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MARCH 1949 TH E BUSINESS REVIEW FEDERAL RESERVE BANK OF PHILADELPHIA BANK OPERATIONS, 1948 . . . were maintained in terms of both earnings and volume. Current earnings of member banks in the Third District increased more than enough to absorb higher operating costs. Earning assets declined slightly. [VtWH- » The composition of these assets continued to shift, but loan expansion and the decrease in holdings of Government securities were less than in either 1946 or 1947. Deposits declined in the first quarter as customers paid taxes, but most of the loss was made up later in the year. 4 G. I. LENDING ... has been declining for two years. Lenders are more cautious and the number of borrowers in difficulty has increased. Prospects are for a continued decline in G. 1. lending activity. THE BUSINESS REVIEW BANK OPERATIONS, 1948 I. EARNINGS AND EXPENSES Total earnings of the member banks in the Third Fed eral Reserve District increased over 8 per cent from 1947 to 1948, according to preliminary tabulations. Net current earnings—the amount remaining after ex penses—increased at both reserve city and country banks. In total, they advanced to a new peak following the slight decline in 1947. Substantial transfers were made to valuation reserves against loans, but net profits were main tained, falling somewhat at the country banks and rising at the reserve city banks. These changes in earnings of all member banks in this district were in general accord with those for banks throughout the country. The experience of individual member banks, of course, frequently diverges somewhat from the over-all summaries. A study will be issued shortly giving the averages of individual bank operating ratios by size groups. These studies are prepared annually as a service of this Bank to its member banks. Total income of member banks in this district last year was equaled only in 1929. In that year, earning assets were much smaller but money rates were substantially higher, and loans comprised more than two-thirds of total earning assets as against only one-third at the close of 1948. Year by year through the post-war period, bank loans have been increasing and recently the rates on some types of paper have been advanced. Earnings on loans last year were $68 million as against $54 million in 1947, and for the first time since 1941 were about as large as for the entire securities portfolio. Increased income over 1947 also was reported from service charges on deposits, from trust departments, and from other sources, much more than compensating for the reduction in income derived from United States Government securities, from $58 mil lion to $54 million. Total earnings of the member banks in this district in 1948 came to approximately $167 mil lion, as against $154 million in 1947 and $106 million in 1940, the low point of the past decade. Current expenses also have been tending steadily up ward in recent years. In 1948 they were $107 million as compared with $99 million in 1947 and $70 million in 1940. The largest single component continued to be sal aries and wages, which rose about 10 per cent from 1947 Page 28 to 1948. In the late 1920’s, interest on deposits, payable then on demand as well as on time balances, was the out standing cost of bank operation. Although salary and wage rates are now considerably higher than they were two decades ago, such costs per dollar of assets have de creased substantially owing, no doubt, to increased mech anization, the large proportion of earning assets invested in Government securities, expansion in resources and an increase in the average size of individual transactions. EARNINGS AND PROFITS THIRD DISTRICT MEMBER BANKS MILLIONS DOLLARS MILLIONS DOLLARS TOTAL EARNINGS EXPENSES NET CURRENT EARNINGS *■»' NET PROFITS AFTER TAXES DIVIDENDS- 1942 1943 1944 1945 1946 1947 1948 ■^PRELIMINARY With expenses rising less than income, net current earn ings before income taxes increased from $55 million in 1947 to over $60 million in 1948, a new peak. In relation to total capital accounts at the close of the year, the pro portion was 9.7 per cent in 1948 and 9.1 per cent in 1947. In 1929 it was 8.2 per cent. THE BUSINESS REVIEW Taxes paid on income in 1948 were less than in 1947. The decrease was due, in part at least, to the greater use made by banks of the privilege of building up reserves for bad debt losses on loans. This was reflected in heavier charge-offs, in which transfers to these reserves were in cluded. At the close of 1947, the member banks in this district had $2% million in these “bad debt reserves”; by the end of 1948 they had risen to about $12% million. The increase in net current earnings and the decrease in income tax payments were offset, for the most part, by a larger excess of deductions over additions to current earnings. The result was a small increase in net profits after taxes from $37 million to about $38 million, taking the member banks in this district as a whole. The moder ate decline reported by those in the country bank classifi cation was apparently due almost entirely to transfers to bad debt reserves. Net profits after taxes for Third District member banks were less in 1948 than in either 1945 or 1946, due mainly to a decline in profits on securities and recoveries which were unusually large in those years. Ordinarily, bankers can expect losses to run somewhat ahead of such profits and recoveries. Reasonable risks are part of the cost of serving the community. It is against these risks that banks build up valuation reserves and capital accounts to safe guard their customers. Cash dividends increased some what in 1948, but still