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Eighteenth oAnnual 'Report
of the

FEDERAL RESERVE BANK
OF PHILADELPHIA




Made to the Federal Reserve Board
by the Chairman of the Board
and Federal Reserve Agent
of the Third Federal Reserve District

193 2

Eighteenth oAnnual cReport
of the

FEDERAL RESERVE BANK
OF PHILADELPHIA




Made to the Federal Reserve Board
by the Chairman of the Board
and Federal Reserve Agent
of the Third Federal Reserve District

19 3 2




CONTENTS
Page

Profit and loss statement
Statement of condition
Business conditions
Industrial activity:
Manufacturing
Mining and quarrying
Building and real estate
Agriculture
Distribution
Financial changes:
Member banks
Federal Reserve Bank
Bill and security holdings
Local use of reserve bank credit
Reserve position
Currency demand
Federal reserve notes
National bank notes
Money rates
Departmental operations
Personnel and building
Banking changes in the district
Fiduciary powers
Bankers' acceptances
Member bank earnings and expenses
Banking and business information
Manufacturing
Coal mining
Building and real estate
Retail and wholesale trade
Other business indicators
Banking
The Business Review and other reports
Survey of industrial, mercantile and agricultural
credit conditions
Committee on Banking and Industry




5
7
9
9
12
13
14
15
17
20
20
22
25
27
28
30
30
31
32
33
35
35
36
37
37
40
41
41
45
45
46
46
48

BILL AND SECURITY HOLDINGS
FEDERAL RESERVE BANK OF PHILADELPHIA
MILLIONS

0 L

1929

1930

1931

1932

DISTRIBUTION OF BILLS DISCOUNTED
MILLIONS

FOR PHILADELPHIA
BANKS




932

Annual Report of the Federal Reserve Bank
of Philadelphia for 1932
There was a sharp decline in business activity and in prices
during the first half of 1932. In the summer, prices of securities and
commodities advanced and the rise in production and in some types
of distribution, which was of more than seasonal proportions, continued into the fall. Changes during the closing months of the year
were downward, particularly in the case of commodity prices, but
most of the indicators in general use continued above the low points
recorded in the middle of the year.
Pronounced declines in loans to customers, which continued
with little break over most of the year, were reported by the banks.
In the earlier months this was accompanied by decreases in deposits ;
investments were sold, partly to furnish the funds to reduce borrowings. After the end of April, deposits were more stable and
toward the end of the year increased; the banks added substantially
to their holdings of United States securities and further reduced
their borrowings from the reserve bank. Bank suspensions were
far fewer than in 1931.
Profit and loss account
Federal Reserve Bank of Philadelphia
(000's omitted)
Earnings:
From bills discounted
From bills bought
From United States securities
From other sources
Gross earnings
Current expenses
Current net earnings
Additions to current net earnings
Deductions from current net e a r n i n g s . . . .
Net additions

Net earnings available for distribution. .
Distribution of net earnings:
Dividends paid
Paid to Government as a franchise tax. .
Transferred to surplus account
^ ithdrawn from surplus.



1932

1931

1930

$2,594
197
2,037
173
$5,001
1,994
$3,007
$312
48
$264
$3,271

$1,407
214
969
124
$2,714
1.986
$728
$219
63
s 156
$884

$1,218
155
1.522
101
$2,996
2,041
$955
$193
45
$148
$1,103

$973
0
2,298

$1,005
0
121#

$1,003
0
100

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

The gross income of the reserve bank increased from $2,714,000
in 1931 to $5,001,000 in 1932, which was the largest amount since
1929. Earnings from bills discounted were much greater than in
1931, reflecting a higher average volume of discounts and a rate
of discount somewhat above the percentage charged over most of
1931. Greatly increased holdings of United States securities resulted
in an income from this source that was more than double that
received in the earlier year.
Current expenses did not change materially and are given
below, distributed according to departments:
Departmental expenses (000's omitted)
Maintaining the accounts of the bank
Loans and discounts
Currency and coin*
Transit and collections
Fiscal agency functions
Custody of securities, including purchases
and sales. .
Transfer and telegraphic service
Official salaries and supervisory expenses. . .
Federal reserve agent's department:
(Custody of collateral against federal reserve notes, note issues, bank examination, library, statistical and business
reporting and analysis work)
Maintaining the general audit
Bank relations
Insurance (other than on currency, coin
and security shipments)
Operation of banking house
This bank's portion of Federal Reserve
Board expenses
Miscellaneous .
Totals*
Cost of federal reserve currency
Total current expenses

1932

1931

1930

$98
81
340
407
19

$96
58
361
434
21

$98
54
390
433
25

71
27
158

72
°7
160

68
°7
159

101
62
16

91
60
19

89
60
18

36
188

32
151

33
154

75
180

71
178

79
174

$1,859
135

$1,831
155

$1,861
180

$1,994

$1,986

$2,041

Omitting cost of federal reserve currency.

Earnings available for distribution rose from $884,000 to
$3,271,000. This was far more than sufficient to cover the dividend
requirements, which approximated a million dollars, leaving a balance of $2,298,000 which was transferred to the surplus account
of the bank. Even with this addition, and the transfer of $458,000
from the depreciation reserve on United States bonds, the surplus
still is less than double the capital already paid in, to which figure
it may be raised before the bank becomes subject to a franchise tax.



Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
A statement of the surplus account follows:
(000's omitted)
Balance—close of previous year
Transferred from:
Profit and loss account
Depreciation reserve on U. S. bonds
Transferred to:
Profit and loss account
Depreciation reserve on U. S. bonds
Balance close of this vear

1932
$26,486
2,298
458

0
0

0
0
$29,242

+
+

1931
$27,065

121
458
$26,486

1930
$26,965

+

100
0

0
0
$27,065

Statement of condition
Federal Reserve Bank of Philadelphia
December
31, 1932

December
31. 1931

Changes

$185,171
20,206
$205,377
4,921

$227,704
15,237
$242,941
3,656

-$42,533
+ 4,969
-$37,564
+ 1,265

11,149
36.451
$47,600
3.054
139.269
1.000
$190,923
322
965
30,359
2,989
1,339
$437,195

(000's omitted)

48,295
68,117
$116,412
4,065
68,652
5,610
$194,739
904
624
43,558
2.626
1,397
$490,445

- 37,146
- 31,666
-$68,812
- 1.011
+ 70,617
- 4,610
- $3,816
- 582
+
341
- 13.199
+
363
58
-$53,250

$238,125

$269,372

-$31,247

121,686
647
2.157
85
$124,575
29,079
16,045
29,242
16
113
$437,195

123,939
3,551
7,609
391
$133,490
41,826
16,600
26,486
475
196
$490,445

-

RESOURCES
Gold reserves
Reserves other than gold

Total cash reserves
Non-reserve cash
Bills discounted:
Secured by government obligations
Other bills discounted

Total bills discounted

Bills bought
United States securities
Other securities

Total hills and securities

Due from foreign banks
Federal reserve notes of other banks
Uncollected items
Bank premises
All other resources
Total resources

LIABILITIES
Federal reserve notes in circulation. . .
Deposits:
Member bank—reserve account
Government
Foreign bank
Other deposits

Total deposits

Deferred availability items
Capital paid in
Surplus
Depreciation reserve on U. S. bonds
All other liabilities

Total liabilities
Ratio of total reserves to deposit and federal reserve note liabilities combined. . ,
Contingent liability on bills purchased for
foreign correspondents
,




7

56.6%
$4,008

60.0%
$24,604

2.253
2.904
5.452
306
-$10,915
- 12.747
555
+ 2,756
- 459
83
-$53,250
3.4%
-S20.596

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

DISTRIBUTION
RETAIL AND WHOLESALE DOLLAR SALES
1923-25 AVG.= IOO
I
-

—

RETAIL
75
5 0

.ADJUSTED FOR SEASONAL VARIATIONS

1927

1928

1929

1930

1931

1932

1931

1932

FREIGHT CAR LOADINGS

25

ADJUSTED FOR SEASONAL VARIATIONS

927

1928

1929

1930

SALES OF NEW PASSENGER AUTOMOBILES

J

150
125

1923-25 AVG = 100

A

100
75
50

v/vvi

25

1927

1928

1929

1930

1931

1932

COMMODITY PRICES

125

RETAIL. COST OF LIVING
(PHILA

100
WHOLESALE
75

AND SCRANTON COMBINED)

(UNITED STATES)

50

1927

1928




1929

1930

193

932

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

Business conditions in the
Philadelphia Federal Reserve District
Most of the characteristics that marked other major depressions continued in full force throughout the year 1932. The volume
of production and distribution in the district declined steadily,
reaching in the middle of the year a record low level; such improvement as occurred in the fall proved to be temporary, though production was a little higher at the year-end than in the summer.
Prices of commodities, securities, and real estate fell off, although
at a somewhat less rapid rate than in the previous two years, owing
largely to the rise of prices of some of these that occurred in the
third quarter of the year. Earnings decreased precipitously, so that
incomes from wages, salaries, dividends, interest, rents, and other
sources were reduced further, thereby curtailing the ability of the
population to buy goods, repay loans, and meet such ordinary
expenses as taxes and interest on mortgages. Business retrenchment became general, and the shrinkage in employment in all occupations reached the largest proportions in the past decade. Commercial liquidations spread throughout the district, so that the
number of business failures and the amount of liabilities involved
reached the largest annual total in the past fifteen years: this was
also true for the country as a whole.
Industrial activity
Output of factory products in 1932 showed a continuance of the drastic decline which began three
years ago, reaching by the middle of the year the lowest level in
the past decade, but in the fall months there was more than the
usual seasonal increase. The index of manufacturing production
Manufacturing

Factory output
Philadelphia Federal Reserve
District
Manufacturing — total. . .
Metal products
Textile products
Transportation equipment
Food products
Tobacco and products....
Building materials
Chemicals (and related
products
Leather and products
Paper and printing
Electric power output. . . .




