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THE BUSINESS REVIEW
FEDERAL RESERVE RANK
OF PHILADELPHIA
\
DECEMBER 1, 1943

Distribution and Ownership of Demand Deposits .
in the Third Federal Reserve District
One of the most significant developments in
the field of banking over the war period has
been the unprecedented expansion of bank de­
posits. Since the outbreak of war in 1939,
demand deposits of individuals and business
concerns in the United States have more than
doubled. This tremendous growth has many
implications for the policy decisions of the
individual banker, who asks—
How has my bank shared in this expansion?

In the event that his deposits have gone up
markedly, as has been the case in most instances,
the next question may well be—
How permanent are these new deposits?

Answer to the second question leads to an anal­
ysis of the position of the bank with respect to
future demands—
How have my investment and loan policies been
administered in viezv of the demands that may be made
upon my bank during the post-war period?

In his position of public trust, the banker
naturally gives primary consideration to the
safety of deposits; as the focal point for local
financial requirements, he has a responsibility
for meeting the sound credit requirements of his
community; and, as the operator of a going
concern, he must have an eye to the proper rela­
tionship of income and expense, and the main­
tenance of earning power. This unique com-




/VV

5

bination of responsibilities calls fyr the exercise
of sound judgment, and the evolution of an ade­
quate policy and program.
• . , '/^j
The development of an effective banking pol­
icy and program is always important to the
proper functioning of the economy, and it is
essential under current and prospective domes­
tic and world conditions. To the extent that
bank management evolves and applies progres­
sive banking standards and methods, it will be
able to sustain and enlarge its position of
strength and usefulness in the community both
in promoting savings and in facilitating the
growth of business which is the prime source of
employment and income. This consideration is
of the utmost importance to individual banks
and the banking system as a whole if savings of
the community are to be properly directed into
productive channels and made a contributory
force in maintaining high levels of production
and high standards of living.
The Over-all Picture
Growth of deposits. Expansion in the volume

of deposits during the thirties and early forties
was the result chiefly of a tremendous inflow of
gold, which terminated in 1941, and the flood
of new securities offered by the Treasury, no
small part of which was taken by banking insti­
tutions. Between June 1939 and June 1943, a
period mainly of intensive defense and war
effort, the amount of Governments hfl>ld ’ v com-

Pt , O/tj

GROWTH AND DISTRIBUTION OF DEMAND DEPOSITS
GROWTH OF DEMAND DEPOSITS
FEDERAL RESERVE DISTRICTS

Member Banka

-20

Changes in each District
(June 1939 "June 1943)---are related to increase of
113% at all Member Banks

-40 -

Not* . D«mand

«f individual! and busin«t*

mercial banks and the Federal Reserve Banks
increased $41 billion, accounting for 44 per cent
of the total rise in outstanding interest-bearing
obligations of the Federal Government.
Deposits at commercial banks, exclusive of
interbank balances, increased by about the
same amount; $29 billion of this was in
demand deposits of individuals and business
enterprises. The striking difference in relative
growth of deposits at member banks in the
northeastern section of the country as con­
trasted with other sections is portrayed in the
chart. Because of these various rates of expan­
sion, the distribution of deposits over the coun­
try has changed considerably over the war
period.
DISTRIBUTION OF DEPOSITS OF INDIVIDUALS AND
BUSINESS CONCERNS—MEMBER BANKS
Federal Reserve Districts:

Distribution—June

Increase
1939-1943

1939

1943

New York............................................

7.5%
3.0
3.4
3.6
7.1
3.6
13.6
1.8
3.1
5.6
6.3
41.4

10.3%
3.9
4.2
4.1
8.0
4.0
14.8
2.0
3.2
5.4
5.9
34.2

191%
173
166
147
141
135
132
131
123
106
99
76

UNITED STATES.....................

100.0%

100.0%

113%

San Francisco.....................................
Richmond...........................................
Dallas...................................................
Cleveland............................................
Kansas City........................................
Chicago................................................
Minneapolis........................................
St. Louis..............................................
Philadelphia.......................................

The growth of 106 per cent in demand de­
posits of individuals and businesses at member
banks in the Third Federal Reserve District was
the third smallest of any Reserve District, and
compared with an average of 149 per cent in the
nine districts outside of the northeast. In the
Page Two



June figures
June 1939=100

Distribution

1939

1941

1943

1939

1943

Third Fed. Res. District
All members............................
Reserve city banks............
Country banks...................

100
100
100

139
141
135

206
200
214

100.0%
59.4
40.6

100.0%
57.8
42.2

United States
All members............................
Central reserve city banks
Reserve city banks............
Country banks...................

100
100
100
100

140
142
138
138

213
172
236
258

100.0%
43.9
32.6
23.5

100.0%
35.5
36.1
28.4

initial phases of the war effort, the Third Dis­
trict, a highly developed industrial area, was
relied upon for immediate production of war
materials, and at that stage the proportion of
war contracts placed here was high. In time,
however, new plants were constructed and con­
versions were completed in other areas, reducing
the share of total war contracts and Govern­
ment expenditures received by the district.
Further evidence of the geographical expan­
sion of the war effort is found in the figures of
deposits classified by location of bank—in cen­
tral reserve cities (New York and Chicago), in
reserve cities, and in areas outside the more
important urban centers of the country. In the
first two years of war, deposits at banks in cen­
tral reserve and reserve cities increased as rap­
idly or more rapidly than at banks located else­
where. This was reversed subsequently, so that
now the so-called “country” banks show the
greatest gains. In part this may represent the
sharp growth in farm incomes, but a factor
which probably is of equal or greater impor­
tance has been the spread of war contracts,
sub-contracting, development of plants in areas
away from the seaboard, and building up of
military establishments. Changes in this district
and in the United States, based on 1939 as 100,
are shown in the table above.
Ownership of demand deposits. While expan­
sion in deposits depends mainly upon national
fiscal policies with respect to taxation and bor­
rowing from others as against borrowing from
banks, the ownership of deposits hinges in large
part upon the decisions of individuals and busi­
nesses regarding the use of their incomes. Since
little was known about the ownership of de­
posits, the Federal Reserve System initiated an
analysis of the subject in May and conducted
another and more complete survey in July.

As of the close of July, 217 banks in the Third
Federal Reserve District supplied the Federal
Reserve Bank of Philadelphia with data show­
ing the ownership of demand deposits of indi­

viduals, partnerships, and corporations. Ninetynine banks with less than $2 million of such
deposits classified accounts of $3,000 to
$10,000, and those over $10,000; 112 banks with
deposits of from $2 million to $100 million re­
ported on accounts of from $10,000 to $100,000
and those over $100,000; 6 larger banks gave
data on deposits of $25,000 to $100,000 and
over $100,000. Since the reporting banks were
distributed widely over the area, and since they
held 75 per cent and classified 52 per cent of
the total at all banks, the sample was deemed
sufficiently complete to estimate the distribution
of the nearly $3 billion of demand deposits held
by all banking institutions in the Third Federal
Reserve District.
OWNERSHIP OF DEPOSITS
_ Demand deposits of
individuals, partnerships,
and corporations
July 1943
Domestic business:
Nonfinancial:
Manu. and mining.............
Public utilities, transpor­
tation, and communica­
tions.....................................
Retail and wholesale trade
and dealers in commodi­
ties.......................................
All other nonfin. business,
incl. constr. and services.

