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RewLeur Monthly FEDERAL RESERVE BANK OF SAN F R A N C ISC O J U L Y 1, 1942 h e broad pattern of changes in industrial activity in the Twelfth District during May resembled that of earlier months this year. Output and employment of the increasing number of firms engaged in the pro duction of war materials, equipment, and supplies con tinued to expand, more than offsetting further contrac tion at plants engaged in producing civilian goods. Shortages of labor, both industrial and agricultural, were increasingly reported during the month. New private residential building was further curtailed and amounted to only a fraction of the total for a year earlier. Total building, howxver, continued in large volume. Value of department store sales again declined, but little or no change from May to June is indicated by preliminary data. Bank credit extended customers decreased during April, May, and June, loans of district city banks declin ing in all major classifications. At the same time, invest ments of these banks in Government obligations ex panded substantially further. These gains in earning assets were accompanied by an increase in deposits. T Industry and Trade Industrial activity again rose to new record levels in May, with production vital to the war effort continuing to make large gains, partly, at least, at the expense of output of strictly civilian goods. Sharp expansion in ship building and a further increase in the aircraft industry, which continued to embrace facilities of ad ditional firms through sub-contracting the production of materials and parts, accounted for much of the rise in war production. The decline in activity in industries not directly engaged in the war effort was somewhat less pronounced than in the preceding month. Curtailment in employment occurred in a few non-durable consumers goods indus tries such as apparel manufacturing, and was evident in the paint and heating and plumbing equipment industries, dependent to an important extent for a market upon private residential building. Production of metal products for civilian use continued to taper off. Shortages of labor, particularly in the skilled categories, are becoming more seri ous in several war production centers of the district. These shortages will continue to increase in severity, moreover, as demands for thousands of additional workers are made by shipyards and other plants now building. Actual shortages in the labor sup * V ic to ry , ★ ply are being aggravated by an unduly high rate of turn over in areas characterized by inadequate housing and commutation facilities. Value of new private residential building undertaken in May dropped below $7,000,000, less than half the April total and far below the average of $30,000,000 for the three spring months of 1941. Federally-financed resi dential construction, however, was particularly active in May, with contracts awarded for the building of several thousand units to accommodate workers and families of workers in war production centers. The pressure for housing facilities and the need to conserve materials is leading to increased emphasis upon temporary housing structures including dormitories and demountable units. Evidence that the district lumber industry will not be adversely affected by limitations upon construction and other civilian activity but rather will have demand for its output more than sustained by essential war needs is seen in recent estimates that total lumber demand in 1942 will approximate 37 to 39 billion board feet. Upwards of twothirds of this will be needed for essential purposes. Since the Twelfth District ordinarily furnishes almost half of the total domestic output, and production so far this year is at a near record annual rate of 15 billion feet, most of the district lumber output is being and will continue to be used to fulfill war requirements, including army base structures, defense housing, and boxing and crating. A shortage of logs has been a major ob stacle to increased lumber output. Accord ing to the O PA, which established maxi mum prices effective June 20 for the major species of West Coast logs, contributing factors to this shortage have been an exodus of loggers to shipbuilding and other war production centers and unfav orable weather during the past winter. Despite a continued rise in consumer incomes, value of department store sales declined in May for the fourth successive month, allowing for seasonal influences, but little change is indicated for June. The extent of this decrease is indicated by a de cline in this bank’s seasonally adjusted in dex from 167 percent of the 1935-1939 