1932 index
numbers:
1923-25 = 100

1931

1930

1929

60 4
34.1
72.0
47.5
71.2
78.1
25.6

-21.3%
-44.6 "
-12.9 "
-18.8"
-10.6 "
-17.1 "
-40.3"

-37.3%
-66.5"
-18.3
45.1
19.2
-26.5
-61.0

-45.3%
-72.4"

89.4
98
83
118.9

-13.7"
-13.9"
-15.8 "
-11.2"

-22.3
-19.0
-26.6

-26.6"
-22.7 "
-29.4"
-26.5"

1932 compared with

-15.1

-31.9 "
49.4"
-24.5"
34.7 "
-69.3"

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

for the year as a whole declined from 77 in 1931 to 60 per cent of
the 1923-25 average; this is a further drop of about 21 percent
and compares with the decline of about the same percentage for
the country as a whole.
Output of fabricated metal products, building materials, and
transportation equipment has shown the severest reduction during
the past three years. The rate of production in such other important industries as textiles, foods, tobacco, chemicals and related
products, and paper and printing showed smaller declines.
Along with other forms of readjustment in management and
equipment, strong efforts were made by factories to reduce their
inventories to the lowest level possible. As a result, stocks of both
finished goods and raw materials generally at the end of 1932 were
the smallest in several years.
It is estimated from our indexes and from the Census figures
that the average employment in factories of this district in 1932
amounted to about 512,000 workers as compared with 611,000 in
1931. Similarly, the total amount of wages paid to factory workers
in 1932 was roughly $407 millions as against $612 millions in
1931. The decline in wage earnings was much more severe than in
either employment or operating time, owing largely to the downward readjustment of wages. Such a continuous decrease in wage
earnings inevitably affected the purchasing power of a large body
of consumers, a fact which accounts largely for the reduced volume
of general trade.
The trend in the number of wage earners employed and in the
amount of wages paid by factories of this district by years since
1923 is illustrated by the table below.
Factory employment
and payrolls

Employment
'average for year)

Payrolls
(total)

877,316
785,198
804,043
829,772
792,432*
757,282
804,244*
734,275
610,917
511,948

$1,075,814,441
960,702,296
1.003.933,900
1.063.166.001
996,186,543*
933.937,683
1.025.056,704*
866.172,915
612,384,251
406.623.143

1923.
1924.
1925.
1926.
1927.
1928.
1929.
1930.
1931.
1932.

* From the Census of Manufactures for 60 counties in eastern Pennsylvania, southern
New Jersey and Delaware; prior to 1927 these figures were not subdivided by
counties. Figures for other years were computed from the indexes of employment
and payrolls compiled by the Philadelphia Federal Reserve Bank.



10

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

INDUSTRIAL PRODUCTION
ADJUSTED

FOR SEASONAL VARIATIONS

1923-25AVG. = 100

TOTALI"

1927

1928

1929

1930

1931

1932

VALUE OF BUILDING CONTRACTS

1927




1928

1929

1930

11

193

1932

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
Mining and
quarrying

Production of both anthracite and bituminous coal in
Pennsylvania showed a fairly consistent decline during- the past three years, barring accidental fluctuations, although in the last half of 1932 there occurred a steady
increase in the output of coal for domestic and industrial purposes.
The trend in prices of bituminous coal has been noticeably downward in the past six years; quotations for anthracite in the same
period showed variations, but in 1932 they declined to about 88 as
compared with 91 per cent of the 1926 average in 1931.
Stocks of anthracite held by retailers, producers, and on upper
lake docks at the end of the year were from 38 to 44 per cent
smaller than at the end of 1931. The tonnage of bituminous coal
held in stock also declined in the year and on January 1, 1933 was
the lowest since 1920.
Employment in the anthracite industry has been shrinking
steadily since 1926, and in the bituminous coal fields the decrease
has been continuous in the past nine years. This shrinkage in
employment of the coal industry may be attributed partly to various improvements in production methods with a consequent
increase in the output per man per day and partly to the introduction and growth of other forms of industrial and household
fuels.
The table below shows the employment trend and production
in the coal mining industry of Pennsylvania from 1923 through
1932.
Coal
mining
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932

Employment
Anthracite
157,743
160,009
160,312
165,386
165,259
160,681
151,501
150,804
139,431
108,198*

Production (tons)

Bituminous

Total

Anthracite

194,981
169,322
156,798
155,999
153,699
133,414
131,774
130,150
116,726
103,186*

352,724
329,331
317,110
321,385
318,958
294,095
283,275
280,954
256,157
211.384*

93,339,000
87,927,000
61,817,000
84,437,000
80,096,000
75,348,000
73,828,000
69,385.000
59,646,000
49,350,000

Bituminous
171,880,000
130,634,000
136,928,000
153,042,000
133,099,000
131,202,000
143,516,000
122,539,000
97,276,000
75,878,000

* Estimated.
Source: Bureau of Mines, U. S. Department of Commerce.

Activity in the quarrying and non-metallic mining industry
showed extraordinary slackness throughout 1932. As a result, the
volume of output and employment decreased further, reaching the
lowest level in many years.



12

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
Building and
real estate

The volume of building continued the sharp decline
through 1932, the rate of decrease being even more
pronounced than that in the output of manufactures.
The total value of contracts awarded for new construction, repairs,
alterations and additions decreased further and was only about 26
per cent of the 1929 volume. While the drop in contracts for dwellings was not as sharp as that in the total awards, the decrease as
compared with three years ago was much heavier. Both the number and the value of building permits also showed a progressive
falling off, although the rate of decline was growing less marked
than in the previous two years. This adverse comparison reflected
partly the influence of lower prices of materials and labor and
partly the general industrial conditions.
Employment and wage earnings in building trades showed a
corresponding downward trend. For example, the average number
of wage earners employed in building trades of Pennsylvania in
1932 is estimated at about 120,000 as compared with 176,000 in
1931, 249,000 in 1930 and almost 252,000 in 1929. The estimated
amount of wages paid totaled roughly $130 millions as against $214
millions in 1931, $346 millions in 1930 and $365 millions in 1929.

The real estate market continued highly unsatisfactory; the
demand for houses and other real estate in general fell off further,
and prices dropped persistently. Largely as a result of the inability
caused by reduced incomes to meet such fixed charges as taxes,
interest and rent, foreclosures continued excessively large.
Comparison of the 1932 activity in building and real estate is
indicated by the percentage changes in the following table:
1932 compared with

Building and real estate
activity

1931

1930

1929

Contracts awarded:
Total
Residential
Building permits
Employment (Pennsylvania)
Payrolls (Pennsylvania)

-45.4%
-39.3 "
-56.0 "
-31.8 "
-39.2 "

-68.7%
-63.5 "
-74.6 "
-52.0 "
-62.4 "

-74.4%
-83.4 "
-86.2 "
-52.4 "
-64.3 "

Mortgages recorded
Real estate deeds
Sheriff deeds

-33.1 " (b)
- 8.6 " (c)
+14.9 " (d)

-52.3 " (a)
-14.2 " (d)
+49.2 " (c)

-67.8 " (a)
-26.5 " (a)

(a) 1 city, (b) 2 cities, (c) 3 cities, (d) 4 cities.




13

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

Agriculture Like other occupations, farming has sustained material losses of income under the depressing influences
that have prevailed in recent years. Continued decline in prices of
farm products, unusually large carry-over of important grain crops,
and a severe drought in the fall months were among the factors
that continued to make farming unsatisfactory in 1932.
Income from farm production
in this district
(000's omitted)

Gross income*
$333,749
295,306
233,751
180,228

1929
1930..
1931
1932

Cash income
$284,397
253,259
199,592
152,456

*Gross income is cash income plus the value of the products consumed in the farm
household on the farm where commodities were produced.
Source: Department of Agriculture—state and federal.

Nevertheless, farmers in this section, particularly in Pennsylvania, probably fared better than those in other parts of the
country, owing largely to smaller indebtedness and fixed charges,
according to figures published by the Pennsylvania Department of
Agriculture. The number of farms mortgaged in 1930 was estimated to be about 34 per cent of all farms, as compared with the
average of 42 per cent for the country. The ratio of charges to
the total farm indebtedness in Pennsylvania—5.76—was the lowest with the exception of New Hampshire, Wisconsin, Iowa and
Nebraska. In 1930 there were in Pennsylvania 172,419 farms and
the average cash income totaled about $1,519 per farm as compared
with $1,270 per farm in the country as a whole.
Production of such leading crops as corn, wheat, hay, potatoes,
tobacco, and nursery and greenhouse products was considerably
smaller than in 1931 and somewhat below the five-year average,
1924-1928. Yields of vegetables and fruits also declined as compared
with the preceding two years.
The dairy industry, which for many years has been superseding in importance grains, beef cattle, swine and sheep, was less
active in 1932 than in the previous three years. Output of milk and
butter decreased further, in spite of some increase in the number
of milch cows on farms. This is attributable to poorer pastures,
reduced feeding, and unfavorable weather conditions generally. The
cash income from the milk produced in 1932 on Pennsylvania farms
was estimated at about $71 millions or 61 per cent of cash income
realized from all livestock and livestock products; it was 45 per cent
of total cash income.



14

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
The poultry business, which is of considerable importance in
this section from the standpoint of cash income, increased in volume by almost 35 per cent as compared with 1931, owing solely to
the sale of live poultry which was 86 per cent of the total. Prices,
however, were about 20 per cent lower than a year before. The
number of cases of fresh eggs sent from this section to the four
principal eastern markets showed a drop of 15 per cent in the year;
egg prices on the average were 12 per cent lower in the Philadelphia market and 7 per cent lower than in the previous year in the
New York market.
The supply of farm labor increased steadily throughout the
year, owing largely to the influx of industrial workers, but the
demand for labor was considerably below the estimated normal in
the three states comprising this district. The trend of farm wage
rates was more sharply downward during 1932 than in either of
the two preceding years; as compared with 1931, monthly wages
for farm workers without board showed declines ranging from 19
per cent in New Jersey to nearly 24 per cent in Pennsylvania.
Distribution
The volume of business that moved from productive to distributive channels and to ultimate consumers in 1932 was greatly
reduced as compared with the previous three years. This reduction
was due in part to steadily declining prices and in part to the general curtailment of industrial activity with a consequent decline in
the purchasing power of the rank and file of the population.
Sales at retail and wholesale establishments continued downward for the third successive year and were only about 60 per cent
of the 1929 dollar volume. The decline in sales was steady over
most of the year as indicated by our seasonally adjusted indexes.
This was also true of the stock of merchandise which declined consistently from month to month, when allowance is made for the
normal seasonal changes.
Retail and wholesale
trade sales
1929.
1930.
1931.
1932.