were litde more than one-half of net profits, the balance being available for addition to capital accounts. In the last three years of the 1920’s the proportion paid out was over three-fifths. II. SHIFTS IN EARNING ASSETS The trends in earnings, of course, reflect the shifts in assets from which they are derived. Total earnings in creased despite a small decrease in assets because the larger income from an expanding loan porfolio more than offset the lower income from investments. Total earning assets of member banks decreased nation ally as well as in the Third District in 1948. However, the small decrease in the total obscures the effects of forces of considerable magnitude, some tending to increase and others to decrease the volume of earning assets. The prin cipal factors tending to increase earning assets were a continuing demand for bank credit, gold imports, and Federal Reserve purchases of Government securities from nonbank holders. The first resulted in a direct increase and the latter two provided the basis for further expan sion. These expansive forces, however, were more than offset by others tending to bring about contraction—the Treasury’s cash redemption program, the sale of short term Government securities by the Federal Reserve Banks, and the increase in member bank reserve requirements. The relatively stable level of commercial bank earning as sets is a significant indication that the anti-inflation efforts of the banks themselves and the monetary and fiscal authorities met with some measure of success. The private business sector of our economy operated at a substantial cash deficit in 1948. Businessmen, home buyers, and consumers resorted to bank credit to help finance a record volume of business and consumer spend ing. An increase of $4.6 billion in commercial bank loans was perhaps the major factor tending to increase earning assets and deposits. Gold imports added $1.5 billion to EARNING ASSETS OF MEMBER BANKS THIRD DISTRICT MILLIONS DOLLARS MILLIONS DOLLARS TOTAL EARNING ASSETS 5000 5000 4000 4000 GOVERNMENT SECURITIES 3000 3000 2000 2000 TOTAL LOANS 1000 1000 OTHER SECURITIES 1945 1946 1947 1948 0 the cash assets and deposits of commercial banks, which in turn made possible an increase in loans and investments. Federal Reserve support operations, which resulted in the Page 29 THE BUSINESS REVIEW purchase of a substantial amount of bonds, had a similar effect. Purchases from commercial banks had the direct effect of increasing reserves, which made possible a mul tiple increase in loans and investments. If the purchases were from nonbank holders, the checks received by the sellers drawn on the Federal Reserve were deposited in commercial banks, thus increasing their deposits. The col lection of these checks increased the reserves of commer cial banks, thus making possible a larger expansion of earning assets through additional loans and investments than might otherwise have occurred. The expansive effect of the cash deficit in the private sector of our economy was more than offset by the cash surplus in the public sector. The Federal Government had a cash surplus of over $8 billion in 1948—the largest in its history. This excess of Treasury receipts over expendi tures was used primarily to retire marketable Government securities, and was the most important factor tending to reduce earning assets. A description of the steps involved in this process will make clear the effects on the commer cial banks. The first step, which is the collection of checks drawn on commercial banks in the payment of taxes, trans fers deposits from private to Government account, leaving total assets and total deposits unchanged. The second step involves the transfer of Government deposits from the commercial banks to the Federal Reserve Banks in prepa ration for the payment of Treasury expenses, including debt retirement. Since banks usually draw on their ac count in the Federal Reserve to meet the Treasury call for payment, the result is a decrease in their Government de posits and in their reserve accounts at the Federal Reserve. It is in this stage that banks lose reserves and, unless they have excess reserves, are forced to sell Government secur ities or draw on other assets to replenish them. As a final step, the Treasury pays the holders of the redeemed securities with checks drawn on its account in the Reserve Banks. If the checks go to nonbank holders, they will soon be deposited, thus building up commercial bank deposits and reserves. If the redeemed securities are held by the commercial banks, cash or reserves are in creased and Government security holdings are decreased. In either case, commercial banks have excess reserves. These reserves serve as the basis for restoring earning assets to their former level. If, however, the maturing se curities are held by the Federal Reserve Banks, the funds originally collected in the form of tax receipts are not returned to the public and the commercial banks. Com mercial bank deposits and reserves are decreased equally Page 30 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis and unless they have sufficient excess reserves the result is a reserve deficiency. Similarly, sales of short-term Government securities and increases in reserve requirements by the System tend to create deficiencies in reserves and thus exercise a restrain ing influence. To the extent that reserve deficiencies are not met by the forces described above which tend to add to reserves, they are met by the sale of Governments or by drawing on other assets and, as a result, earning assets are decreased. LOANS EXPAND LESS The demand for credit by businessmen and consumers subsided somewhat in 