal fields in Harlan and Pike
able because most of the stores reporting to this bank
Counties, Kentucky. New rail facilities are being con
are located in the larger cities. Coverage in the smaller
structed now to open virgin fields of considerable size
cities is less complete, and the sales experience of these
from which production is expected by mid-1945.
units from 1929 to 1939 differed from that of the stores
located in larger localities. According to Census data,
Rubber
Further progress in the substitution of synthetic
sales in the latter declined over this ten-year period, while
for natural rubber is shown with a revision of
there was an increase in the smaller cities. Therefore,
regulations released late in August by the Office of Rub
in an attempt to make the index as representative of the
ber Director, now dissolved. The new orders, in general,
experience of all department stores in this district as pos
call for an increase in the percentage of synthetic com
sible, a correction was made.
bined with natural rubber in the manufacture of all medi
um-sized highway truck tires (changed from 70 to 90
Wartime conditions have changed somewhat the former
buying habits of many consumers. As a result, the sea
percent synthetic) and special purpose tires. All truck
and a large group of airplane tire inner tubes are now
sonal pattern of department store sales has been altered,
being made of synthetic. Restrictions on the use of Neo
and several changes were made in the factors used to
prene and Buna N have been removed, while the use
adjust the fourth district index for these variations. The
factors for January, March, August, October, and Novem
of crude is further curtailed in some applications.
Progress in the use of GR-S synthetic is matched by
ber were increased, while the importance of business done
recent changes in techniques employed in its production.
during May, June, September, and December declined.
Announcement has been made of two major improvements
The largest revisions were made in the November and
in production processes with a consequent increase in out
December factors as a result of the shift that has oc
put. Replacing the batch type method now in use, one
curred in Christmas shopping since the start of the war.
of the new processes involves continuous polymerization
The encouragement to shop early, growing out of a fear
or blending of butadiene, styrene, and other chemicals
of shortages, and the necessity of buying merchandise
in making GR-S synthetic rubber latex. Another im
for overseas shipment prompted many customers to pur
chase more in November, and even as early as October,
provement recently announced provides for suspension
than they had done previously. Nevertheless, December
of carbon black in the liquid latex. This eliminates
necessity for milling carbon black into the rubber after
continues to be the most important trading month of the
it has been rolled into sheets. Savings in milling time
year, followed by November. July sales are usually of
least importance.
amount to an approximate 35 percent.
The seasonal factors used to adjust the department store
Miscellaneous
New orders for machine tools have exManufacturing
ceeded shipments in that industry since
DEPARTMENT
STORE SALES
March. As a consequence, unfilled or
FOURTH D I S T R I C T
ders have risen steadily from $147 to $194 millions. The
industry reports that most of the new orders are for
special purpose tools and equipment. It will, how
ever, be interesting to observe the ultimate disposition
of this backlog in view of the estimated $2,000,000,000
plus of machine tools owned by the Government. The
Defense Plant Corporation has begun sale of this propertythrough district offices of the Reconstruction Finance Cor
poration. New orders for machine tools are screened by
the War Production Board against available equipment,
and sales of such surplus have been totaling approxi
mately $28,000,000 monthly. It is reported that orders
1937 ___________ 1939_______
1941 ____
1943
1945
for post-war tools, permitted since July 29, have been
THE MONTHLY BUSINESS REVIEW
sales indexes for each of the eleven cities in the district
for which separate indexes are prepared each month also
were revised for the years 1941, 1942, and 1943. Copies
of the revised indexes for each of these cities and the
district may be obtained from the Research Department,
Federal Reserve Bank of Cleveland.
As the chart shows, the trend of sales since 1938 has
been upward, and this tendency was accelerated during
recent years by the heavy purchases of many types of
goods on the part of consumers whose incomes were
greatly enlarged as a result of the war. During the first
eight months of this year, sales were up six percent from
January-August 1943 and were the largest for any similar
period on record. The all-time high in the seasonally ad
justed index was reached in July of this year, and, al
though daily average sales last month failed to show the
usual increase from July, the adjusted index for August
was still at a very high point. Total sales during Au
gust this year were the largest on record for that month
and were at a level 15 percent above the same month a
year ago. The year-to-year gains for the principal cities
of the district ranged from five percent in Erie to 23
percent in Cincinnati. Sales in Akron were up 10 per
cent, Cleveland 11 percent, Pittsburgh 16 percent, and
Toledo 18 percent. During the first half of September,
sales at all reporting stores in the fourth district were 15
percent larger than they were in the corresponding pe
riod of 1943.
