Madison County Democrat. (London, Ohio) 19??-1958, 1950-12-15
Are Consumers
Saving Again


Trade Economist, Federal Reserve
Bank of Cleveland
There are signs that the recent
practice of consumers in drawing
down past savings in order to
stock up on certain types of goods
is passing out of the picture, at
least for the time being. On bal
ance consumers seem to be start
ing to save again to a modest ex-
tent.
AT this time it Is especially inn
pOrtant to see in which direction
the figures are pointing, becailse
OF the fact that savings make up
one OF the antidotes to initiation.
As indicated previously in this
series, the problem of initiation
is serious at present, and bids
fair to be aggravated by the mid
die of next year when the federal
government will be laying out
large sums for defense materials
and services at the very time
when the output of civilian con-
sumner goods will be curtailed. II
the resulting pressure of money
against goods is to be prevented
from pushing up prices in a new
acceleration, then active buying
power will need to be restrained
in some fashion or other. Volun-
tary savings by consumers con-
stitute one of the possible chan
nels, while draining of civilian
buying power by stiffer taxes is
another, and credit restrictions of
the type of Regulations w and X
constitute still a third channel.
Direct controls of prices and
wages, which may be in the of
fling, operating in a different way.
but would be directed toward
the same general goals as the de-
vices just mentioned.)
AS between savings and much
sitter taxes there are obvious
advantages to the savings pro-
gram from the consumers point
of view. At the same time, how
ever, the possibility of achieving
any set quotas by the savings
route is uncertain, barring a
wave of patriotic motivation which
is not at the moment visible. It
is against this background that
the, most recent trends of saw
ings habits should be assessed.
Coinciding with the consumer
buying wave which struck inn
mediately after the outbreak of
war In Korea, and lasting well in
to the third quarter of this year,
the disposition of many consumers
to abandon all efforts to save vol
UNFAIRLY, and even to draw down
from past aecunulations, is
borne out by available data on
several types of savings. Thus,
time. deposits at commercial
banks throughout the country de-
clined half million dollars be-
tween the end of June and the
end of September, and in this
Federal Reserve District We're es-
tifnafed to have dropped about
so million dollars. In each case,
however, the reductions amounted
10 a relatively small percentage
of aggregate time deposits.
Likewise at savings and loan
associations, Withdrawals during
the third quarter exceeded new
sayings, although the recovery ir
this form of savings during Sep
tefnber kept the total decline fol-
the, third quarter to small
amount.
Savings bonds, too, were sub
iect to the heavy demands foi
liquid funds during the per
iod of the buying splurge. Me-
redemptions and n1aturities foi
the United States as a whole to
tailed $40 million during the thirc
quarter, of which $24 million oc.
CURED in this District. This
liquidation, however, represented
a very small proportion of the to
tai value of savings bonds out.
standing.
More recently the evidence in
dicates that the decline in tht
forms of personal savings jus
mentioned has, been halted, or a
the very least slowed down. Thus
at the end of November, time de
posts at banks both In this ares
and in the country as a whole
we're practically the same as a
the end of September. Saving.
and loan associations in Ohio wers
reporting new savings somewha
I'm excess of Withdrawals Also
In October individuals and invest
ors throughout the country pait
$475 million more for saving
bonds than they received for cash
ins and maturing issues. This las
bit of news is not so favorable al
it seems at first sight, however
because il. allowance is mad,
for the special sale of bonds tx
institutions which was permittes
by the Treasury early in tn,
month it appears that individual
were still selling bonds on bal
ance.
There are many other type
OF savings, of course, besides vol
untary consumer savings. Th
irlterningling of various forms
and their relations to the incur
renee of debt, help to explain dis
: