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ANOTHER

YEAR OF WAR

Thirtieth Annual 'keport
of the
FEDERAL

RESERVE BANK

OF PHILADELPHIA

1944
Third Federal Reserve District

CONTENTS

Page
I

Introduction

..............................
War finance in 1944:
Treasury borrowing

.2

.............................
Bank credit and war financing
...................

..

4

Economy of the Third District in 1944:
Developments

in business

Developments

in banking

7

...........................

13

...........

Prospects of the Third District:
Business prospects
Banking

22

................................

26

prospects ................................

Federal Reserve Bank:
Fiscal Agency

....................................
departments
..........................
Credit policy
....................................
Membership
.....................................
Directors and officers
. ......................
.....

Other

Appendix

....

..........

..............

32
..

34
35
36
36

....

(Contains following
tables: Statement of condition;
profit and loss account; volume of operations; applicaloans; member bank reserves;
tions for industrial
bank
in
changes
member
reserves and related items;
banks in Third Federal Reserve District. )

40

FEDERAL RESERVE BANK
OF PHILADELPHIA

April 30,1945.

To the Member Banks in the
Third Federal Reserve District:

Developments in business and banking
in the Third Federal Reserve District over
another year of war are presented in the
accompanying Thirtieth Annual Report of
the Federal Reserve Bank of Philadelphia.

ALFRED

H.

WILLIAMS

President.

ANOTHER

YEAR OF WAR

The mobilization
in 1944
of our human and material resources
reacheda height and intensity never before known in our recorded
experience. Our armed forces have broadened the attack on our
enemieson all fronts. Those at home virtually maintained for the
whole year the very high rate of output reached late in 1943. The
year's record shows the economy almost completely transformed
to the waging of the greatest war in history.
Total output
of goods and services, or the gross national
product, reached an unprecedented record of almost $200 billion,
about 6 per cent higher than in 1943. It was about equally
divided between
largely for war,
expenditures by Government,
This
and output available for private use.
output met the needs
on the fighting fronts and afforded civilians a greater dollar volume
of consumption than in any previous year. The achievements of
our war economy are revealed by the fact that over one-half of
the munitions schedules were no longer rising and some were
declining.
Never before was labor in this district as in the country
employed so extensively and intensively as at present. About 64
million people, or 61 per cent of the population over fourteen
years of age, were in the labor force. Of these, 12 million were in
the armed forces, and 52 million were engaged in various occupations. Nine million were employed in munitions production,
7
million in other manufacturing
industries, 9 million in agriculture, and 27 million in transportation,
trade, and related service
occupations.
Further expansion of the armed services caused a
shrinkage in the civilian labor force, but average employment did
not decline as much as the labor force, since unemployment
dropped to
Manan unprecedented low of less than one million.
Power shortage has become an acute problem, particularly
in certain industrial areas such as Philadelphia.
1

I

Thirtieth Annual Report, Federal Reserve Bank of Philadelphia
The peopleof the United States, as individuals, received $157

billion income in 1944. They paid $19 billion in personal taxes,
Over three-fifths of the
saved $40 billion, and spent $98 billion.
for nondurable
billion-were
goods, $31
expenditures-$60
billion for services, and $7 billion for durable goods.

The dollar amount of goods and servicespurchased by civilians
has increasedsteadily since 1939. The increasein dollar volume is
due in part, of course, to higher prices, even though quality has
deteriorated. Many services, customary in peacetime, have been
greatly reduced or virtually disappeared during the war. The
significant fact is that our industry has been able both to produce
and deliver a staggering volume of war goods and to meet increasing demandsof civilian consumers. This is a record of exceptional
achievement.
War Finance in 1944
T reasrrr) borrowing
When the war has run its course, the period since 1943 may
well prove to have been the costliest in men, materials, and money.
Disbursements by the Treasury and Government corporations
were in excessof $96 billion, including $91 billion for war. Taxes
and other revenues applicable to this huge total were $44 billion,
leaving a deficit of $52 billion to be met by borrowing.
The
Federal Government actually borrowed well over $60 billion,
as
financing toward the
close of the year also resulted in a sharp
increase in the Treasury's cash balance.
Borrowing operations during 1944 followed closely the plans
developed earlier in the war. Loan drives-the
Fourth, Fifth, and
Sixth of the war-were
the principal means of obtaining new
In each, a "basket of securities" suitable for diverse
money.
investment requirements was offered to the public. In addition
to
savings bonds and savings notes, the basket included a variety of
marketable issues. Shortest among these were the 7/ per cent cer_
tificatcs of indebtedness maturing in one year, and longest were the
2 /2 per cent bonds having more than twenty years to run. Within
these extremes were 2 or 2 %4per cent bonds and, in the last two
ý

Thirtieth Annual Report, Federal Reserve Bank. of Philadelphia
drives, 1 %4per cent notes. These offerings fitted into the general
pattern of rates which had prevailed since early in the war period.
Offerings in all three drives were restricted to investors other
than commercial banks, although commercial banks were given
certain opportunities for limited investment of their time deposits,
concurrently with the drives but not as a part of them. During
the three war loans $59 billion of new securities were sold to nonbank investors, of which $2.9 billion, or 5 per cent, were credited
The
to the sixty counties of the Third Federal Reserve District.
district and national results of the war loan drives are shown in
Sales also are summarized to indithe table by class of investor.
importance
in each of the six
cate the relative
of the District
drives.
Loan Drive sales in 1944
Uollar amounts in millions)
Investor
class:
Individuals,
partnerships,
and per
sunal trusts
Savings hanks ...................
..................
Insurance
companies
............
Brokers
and dealers ..............
State and local governments
and
their agencies
.................
All
( nonfinancial
other
corporations, associati lis, etc. )
........
Total
]? bonds

......................
( inclu(lcd aliocc

individual, )

Total sales to
First I)ri
Second I)riv(
'T'hird Drive
I'nurth
I)rivc
Filth I )rive
Sixth
I)rivc

To al-all

Third Fed.
Res. Dist.

United
States

$1,024
200
283
12

$17,542
5,101
8,106
1,283

5.9
5.1
3.5
0.9

3,348

8.2

1,072

23.610

4.5

$2,925*

$58,990

5.0

9,091

5.5

1.003*
1,0G5*

$ 7.860
13,476
18.944
16,730
20,639
21,621

4,3
4.9
4.9
i. 1
4.9
4.9

$4,852*

$99,270

4.9

274*

in sales to

497

...................
nonbank

investors:

.....................
. ...................
....................
...................
.....................
....................

drives

',, Third District of U. S.

............

ý

33i
65 9
934
fi5(i

* Including proportionate share of purchases hr Conunonwcalth
of Peunsylt"ania, which
in the last two drives were
not allocated by counties.

Apart from the drives, substantial sales
of savings bonds and
funds to support
savings notes contributed
the war effort.
Increased weekly offerings of Treasury bills, largely
taken by the
banking
Total
system, also were part of the financing
plan.
3

Thirtieth

Animal

Report,

Federal Reserve Bank of Philadelphia

credits to the Treasury by this Bank, covering cash sales of all
classesof securities, were nearly $5 billion in 1944.
With
many short term securities outstanding,
and with
maturities coming at frequent intervals, refunding operations also
During 1944
were an important aspect of Treasury financing.
holders of a number of issues guaranteed by the Treasury likewise
were given the opportunity
to exchange them for direct issues of
Government.
the

Ballk. credit and war

financing

From

the outbreak of the war the Treasury has kept four
objectives in mind: (1) to secure all needed funds, (2) to raise a
maximum from nonbank sources, (3) to keep banks liquid, and
(4) to keep the cost of financing down. Initially, when the rate
of war expenditures was rising very rapidly, primary attention
was necessarily directed to securing sufficient funds; but as the
economy became absorbed into the war effort, emphasis was
shifted to securing funds from least inflationary sources. This
shift in emphasis is reflected in the decrease from 41 per cent of
the increase in public debt absorbed by commercial banks in 1942
to 29 per cent in 1944. If Federal Reserve Bank holdings are
included, the reduction was from 50 per cent in 1942 to 40
Per
cent in 1944.
Calendar years
1943

1942

Rank credit and war financing

l'er

lulls
C

Billions
$

int

I'cr
oni

1944
Itilliuus ý Per

ý

cý"nt

Uses of funds:
Iispcnditurc,
...............
Increase in working
balance.....
Total

....................
Source
of funds:
Receipts from taxes, etc.........
R. rrrnwing
....................
Increase in nonhank holdings..
Increase
in Federal
Reserve
flank holdings
............ hank
Inrrca. e in c. nnnxereial
h.. ldinc.
.....
............

57

11"
11
100

64
16
48

a;
7;
38

24

6

4
20
r,4

lun

4

90
2

98
2

96
11)

91
9

92

100

106

100

35

57

38
o?

44
62

33

36

37

42
58
35

5

5

7

6

19

21

ix

17

92

100

iur,

l00

Thirlielh

Annual Report, Federal Reserve Bank. of Philadelphia

In the early period of war financing, before the machinery for

selling securities to nonbank investors was developed, banks were
encouraged to invest in Government
securities and war loan
This
accounts were made exempt from reserve requirements.
during
loan
drives
because
the
relief
war
was considered necessary
rate of war expenditures was increasing very rapidly and banks
seemed hesitant to buy a sufficient volume of Government
Securities.