1948. Total loans of Third District member banks were up $160 million—an increase of 10 per cent, as compared to a 25 per cent increase in 1947. The slower rate of expansion in 1948 was largely ac counted for by the smaller increase in commercial and in dustrial loans. Business loans gained about 5 per cent as LOANS OF MEMBER BANKS THIRD DISTRICT MILLIONS DOLLARS MILLIONS DOLLARS 1600 1400 1400 TOTAL I 200 1200 1000 1000 000 600 COMMERCIAL AND INDUSTRIAL ^ REAL ESTATE 400 CONSUMER 200 . FOR PURCHASING OR CARRYING SECURITIES 1945 1946 1947 1943 0 compared to 28 per cent in the previous year. The rate of expansion in the other major segments of member bank loan portfolios—real-estate and consumer loans—was con siderably slower also. The continued high level of private construction resulted in a substantial expansion in real- THE BUSINESS REVIEW estate loans, especially on residential property, but realestate loans increased only 16 per cent as compared to 26 per cent in 1947. The record level of consumer expendi tures was also reflected in consumer loans, although this type of credit rose less in 1948 than in 1947. Instalment loans on automobiles and other retail goods and repair and modernization loans were up over 50 per cent, but instalment cash loans gained only 8 per cent in contrast to 52 per cent in 1947, and single payment loans decreased slightly. Farm real-estate loans and farm production loans, a relatively small segment of the total in this district, also increased more slowly than in the previous year. Changes in the loan portfolios of member banks in the Third District were similar to the national trend. Total loans of district member banks expanded 10 per cent, as compared to 11 per cent, for all member banks. Business loans increased more in the district than nationally, but consumer loans were up slightly less. Instalment cash loans and single payment loans to individuals, which make up over one-half of the consumer loan portfolio of mem ber banks, both in the district and nationally, rose less than the national average. Automobile and other retail in stalment paper of district member banks, however, regis tered a larger gain than for the country as a whole. The different trends in the major segments of the mem ber bank loan portfolio are reflected in the rate of expan sion for different size groups of banks. Preliminary data for member banks in the United States indicate that coun try banks experienced an above-average increase in loans —16 per cent as compared to 11 per cent for all member banks. The more rapid rate of increase for country banks is due largely to the composition of their- loan portfolios. Real-estate, consumer, and agricultural loans, in the order of their importance, make up over two-thirds of their loan portfolios and these types of loans registered above-avera8e Sflins tn 1948. On the other hand, business loans, which rose only 3 per cent as compared to 11 per cent for all loans, account for about seven-tenths of the loan port folios of central reserve city banks and about one-half of that of reserve city member banks. A sharp rise in loans to brokers and dealers for purchasing or carrying secur ities, important for central reserve city members but un important for the other groups, tended to offset the slow rise in business loans for the larger institutions. Reflecting the different rates of increase in these loan categories, loans of central reserve city members gained 10 per cent, and those of reserve city banks, 8 per cent. Preliminary data indicate a similar trend in the Third District, with country member banks continuing to show a larger per centage increase in loans than reserve city banks. INVESTMENTS DECLINE Total investments of commercial banks in the United States, member and nonmember, dropped about $6.6 bil lion in 1948 due to the decrease in Government securities. Government security holdings of district member banks were down about $200 million, and the decrease for all member banks was about $6 billion. Holdings of other securities showed little change either locally or nationally. CASH REDEMPTION AND EXCHANGES OF MARKETABLE GOVERNMENT SECURITIES—1948 (In billions of dollars) Type of Security Matured or Called Cert, of Indeht. Notes 2.9* 21.2 7.8 6.4 ii 5 3 9 5 1 3.6 38.3 26.5 3.6 Bills Bills........................... Certificates.............. Notes......................... Bonds........................ Total..................... Cash Redem ptions Ej changed or Total Fed. Res. Banks 2:4 1.4 8.3 5.5 * Net reduction in bills outstanding. ** Assumed that all bilk redeemed were from Federal Reserve holdings. The Treasury cash surplus was the major factor tend ing to reduce member and nonmember bank holdings of Government securities in 1948. Of the $8.3 billion of cash redemptions, it has been estimated that commercial banks held in the neighborhood of $1 billion. The direct effect, therefore, was to decrease commercial bank holdings by a similar amount. Even more important in its influence on earning assets, however, was the indirect effect of the cash redemption of an estimated $5.5 billion of securities held by the Federal Reserve Banks. Thus the direct and in direct effects of the Treasury’s cash redemption program were substantial forces tending to decrease commercial bank investments and earning assets. Data reported in the Treasury Ownership Survey, which included a sample with about 94 per cent of district mem ber bank holdings, indicate some shifts in the maturity distribution of Government security portfolios. Member bank holdings of Treasury bills and certificates, both in the district and nationally, increased during the year, re flecting in part the rise in short-term interest rates. Treas ury bill holdings of reporting district members were up about $100 million, constituting nearly 7 per cent of total Government security holdings at the end of 1948 as com pared to about 3 per cent a year earlier. Treasury cer Page 31 THE BUSINESS REVIEW tificate holdings were up over $50 million, probably due largely to the exchange of bonds for certificates and the rise in the certificate rate. Reflecting primarily the effects GOVERNMENT SECURITY HOLDINGS—THIRD DISTRICT MEMBER BANKS Millie ns $ (End-of-ycar data) % Dis tribution 1948 1947 1948 1947 Bonds........................................... 