Retailers made large additions to their inventories dur
ing August, and at month-end total stocks were up ten
percent from July 31. However, this increase was sea
sonal, and the adjusted index advanced only one point
to 165 percent of the 1935-39 average. This was two
percent higher than the index number for August 31,
1943.
Wholesale
Sales at 177 wholesale firms in this district dur
ing August were six percent larger than they
were in the same month of 1943, according to reports re
ceived from the Departm ent of Commerce. Sales of au
tomotive supplies were 22 percent larger, electrical goods
21 percent, clothing and furnishings 16 percent, and lum
ber and building materials 14 percent. Hardware and
beer sales were only slightly larger this August com
pared with last, while firms selling paints and varnishes,
furniture, and jewelry reported declines in their business.
Inventories carried by reporting wholesalers were reAGRI C U LT U R A L
TWO
WAR
PRODUCTION
P E R IO D S
duced four percent during August, but at the end of the
month were up eight percent from August 31, 1943.
AGRICULTURE
A Record
Agricultural
Production
From the point of view of production
achievement, the record of American agriculture during the war period has been noth
ing short of phenomenal. When the slow
ness of the physiological processes fundamental to agri
culture are considered, no other item in the total war
production of the last five years outshines the performance
of the Nation’s farms. This record has not only contrib
uted immeasurably to military victories, but it has also
assisted more than generally realized in the home front
battle against inflation. By producing the greatest vol
ume of farm commodities in history, the American farmer
has done much to prevent the scarcities upon which in
flation grows.
One of the most meaningful measures of farm produc
tion, especially as it applies to the war effort, is the index
of the physical volume of farm marketings. Using the
average of 1935-39 marketings as a base (100), the indexes
of the volume of marketings during the war years, begin
ning with 1939, have been 109, 112, 115, 128, and 135.
It now appears that this impressive series of increases
will have still another addition when complete 1944 data
become available, owing to the fact that the index for
the first six months of the year stands at 148.
Even when compared with advances in agricultural out
put during the first World War, the accomplishment of
the last half decade is impressive (see bar chart). Aver
age yearly production during the 1914-18 period was only
six percent more than the average of the previous five
years, whereas the mean production of 1939-43 was
twenty percent greater than the output of 1934-38.
What factors have been responsible for the amazing
farm production of World War II, and why has the in
crease been so much greater than during World War I?
Acreage expansion does not provide the answer be
cause, on a relative basis, both periods— at least in the
first four years— experienced about the same increase. It
appears likely that the solution to the question lies to
a large extent in the unusually favorable weather of re
cent years and in the increased farm efficiency since the
first war.
W^ith respect to production advances in crops alone,
the influence of the favorable weather of the last few
years can scarcely be overstressed. The following index
numbers of yields per acre indicate the importance of
the weather factor, although it should be kept in mind
that other factors such as improved varieties and better
cultural methods have also been instrumental in build
ing higher yields.
1914— 109
1915— 110
1916— 97
1917— 101
1918— 98
1914 1939
♦ ESTIMATE
1915 1940
•
1916
SOURCE: BUR OF AGR
1941
ECON
1917 1942
1916
1943
>919 1944*
5
(1923-32 = 100)
1939— 114
1940— 120
1941— 121
1942— 137
1943— 124
In a discussion of wartime farm production, the Re
view of Economic Statistics stated recently that, if yields
per acre for wheat, feed grains, and hay in 1942, in
stead of being above average as they were, had been equal
to the average of the five preceding years, the effect would
6
THE MONTHLY BUSINESS REVIEW
have been: “(1) A wheat crop only two-thirds the size
actually harvested. (2) A 19 percent smaller corn crop.
(3) A reduction of 4 million tons in the production of oats,
barley, and grain sorghums. (4) A reduction of about 10
percent in hay production. (5) A reduction in feed pro
duction from range and pastures of about 10 percent.”
Livestock production has been stimulated markedly by
the better growing conditions for the production of live
stock feed. In addition, World War II began with larger
stocks of grain, cotton, and tobacco than World War I.