Retail

W holesale
:i

$3,223,550,000
2,926,983,000
2,590,380,000
1,947,966,000

P,349,508,000*
2,917,421,000
2,485,643,000
1.998,457,000

*Census of Distribution, 1929; figures for other years computed by applying index
Kt»rc to 1 Q^Q ficriirpsi
numbers tr> 1929 figures.
15



Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
Registrations of new passenger automobiles were 64 per cent
of the previous year, continuing the sharp decline in sales since
1929. The change in the sales of used cars on the whole was more
favorable when contrasted with recent years.
The amount of premiums paid on ordinary life insurance in
1932 was 18 per cent smaller than in 1931, 27 per cent less than in
1930, and 28 per cent smaller than in 1929. Individual borrowings
on life insurance policies increased sharply.
The volume of freight car loadings in this section was about
74 per cent of that in 1931. This decline was a continuation of
the downward trend in the past three years, even though in the fall
months of 1932 there was an upturn in the movement of goods.
The falling off in the loadings of merchandise and miscellaneous
commodities throughout the year was about as severe as that in
the shipment of such heavier commodities as coal, timber, grain
and ore.
The value of foreign trade at the Port of Philadelphia was
about one-third less than that in the preceding year. This was a
further decline so that compared with 1929 both imports and
exports were 67 per cent smaller; the decline in the national value
of imports and exports was almost 70 per cent between 1929 and
1932.
Further comparisons of trade activity in 1932 with the previous three years follow:
1932 compared with
1931
1930
1929

Changes in distribution of goods
Retail trade
Sales
Stocks
Wholesale trade
Sales
Stocks
Freight car loadings
Total
Merchandise and miscellaneous

-24.8%
-17.1 "

-33.4%
-26.9 "

-39.5%
-31.7 "

-19.6
-16.0 «

-31.5 "
-27.4 "

-40.3 "
-34.9 "

a
u

-41.7 "
-41.6 "

-50.4 "
-50.0 "

Registrations of new passenger automobiles.
Casoline consumption
Life insurance sales

-35.5
- 1.9
-17.7

it

a

-47.9 "
+ 17.5 "
-27.1 "

+22 2 "
-2l7) "

Foreign trade—Port of Philadelphia—value
Imports
Exports

-30.5
-45.6

a
a

-51.7 "
-60.4 "

-67.1 "
-67.3 "




-26.2
-26.4

13

-60.6 "

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

Financial changes in the Third Federal Reserve District
Member banks
The decline in deposits which marked the last quarter of 1931
continued, though at a slower rate, in the first four months of 1932,
as shown by a decrease in the demand and time deposits of all member banks from a daily average of 2,079 millions in December to
1,964 millions in the following April. Thereafter the general level
was quite stable for six months but increased to 1,980 millions in
December. During the last eight months of the year, average
deposits of Philadelphia member banks increased from 786 to 844
millions, offsetting declines in the deposits of banks located in other
cities of more than 15,000 population from 622 to 606 millions, and
a reduction in the smaller communities from 556 to 530 millions.
Of the total decrease of 99 millions in the year in the deposits of all
member banks, 68 millions was in net demand deposits and 31
millions in time deposits.
Member bank loans and investments
(000,000's omitted)

December
31, 1932

Loans:
On securities:
To ^Vew York City brokers
To other brokers
To other customers . .

December
31, 1931

December
31, 1930

$2
16

$729

8
229

13
240

242

577

688

755

$1,521

$1,767

337

219

633

Total loans and investments. . .

$580

410

United States securities. .
Other securities. .

653

$1,312

Total loans and discounts

550

S498

Bought commercial paper and bankers'
acceptances
Real estate loans
Other (largely commercial) loans and
discounts

$16
60

480

Total loans on securities

$5
25

700

747

$2,355

$2,558

$2,733

41

Banks in Philadelphia:
Loans and discounts. .
United States securities
Other securities

521

652

810

232
220

172
248

106
258

Banks outside of Philadelphia:
Loans and discounts
United States securities
Other securities

791
178
413

869
165
452

957
113
489




17

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

MEMBER BANK DEPOSITS
PHILADELPHIA FEDERAL RESERVE DISTRICT

TOTAL NET DEMAND
AND TIME DEPOSITS

1929

1930

1931

1932

CLASSIFICATION OF DEPOSITS

1000
900

1929

1930

1931

1932

GEOGRAPHIC CHANGES IN DEPOSITS
BANKS IN
PHILADELPHIA

900
BANKS IN TOWNS OF
15000 OR MORE
OUTSIDE OF PHILADELPHIA

800
700
600
500

BANKS IN TOWNS I
I UNDER 15000 POPULATION

1929




1931

1930
IS

1932

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

MEMBER BANK LOANS AND INVESTMENTS
PHILADELPHIA FEDERAL RESERVE DISTRICT
MILLIONS
#

850

OTHER LOANS
TO CUSTOMERS

800
750
700
650
600

INVESTMENTS
-OTHER THAN U.S.
SECURITIES
LOANS ON STOCKS
AND BONDS TO
CUSTOMERS

550
500
450
4.00

UNITED STATES
SECURITIES

1929
Note: Distribution in 1929 partly estimated.




19

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

The reduction in deposits during the past year reflects largely
the influence of the repayment of loans, which declined from 1,521
to 1,312 millions. The loan decline, which was particularly rapid in
the spring and which occurred in all classes of loans, may be considered the resultant of several factors: reduced business at declining prices, making it possible for some to finance their operations
out of their own resources; repayments or reduction at maturity;
low prices in the security markets, which discouraged dealing in
stocks and other securities over most of the year; a marking down
of assets to adjust them to current values.
Although member banks in this district show a decrease in
loans to the open market, which include loans on securities to New
York brokers and bought commercial paper and bankers' bills, and
a larger decline in securities other than those of the United States
Government, the drop in these assets was nearly balanced by an
increase of 73 millions in United States securities.
The reduced activity of business found reflection, not only in
the decline in loans and deposits, but also in a slower rate of turnover of deposits. Index numbers based on some of the larger member banks in Philadelphia show a decline in the rate of turnover of
demand deposits of 23 per cent from 1931, and 42 per cent in
comparison with 1930.
Federal Reserve Bank
Bill and Bills discounted held by this bank declined from 116 to
security 47 millions in the course of the year. The highest point
holdings was 134 millions on January 29th, and the lowest was a
little less than 47 millions on November 14th. During
January and February, the daily averages were in excess of that in
December, 1931. In succeeding months there was a pronounced
decline, owing largely to repayments by Philadelphia banks, which
by the end of May had reduced their borrowings at this bank from
about 60 millions to a little over 10 millions, a figure which changed
little to the end of the year.
Borrowings of country member banks were at the highest point
in recent years during January, February and March, with an average of approximately 60 millions. There was a decline to 49 millions on May 18th, followed by an increase to 61 millions on July
27th and a subsequent decline to less than 40 millions in the fall.
At the end of the year, the total under discount for these banks was
38 millions, a decrease of 13 millions from a year earlier.



20

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

Trends in the total number of borrowing banks were similar to
those shown in discounts for country banks. There was a decline of
about 18 per cent in the course of the year. Discounts and advances
were made for 609 member banks during 1932.
Under the Glass-Steagall bill, approved February 27th, the
reserve banks are authorized, upon receiving the permission of the
Federal Reserve Board, to loan to groups of five or more member
banks which wish to use the proceeds to help such of their number
as do not have adequate amounts of eligible assets to obtain credit
accommodation directly from the reserve banks. It was further
provided that, until March 3, 1933, and in "exceptional and exigent
circumstances," banks lacking such assets and having a capital not
in excess of $5,000,000 might, with the permission of the Federal
Reserve Board, obtain advances from the reserve bank upon their
own notes, acceptably secured. Although in a few instances member
banks contemplated forming loan groups under the first part of this
act, plans were not completed for any of them, so that no loans were
made. Several were made to banks under the second section.
An amendment to the Reconstruction Finance Corporation Act
similarly provided that the Federal Reserve Board might permit
reserve banks to loan directly to individuals, partnerships and corporations. These loans also are to be granted only in unusual and
exigent circumstances and the paper upon which such a loan is made
must be of the kind and maturity that is eligible for rediscount under
the Federal Reserve Act and must be endorsed and satisfactorily
secured. The Federal Reserve Bank, in accordance with the terms
of the law, also is required to determine that the applicant had not
been able to secure adequate credit from other banking institutions.
Applications for loans under these provisions on the whole were not
as numerous as might have been expected. In the majority of
instances, too, it was found that the applicants were not able to
meet the eligibility requirements, so that only a few of these loans
actually were made.
Very few bankers' bills were presented to this bank for purchase. Throughout the year over 3 millions of foreign bills were
carried in the statement, representing a participation in system
holdings, and the bank also participated on several occasions in
system purchases of domestic bills. The highest figure reached by
"Bills bought" was about 7 millions on January 8th, and the lowest
was 3 millions, extending over most of December.



21

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

The bank held 69 millions of United States securities on January 1st; part of this represented securities bought from member
banks under repurchase agreements. These securities shortly were
taken back by the banks, reducing our holdings to 59 millions. This
figure changed little until March. Thereafter the bank's holdings
increased rapidly, owing to its participation in active open market
purchases by the system. The termination of these purchases early
in August found the bank with 139 millions of government securities, the highest amount in its history. Subsequent changes were
minor.
Holdings of securities other than issues of the United States
totaled nearly 6 millions at the end of 1931, of which 3 millions was
in municipal warrants and the balance in debentures of the Federal
Intermediate Credit banks. The debentures matured or were sold
early in the year, but over most of 1932 from one to two millions
of municipal warrants were held.
Bills
bought

U.S.
securities

Other
securities*

Totals

$42
75
89
29

$18
25
13
4

$29
26
20
49

$1
#
1
1

42
73

5
4

53
111

2

$ 90
126
123
83

117
119

5
6

58
61

7
4

102
190

187
190

6

59

97
74
63
66

CO CO ON

Annual averages:
1927
1928
1929
1930
1931
1932
Monthly averages:
1931—Dec.
1932—Jan
Feb.. .
Mar..
Apr
May. .
June..
Julv
Aug.. . .
Sept
Oct
Nov
Dec .