Third Federal
Reserve District

United States

Amount
(millions)

% of
total

Amount
(billions)

% of
total

$ 790

26.5%

$18.4

33.1%

%
District
of
United
States

4.3%

264

8.8

3.4

6.1

7.8

348

11.7

7.5

13.4

4.7

155

5.2

3.5

6.3

4.4

Total nonfinancial. . .
Financial business................

$1,557
405

52.2%
13.6

$32.8
6.0

58.9%
10.7 ~

4.8%
6.8 w

Total bits, deposits. . .
Nonprofit associations,
clubs, churches, etc...............
Personal,including farmers..
Foreign accounts.....................

$1,962

65.8%

$38.7

69.6%

5.1%

2.5
25.7
2.2

6.5
6.5
.2

GRAND TOTAL.........

$2,981

89
927
3

3.0
31.1
.1
100.0%

1.4
14.3
1.2
$55.6

100.0%

5.4%

Although the distribution of deposit owner­
ship in the Third District differs somewhat from
that in the country as a whole, the preponder­
ance of demand deposits in both areas is in the
accounts of business concerns. Variations in the
distribution reflect in large measure differences
in the economic composition of the two areas,
and the varying degree of expansion during the
war years. In the accompanying table, district
proportions of national totals in manufacturing
and mining, trade, and personal accounts are
compared with percentages showing the dis­
trict’s share of activities which may be presumed
to give rise to the bulk of such deposits.
As may be seen from the table, the district’s
share of business demand deposits is scarcely
consistent with its share of country-wide eco­
nomic activity. This is particularly true in de­
posits of manufacturing and mining enterprises.
Although the principal balances of some of the




Relative importance: Percent Third Federal Reserve
District to United States

Manufacturing (value added by manufacture—1939)..
Mining—1939: Value of coal production:

b

Economic Demand
activity deposits
5.9%
6 1

81 1
5.8
100 0

- 4.3%

}
Gash farm income—1942 (3 states: Pennsylvania, New

634-7
3.7

,
1

4.7
6.5

large corporations operating in this district are
kept in New York City, in a normal period busi­
ness deposits might be expected to correspond
more closely with the district’s portion of na­
tional enterprise in manufacturing and mining
lines. But the influence of war activity upon the
growth of deposits has been considerable, owing
largely to the increasing placement of contracts
for war materials in other sections. Accounts
of public utility, transportation, and communi­
cations enterprises and those of financial insti­
tutions (which include many trust accounts),
constitute larger proportions of the country’s
totals in these classifications, as might be ex­
pected in view of the fact that this area is
closely settled and has had a long period of
development.
Whereas locally 31 per cent of demand de­
posits is estimated to be in personal accounts,
including those of farmers, nationally 26 per
cent is so classified. Higher per capita incomes
in the district than in the country make this
appear natural. Denser population and more
accessible banking facilities may also be con­
tributing factors. The district’s proportion of
such deposits throughout the country is 6.5 per
cent, while income payments to individuals are
estimated to be 6Y2 per cent or more of the
national total.
Deposits Within the Third Federal Reserve
District
The foregoing discussion gives an over-all
appraisal of deposit ownership and the relative
growth in the Third Federal Reserve District,
but to the individual banker the survey becomes
immediately significant when growth and own­
ership are broken down into areas of the district
and by size of bank. The banker is thus enabled
to compare the position of his bank with others
of similar location and size.
Areas. Examination of total deposits by
counties, as indicated on the map, shows the unPage Three

The various groups agree in one important
characteristic: classified deposits, covering the
large accounts, are predominantly owned by
business concerns. These classified balances ac­
count for proportions ranging from a high of 75
per cent in the area covering Philadelphia, to a
low of 46 per cent in the case of the area in
which Johnstown and Altoona are located. Un­
classified smaller deposits may be presumed to
be principally personal accounts.
THIRD FEDERAL RESERVE DISTRICT

EXPANSION IN TOTAL DEPOSITS

Hftjvy lines in Penn* indicate boundariec ol Penn*. Bankers Ann. groups

evenness of expansion within the Third Federal
Reserve District. The greatest relative expansion
has occurred in the southeastern metropolitan
section of the district, while the smallest took
place in the anthracite region. But because the
growth of time deposits at the country banks
has on the whole been negligible, many of the
differences in growth of total deposits among
the various areas are a reflection of the impor­
tance of demand deposits.
Returns from the 217 reporting banks as of
the close of July were divided into nine area
groups, corresponding to those shown by the
heavy lines in the map. The areas in the case of
Pennsylvania are seven groups of the Pennsyl­
vania Bankers’ Association; the nine southern
counties of New Jersey and the entire state of
Delaware are the other two areas. In most cases
the sample was sufficiently large to give a rea­
sonably accurate indication of the ownership of
classified large deposits.
OWNERSHIP OF DEPOSITS BY AREAS

Area

Philadelphia........................
Southeast — Reading,
Chester, Norristown,
Pottsyille............................
Northeast — Scranton,
Wilkes-Barre, Allentown.
N orth-central—W i lli amsSouth - central — York,
Harrisburg, Lancaster.. .
Southwest — Johnstown,
Northwest—Bradford. . . .
State of Delaware...............
Southern New Jersey (nine
counties).............................
Total...............................

Page Four



Demand deposits of individuals, part.,
and corporations
Unclass­
reportClassified large deposits
ified
banks Nonfin. Finan. Per­ Other smaller
deposits
sonal
business
business
23

49%

16%

8%

2%

25%

26

37

10

7

2

43

53

45

9

7

2

37

24

37

7

7

2

47

37

37

11

7

2

43

23
4
4

30
47
37

5
2
15

9
12
15

2
8
3

54
31
30

30

13

8

2

47

46%

14%

8%

2%

30%

23
217

_

Emphasis has been placed on changes in the
ownership and distribution of demand deposits *'
for the reason that changes have been almost
entirely in this classification. In this district time
deposits have declined over the war period at
city banks and have shown little expansion at
country banks. For the first time many of the
country banks find themselves with a prepon­
derance of deposits withdrawable on demand, a
factor to be reckoned with in framing bank
policy.
^
Size of bank. While deposit gains since 1939
have been general, their distribution among size
groups has shifted materially during the war
period. From 1939 to 1941 balances at member
banks with total deposits of $20 million or more
increased relatively twice as fast as at the
smaller banks, but in the following year gains
at the smaller banks were much more rapid
than at the larger banks.
*