The large stocks of cotton and tobacco have made it pos
sible to step up the acreage of peanuts and feed crops
in the South to augment the initial feed supplies for live
stock. As a result, the volume of livestock production
in 1943 was the greatest in history.
The improvement in agricultural efficiency of the last
three decades also has had much to do with the farm
record of World War II. Technological advances un
known in the days of World War I have provided farm
ers with means of taking full advantage of production
opportunities provided by favorable weather. Improve
ments in plant and animal breeding, the use of power
machinery, and the development of a more informed and
skilled farm population, all have contributed to building
an amazingly productive agriculture.
(A discussion of the economic difficulties and problems
arising out of the super production of American farms
will be carried in the next issue of the Monthly Business
Review.)
District
National crop prospects improved about two
Crop
percent during August as a result of abundant
Conditions rainfall during the second half of the month.
On September 1, crop production for 1944
seemed likely to be above that in any previous year ex
cept 1942. According to Bureau of Agricultural Eco
nomics, the indicated aggregate crop production for this
year is about 4 percent above last year’s production,
9 percent above any year prior to 1942, and 22 percent
above the 1923-32 “predrought” years. During the month
of August, fourth district prospects improved for com,
hay, and tobacco while estimates for oats and potatoes
fell.
National corn prospects for 1944 improved 172 million
bushels during the month of August, with the present fore
cast of 3.1 billion bushels, higher than any previous year
except 1942. This indicated production represents not
only a recovery of the decline in corn prospects from
July 1 to August 1, but is also an actual increase of four
percent over the July 1 forecast. The condition of the corn
crop in the Fourth Federal Reserve District is not, how
ever, as favorable as for the Nation as a whole. Although
the prospects improved during the last month when rains
broke the severe drought in the southern and central parts
of the district, they were still below the July 1 forecast
and 15 percent below last year’s production. Further
improvement is expected if frost holds off until the crop
can mature.
Fourth district wheat conditions improved throughout
the season and produced a crop second onlv to that of
1941. For the Nation as a whole, the 1944 wheat pro
duction is placed at 1.1 billion bushels— a new record.
This year’s volume of oats production is expected to be
greater than last year’s and greater than average for the
fourth district as well as the United States. Volumes
smaller than last year are estimated for both hay and po
tatoes. The aggregate tonnage of the eight major decidu
ous fruits is indicated at one-fifth greater than last yeai
and ten percent greater than the ten-year average. The
total tobacco crop for 1944 is expected to be the second
highest on record— second only to that of 1939. The
f ourth district crop promises to be the largest since 1940.
Ohio: Prospects for most late-maturing crops declined
in Ohio during August because of the hot, dry weather
during the first half of the month. However, good rains
in most parts of the State during the second half of the
month prevented further declines and even brought about
some improvement over mid-month conditions.
On September 1, the corn crop was estimated at 144
million bushels, a decline from the estimate of the begin
ning of the season, and 17 percent below last year’s pro
duction. Soybean production is placed at 21 million
bushels as compared with 28 million bushels last year,
partly a result of an estimated decrease of five bushels per
acre in the yield. More soybeans have been cut for hay
than was intended earlier this year, some of them being
cut green and dehydrated. The oats crop is placed at
about one-fourth above last year’s small production. Pro
ductions smaller than last year are forecast for barley,
potatoes, and hay. Fruit crop estimates are well above
last year’s small cropsKentucky: Current Kentucky prospects indicate that
the production of tobacco and the small grains will be
greater than either the 1943 crops or the ten-year av
erages. Tobacco in central Kentucky has made enormous
growth during the first part of September, and some ob
servers in that area feel that the yield will be far above
the average. However, crops of corn and potatoes are
likely to be abnormally low. Hay production apparently
will total more than average, but it will be sharply lower
than last year’s heavy output.
As of the second week of September, Kentucky tobacco
farmers were about two weeks behind in the housing of
the burley crop because of wet weather and the shortage
of help, and faced the possibility that part of the crop
would be lost unless additional help was received. The
wet curing season has made it necessary for some farmers
who had already cut their tobacco to heat their barns
artificially to prevent houseburn.