average in January to 147 in May..While the index in the latter month was 13 points above the level of a year earlier, the rise in prices over the past year would more than account for this increase, indicating that the physical volume of sales was below that of May 1941. B u y fy tv U e d S ta te d , rW a /i S a a is U jA ß o s t& i. a n d B ta n v p A ★ 34 FEDERAL RESERVE BANK OF SAN FRANCISCO The year-period gain in value of sales of department stores was considerably smaller in May than in earlier months this year, with sales of a number of depart ments showing declines from those of May 1941. The house furnishings group reported a decrease of 9 per cent, the largest decrease (40 percent) being shown by the department handling major household appliances. The men’s and boys’ wear group likewise showed a decrease of 9 percent while sales of the women’s ready-to-wear group were only 2 percent above those of a year earlier. Lack of availability of some major household appliances may account partly for the large decrease in the department handling such items, but a factor of more general appli cation appears to be the marked lessening of advance buying by consumers. Perhaps contributing somewhat to this development was announcement of the general maximum price regulation, the terms of which applied to most retail prices effective May 18. Advance buying by consumers in the latter part of 1941 and earlier this year swelled retail sales. At the same time it led to some accumulation of merchandise in the hands of consumers and left the public better equipped with durable goods such as furniture and house hold appliances. But despite the large volume of sales over the period, at least department stores have succeeded in making substantial additions to their inventories of many goods. At the end of May, value of inventories of reporting stores was 64 percent above a year earlier. The year period increase as of April 30 was 47 percent. As of the end of April, departments handling piece goods held inventories 48 percent larger than a year earlier. Inventories of small wares departments as a group were up 46 percent. Those of the ready-to-wear accessories departments showed an increase of 49 percent, the most marked gain (135 percent) occurring in the women’s and children’s hosiery department. The group handling women’s ready-to-wear garments had inven tories 38 percent higher and departments handling men’s and boys’ wear had inventories 43 percent above a year earlier. Stocks of the group of departments handling house furnishings showed a gain of 60 percent. These large stocks will provide something of a cushion against immediate shortages of a wide variety of goods as more and more of the production facilities of the country are devoted directly to the war effort. Persistent increases since 1940 had raised costs of living by May 15 to about the 1929 level in San Fran cisco and Seattle and to within 5 percent of that level in Los Angeles, according to the indexes prepared by the United States Bureau of Labor Statistics, and shown in the accompanying table. The rise in living costs, however, I n d e x e s o f C o st o f L iv in g i n T h r e e P a c if ic C o a s t C it ie s (1935-1939=» 100) San Francisco..................................... Los A n geles....................................... S e a ttle ................................................... June 1929 117.7 124.6 119.1 M ay 15 1941 104.2 104.4 106.0 May 15 1942 117.7 117.9 121.3 June 2 1942 117.5 117.8 120.4 Source: United States Bureau of Labor Statistics. has been checked since the effective date of the general maximum price regulation. On June 2, the indexes for all three cities were slightly lower than in mid-May. The largest decline occurred in Seattle, the result principally of the O PA order reducing residential rentals to the April 1, 1941 level. July 1, 1942 Agriculture Estimates indicate that production of most of the major Twelfth District crops now being harvested or shortly to be harvested, will be larger than a year ago and, in some cases, of record proportions. O f the grains, bar ley production in California is forecast at 44,700,000 bushels, 75 percent above last year and the largest crop ever to be harvested in the state. Combined production in Idaho, Oregon, and Washington is expected to approxi mate 34,400,000 bushels compared with 23,100,000 har vested in 1941. The oat crop in Washington is the largest since 1916 and current estimates indicate gains over a year earlier in all other district states. Despite a reduction in acreage from 213,000 to 200,000 acres, the flaxseed crop in California is now indicated at 3,600,000 bushels compared