By far the greatest number of banks have
demand deposits of less than $100 million each
(and most have less than $5 million), but these
smaller banks hold only 56 per cent of total de­
mand deposits and an even smaller share of
total business deposits. Our estimates indicate
that in proportion to total demand deposits
business accounts comprise only 40 per cent at ^
banks with less than $2 million in deposits, 52
per cent at those with $2-$5 million of demand
deposits, 64 per cent at banks with $5-$100 mil­
lion, and 79 per cent at larger institutions. This
reflects the concentration of business balances in
comparatively large accounts.
The importance of not underemphasizing the
place of the smaller banks, however, is indi­
cated by the fact that three-fourths of personal *
demand deposits is in banks with less than $100
million in deposits. Personal and trade deposits
decline in importance as size of bank increases.
In the case of accounts over $100,000, to be
found principally at large banks, 93 per cent of

OWNERSHIP BY SIZE OF BANK
Classified by size of demand
deposits of individuals &
business concerns
Domestic business:
Nonfinancial:
Manufacturing and mining... .
Public utilities, transportation
and communications................
Retail and wholesale trade and
dealers in commodities............
All other nonfinancial business,
includ. construction & service

Less
Over
than
$2-$5 $5-$100 $100
$2
million million million million

10.7% 19.1%

21.4%

35.0%

Total

26.5%

3.1

3.1

5.1

14.7

8.8

16.0

15.5

13.0

8.4

11.7

6.7

6.0

5.5

4.4

5.2

Total nonfinancial.............
Financial.........................................

36.5% 43.7%
8.5
3.2

43.0%
16.1

62.5%
16.4

52.2%
13.6

Total business......................
Nonprofit associations, clubs,
churches, etc...................................
Personal,including farmers..........
Foreign accounts.............................

39.7% 52.2%

64.1%

78.9%

65.8%

3.2
32.6
.1

2.4
18.6
.1

3.0
31.1
.1

3.8
56.5

3.6
44.2

GRAND TOTAL.................. 100.0% 100.0% 100.0% 100.0% 100.0%

total dollar volume was classified as business
and only 5 per cent as personal. The converse
of this is found in relatively small balances—
those of less than $10,000 or $25,000, depend­
ing upon the size of the reporting bank; here
business accounted for only 32 per cent, as
against an estimated 65 per cent classed as
personal.
Banking Policy: Significance of Survey

4k

*

«

In analyzing the significance of these devel­
opments to future bank policies, it is convenient
to divide the problem into two parts, namely,
the future of bank assets and liabilities as a
whole and the share of the individual bank in
the entire structure.
As to the deposit structure as a whole, further
expansion is in prospect during the war to the
extent that Government fiscal requirements are
met through direct absorption of Government
securities by commercial banks or indirectly by
an increase in bank credit to facilitate the distribution of these securities to other investors.
In any event, the country will enter the post-war
period with a vast volume of deposits. The trend
of deposits after the war will depend largely
upon the extent to which Government debt is in
the hands of the banks. Even a decline in gross
debt would not necessarily result in smaller
holdings by banks since cashing in of securities
by the public might result in still larger bank
portfolios with accompanying increases in
deposits.
Any rise in loans also would tend to increase
deposits. One of the important factors that will
affect the post-war demand for loans is the
liquidity of business and individuals. Available
evidence indicates that business in general is




becoming more liquid, as partly indicated by in­
creases in bank balances and holdings of Treas­
ury securities. These accumulations represent
largely retained earnings. War industrial facil­
ities have been largely financed by the Govern­
ment—over three-fourths of the total cost
through March 1943. In less essential lines re­
placement of capital equipment has been diffi­
cult, resulting in the accumulation of funds in
reserves and amortization accounts. Other fac­
tors have been the reduced operations of many
concerns as a result of scarcity of labor and ma­
terials, and inability to replace inventories.
Some part of the accumulation of deposits and
securities, of course, is in anticipation of taxes
and will be used for that purpose.
The magnitude of business funds suggests
that many concerns will be able to finance post­
war conversion costs out of their own re­
sources. The ability of many others to do
so will depend upon the speed with which the
Government effects a settlement of claims aris­
ing under the tens of billions of dollars of out­
standing contracts. In the case of those busi­
nesses which are low in cash and securities and
high in inventories and receivables, increased
demands for loan accommodation are likely to
be made upon the banks.
At the member banks in the Third Federal
Reserve District, business paper in loan port­
folios increased from $352 million in June 1939
to about $500 million late in 1941, but by the
middle of the present year there had been a
decline to $330 million. A moderate increase
from this exceptionally low level may since have
taken place, but it is likely that business loans
now account for only about 8 per cent of the
outstanding credit of these banks.
Although consumer expenditures for goods
and services have been larger than ever before,
they have fallen far short of income payments
to individuals. In the third quarter income pay­
ments in the United States were at an annual
rate of $144 billion; personal taxes and con­
sumer expenditures absorbed $18 billion and
$91 billion respectively, leaving $35 billion (an­
nual rate) as net savings of individuals, accord­
ing to the Department of Commerce. What this
means in terms of accumulated purchasing
power is suggested by estimates that $60 billion
of the $113 billion of deposits and currency out­
standing last August belonged to individuals,
trust funds, and nonprofit organizations. This
does not take into account the $26 billion of
savings bonds outstanding at the end of Oc­
Page Five

tober, most of which are held by individuals.
Moreover, consumer indebtedness has been
greatly reduced; consumer credit, now less than
$5 billion, is only about one-half of that reported
in the early fall of 1941.
It is against this general background that the
individual banker must shape his own policies.
Just as the uneven stimulus given by the devel­
opment of war industries and military centers
has resulted in uneven distribution of deposits,
so shifts of deposits after the war are to be
expected. For the individual banker the impor­
tant thing is to analyze the position of his com­
munity in the post-war world. His community
will tend to gain deposits as its businesses and
individuals sell their products and services out­
side and will tend to lose deposits as they buy
elsewhere. The community’s net position will
be influenced by such factors as changes in pop­
ulation and working force, the adaptability of
local productive facilities to the satisfaction of
post-war demand, the expenditures of inhabi­
tants, especially for durable consumers’ goods,
the needs of business establishments for recon­
version and placing operations on a peacetime
basis.
Along with the analysis of his deposits the
banker will wish to study his prospect for loans.
He will then be in a position to determine his
investment policies. Some banks are now in a
fully invested position. An indication of this is a
consistently low proportion of excess to required
reserves. Recent figures for member banks in
Philadelphia show that this excess has been
averaging about 4 per cent; this contrasts with
figures for the country banks in the district,
which have been carrying balances about 30
per cent above requirements.
Virtually all banks have large volumes of
Treasury securities, which can be used as a basis
for borrowing from the Reserve Bank. On Oc­
tober 18 members in this district had $2,959
million invested in Governments, an amount
four times as large as before the outbreak of
war in Europe. That the bulk of this investment
was in bonds is indicated by the more detailed
figures as of June 30, showing, in the case of
direct Treasury issues: bonds, 59 per cent; notes,
10 per cent; certificates, 18 per cent; and bills,
13 per cent. Four-fifths of the banks had money
invested in bills or certificates or both types of
securities; in the case of three-fifths of the
members, the amount held was equal to more
than 40 per cent of reserves.
Page Six



The growth and distribution of deposit own­
ership also have broader significance than their
effects upon individual bank asset policy. From
the standpoint of the economy in this district, as
well as other reserve districts, questions may be
raised as to whether the large gains in deposits
are permanent or temporary; the extent to
which deposits may be shifted in peacetime
from one district to another and from one type
of ownership to another; the areas in the
economy that may be subject to the greatest
inflationary pressures by reason of the use and
possible change in ownership of deposits; and
the possibility that individual and business pref­
erences for liquidity have undergone funda­
mental changes. To such questions may be
added even broader considerations, including
growth of new industries, relocation of existing
industries, and technological changes within in­
dustries. All such changes are bound to be re­
flected in deposits and are of crucial importance
from the standpoint of banking and the devel­
opment of appropriate banking policies. The
survey of deposit ownership provides the es­
sential background that our banks must have
to facilitate business growth, employment and
income.