Many appeals were made to secure much needed labor
to cut and house the burley crop. Merchants, manufac
turers, bankers, school children, and jurors were among
those that have responded to the appeal during Septem
ber. The most recent means to provide extra labor to
aid in the harvesting of the burley crop was the plan
to receive about 1,500 prisoners of war at stockades set
up at Lexington, Frankfort, Maysville, and Eminence
during the third week of September. Regulations pro
vide that prisoners may not be worked more than nine
hours a day and must not be kept away from camp more
than twelve hours a day. Each man must have one workfree day each week, and they must be employed in units
of ten. Wages which must be paid by farmers employ
ing war prisoners in housing tobacco were determined by
the Central Kentucky Farm Wage Board at a meeting
in Lexington on September 18. The scale of wages for
prisoners was set at 40 and 45 cents an hour, and the
farmer must transport them to and from his farm.
THE MONTHLY BUSINESS REVIEW
Pennsylvania: Hot, dry weather during August fur
ther reduced prospects for corn, buckwheat, potatoes,
apples, peaches, and grapes. The indicated com crop
declined about three million bushels during the month
of August, but is still forecast at more than last year’s
production. Many silos were filled by mid-August in or
der to salvage some feed from the deteriorating crop.
By September 1, some late-planted fields were still green
and were aided by showers during the last week of Au
gust. Neither oats nor buckwheat yielded crops as large
as were expected. Potato prospects declined during the
month and were about one million bushels less than last
year’s production. Hay production was estimated at ten
percent less than a year ago. Second crops of both al
falfa and clover and third cuttings of alfalfa were excep
tionally light in most localities. Recent showers in the
northern and western parts of the State were very bene
ficial to all grasses. The set of all fruits was generally
full, but most did not size well because of dry weather
and insufficient help for proper thinning. In most areas,
drop was prolonged and rather heavy. Late August
rains improved peaches in the western part of the State,
but they were small in other areas. Rains during the
latter part of the month prevented further declines in the
condition of the Erie Belt grape crop.
Fourth District Business Indexes
(1 9 3 5 -3 9 = 100)
B a n k D e b it s (2 4 c it ie s') ............................................
C o m m e rc ia l F a ilu r e s ( N u m b e r ) ..........................
”
”
( L i a b i l i t i e s ) .......................
S a le s — L ife I n s u r a n c e (O . a n d P a . ) ..................
” — D e p a r t m e n t S to r e s (9 7 f ir m s ) .............
” — W h o le sa le D r u g s (7 f i r m s ) ......................
” —
”
D r y G o o d s (4 f ir m s ) ...........
” —
”
G ro c e rie s (41 f ir m s ) ...........
” —
”
H a r d w a r e (2 5 firm s) . . . .
” —
”
A ll (7 7 fir m s)..........................
” — C h a in D r u g s (5 f i r m s ) * .............................
” — C h a in G ro c e rie s (4 f ir m s ) ........................
B u ild in g C o n t r a c t s ( T o t a l ) ....................................
”
( R e s id e n t i a l ) .......................
P ro d u c t io n — C o a l (O ., W . P a ., E . K y . ) . . . .
”
— C e m e n t ( 0 . , W . P a ., E . K y . ) * *
”
— E le c t r ic P o w er ( 0 . , P a .. K y . ) * *
”
— P e tro le u m (O ., P a ., K y . ) * * . . . .
— S h o e s .......................................................
* P e r in d iv id u a l u n it o p e r a te d .
* * Ju ly .
A ug.
1944
202
3
3
I ll
159
186
156
138
147
161
163
152
68
30
162
80
187
91
93
A u g . A u e . A u g.
1943 194 2
1941
185 159
147
16
45
70
16
17
51
100
75
99
148
143
136
117
169
139
139
122
128
127
158
144
143
154
169
151
169
160
160
145
123
139
143
126
77
213
216
128
99
322
157
145
144
129
159
184
185
166
146
108
100
96
124
93
101
A u e.
1940
110
68
47
91
102
106
89
102
104
109
118
103
145
203
124
154
120
98
110
7
Wholesale and Retail Trade
(1944 com pared with 1943)
Percentage
Increase or D ecrease
SALES
SALES
STOCKS
A u gust
first 8
August
1944
m onths
1944
D E P A R T M E N T S T O R E S (97)
A k r o n ......................................................................
+10
-0 — 15
C a n to n ....................................................................
+12
+ 2
a
C in cin n a ti..............................................................
+23
+ 9
+ 1
C le v e la n d ...............................................................
+11
+ 2
+ 1
C o lu m b u s ..............................................................
+22
+12
+ 6
E rie..........................................................................
+ 5
+ 4
+ 9
P ittsb u rg h .............................................................
+16
+ 8
+ 8
Springfield.............................................................
+ 7
+ 2
a
T o le d o .....................................................................
+18
+10
+ 4
W h eelin g................................................................
+20
+15
+16
Y o u n g sto w n .........................................................
+16
+ 9
a
Other C ities.........................................................
+1?
— 2
+ I
D istrict...................................................................
+15
+ 6
+ 2
W E A R I N G A P P A R E L (16)
C a n to n ....................................................................
+13
+10
— 1
C in cin n a ti..............................................................
+22
-0 a
C levela n d ...............................................................
+21
+ 8
+ 9
P ittsb u rg h .............................................................
+12
+25
+22
Other C ities.........................................................
+ 5
— 3
— 16
D is trict...................................................................
+15
+ 7
+ 6
F U R N I T U R E (75)
C a n to n ....................................................................
+ 1
+ 9
— 28
C in cin n a ti..............................................................
— 6
— 7
— 4
C levela n d ...............................................................
— 9
— 15
— 14
C olu m b u s..............................................................
-0 + 1
— 21
D a y to n ...................................................................
— 10
— 27
a
P ittsb u rg h .............................................................
+11
+ 1
— 17
T o le d o .....................................................................
— 9
— 6
— 12
Other C ities.........................................................
-0 — 5
— 9
D istrict...................................................................
— 1
— 5
— 15
C H A IN S T O R E S *
Drugs— D istrict ( 5 ) ..........................................
+ 2
+ 1
a
G roceries— D istrict ( 4 ) ...................................
+16
+ 7
a
W H OLESALE T R A D E **
A u tom otiv e Supplies ( 8 ) ...............................
+22
+23
— 15
Beer ( 6 ) .................................................................
+ 2
+ 5
a
C lothing and Furnishings ( 3 ) .....................
+16
a
a
D rugs and D ru g Sundries ( 7 ) ....................
+10
+ 7
+ 8
+12
a
+11
D ry G oods ( 4 ) ...................................................
E lectrical G ood s ( 1 3 ) ......................................
+21
— 3
+36
Fresh Fruits and Vegetables ( 7 ) ..............
+17
— 2
+19
Furniture & H ouse Furnishings ( 3 ). . . .
— 30
a
a
G rocery G rou p ( 4 1 ) .........................................
— 13
+ 3
+ 1
T o ta l H ardw are G rou p ( 2 5 ) .......................
+ 3
— 4
+21
G eneral H ardw are ( 7 ) ................................
+29
+ 4
+27
Industrial Supplies ( 9 ) ...............................
— 13
— 13
+14
P lum bing & H eatin g Supplies ( 9 ) ..........
— 5
— 5
-0 Jew elry ( 8 ) . . . . .................................................
— 23
— 9
— 9
Lu m b er and Building M aterials ( 4 ) ..........
+14
a
— 19
M achinery, E quip. & Sup. (exc. E le ct.) (5)
+ 1
a
— 5
M eats and M eat P rodu cts ( 5 ) .....................
+21
+23
+26
M etals ( 3 ) .............................................................
— 2
a
a
Paints and Varnishes ( 4 ) ..............................
— -17
+12
a
Paper and its P rodu cts ( 5 ) .........................
+13
+14
a
T o b a c c o and its P rod u cts (1 3 )..................
— 2
—- 3
+ 2
M iscellaneous ( 1 0 ) .............................................
+ 1
+ 5
+ 7
D istrict— All W holesale T ra d e ( 1 7 7 ) . . . .
+ 6
+ 3
+ 8
* Per individual unit operated.
* * W holesale data co m p ile d b y U. S. D epartm en t o f C om m erce, Bureau
o f the Census,
a N o t available.
Figures in parentheses indicate num ber o f firms reporting sales.
Debits to Individual Accounts
A u gu st
1944
A k r o n ................
1 9 1 ,9 4 6
1 7 ,7 4 8
B u t l e r ................
8 1 ,9 6 8
C a n t o n .............
C i n c in n a t i. . .
5 7 2 ,1 5 8
C le v e la n d . . . . . 1 ,2 7 9 ,0 8 8
C o l u m b u s .. . .
3 1 1 ,3 9 7
C o v in g to n 2 4 ,0 7 9
N e w p o r t. . .
