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AUGUST 1954 business view FEDERAL RESERVE BAN K OF PHILADELPHIA THE BRANCH AND MERGER MOVEMENT IN THE THIRD FEDERAL RESERVE DISTRICT Thiskarticle, the first o f a se rie s on results o f a case study o f basic chan ges currently going on in the banking structure, presents the backgro un d fo r recen t developm ents. FIXED COSTS OF LIVING F ixe d claim s on incom e are rising fa ster than take-hom e p ay. This helps explain the low er level o f retail sales. NEW INDUSTRIAL STATISTICS . . . now a va ila ble monthly fo r the Third Fe d e ra l Reserve District, CURRENT TRENDS Vacation spen din g in resort a rea s holds up well. THE BRANCH AND MERGER MOVEMENT in the Third fj Federal Reserve Dis This is the first of a series of articles on re fir s t National Bank and Second sults of a case study of bank mergers* and Trust Company to M erge The theme for this study is struck by the imagi Directors of the First National Bank and the Second Trust Co. announced here yesterday ap proval of plans to merge the two banks under the j charter of the First National Bank. The combined institution will be known as the First-Second N a tional Bank & Trust Co. The merger is subject to the approval of stockholders and of regulatory authorities. Stockholders of the Second Trust Co. will re ceive two shares of par $20 stock in the consol idated bank for each share, par $25, now held. Shortly after announcement of the plan the price of Second Trust Co. stock advanced several points. Charles B. Abbott, President of the First N a tional Bank, will serve as Chairman of the Board of the combined institution; Arthur C. Beals, Pres ident of the Second Trust Co. will become Chair man of the Executive Committee; and Benjamin A. Carlson, Executive Vice President of the First National Bank, will be President. A ll personnel of both banks, it was stated, will be retained, and officers and employees of the Second Trust Co. will come under the retirement plan in effect at the First National Bank. Mr. Beals and Barton C. Alexander, presently directors of the Second Trust Co., will join the board of the combined institu tion. The remainder of the present board of di rectors of the Second Trust Co. will serve as a special advisory committee. The First National Bank had resources of $53,000,000 on June 30. Total resources of the Second Trust Co. on that date were $18,000,000. With combined resources of $71,000,000 the new i institution will be second largest in the city. In the joint announcement, Abbott and Beals stated that, “the merger will make possible in creased, and more efficient, services to customers of both institutions. It brings together the com plete lending services of the First National Bank and the fiduciary facilities of the Second Trust Co. Moreover, the three branches of the Trust Com pany will enable the enlarged bank to better meet the growing needs of the suburban area.” 2 branches in the Third Federal Reserve District. nary news item to the left. Any resemblance to an actual, or even typical, situation is purely coinci dental; but the habitual reader of the financial press may find it somewhat familiar. Reports like this reflect a basic change cur rently going on in the structure of the banking system. Those who earn a living from banks, of course, are intimately affected by it. To the banker himself it may mean a change in his job, particularly in how much he has to say about bank policy. And to the stockholder it may mean a change in yield or value of his holdings. In the longer run, however, the person affected more vitally than anyone else may well be the customer, because current changes in the bank ing structure may greatly influence the quantity, quality, and cost of services he gets from banks. So these news items are worth looking into. On the other hand, most people over thirty years old can recall that the banking structure has changed before; current developments should be kept in perspective. Our case study of the branch and merger movement, therefore, will * Distinctions are sometimes drawn among mergers, consolida tions, absorptions, and purchases. Unless otherwise noted, the term “ merger” will be used to cover any combination o f banks. b usin ess re v ie w begin with a brief consideration of the back ing in the other. People were moving to large ground against which current changes are taking cities and business concerns were merging or in place. Then, in subsequent issues of this Re other ways building huge organizations to pro view, we shall look at (1) the nature of the duce and distribute goods on a mass basis. The changes, particularly the characteristics of the banking structure was due for a change. banks involved; (2) the “ how” of the branch and merger movement, including legal aspects Phase No. 2 and the terms of mergers; (3) the “ why” of Beginning in the early twenties and ending with mergers and branches; and (4) some general