186 278 126 2,116 84 221 197 2,417 6.9 10.3 4.7 78.2 2.9 7.6 6.8 82.8 Total*.................................. 2,706 2,919 100.0 100.0 5 to 10 years.......................... Over 10 years......................... 676 1,269 422 339 586 1,505 385 442 25.0 46.9 15.6 12.5 20.1 51.6 13.2 15.1 Total*.................................. 2,706 2,919 100.0 100.0 Bills............................................... Certificates.................................. Maturing or callable: * Excludes postal savings, Panama Canal, and guaranteed bonds. Source: Based on Treasury Ownership Survey, which includes banks holding about 94 per cent of district member bank total. of the cash redemption of Government securities and sub stantial exchanges of bonds for certificates, bond holdings of district member banks decreased about $300 million. As a result, Treasury bonds accounted for only 78 per cent of Government security portfolios as against nearly 83 per cent at the end of 1947. The maturity distribution of the Government security portfolios of district member banks at the end of 1948 was little different from a year ago. Issues maturing or callable within one year increased from 20 per cent to 25 per cent of the total, but there was a decrease in the pro portion maturing or callable within one to five years. In other words, the increase in bill and certificate holdings was largely offset by a decrease in short-term bonds. There was also a slight increase in the percentage of the portfolio maturing or callable within five to ten years, but a decrease in the over ten-year group. G. I. LENDING Recent trends in G. I. lending are in accord with the general feeling of uncertainty currently dominating the business and financial scene. Activity has slackened, lend ers are more cautious, and the number of borrowers in financial trouble, while still small, has increased some what. These are all signs of an adjustment period in which returning competition and growing risks are typical. Yet, the trend of veterans’ loans reflects more than this; unlike other types of loans, activity in G. I. lending has been declining for as long as two years. The importance of this decline cannot be judged merely by the number of dollars involved. For, while it is true that veterans repre sent only a small portion of today’s borrowers, they will be big customers in the future and they constitute a group whose influence will be widely felt. TREND OF ACTIVITY The sharp decline in the number of veterans’ loans guar anteed monthly can be seen in the first chart. From a peak of almost 65,000 in late 1946, loans have dropped to about 23,000. The trend in the total is influenced most strongly by home loans, which account for more than nine out of every ten loans being guaranteed. On these mortgages the Page 32 Veterans Administration guarantees up to 50 per cent of any individual loan but not more than $4,000, or insures 15 per cent of the aggregate volume of loans made by a given lender. The mortgages bear a 4 per cent rate, may be amortized over twenty-five years, and must be based on a “reasonable value” of property. While these G. I. mort gages were declining, other mortgage lending remained high. The market premiums on veterans’ mortgages dis appeared and there was a growing tendency for VA guar antees to be used for second mortgages in combination with FHA insured first mortgages. There are several reasons for this decline in G. I. home loans. Perhaps the most important has been the housing situation itself. The most urgent demands for homes have been met; yet, prices, particularly on small homes, are still sky high. Another reason often given is tight mortgage money. Lenders have been particularly cautious for some time, requiring stricter terms on G. I. mortgages. In view of rising rates on alternative investments, some lenders apparently find a 4 per cent rate on G. I. mortgages un attractive. The Veterans Administration last August was given the power, with the approval of the Secretary of the Treasury, to raise the rate to 4% per cent, but as yet has taken no action under this authority. The status of the THE BUSINESS REVIEW secondary market for G. I. mortgages has changed con siderably. At present the Federal National Mortgage As sociation may buy up to 50 per cent of a lender’s mort gages insured after April 30, 1948, but many lenders and other observers feel this is still inadequate. G. I. LENDING ACTIVITY •TOTAL HOME BUSINESS " i.i i 1945 I 948 G. I. business loans are much less important, dollarwise, than home loans. The legal provisions are similar, the main differences being that the guarantee limit on nonreal estate loans is $2,000, the maximum maturity for nonreal-estate loans is 10 years, and insured loans may have rates as high as 5.7 per cent. The veteran must have had some experience and a reasonable degree of success must be in prospect. Lenders have been much more hesitant to make this type of loan, and activity has been declining for a longer period and rela tively more rapidly than home loans. This