BUSINESS AND BANKING
Manufacturing.
The demand for factory
products in this district continues near the
highest levels reached in the war period. Fre­
quent cut-backs are reported in outstanding
contracts for certain types of munitions, but in
some cases they are offset by additional place­
ments in other categories, whose relative impor­
tance in the total war effort has been increased
by developments on the battle fronts. A scarcity
of raw materials and limited productive facilities
still restrict the production of certain goods, in­
cluding some textiles and leather manufactures
for non-war use, but the greatest single factor
preventing increased operations is the shortage
of manpower.

Factory employment in Pennsylvania has fluc­
tuated narrowly in recent months, while payrolls
have continued to advance to new peaks. The
number of wage earners in October, estimated at
nearly 1% million, was little larger than in
September, and only 3 per cent greater than a
year ago. Wage disbursements increased slightly
in October to a new high of $52 million a week,
exceeding those of a year earlier by 17 per cent.
The total number of employee-hours worked was

INDUSTRIAL AND TRADE ACTIVITY

FACTORY

THIRD FEDERAL RESERVE DISTRICI

PERCENT

PAYROLLS

PENNSYLVANIA

PERCENT

CAPITAL
GOODS

'J \!
PRODUCTION
DEPARTMENT
SALES

GOODS
1938

*

A

*

193 9

1940

1941

1942

1943

about 8 per cent above October 1942. In the
three and one-third years of defense and war
production, employment has risen 39 per cent,
payrolls 139 per cent, and working time 84 per
cent, reflecting in large part the tremendous ex­
pansion in durable goods lines, which supply the
bulk of the war materials.
Average weekly income of factory workers at
reporting plants in Pennsylvania increased to a
record level of $46.06 in October, from $45.82
in September and $40.70 a year ago. Hourly
earnings averaging nearly $1.02 were about the
same as in the preceding month, and compared
with 95 cents in October 1942. Average working
time increased in October to 45^4 hours a week
per employee, the highest reported since the
spring of 1930.
The output of manufactured goods in this dis­
trict failed to show the customary increase from
September to October, but with most munitions
plants operating close to capacity and producers
of civilian goods making full use of the raw ma­
terials and manpower currently available, sea­
sonal changes have lost most of their former sig­
nificance. Total production was 13 per cent
greater than a year ago, owing principally to
gains in the heavy industries. In the ten months
ended October, the output of durable goods was
30 per cent above the 1942 level, as against an
increase of only 2 per cent in the case of lighter
products, manufactured chiefly for civilian use.
Coal and other fuels. The demand for solid
fuels continues to exceed the supply, necessitat­
ing the continuance of restrictions on deliveries
to consumers for heating purposes. Substantial




1938

1939

1940

1941

1942

1943

tonnages of anthracite and bituminous coal, tem­
porarily frozen at the mines to meet emergency
requirements, have been released for distribution
to dealers. Reserves of fuel oils have increased
from exceptionally low levels prevailing earlier
this year, but stocks in the Eastern rationing area
still are below the estimated normal for this
season, according to latest official reports.
Operations at collieries in both the hard and
soft coal fields slackened considerably during the
latter part of October, and production was dras­
tically curtailed in early November, when wide­
spread shutdowns resulted from the failure to
negotiate a new contract. Mines were reopened
after the WLB on November 6 approved a higher
pay scale plan worked out by the Secretary of
the Interior, acting as Government custodian of
the mines, and representatives of the United
Mine Workers. Subsequently, the Office of Price
Administration authorized temporary increases
in the retail prices of anthracite and bituminous
coal, in view of a rise in production costs under
the new agreement.
Output of anthracite averaged about 213,000
tons a day in October, as against the 1943 peak
of 218,000 reached in July, and some 197,000
reported a year ago. Total production in the
first ten months, approximating 51 million tons,
was only 1/2 million tons greater than in the
same period of 1942. Requirements for the full
year 1943 have been estimated at 65 million
tons, a goal that in all probability cannot be
reached, since it would necessitate an increase
in output of about 2 million tons a month during
November and December.
Page Seven

Production of bituminous coal in Pennsylvania
decreased in October for the second successive
month but continued above the level of a year
ago. The volume of soft coal mined in the ten
months ended October was 4 per cent less than
a year earlier, reflecting several shutdowns oc­
casioned by failure to negotiate a new contract
to replace the one that expired last April. It
has been estimated that the country’s soft coal
requirements this year will approximate 600
million tons, as against the 580 million produced
in 1942.
Building. Operations in the building industry
are directed almost entirely toward the comple­
tion of emergency construction, which includes
both civilian and military installations. An in­
creasingly large part of new building in the civil­
ian category consists of housing and recreational
facilities in or near centers of munitions produc­
tion to care for the heavy influx of workers and
their families from other areas. Factory con­
struction has been declining for some time, and
expansion programs undertaken by public util­
ity companies will soon be completed. It appears
unlikely that the severe restrictions on nonessen­
tial building can be eased in the near future,
owing to a critical shortage of manpower
throughout the industry and the continuing scar­
city of steel, lumber, and other construction
materials.

Awards of building contracts in this district
have increased from exceptionally low levels
prevailing over the summer. New contracts in
October approximating $1414 million, although
50 per cent greater than in the two preceding
months, were less than one-half the dollar vol­
ume reported a year earlier. All classes of con­
struction except family houses and educational
buildings showed substantial declines from 1942.
The value of contracts awarded in the ten
months ended October was just under $150 mil­
lion, as against last year’s record of over $300
million. The sharpest declines were in place­
ments for factory buildings and public works
and utilities, which reached exceptionally high
levels last year.
The value of retail sales in most lines
continues above 1942 levels in this district and
in the country, reflecting to a large extent the
influence of higher prices. Increases in the sale
of clothing have been especially pronounced and
more moderate gains have occurred in the case
of many other non-rationed soft goods items in
Trade.