the banking holiday, banks suffered through conclusions. their next phase— a period of retrenchment. The number of banks was cut in half as a result of PART I: BACKGROUND Like everything else, banks, if they are to sur three main things: fewer new banks being estab lished, failures, and mergers. Although we usu vive, must adapt themselves to their environ ally think of the twenties as a prosperous period, ment. As our economy has changed over the this was not so in many farm areas. Bank earn years, so has the banking structure. The charts* ings were poor and there were too many banks. on pages 8 and 9 give an over-all picture Consequently, few applications were submitted of how the banking structure has evolved thus to start new banks. far in this century. Phase No. 1 During approximately the first two decades, the picture is one of “ extensive” expansion in bank ing. This was a period of economic growth, and farming was especially prosperous. New banks — mostly small banks chartered by the states— sprang up in small towns all over the South and mid-West. The outlook for banking was profita ble and it was easy to get a bank started. Most of these banks were unit banks. Branch banking had not been uncommon before the Civil War but with the establishment of the na tional hanking system, branches were generally frowned upon. There were times when pressure for branch banking would build up, but not until the twenties did it have much effect on the bank ing structure. While banks were heading in one direction, various strong forces in the economy were head * Data to 1933 are for all commercial ban ks; since 1933 for all banks. Hard times — and hindsight — revealed that banking practices in many cases had not been good for a long time. Gradually the number of bank failures picked up speed. At first failures were mostly in small banks in rural areas, but eventually they spread to industrial areas. Fi nally, in 1933, the situation got completely out of control and many fundamentally sound banks were pulled down with the weak ones. We shall never know how much mergers in the twenties eased or aggravated the problem. Many mergers were outright life-saving opera tions, strong banks taking over weak ones. Many were made in an effort to meet better the needs of the economy, to increase lending capacity, and to acquire branches in growing areas. But mergers during this period were mostly in larger cities and, on the whole, did not make services of big banks available to small towns. In many cases they were inspired chiefly by profitable prospects of a trust or securities business or simply by a desire to be bigger. 3 business re v ie w While the number of banks was dropping, the latter part of the thirties the Federal Deposit number of branches was increasing. Pressures Insurance Corporation arranged for the merger behind branch banking were building up, espe of a fair number of banks into other banks to pre cially since the law put national banks at a dis vent imminent collapse. On the whole, however, advantage compared with state banks. As steps both failures and mergers have been relatively were taken to liberalize the restriction, branches small — certainly of national banks increased along with branches twenties. when compared with the of state banks. Where state laws remained tight, By far the most significant development in the pressures tended to break out in the form of chain and group* banking. this third period has been the steady growth in number and importance of branches. We shall H O W BRANCHES A N D MERGERS IN THE THIRD to point out here two important factors: eco look into the reasons for this later. It is enough DISTRICT COMPARE W ITH THE UNITED STATES THIRD DISTRIC T UNITED STATES nomic developments and legal provisions. Both have fostered the spread of branches. In many ways the centralization movement at work earlier in the century is being reversed; people have been moving to the suburbs and industry is de centralizing. Laws have been further liberalized, facilitating mergers, the creation of new branches, and the conversion of chain and group banking systems to branch banking systems. Conclusions This historical development is the backdrop against which we shall look at recent events. It is significant not only because it throws current 1947 1948 1949 1950 1951 1952 1953 1954 portant, it sets the environment in which the Phase No. 3 branch and merger movement is taking place. In the past two decades, banking has been in its third phase— one of maturity. developments into perspective but, more im The banking industry has matured. Drastic, sud A number den changes are unlikely. Bankers now have a of new banks was established in 1933 and 1934 strong sense of public responsibility, and the to meet the needs of areas left without banks; supervisory authorities are mindful of past mis and again in the mid-forties new banks were set takes. up in response to the expansion of the economy