As war expenditures reached a peak and sales organizations
were developed, larger proportions of securities could be sold to
nonbank investors. It was no longer necessary to rely so heavily

OWNERSHIP
OF INTEREST-BEARINGPUBLICDEBT

5

Thirtieth

Ainlnal

Retort,

Federal Reserve Bank of Philadelphia

Fourth Drive in January
on bank purchases. Beginning with the
1944 commercial bank subscriptions to new issues were limited to
bought secura proportion of their time deposits. As customers
deposits-which
ities, their
required reserves-were shifted to war
loan account, which did not require reserves. Thus, the exemption of war loan accounts from reserve requirements, designed to
direct bank subscriptions,
prevent deficits in reserves as a result of
large
during
Such
war loan drives.
produced
excess reserves
banks
increase
investments.
to
their
excess reserves stimulated
Rank credit, largely excluded from direct participation in war
bond drives, thus entered war financing indirectly as banks PurSome cuschased outstanding issues during and after drives.
have
banks
tomers
sold to
at a premium securities acquired at par
in war loan drives and have reinvested the proceeds in new issues
of succeeding drives. This has facilitated the meeting of quotas,
but has increased the expansion of bank credit. It has been necessary to scrutinize subscriptions in order to restrict development of
such undesirable practices as indirect acquisition of securities by
banks for their own account through customers and acquisitio118
of outstanding Government securities with the understanding
that sellers would use the proceeds to pay for subscriptions
entered through the institution during drives.
Commercial banks also supplied credit by extending loans to
customers for the purchase of Government securities. Along with
other Reserve Banks, this Bank issued circulars urging banks to
discourage borrowing for speculative purchases of Government
securities and to confine security loans to those which can be
repaid out of anticipated income within six months.
The System continued to supply reserves, primarily to meet
increased demands for currency and reserves against enlarged
deposits as well as reductions in gold stock. In so doing it acquired
$7 billion of additional Government securities. Generally speaking, the Reserve Banks acquired securities between drives as reserve
positions tightened and reduced their holdings during drives when
reserve positions eased. In continuation
of the Treasury bill
policy, initiated in 1942, the System increased its holdings of
Treasury bills, which expanded from 52 to 68 per cent of those
6

Thirtieth Annual Report, Federal Reserve Bank of Philadelphia
outstanding. To an increasing extent banks resorted to borrowing from the Reserve Banks when they needed reserve funds.
During most of 1944 the System maintained the pattern of
interest rates with little significant alteration.
At the close of the
however,
in
1945,
a marked preferyear and
the early months of
issues raised
ence of banks and other investors for longer-term
market prices of certain Government securities sharply and lowBetween December and the middle
ered yields correspondingly.
full
February
point or more were registered by some
of
gains of a
bonds,
2
the
taxable
of
per cent
and substantial gains also occurred
in quotations on other intermediate and long-term bonds. On
February 19,1945 the 2's of December 1952-54 issued at par in
the Sixth Drive yielded 1.77 per cent to call date. Banks and
others who may have bought in the desire to safeguard against
possible future offerings of lower-rate securities have in effect
tended to bring about the very situation they sought to avoid.
The activities of member banks in the Third Federal. Reserve
District have formed a part of the general picture of bank participation in war financing and have conformed closely to the average
for the country as a whole. During 1942,1943, and 1944 member
banks in this district increased their holdings of Government
securities by $2,579 million, or 250 per cent. This percentage
increase corresponded closely to that for all member banks. At
the end of 1944 member banks in the district held 5.3 per cent
of the Government securities owned by all member banksapproximately
the same proportion
that they held at the end
of 1941.

Economy of the Third

I'

District

in 1944

DCVCIDJ1111C11ts
117 b11s111C'ss
Industrial

ý.,.,..ý........ --

T. vanctr:
ý.......,....
L/13Ll

ILL

ýl
ý...

t..

was

vuuý,

LivIi

iruainiaineu

..,
III

'-1,,,
Llll,

-J

_]___.: _-

uuring

l llllll

F.. AL

1 k. lAl, iai

virtually

1R

ncnrvn
i. wfl,....

Lice CIILILe

year at just under the all-time peak reached in the

middle of 1943. At the close of 1944 output was still 75 per cent
Similarly, the index of industrial
greater than before the war.
production in the United States, which rose to a peak of 247 in
October 1943, was still at 232 by the
end of 1944, or more than
7

Thirtieth

Annual Report, Federal Reserve Bark of Philadelphia

twice the pre-war level. These indexes indicate the comparatively
milder stimulus of the war in this district.
Although it is impossible to calculate future requirements of
war materials, it appearsthat the peak of war production hasbeen
passed. Since 1939 durable goods accounted for the greater part
of the increase in industrial production in this district. The output of durable goods rose from a pre-war base of 100 to a peak
of 368 in July 1943 and then declined; but at the end of 1944 the
flow of output was still more than three times that of pre-war.
The decline reflects cut-backs in production schedules of some
classesof munitions.
A great variety of war materials is produced in this district,
but the outstanding contributions are transportation equipment
Production of the former
and fabricated metal products.
by
expanded several. times
reason of the Delaware River shipbuilding facilities, and the output of metal products more than
doubled. Activity in the manufacture of transportation equip
ment has declined substantially since the peak attained in Sep
tember 1943, and production of metal products has leveled Of
slightly from the peak output in January 1944.
Output

of consumer goods, except tobacco, shoes, and textile
products, was slightly above that of 1943. Since 1939, production of consumer goods has been irregular and wartime controls
have limited expansion to very modest proportions.
At no time
has the expansion been in excess of 14
per cent of pre-war levels.
Although the war stimulus greatly increased industrial activity'
in this district, it was on the whole somewhat less than in other
areas. Primarily a manufacturing
region, this district might have
been expected to share in major war contracts in about the sane
proportion as its pre-war contribution
to manufacturing
outpur;
But it received a somewhat smaller share of the dollar volume of
contracts owing to considerations of strategic- location, utilization
of available labor, and other factors.

Thirtieth Annual Report, Federal Reserve Bank of Philadelphia

BUSINESSCONDITIONS
THIRD

INDEX
1915-59"*.

RESERVE DISTRICT

FEDERAL

ý

iI

350

I

'

"_^ ._ `ý'"'

rý

300
PRODUCTION

ý",.

ý J

250

DURABLEý
.ý

rýr.

INCOME

250

1ý

t
---1
1\1\

1ý

200
FARMINCOME
(PA

M. J.

150

;

I

DEL.)

\\

ýv

\`

1
r",

`ý
I

ý

ý
I'`ý

100

zoo
NON-AGRICULTURAL
PAYROLLS
-PA**

15

,I

10
ýr
15 > -TRADE

DEPARTMENT
STORE
SALES*
1
AND PRICES

10

ýý

-----

----Mý

I

COSTOf LIVING
IN PHILADELPHIA
5ý
1939
1940
*AOJUSTCD
1011SCASDMAL
VAIIIATCIM
I= LIMCS
OT T14DC
AND

1...
194

1

1942

R.

ýMDUSTIIf

9

1943

194"

Thirtieth

Aurrrral Report,

Federal Reserve Bank, of Philadelphia

Through

December 1944 only 6 per cent of the major war
district, which in 1939
supply contracts were awarded in this
9.0
manufacturing
workers
per
cent
of
the
country's
employed
by manufacture.
and produced 8.1 per cent of the value added
The proportion in contracts for aircraft (2.6 per cent) was espeless than
cially small, and in ordnance (6.9 per cent) somewhat
for ships (8.0 per cent)
have
been
Placements
might
expected.
were in line with the specialized capacity of this area, and those
for miscellaneous items (8.6 per cent) apparently took cognizance
of the diversified facilities of local industry.

Similarly, by reason of its established industrial facilities, this
district did not receiveas many new facility projects as other areas.
Through

November

1944 only about 434 per cent of all new

industrial facilities were assignedto the 60 counties of the district.
Data on military installations, though incomplete, indicate that
the proportion of military facilities was still smaller. This is quite

natural in view of the strategic need for dispersal of forces and
requirements for maneuvers away from centers of population.
Employment
level,
though
and earnings

Employment

in Pennsylvania
remained at a very hig11
lower
in the preceding year,
trifle
than
a

As the armed forces continued to draw upon the

labor supply, employers encountered more and more difficulty in
replacing workers. In Philadelphia, for example, the labor situa_

.ion became increasingly acute throughout the year. In Septern_
per it became necessaryto make the 48-hour week mandatory for
-ssential industries, and war procurement agencies were directed
:o divert new contracts to other areas where labor was more
'lentiful.

Advance preparation for national defense is revealed in
the
At the time of Pearl Harbor, Pennsylearly rise of employment.
vania employment in manufacturing
and nonmanufacturing
was
about 25 per cent above the 1935-39 level. The process of building the armed forces to full fighting strength depleted
manpower
reserves so that the working force at home is now smaller than at
the outset of war.
The industries of this area turned out
put despite wartime shortages of labor.
increases
by substantial
increases in
in working
worKing
partly by
suustanuai
partly
in
to
maintain output at
tms way
possible in this

I

10
10

a huge volume of out_
ou,
This was accomplishedThat
time.
I hat it
has been
been
time.
it has
levels
near all-time peak level,

Thirtieth

Annual

Report,

Federal Reserve Bank of Philadelphia

for a long period is a tribute to the stamina of the working population. The average workweek of all Pennsylvania industries was
stepped up nine hours above the 1939 level. Most of the increased
In iron and steel
effort was concentrated in the war industries.
and transportation
equipment
the average number of hours
hours to
worked was expanded from a pre-war level of about 37
47 hours in 1944. This is in marked contrast to the 37-hour week
that prevailed in consumer goods industries such as clothing.
Payroll disbursements of manufacturing
establishments in
Pennsylvania reached about $3 billion in 1944. This was considerably over twice the amount paid out in 1939. A combination
of substantially full employment, longer hours, and higher rates of
pay accounts for the huge expansion in total earnings. Workers
averaged better than a dollar an hour in contrast to the 69-cent
pre-war level.
Construction All except the most essential building and construction had to be sidetracked as a result of more pressing
for
In this area contracts were
needs
materials and manpower.
awarded in only about one-fourth
of the 1942 volume when
expansion of wartime facilities was at its peak. Half of the local
contracts awarded last year were for urgently needed industrial
structures, utilities, and public works.
the war, the mineral industries have been
under steadily increasing pressure for greater output
and at the same time handicapped by continued loss
Since 1939 anthracite output has been increased
of manpower.
This was
25 per cent despite a 21 per cent decline in employment.
accomplished by improved operating practices and increased
working time. The peak output of 64 million tons last year is
considerably below the 100 million-ton
peak attained during the
last World War, because in the meantime many consumers have
shifted to oil for domestic heating.