139,891
D a y t o n .............
6 0 ,1 9 4
E r i e .....................
5,893
F r a n k l in ..........
1 1,7 5 4
G r e e n s b u r g .. .
H a m il t o n . . . .
19,5 9 6
4 ,965
H o m e s te a d .. .
2 8 ,5 3 4
L e x i n g t o n .. . .
2 7 ,4 1 6
L i m a ..................
8 ,1 8 9
L o r a i n ...............
2 4 ,4 9 7
M a n s fie ld . . . .
19,041
M i d d le t o w n ..
15,182
O il C i t y ...........
P i t t s b u r g h . . . . 1 ,2 2 6 ,0 0 2
11,2
28
P o rtsm o u th . .
16,4 2 4
S h a r o n ..............
3 2 ,9 8 7
S p r in g fie ld . . .
S te u b e n v ille . .
13,874
T o l e d o ...............
26 4 ,3 7 3
23,905
W a r r e n .............
4 3 ,8 6 7
W h e e lin g . . . .
85,9 3 2
Y o u n g s t o w n ..
13,558
Z a n e s v i ll e .. . .
T o t a l ............. . 4 .5 7 5 .6 8 6
( T h o u s a n d s o f D o lla rs )
% change
J a n .- A u g .
fro m 1943
1944
+ 1 4 .5
1 ,4 4 6 ,7 8 5
+ 1 4 .8
141,243
6 5 7 ,8 7 7
+ 1 0 .9
4 ,8 6 4 ,7 2 0
+ 1 0 .7
1 0 ,5 1 9 ,4 8 8
+ 1 0 .0
+ 1 4 .9
2 ,5 6 2 ,5 3 3
+ 1 4 .7
+ 5 .2
+ 3 .9
+ 1 8 .7
+ 1 1 .8
+ 1 0 .2
+ 7 .0
+ 1 5 .3
+ 1 6 .2
+ 1 4 .8
+ 3 4 .2
— 1 .5
+ 3 .8
+ 4 .7
+ 1 3 .5
+ 1 2 .8
+ 8 .8
+ 1 4 .0
+ 1 2 .2
+ 7 .5
+ 1 9 .8
+ 5 .1
— 1 .0
+
9 .1
1 9 8 ,6 4 2
1 ,1 5 3 ,0 7 4
5 1 0 ,4 2 3
4 8 ,7 6 6
9 8 ,2 7 3
1 6 1 ,5 3 5
3 9 ,8 0 9
2 9 7 ,4 7 3
21 6 ,6 4 5
6 9 ,6 8 2
1 6 8 ,8 3 6
1 6 0 ,0 0 2
12 2 ,1 7 8
1 0 ,5 8 2 ,7 4 4
9 1 ,1 4 2
1 3 5 ,2 3 9
2 6 0 ,6 5 1
1 0 9,023
2 ,1 4 5 ,5 8 9
19 4 ,7 6 2
‘
3 4 3 ,1 7 1
6 8 6 ,4 4 4
1 0 3 ,8 6 8
3 8 ,0 9 0 ,6 1 7
J a n .- A u g .
1943
1 ,3 4 7 ,1 7 3
113,983
5 7 7 ,4 4 0
4 ,5 1 4 ,0 0 9
8 ,9 4 8 ,2 1 9
2 ,2 4 1 ,5 7 8
% change
fro m 1943
+ 7 .4
+ 2 3 .9
+ 1 3 .9
+ 7 .8
+ 1 7 .6
+ 1 4 .3
1 7 8 ,5 7 2
1 ,0 9 8 ,0 4 0
4 6 5 ,6 2 6
3 9 ,9 7 8
8 3 ,0 9 9
1 5 4 ,8 8 2
3 6 ,3 0 8
2 6 2 ,8 6 5
1 8 7 ,8 4 7
5 5 ,2 8 3
1 3 8,071
15 7 ,3 2 5
1 2 4 ,2 0 0
9 ,6 3 0 ,2 6 7
7 9 ,0 8 8
11 5 ,9 7 3
2 4 4 ,3 8 1
9 9 ,3 9 1
1 ,8 8 0 ,6 3 5
1 8 7 ,3 8 2
3 0 5 ,3 5 2
6 3 8 ,8 0 1
1 0 3 ,0 3 0
3 4 .0 0 8 ,7 9 8
+ 1 1 .2
+ 5 .0
+ 9 .6
+ 2 2 .0
+ 1 8 .3
+ 4 .3
+ 9 .6
+ 1 3 .2
+ 1 5 .3
+ 2 6 .0
+ 2 2 .3
+ 1 .7
— 1 .6
+ 9 .9
+ 1 5 .2
+ 1 6 .6
+ 6 .7
+ 9 .7
+ 1 4 .1
+ 3 .9
+ 1 2 .4
+ 7 .5
+ 0 .8
+ 1 2 .0
Fourth District Business Statistics
(0 0 0 o m itte d )
F o u r t h D is t r ic t U n le s s
A ug.