Page Eight



BUILDING CONTRACTS
THIRD FEDERAL RESERVE DISTRICT

MILLIONS

TOTAL

INDUSTRIAL

, v

1939

; il

/

! *■J

1940

1942

1943

adequate supply. Declines from a year ago in
most types of consumers’ durable goods have become steeper month by month, as distributors’
inventories neared depletion.
At reporting department stores in this district
dollar sales in October were 8 per cent larger
than a year earlier. Much sharper gains were
shown by establishments specializing in men’s
and women’s apparel, but sales of leather foot­
wear, curtailed by rationing, were smaller than
in 1942. At furniture stores, volume was appre­
ciably less than a year ago; cash sales increased
but credit purchases declined sharply over the
twelve months. Active buying of holiday goods,
influenced in part by the fear of shortages later
in the season, was largely responsible for an un­
usually sharp rise from September to October in
sales of general merchandise and women’s ap­
parel. Preliminary reports indicate that con­
sumer purchases in these lines expanded further
in early November.
Department store inventories in October
again failed to reflect the increases that are
usual in advance of the Christmas buying sea­
son, further emphasizing the difficulty of accum­
ulating reserves in the face of continuing short­
ages in certain lines. Stocks at the close of Oc­
tober were down considerably from a year ago
at department and shoe stores, but at establish­
ments specializing in women’s apparel increased
about one-fifth. Although outstanding commit­
ments for merchandise have declined somewhat
since mid-summer, at the end of October they
were over twice the dollar volume reported at
the same time last year.

«

$

*

^

Activity in wholesale lines slackened some­
what from September to October, the sharpest
decline in sales—28 per cent—occurring in the
case of shoes. The total value of sales in eight
reporting branches of the trade was 2 per cent
larger than a year ago, a much smaller increase
over 1942 than was reported earlier this year.
Inventories at wholesale establishments showed
only a slight decline in the month, but they were
considerably below 1942 in most lines.
Rail freight shipments continue exceptionally
heavy throughout the country, according to the
latest report from the Association of American
Railroads. Class I carriers handled 3 per cent
more ton-miles of revenue freight in October
1943 than a year earlier. In the first ten months,
the increase over 1942 was 15 per cent and in
comparison with 1941 it exceeded 50 per cent.
Traffic in this district, measured in number of
cars loaded, shows substantial gains over the
past twelve months in the movement of less than
carlot freight, solid fuels, grain products, and
livestock.
Banking conditions. Plans are now being laid
for the Fourth War Loan Drive, scheduled to
start January 18 and continue until February
15. An over-all goal of $14 billion from non­
banking investors has been set. Special em­
phasis will be placed upon subscriptions from
individuals; this class of investor is assigned a
quota of $514 billion; it supplied $5.4 billion
last time.

The securities to be offered during the Fourth
Drive will comprise Series E, F, and G savings
bonds, Series C savings notes, % Per cent cer­
tificates of indebtedness, 2*4 per cent bonds of
1956-59, and 2% per cent bonds of 1965-70.
Commercial banks will be given an opportunity
to invest a limited portion of their time deposits
in the 214 ar d 214 per cent bonds, but otherwise
cannot own ;hese securities until 1946 and 1954
respectively
All member banks in the Third Federal Re­
serve District held a record $2,959 million of
United States Government obligations on Octo­
ber 18, according to preliminary tabulations.
This investment was four times as large as be­
fore the outbreak of war in Europe; it consti­
tuted 69 per cent of total earning assets, as
against 33 per cent in June 1939 and 8 per cent
in 1929. As the chart shows, gains in late years




INVESTMENTS IN U.S. GOVT OBLIGATIONS
MEMBER BANKS

THIRD FED. RES. DISTRICT

MILLIONS

1600

PHILADELPHIA
BANKS '■
1200

1939

1940

1941

1942

1943

1944

have been large at both the Philadelphia and
country banks.
Since October the investment in Governments
has decreased somewhat. Reports from a group
of banks in leading cities show that there was
a decline of $69 million to $1,658 million at
these institutions between October 20 and No­
vember 24. Holdings of United States bonds
increased further, but declines were reported
in shorter term issues, the largest being $75
million in Treasury bills, of which only $176
million are now held as against a peak of $308
million seven months earlier. The current re­
duction in the bill portfolio was due partly to
sales to maintain reserves in the face of a
decline in deposits. United States Government
balances at the reporting banks decreased $159
million and interbank deposits also were down
somewhat. Further gains approximating $100
million in the demand balances of individuals
and business concerns reflected in part the re­
turn of a portion of the funds withdrawn and
spent by the Government.
For the district as a whole, there was a de­
cline of $3 million to $612 million in member
bank reserves during the five weeks ended No­
vember 24. Approximately $8 million of re­
serves was absorbed by operations of the Treas­
ury, and a substantially greater amount through
currency demand. These losses, however, were
largely compensated for by gains in interdistrict
commercial transactions and an increase in Re­
serve Bank credit. Treasury bills held by the
Bank under repurchase option expanded $24
million to $258 million, despite the large
amounts resold or redeemed at maturity.
Page Nine

BUSINESS STATISTICS
Production

Employment and Income

Philadelphia Federal Reserve District

in Pennsylvania

Adjusted for seasonal variation
Per cent change
Indexes: 1923-5-100

Oct. Sept. Oct.
1943 1943 1942

Oct. 1943
irom

1943
from
10
mos.
1942

Year
ago

Mo.
ago
INDUSTRIA LPRODUCTION 153p 156 136 - 2
MANUFACTURING............
139 - 2
157p 161
259p 269 221 — 4
Durable goods......................
Consumers9 goods..............
86p 87
83 — 1
Metal products.....................
175 179 157 - 2
Textile products...................
65 + 2
67p 66
Transportation equipment
750 781
579 r - 4
Food products.......................
107p 108
95 - 1
Tobacco and products........
85
92 116 - 8
Building materials...............
38p 37
52 + 5
Chemicals and products. . . . 161
164r 136 - 2
Leather and products..........
98p 100
97 - 2
Paper and printing..............
96
97 r 90
0
Individual lines
Pig iron...................................
109 116r 110 - 6
Steel.........................................
143 149 r 130 - 4
Silk manufactures................
83
81
78 + 3
Woolens and worsteds........
54p 54
54
0
Cotton products...................
48
52
59 - 7
Carpets and rugs..................
53r + 6
49p 46
Hosiery....................................
70
74
74 - 5
Underwear.............................
140 146
139 - 4
Cement...................................
42p 40
77 + 5
Brick........................................
55
54 r 69 + 2
Lumber and products.........
27
25
29 + 7
Bread and bakery products
+ 1*
107 110
98 - 3
Sugar relining.
121
44 +24
98
115p 127
96 r -10
Cigars.............................
115 - 9
83
91
Paper and wood pulp.
84
83 r 82 + 2
99
99
92 - 1
Shoes.......................................
112 112 119
0
Leather, goat and kid.........
85p 88
77 - 4
Paints and varnishes...........
92 103
83 -10
Coke, by-product.................
165 171
163r - 4
COAL MINING.....................
81
83
76 r - 2
Anthracite..............................
80
74r - 1
81
Bituminous............. ..............
93 101 r 88 - 8
CRUDE OIL............................
388 403 458 - 4
ELEC. POWER—OUTPUT. 400 414 365 - 3
Sales, total.............................
440 443 371 - 1
Sales to industries................
383 347 290 +10
BUILDING CONTRACTS
TOTAL AWARDSt...............
42
49 126 -14
Residential!...........................
38
36
45 + 5
Nonresidentialf. .. v>... ..
38
59 243 -36
Public works and utilities!-.
55
47
110 +17

