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Federal Reserve Bulletin April 1944 - FRASER · PDF fileFEDERAL RESERVE BULLETIN APRIL 1944...

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  • FEDERAL RESERVE

    BULLETINAPRIL 1944

    BOARD OF GOVERNORS

    OF THE FEDERAL RESERVE SYSTEM

    WASHINGTON

    Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

  • EDITORIAL COMMITTEE

    ELLIOTT THURSTON E. A. GOLDENWEISER CARL E. PARRY

    The Federal Reserve BULLETIN is issued monthly under the direction of the staffeditorial committee. This committee is responsible for interpretations and opinionsexpressed, except in official statements and signed articles.

    CONTENTS

    PAOS

    Review of the MonthConsumer Incomes and Expenditures in Wartime 305-310

    Establishment of Editorial Committee 311Research and Policy, by E. A. Goldenweiser 3ix~3i7Currency in Circulation, by G. L. Bach 318-3x8

    Extension of Emergency Price Control Act of 194Z ^Srl^Annual Report of the Bank of Canada 332.-337Current Events 338Law Department:

    Absorption of Exchange ChargesAvoidance of Expense to Member Bank.. 339Consumer Credit:

    Amendment to Regulation W 339342.Maximum Credit Values for Used 1941 Automobiles 341

    Foreign Funds ControlTreasury Department Releases 34Z-348

    National Summary of Business Conditions 349~~35Financial, Industrial, Commercial Statistics, U.S. (Seep. 351 for list of tables) 35I~397International Financial Statistics (See p. 399 for list of tables) 399~4IJ

    Board of Governors and Staff; Open Market Committee and Staff; Federal Ad-visory Council 411

    Senior Officers of Federal Reserve Banks; Managing Officers of Branches 413Map of Federal Reserve Districts 414Federal Reserve Publications (See inside of back cover)

    Subscription Price of Bulletin

    A copy of the Federal Reserve BULLETIN is sent to each member bank without charge. The subscription pricein the United States and its possessions, Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic,Ecuador, Guatemala, Haiti, Republic of Honduras, Mexico, Newfoundland (including Labrador), Nicaragua,Panama, Paraguay, Peru, El Salvador, Uruguay, and Venezuela, is $2.00 per annum, or 20 cents per copy; else-where, $2.60 per annum or 25 cents per copy. Group subscriptions for 10 or more copies, in the United States, 15cents per copy per month, or $1.50 for 12 months.

    Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

  • FEDERAL RESERVE BULLETINVOLUME 30 April 1944 NUMBER 4

    CONSUMER INCOMES AND EXPENDITURESIN WARTIME

    Incomes of individuals have continued toexpand in recent months and for the firstquarter of 1944 are estimated at an annualrate of 154 billion dollars as compared with144 billions last summer and 135 billions inthe first quarter of 1943. Recent increases

    INDIVIDUAL INCOMES, EXPENDITURES, AND TAXESSEASONALLY ADJUSTED, ANNUAL BASIS

    QUARTERLY

    1940 1942

    Department of Commerce data with estimates for first quarter of1944 and minor changes in seasonal adjustments for consumer expendi-tures by Federal Reserve. Amounts indicated as "Savings" representexcess of individual incomes over consumer expenditures and taxes.

    have been substantial, although not as largeas in 1941, 1942., and the early part of 1943when the physical output of industry wasincreasing at a rapid pace. Since Novem-ber payments to the armed forces and their

    dependents have increased further, incomesof railroad workers and other employeesengaged in the distribution and service in-dustries and agricultural incomes haveshown less decline than is usual at this sea-son, and payments of interest and dividendsto individuals have been larger. Pay rollsat factories, however, declined 3 per centfrom November to February, reflecting de-creases in employment in most industries,as well as some reductions in average hoursworked in munitions plants and in ship-yards.

    MAINTENANCE OF CIVILIAN SUPPLIES

    Although there has been a steady declineduring the past year in employment in a num-ber of industries producing consumer goods,aggregate supplies available for purchase bycivilians have been maintained. That thishas been possible, notwithstanding in-creased use of consumer goods in the armedforces, has been due to several differentdevelopments. In such industries as meat-packing and tobacco products, productionhas increased, in spite of a decline in em-ployment, as the result of a lengthening ofworking hours and some rise in output perman-hour. In some other industries likethose producing woolen goods and proc-essed vegetables a larger share of produc-tion has recently become available for civil-ians as Government purchases have declined

    APRIL 1944 305

    Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

  • REVIEW OF THE MONTH

    during this period. Manufacturers and dis-tributors of civilian products have alsodrawn on their inventories of materials andfinished goods.