branch and merger movement is different from in World War II. But, generally speaking, the anything that has happened in banking before. Whatever it may be like, the current number of new banks has held fairly steady. Failures have been very few, although in the * Chain banking is control o f two or more banks by one or more individuals; group banking is control through a holding com pany. 4 THE THIRD DISTRICT IN PERSPECTIVE Although our case study deals with the Third Federal Reserve District, the recent trend to- b usin ess r e v ie w HOW THE THIRD DISTRICT COMPARES WITH OTHER AREAS — 1947 -1953 R A N K IN G OF M O ST ACTIVE STATES H O W BANK FACILITIES WERE INCREASED STATES PERMITTING STATE-WIDE BRANCH BANKING NEW BANKS NEW BRANCHES STATES PERMITTING LIMITED BRANCH BANKING STATES PROHIBITING BRANCH BANKING OR WITH NO LEGISLATION PENNA. N.Y 3RD DIST THIRD DISTRICT N.J. OHIO C A LIF MICH. WASH. MQ IND. MERGERS CONN. HOW KANS. BRANCHES WERE OBTAINED MASS. d el. STATES PERMITTING STATE-WIDE BRANCH BANKING p BRANCHES FROM MERGERS NEW BRANCHES STATES PERMITTING LIMITED BRANCH BANKING NEW BANKS 75 100 NUM BER 125 150 0 i i 25 i 50 PER 75 i 100 CENT 5 b usin ess re v ie w ward more mergers and branches has not, of the course, been confined to this area. So we shall branches; they are way down the list for new top of the list for mergers and new look briefly at developments here compared with banks. other sections of the country. State and these charts are in absolute amounts. The Third Federal Reserve District comprises the eastern two-thirds of Pennsylvania, the Delaware is low because it is a small If you relate the number of mergers and new branches to the number of banks in existence, southern half of New Jersey, and the State Delaware turns out to rank seventh in merger of Delaware. It has a population of more than activity and sixth in new-branch activity. 8 million (5.6 per cent of the United States) and a land area of 37,000 square miles (1.2 per shows low activity in the number of new banks. cent of the United States). Anyway you look at it, though, this district It has over 800 One explanation lies in state laws governing banks, with resources of nearly $12 billion (5.6 branch banking. Eighteen states (counting the per cent of the number and 5.3 per cent of the banking resources of the United States). District of Columbia as a state) permit state wide branch banking; 18 permit branch bank From the beginning of 1947 to the middle of ing within certain limits; 10 prohibit it entirely; this year (the period our study will cover) there and 3 have no legislation on the matter. were 66 mergers between banks in this district. the charts in the right-hand column indicate, in These resulted in 64 banks being converted to those states where laws permit branches, most branches. of In addition, there were 118 new the new banking facilities have As been branches established. As the chart on page 4 branches; only a relatively small proportion has indicates, banks in this district were a little slower been new banks. In states where branches are getting started than banks elsewhere, but in the prohibited or there is no legislation, new banks past couple of years they have been catching up have been the only way of meeting the demand fast, particularly in merger activity. Furthermore, for more banking facilities. taking the period as a whole, banks in this district trict an exceptionally high proportion of new have been relatively more active than banks in banking facilities has been branches. In the Third Dis the rest of the country in the sense that they ac A bank can obtain branches in two ways: by counted for 9.2 per cent of all mergers and 7.3 establishing new branches, or by merging with per cent of all new branches, while having only other banks and converting those banks to 5.6 per cent of the banks. branches. The second method, of course, does The chart makes it clear that recent develop not add to the total number of banking offices. ments have been only a part of a much broader Where state-wide branch banking is permitted, But it does not show branches are somewhat more likely to be ob how the movement has expressed itself in dif nation-wide movement. tained by the establishment of new offices than ferent ways in different areas. This is illustrated where branch banking is limited. In the Third in the charts on page 5. The charts on the left D is t r ic t, an a b o v e - a v e r a g e p r o p o r t i o n o f of the page show the number of new branches, branches has been obtained through mergers mergers, and new banks established in the pe rather than the establishment of new offices. The riod 1947-1953 for the top dozen states. Penn reason for this is one of the things we shall want sylvania and New Jersey are well up toward to look into in future articles. 