Bills
discounted

64
77
107
128

72

4

136

o

214

65
57
50

3
3
3

139
139
139

1
1

209
200
193

49
51

3
3

139
139

1
1

192
194

122

•fi-

Bill and security holdings
(000,000's omitted)

* Including foreign loans on gold.

189

1
2
2

168
156
175
200

Less than $1,000,000.

Local use
Every member bank must keep on deposit with the
of reserve reserve bank a sum equal to certain percentages of its
bank credit demand and time deposits. This sum is the bank's
reserve deposit. Ordinarily, a bank will not maintain
its reserve deposit at a figure much in excess of legal requirements,
as such a deposit does not bear interest, but it will exercise caution



22

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

not to allow this deposit to fall below the required amount, thus
avoiding penalty.
Through the facility of the balances necessarily carried with
the federal reserve bank, clearing transactions of all kinds and
other transactions incident to the routine of banking operations are
conducted. Requisitions upon the reserve bank for currency and
coin, transfers of funds to other banks, the payment of checks,
drafts and other items drawn upon the bank reduce the bank's
reserve deposit, while deposits of currency and coin in the reserve
bank, and such transactions as the collection of checks, drafts and
other credit items naturally increase it. If a bank finds that its
payments exceed receipts sufficiently to force the reserve deposit
below requirements, it may borrow from the reserve bank and have
the proceeds added to its account; if the deposit, as a result of the
day's transactions, is much in excess of requirements, the excess
may be used to repay borrowings.
Specifically the principal factors which tend to raise or lower
member bank reserve deposits in this district may be indicated
briefly as follows:
1. Interdistrict settlements (settlements between
federal reserve districts) :
Payments between districts for checks, drafts and such
other items as wire transfers are handled through the
gold settlement fund. If the member banks have to pay
more than they receive, their reserve deposits are
reduced, and vice versa.
2. Treasury operations:
Large sums are received by the government as a result
of tax collections, payments for new securities, insurance premiums, and other transactions, but government disbursements, including interest, redemption of
securities, pensions, insurance payments, wages, supplies and miscellaneous payments of this character
within the district also reach large figures. If local
receipts by the Treasurer exceed disbursements, the
reserve deposits of member banks decrease, and vice
versa.
3. Demand for currency and coin:
If more currency is obtained from the reserve bank than
the member banks return to it, reserve deposits are
reduced, and vice versa.



23

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

There is a close relationship between the first and second of
these factors because of the large amount of government securities
issued each year. The bulk of these securities are paid for, not by
cash, but by deposit credit at the banks to which they have been
allotted. The government withdraws these deposits as it needs money
for current use. The banks in turn, unless they have a surplus of
funds, sell a large percentage of the securities allotted to them,
most of the sales probably being made to New York firms. Payment
is received either through the gold settlement fund, writh a resulting
credit to reserve deposits at the reserve bank, or by deposit credit
at New York banks. In the course of a year these sales reach large
figures, as may be gathered from the fact that member banks in
this district showed an increase of only 73 millions in holdings of
United States securities during 1932, although they had received
much the greater part of the 298 millions of new government securities allotted to banks in this district for which payment was made
in cash or by deposit credit.
The actual changes affecting the reserve deposits of member
banks in the district during 1932 are reflected by the following
operations:
Factors affecting reserve deposits
(000,000's omitted)
Interdistrict settlements: Net gain arising largely from sale of securities
Excess of currency returned to reserve bank over currency received
by banks
Receipts by Treasury in payment for new securities (cash or
amounts withdrawn from depositary banks)
All other Treasury transactions (including operations of Reconstruction Finance Corporation and new issues of national
bank notes): Excess of local disbursements over receipts
Indicated effect of foregoing transactions on member
banks' reserve deposits
Actual change in reserve deposits
Indicated decline in reserve bank credit

Effect on reserve
deposits

+$145
+

21

- 289
+ 200

+ $"7
9

- $79

The table shows that the various activities of the banks and
the Treasury would have added 77 millions to the reserve deposits
of the member banks, but that there was an actual decline of 2 millions in such deposits. These funds, totaling 79 millions, were applied
to the reduction of reserve bank credit, of which 69 millions was
evidenced by a reduction of bills discounted at this bank.
In view of the very large purchases of government securities
by the federal reserve system during the past year, it is probable



24

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
that some of the securities were acquired by the system, directly or
indirectly, from member banks in this district and that these funds,
supplied by the system, constituted one of the factors making
possible a reduction in borrowings.
Reserve
position

The ratio of average cash reserves to the federal reserve
note and deposit liabilities in 1932 was 58.6 per cent,
which compares with 78.8 per cent in 1931 and 81.7 per
cent in 1930. The highest point this year was 69.7 per cent on April
19th and the low was 51.1 per cent on July 23rd. The net change in
the year was a decline from 60 per cent to 56.6 per cent.
Year end figures show declines in both the deposit and federal
reserve note liabilities, but the decrease in cash reserves also was
large. Note circulation is discussed in some detail in the section
on "Currency demand." The decrease in deposits reflected lower
figures for member banks' reserve deposits, government deposits
and foreign bank deposits. Monthly averages of member bank
reserves declined from 124 millions in December, 1931, to 116 millions in the spring and early summer. There was a rise thereafter,
particularly pronounced in November and December, when temporary influences, which disappeared by the end of the year, raised
the averages unduly.
During 1932 the cash reserves of the bank declined from 243
to 205 millions. Reserves other than gold increased 5 millions,
Reserve position
(000,000's omitted
in dollar figures)

Member bank
reserve
deposits

Total
deposits

$136
134
138
141
119

$139
137
140
150
124

$132
147
135
175
252

$172
192
225
257
221

63.6%
67.6'
81.7'
78.8'
58.6'

124
122
118
117
116
116
116
116
117
118
118
121
127

139
132
126
122
123
124
123
120
121
122
122
125
131

276
265
265
260
253
250
249
257
256
249
242
239
242

261
240
233
248
254
234
207
199
203
205
205
207
214

62.8'
60.4'
59.7'
64.9'
67.5'
62.5'
55.7'
52.7'
53.8'
55.2'
56.3'
56.8'
57.3'

Annual averages:
1928
1929 .
1930..
1931
1932
Monthly averages:
1931—Dec
1932—Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec




25

Federal reserve
Cash
note
reserves
circulation

Reserve
ratio

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

RESERVE POSITION
FEDERAL RESERVE BANK OF PHILADELPHIA

r\ \

PERCENT
85
80

/

75

f

RESER1•E

70
65

\

1

RATIO

\.

—

\

1

1

II

5U

55 —
50

929

931

1930

1932

FED RES. NOTES
IN CIRCULATION

1929




1931

1930
26

932

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

owing mainly to an accumulation of United States notes, while gold
holdings declined 43 millions.
Several well-defined movements are apparent in the gold figures. Up to March 2nd there was a decrease of 27 millions, reflecting losses in the settlements and transfers for the Treasury. In the
next five weeks, ending April 6th, gold increased 31 millions, chiefly
as a result of security sales by the member banks. Thereafter there
was a rather steady decline totaling 74 millions to the lowest point
of the year on July 27th; this was due largely to the acquisition of
United States securities by this bank. Over the balance of the year
the trend was upward and, by December 31st, 185 millions was on
hand, an increase of 27 millions over July 27th.

Currency demand
In contrast with the extraordinary increase during the fall of
1931, the trend of currency demand during the first half of 1932
was generally downward. This was to be expected in view of the
trend of business, but the total volume continued unusually large as
compared with normal years. There was a rise of more than the
usual amount early in July, but subsequently the decline was
resumed, despite some improvement in business, and continued until
the end of October. The increase in currency during the last two
months of the year was less than that usually to be anticipated at
a time when the holiday trade is active.
Although it is evident that some currency has returned from
circulation, it is impossible to state definitely what factors have
brought it about. Quieter banking conditions in the district have
made it possible for the banks to carry smaller amounts of money
in their tills. The decline in wage payments and in the dollar volume of retail trade must have had something to do with the falling
off in currency demand. And it probably is true that some of the
hoarded money has returned, either by redeposit in banks, or as a
result of investment or spending to meet living expenses. Offsetting
factors include the need for cash in communities which are devoid
of banking facilities and, possibly, an increased use of cash as a
result of the tax on bank checks.
Federal reserve note circulation in this district declined from
269 to 238 millions in the year, but this does not give an exact indication of the decline in circulating money. These notes are only one
of a number of types of money in use. This bank, which is the principal source of money within the district, may pay out whatever



27

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

CURRENCY DEMAND
FEDERAL RESERVE BANK OF PHILADELPHIA
MILLIONS
CD;

r

+ 125
+ 100
+ 75
+

50

1
i

+ 25
O

J

25
50
-

75
MARCH 31,1927 = 100

- 100

1930

1931

1932

kind of currency it may find convenient in meeting the requisitions
of the member banks.
Federal The Glass-Steagall Act, approved February 27, 1932, perreserve mitted the Federal Reserve Board over a period of one
notes
year to allow the reserve banks to pledge United States
securities as collateral for federal reserve notes; this made
possible the liberation of a large amount of gold then used for that
purpose. On February 24, $2,037,000,000 in gold was being so used.
In thus releasing gold, the Act opened the way for the system to
make such purchases of United States securities as might appear
necessary.
The new Act in no way affected the reserve requirements
against notes. Under the Federal Reserve Act, reserves in gold of
40 per cent must be kept against federal reserve notes in circulation and reserves in gold or lawful money of 35 per cent against
deposits. The reserve banks must keep on deposit with the United
States Treasurer a gold redemption fund equal to 5 per cent of the
notes not covered by gold, but this redemption fund counts as part
of the 40 per cent reserve against notes.