    Output of consumer durable goods hascontinued in small volume, although avail-able supplies of metals have increased some-what in recent months. On account ofshortage of manpower and difficulty of ob-taining component parts, output of thesegoods has been limited to replacement partsand the more essential items. Continuedrestriction on output of these goods has beenfeasible because civilians have found itpossible to use durable goods in theirpossession much longer than had been cus-tomary before the war. Also, consumerstocks of these products had been built upin 1940 and 1941 before our entry into thewar.

    Production of nonmanufactured foods,such as citrus fruit, potatoes, eggs, andmilk, has been in large volume during thepast year, though the supply of fluid milkhas not been large enough to avoid somelimitations on its sale to civilians. In theservice, trade, and public transportationindustries the volume of services availableto civilians has declined somewhat, but notbelow the level of 1941, which was con-siderably above that of peacetime years.

    EXCESS BUYING POWER

    Incomes of individuals, after increasedtax payments, have continued to be sub-stantially in excess of the supply of goodsand services available for purchase as isshown on the chart on the preceding page.During 1943 and the early part of 1944 thissurplus amounted to about 2.7 cents out ofevery dollar of income after taxes. Thissurplus spending power has been added tothe public's large holdings of liquid assetsand has not been used to bid actively for the

    306

    available supply of goods. This has beendue principally to wartime controls overprices and purchases of goods, combinedwith a public realization of the importanceof saving rather than spending. Cash, bankdeposits, and Government security holdingsof individuals and unincorporated busi-nesses have increased by about 70 billiondollars in the past three years.

    PRICE MOVEMENTS

    Prices generally have been fairly stable inrecent months. Some commodities pre-viously in great demand for the warprogram have declined in price owingchiefly to greatly expanded supplies of newor substitute products. These commodities

    COST OF LIVING

    170

    60

    50

    140

    130

    120

    110

    100

    90

    80 1

    A

    FOODSy * V ^

    CLOTHING^ /

    f/^^S^hW. ITEMS

    /*S 1RENT

    PER

    160

    150

    140

    130

    120

    110

    100

    90

    80

    1937 1938 1939 1940 1942 1943 1944Bureau of Labor Statistics indexes. Last month in each calendar

    quarter through September 1940, monthly thereafter. Mid-monthfigures, latest shown are for February 1944. Groups not shown are fueland lighting, housefurnishings, and miscellaneous.

    include mercury, secondary metals, usedmachinery, and synthetic drugs. Prices ofsome metals will be affected by the an-nounced reduction in Federal premium pay-ments made for the purpose of encouragingdomestic production. In consumer marketsprices of some wartime substitute productshave been reduced in anticipation of a largerproduction of regular peacetime products.On the other hand, wholesale prices ofwood pulp, furniture, lumber, farm

    FEDERAL RESERVE BULLETIN

    Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

  • REVIEW OF THE MONTH

    products, and low-priced clothing have in- %

    creased recently. The cost-of-living indexof the Bureau of Labor Statistics has shownlittle change since last spring, as shown inthe chart. Prices of foods have declinedfrom the high level reached at that time,while prices of other goods and services,except rents, have risen.

    SHIFTS IN CONSUMER EXPENDITURE

    Total consumer expenditures, accordingto estimates of the Department of Com-merce, were at an annual rate of 93 billiondollars during the fourth quarter of 1943,as shewn on the chart. During the firstquarter of 1944 they advanced further to arate 7 per cent higher than in the corre-sponding period of last year. The increasesince the first quarter of 1941, when con-sumer expenditures were at a rate of 71billion dollars a year, has been due mainlyto the rise in prices paid by consumers forgoods and services. The largest increasesin retail prices have been in nondurablegoods. In the case of durable goods, priceadvances have been less marked, but pur-chases of such goods, other than newhouses, make up only a small part of con-sumer expendituresabout 10 per cent in1939 and much less now.

    Consumer expenditures for services haveincreased considerably since 1939 and aboutone-half of the increase has reflected higherprices. These services, which include rent,household maintenance, and payments forutilities, transportation, medical care, andrecreation, represented a little over one-third of total consumer outlays in 1939, butowing to the subsequent sharp rise inexpenditures for nondurable goods, theywere a smaller part of the total in 1943.

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FEDERAL RESERVE BULLETIN APRIL 1944 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
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