Mineral
Production

Throughout

The war imposed sharply increased demand
upon industrial
fuels. Bituminous tonnage in Pennsylvania
was stepped up about
60 per cent. As in the case of anthracite, increased production
was attained with a smaller labor force by extending the working
time and by greater use of machinery.
11

Thirtieth

Annual Report,

Federal Reserve Bank of Philadelphia

Agricultural
income in Pennsylvania, New Jersey,
douDelaware
and
was over $800 million, more than
ble that of 1939. Higher prices are primarily respon_
larger flow of income. Farmers are utilizing their
sible for the
increased returns to much better advantage in this war than they
did in the first World War. They came out of the last war with a
heavier mortgage burden, because of land speculation, but in the
farmers are using their wartime gains to reduce their
present war
debts.
mortgage

Agricultural
income

Total income The tremendously increased tempo of wartime activ_
ity on the farms, in the mines, and in the factories has
payments
boosted income payments in Pennsylvania to well over
This was the highest ever attained and was consider$10 billion.
ably above the record peace time year of 1929.
The swollen stream of income would have brought
retail merchants still greater volume of business had
they been able to obtain the merchandise. Department store sales
were two-thirds above pre-war volume and still rising, though
some of the expansion was due to higher prices. Dollar saleswere
higher in all major lines of merchandise, with greatest gains in
women's apparel. Last year's sales volume in practically all individual lines also surpassed that of the preceding year. The few
exceptions were electrical household appliances, floor coverings,
and furs.

Trade

Prices

Execution and administration of the President's order
to "hold the line" have kept prices well under control,

especially in view of the large buying
power in the hands of the
The cost of living at the turn of the year was 29 per cent
public.
1939, and only two points above December
1943
above August
Prices of clothing,
which rose 9 per cent in 1944, and housefur
nishings, which rose 13 per cent, were the principal
exceptions
to
during
Shortages
1944.
the generally
stable price structure
of
items in both clothing
low-priced
forced
and housefurnishings
higher priced products,
buy
in
to
some
customers
cases of better
This situation
quality and in others of poorer quality.
also applied
to many other items so that the index understates the effective rise
Nevertheless,
in contrast to the last war,
in the cost of living.
a
12

Thirtieth

Annual

Report,

Federal Reserve Bank of Philadelphia

in
much better job has been done in "holding the line, " especially
have
been
fact
inflationary
much
that
ever so
view of the
pressures
stronger.

Developments

in

banking

Member banks in the Third District
continue to reflect the
The most important
impact of war financing.
change was an
increase of $846 million, or 31 per cent, in United States obligations accompanied by an almost equal increase of $837 million, or
Major changes are shown
17 per cent, in total deposit liabilities.
in the accompanying table.

Assets

The outstanding development in bank assets, of
course, hasbeen the continuous and enormous increase

in United States Government

securities. Acquisition of the major
portion of these securities has resulted in creation of additional
deposits. To the extent necessary reserves have been provided by
the Reserve Banks to enable member banks to meet the resulting
increase in requirements.
When the war broke out in Europe,
banks had large excess reserves. Since that time they have moved
to a much more fully invested position so that the relative increase
in cash assetshas been small compared with that in deposits. As
the table shows, banks also have disposed of other assets as they
have acquired Government
securities.

The trend of loans has continued downward, although at a
declining rate. At Philadelphia banks the declines have not wiped
out the substantial increase that occurred prior to Pearl Harbor,
and the volume remains above 1939 levels. At members outside
Philadelphia, however, loans
lower in
were almost one-fourth
December 1944 than in June 1939. Banks also liquidated substantial portions of other securities and miscellaneous assetspartly real estate-as they acquired Governments.
The net result of these
several factors has been to change asset
distributions completely in four
and one-half years. The proportion of Government securities to total assets is almost three times
as great as in 1939. Offsetting this change, loans are only half as
important, other securities
and miscellaneous assets only one-third
as important, and cash two-thirds as important as in 1939.
13

Annual

Thirtieth

Federal Reserve Bank of Philadelphia

Report,

The continued expansion in deposits in 1944 provides
an even clearer picture of the wartime movement of
funds. Total deposits of member banks in this district increased
only 17 per cent, although deposits of all member banks in the
United States increased 20 per cent. Philadelphia member banks
showed an increase of only 13 per cent during the past year, as
compared with an increase of 22 per cent for other member banks
in the district.

Deposits

Per cent change

Ucc. 30,
1944

Resources of member banks
Third Federal Reserve District

(Million

S)

Dec. 31,
1943

])cc. 31,
1941

Per cent
(listributioii

from

June 30,
1939

I)cc. 30,
1944

Inne 30
1939

All member hanky:
Cash as, ct5*
..............
Loans
J. S. (; .....................
uccrnmcnt
nbIigatüm,
Other securities
............
O(her assets
...............
T, dal resonircc;

Philadelphia

Country

+ 27.8
- 12.2
-F382.r,
- 36.5
- 46.6

20.6
13.0
583
6.4
1.8

2ä. G
2G. 3
21.4
17.9

f 16.1

47.4

} 77.3

100.0

100.0

- 19.2
- 22.8
+221.7
- 43.2
-26.2

+
4.3
+ 7.0
+329.1
- 42.5
- 49.5

21.6
13.1
59.9
4.8
1.6

3,
ý.
21.06

+37.7

+ 71.8 1

100.0

100.0

+ 17.1
- 31.G
+280.4
- 199
- 35.1

+ G3.3
- 24?
t4 43.4
32.7
- 44.0

5. S

member banks:

resnurccs

member

........

h3i
381)
1.71)8
138
48

3.1
6.2
-F 2(i. 1
13.8
17.2

3,901 1+

F

12.2

23,6
14.2
5. ý

hanks:

Cash assets*
..............
Loans
........
.
U. S. (; ocernment
obligations
Other securities
...........
Other assets
..............

Total

4.1
- 27.7
+249.8
29.8
- 31.4

.........

securitles
assets ...............

'I'utal

+ 9.4
5.3
+30.6
6.0
-16.9

G.'U3

Cash assets*
..............
Imall
U. S. Government obligation,
Wier
Other

1.257
till}
3 (, 11)
399
109

resources ........

450
428
1!902
2ýi1
61

+ 16.1
4.3
+ 35.0
2.2
- 15.3
-

3,302 1 +]9.9

* Includes reciprocal bank balances prior to 1942.

14

1+

57.2 1+

83..7 1

19.7
13.0
57.6
7.9
1.8

31, ý
19

100.0

100.0

2.0

ý

=1. q
fi. n

Thlrileih

Annual Report, Federal Reserve Bank

of

Philadelphia

The past two years have seen a significant change in the devel-

opment of time deposits at the member banks. From the end of
1937 to the end of 1942 time deposits remained relatively stable.
In the years following 1939 banks ceased to solicit and in many
cases discouraged growth of time accounts by reducing or eliminating interest payments, by limiting amounts, and by recomfor investment in
mending that such accounts be withdrawn
Government securities or placement with specialized savings insti-

Liabilities
accounts
"I'hirl
All

and capital
of member banks

Ic(lcril

Reserve I)istrict

Dec. 30,
1944

Per cent
distribution

Per cent change from
Dec. 31,
1943

Dec. 31,
1941

June 30,
1939

4,384
1,284

+ 17.1
+ 18.3

+ 66.4
+ 20.1

+135.7
+ 13.9

70.7
20.7

53.1
32.2

5,668

+

91.4

85.3

.4
.2

.6
14.1

(M iuian

$)

I)ec. 30,
1944

June 30,
1939

member banks:
)eiuand dcpusits*
..........
Time deposits
..............

+ 53.0

+ 89.8

24
511

+ 26.3
+ 4.1

+
+

+
+

6,203

+ 16.1

+ 47.4

+ 77.3

100.0

100.0

I)cmand
dc1s sits*
..........
Time dcpusits
..............
Total deposits
..........

2,519
155

+ 12.8
+ 13.1

+ 48.1
- 22.5

+104.1
- 37?

ßiß.8
5.4

73.0
14.6

2,674

+ 12.8

+ 40.7

+ 80.7

92?

87.6

)thcr liabilities
Capital accounts ............
...........

18
209

+ 28.6
+ 4.5

+ 12.5
+ 10.0

+ 28.6

7.2

.6
72

.8
11.6

2,901

+ 12.2

+ 37.7

+ 71.8

100.0

100.0

I )cnland dcposits*
..........
Time deposits
..............

1,865
1,129

23.4
-1+ 19.0

+ 99.7
+ 29.8

+197.9
+ 28.3

56.5
34.2

34.6
48.6

Total deposits
..........
Other liabilities
Capital accounts ............
...........
"total liabilities
and
capital accounts
......

2,994

+ 21.7

+ 66.0

+ 98.8

90.7

83.2

6
302

4-20.0
+ 3.8

+

-14.3
+
1.7

.2
9.1

.4
16.4

3,302

+ 19.9

+ 57.2

+ 82.4

100.0

100.0

Total

deposits

Other liabilities
Capital
accounts

..........
............
...........

Total liabilities and
capit; d accounts ......
Philadelphia
member hanks

Total liabilities
and
capital accounts

Country

17.3

9.1
6.2

14.3
3.9

+

member banks:

15

3.8

Tl, irlhelh Annual Rehort, Federal Krscrvc' RmIz. of PLºilaJrllºLºict

MEMBER

BANKS

UNITED

mil I low,

STATES

BILLIONS

SELECTED

ASSETS

ý

i00

90

0
70
G".

4,

I,
. V;

0

,,

-------------ý--

10
riIýIIIý

1131

11)4

11)1

: 14ý

IND

, 142

iN3

19,11

iY44

1938

19P1

', IýýIIII111', ý
1940

1941

II
1942

1943

1944

0

THIRD FEDERAL RESERVEDISTRICT

DCPO$ITS.

4.5 .

ýCLCGTED

ý. __

A5

ITS

!! II 1

4,0

4.5
4.0

i, ý

I

'

y:

,,

- -----------

tºn

rf7!

nof

n. u INý IN? M7

muru
SLCURITICST_
ii
I
1937 193E 1939 1940 1941 1942 1943 1944

I

nu

. _._ .ý_. __.._.,
_..

16

0

Thirtieth

Annual

Report,

Federal Reserve Bark of Philadelphia

tut tons. A very large reduction
Philadelphia in 1942.

in time deposits occurred

in

The sudden change in trend occurred both nationally and
within the district beginning with 1943. In the past two years
time deposits of member banks increased 51 per cent in the
district.
This growth
country as a whole and 32 per cent in this
increase
4
per cent nationally and a
compares with an
of only
decrease of 11 per cent locally in the preceding two years. The
differences in the rates of total deposit expansion in the country as
a whole and in this district in the last two years are explained
primarily by the behavior of time deposits.