with 3,267,000 last year. Reflecting the deliber ate reduction in acreage of wheat in accordance with the production goals suggested by the United States Depart ment of Agriculture, output of this crop in the three Pacific Northwest states is estimated at 89,506,000 bush els compared with 112,406,000 bushels in 1941. O f the principal deciduous fruit crops, production of peaches in California is expected to be the largest for any year since 1930. The California apricot crop is fore cast at 220,000 tons compared with 198,000 tons har vested in 1941, and a somewhat larger crop is indicated for Washington. Bumper crops of cherries on the Coast have more than offset relatively small crops in Utah and Idaho. Pear production in the three Pacific Coast states is expected to be about the same as a year ago. Prune production in California is forecast at 166,000 tons, com pared with 177,000 tons harvested in 1941 and is the smallest crop since 1936. Egg production during the first five months of 1942 in the three Pacific Coast states was higher than a year earlier. Milk production during the spring months was also larger, reflecting heavier feeding, excellent pastures, and larger herds. Available information on acreages and estimated yields of district crops suggests that farm labor requirements this season are at least as large as, if not somewhat above, those of a year ago. Younger farm laborers and members of farm families, however, are being drawn into the armed services. Agricultural workers are also being atDistribution and Trade— Index numbers, 1935-1939 daily average=100 With Seasonal Adjustment,---------1942m i Retail Trade M ay Apr. Mar. M ay Department store sales (value)1 Twelfth D istrict............... *147 161 157 134 Southern California. . . *148 158 160 147 Northern C alifornia.. *134 142 145 116 P o rtla n d .......................... *151 160 166 126 W estern W ashington. *182 191 206 147 Eastern W ashington and Northern Idaho *121 136 145 115 Southern Idaho and U ta h ...................... *143 162 130 160 *153 160 162 133 Automobile sales (num ber)5 — — — — — — — — P a ssen ge r........................ — — — — Commercial .................... Carloadings (num ber)2 T o t a l ............................................ *109 Merchandise and m i s c ... *124 Other .................................... * 98 116 123 108 117 127 105 101 117 80 Without Seasonal Adjustment,---------1942--------- V "l941 M ay A pr. M ar. May *142 *140 *130 *146 *177 148 147 133 154 191 148 151 134 152 183 129 139 112 122 144 *122 132 123 116 *156 *157 152 171 142 166 141 137 18 14 59 12 8 52 10 7 41 237 233 287 *110 *116 *110 113 115 110 109 118 98 101 110 90 1Revised series. Tabulations of back figures for these and other cities and areas will be made available on request. 21923-1925 daily average = 100. * Preliminary. M O N T H L Y REVIEW July 1, 1942 tracted to jobs in war industries. Evacuation of the Japanese from most of the intensive farming areas of the three Pacific Coast states has drawn off a substantial number of skilled workers and farm families previously engaged particularly in the production of “stoop labor” crops. Shortages in the ranks of experienced farm help to care for and harvest district crops have, as a result, been reported over wide areas. Indicative of the situation which has been developing during the past several months is the rise in wages reported by the United States Depart ment of Agriculture. Data released by that agency indi cate that average wage rates paid farm workers have risen in California, for example, from $84.75 per month (without board) on July 1, 1941 to $107.00 on June 1 of this year. The increase in Oregon has been from $68.25 to $86.50, and in Washington from $72.00 to $89.25. Somewhat similar increases have occurred in other district states. Shortages in the ranks of workers from which farm labor is customarily drawn have led to strenuous efforts to supplement the available supply of help. The United States Employment Service, the United States Depart ment of Agriculture and its county war boards, and the United States Office of Education have been active in providing supplementary farm labor and in promoting the more efficient use of available experienced help. Townspeople, including women and children, in the areas where shortages have developed have been recruited to work in fields and orchards, and laborers have been im ported in a few localities. To cite a few illustrations, students and townspeople cooperated in the strawberry harvest and in apple-thinning in the Watsonville area in California; students and women are picking oranges in Los Angeles County; school children are picking berries in Washington. Additional use of women is reported proving satisfactory in the guayule fields in California. Labor has been imported from other sections of the United States and from Canada. The Federal Security Production and Employment— Without Seasonal With Seasonal -Adjustment ------ N ,-------- Adjustment-------- \ -1942-------- \ 1941 f--------19421941 Industrial Production1 May Apr. Mar. M ay May Apr. Mar. M ay Manufactures (physical volume) 130 146 142 Lumber2 ................................ *140 137 t l 4 4 127 *160 — — — — 168 160 172 176 Refined oils........................... 155 184 162 138 163 C e m e n t .................................. 176 132 161 134 100 114 121 107 117 152 114 W heat flour........................ average=100 Minerals (physical volume) — Petroleum ........................... Lead ( U . S .) 3................... Copper ( U . S .) 3................. *177 Miscellaneous Electric power production *285 — 134 162 — 115 159 *177 96 135 169 92 131 165 94 117 159 294 t304 244 *290 290 t283 248 — 132 164 95 Factory Employment and Payrolls4 Agency has reported the movement of negroes from Texas and Oklahoma to thin sugar beets in the San Joaquin Valley of central California. The United States Department of Agriculture reports that “a great num ber” of Indians have been brought in from British Columbia to pick berries in Washington. Despite these expedients, data available at this time appear to indicate that labor shortages have resulted in delays in farm operations in a number of areas, some deterioration in the quality of crops, and in a few in stances in actual losses in production. The usual pattern of farm employment is from a low point in January to a seasonal peak in September in the Pacific Coast states and somewhat earlier in the Mountain states of the dis trict. Some increase in employment of members of farm families usually occurs during this period but the gain is primarily in the number of hired workers which nor mally more than doubles during the period of seasonal expansion. On June 1, total farm employment in the dis trict, as reported by the United States Department of Agriculture, approximated 748,000 men and women, 3 percent below a year earlier. O f this total, 344,000 were hired and 444,000 were members of farm families. A substantially larger number of workers will be needed to meet peak seasonal demands in the late summer and early fall. At that time the effectiveness of measures be ing taken to utilize agricultural workers more efficiently and to supplement the regular farm labor supply will be given their real test. Banking and Credit Total loans of member banks in the larger cities of the district declined considerably during the second quarter. Decreases have occurred in all major classifications. Loans for commercial, industrial, and agricultural pur poses, after increasing steadily since the late summer of 1940 to a peak of $516,000,000 on April 16, have since declined to $484,000,000 on June 24. A decline in loans secured by real estate, while small, has been persistent since early April and has reflected sharp curtailment in privately-financed building, particularly residential build ing. Advances to finance transactions in securities have been dwindling in amount, continuing the trend evident over the past several years. Finally, loans outstanding in the miscellaneous “other” loan group have been de creasing persistently since the first of the year, following the slight decline during the last four months of 1941. Contraction in this group of loans has come principally in personal and retail instalment paper. S e le c te d I t e m s o f C o n d i t i o n o f R e p o r t in g M e m b e r B a n k s — Employment Pacific C oast...................... *244 *238 242 288 279 t283 C alifo rn ia ........................ Oregon ............................. *207 *208 216 174 W a s h in g t o n ................... *175 *172 158 191 125 109 *248 *239 289 277 *215 *212 *182 *177 236 275 208 172 160 192 130 113 Payrolls Pacific C oast...................... *371 *350 California ...................... 432 *404 O r e g o n ............................. *325 *322 W ashington ................. *261 *251 182 219 145 125 *382 *354 438 405 *348 *329 *282 *262 351 405 319 254 187 222 155 131 356 410 332 254 1Daily average. 2Converted to 1935-1939 base. Back figures will be supplied on request. 3Prepared by Board of Governors of the Federal Reserve System. (1935-1939 = 100). 4Excludes fish, fruit, and vegetable canning. * Preliminary. f Revised. N o te : Construction indexes discontinued because adequate data on Federally-financed projects, which now account for nearly all construc tion, are no longer available. 