+
+
44+
+
+
+
—
+
+
+

Not adjusted

+
+
+
+
+

12
13
17
4
11
3
30
12
27
27
19
1
7

+
+
—
+
+

Oct. Sept. Oct.
1943 1943 1942

2
8
3
2
5
7
2
3
40
12
9
10*
7
48
28
11
0
3
5
11
b
2
1
1
4
11

155p 156
160p 160

139
142

182
69p
718
120p
104
41p
163
104p
97

181
66
740
117
106
39
163r
109
96

163
68
554
104
141
56
137
104
91

109r
141
81
58
49
46
74
146
46
55r
27
116
112
84
165
106
83r
98
128
92
98
165
83
81
103r
403
406
438
368

109
130
79
59
61
56 r
81
152
86
70
30
110
102
37
131
141
83
93
129
80
89
159
76
74
95
458
376
371
282

48
42
56
43

130
52
233
116

_ 101
+
+ 7
1
— 19
— 8
— 5
0
— 46
— 20
— 6
+ 7*
+ 9
+176
+ 19
28
+ 3
+ 7
6
+ 10
+ 11
+ 2
+ 8
+ 8
+ 5
— 15
+ 9
+ 19
+ 32

_
+

—
+
+ 15
+ 21

108
143
85
58p
50
50p
77
152
47p
56
28
118
111
102
169p
102
86
100
121
88p
99
162
82
80
100
388
412
440
372

_ 67
_ 17
— 84
' 50

34
_ 2
_
— 47
" 38

43
43
37
58

* Unadjusted for seasonal variation.
p—Preliminary
! 3-month moving daily average centered at 3rd month.

—
—
—
+
—
—
+
+
+
+
+
—
—
+
+
+
+

Employment

11

GENERAL INDEX
Manufacturing....................
Anthracite mining.............
Bituminous coal mining.. .
Building and construction.
Quar. and nonmet. mining.
Crude petroleum prod.......
Public utilities.....................
Retail trade..........................
Wholesale trade..................
Hotels....................................
Laundries. . .........................
Dyeing and cleaning..........

Wilkes-Barre....
Williamsport....
Wilmington........
York.....................

- 1
0
- 4
0

-14
+ 3
+21
- 5

Sept.
1943

Building
permits
value
Oct.
1942

Sept.
1943

Oct.
1942

Sept.
1943

Oct.
1942

+ 3
- 24
- 87
+199
- 70
- 65
- 67
+ 30
+ 64
- 36
- 9
+ 43
0

+238
- 8
- 78
+265
+ 182
- 91
+241
+128

+17
-10
- 8
-13
15
-15
-13
b!2
1-13
+ 9

+ 7
+10
+13
0
+13
+ 9
+12
+19
+18
+15

+11
+10

+ 3
+ 9

-12
- 9
-17
-12
- 6
-19
-13
-47
- 9
- 9
- 8
-12
-13

+ 7
+ 8
- 1
- 2
+15
+11
+ 11
+ 8
+13
+13
-18
+12
+ 9

+14
+14
+ 4
+16
+21
+21
+11
+27

+
+

6
1
7
2

-31
+13
+33
+ 4

+ 52
- 18
+348
- 88

* Area not restricted to the corporate limits of cities given here.

Page Ten



Debits

Sept.
1943

2
1
3
1
3
1
1
4

326
484
91
346
132
317
219
140
158
147
163
157
167

+1
+1
+ 2
- 2
- 8
0
- 3
0
+ 8
0
+ 4
+ 2
+ 9

+ 14
+17
+ 8
+12
- 7
+10
+ 6
+ 3
+15
— 3
+ 5

Payrolls*

TOTAL......................................
Iron, steel and products.. .
Nonferrous metal products
Transportation equipment
Textiles and clothing.........
Textiles............................
Clothing...........................
Food products.....................
Stone, clay and glass.........
Lumber products...............
Chemicals and products...
Leather and products........
Paper and printing............
Printing............................
Others:
Cigars and tobacco........
Rubber tires, goods........
Musical instruments... .

119
131
195
150
83
75
112
121
90
51
124
77
103
95

0
0
+1
0
0
0
0
0
+ 1
0
0
- 1
+ 1
+ 1

+ 3
+ 4
+ 2
+20
- 6
- 6
- 8
+1
- 4
- 3
+ 5
-16
+ 3
+ 4

197
280
411
258
122
114
165
178
133
81
213
113
146
128

+ 1
+ 1
+ 4
0
+ 5
+ 5
+ 4
+ 2
+ 3
+ 5
+ 1
0
0
- 2

+17
+19
+17
+25
+ 8
+ 9
+ 5
+16
+ 6
+ 14
+20
- 8
+13
+12

58
143
100

- 1
+ 2
+ 4

-15
+29
+31

80
284
173

- 1
+ 4
+ 3

- 7
+55
+42

* Figures from 2906 plants.

Hours and Wages

Oct.
1942

+
+
+
+
+
+
+
+

0
+ 3
-19
-15
- 9
-18
- 3
- 3
+ 3
+ 7
+ 3
- 9
- 7

Per cent
Per cent
Oct. change from Oct. change from
1943
1943
index Sept. Oct. index Sept. Oct.
1943 1942
1943 1942

Indexes: 1923-5-100

October 1943
and per cent change
from year ago

Retail
Sale

+1
0
0
- li
-10
- 2
- 1
- 1
+ 9
0
+ 1
+ 1
+ 1

Employment*

-Revised.

Local Business Conditions*
Factory
payrolls

135
184
50
82
51
96
138
99
118
106
102
100
97

Manufacturing

Factory Workers

Percentage
Factory
change—
employment
October
1943 from
Sept. Oct.
month and
1943 1942
year ago
Allentown........... +1
- 2
Altoona...............
0
+10
Harrisburg.......... +1
- 8
Johnstown.......... - 1
- 3
Lancaster............ +1
+ 8
Philadelphia.... +1
+ 8
Beading...............
0
- 3
Scranton..............
0
+14

Payrolls

Per cent
Per cent
Oct. change from Oct. change from
1943
1943
index Sept. Oct. index Sept. Oct.
1943 1942
1943 1942

Indexes: 1932-100

17
19
30
2
12
3
57
13
9
22
15
7
3

+

Industry, Trade and Service

TOTAL............................
Iron, steel and prods..
Nonfer. metal prods...
Transportation equip..
Textiles and clothing..
Textiles........................
Clothing.......................
Food products.............
Stone, clay and glass..
Lumber products.........
Chemicals and prods..
Leather and products.
Paper and printing. . .
Printing........................
Others:
Cigars and tobacco. .
Rubber tires, goods..
Musical instruments.