Time
(IeI/11NiIM

of member
banks
I'.tuf of year :I
1937.......
193K.......
1939......
194(1.......
1941......
1942...
.
1943...... ..
1944......

Third
United States
Millions
$I

challr(

$Ic

District

Phila. banks
%I llions

Niillions

'%%

11.52' 1
11,510
11,K52
+
12,319
+
12,497
+
12,841
-}15,330
419117
I-

I

Total

lcuiy c$

1.107
1
.11,10t.
3.0
1,115
+ 0.8
3.9
1,099
1.4
1.4
1,069
2.7
2.8
974
8.9
19.4
1,1185 + 11.4
2h.(1
1 2K4
+ 18.3
,

I Country banks

^/0

change

235
241
245
222
200
121
137
155

2.6
1.7
9.4
9.9
39.5
+ 13.2
+ 13.1

+
+

Ni illions

$

872
865
870
877
870
853
949
1,129

1/0
change

0.8
0.6
0.8
0.8
2.0
+ 11.3
+ 19.0

+
+

The rapid changes in the
volume of time deposits indicate the
importance of analyzing their
Such deposits are but
ownership.
one way in which idle balances may be held. Although the rate
of expansion has been increasing and the over-all peak appears not
to have been reached, individual bankers may find time accounts
more volatile than they once supposed, particularly those that are
being accumulated
against post-war purchases.
Deposit
ownership

The broad trends in
ownership of deposits that have
been evident
since surveys were initiated in July
1943 continue.
Personal deposits still grow more
rapidly than business deposits, and hence increase gradually in
Among business balances, those of trade
relative importance.
17

ThirNelh

Annual

Report, Federal Reserve Bark

of Philadelphia

increase in relative imporenterprises show the most consistent
those
the
most consistent decline.
tance and
of public utilities

i

Someof these trends may be expected to continue as long as conditions of all-out war prevail, but changes in ownership are not
likely to be of sufficient size to alter the general pattern very
greatly.
Conflicting

opinions are current as to the effects of transfers
of ownership among groups of depositors in the post-war period.
The importance of the issue arises, of course, from the fact that a
change in ownership affects the behavior of deposits and therefore
the investment policies of banks. Periodic surveys will be continued in order to ascertain any evidences of changes in trend as
soon as possible after they arise.

Ownership
of demand
deposits of individuals,
partnerships,
and
corporations
't'hird
Fed. ltc,. District
Ionic

Amount
$)
(\lillions

Percentage distribution

I cb. 29, July 31, Jan. 31,
1944
1944
1945

let). 29, July 31, jail. 31,
1944
1944
1945

tic business :

Nonfinancial-

823
224
376
140

-Manufacturing and mining
I'uhlic utilities
...........
I'r; ule
...................
Uthcr nonfinancial
........

8; 1
209
392
146

929
788
463
157

1,563 ý 1,598 1 1,737 1
Pinan

27.2
6.7
12.5
4.7

26.5
5.4
13,2
4.5

51.0 j

51.1 1

49. G

2.6
4.5

2
.2
5"1

ial---

Insurance connl,ruiics
...... ..
Other financial
Total

2G.8
7.3
12.3
4.6

domestic

business.......

't'rust funds
.................
Nonprofit
associations
Personal
(incl. farmers) ........
.......
Foreign
.....................

Grand total

..........

69
156

82
141

77
178

2.2
5.1

1,788

1,821

1,992

58.3

58.2

202
87
1,017

223
114
1,172

6.2
3.2
32.2

6.5
2.8
32.5

5G
.9
6-4
3"2
33.5

100.0

1 00. ()

191
98
987
222

I

3,066

I

3,129

I

3,503

11

00.0

I

* Less than 0.1 per cent.

One of the effects of war financing hasbeen to induce
banks to move closer to fully invested positions. Since
banks entered the war with substantial excessreserves,they were

Reser:
yes

18

Thirtieth

Annual

Report,

Federal Reserve Bank of MiladeIpbia

able to expand their deposits without substantial changes in total
reserves. Country member banks in this district experienced considerable increases, but these were more than offset by decreases at
Philadelphia members.
By the end of 1943, however, excess
Philadelphia
reserves, especially at
members, had been reduced to
During
1944
an operating minimum.
total reserves increased sigfor the first time since 1940. Further expansion in
nificantly
deposits will call for additional reserves. Analysis of reserves is
complicated by the war loan drives because they result in shifts
from deposits against which reserves are required to reserve-free
But such increases in excess reserves-or
war loan accounts.
reductions in total reserves-are only temporary.
Member banks in this district have maintained a substantially stronger capital position than those in the
In addition, they have improved
entire country.
their relative position since 1939. It is generally conceded that
the traditional
ratio of capital to deposits is an inappropriate
measure of capital adequacy and that the basic elements are nature
and quality of assets relative to liabilities-contingent
as well as
actual. The accompanying table presents three different measures
of capital adequacy.

Capital
position

Capital positions continue to be influenced more by changes
in deposits and resources than by
The
changes in capital accounts.
from
during
1944 came
chief additions to capital.
retained earnings. Instead
of increasing dividends banks are retaining enlarged
earnings to be in position to resume their traditional function of
calculated, well-considered, efficiently administered risk taking.
funds to
The traditional measure
of capital adequacy-capital
deposits-has been influenced
by
1939
primarily
a 90 per
since
cent increase in deposits as compared with a4 per cent increase
in capital. At the
end of 1944 the ratio for members in this
district was half
again as high as for all member banks in the
country.

Adequacy of capital may also be
measured in relation to the
risks that capital must cover. One such measure is the ratio of

I

capital to risk assets, which are usually assumed to be all assets
other than cash and Government securities. Such a definition of
19

Thirtieth Annual Report, FederalReserveBank of Philadelphia

Capital
Capital

ratios

of member banks

funds to deposits

Third District:
Philadelphia banks
Country banks
All member banks .........................
..........................
United States:
All member banks
..........................
funds to "risk assets"

Capital

Third District:
Philadelphia banks
.........................
Country banks
.............................
All member banks
..........................
United States :
All member banks
..........................
"Net capital" to deposits less cash and
Government securities

28.2
28.0
28.1

26.8

28.6

27.7

35.1
25.7
25.5

40.0
45.0
42.8

53.4

35.2

34.7

Third District:
Philadelphia banks
.........................
Country banks
.............................
All member banks
..........................
United States :
All

member banks ..........................

28.4

;

54."

risk assetsis necessarilysomewhat arbitrary, but it provides a more
realistic measure of capital adequacy than the traditional ratjO'
On this basis, member banks in this district have
shown marked
and continuous improvement, primarily through reduction
risk assets.
A third measure of capital
adequacy was developed troll'
demonstrates
experience which
that capital invested in real estate
bN
cannot be realized readily and that some deposits are covered {
riskless assets. In view of theseconsiderations a ratio is comput`
between capital. less real
estate, called "net capital, " and depo'
less cash and Governments. For
distr``
member banks in this
this ratio shows a remarkable improvement in the last year '3
especially since 1939.

20

Thirtieth Annual
Report, Federal Reserve Bank of Philadelphia
Eir, z;,
i s

Net profits of member banks in this district increased

an additional 19 per cent to $36 million and were the
since 1929. Banks are using the increase in profits to build
up capital
accounts rather than to pay them out as dividends,
which changed little.
In this way they are preparing to resume
risk taking in
by inference
Furthermore,
the post-war period.
one may conclude
has
improved
in
that capital
more
the past five
years than
from
increase.
At an
appears
the mere quantitative
earlier period banks
substantial part of net earnings to
charge off doubtful utilized a
Net
charge-offs last year were only
one-sixth those in assets.
1939, suggesting that weak assets are at a
minimum.
largest

Growth
of 8 per cent in total earnings to $120 million was
offset in
part by somewhat higher expenses. Most of the increase
shown below in
current expenses, however, is accounted for by
higher
taxes on income.

Earnings
Third Districtand expenses
member banks
(Millions $)
Total

1929

1939

1943

1944

earnings.

Ott
On securities
loans

Other

45.;
106.6*
18.1

..........................
.................

Total
.........................
Current
expenses:
Salaries
Interest and wages
.................
Other on deposits........
(including
taxes)...........
Total
,..
ýTet currents: earnings
charýý_,.

_ ,.

I

*Eýc1ud"ýý

110.6

119.8

30.8
52.7
33.4

27.6
16.6
27.8

30.9
9.7
34.7

32.2
10.2
38.6

116.9 ý

72.0

75.3

81.0

53.3

36.6
.........

64.2
32.5
23.1

107.9

.............. .....

declared.

53.3
33.2
22.1

170.2

et Profits

ý "it diridends

44.8 "
42.1"
21.0

...

service charges
and fees on loans.

333.1

21.2 ;

35.3 i
38.8
4.8 ?.4
30.5
36.4

17.4 1

15.8 1

35.9
-14.7

-

16.-1

Thirtieth

Annual Report, Federal Reserve Bank of Philadelphia

Problemsof Commercial banking shareswith industry the problems of carrying on an increasedvolume of operations
bank
operation in the face of much greater difficulties in maintaining
in wartime personnel. Routine operations, such as maintenance
of deposit records, cashing and collection of checks, and provision
The
of currency, have increased with the growth of business.
small bank of 1939 is medium-sized today; the erstwhile mediumsized bank hasblossomedinto a moderately large one. In addition,
banks have taken on many war services, such as ration banking,
sale and redemption of war savings bonds, and tax withholding.
Commercial banking is not classedas an "essential industry",
and many experienced employees have been lost to the armed
forces or have been attracted to war industries by higher wagesAs a result, banks have had to perform the enlarged operations
with lessexperienced help and are being confronted with a much
higher rate of turnover than customary.