28

Eighteenth Annual Be port, Federal Reserve Bank of Philadelphia

"Excess reserves" of a reserve bank are figured by deducting
reserves of 35 per cent of the deposits and 40 per cent of the notes
in circulation from the total cash reserves of the bank. But to figure "free gold" there also must be deducted the amount of gold
needed, in addition to eligible paper, to bring the collateral pledged
against federal reserve notes up to a full 100 per cent of the notes
outstanding. Calculations follow which show the free gold position
of this bank prior to the approval of the Glass-Steagall Act and on
May 4.
Excess reserves and free gold
(000,000's omitted)

Additional gold required as collateral for federal reserve
notes
Free gold

44
100
$144
$100

62

97

$19

Excess reserves

43
105

$81

Total required reserves

$244

$148

Required as deposit reserve
Required as note reserve (includes redemption fund)....

Mav 4,
1932

$229

Total cash reserves . .

Feb. 24,
1932

$3

Reflecting the influence of government security purchases, the
free gold at this bank decreased in this period from 19 millions to
3 millions, a figure which was too small for current operations. On
May 5, however, the Federal Reserve Board permitted the reserve
banks to pledge United States securities as collateral for notes. The
bank thus was enabled to continue participating in system purchases of government securities. In granting this permission, the
Federal Reserve Board placed certain restrictions on the procedure,
so that no greater amount of government obligations would be so
used than is necessary to give the reserve banks a reasonable
working gold balance for their operations. The maximum amount
of securities pledged by this bank as collateral for outstanding
notes was 56 millions; at the end of the year 52 millions was so
used.
Total issues of new federal reserve notes to the bank during
1932 amounted to 78 millions, which compares with the record total
of 233 millions in 1931, and with 152 millions in 1930. Year-end
statements of notes issued and collateral held follow:



29

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

Federal reserve note issues and collateral
(000's omitted)

December 31
1932

1931

1930

Notes received from comptroller
Notes on hand (held by federal reserve agent)

$353,179
101,790

$388,667
93,600

$242,755
61,620

Notes issued to bank (outstanding). . .

$251,389

$295,067

$181,135

78,290
73,710
47,463
52,000

54,700
125,300
116.949
0

38,700
121,300
22,444
0

$251,463

$296,949

$182,444

Collateral held:
Gold and gold certificates on hand
Gold fund—Federal Reserve Board
Discounted and purchased bills
United States securities
Total collateral held

National
bank notes

In the years from 1927 to 1931 the amount of national
bank notes outstanding in this district changed little,
moving within a range of roughly from 54 to 57 millions. During the first half of 1932 the outstanding notes increased
from 57 to 65 millions, 3 millions of the increase being accounted
for by banks in Philadelphia. These notes were issued against 2 per
cent consols of 1930 or Panama Canal bonds.
The Federal Home Loan Act was approved on July 22nd; one
of its sections permitted national banks to pledge, over a period of
three years, any outstanding bonds of the United States bearing
interest up to 3 % per cent. Many banks in the district took advantage of this liberalization of the law with regard to acceptable
security. From June 30th to December 31st outstanding notes
increased from 65 to 73 millions.
The law limits the amount of notes issued at any one time to a
national bank to an amount equal to the capital stock of such bank.
The total capital of all national banks in this district on December
31st was 124 millions; with 73 millions of notes then outstanding,
there still remained considerable latitude for expansion. The Attorney General has ruled that the bonds referred to in this new legislation lose the circulation privilege at the end of the three-year period
and that the notes issued upon the deposit of such bonds then must
be retired.
Money rates
Open market money rates declined in 1932 to exceedingly low
levels; prime commercial paper at the end of the year was offered
for sale at as low as l ^ - l 1 / ! ' per cent. Nevertheless, Philadelphia



so

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

banks continued through the year to quote 4!/^r5 per cent on the
bulk of the commercial loans granted to customers in good standing.
Rates were raised to this level during the period of gold drain and
banking disturbances in the fall of 1931. The rate for brokers' call
money in this city continued at 4 per cent, unchanged since May, 1930.
In common with most of the other reserve banks, the discount
rate of this bank was unchanged at zy± per cent during 1932.

Departmental operations
(000's omitted)

1932

1931

1930

1929

Number of pieces or transactions handled:
68
60
Notes and bills discounted
161
51
Notes (currency) counted
179,004 199,377 211,091 215,030
Coins counted
291,563 308,220 334,963 331,780
Ordinary checks handled (including return
63,154 70,134 72,846 70,234
items)
U. S. government checks handled
2,054
2,130
1,929
1,952
Items payable at a future date (collection
items):
1356
1,680
1,361
1,487
United States coupons paid
All other items
607
548
570
594
Transfers of funds
123
122
126
116
U. S. securities issued, redeemed, or ex80
73
112
61
changed

The discount department reported substantial increases both in
the number of items handled and in the dollar total. This probably
also was true of the vault department; although no figures are available on the number of pieces, the total of securities held in custody
for member banks increased from an average of $301,000,000 in
1931 to $313,000,000 in 1932, and the amount of securities and cash
held for this bank, the United States Treasury and others rose from
$454,000,000 to $683,000,000. The collection department also had
an increase in the number of items handled, but the currency, transit and fiscal agency departments show a decline in the physical
volume of work.
With the opening- of the local office of the Reconstruction
Finance Corporation in the bank building, the bank had to set up a
custody department to care for all notes and collateral turned over
to the corporation and to arrange for the collection of maturing
items. And, too, it wras necessary to provide a staff to examine
applications for direct loans received from individuals, partnerships
and corporations, but these applications dwindled rapidly as the
year waned.



31

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

The number of cities for which clearing house balances are paid
daily through the reserve bank increased during- the year from 12
to 14, but the total of the balances decreased from $172,000,000 to
$146,000,000. The number of county clearings systems in operation
increased from 8 to 12 and the number of participating- banks from
102 to 186; the amount of items interchanged by these banks, settlement for which was handled by the reserve bank, increased from
$48,000,000 to $70,000,000. Direct sendings of checks by banks in
this district to the reserve banks in other districts, thereby expediting the receipt of payment, decreased from $5,100,000,000 to
$3,300,000,000; this decline is not surprising in view of the falling
off in the dollar volume of business and financial transactions.
Redemptions of maturing issues of United States certificates of
indebtedness and Treasury notes totaled $69,000,000 in this district,
or 46 per cent of the amounts originally allotted here; in addition,
$21,500,000 of Treasury bills were redeemed. Subscriptions to new
issues of certificates, notes and bills issued by the United States
totaled $3,283,000,000; $347,000,000 was allotted to the district.

Personnel and building
Board of directors
Class

Name

Joseph Wayne, Jr., President,
Philadelphia National Bank,
Philadelphia, Pa.
A - Group 2 George W. Reily, President,
I
Harrisburg National Bank,
Harrisburg, Pa.
[Group 3 John C. Cosgrove

Residence

Term expires

[Group 1

Philadelphia, Pa. December 31, 1932
Harrisburg, Pa.
Johnstown, Pa.

December 31, 1933
December 31, 1934

C. Frederick C. Stout, Member,
John R. Evans & Company,
Ardmore, Pa.
December 31, 1934
Philadelphia, Pa.
| Group 2 Arthur W. Sewall, President,
General Asphalt Company,
Philadelphia, Pa. December 31, 1932
Philadelphia, Pa.
' Group 3 J. Carl De La Cour, Vice-President,
Wm. S. Scull Company,
Riverton, N. J.
Camden, N. J.
December 31, 1933
['Group 1

Richard L. Austin,
Philadelphia, Pa. December 31, 1932
Chairman of the Board
Alba B. Johnson, Deputy ChairDecember 31, 1933
man of the Board
Rosemont, Pa.
Bridgeville, Del. December 31, 1934
Harrv L. Cannon

The terms of office of Joseph Wayne, Jr., a class A director,
and Arthur W. Sewall, a class B director, terminated on December
31st. At the elections held in the fall, they were elected by the
banks of groups 1 and 2, respectively, without a dissenting vote.



Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

The term of Richard L. Austin, a class C director, also expired
on December 31st, and he was redesignated by the Federal Reserve
Board to serve as a director for a further period of three years and
to hold office as chairman of the board and federal reserve agent
during 1933. The Federal Reserve Board also reappointed Arthur
E. Post and Ernest C. Hill as assistant federal reserve agents during 1933.
At the first meeting of 1932, the board of directors again chose
Howrard A. Loeb, chairman of the board of the Tradesmens National
Bank and Trust Company of Philadelphia, to represent this district
on the Federal Advisory Council. The officers of the bank also were
reappointed for 1932 as follows: governor—George W. Norris;
deputy governor—William H. Hutt; cashier and secretary—C. A.
Mcllhenny; assistant cashiers—W. J. Davis, J. M. Toy, R. M. Miller,
Jr., S. R. Earl; comptroller—William G. McCreedy.
The number of employees other than officers increased during
the year from 686 to 752, owing largely to employees taken on to
handle work in connection with the activities of the bank as a
custodian for the Reconstruction Finance Corporation. This increase
also reflects employment given to 22 persons, starting in December,
in the effort to alleviate some of the distress now so prevalent; the
funds to compensate these additional employees were derived in
part by graded temporary reductions in the salaries of the staff, in
return for which a half-day holiday can be taken each month.
During the year the property fronting on Chestnut Street
between the bank building and the post office was acquired by the
bank and the building situated thereon was removed. The erection
on the lot to the other side of the building of an addition corresponding to six stories of the older building was begun; when completed,
the front of the original building will be altered to conform to the
front of the new building.

Banking changes in the district
Bank suspensions in this district declined from 101 in 1931 to
27 in 1932, of which only 7 were reported in the last half of the
year. Eighteen of the banks had deposits under $1,000,000 and
nine in excess of $1,000,000. None of the failures this year was in
Philadelphia. Ten of the suspensions were member banks; the
deposits of failed member banks made up 21 per cent of the total for
all failed banks, but comprised only one-quarter of one per cent of



33

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

the total deposits at the beginning of the year of all member banks
in the district.
Consolidations or absorptions continued numerous in 1932.
There were 23 instances in which member banks acquired the assets
of nonmembers by one of these methods and three cases in which
membership was lost for like reasons. The ten suspensions of
member banks were offset in part by six cases of reopening and an
additional case in which a new charter was taken out prior to reopening. The assets lost to the system by some of these changes
were more than balanced by amounts gained by others. Consolidations or absorptions between member banks reduce the number of
members, but not the total assets.
Changes in the number of member banks are summarized below:
National
banks

Changes in membership

State
bank
members

Totals

73

715

0
0
0

6
1

9

0

9

10

0

10

12

5

17

0
1

3
0

3
1

23

Gains in 1932:
Primary organizations
Suspended banks reopened
Conversion from nonmember bank

642
2
6
1

Active membership, December 31, 1931

8

31

628

65

693

Losses during 1932:
Suspensions..
Consolidation with or absorption by member
banks
Consolidation with or absorption by nonmember banks .
National bank succeeded by national b a n k . . . .

Active membership, December 31, 1932

The loans and investments of member banks on September 30,
1932, totaled $2,414,000,000, as against $3,524,000,000 for all banks
in the district. The proportion held by members was close to 69 per
cent, which compares with 66 per cent a year earlier, 62 per cent
two years ago, and 61 per cent three years ago.
The principal function of the bank relations department is to
keep the banks of the district informed fully regarding the services
offered by the federal reserve system and the ways in which they
may be used most advantageously. During 1932 over 1,300 visits
were made to banks as a matter of routine and 360 special visits to
deal with specific problems, including the setting up of county clearings systems.



34

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
The reports and subsequent follow-ups of the department of
bank examination are designed, not only to secure full knowledge
of the condition of banks, but also to help the banks to operate
more efficiently and profitably. Bankers find these services helpful
and visit this bank frequently to talk matters over with the officials
here; the total number of visits received from bank officers during
the year was in excess of 2,300.
Fiduciary powers
Changes during 1932 which increased the number of banks
having fiduciary powers in this district include original grants to
five banks and the reopening of one bank which had such powers.
Decreases resulted in five instances from consolidations of banks
having these powers, suspensions or liquidation in four other cases,
and the surrender of powers by one bank. One bank which had
partial powers was granted full powers. The total number of
national banks permitted to exercise such powers declined in the
year from 289 to 285, of which 222 were in Pennsylvania, 53 in
New Jersey and 10 in Delaware.
Number of banks granted

National banks having fiduciary powers

Full powers
224
254
262
268
264
262

December 31, 1927
31, 1928
31, 1929
31, 1930
31, 1931
31, 1932

Partial powers
36
32
30
29
25
23

Totals
260
286
292
297
289
285

Bankers' acceptances
No change has taken place during the past year in the banks
which have been granted authority to accept bills up to 100 per cent
of combined capital and surplus. Five banks have been granted this
privilege, all of them being in Philadelphia.
Philadelphia banks continue to account for nearly all of the outstanding bankers' acceptances in this district, which totaled $12,300,000 at the end of 1932; this was a decline of 27 per cent from a
year earlier, about the same as that shown in the national figures,
and was only about half the year-end totals in 1929 and 1930. The
decrease may be ascribed in considerable part to declines in prices
and in the volume of products handled. Import bills continue to be
the largest single class of bills; the amount based on goods stored in



35

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

or shipped between foreign countries, which was at a high point at
the end of 1930, has shown the largest percentage decline since
that time.
Outstanding acceptances of banks in
Third Federal Reserve District

December
31, 1932

December
31, 1931

December
31, 1930

Based on:
Imports
Exports
Domestic shipments
Warehouse credits
Dollar exchange
Goods stored in or shipped between
foreign countries

84,800,000
1.200,000
1,200,000
2.500,000
500,000

§8,500,000
900,000
2,000,000
1,900,000
600,000

$10,000,000
1,700,000
1,800,000
2,300,000
1,500,000

2,100,000

3,000,000

7,300,000

$12,300,000

$16,900,000

$24,600,000

Total

Member bank earnings and expenses
Net earnings from ordinary operations, as reported by member
banks in this district for the year ended June 30, 1932, in comparison to loans and investments were slightly larger than in the preceding year. Extensive readjustments of loan and security values,
Ratios of average
loans and investments

Earnings and expenses
of member banks

Years ended June 30
1932

1931

1930

4.88%
.31"
.28"

5.26%
.32"
.28"

5.59%
.31"
.34"

Total earnings

5.47%

5.86%

6.24%

Expenses:
Salaries and wages paid
Interest paid on borrowed money
Interest paid on deposits
Taxes
Other expenses

1.14%
.16"
1.67"
22 "

1.15%
.06"
2.15 "
.29"
.63"

1.16%
.20"
1.98"
.31"
.67"

Total expenses

3.84%

4.28%

4.32%

Net earnings
Recoveries on charged-off assets
Profit on securities sold

1.63%
.12"
.12"

1.58%
.06"
.23"

1.92%
.07"
.26"

Net earnings, recoveries and profits on securities sold
Losses and depreciation charged-off

1.87%
2.52"

1.87%
1.30"

2.25%
.58"

.57%

1.67%

Earnings:
Interest, discount and dividends received
Trust department earnings
Other earnings

Net addition to profits

.65%'

*Net loss.




36

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

necessitated by adverse developments in business and decreases in
security prices, resulted in charges against earnings that more than
exceeded the earnings from operations, so that the banks as a whole
had a net loss for the year, as shown in the preceding table.
The bulk of the amount charged off as losses and depreciation
represented a reduction in the value of securities and loans. Losses
on loans were nearly 2 per cent of the average total of loans held
during the year ended June 30, 1932, and losses on securities
approximated 5 per cent of the total of investments held other than
obligations of the United States.

Banking and business information
Through the generous co-operation of business concerns as
well as private and public agencies, our Department of Research
and Statistics has been able to continue the collection and analysis
of economic data bearing on production and distribution of commodities in this district. Largely because of the length and severity of the depression, the demand for authoritative information on
business conditions by trade, industry, banks and the public generally has increased greatly. It was met as promptly as possible
in various ways but chiefly through the published reports, which
give comprehensive data on banking and business conditions each
month.
The work of this department has been enlarged in scope and,
it is believed, improved in quality without any marked increase in
the working staff or in expenditure. Increased proficiency, owing
chiefly to the absence of turnover, and the improvement in mechanical equipment, undoubtedly have increased the efficiency of the
organization. A brief description of the principal features of the
department's activity follows:
Manufacturing
Manufacturing is the most important single industry in this
district since it employs one-third of the working population. It is
also extremely diversified in its character. Yet prior to 1931, there
was no general index of productive activity such as would indicate
long-time trend and current changes in the rate and volume of output by factories. It was thus difficult to determine in any one month
just what was taking place in the manufacturing industry as a
whole. The department remedied this shortcoming by constructing
an index number of factory productive activity which was first published in a supplement to our Business Review issued in January 1932.



37

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

This index is made up of 45 series of figures covering most
of the important manufacturing lines, representing over two-thirds
of the total output of manufactures in this district. Data were
secured back to 1923, reduced to daily averages, and expressed for
each line in percentages of the 1923-25 average which was taken as
100. Individual indexes, given both with and without adjustment
for the usual seasonal variations, were combined into a general
index according to the relative importance of the items composing
this index as derived from the 1923 and 1925 biennial censuses
and adjusted for the change in 1924, for which the census figures
were not available.
In order to obtain a general index number of industrial production, similar to that of the Federal Reserve Board, a further
combination was made of the indexes of factory and coal mine
output in the proportion of 91.6 per cent for manufacturing and
8.4 per cent for coal. This index is made available currently and
it extends back to 1923.
Before publishing these indexes, careful analyses and comparisons were made in order to test the accuracy of the new
measurements. In addition, they were used internally for many
months, and only after they proved to be reliable indicators were
they published. In actual application over the past two years, these
indexes have been found to be extremely useful instruments in
measuring changes in the rate and volume of industrial production.
In the fall of 1931, the Department of Research and Statistics
and the United States Bureau of Labor Statistics adopted a
co-operative plan under which this bank has become a collecting
agency of the factory employment data from all those companies
which have their factories located in Pennsylvania and Delaware,
while the Bureau of Labor Statistics undertook to collect similar
data from those companies which have plants all over the country
including Pennsylvania and Delaware. Each month original data
so gathered are exchanged between the two agencies. This arrangement eliminates duplication, which existed prior to 1932, and promotes greater co-operation on the part of manufacturing concerns.
The Pennsylvania Department of Labor and Industry continues to
co-operate with us by supplying certain additional information such
as changes in employment and payrolls in some of the more important non-manufacturing industries.
As a result of this co-operative arrangement with the Bureau
of Labor Statistics, our factory employment indexes are increased
to include about 55 per cent of the total workers engaged in manu


38

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
facturing. Since early 1932 the department has been engaged in
revising the Pennsylvania factory employment indexes, the revision
consisting of the following features:
Data from new concerns are being added to the figures reported to us by the old companies. In many instances this has
required securing back figures for the new companies in order
to make the final indexes comparable with those for past
months and years.
Our old classification had to be revised, largely because of
the introduction of industries which had not been covered. The
new classification follows as closely as possible those of the
Federal Reserve Board, the Bureau of Labor Statistics and the
Bureau of the Census.
The new indexes are being weighted so that every individual line will be properly represented according to its importance in the industry. This will correct any inequalities arising
from varying sizes of representation, so that the final general
index number will measure more precisely the general trend
and monthly changes of employment and payrolls in the manufacturing industry as a whole.
A further adjustment to the level as shown by the Census
of Manufactures for 1929. Because of the sharp decline in
1930 from the high level of 1929, the 1930 state census is being
used for further adjustment whenever it appears desirable.
This revision, it is hoped, will be completed early in 1933. Then
the employment indexes will be adjusted for seasonal variation by
individual industries in the same manner as that followed by the
Federal Reserve Board in adjusting the national factory employment indexes.
In addition to the factory employment and payroll data, similar labor statistics are now available currently, through the Bureau
of Labor Statistics and the Pennsylvania Department of Labor
and Industry, for such non-manufacturing industries and services
as coal mining, quarrying and non-metallic mining, construction,
crude petroleum production, public utilities, transportation and
communication, retail and wholesale trade, hotels, laundries, dyeing
and cleaning establishments, and banking, insurance and real estate.
Most of these figures do not extend further back than 1931; nevertheless, combined with factory employment and payrolls, they afford
excellent material for a general index of industrial employment.
This index is now in process of construction and when completed
it will cover about 75 per cent of all occupations in Pennsylvania.