35 T w e l f t h D is t r ic t (in millions of dollars) June 24, 1942 Loans and investments— total............ . . 2,685 Loans— total ......................................... . . 1,092 Commercial, industrial and agricultural loans...................... 484 Open market paper........................ 15 Loans to finance securities tran sa ctio n s.................................. 42 Real estate loans............................. 380 All other loans.................................. 171 Investments— t o t a l ............................. . . 1,593 U . S. Government obligations. . . . 1,301 Other securities............................... 292 Demand deposits— adjusted................. 1,600 Time deposits.............................................. . . 1,086 t---------- -Change From----------- > M ay 27, Dec. 31, June 25, 1942 1941 1941 — 5 + 27 +225 — 24 — 74 + 20 — 10 — 1 — 22 — 10 + — — 1 — 4 — 8 +19 —]—24 — 5 +33 — 19 — — — + + — + — — 7 — 5 — 24 +205 +259 — 54 +271 — 19 7 9 26 101 138 37 121 33 60 4 36 FEDERAL RESERVE BANK OF SAN FRANCISCO July 1, 1942 S u m m a ry o f N a tio n a l B u sin ess C o n d itio n s Released June 20, 1942—Board of Governors of the Federal Reserve System activity continued to advance in May and the first half of June. Commodity prices showed little change after the middle of May when the general maximum price regulation went into effect. Retail trade declined further in May but increased somewhat in the first half of June. I n d u str ia l P r o d u c t io n IN DU STRIAL PRODUCTION Federal Reserve monthly index of physical volume of production, adjusted for seasonal variation, 1935-39 average=100. Latest figures shown are for May 1942. DEPARTM EN T STORE SALES A N D STOCKS Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 192325 average = 100. Latest figures shown are for May 1942. Volume of industrial production increased in May and the Board’s seasonally ad justed index advanced to 176 percent of the 1935-39 average, as compared with 173 in April and 171 during the first quarter of this year. Output of manufactured products continued to increase, reflecting chiefly further growth in production of war materials, while mineral production showed a seasonal rise. The largest increases in May, as in other recent months, were in the machinery and transportation equipment industries which are now making products chiefly for military purposes. The amount of copper smelted rose sharply and output of chemicals con tinued to advance. Activity in the automobile industry, which since January had been retarded during the conversion of plants for armament production, showed an increase in May. Steel production was maintained at about 98 percent of capacity in May and the first half of June. Lumber production increased seasonally and activity at furniture factories, which usually declines at this time of year, was sustained at a high rate. In industries manufacturing textiles and food products, output continued large in May. Gasoline pro duction declined further, however, reflecting the effects of transportation difficulties. There was a further marked decrease in paperboard production which, according to trade reports, reflected a slackening in demand. Coal production was sustained at a high rate in May and output of crude petroleum increased somewhat, following considerable declines in March and April. Copper pro duction and iron ore shipments rose sharply to new record levels. Value of construction contract awards increased sharply in May, following a decline in the previous month, and was close to the record high level reached last August, according to figures of the F. W . Dodge Corporation. Awards for publicly financed work increased in May and, as in other recent months, constituted around three quarters of the total. Awards for residential building continued to decline. D is t r ib u t io n Retail trade declined further in May. Department store sales were about 7 percent smaller than in April and sales by mail-order houses showed a similar decrease. In the first half of June department store sales increased somewhat. Carloadings of revenue freight increased in May by about the usual seasonal amount. There was a further substantial decline in the number of cars loaded with merchandise in less than carload lots, reflecting the effect of Federal orders raising the minimum weights for such loadings. Increases were reported in shipments of most other classes of freight, particularly coal, ore, and miscellaneous freight. C o m m o d i t y P r ic e s MEMBER BANKS IN 101 LEAD IN G CITIES Wednesday figures. Commercial loans, which