Weekly
working
time*

Hourly
earnings*

Weekly
earnings!

Aver­
Aver­
Aver­
age Ch’ge age Gh’ge age Ch’ge
hours
45.5
47.0
46.0
47.5
40.3
41.4
37.7
44.4
41.2
44.5
45.1
40.9
43.4
40.7

+ 5 $1.018 + 8 $46.06
+ 6 1.086 + 6 51.02
+ 6
.956 + 8 43.97
0 1.157 + 5 54.98
+ 3
.739 +11 28.68
+ 4
.763 +11 31.53
+ I
.679 +11 25.65
+ 5
.781 +11 34.79
+ 6
.883 + 3 36.29
+ 3
.746 +14 33.09
+10 1.027 + 4 46.16
+ 3
.723 + 8 29.33
+ 5
.869 + 5 38.01
+ 6 1.014 + 5 41.31

+13
+ 13
+15
+ 5
+11
+16
+13
+ 16
+10
+18
+16
+10
+ 8
+ 8

41.8
44.2
48.1

+ 2
+ 4
+ 7

+10
+20
+ 9

* Figures from 2754 plants.

.601 + 9
.998 +15
.945 + 2

25.08
44.09
45.42

! Figures from 2906 plants.

Distribution and Prices
Wholesale trade
Unadjusted for seasonal
variation

Per cent change
1943
from

October 1943
from
Month Year
ago
ago

Sales
Total of all lines....................
Boots and shoes..................
Drugs.....................................
Dry goods.............................
Electrical supplies..............
Groceries...............................
Hardware.............................
Jewelry..................................
Paper.....................................
Inventories

- 3
-28
+ i
- 4
- 7
+1
+1

+ 2
-30

Paper.....................................

+n
+ii
+ 4
+19
+23
+13
-10
- 8
- 6

05

- 4

+
-31
+16
- 7
-21
+25

+
—
+
-

-16
-26
-42
+ 5
- 3
-31
-21

0

Electrical supplies..............

10

mos.
1942

1
2
4
3
1
2
8

Basic commodi ties
(Aug. 1939 =100). . .
Wholesale (1926 =
100).............................
Farm...........................
Food............................
Other..........................
Living costs
(1935-1939=100)...
United States...........
Philadelphia.............
Food.......................
Clothing................
Rent........................
Fuels......................
Ilousefurnishings.
Other......................

Per cent change from
Oct. Month Year Aug.
1943 ago
1939
ago
0

+ 5

+ 78

103
122
105
97

0
- 1
0
0

+ 3
+12
+ 2
+ 2

+ 37
+ 100
+ 56
+ 21

124
124
137
131
107
106
125
116

0
+ 1
+ 1
0
0
0
0
+ 1

+
+
+
+

+
+
+
+
+
+
+
+

178

5
5
»
4
0
+ 2
+ 2
+ 3

26
26
47
32
4
10
24
15

Source: U. S. Bureau of Labor Statistics.

Not adjusted

Per cent change
Indexes: 1935-1939=100

Oct.
1943

RETAIL TRADE
Sales
Department stores—District....
Philadelphia
Women’s apparel............................
Men’s apparel..................................
Shoe....................................................

Inventories
Department stores—District. . . .
Philadelphia
Women’s apparel............................
Shoe....................................................

Source: U. S. Department of Commerce.

Prices

Adjusted for seasonal variation

FREIGHT-CAR LOADINGS
Total...........................................
Merchandise and miscellaneous
Merchandise—l.c.l......................
Coal..................................................
Ore....................................................
Coke.................................................
Forest product............................
Grain and product......................
Livestock........................................

MISCELLANEOUS
Life insurance sales___
Business 1 iquida tions
Number......................
Amoun t of liabilities,
Check payments...........

Sept. Oct.
1943 1942

150p
147
147
151
130p

138
136
137
150
138

139
137
123
117
143

140p 156
136 157
180 182
88p 87

160
163
148
103

136
129
85
135
185
188
102
152
132

138
131
87
145
183
200
109
131
123

133
128
75
124
189
174
114
136
121

105

109

220

* Computed from unadjusted data.

October 1943
from
Month Yeur
ago ago

+

+

+ 61
-

8
+ 7
+20
+29
- 9

-10

-12

8

+ 9
+ 7

-13

1943
from
10
mos.
1942

Oct. Sept. Oct.
1943 1943 1942

+

l71p
171
168
169
l46p

6

+6

+20
+ 5
- 2

-16

-1
+1

+22

1

+3

149
146
160
135
157

159
159
141
131
161

165p 165
162 165
212

188
193
181

94

111

154
142
90
160
295
212
137
130
148

143
135
79
138
271
197
134
136
142

220

-15

95p

2
- 3
- 2

- 7
+16
+ 7

+ 8
- 2
+
8
-11

-111
+ 61

+12
+ 9

+ 5
+12

147
137
90
148
266
214
119
152
154

75

- 3

+40

+10

109

96

78

-71*
+58*
+14

-65*

15
29
164

12
6

146

+ 25*
+368*
- 24

51
19
143

-

+
- 13
+131
- 7

+ 61
-

-

+20*

+19

198

p—Preliminary.

BANKING STATISTICS
MEMBER BANK RESERVES AND RELATED FACTORS
Changes in—
Reporting member
banks
(000,000’s omitted)

Nov.
24,
1943

Assets
Commercial loans................... $ 245
43
11
Other loans to carry secur...
41
Loans on real estate..............
Other loans..............................

103

Five
weeks

One
year

+$ i

Sources of funds:
Reserve Bank credit extended in district........
Commercial transfers (chiefly interdistrict).. .

—

2
2

-$ 8
+ 18
*
6

-

2

*

Total loans............................ $ 443

-$ 5

-$ 16

Government securities.......... $1587
Obligations fully guar’teed..
71
Other securities......................
180

—$68
- 1
- 6

+$679
+
8
- 65

Total investments............... $1838

—175

+$622

Total loans & investments. $2281
Reserve with F. R. Bank.. .
373
Gash in vault..........................
28
Balances with other banks..
77
62

— $80
+ 9
- 1
- 5

Liabilities
Demand deposits, adjusted. $1594
Time deposits..........................
163
U. S. Government deposits..
494
Interbank deposits................
330
Borrowings...............................
3
12
Capital account......................
225

+$96
+ 1
-159
- 19
+ 3

+$ 99
+
5
+ 460
- 60
+
3

+ i

+

♦Figures not available.




Philadelphia Federal Reserve District
Oct. 27
(Millions of dollars)

+$606
- 56
+
1
- 34
—
4

6

Changes in weeks ending—
Nov. 3 Nov. 10

Nov. 17

Nov. 24

Changes
in five
weeks

+15.9
- 5.7
-14.1

-49.1
+30.3
+36.8

+34.0
- 9.8
- 2.3

- 5.7
+ .8
+ 1.5

+28.5
+ 10.4
-30.4

+23.6
+26.0
- 8.5

- 3.9

+18.0

+21.9

- 3.4

+ 8.5

+41.1

Uses of funds:
Currency demand....................................................
Member bank reserve deposits...........................
“Other deposits” at Reserve Bank...................
Other Federal Reserve accounts........................