Prospects of the Third District
This district

was affected very little by the large movement of
boom centers on the Pacific Coast
to
wartime
people
and in other
its
areas, and
civilian population was about the same in March
1943 as it had been in April. 1940. But substantial population
The expansion of industrial
shifts occurred within the district.
brought about 160,000 people into Philadelphia an,
activity
Chester'
other counties of the Delaware River Valley-Bucks,
Delaware, and Montgomery.
Whether they will stay after the
war depends, of course, primarily
upon employment
oppor,
tunities.
Business

prospects

Although the general level
of post-war businessactivity
district will depend largely
upon general business condit101
throughout the country, it will be influenced by the character 0
the region and its residents. The area has two material ad-,v311
tages: its pre-war pattern of industrial
divers`
was well
fled, and the new facilities built during activity have
the war
not seriotlsh
distorted the pattern
of its economy.
22

Thirtieth

Auurral Report, Federal Reserve Bank of Philadelphia
Formerly,
manufacturing, which employed one-third of all
j employed here, was so diversified
that no major industr al
tri
group accounted for
more than one-sixth of the total em},ment. In
contrast
with other areas, a larger proportion of
the new Government-financed
facilities built in the district
during
the war could be converted to produce durable peacetime
Products. Increased
productive capacity in metals and machinery may
enable this area to participate more favorably in the
post-war
program of "catching up" on durable goods production.

Manufacturing
employment in Pennsylvania rose from almost
1,200
thousand in 1940 to
a wartime peak of 1,600 thousand in
1943. In
the service industries-trade,
transportation,
and others
-the number
from 1,400 thousand to 1,424
increased
of
workers
thousand, but
in the extractive industries-agriculture,
forestry,
fishing,
and
decline
from
mining-there
417
372 thousand.
was a
thousand to

Although Pennsylvania
is primarily an industrial state, manufacturing
be counted upon to take
cannot
War labor
up the sack in the postmarket.
Service
industries
than manufacturing
consistently employ more
and for many years the service industries
lave grown
more rapidly. If long-time trends are continued to
1911,it
fearer appearsthat manufacturing would employ about 200,000
workers than
at the wartime peak, whereas the service
industries
would offer prospective
more than
employment for about 250,000
at the wartime peak.
Post-war
the available prospects in this region may be indicated partly by
evidence with respect to Philadelphia, its industrial
center. Through
active cooperation
Philadelphia Committee for
Economic Development, with the
tt°.ä Posite judgment
this Bank has obtained a
of a majority of Philadelphia's leading indusr
as to the volume
of business and employment they expect
the first

post-war year.

The dollar
volume of
which
manufactured in Philadelphia,
rosefrom $1 400 products
is
in

million
1939 to $2,700 million in 1943,
estimated for
60 Per
the first post-war year
at $2,300 million, or about
cent above the
Total employment
pre-war volume.
in
23

Thirtieth

Annual

Report,

Federal Reserve Bark

of Philadelphia

Philadelphia, which rose from 700 thousand in 1939 to 880 thousand in 1943, is expected to be 824 thousand in the first post-war
year.
Manufacturing
activities, which afforded jobs for about 400
thousand workers at the wartime peak, are expected to employ
330 thousand workers in the first post-war year. Nonmanufac'
turing activities have been estimated to require 495 thousand
workers in Philadelphia in the first year after the war. This is 11
per cent more than the pre-war employment and 4 per cent more
than the wartime peak.

In manufacturing, most of the declines will doubtless be iII
iron and steel, machinery, and transportation equipment-espe'
cially shipbuilding. Declines in these industries may be offset III
part by gains in the food, textile, leather, and printing and publishing industries.
In nonmanufacturing activities a substantial decline antics'
pated in Government service is expected to be more than compen'
sated for by increased employment opportunities in trade and
other services.
On the basis of reports and estimates from leading industrial
concerns it appears that about 900 thousand workers will be in the
post-war labor market of Philadelphia competing for the 324 thou'
sand jobs. With a reasonable allowance for workers in the course
of changing from one job to another, seasonality of occupation"
in the first post-war ye;'r
sickness, and the like, unemployment
be
in
the neighborhood of 36 thousand. While this is not'
might
it
is the most reliable appraisal of the task for whicl'
prediction,
advance preparation must be made.

Concerted efforts by industry and labor are being made
provide jobs for all who seek work. The Federal Reserve Bank of
Philadelphia cooperated with the Committee for Economic DeVel'
opment in stimulating individual firms to devise programs ts'
expand post-war activity. In 1944 joint labor-industry forun';
were held with twenty of the leading manufacturing industries of
Philadelphia. Members of the Bank's research staff prepared
economic analyses of each industry's development, the imp0r1
tance of Philadelphia's position in the industry, and an appra's''
24

Thirtieth Animal
Report, Federal Reserve Ballk of Philadelphia
of the post-war outlook. Representatives of labor and industry
participated in discussions the problems of each industry.
of
It was brought
out at these forums that in some industries the
major post-war
problem will be shortages of raw materials, particularly imported. In
be the need for
other instances it will
lines,
modernization
of equipment or simplification of product
or,
shortages of
fforuagasin,
to deal with
its problems. industry appointed alspecial committee
The purpose of the forums has been to encourage
industry
to seeknew ways of employing more people productively
-to provide the additional jobs that would prevent or minimize
serious unemployment. The
preliminary estimates of possible
unemployment
were made to serve as a challenge rather than as a
prediction of things
to come.
Reconversion
of industrial facilities to peace time production
apparently can be
accomplished in a short time and at moderate
cost. Two-thirds
the reporting Philadelphia concerns indicate
no reconversion of
95 per cent reported
that reconversionproblem whatsoever, and
wou''d require three months or less. Retooling
may require
only several months, but it may take a year or more
before industry
can attain sufficient volume to meet peacetime
requirements
of civilian goods.
A recent
survey of Philadelphia manufacturing
concerns indicates that they
are
to spend about $ 100 million
on new constructionat present planning
and equipment alone as soon as the war ends.
Nearly
two-thirds of this amount is to be expended for machinery
and the
These contemplated
remainder for new construction.
expenditures
may appear small, but it should be noted that they
do
not include any amounts for replenishment of inventories,
trade credit,
or other working capital requirements.
Our economy
must continue to operate under great strain
until the
greatest war of all times is brought to a successful conclusion. The
over-all job of reshaping the economy for peace
will be a
monumental task. However, an early termination of the
war in Europe
would make possible an easier transition to a peacetirne basis.
25

Thirtieth
Banking

Annual Report, Federal Reserve Bark of Philadel phi
Prospects

Two interrelated problems of concern to bankers are t"
demand for bank credit and changes in bank deposits. Answe
to other problems of banking depend largely upon these factors
From the standpoint of the banking system as a whole, changes 1
the volume of bank loans and investments are one side of the shiel
and changes in the level of deposits are the other side, but from th
standpoint of individual bankers this condition does not neces
sarily hold.

Regardless of the levels of business activity and enl"
Total
depositsof
ployment which may prevail in the post-war period'
the banking total bank deposits are not likely to decreasebelow the
system
figure which will be reached by the end of the warI
financing
Deficit
will probably continue for a time after the
fighting stops, and commercial bank holdings of Government
securities are almost certain to increase. New budgetary deficits'
however, may provide less of a problem to the Treasury than
refinancing run-offs and redemptions, along with support of the
market against possible liquidation through sale of market issues.
These problems can hardly be met successfully by the Treasur)'
without considerable help from the commercial banking systen1-

Indeed it is difficult to visualize possible conditions in the first
few years after the war in which bank deposits
will not increase;
Such a complete change in the character of commercial banks
earning assetshasoccurred over the last fifteen years that contras
tion of businessborrowing in time of liquidation and depression`
no longer capable of reducing commercial bank deposits by arl)
appreciable amount, whereas Government deficit financing'
return flow of currency from circulation, or an increase in either
long-term or short-term financing
of individuals or business
increase
bank
deposits.
enterprises may
In our present domestic economy there
'I
are only three potenti,
developments that might
cause substantial reduction in depos'''e
The first would be a desire
on the part of the public to use
currency and less deposit credit. The second would be a repa, "
ment by the Federal Government of debt now in bank portfoli05
in excessof expansion in other types
of banking assets. The tbir
26

Thirtieth Annual
Report, Federal Reserve Bank of Philadelphia
possibility would be
a movement of Government securities from
banks
to nonbank investors, without an offsetting increase in
other loans
or investments.
None
of these developments is likely for some time after the
war. Withdrawals
of deposits in cash in amounts sufficient to
affect the volume
deposits substantially are unlikely.
A reduction in Governmentof debt
be
deflationof sufficient magnitude to
ary is highly improbable
unless
preceded by several years of boom
prosperity.
The prospect of banks voluntarily
holdings
reducing their
of Governments, except to acquire other securities or
obligations
which carry more attractive
yields, would seem
remote.

Pr'iz'ate
There is little doubt that the
end of the war will find
credit
both business
organizations and consumers with a
de"ta;id
filled during considerable accumulation of needsthat could not be
the war. A heavy potential demand for consumers'
durable
goods is generally conceded. Greater differences of opinion
exist as to the magnitude
of businessneedsfor plant expansion,
additional equipment,
and acquisition of inventory.
The
enormous expansion in productive capacity during the
war has led
many to assume that existing facilities will exceed the
quirements
of a peacetime economy and that industrial con-

struction
and equipment needs will be below normal for some
Yearsafter
the war. This assumption overlooks the fact
substantial
that a
part of our war plant is specialized and not
peacetime
adapted to
needs. Furthermore, a mere return to pre-war levels
of production
will not support the level of national income neces`°ary for a high level
of employment. In modernizing our peacetime industry,
management must cope with obsolescence and
cumulated
wear and tear and in many cases must correct
of balance in
a lack
equipment which has been the outgrowth
ized
of specialwar production.
The prospect for increased
tures thus
capital
expendimay be considerably greater than is
suppo_ed in some
quarters.