in clude industrial and agricultural loans, represent prior to May 19, 1937, so-called “ Other loans” as then reported. Latest figures shown are for June 10, 1942. Prices of most commodities both at wholesale and retail showed little change after the general maximum price regulation went into effect around the middle of May. Declines occurred in prices of cotton and some other agricultural commodities, and prices of some industrial commodities were reduced to conform with the general order that prices should not exceed the highest levels reached in March. Action was taken to exempt most military products from the general regulation and to allow for special treatment of women’s coats and dresses and a few other nonmilitary items. B a n k C r e d it FACTORS USING RESERVE FUNDS 1 MEM8ER BANK RESERVt: BALANCES rvw ■ f* • y J Reporting member bank holdings of United States Government securities increased by nearly a billion dollars during the period. Two-thirds of the increase came in the week ending May 20 with delivery of new Treasury 2 percent 1949-51 bonds, and the balance represented mainly increased bill holdings. Loans declined somewhat in the period. Adjusted demand deposits continued to increase, while United States Government deposits were reduced. MONEY CIRCULAT TREASURY CASf AND DEPOSITS Mr h .-*'“*W *N0NMEMBER DEPOSITS . 1..... . ... . MEMBER BANK RESERVES A N D RELATED ITEMS Wednesday figures. Latest figures shown are for June 10, 1942. During May and the first half of June, the Federal Reserve banks purchased about 200 million dollars of United States Government securities. Additions to member banks’ reserves from this source, however, were offset by continued withdrawals of currency by the public. Excess reserves fluctuated around 2,700 million dollars during the sixweek period. U n it e d S t a t e s G o v e r n m e n t S e c u r i t y P r ic e s Prices of taxable United States Government bonds, which declined by about y2 point at the time of the early May financing, subsequently regained that loss and during the first half of June remained steady. M SUPPLEMENT FEDERAL & n tU lif, R e v ie n t RESERVE B A N K OF S A N FRANCISCO JULY 1, 1 9 4 2 Commercial and Industrial Loans M ade b y Twelfth District M em ber Banks April 16 to M a y 15 , 1942 h ile commercial and industrial loans of district member banks have declined in the aggregate during the past two months, a recent survey reveals the increasing extent to which current commercial and industrial loan operations are for war purposes. This survey covered loans made during the period April 16 to May 15 by mem ber banks accounting for more than 90 percent of the re sources of all Twelfth District member banks. O f the dollar volume of all new loans and renewals for com mercial and industrial purposes made by these banks dur ing the period, about two-fifths were to finance war ac tivity. Approximately one-third of these war loans and renewals were made to building contractors and another third to producers of metal products, including trans portation equipment, shipbuilding, ordnance, and muni tions. Much of the borrowing was by medium sized busi ness firms (those with assets of $50,000 to $5,000,000) and the most common rates of interest charged these firms were within a range of 4 to 5 percent. Banks included in the survey made loans and renewals for commercial and industrial purposes amounting to $281,213,000 from April 16 to May 15, a period during which loans outstanding of this character declined slightly from $761,820,000 to $760,513,000. Loans made during W the period in excess of amounts ranging from $1,000 to $5,000, depending on the size and location of the report ing bank, are shown in the accompanying table, classified by types of business, size of borrower, rates of interest charged, and purpose (i.e. whether to finance war or other activity). O f the dollar amount of loans and renewals included in the table, 38 percent was to finance war activity, while an additional 3 percent was partly for this purpose. O f the dollar amount of new loans, 45 percent was for war purposes while of renewals, the proportion of war loans accounted for only 24 percent. This suggests that during the period the proportion of outstanding loans extended to finance war activity was increasing. Among loans classified for other purposes, strong ground exists for believing that a substantial proportion was made to firms which, although not engaged directly in war work, are supplying goods and services vital to the war program. As indicated earlier, 37 percent of all war loans and renewals during the period covered by the survey were made to finance building