% ch an ge
O th e rw ise S p e c ifie d
19 4 4
fro m 1943
B a n k D e b it s —-24 c i t i e s ................ 554,488,000
+ 9
S a v in g s D e p o s it s — en d o f m o n th :
+ 19
3 9 b a n k s O. a n d W . P a .............3 1 ,0 6 6 ,2 4 4
L ife In s u r a n c e S a le s :
9 3 ,2 2 4
+10
O h io a n d P a .................................... 55
R e t a il S a le s :
D e p t. S to r e s — 9 7 f ir m s ............. 55
4 0 ,3 0 5
+ 15
W e a rin g A p p a r e l— 16 f i r m s . . 3
1 ,9 6 6
+ 15
F u r n itu r e — 75 f ir m s .................... S
2 ,463
—
1 6 .6 0 4
B u ild in g C o n t r a c t s — T o t a l . . . .55
”
”
— R e s id e n tia l %
2 ,3 5 0
— 76
C o m m e rc ia l F a ilu r e s —
43
L ia b ili t ie s ....................................... $
— 82
C o m m e rc ia l F a ilu r e s — N u m b e r .
2
— 82
P r o d u c t io n :
S te e l I n g o t — U . S .. . . N e t to n s
7 ,4 7 0
B itu m in o u s C o a l— O ., W . P a .,
E . K y ............................ N e t to n s
2 0 ,3 5 5
+ 4
C e m e n t— O ., W . P a .. W . V a .
.......................................................B b ls .
6 6 1 a — 38
E le c t r ic P o w e r— O ., P a ., K y .
— 16
.............................T h o u s . K .W .H .
2 ,8 4 9 a
P e tro le u m — O ., P a ., K y . . B b l s .
2 ,0 0 5 a — 16
S h o e s ..........................................P a ir s
B itu m in o u s C o a l S h ip m e n ts :
L a k e E r ie P o r t s . . . . N e t to n s
7 ,6 9 9
+18
1
—12
+ 1
-0-
a Ju ly .
b J a n u a r y - J u ly .
c C o n fid e n tia l,
J a n .- A u g .
1944
3 7 ,3 9 9 ,0 0 0
% change
fro m 1943
+12
7 4 9 ,2 9 0
+ 13
3 0 0 ,4 9 3
1 4 ,595
1 9 ,8 6 1
1 1 0 ,9 2 9
2 4 ,1 2 5
+ 6
+ 7
1 ,1 1 9
53
6 0 ,0 0 6
1 5 9,161
3 ,5 4 8 b
15,033
2 0 ,7 2 1 b
1 5 ,0 3 3 b
c
3 5 ,6 0 9
— 5
— 38
—64
—54
—60
+ 2
+10
—49
— 3
+ 7
— 3
—
2
+ 31
8
THE MONTHLY BUSINESS REVIEW
Su m m ary o f N ation al B u sin ess Conditions
By The Board of Governors of the Federal Reserve System
i n d u s t r ia l
p r o d u c t io n
Industrial output and employment showed little change in August. Retail trade
was at a new high level for the month. There was a small further rise in retail
commodity' prices.
T
i
*:
*
Industrial production
Output at factories and mines was 232 per cent of the 1935-39 average in
August as compared with 231 for July, according to the Board’s seasonally adjusted
index of industrial production. Steel production was maintained, while output of
nonferrous metals continued to decline. Overall, activity in the metal fabricating
industries continued at the level of the preceding month. There were large increases
in output of heavy trucks, tanks, and some other critical ordnance items in August;
aircraft production showed little change; while shipbuilding declined.