reflects, in part, the leveling off of the business population as a result of declining business births since early 1946, and rising busi ness discontinuances through failures and other reasons. It also reflects the fact that the experience of lenders with business loans has been less satisfactory than with home loans. Examining the risks involved, banks found in many cases that veterans had neither the financial standing nor business experience necessary. Moreover, the costs of interviewing, screening, making and servicing the loans tend to be high and are multiplied many times as a veteran goes shopping from bank to bank for a loan. Foreseeing these difficulties, the banks in Philadelphia formed, soon after V-E Day, a unique organization to han dle this type of loan. The Philadelphia Agency for Busi ness Loans to Servicemen, Inc., interviewed almost 20,000 veterans before it ceased lending operations at the end of 1948. Nine out of ten of these interviews were solely to give information and advice. This in itself was an essen tial service which the individual banks acting alone could not have performed nearly so efficiently or effectively. During the three and two-thirds years of its existence, the Philadelphia Agency disbursed 641 loans amounting to more than $1 million. Seven out of every ten loans made by the Agency were to finance the purchase of equipment and automobiles, the equipment being mostly for repair and service industries; one-eighth was for inventory and working capital; and only one-sixth was for the purchase of established businesses. In addition to loans guaranteed by the Veterans Admin istration, banks in New Jersey may make loans guar anteed by that state’s Veterans Loan Authority. In almost four and one-half years of operation, the Loan Authority has received over 17,000 applications for business loans and 6,500 applications for “household” loans. The pro visions for business loans are similar to those of the Vet erans Administration except that some are more liberal— the maximum amount is $3,000 instead of $2,000, the guarantee is 90 instead of 50 per cent of a loan, and in surance is 20 per cent of total outstandings instead of 15 per cent. Partly for this reason the Loan Authority has guaranteed thirteen times as many New Jersey loans as has the Veterans Administration. Like Veterans Adminis tration guarantees most of these loans went to retail trade and service enterprises and relatively few to manufact uring, construction, or farming. And while activity has been much greater, it has been declining since 1946. Since 1946 the Loan Authority also has been guaran teeing veterans’ loans up to $1,000 for the purchase of household furnishings and appliances. About 6,000 of such loans have been made to date, involving over $3% million. Most of these have been for the purchase of fur niture and kitchen equipment. As in business loans, the number of new loans made has been declining. Page 33 THE BUSINESS REVIEW LENDING PROSPECTS The prospects are for a continued decline in G. I. lend ing activity. Just how rapidly this will take place will de pend, for one thing, on the environment in which the lending is carried on. Only about one out of ten eligible veterans has obtained a home under the guarantee pro gram. Undoubtedly, many of those who have not yet used their guarantee privilege have been restrained by high housing costs, and a decline in construction costs should bring an increased demand for G. I. mortgages. As far as business loans are concerned, the demand for credit will depend largely on the rate at which new firms are estab lished and on the general level of business activity. After more than three years of post-war readjustment, the num ber of businesses now in operation is about “normal” in relation to business activity, and it is unlikely that there will be a substantial increase in the business population in the near future. Some of the boom forces which contrib uted to a heavy loan demand are now absent. A continued decline in G. I. business loan guarantees is, therefore, to be expected. A second important factor determining the trend of G. I. lending will be the attitude of lenders. This has been one of caution for some time and unless the business outlook becomes definitely more optimistic, it is unlikely to change. Finally, any action of the Government with re spect to rates on G. I. loans and the secondary market for G. I. mortgages will be an important consideration. INFLATION AND RISKS G. I. loans have involved a mixture of economic, social, and political problems. Congress decided for several rea sons, some of them non-economic, that credit should be available to veterans. And because many veterans did not have the required amount of the generally accepted types of security, it was necessary to provide lenders some guarantee against loss. The attainment of these economic and non-economic objectives, however, was partly at the cost of aggravating inflation by extending increasing amounts of credit at a time when the supply of goods was limited. G. I. loans, of course, were only one of the many inflationary forces at work. As prices rose it was necessary to relax the requirement of “reasonable normal value” as a basis for property appraisal to “reasonable value.” The average size of home loans being guaranteed rose rapidly Page 34 during 1946 and stayed high in 1947. Eventually, however, more and more lenders apparently felt the risks too great and the return too small. They became stricter, turning DEFAULT RATE- ON G. I. LOANS -------------------------- r _________________ / / s'\ / ^-BUSINESS f / / / / / / ^-FARM /--*•___ . / / / / ✓ ^TOTAL Vf OME r i i i i i _j___ i___i—i—i— 