and construction operations and 35 percent to manufacturers of metal products. The im portance of the metal products group reflects the fact that it includes such rapidly expanding local defense industries C o m m e r c ia l a n d I n d u s t r i a l L o a n s a n d R e n e w a l s M a d e b y T w e l f t h D is t r ic t M e m b e r B a n k s A p r il 16 to M a y 15, 19421 t------------------------------------------- Amount of Loans, in Thousands of Dollars-------------/----------- - Purpose of Loan Assets of Borrower--------- ---------- \ A /---------dumber of N onN ot In Under $50,000- $500,000- $5,000,000 Not Inof Loans Total Defense Defense Both dicated $50,000 $500,000 $5,000,000 and Over dicated Total .......... ................................................................. Business of Borrower Whsle. and Ret. Trade, inc. Commodity Dealers. Sales Finance and Personal Loan Companies. .. . Services: Hotels, Repair Shops, Prof. Serv., etc.. Metal Mining, Refining, and Smelting................ Metal Products, inc. Transportation Equipment, Shipbuilding, Ordnance and Munitions.......... Petroleum and Petroleum Products...................... Chemicals, Drugs, Rubber and Products.............. Textiles, Apparel, Leather and Products............ Food, Liquor, and Tobacco.................................... All Other Manufacturing and Mining.................. Pub. Util., Transportation and Communication. . Building and Construction Operations.................. All Other.................................................................. Business Not Reported.......................................... Rate of Interest Under 1 percent........................................................ 1 percent.................................................................... Between 1 percent and 2 percent............................ 2 percent.................................................................... Between 2 percent and 3 percent............................ 3 »percent.................................................................... Between 3 percent and 4 percent............................ 4 percent.................................................................... Between 4 percent and 5 percent............................ 5 percent.................................................................... Between 5 percent and 6 percent............................ 6 percent.................................................................... Between 6 percent and 7 percent............................ 7 percent.................................................................... Between 7 percent and 8 percent............................ 8 percent.................................................................... Over 8 percent.......................................................... Rate of interest not reported.................................. 14,687 256,984 96,472 150,793 8,800 919 22,554 86,167 90,955 53,515 3,793 5,767 385 948 169 87,460 12,765 5,306 1,584 8,366 973 1,008 841 75,281 11,666 4,171 727 3,564 75 109 249 51 17 16 8,644 272 1,804 165 29,647 3,370 2,316 652 27,568 3,070 753 358 19,860 6,053 417 408 1,741 845 194 83 361 965 900 231 1,641 2,131 67 35,865 2,514 1,647. 7,395 21,971 12,318 6,210 40,150 21,294 505 34,227 830 1,142 2,327 1,344 4,553 3,460 35,3~89 1,950 62 1,317 1,602 495 4,671 18,896 6,153 2,728 4,352 18,313 422 321 49 10 358 1,505 1,597 21 232 958 1,292 191 100 946 1,521 1,213 304 2,934 3,087 82 8,288 1,040 418 3,403 7,048 5,577 1,196 15,025 8,063 123 16,811 1,237 379 2,946 8,889 4,516 1,100 17,460 5,868 8,470 46 750 90 4,083 910 3,609 4,445 4,075 300 1,004 9 17 161 117 185 529 180 1,323 272 2,856 129 5,721 17 1,419 5 1,409 209 129 57 5,041 19,494 17,793 19,265 31,218 5,327 45,202 8,928 52,176 1,474 36,600 107 5,552 17 3,458 3,626 1,649 5 2,285 3,152 120 14,664 18,845 1,517 16,688 4,766 19,276 445 11,520 51 1,173 14 607 946 397 53 2,656 16,242 17,673 4,486 11,893 3,372 25,402 3,707 30,829 896 23,597 56 4,184 3 2,728 2,060 955 43 14 106 208 105 1,099 3,906 1,351 13,974 6,550 29,900 1,045 20,929 50 3,115 125 4,470 3,009 10,697 19,352 2,514 27,747 2,080 14,404 225 5,117 4,810 14,748 14,679 6,487 6,822 884 1,174 33 39 226 16 1 177 74 21 io6 100 ” ’i Ü5 479 437 2,960 421 1,720 122 1,288 15 474 114 1,135 261 4,080 178 10,361 57 2,153 17 2,574 927 165 152 33 351 12 196 Î8Ô is 105 619 154 18 143 *637 2,609 567 3,59 i 21 5 1 “ ii 430 102 2 286 201 "6 7 *967 664 464 1,172 36 200 5 189 ” *2 282 235 90 609 "\6 "Ï2 ’ ¿94 “ is N ote: Because all figures have been rounded off to the nearest thousand, amounts in columns do not necessarily agree with totals. 