39

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

The occupations of the persons gainfully employed in the
Philadelphia Federal Reserve District, computed from the Census
of 1930, are given below:
Occupation

Number
of
workers

Per
cent
of
total

Occupation

221,392 7.30
Agriculture
Forestry and fishing. . .
6,264 0.21
Coal mines and other
minerals
211,227 6.97
Building
220,742 7.28
Manufacturing
1,002,820 33.09
Transportation and
communication
301,211 9.94
Banking, insurance and
real estate
82,318 2.72
\\ holesale and retail
trade
350,029 11.55
Other trade industries. .
12,568 0.42

Garages, automobile
agencies and filling
stations
Recreation and amusement
Other professional and
semi-prof, services. .
Hotels, restaurants,
boarding houses, etc.
Laundries and cleaning
and pressing shops .
Other domestic and
personal service....
Industry, not specified.
Total

Number
of
workers

Per
cent
of
total

50,044

1.65

22,350

0.74

179,852

5.93

76.917

2.54

21,347

0.70

185,736
85,891

6.13
2.83

3,030,708 100.00

Coal mining
The coal mining industry, particularly anthracite, is of vast
importance in this district, chiefly because of its geographic concentration, the large investment of capital, and the growing competition from other fuels. The anthracite field alone employed about
108,000 workers in 1932, all being drawn from a half dozen adjoining counties. In the bituminous region covered by this district, over
50,000 workers depended on this industry for their livelihood. The
two branches give employment to about 7 per cent of the total
working population in this district. Obviously, reliable information
on the conditions prevailing in coal mining is necessary from the
standpoint of both banking and business.
As in the case of manufacturing, therefore, this bank has
been compiling essential facts reflecting current activity of the
coal mining industry. Data showing the physical volume of production of anthracite and bituminous coal have been obtained from
official sources, expressed in index numbers, and presented monthly
in two sets, one adjusted for the normal seasonal variations and
the other without such adjustment. To make the original figures
comparable they have been reduced to a daily basis and expressed
in percentages of the 1923-25 average. The indexes of anthracite
output and bituminous coal production also were combined into
one index number according to their relative importance.



40

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
Through the courtesy of the Anthracite Institute, monthly
figures showing employment and payrolls in the anthracite field
are obtained from representative coal operators employing about
80 per cent of the total workers engaged in that industry. Monthly
indexes are constructed from the actual figures and expressed in
percentages of the 1923-25 average. Similarly adequate employment and payroll data are obtained for the bituminous coal industry in this section from the Bureau of Labor Statistics and current
changes are presented in our monthly bulletion, The Business
Review.
Building and real estate
Among the valuable indicators of conditions in the building and
contracting industry are the monthly figures showing the value of
contract awards and permits issued for new construction, additions
and alterations. The indexes of these data have been improved in
1932. In the case of contracts awarded two separate indexes were
computed, one of contracts for residential buildings and the other
for the total awards. As in other instances all figures were first
reduced to daily averages and then expressed in percentages of the
1923-25 average. Because of wide monthly fluctuations caused by
such factors as the award of one or more very large contracts in a
given month it was advisable, in the revision of the indexes and in
the computation of seasonal factors, to use the average figures of
contract awards for three months instead of those for one month,
especially in view of the length of time that is required to complete
a contract after it is awarded.
Building trades in this district ordinarily employ over 200,000
workers or about 7 per cent of the total working population.
Changes in this employment from month to month indicate current activity and thus supplement data on contract awards and
permits granted which in the main reflect future activity. To measure these changes in employment and wage payments, fairly representative figures are obtained from the leading builders and
contractors through the Pennsylvania Department of Labor and
Industry. These figures are published each month in the bank's
Business Review.
Retail and wholesale trade
In 1931 the Department of Research and Statistics undertook
the revision of the retail trade indexes in the interest of greater
accuracy and representativeness. To that end, many stores were



41

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

Indexes of business conditions
Philadelphia Federal Reserve District
Adjusted for seasonal variation
(1923-1925 average=100)
Factory
productive
activity

New
Coal mining
Building
Freight Wholepassenger
contract
Retail automobile
car
sale
awards
loadsales sales registrations
(value) Total A.nthra- Bitumi- ings
nous
cite
or sales

1931
Jan....
Feb...
Mar.. .
April. .
May. .
June..
July...
Aug.. .
Sept...
Oct....
Nov..
Dec. .

80
81
81
85
81
76
75
76
75
73
70
69

73
59
60
60
60
77
70
70
59
62
58
39

80
80
82
80
75
75
71
62
65
72
65
67

82
81
84
82
75
75
70
62
65
74
66
69

70
70
70
71
73
72
74
65
63
61
59
54

79
78
77
77
72
70
69
70
66
66
64
64

77
76
80
80
80
76
79
72
69
64
66
66

84
85
89
88
85
84
78
77
79
77
71
75

89
87
79
83
87
77
73
75
73
68
72
100

1932
Jan....
Feb. . .
Mar.. .
April. .
May . .
June . .
July...
Aug.. .
Sept.. .
Oct....
Nov.. .
Dec.. .

70
67
63
60
56
55
55
57
64
62
59
57

38
37
34
33
31
30
37
35
31
30
32
37

53
57
77
78
49
43
54
48
60
61
64
72

54
58
81
81
49
42
55
48
61
61
65
75

46
48
54
60
50
46
48
48
52
58
58
55

62
61
59
58
49
47
46
46
48
52
51
53

65
65
63
61
63
63
57
56
55
53
55
54

67
68
64
69
64
64
56
52
58
61
53
56

83
71
46
42
51
64
45
43
46
42
39
67

Seasonal factors
(Used in adjusting the actual indexes for seasonal changes. The average for the year
equals 100)
99
Jan
Feb.. . . 101
Mar.. . . 101
April.. . 98
May. . . 99
June... 100
July....
97
Aug.. . . 100
Sept... . 102
Oct
104
Nov.. . . 102
Dec
97

81
95
117
122
123
108
98
96
100
97
86
77




108
107
82
104
100
87
82
100
101
128
103
98

114
109
102
91
90
88
88
94
102
107
110
105

90
94
95
97
104
102
103
105
111
108
101
90

89
91
94
94
96
97
94
95
114
114
113
109

81
83
97
100
100
98
73
80
90
113
120
165

54
74
112
151
144
140
113
110
96
82
70
54

Eighteenth

Annual

Report, Federal Reserve Bank of Philadelphia

Indexes of business conditions
Philadelphia Federal Reserve District
Without adjustment for seasonal variation
(1923-1925 average=100)
Factory
productive
activity
Annual
averages

NewFreight
(
Hoal mining
Building
passenger
Wholecar
contract
sale Retail automobile
loadawards
sales
sales registrations
Anthra- Bitumi- ings
(value) Total
or sales
nous
cite

.
.
.
.
.
.
.
.
.
.

102
95
103
108
104
102
110
96
77
60

75
107
118
137
160
165
132
108
62
34

116
105
79
104
98
93
92
86
72
60

115
108
77
104
99
93
91
86
73
61

117
89
94
105
91
90
98
84
67
52

106
102
102
106
90
71
52

99
97
98
94
94
98
85
73
59

Mar.. . .
April.. .
May. . .
June...
July....
Aug.. . .
Sept... .
Oct
Nov... .
Dec

78
82
82
83
80
76
73
76
76
76
71
67

59
56
70
73
73
83
69
67
59
60
50
30

88
85
69
83
74
66
58
62
66
91
68
66

89
86
69
86
75
66
57
62
66
95
68
68

79
77
71
65
66
63
65
61
64
66
64
57

71
74
73
75
75
72
72
74
73
71
65
57

67
69
75
74
75
73
73
67
78
73
75
74

85
123

1932
Jan
Feb.. . .
Mar.. . .
April.. .
May. . .
June...
July....
Aug.. . .
Sept
Oct
Nov
Dec.. . .

69
68
64
59
55
55
54
57
65
65
61
55

31
35
39
40
38
33
36
34
31
29
28
29

58
61
65
81
49
38
45
48
61
77
67
72

59
62
67
85
49
37
45
48
62
79
67
74

53
52
55
55
45
41
42
45
53
62
63
57

56
58
56
56
51
48
47
48
53
56
52
48

57
59
59
57
60
61
53
53
62
60
62
59

55
56
62
69
65
62
41
42
52
69
64
91

1923.
1924.
1925.
1926.
1927.
1928.
1929.
1930.
1931.
1932.

.
.
.
.
.
.
.
.
.
.

1931
Jan
Feb

104
96
100

104

99
99
102
106
102
101
100
91
80
61

97
99
104
123
104
111
131
99
80
52

69
70
84
90
86
82

48
65
89
125
126
108
82
83
70
56
50
54

57
61

71
87

45
52
52
63
73
89
50
48
44
34

°7

36

Note: Monthly indexes for previous years are given in the Seventeenth
Annual Report, 1931, pp. 33-38.