The difficult
reconversion problem is not just to
ian
produce civilgoods; it is to
adapt our productive facilities to turning
types and
out
quantities of products desired by
the post-war world
27

Thirtieth

Annual Report, Federal Reserve Bank of Philadelphia

and to utilize effectively the cumulative improvement in technology and in materials which has been one of the useful byproducts of an otherwise destructive war. Expansion and
modernization will be necessaryif our economy is to be efficient
and is to maintain high levels of productivity beyond that interim
period when accumulated consumers' demand for goods will provide a temporary stimulus to employment.
Termination
of war contracts will leave some concerns with
large amounts of working capital tied up in inventories which are
not well adapted to peacetime needs. Furthermore, concerns at
present engaged in civilian activities may end the war with large
amounts of substitute or inferior grade products that may pro\'e
unsalable or salable only at less than cost. In both cases working
capital will shrink and the need for new inventory will be urgent.
American industry and trade may emerge from the war witl'
Sucl'
appropriate inventories at the lowest level in recent history.
heavy
by
business
if
ouf
a situation will require
expenditures
is
forward
into
heavy
to
economy
move
and not slump
unen"
ployment.

Opinions differ even more widely as to the amount of bank
credit which will be required by individuals and business enter"
prises in meeting their post-war expenditures. American business'
generally, will face reconversion with more liquid funds than "
any previous time in its history, and the same is true of consunlL 1
as a class. It has been estimated that deposits, currency, a1"
Government securities held by nonfinancial business in the United
States at the end of 1944 would total between S65
and $70 billion.
and that the value of such liquid assets held by individuals on the
Comparable estimate`
same date was approximately $130 billion.
of liquid assets for the Third District would indicate holdings of
between $3 and $3.5 billion by nonfinancial business
and beo%'een
$7 and $8 billion by individuals.
The tendency has been stroll'
in some quarters to interpret these figures
as indicating that the"
will be little demand for consumer credit after the war and t11'ß'
since liquid resources of business in the aggregate exceed probat'
reconversion costs, business enterprise will have little need tO
funds from outside sources.

Thirtieth Annual
Report, Federal Reserve Bank of Philadelphia
Such
are based on inadequate data and analysis.
Aggregateconclusions
figures

averages are not representative of individual
cases, and liquid and
funds are not distributed
in proportion
to
expenditure
The
fact
has accumulated
needs.
John
Smith
that
$5,000 in
savings bonds and cash will not enable William Jones to
buy
a badly needed
when new cars again become
available. Similarly, automobile
fact
the
five times
that one business concern possesses
more liquid funds than it will need to spend on post-war
changes will
not help another concern with slim cash resources and
heavy
reconversion costs.

These
principles are illustrated concretely by a recent survey
of manufacturing
concerns in the City of Philadelphia, in which
this Bank
cooperated with the Philadelphia Committee for Economic Development.
The survey indicated that one-quarter
of
post-war expenditures
now planned by Philadelphia manufacturers for
financing. new construction and equipment would require bank
This was true despite
Government
the fact that total holdings of
securities and demand deposits by Philadelphia
ufacturers
manat the
three-quarters end of 1944 were conservatively estimated to be
of a billion dollars.
Marge
part of business ho'dings of Governments
direA
can be
} offset against present huge
tax liabilities; and, judging by
pre-war conditions
at least two-thirds of existing demand deposits
will be required
as normal operating balances. Termination
war contracts
of
undoubtedly
will tie up large amounts of working
capital pending
interim financial eventual settlement, unless replaced through
such as those afforded by T loans
or other access arrangements
to bank credit.
The
for bankgreater danger is not that there will be insufficient demand
liquidation credit, but that too much expansion
may occur. If
individual
and business holdings of Government
securities of
after the war requires
additional bank purchasesof such
securities,
and if at the same time
there is a tendency for expansion of private borrowing
from
banks,
may develop. It
widespread price inflation
is this danger
that suggests a continuation of
controls on
consumer credit and
toward expansion
effective checks on any tendency
of credit for speculative usesin
modities, or
securities, comreal estate.
29

Thirtieth

Annual Report, Federal Reserve Bonk of Philadelphia

Even if total deposits for the country remain unchanged in the post-war period, deposits of individual
banks may alter considerably. Funds will move in
considerable volume between sections of the country and between
banks within an area. What effects are such shifts likely to have
on the volume of deposits in this district?

Deposit
prospects

The table indicates the unequal expansion of member bank
deposits in different parts of the country during the past five
years. It is apparent that the northeastern section of the United
States and Chicago have not expanded as rapidly as other parts of
Philadelphia member banks expanded least of all;
the country.
These differences in rates of growth have been incidental results of
wartime activity and financing. Heavy Government expenditures
in excess of receipts from taxes and sales of securities-were
-far
in
made
southern and western districts as part of strategic decent
Of
tralization
of specialized war industries and concentration
military personnel in areas favored by climate and possessed of
ample space for maneuvers. In addition, agricultural
regions ill
have
increases
in
income
the
general
experienced
greatest
so that
have
smaller communities and agricultural
areas
expanded more
than large centers of population.
ý
Wartime deposit shifts
Member banks

Gains in deposits
Dec. 1939 to
Dec. 1944
Billions S

Philadelphia
Reserve City Banks....
Philadelphia
District
..............
Large New York City banks
Philadelphia
Country
Banks .........
........
Large Chicago city banks
............
Boston district
Other New York .....................
district............

All

member banks .............

1.0
2.4
12.3
1.4
3.1
Si)
.
3.9

Per cent
64.2
76.7
'Z4.i

89.6
92.2
109.1
122.4

61.0

124.0

4.7
2.4
1.7
2.9
3.2
8.7
2.8
3.1
6.8

124.1
138.4
147.i
1 50.6
,
161.3
178.6
179:2
183.2
190.1

Cleveland district
St. Louis district ....................
Minneapolis district.....................
Kansas City district ..................
..................
Richmond district
..................
San Francisco district
................
Dallas district
Atlanta district .......................
.....................
Other Chicago district
................

30

Changes necessary
to equalize rates
of expansion
Per cC'

Billions
+
+

1.0
1.5

+
+
+

5.7

+
+

31i.4
1.0
jt.. 1

.J+

1
.4-,.

Thirtieth Annual
Report, Federal Reserve Bank of Philadelphia
It seems
reasonableto expect most of these factors to operate
in

reverse after the
war, even though total deposits for the country
as a whole reach
a plateau. For example, it is unlikely that urban
dwellers
will then increase purchases of agricultural
products by
as much as farmers
increase
will
their purchases of manufactured
products, many
of which have been unavailable during the war.
Similarly,
after troops are demobilized and war contracts are terminated, the Government
will no longer spend such huge sums at
cantonments
in
and
areas
Doubtless
with specialized munitions
plants.
some unemployed war workers will leave areas where
Population increases have
been greatest during the war.
The last
two columns have been included in the table to indicate the shifts
that would be necessary to equalize rates of deposit
expansion. They
should not be interpreted as predictions. Rather
they would
appear to set a limit in one direction of the amount of
that may occur. The
other limit would be no post-war
change
Change at
all. Thus, on analytical grounds, it would appear that
even if we had
no further expansion in total deposits the Third
District
might
expect to gain up to perhaps $1.5 billion or onefourth
of its present holdings
of deposits.

Individual
localities
deposits,
or banks, of course, may gain or lose
depending
upon the net result of many factors. Deposits
are likely
to shift from purely
urban centers.
agricultural communities toward
Accounts of customers
production
engaged in specialized war
adaptable may well decline, if their facilities are not readily
deposits, to turning out desired civilian products. Individuals'
during which have been built up to abnormally high levels
the war, may decline
when funds can again be used to
acquire
homes, consumers' durable goods, to repair, remodel,
or build
and to meet
other deferred demands.
general tendency in
gainsbeY
analyzing potential deposit lossesand
an individual bank is
be
to stress the accounts which may
expected to decline.
But when deposits
declining,
as a whole are not
funds
banking
nds lost from
deposit
do not disappear from
one
the
system. No
matter how fast deposits are spent they
Adbank ep up in other deposits, perhaps
A
even in the same bank.
lose

funds only
lmay expect to
when its community, or its
group of depositors, has
a net outflow of cash funds. It
31

Thirtieth

Annual Report, Federal Reserve Baiik of Philadelphia

is more difficult to identify factors which will increase customers'
accounts in the future, but the best approach is to survey the
relative demand for products and services which the community
is equipped to supply, as compared with community needs which
must be supplied from outside.

Federal Reserve Bank
The importance of the Reserve Banks in the war effort was
recognized when they were declared an essential industry. And,
indeed, their operations illustrate in miniature the adjustments that
war industry has had to make to meet the increased responsibilities
under the impact of war.
I

Fiscal Agency

Take for example the Fiscal Agency Department of this Bank

which issues, exchanges, transfers, redeems, and performs othef
services incident to the enormous volume of United States Goy"
There was no way of knowing
ernment securities in this district.
in 1939 or 1941, what problems would be encountered in finanC'
ing the war; consequently, there was no way of knowing what the
The
ultimate task of the Fiscal Agency Department might be.
immediate problem was an insistent need to increase the capacity
for handling an avalanche of work.
The organization had to be
knowledge as to its ultimate size'
expanded rapidly without
Urgency of the task allowed little time for over-all planning 31'ý
Even the newest and most inexperienced employees 1111d
training.
immediately
to work
on operations which normally would ha"e
required months of experience.