6 business re v ie w FIXED COSTS OF LIV IN G Since the beginning of the year, merchants have been watching a strange phenomenon. keep up customary living standards makes a lot Take- of expenditures seem fixed. So it is impossible home pay is somewhat higher than a year ago, to set up clear-cut boundaries for fixed spend but retail sales are at a slightly lower level. Salesmen get the blame when sales lag, es pecially when incomes are rising. This year, ing. Some fixed expenditures, however, can be measured because they involve actual commit ments or contracts. however, before blaming their salesmen, busi The largest item among contractual expendi nessmen might take a closer look at consumers’ tures is debt service. Scheduled repayment and income. Why? Because all money included as interest charges on installment and mortgage disposable income of consumers (personal in debt are fixed claims against income. Over the come after taxes) is not currently available for early part of 1954, it is estimated that on a spending. A good part of it is taken by “ con yearly basis these claims on income totaled sumers’ fixed costs.” $34.5 billion— more than three times the level at the end of World War II. Payments on in What are fixed costs? stalment debt, principally for automobiles and No clear line can be drawn to separate consu major home appliances, have been running at mers’ fixed expenditures from other outlays. about $28 billion, and scheduled payments on Spending patterns can be rigid without contracts residential mortgage debt come to around $6.5 to make them rigid. For example, the urge to billion. Actually, mortgage repayment has been FIXED COSTS HAVE NEARLY TRIPLED SINCE 19 4 6 represents regular payments. BILLIONS $ prepayment and “ roll over” — sell one home, pay off mortgage, then buy another home. 80 - fixed claim against consumer incomes. much larger, but only a fraction of the total A big portion is Contractual repayment of debt is not the only Con sumers have commitments for rents,** insurance, and property taxes. (Property taxes are not in 60 - cluded as personal taxes in the calculation of dis posable income by the Department of Com merce.) 40 - The total of all these claims has in creased rapidly in the post-war period. So far in 1954 these costs total about $46.3 billion at 20- an annual rate. The rise has been held down by the continued existence of rent controls in 1939 1946 1947 1948 1949 1950 1951 1952 1953 1954* * 1954 figures are rough estimates derived from firs t-h a lf data. ( Continued on page 10) * In addition to contract rent payments, estimated rent of hom eowners is included since this is an imputation and does not represent funds available for spending. 7 New banks established follow e d a downward tre n d in the tw enties and thirties and have not increased much in re cent years. THE CH A N G IN G BANKING STRUCTURE Mergers du ring the tw enties make recent a c tiv ity look ra ther small. These charts may help to put the recent meger 30 per cent of the number o f banking offices and branch movement into perspective. are now branches. The chart below shows the long-run trend The charts on the left show some of the fac in the number of banks, branches, and banking tors influencing the number of banks in opera It suggests two significant conclusions. tion. All show relative stability for about the The first is that the banking industry has ma past two decades. Except for a slight spurt in tured. It experienced severe growing pains in the number of new banks being established dur the first two decades of this century and a ing a few years after World War II, these forces painful readjustment in the third, culminating have contributed to a gradual decline in the in a disastrous 1933. Since then changes have number of banks. offices. been gradual and orderly. ra p id ly since W o rld W a r II. The charts on the right show some of the The second conclusion is that the banking factors influencing the number of branches. Here structure is moving steadily toward a greater it is quite clear that the important force has In only three out of been the establishment of new branches. The num the past 53 years has the number of branches ber of branches resulting from mergers has been declined. Furthermore, the branch movement less important. And, so far at least, the number has picked up speed since World War II. About of branches discontinued has been negligible. proportion of branches. New branches established have spurted Banks converted into branches (through m ergers) have also added somewhat to the num ber o f branches. 250 0 1 9 36 Suspensions o f banks (a b o u t o n e -fifth o f these were re-opened) were high in the twenties, and reached a peak in 1933; fo r the past tw o decades they have been ne g lig ib le . few . 