1947 i i i t i i i i i__ i__ i__ 1948 * NUMBER OF LOANS IN DEFAULT AS PER CENT OF LOANS OUTSTANDING. down a greater proportion of applications, insisting on lower appraisals, and requiring larger down payments. Lenders also found justification for their attitude in a rising proportion of loans in default, as shown in the chart. Defaults on business loans were particularly high, amount ing to 58 loans out of every 1,000 outstanding at the end of 1948. One of the purposes of the Philadelphia Agency was to screen applications for business loans more effec tively, and the Agency has experienced a lower default rate than prevailed either in the local eight-county VA area or the United States as a whole. The rising proportion of loans in difficulty is in line with the current trend toward slightly rising mortgage foreclosures and more business failures. Even if economic activity remains generally high as the economy returns to normal, it is possible that more people will face unem ployment and declining incomes. This would mean more mortgages in default. Credit men are finding that some veterans in business are now feeling the effects of their under-capitalization and have too much tied up in fixed assets and inventories. And since a large proportion of business failures typically consists of young concerns, more and more veterans are likely to have difficulty. THE BUSINESS REVIEW BUSINESS STATISTICS Production Production Workers in Pennsylvania Factories Philadelphia Federal Reserve District Adjusted for seasonal variation Jan. Dec. Jan. 1949 1948 1948 Indexes: 1923-25 =100 Not adjusted Per cent cha uge Jan. 1949 fro m Jan. Dec. Jan. 1949 1948 1948 Summary Estimates—January 1949 Month Year ago ago INDUSTRIAL PRODUCTION.... MANUFACTURING......................... Durable goods ................................. Consumers goods .................... Metal products.................................. Textile products................................. Transportation equipment............. Food products.................................... Tobacco and products..................... Building materials............................. Chemicals and products.................. Leather and products...................... Paper and printing........................... Individual lines Pig iron................................................. Steel....................................................... Iron castings....................................... Steel castings...................................... Electrical apparatus......................... Motor vehicles.................... ............... Automobile parts and bodies........ Locomotives and cars...................... Shipbuilding........................................ Silk and rayon.................................... Woolens and worsteds..................... Cotton products................................ Carpets and rugs............................... Hosiery................................................. Underwear........................................... Cement................................................. Brick...................................................... Lumber and products...................... Bread and bakery products........... Slaughtering, meat packing........... Sugar refining..................................... Canning and preserving.................. Cigars.................................................... Paper and wood pulp...................... Printing and publishing.................. Shoes..................................................... Leather, goat and kid...................... Explosives........ ................................... Paints and varnishes........................ Petroleum products.......................... Coke, by-product.............................. COAL MINING................................... Anthracite........................................... Bituminous.......................................... CRUDE OIL......................................... ELECTRIC POWER—Output... . Sales, total. . . .................................... Sales to industries............................. BUILDING CONTRACTS TOTAL AWARDS t............................ Residentialf........................................ Nonresidentialf. . . v ...................... Public works and utilitiest............. 112p 115p 135p 100p 150* 68p 142p 118p 143 64p 189p 85p 112 115 118 153 r 74 141 126 149 58 181 92 112 102 148 72 126 r 121 147 60r 167 r 96 120 100 126 92 94 219 25 98 68 98 r 129 r 95 108 222 r 34 r 99 69 100 119 92 83 227 44 135 67 r 112 114 125 133 106 86 81 82 76p 89 78r 30p 32 40 113p 116 113r 70 83 r 78 120r 151 111 121p 104 104 63 61 64 31 29 32 104 175 201 151 89 116r 109 77 115 112 246 186 492 294 475 510 368 490 348 155 175 130 203 139 189 193 150 234 146 + 5 125 I “ 8 185 -19 65 87 288 + + 109p 112 112p 115 0 1 -11 111 144 69p 142p 115p 117 52p 184p 88p 112 146 r 73 142 124 107 52 179 88 113 97 123 84 100 206 22 98 66 97 r 97 121r 117 88 84 88 104 215r 213 27 r 39 98 134 69 65r 83 77p 31p 108p 72 109 85p 58 28 104 111 90 179p 119 92 116 91p 86p 104 108 258p 185p 59p 55 87p 88 82 34 111 81 119r 85 59 28 109 111 114 204 109 89 118 92 84 114 109 245 181 68 65 91 271 519 536 375 527 526 350 83 78 41 109r 81 148 73 r 59 29 106 111 11 203 121 101 124 104 97 r 99 r 105 217r 175 73 70 99 282 503 505 338 172 164 150 242 194 144 187 162 281 118 135 237 270 + 20 + 39 + 11 + 2 * Unadjusted for seasonal variation. t 3-month moving daily average centered at 3rd month. 