In addition, requirements fluctuated greatly. Periodic n"t
loan drives increased volume suddenly and
enormously, while
between drives the manhours required might fall off at times
much as 50 per cent. Especially the early drives could be handle
only because of the loyal cooperation of personnel of the enure
Bank. All departments worked harder and longer to releasesonj
members for aid to "Fiscal. " Many employees simply rema11
at their posts until the work of the day was completed. During
the Third Drive 12,500 hours of overtime were worked by nlen"
bers of the department, and in some casesindividual empl0` e`
worked double the usual number of hours in a single week.
32

Thirtieth

Annual Report, Federal Reserve Bank
of Philadelphia

But
even the fullest cooperation
of other departments was not
enough, and
help had to be obtained from
more
a labor market
which was
already
demands
straining under the
Women
of war industry.
previously unemployed, high school and college
students
°n vacation
and part-time employees who were working regular
hours in
other employment were a few
help
of the sources from which
was drawn. This introduced
0Aerations
serious problems of training.
were subdivided into segments which could be
perby inexperienced
workers after a few days' training, but
fformed
greater strain
for
was placed on supervisors and others responsible
coordinating
the results.
Mechanical
devices,
such as card punching and recording
machines,
were introduced as rapidly as they
new operations
could be secured and
be standardized. This
could
problems because
also raised additional
and maintenance of the shortage of trained supervisors, operators,
further
men. Installation of a new system was itself a
temporary strain
on current accomplishment.
rapid growth of the
threat
organization
provided a constant
ret to
efficiency through overcrowding.
Space was acquired
of the Bank but
prove
moving to new quarters without interg current
performance and the resulting decentralization
da
additional burden. Early in the summer of 1944
all savingsserious
bond functions
ments
and about 94 per cent of the departpersonnel were
moved to new and more squarters
concentrate
iinvolved
But
operations at one place.
ie move itself
transferring
equipment
some 500 employees and many tons of
without interrupting
current operations.

he

staff, which
0 577 during numbered only 28 in 1941, expanded twentythe Fifth War Loan Drive in July 1944. This
efhciehe peak. Thereafter the continuing efforts to increase
ceduresy through planning, training, introduction of new
proand labor
bas
saving devices, and various short cuts began to
reflected in
increases in
It
output per roan-hour.
possible, significant
emplOYees by the end of December, to reduce the
number of
add'tion to 478 and simultaneously to reduce overtime despite
fs
dep
irtmen several operations formerly performed by other
fold

33

Thirtieth Annual Report, Federal Reserve Bank of Philadelphia
The department experienced what in some respects resembled

for a manufacturing
concern,
a partial cancellation of contract
bonds
banks
when qualified
were authorized to redeem savings
on
October 1. The purpose of this move was to relieve the load on
Federal Reserve Banks and to provide a convenient service to the

public. Agents, of course, have not relieved the Reserve Banks
of all operations in connection with redemptions. In the last
three months of the year 32,000 transmittal letters, listing paid
bonds, were received from redeeming banks.

r
ý,

The great volume of work, its exacting nature, and its urgency,
presented a task that could not have been well performed without
a deep sense of patriotism and close cooperation on the part of
everyone throughout the Bank. This record adds to the total
district.
war efforts on the financial front in this
Other depart merits
Changes in the life of the region also are reflected promptly
in
other departments of the Bank. The great expansion in recent
years has put burdens on them similar to those encountered
jr,
To illustrate:
Fiscal Agency, though in less extreme form.
the
number of Treasury checks handled by the Transit Department
increased from 3 million in 1939 to 23 million in 1943 and to S-)
million last year. Most of these were allotment and allowance
checks for families of our rapidly expanding armed forces. The
number of ordinary checks also increased as the dollar total almost
doubled that of 1939.
Both larger incomes and changing methods of payment moreover are reflected in operations of the Currency Departme17t
It sorted
which supplies hand-to-hand money to the district.
anä
167
in
1939
counted
million pieces of currency
and nearly 21 p
last
million
year. In addition, it counted 273 million coins in
1939 and 437 million in 1944.
Acting as agents for the War and Navy Departments and
the
Maritime Commission, the Bank continued to assist commerc.
j
banks to extend loans to war industry by making guarantees u"cier
dollar
Regulation V. Although the
volume of loans approved
and on which guarantees were executed, was 36 per cent less tI'aiZ
in 1943, the total volume of loans outstanding was substantially
34

l
I

Thirtieth

Annual

Report,

Federal Reserve Bank. of Philadelphia

The work of servicing loans expanded cumulatively
greater.
with the total volume outstanding, and the growing complexity
of contracts and regulations relating both to V-loans and the
newer T-loans has further increased the responsibilities of the
Credit Department.
in connection
Administration
of the examination function
forbanks,
with member
and of the regulations pertaining to
facets
funds
important
eign
and consumer credit were other
of
Research along industrial and banking
the Bank's operations.
lines has been
part of
extended considerably as an important
effective preparation for meeting current and post-war problems
by the Federal Reserve System, the banking institutions,
business,
Government.
This
broadened
and the
scope of cooprequired a
eration with public and private agencies, organizations,
and
establishments. To meet this responsibility as well. as opportunity,
representatives of the Bank participated in a great many activities
throughout the district, sparing no effort in making their contribution on the home front.

Credit Policy
Credit policy of the Reserve System continued to be directed
toward assuring success of war finance with a minimum extension
of bank credit and maintenance of reasonable stability in the
Government
All member banks of the System
securities market.
were supplied with about $7Vz billion of additional Federal
Reserve
credit primarily to offset almost $S billion of additional
currency and approximately
$1 billion each for loss of gold and
increased
Acquisitions
reserve requirements.
of Treasury bills
funds to the
be
continued to
the largest means of supplying
market, although purchases of certificates and notes were much
more important than in earlier years.
in this district,
as elsewhere, there was a small
shift from use of bills to direct borrowing from
means of adjusting reserve positions. The number
institutions increased from
50 in 1943 to 69 in
largest amount
under discount at any one time was
million.
35

but significant
this Bank as a
of borrowing
1944, but the
less than $17 V2

Thir/ieth Annual Rejbort, Federal Reserve Bank of Philadelphia
This bank assistedthe War Finance Committees of the region

It
in selling as many securities as possible to nonbank investors.
also adopted measures to curtail excessive purchases of outstandby banks, especially during and following war loan
ing issues
drives. To obtain as large an amount of funds as possible from
sources has been the principal objective toward
noninflationary
directed.
which the efforts of the Bank were vigorously
Menibersbi/)
During the year the number of member banks increased front
646 to 647. Three state banks were admitted to membership and
bank. During
one state member consolidated with a national
the
bank
was organized and two others
sane period one new national
were absorbed by a third national bank. Summary figures showing the principal assetsand liabilities of member and other barlk_
ing institutions in this district are given in the appendix.
Directors and officers
The regular elections for directors of this Bank were held in
the fall of the year. They resulted in the unanimous reelection of
Howard A. Loeb, Chairman of the Tradesmens National Banlc
and Trust Company of Philadelphia to represent Group 1 barks
as a Class A director, and of Harry L. Cannon as the represent,
tive of Group 2 banks among directors of Class B.
It was a great shock to all when Mr. Cannon suddenly died
November 9,1944.
This was a great loss to the Bank and OI1
district which be had served most effectively for nearly twel1tthe
years as a director of the Bank. His death, of course, necessitated
a special election of his successor.
Early

in 1945 Charles

A. Higgins,

Chairman

and President

a
Delaware,
the Hercules Powder Company of Wilmington,
is
banks
for
by
Group
2
beginning
January
the
the term
selected
1945. C. Canby Balderston, Dean of the Wharton School
of
Finance and Commerce of the University of Pennsylvania,
Was
Class
C
director
by
Board
Governors
the
of
reappointed as a
of the
Federal Reserve System, beginning his new term on January
1945.
36

ýp

Thirtieth

Annnal

Report,

Federal Reserve Barak of Philadelphia

Appointments
by the Board of Governors for the year 1944
included Thomas B. McCabe as Chairman of the Board and Federal Reserve Agent, and Warren F. Whittier as Deputy Chairman.
The Board of Directors of this Bank again designated William
Fulton Kurtz, President of the Pennsylvania Company for Insurances on Lives and Granting Annuities, to represent the Third
Federal Reserve District on the Federal Advisory Council during
1944.
A number of changes occurred in the official staff of the Bank.
In May Wallace M. Catanach
was made an Assistant Cashier, and
in August Karl R. Bopp, Director
of Research, was made an
William
D.
Cobb
became
officer.
also
an Assistant Cashier, effective January 1,1945, succeeding James M. Toy, who retired at the
end of 1944 following more than twenty-seven years of effective
service. Philip F. Coleman, an Assistant Vice President, resigned
as of the close of the year to become a Vice President of the First
National Bank
of Philadelphia.

The appendix, beginning on page 40,
contains the following tables:
Statement
Profit

of condition
and loss account

Volume of operations
Applications for industrial

loans

Member bank reserves

Changes in member bank reserves and
related items
Banks in Third Federal Reserve District

37

Thirtieth Annual Report, Federal Reserve Bank of Philadeljihia
Directors
as

1,1945
of January
Group

Class A:
A.

I loaard

Lnch

Chairman,

....................................
Tradc. mcns National

1
Bank

Term E-rpiz-es
lleccniber
31
1947

and Trust

Company, Philadelphia, Pennsylvania.
\V.

George

Reily

President,
Harrisburg,

.....................................
Harrisburg
National
Pennsylvania.

1945
Bank,

Juhe B. lienniny;.....................................
President. Wyoming National Bank,
'I'mikh: umuck, Pennsylvania.
('Ias

3

1946

{i:

Jams,

T. I; ucklc
....................................
Chairman.
II. Itivr
('ununittcc.
Philadelphia,
Pcnnsyl aria.

hark,

Ward

A. Higgins
...................................
Chairman and President, Ilercules
Company, Wilmington, 1)clawarc.
( I?lected February R, 1945. )
I). Kerlin
Secretarv
c": nndrn.

1

1946

2

1947

11hilcu Corporation,

......................................
Camden
and Trcuurer,
\e%% Jersey.

Powder

1945
Forge

Company,

CInrH C:
Thoma,

B. \IcCahe,
President,

Chairman

Scutt

and Federal
Paper Company,

Reserve

\geh t

1945

Chester, Pennsylvania.
Warren

Ucputy Chairman
F. Whittier,
Pennsylvania.
Chcstcr Spring,

C. Canby llaldcrston
.................................
I an, \Chart, m Scholl of Finance
I iiiversity
ania,
of I'ennsyi

I'hilaficlphia,

................

and Commerce,

Pennsylvania.

38

»4G

1947

Thirtieth Annual Report, Federal Reserve Bank of Philadelphia

Officers
as of January 1,1945
ALFRED

PRANK

J.

H.

President

WILLIAMS,

DRINNEN,

L.

E.

First Vice President
C. A.

MCILHENNY,

Assistant

ROBERT

Vice President and Cashier

W. J.

DAVIS,

A.

WALLACE M.

SIENKIEWICZ,

MCCREEDY,

CATANACH,

Assistant Cashier

D.

WILLIAM

Vice President

COBB,

Assistant Cashier

PHILIP

Assistant Vice President
lJlJd

HILKERT,

llircctor of Research

Presirle, tt

WILLIAMG.

N.