1Banks included in the survey account for well over 90 percent of the resources of all Twelfth District member banks. Loans and renewals ranging from $1,000 to $5,000, depending on the size and location of the reporting bank, are excluded. M O N T H L Y REVIEW as aircraft construction, shipbuilding, and aluminum fab rication. O f loans other than for war purposes, on the other hand, advances to these two groups amounted to less than 4 percent of the total, while those to firms en gaged in wholesale and retail trade, including commodity dealers, amounted to 50 percent. Looked at another way, borrowings for war purposes accounted for 92 percent of all commercial and industrial loans made for building and construction operations and the manufacture of metal products, but only for 10 percent of bank loans made to the group including wholesale, retail, and com modity dealers. Analysis of loans to business firms by size groups re veals that 34 percent of the dollar value of all loans made to firms with assets of $5,000,000 or more was made for war purposes. O f the smaller firms, 45 percent of the loans made to those with assets of $500,000 to $5,000,000 were for war purposes while 35 percent of the loans to firms with assets of $50,000 to $500,000 were for such purposes. The proportion of borrowings from the banks by the very small concerns (those with assets of less than $50,000) to finance war activity was considerably below that for any other size group. Loans for war purposes comprised only 24 percent of total borrowings from the banks by these very small concerns. Loans and renewals to finance war activity averaged $32,600, more than twice as large as the average of non defense loans. These latter, however, were much more numerous, numbering 11,312 as against 2,960 separate loans and renewals made for war purposes. The 293 loans classified as made for both defense and other purposes averaged $30,000, while the 122 loans for which the pur pose was not stated averaged only $7,500. These aver ages, of course, would be somewhat smaller if all com mercial and industrial loans made by banks were included instead of only those above certain minima. Classified by the business of the borrower, the average size of all re ported loans and renewals ranged from $42,000 for metal products firms down to $5,600 for service institutions which include hotels, restaurants, amusement places, re pair shops, organizations rendering professional services, and the like. Advances to sales finance and personal loan companies averaged $33,200, to public utilities $26,900, and for building and construction operations $24,500. To a large extent, variations in the average size of loans among business groups is explained by differences in the average size of firms in the several lines borrowing dur ing the period of the survey. In the metal products group, for example, 70 percent of the dollar volume of loans and renewals went to borrowers with assets of $500,000 or more; in the service institutions group, only 22 percent of the advances were made to concerns of comparable size. O f the total amount extended for war purposes, 62 percent went to borrowers with assets of $500,000 or more; while of loans made for other purposes, 53 percent went to borrowers of like size. With regard to rates of interest charged on commercial and industrial loans made during the 30. day period, the largest dollar amount (20 percent of the total) was ad vanced at 5 percent, with the next largest amount (18 percent) advanced at 4 percent. In the aggregate, loans for other than war purposes carried somewhat higher rates than war loans, with 43 percent of the dollar value of the former made at rates of 5 percent or more, while 35 percent of the dollar value of war loans was made at such rates. As already indicated, a direct relationship existed be tween size of borrower, as determined by assets, and the size of loans made during the period of the survey. To a considerable extent this relationship, together with the fact that financial stability usually is long established in the case of larger firms, explains the somewhat lower rates of interest at which the larger firms borrowed from the banks. Approximately 90 percent of the dollar amount of loans to concerns with assets under $50,000 was made at rates of 5 percent or more. Similar rates were charged on 68 percent of the funds advanced to firms with assets of $50,000 to $500,000, and on 22 percent of the dollar amount of loans to firms with assets of $500,000 to $5,000,000. To the very large concerns, 7 percent of the loans were made at 5 percent or more, while 64 percent were made at 2 percent or less.
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