109 8 — 6 2 - 2 + 1 - 9 6 0 + 13 - 7 — 2 - 4 — 3 +10 + 6 + 4 + 13 - 8 12 0 - 7 + 2 0 - 3 + 5 - 3 0 -13 + 14 - 1 3 -26 — 44 - 1 — 27 - 1 + 2 + 5 4- 71 - 5 + 1 -15 — 3 - 4 — 25 - 2 0 -16 — 11 - 7 — 26 +17 + 16 + 2 — 2 + 6 — 4 - 5 _ 2 0 0 -26 +756 - 8 — 12 - 4 — 2 + 5 — 8 - 1 — 7 -18 — 13 + 6 — 11 - 9 + 6 + 7 + 3 + 6 + 19 0 + 6 -15 — 20 -15 — 21 -12 — 12 - 2 — 4 - 1 + 3 + 2 + 6 + 5 + 11 104 130 184p 145 93 116 89p 81p 104 120 261p 185p 57p 55 76p 281 489 520 387 67 104 15 209 148 102 124 102 91 99 r 116 219r 175 72 70 87 - 3 - 2 + 1 142 74r 124r 119 121 49 r 163r 100 120 p—Preliminary, r—Revised. Local Business Conditions* Percentage change— January 1949 from month and year ago Factory employfinent Factory payi oils Buil ling perrnits va! ue Re ail sal es Del>its Dec. 1948 Jan. 1948 Dec. 1948 Jan. 1948 Dec. 1948 Jan. 1948 Dec. 1948 Jan. 1948 Dec. 1948 Jan. 1948 Allentown........... Altoona................ Harrisburg.......... Johnstown.......... Lancaster............ Philadelphia.... Reading............... Scranton.............. - 1 0 - 1 - 2 - 1 - 2 - 4 -12 - 3 + 2 - 3 - 4 + 2 - 3 - 2 -13 0 - 3 +1 + 6 - 5 - 3 - 7 -14 +1 + 5 + 8 +11 + 6 + 1 - 1 -15 Wilkes-Barre.... Williamsport___ + - +1 - 2 — 1 -13 - 5 - 3 + 1 -10 + 2 + 4 + 11 - 5 - 36 - 13 - 18 +468 + 14 - 84 + 25 +496 + 54 - 82 +149 - 76 +316 +156 - 51 - 3 +181 + 83 - 47 - 48 +868 + 57 - 36] - 2 - 43 +131 -56 -61 -51 -58 -54 -56 -57 -62 -61 -59 -56 +35 - 4 +12 -10 + 3 - 4 - 6 - 1 + 5 - 3 0 -60 + 4 -24 -12 -11 -14 -13 -16 -17 -11 -22 + 5 -15 -24 -18 -13 - 2 + 2 + 2 - 2 - 5 - 8 0 0 + 6 - 5 + 2 +1 York..................... 3 2 1 9 * Area not restricted to the corporate limits of cities given here. FRASER of 1000% or more. ** Increase Digitized for Weekly Man-Hours Worked Employ ment All manufacturing............... Durable goods industries. Nondurable goods industries........................... Weekly Payrolls 1,074,500 620,200 $56,965,000 36,639,000 42,216,000 24,918,000 454,300 20,326,000 17,298,000 Changes in Major Industry Groups Employment Payrolls Per lent cha age fro m Per lent Jan. Jan. cha age from 1949 1949 In In dex Dec. Jan. dex Dec. Jan. 1948 1948 1948 1948 Indexes (1939 average =100) All manufacturing.................. Durable goods industries. . Nondurable goods industries.............................. Food........................................... Tobacco..................................... Textiles...................................... Apparel...................................... Lumber...................................... Furniture and lumber prods. Paper.......................................... Printing and publishing.... Chemicals................................. Petroleum and coal prods... Rubber....................................... Leather...................................... Stone, clay and glass............. Iron and steel.......................... Nonferrous metals.................. Machinery (excl. electrical). Electrical machinery............. Transportation equip. (excl. auto).......................... Automobiles and equipment. Other manufacturing............ 125 153 -3 -2 - 4 - 2 296 349 —3 -2 + 3 + 6 100 122 98 81 83 92 92 118 132 125 150 130 87 128 141 139 206 229 -4 -6 -7 -3 -4 -1 -5 -2 -1 -3 -2 -6 -1 -5 -1 -2 -2 -2 - 6 - 3 - 7 - 5 -13 - 1 -10 - 3 - 5 + 2 + 1 -20 -11 - 4 +1 - 6 - 2 - 1 233 247 221 204 203 214 225 263 271 267 321 250 183 293 324 304 446 502 -5 -7 -6 -7 -5 0 -7 -3 -2 -3 0 -5 -4 -5 0 -9 -3 -4 - 2 + 8 - 5 - 5 -17 + B - 8 +1 0 + 8 +16 -21 -12 + 4 +11 - 1 + 1 + 3 240 125 130 -3 -2 -5 + 8 -31 - 4 501 263 268 -3 -3 -6 +20 -30 + 2 Average Earnings and Working Time January 1949 Per cent change from year ago All manufacturing. . . . Durable goods indus.. Nondurable goods industries................... Food................................ Tobacco.......................... Textiles........................... Apparel........................... Lumber........................... Furniture and lumber products..................... Paper............................... Printing & publishing. Chemicals...................... Petrol. & coal prods.. . Rubber........................... Leather........................... Stone, clay and glass.. Iron and steel............... Nonferrous metals.. . . Machinery (excl. elec.) Electrical machinery.. Transportation equip. (excl. auto)................ Automobiles & equip.. Other manufacturing.. Week ly Earni ags Hour ly Earni ags Wee dy HouLTS Aver Aver Aver age Ch'ge age Ch’ge age Ch’ge $53.02 59.08 + 7 $1,349 + 8 1.470 + 9 + 9 39.3 40.2 - 2 - 1 44.74 45.09 29.76 44.84 34.57 43.70 + 4 +12 + 2 + 1 - 5 + 9 1.175 1.117 .778 1.199 .952 1.095 +10 + 4 + 7 + 1 +13 38.1 40.4 38.2 37.4 36.3 39.9 - 3 +1 - 2 - 6 - 5 - 3 44.92 48.30 58.15 50.88 64.95 47.77 36.15 52.22 62.01 57.02 54.97 61.44 +2 + 3 + 5 + 6 +14 - 2 - 1 + 9 +10 + 5 + 3 + 4 1.051 1.147 1.557 1.282 1.639 1.423 1.027 1.265 1.540 1.440 1.392 1.542 + 6 + 9 + 7 + 8 +12 + 8 + 5 + 7 + 9 + 8 + 7 + 6 42.7 42.1 37.4 39.7 39.6 33.6 35.2 41.3 40.3 39.6 39.5 39.8 + + + - 63.66 57.84 42.97 +11 + 2 + 6 1.600 1.476 1.152 +10 + 8 + 8 39.8 39.2 37.3 +1 - 5 - 2 4 5 2 2 2 9 6 2 1 2 4 2 THE BUSINESS REVIEW Distribution and Prices Per cent change Wholesale trade Unadjusted for seasonal variation Month ago Sales Total of all lines....................... Dry goods................................. Electrical supplies.................. Groceries................................... Hardware.................................. Jewelry...................................... Paper......................................... Inventories Total of ail lines....................... Dry goods................................. Electrical supplies.................. Groceries................................... Hardware................................. Year ago -17 - 0 Basic commodities (Aug. 1939=100). .. Wholesale (1926 =100)............... Living costs (1935-1939=100) -17 - 7 -56 -67 +32 - 4 - 4 - 1 -31 +13 - 2 - 7 + 6 -27 + 7 Housefurnishings... Perce nt chan ;e from Jan. 1949 Month Year Aug. 1939 ago ago 289 - 3 -17 +189 161 173 166 153 — 1 — 3 — 3 0 — 3 —13 — 8 + 3 +114 +183 +147 + 91 171 170 200 191 144 197 152 + + - + + + + + + + 73 + 74 +115 + 92 + 49 + 96 + 51 0 0 1 2 1 2 0 1 1 3 1 7 3 7 Indexes i 1935-1939=100 Source: U. S. Bureau of Labor Statistics. Not adjusted Per cent cha nge Jan. 1949 frcDm Jan. Dec. Jan. 1949 1948 1948 Jan. Dec. Jan. 1949 1948 1948 Month Year ago ago 3 -25 +12 + 3 -15 + 9 +16 Source: U. S. Department of Commerce. Prices Adjusted for seasonal variation January 1949 frc m RETAIL TRADE Sales Department stores—District..................................... Philadelphia............................ Women’s apparel —District..................................... Philadelphia............................ Inventories Department stores—District..................................... Philadelphia............................ Women’s apparel —District..................................... Philadelphia............................ Furniture......................................................................... FREIGHT-CAR LOADINGS Total................................................................................... Merchandise and miscellaneous................................ Merchandise—l.c.l......................................................... Coal................................................................................... Ore.............................................................................. Coke.................................................................................. Forest products.............................................................. Grain and products................................................ Livestock......................................................................... MISCELLANEOUS Life insurance sales....................................................... Business liquidations Amount of liabilities................................................ Check payments............................................................ * Computed from unadjusted data. 279 244 259 260 287 r 260 272 266 272 246 249 248 - 3 - 6 - 5 - 2 -44* + 3 0 + 4 + 5 + 2* 209 191 213 221 480 r 434 389 380 204 192 204 211 235p 208p 235 265 256 231 228r 254 243 214 248 283 - 8 -10 + 3 + 4 — 4* - 3 - 3 - 5 - 6 —12* 205p 185p 197 228 218 197 201 r 237 212r 191 208 243 124 122 67 114 189 189 68 146 77 126 122 63 120 178 200 68 155 76 132 129 77 132 153 173 87 129 85 - 2 0 7 5 6 6 0 - 6 +1 - 6 - 5 -13 -14 +23 + 9 -22 +13 -10 118 113 63 128 72 217 55 142 78 121 116 62 130 89 216 58 161 82 125 120 73 148 58 199 70 125 86 198 205 216 r - 3 - 8 192 190 210 234r + 7* —44* - 2 + 7* —47* +1 242 277 241 235 239 p—Preliminary. + + - r—Revised. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Reporting member banks (Millions $) Feb. 23, 1949 Assets Commercial loans................... Loans to brokers, etc............ Other loans to carry secur... Loans on real estate.............. Loans to banks....................... Other loans............................... 533 16 11 94 7 275 Total gross............................. Total net.......................... ...... Changesin— Four weeks One year +21 - 2 +1 - 2 - 6 - 2 +12 - 2 - 2 +21 936 926 +10 + 9 +58 +53 Government securities.......... Other securities....................... 1326 290 - 9 + 9 1616 Total loans & investments.. 2542 Reserve with F. R. Bank,.. 522 Cash in vault.......................... 46 Balances with other banks.. 99 Other assets—net.................. 55 Liabilities Demand deposits, adjusted.. 2058 Time deposits.......................... 434 U. S. Government deposits.. 89 Interbank deposits................. 323 Borrowings............................... 28 Other liabilities....................... 25 Capital account...................... 307 +29 -36 + 9 -22 + 2 + 1 + 3 +17 +27 + 3 - 6 - 1 -40 - 4 +33 -21 +24 -53 +35 +47 -14 +19 - 1 + 7 +1 Feb. 9 Feb. 16 Feb. 23 Changes in four weeks - 2 -23 - 5 - 2 +20 -10 +14 + 7 -41 -20 +44 - 9 -10 +48 -65 -30 + 8 -20 +15 -27 + 4 -34 + 1 + 7 -20 +11 + 2 + 1 + 1 +16 -45 + 1 + 1 —30 + 8 -20 +15 -27 Changes in weeks ended— Sources of funds: Reserve Bank credit extended in district............................. -65 +29 Total investments................ Feb. 2 Third Federal Reserve District (Millions of dollars) Total...................................................................... Uses of funds: “Other deposits” at Reserve Bank......................................... Other Federal Reserve accounts.............................................. Federal Reserve Bank of Phila. (Dollar figures in millions) Discounts and advances $ Chang 38 in— Feb. 23, 1949 Four weeks One year 28.2 $+10.7 .7 1523.0 +21.7 $+ 9.9 - .2 +20.6 Total............................... $1551.9 $+32.4 $+30.3 Fed. Res. notes.............. $1636.4 $+ 8.8 Member bank deposits. 896.2 -45.0 U. S. general account. . 138.6 +64.8 Foreign deposits............. 59.5 + 5.2 Other deposits................ 2.6 Gold certificate reserves 1198.9 +26.2 Reserve ratio.................. 43.9% + .4% $- 9.4 +85.2 - 9.1 +29.0 + 1.2 +79.3 +1.4% U. S. securities................ Member bank reserves (Daily averages; dollar figures in millions) Ratio of excess to re quired Held Re quired Ex cess Phila. banks 1948: Dec. 16-31. . 1949: Jan. 1-15.. Jan. 16-31.. Feb. 1-15.. $159 456 450 449 $451 446 446 447 $ 8 10 4 2 2% 2 1 Country banks 1948: Dec. 16-31. . 1949: Jan. 1-15 .. Jan. 16-31. . Feb. 1-15.. $487 484 473 469 $441 437 431 429 $46 47 42 40 n% 11 10 9
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