KARL R. Bopr,

ERNEST C. HILL,

C.

Vice President

Assistant Vice President

Vice President

Vice

DONALDSON,

M.

POORMAN,

General Auditor

Secretary

39

Thirtieth Annual Report, Federal Reserve Bank of Philadelphia
Statement of Condition
Federal

Reserve

(000's omitted

December 31

Philadelphia ,.
of ,,,
in dollar figures)

Bank

1

1942

1

1943

1944

RESOURCES
Gold certificates
Redemption fund-Federal
Other cash
Total

reserve

Reserve notes....

.......................

Discounts
and advances .....................
Industrial
loans
United States Government
securities.........
Total

loans

and securities

.............

$1,147,114
5,666
21,190

$1,029,794
24,120
24,499

$ 945,229
42,799
17,815

$1,173,970

$1,078,413

$1,005,844

2,380
4,710
440,168

700
4,046
861,738

$ 447,258

$ 866,484

5
2,541,4,620
114,047
4,755
6,925

Due from foreign banks .....................
Federal Reserve notes of other F. R. banks..
Uncollected
items
..........................
flank
premises
............................
All other resources
.........................

Total resources

1 $1,749,501 1

......................

13
117,062
3,600
4,815

505
2,570
1,252,245
$1,255,320
12
4,042
153,977
3,457
3,278

$2,075,007 1 $2,425,930

I. IABILITIES
$ 848,682

Federal Reserve notes
......................
Deposits:
\Ieinher hank reserve account
United States Treasurer-general.............
account..
Foreign
................................
Other deposits
..........................
"Total

deposits

651,566
52,643
67,100
4,672
$ 775,981

.......................

I)cicrred
items
availability
..................
Other liabilities
...........................

'I'utal liabilities

$1,149,726

645,809
31,375
120,273
5,351
$ 802,808

89,503
524

......................

84,031
875

$1,714,691

$2,037,441

$

$

$1,427,510

710,778
28,722
106,353
4,578
$ 850,431
105,809
613

$2,384,363

CAPITAL. ACCOUNTS
Capital paid in
Surplus-Section .............................
7
Surplus-Section
136
......................
kcscrt"cs for contingencies
..................
Total liabilities and capital accotntts...

11,747
15,670
4,393
3,000

$1,749,501

11,686
$ 12,227
17.859
19,872
4,421
4,468
3.600 5,000

$2,075,007

$2,425,930

Ratio of total reserves to deposit and Federal
Reserve note liabilities combined...........

72.3%

55.2%

44.2 %

Commitments to make industrial advances....

$1,346

$1,930

$3.048

40

I

Thirtieth Annual Report, Federal Reserve Bank
of Philadelphia
Profit and Loss
account
Federal Reserve
Bank of Philadelphia
(000's omitted)

1942

1943

1944

$3,947
227

$5,122
217

$7,275
165

$4,174

$5,339

$7,440

$2,455

$2,498
409

$2,827

334
167

229

211

$2,956

$3,136

$3,563

$1.218

$2,203

$3,877

$ 277

$2,928

$ 263

150

100

86

13

41

Earnings from:
United States Government
securities.......
Other sources
..........
.................
Total

earnings

......................

Expenses:
Operating

expenses*
.....................
Cost of Federal Reserve
currency ..........
Assessment for
expenses of Board of Governors
..............................
Total

Current
Additions
Profit
ities

net expenses
...................

net earnings
to current

524

.......................

net earnings:

on sales of U.

S. Government

secur-

.............................
of reserves in excess
of requirements
...
...........................
Other
additions
n..
s
Transfers

$ 435

ýCdllctlrtnc

1

$3,041

1$

390

t'____

11-11 current

Net

additions

Net carvings

to current

net earnings........

1,642**

414

net earnings.........

$1,399

$ 386

$1,239

$3,602

$4,263

$

$

$

available for distribution.......

4

21

Distribution
of net
Paid to Treasury earnings
of United
Sec. iso
13b
hividends
ýýý States,
""
sec.
Paid to member banks...........
l'ransferred
to surplus (Sec. 13b).........
i'r ausferred

to surplus

(Sec.

7)...........

*After

32
Ss
708

84
a4
701

0

28

499

2,789

I

aw
719
47
3,4131

deducting
reimbursements
for
received
fiscal
expenses.
certain
agency
and other
** PrinciPally
1 $1,400,000 charge_off on basilk premises and payments
to Retirement
System.
transferred
to Reserves for Contingencies.

41

Thirtieth

Annual

Re(jort,

Federal Reserve Bank of Philadelphia

Volume of operations
l e(leral

l: eserv

(lank

1943

1939

u4 Philadelphia

1944

1

Pieces or transactions handled
((100's omitted)
Discounts and advances

.....................
Currency
counted ..........................
Coins counted
.............................
Ordinary
checks ......
....
in packages
by.........
Checks handled
automobile
run service ..............................
U. S. Government
checks (including
first

handled

i

1
200,093
433,502
110,713

1
209,594
437,431
112-036

16,370

17,608

L(i,32O

3,117
5,613
(1

23,389

52,426
0
5.275

1,230
337
56

1,214
212
02

166,629
273,429
97,232

Treas-

in 1943).....

ury card checks
Work
relief checks .........................
Ration checks .............................
item, :
Collection
Coupons of U. S. Government
and agencies.
MI other (notes, drafts and coupons)......
Transfer
of funds ..........................
Issues, redemptions,
and exchanges by Fiscal
Agency Department
:
U. S. Covernmmnt direct obligations........
All other
...............................

94
144

0
4,993

1,299
12i5
63

19,717**
4

25,479**
36

$

$

Dollar amounts
(000,000's innittcd)
Discounts and advances
.....................
Currency
counted ..........................
Coins counted
.............................
Ordinary
checks
U. S. (; overnntent ...........................
(including
Treaschecks
ury card checks first handled in 1943).....
Work
relief checks .........................
Collection
items :
Coupons of U. S. Government
and agencies.
All other (notes, drafts, and coupons).....
Transfers
of funds .........................
Issues, redemptions,
and exchanges by Fiscal

Agency Department :

direct obligations........
U. S. Government
All other
...............................

$

11
677
26
23,467

509
1,077
41
45,54ý

669
160

6,723
(1

K, IRH
0

S(1
197
3.197

78
224
7,158

lp3
243
8,4? 4

8,014**
17

9,7HK* *
110

396
122

Securities held in cust4xly for member batiks
at end of year
...
Savings bonds in ..............
safekeeping at end of year
(number of pieces) .....................

327
1,015
40
43,593

Average
$640 mil.

$1,651 mil.
133,000

$1}J? 1

»>il.
2-'yAQp

*Less than 500. **Includes savings bonds sold through other issuing agents
Eid
redemptions through commercial banks qualified during the last direr months o[ 1944

42

Thirtieth Annual Report,
Federal Reserve Bank of Philadelphia
Applications for industrial
loans
Federal Reserve Bank
of Philadelphia

1944

June 30,1934December 31,1944

6
0
0
1

353
457
68
1

7

879

$3,185,000

$59,641,426
17,126,350
3,991,700
500,001)

Number
Approved
Rejected ...............................
Withdrawlt ..........
'
......
Under considerat.
. . ion
.....................
Total number
.......................
A mount
Approved
Rejected
...............................
withdrawn ..,
.......................
Under consideration
...........
.....................
Total
amount
........
...............

Member bank
reserves
Third hederal
Reserve District
(I)oIlar figures
in millions)
Philadelphia
banks:
1942: Jan. 1-15
1943: Jan.
...................
1944: Jan. 1-15.....
1-15
1945: Ja1.1-15
...................
...................
Country banks:
1942: Jan.
1943. Jan. 1-15......
.............
1_
1944: Jau.
1945: tan. 1-15 ................
1-15
...................
All members:
1942: Jan.
1943: Ian. 1-15 ..................
1944: Jan. 1-15...................
1945: Jan. 1-15......
1-15
...................

'

500,000
$3,685,000

Actually
held

Required

$81,359,476

Excess

$449
418
370
388

$294
358
357
374

$155
GO
13
15

224
256
272

316

145
184
215
247

79
72
57
69

673
674
642
704

439
542
572
621

234
13_'
70
84

43

Ratio of
excess to
required

531/,
.,
17
4
4
1j

39
26
28
53
24
12
14

Thirtieth Annual Report, Federal Reserve Bank of Philadelphia
Changes in
member bank reserves and related items
Third Federal Reserve District
(Millions of dollars)

1942

Sources of funds:

Reserve Bank credit extended in district........
Interdistrict
transfers
commercial
..............
Dint
gold purchases, net ......................
Treasury
operations
..........................

1

...................................
Uses of funds:

Total

31
+1,053

-659

-755

676

Banks in Third Fed. Res. District
$)
( tlillons
(Partly dcrivcd)
December 30,1944

+

346

+305

+

281
65

+301

Member
banks

Total

+301

-6+

+258

...................................

1944

+210
+846

+280
10
-8+1-1
-4+1-0

Currency
demand
............................
Member
hank reserve
deposits
.................
"Other
deposits"
at Reserve Bank .............
Reserve
Other Federal
accounts ...............

1

+ 39
+876
+20-0

+258

Total

1943

+

I

Mutual
savings
banks

346

Other
non_
members

Assets
Loans and discounts
..................
U. S. Goverment obligations.........
Other securities
.....................
Cash assets
Fixed assets .........................
.........................
Other assets
.........................
Total
.........................
Liabilities

and capital

Deposits:
ln(liViduals,
ps'rations-

1,067
4,808
783
1,491
137
36

808
3,610
400
1,277
84
24

83
506
272
28
15
4

176
692
111
186
38

8,322

6,203

908

1,211

3,457
2,415
1,001
404
299

2,956
1,243
861
397
210

837

7,576

5,667

837

32
714

25
511

8,322

6,203

908

647

10

accounts

partnerships,

and

cor-

I)cmimd
.........
Time
...........................
U. S. Government
..................
]lank
Other .............................
............................
Total deposits
.................
Other liabilities
Capital accounts ......................
.....................
Total
.........................
umher of hanks .....................

I

885

44

1

-7
-

16
70

501
335
140
99
1,012
133
1,211
?

-'S


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102