Output increased in the shoe, woolen and worsted, and paper industries in
August following a drop in July which reflected chiefly the curtailment of operations
around the Fourth. Output of manufactured foods, after allowance for seasonal
changes, declined in August, largely reflecting decreases in output of meats, dairy
products, and sugar products. Distilleries were shifted for the month of August
from production of industrial alcohol for war purposes and output of about
50,000,000 proof gallons of beverage spirits was reported. Production of other
nondurable goods was maintained at the level of the preceding month.
Minerals output in August rose 2 per cent from July, reflecting increases in
coal and crude petroleum. Crude petroleum production was at a rate 11 per cent
above the same month last year.
j
Federal Reserve indexes. Groups are expressed
in terms of points in the total index. Monthly
figures, latest shown are for August 1944.
DEPARTMENT STORE SALES AND STOCKS
j
Distribution
Value of department store sales, according to the Board’s seasonally adjusted
index, was larger in August and the first half of September than in the first half of
1944 and averaged 12 per cent above the corresponding period of last year. In the
third quarter the index at 90 per cent above the 1935-39 average has been at the
highest level on record.
Carloadings of railroad freight were maintained in large volume in August.
During the first three weeks in September loadings were slightly less than during
the same period a year ago, owing to decreases in all classes of freight except
merchandise in less than carload lots and miscellaneous shipments.
Commodity prices
F ed eral Reserve indexes. Monthly figures, latest
shown are for August for sales, and July for
stocks.
MEMBER BANKS IN LEADING CITIES
Wholesale prices of farm products and foods showed small seasonal decreases
from the middle of August to the middle of September. Maximum prices of such
industrial goods as cotton fabrics, cement, and bricks were increased.
Retail prices of food and other cost of living items increased slightly in August
and the average of all items was 2 per cent higher than a year ago, according to
the Bureau of Labor Statistics index.
Agriculture
Dem and deposits (adjusted) exclude U. S. G ov
ernment and interbank deposits and collection
items. Government securities include direct and
guaranteed issues. W ednesday figures, latest
shown are for September 13, 1944.
MEMBER BANK RESERVES
,,
.
partly S a t e d ^ W e K c U y f i g u r e ^ S t ' d S
are for September 2 0 , 1944.
Crop prospects improved during August and the early part of September and
harvests of most major crops are expected to be larger than last season. Marketings
of livestock products, which were at a record level earlier this year and 15 per cent
higher than during the first six months of 1943, have declined in July and August
to about the same level as that prevailing last year.
Bank credit
Bank deposits of businesses and individuals, as well as currency in circulation,
have increased since the end of the Fifth War Loan Drive. This increase in the
money holdings of businesses and individuals is largely a reflection of the expendi
tures made by the Treasury from its war-loan accounts built up during the drive.
Adjusted demand and time deposits at member banks in leading cities increased
by nearly 4 billion dollars between the close of the drive and mid-September, or
by over three-quarters of the amount of reduction in such funds during the drive.
Deposits at non-reporting banks probably increased by nearly 2 billion dollars.
Treasury war loan accounts at banks declined by nearly 8 billion dollars.
In die same period loans and investments at weekly reporting member banks
in 101 leading cities declined by 2.2 billion dollars. Loans to brokers and dealers
for purchasing and carrying Government securities declined to a level approximately
equal to that of the pre-drive period. There was, however, a temporary increase
in such borrowings in late August and early September presumably associated with
market transactions stemming from die Treasury offer to exchange certificates
maturing on September 1 and notes maturing on September 15 for new issues.
Loans to others for purchasing and carrying securities declined steadily, but on
September 13 were still well above the pre-drive level. Government security hold
ings showed a net decline of 800 million dollars over the period, reflecting mainly
substantial bill sales by reporting banks partially offset by some increase in bond
holdings.
As the result of the increase in deposits of businesses and individuals, the
average level of required reserves at all member banks rose by about a billion
dollars between the close of the Fifth Drive and mid-September. In addition, a
billion dollar increase in money in circulation and some further decrease in gold
stock served to absorb reserve funds. Member bank needs for reserves due to these
factors were met largely through an increase of 1.7 billion dollars in the Government
security portfolio of the Federal Reserve Banks and there was also a slight increase
in Reserve Bank discounts Excess reserves declined from an average level of 1.4
billion at the close or the drive to somewhat less than a billion by early September.
@FedFRASER