+ 6.5
-11.0
+ 0.6
- 0.0

+ 11.0
+ 6.0
+ 1.4
- 0.4

+12.7
+ 7.2
+ 2.0
- 0.0

+ .7
- 1.2
- 2.9
+ 0.0

+13.9
- 4.1
- 1.3
+ 0.0

+44.8
- 3.1
- 0.2
- 0.4

Total..........................................................................

- 3.9

+18.0

+21.9

- 3.4

+ 8.5

+41.1

Member bank
reserves
(Daily averages;
dollar figures in
millions)

Held

Re­
quired

Ex­
cess

Phila. banks
1942: Nov. 1-15..
1943: Oct. 1-15..
Oct. 16-31. .
Nov. 1-15. .

$393
347
351
360

$337
329
336
347

$56
18
15
13

Country banks
1942: Nov. 1-15..
1943: Oct. 1-15..
Oct. 16-31. .
Nov. 1-15. .

235
272
263
264

170
196
200
204

65
76
63
60

Ratio
of
excess
to re­
quired
17%
6
5
4
39
39
32
29

Federal Reserve
Bank of Phila.
(Dollar figures in
millions)

Changes in—
Nov.
24,
1943

Five
weeks

One
year

Bills discounted.... $ 4.1
Bills bought..............
0
Industrial advances.
4.4
U. S. securities......... 706.6

+$ 3.4
0
+ 0.0
+ 45.6

+$

Total.........................
Note circulation.. . .
Member bk. deposits
U. S. general account
Foreign deposits... .
Other deposits..........
Total reserves...........
Reserve ratio............

+$49.0
+ 39.8
- 3.1
15.7
+ 16.3
- 0.2
- 9.3
- 1.8%

+$333.3
+ 281.3
- 32.2
+ 23.8
+ 58.1
6.6
- 11.7
- 13.9%

$715.1
1100.2
611.6
24.0
125.3
3.5
1161.3
62.3

2.9
0
0,6
+ 331.0

Page Eleven

National Summary of Business Conditions
INDUSTRIAL PRODUCTION

Federal Reserve index. Monthly figures, latest
shown are for October, 1943.

DEPARTMENT STORE SALES AND STOCKS

1937

1938

1939

1940

1941

1942

1943

Federal Reserve indexes. Monthly figures,
latest shown are for October, 1943.

COST OF LIVING

1937

1938

1939

1940

I943

Bureau of Labor Statistics’ indexes. Last
month in each calendar quarter through
September, 1940, monthly thereafter. Mid­
month figures, latest shown are for October,
1943.

MEMBER BANK RESERVES AND RELATED ITEMS

1939

Wednesday

figures, latest shown
November 17, 1943.


Page
Twelve


are

for

Industrial activity was maintained in record volume in October and the
early part of November. Value of department store sales continued at an
exceptionally high level.
Industrial production. The total volume of industrial production continued to
increase slightly in October and the Board’s seasonally adjusted index was at
245 per cent of the 1935-39 average, as compared with 240 in July and 227 in
January. War production in the machinery and transportation equipment in­
dustries showed a further rise, reflecting largely a new high level of production
of aircraft, aircraft engines, and parts. The total number of planes accepted
during the month was 8,362, or 11 per cent more than the average in the third
quarter. Deliveries of cargo vessels from merchant shipyards continued at an
annual rate of 20,000,000 deadweight tons.
Steel mills operated during October at the highest monthly rate during the
war period. Production of nonferrous metals also continued to rise. Announce­
ment of permission to use aluminum in additional types of war products and
some essential industrial products followed rapidly increasing output of this
metal. Lumber production declined somewhat more than usual at this
season and the prospective supply situation remains critical notwithstand­
ing reduced demand for lumber for building purposes. Output of stone, clay,
and glass products as a whole showed little change and was at about the level
of a year ago. Cement production in October was down 40 per cent from last
year but production of other stone, clay and glass products, like glass contain­
ers and asbestos and abrasive products, was considerably higher than last
year.Output of most nondurable goods showed little change from September to
October. Food manufacturing as a whole continued in large volume allowing
for seasonal changes, although butter and cheese production declined. Output
of butter was 11 per cent below last year in October and declined further in the
early part of November. Meatpacking, however, was at an exceptionally high
level in October and continued to increase sharply in the first three weeks of
November. There was also a rise in production of wheat flour and other
manufactured foods in October. Output of textile and leather products remained
at the somewhat reduced rate of recent months, while production of rubber
products and industrial chemicals increased. Coal production declined 6 per
cent in October and dropped sharply further during the first week of November,
but increased in the middle of November.
The value of construction contracts awarded in October, according to
reports of the F. W. Dodge Corporation, continued at the low level of other
recent months. Total awards this year have been 60 per cent smaller than in
the corresponding period of 1942, when they were at the highest level of the
war period.
Distribution. Department store sales in October and the first half of November
were 10 per cent larger in dollar volume than in the same period last year, and,
allowing for seasonal changes, sales were somewhat higher than in the third
quarter of this year. Total consumer expenditures for commodities and serv­
ices in the third quarter were at about the peak level prevailing in the first
half of this year and were substantially larger than a year ago.
Carloadings of railway freight in October were slightly less than in Sep­
tember, reflecting chiefly declines in shipments of coal and ore. Loadings of
grain increased sharply to a level 20 per cent greater than in October 1942, and
livestock shipments were the highest in recent years.
Commodity prices. Grain prices advanced in the early part of November,
while prices of livestock declined as livestock marketings expanded sharply.
Prices of certain industrial raw materials, such as cotton, wool, and nonferrous
metal scrap, have also declined somewhat since the middle of October reflecting
larger supplies and uncertainties as to the extent of demands for these mate­
rials in war production.
The total cost of living which had declined 1.4 per cent during the summer,
according to the Bureau of Labor Statistics, rose .8 per cent from mid-August
to mid-October. There were increases in prices of food, clothing, and a number
of miscellaneous items.
Bank credit. The average level of excess reserves at all member banks was
around 1.1 billion dollars in mid-November reflecting some decline from the
comparable October period. During the four weeks ending November 17
reserve funds were supplied to member banks by an increase of over 900
million dollars in the Government security portfolio of the Reserve Banks;
increased holdings consisted largely of bills purchased under option and in
part of certificates. The effect of these security purchases on excess reserves
was more than offset, however, by a currency demand of 540 million dollars
and a continued increase in required reserves as Treasury disbursements
transferred funds from reserve-exempt war loan accounts to private deposits.
Following substantial bank purchases of special Treasury offerings in midOctober, Government security holdings at reporting member banks in 101
leading cities declined somewhat over the following month. The principal
decrease was in holdings of bills at banks outside New York. Commercial
loans while decreasing during the past two weeks, showed a net gain for the
four week period, while loans on securities, which rose to a high level during
the Third War Loan Drive, declined substantially.