43

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
added to our reporting list and all reporting stores were asked to
give us data currently and for months back to 1923 on the number
of business days during which reporting stores were actually
opened for business. This information was obtained without difficulty. It showed that the number of business days in retail trade of
our district varied considerably as between the stores and localities.
For example, stores in some cities observe a Wednesday afternoon
closing for the first ten months of the year; others observe a halfday closing from the middle of June to the middle of September;
still others show customary and accidental variations, so that the
comparability of data may be affected from month to month and
from year to year.
The revision of these indexes was completed in 1932. After
determining daily averages, an index number was constructed, with
1923-1925 as the base, for each of the following lines: department,
men's apparel, women's apparel (for Philadelphia and for outside
areas separately), shoe, and credit stores, so designated because
they sell chiefly house furnishings, clothing, jewelry and musical
instruments on longer credit terms than those common under ordinary charge accounts. Each index was also adjusted for seasonal
variation. Individual indexes then were combined into one index
of sales and stocks according to the relative importance of each
line, as determined from the Census of Distribution for 1929. The
old index was not so weighted and was thus defective, owing largely
to varying sizes of the sample, a fact which tended to introduce a
bias whenever a sample was relatively large in one line and small
in another. The new index overcomes this difficulty, and therefore
gives a better cross-section of retail trade sales and stocks than did
the old index. Because of the insistent demand from various
sources, retail trade indexes of sales, with and without adjustment
for seasonal changes, were also computed for eleven city areas and
for all other cities. These indexes have not been subdivided by type
of stores as is the case in the district indexes.
In addition, new indicators have been computed to show the
rate of stock turnover and the ratio of collections during the month
to accounts receivable at the beginning of the month. Data on
retail collections are proving to be quite valuable, since it seems
that there has been a tendency in this section for the ordinary
charge accounts to run longer than 30 days, which had been the
custom for many years. Estimates for Philadelphia indicate that
the average life of a charge account has been running upward of
60 days, based on the figures for the past three years. Such a



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Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

development in liquidating customers' accounts is naturally of interest to banks as well as retail stores.
The character of the revision of our wholesale trade indexes
was similar to that of the retail trade indexes. The fundamental
change consisted in the fact that an index number for each of the
eight reporting lines was constructed, and then these individual
indexes were combined into a general index according to the relative
importance of each line as shown by the Census of Distribution
for 1929. The new general index of wholesale trade sales is therefore superior to the old one which was made up by adding the
figures of all lines together, regardless of the size of the representation.
Other business indicators
Since 1931 revisions have been made of local indexes showing
changes in freight car loadings, check payments, real estate conditions, sales of new passenger automobiles, and insurance sales. In
each case, the revision consisted chiefly of reducing the original
figures to daily averages and in adjusting them for the usual seasonal fluctuations. A number of new series of figures are now being
added to the production and distribution data in order to have
thoroughly representative up-to-date information.
Banking
The department has continued to collect figures on loans, investments, and deposits from a group of member banks that report
weekly and also to obtain weekly figures on debits to individual
accounts from eighteen clearing house associations located in this
district. These figures have been useful to those who desire to study
district changes and have furnished part of the information needed
by the Federal Reserve Board to prepare national totals which are
carefully watched by business and financial observers.
Data on money rates in the city of Philadelphia also are assembled each month from the reports of some of the larger member
banks. In summarized form these rates are published each month
in the Bulletin of the Federal Reserve Board together with information furnished by other districts.
In addition to tabulating currently the statistics of federal
reserve operations, study has been given to those factors which
affect the volume of federal reserve credit in use within the district.
Chief among these factors have been changes in the demand for



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Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

currency, the movement of funds into or out of the district, and
the influence of Treasury operations; these factors have been outlined in greater detail on page 23 of this report. Current changes
are published in the monthly business review.
No special studies of the earnings and expenses of member
banks have been published since that which covered the year 1929.
These studies were especially useful to the banks as they afforded
a basis for comparison of their own operating ratios. It was felt
that conditions affecting banks during the past few years have been
so abnormal that such tabulations would be of rather doubtful value
as a guide to operations.
Indexes of the velocity of bank deposits, based on the figures
of a group of large Philadelphia banks, were computed for the
years 1930 through 1932. Although the actual rates of turnover
could not be taken as indicative of the turnover at all banks, the
changes in the ratios pointed out clearly the diminished activity
which resulted from the decline in business operations.
The Business Review and other reports
Current information on business and banking conditions of this
district is conveyed to the co-operating concerns and to the business
world in general through the monthly bulletin, The Business Review,
as well as through various releases which are issued in advance of
the bulletin. Largely because of the recent improvement made in
the statistical data, it has been possible to make the substance of
the bulletin more comprehensive and authoritative, especially since
most of the figures are secured from the original or official sources.
By means of personal contact and correspondence, the information
in the bulletin is kept up to date as much as possible in order to
supplement the statistical data which are unavoidably a few weeks
old by the time the bulletin is published.
Comprehensive releases on factory employment, and retail and
wholesale trade are prepared and mailed to the Federal Reserve
Board, the press and to the co-operating concerns from ten days to
two wreeks in advance of the Review.
Survey of industrial, mercantile and agricultural credit conditions
At the request of the Federal Reserve Board in July, 1932, a
comprehensive survey was made in order:
To ascertain whether or not business concerns and farmers
of this district experienced unusual difficulties in obtaining



46

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

sufficient funds for ordinary business needs, arising mainly
from the production and distribution of goods;
To determine the extent of a possible demand upon the
Philadelphia Federal Reserve Bank for discounts, under Section 13 of the Federal Reserve Act as amended July 21, 1932;
To determine the condition and character of the existing
productive equipment which may have deteriorated or become
obsolete but cannot be repaired or replaced because of the lack
of capital or credit such as is available under normal conditions; and
To provide this information for the Committee on Banking
and Industry which was appointed to consider methods of
improving the economic situation of this district.
Over 5,500 questionnaires were sent out to various business
establishments and, through the County Agents of the Department
of Agriculture, to a selected group of individual farmers. More
than 50 per cent of these questionnaires were returned with
answers to all or to some of the questions asked. Based on the
1930 census, over 70 per cent of all occupations in this district was
represented by these answers. The most important branches of
production and distribution were thus covered—manufacturing,
building and contracting, coal mining, retail and wholesale trade,
services such as hotels, restaurants, and laundries, and agriculture.
Every reply was carefully analyzed and classified according to
type of business, net worth, rating and location of the concern.
As each questionnaire asked seven main questions and six subquestions, the replies to all or some of these had to be properly
appraised and classified so as to give the desired information as
accurately as possible. As the returns began to come in, weekly
summaries were prepared for the Banking and Industrial Committee and for the Federal Reserve Board. This was continued
through August, September and the first two weeks of October,
when the tabulation was closed. The final report, which was submitted to the Banking and Industrial Committee and to the Federal
Reserve Board for their confidential use, was a detailed statistical
summary of 66 pages, divided into four parts as follows:
Part 1—Dealing with personal experiences of reporting concerns in borrowing funds for working capital and for
productive equipment needs;
Part 2—Giving information by reporting concerns based on
knowledge, observation, and opinion regarding the
experiences of other companies in obtaining credit;



47

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia
Part 3—Personal experiences of reporting concerns classified
by twenty-one industrial areas of this district in order
to determine the extent of credit difficulties in different localities, particularly those where bank suspensions were prevalent; and
Part 4—Dealing exclusively with personal experiences of
farmers, classified by counties of this district.
A brief description of the membership and the character of
activity of the Banking and Industrial Committee for this District
follows.

Committee on banking and industry
In an effort to find ways and means of improving the existing
business situation, a group of representative business men were
called to a meeting at the Reserve Bank on June 2, 1932. The
following resolution was adopted at this meeting:
RESOLVED: That the chairman of this meeting be empowered
to appoint a committee of twelve to consider methods of improving
the present economic situation, and that the Federal Reserve Bank
place its board room at the disposal of that committee for such
meeting's as may be held.

The members of this committee were as follows:
George W. Houston, Chairman
President of the Baldwin Locomotive Works
General W. W. Atterbury
President of the Pennsylvania Railroad
Arthur C. Dorrance
President of the Campbell Soup Company
Irenee du Pont
du Pont de Nemours Company
Edward Hopkinson, Jr.
Partner of Drexel and Company
William A. Law
President of the Penn Mutual Life Insurance Company
Howard A. Loeb
Chairman of the Board of the Tradesmens National Bank and Trust
Company
George Horace Lorimer
Editor of the Saturday Evening Post
Benjamin Rush
President of the Insurance Company of North America
Burton C. Simon
Operative builder
Dr. Herbert J. Tily
President of Straivbridge and Clothier
John E. Zimmermann
President of the United Gas Improvement Company



48

Eighteenth Annual Report, Federal Reserve Bank of Philadelphia

Similar committees were established in other federal reserve
districts so that there was national co-operation in exchanging
findings and plans.
After a general survey of economic conditions of this district
was made, a local committee delegated the consideration of some
of the most pressing problems to various sub-committees. Among
these the most important ones were:
Trade acceptances, securities, and credit
Howard A. Loeb, Chairman
This sub-committee endeavored to sponsor a more extensive use
of trade acceptances; it also dealt with matters pertaining to the
security market and commercial banking, particularly that phase
which related to the availability of funds for working capital as
well as for capital equipment.

Housing and mortgage financing
William A. Law, Chairman
The function of this sub-committee was to deal with all construction and modernization of dwellings, and with slum reclamation
including the financing of such undertakings. Consideration of the
Home Loan Bank Bill and its application in this district also was
assigned to this committee.

Railroad and industrial financing
John E. Zimmermann, Chairman
It was the function of this committee to stimulate employment
through railroad and industrial buying of capital goods and to
devise ways and means of financing such purchases.

Public works
Arthur C. Dorrance, Chairman
It was the aim of this committee to investigate and consider the
possibility of enlarging public works in this district, other than
Federal construction, whether of self-liquidating or non-liquidating
character. Its purpose was to stimulate industrial employment.

Share-the-work committee
Herbert J. Tily, Chairman
The efforts of this sub-committee were to induce commercial and
industrial concerns to spread the work among their employees in
order to supplement the various relief measures for those who had
been unemployed for a long period of time.

Members of the general committee and of sub-committees
served without compensation.




49




Federal Reserve Bank of Philadelphia
Directors and Officers Appointed and Elected for the Year 1933
DIRECTORS
Class A
John C. Cosgrove, Johnstown, Pa.
George W. Reily, Harrisburg, Pa.
Joseph Wayne, Jr., Philadelphia, Pa.

Class B
J. Carl De La Cour, Camden, N. J.
Arthur W. Sewall, Philadelphia, Pa.
C. Frederick C. Stout, Philadelphia, Pa.
Class C

Richard L. Austin, Philadelphia, Pa.
Harry L. Cannon, Bridgeville, Del.
Alba B. Johnson, Philadelphia, Pa.

Member of Federal Advisory Council
Howard A. Loeb, Philadelphia, Pa.

OFFICERS
Richard L. Austin,
Chairman and Federal Reserve Agent
Alba B. Johnson,
Deputy Chairman
Arthur E. Post, Assistant Federal
Reserve Agent
Ernest C. Hill, Assistant Federal
Reserve Agent

George W. Norris,
Governor
William H. Hutt,
Deputy Governor
C. A. Mcllhenny,
Cashier and Secretary

W. J. Davis, Assistant Cashier
J. M. Toy, Assistant Cashier
R. M. Miller, Jr., Assistant Cashier
S. R. Earl, Assistant Cashier

William G. McCreedy, Comptroller




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