30 ALL 20 15 10 '45 '5 0 Branches discontinued have been extrem ely THO USANDS 25 '4 0 B A N K IN G O F F IC E S business r e v ie w some areas; however, total payments on rent, insurance, and property taxes are at least double for the first half of this year as compared with what they were in 1946. The chart on page 7 shows the trend in contractual payments in the to the consumer, of course, is that he has a lesser proportion of his disposable income avail post-war period. able for the purchase of other goods and serv 6 cents at the end of the war. What this means ices. It is interesting, too, that this year is the FIXED COSTS ARE RISING AS A PROPORTION first time that fixed costs absorbed as large a OF DISPOSABLE IN C O M E proportion PER CENT war 1939. o f disposable income as in pre Uncommitted income is below year-ago levels Consumers’ fixed costs have increased actually and in relation to income each year since 1946. Generally, however, the yearly increase in income has been larger in dollars than the rise in con tractual payments. Therefore uncommitted in come has tended to increase each year. This is illustrated in the chart below. The black portion above the line represents uncommitted income. It shows a rise in every year except 1949 and so far in 1954. The white portion below the zero 1939 1946 1947 1948 1949 1950 1951 1952 1953 1954 UNCO M M ITTED IN C O M E IS BELOW 19 5 3 LEVELS Fixed costs are taking a larger slice of income BILLIONS $ UNCOMMITTED INCOME Of course, contractual payments would be ex pected to increase in the post-war period. Prices and incomes are both higher, so that the dollar total of fixed costs is not too meaningful. What is significant is that the proportion of income taken by contractual payments has also been ris ing. This means that consumers are giving themselves less leeway in the use of current income. In 1946, only about 20 cents of the con sumer’s dollar was tied up in contract payments. This year the part that consumers have com mitted has climbed to 32 cents. Debt service charges alone took 14 cents out of their dollar 10 50 - COMMITTED INCOME 1939 1946 1947 1948 1949 1950 _____ 1951 1952 1953 1954 b usin ess re v ie w line represents contract payments. These have special meaning for companies that relate their gained each year. The black and white parts to sales to general business conditions affecting gether equal disposable income for each year. The fact that fixed costs are rising more, dollarwise, than income in 1954 is important.* It has * The decrease in uncommitted income this year "reflects, in part, a relatively high volume o f instalment sales o f automobiles and other durable goods last year. M any of these buyers could not be expected to be in the market for the same goods this year. PERCENTAGE OF DISPOSABLE INCOME AN D UNCOMMITTED INCOME PER CENT 1953 1954 1953 1954 Food sales are taking a smaller slice of dispos able income, but are a bigger part of uncom mitted income than in 1953. Spending on automobiles is a smaller part of the consumer's budget by either standard. PER CENT 1953 1954 1953 1954 Department stores have almost as much of the uncommitted dollar so far in 1954. Furniture and major appliances hold their own with disposable income, are on the rise if un committed income is the standard. 11 b usin ess r e v ie w them. If a company’s product sells directly to income in each year the sales of food prod consumers, purchasing power— as reflected in ucts takes a larger slice of the consumers’ un total disposable income— is usually the factor committed dollar this year. On the other hand, most closely associated with sales. This year, automobile purchases are not taking so large a particularly, many firms comparing sales and part of income this year by either standard. De income are faced with a discouraging trend. partment stores have nearly as much of the market Sales are down and income is up. But does this in 1954 as in 1953, if consumers’ uncommitted indicate they are losing their share of the income is used. Furniture and major appliances market? are running ahead of last year’s relationship with uncommitted income. Uncommitted income— -a better guide? Uncommitted income is possibly a better indica Summary tion of ability to buy and therefore a more appro Since the end of World War II, consumers have priate guide to the success or failure of a company shown an increasing willingness to commit their to hold its share of the consumer market. Cer incomes. Total contractual payments on mort tainly, the fact that fixed commitments are rising gages and instalment debt, life insurance policies, faster than income must influence consumers’ property taxes, and rent have absorbed an in spending patterns. creasing share of income in each successive year. The charts on the previous page show the Usually, however, income increased more than different results that are obtained by comparing contractual payments; so that uncommitted in a few of the major parts of total retail sales come tended to rise. with (1) income and (2) income minus fixed income has declined, even though total income is This year uncommitted costs— uncommitted income. Food merchants, slightly higher than a year ago. In other words, especially, find a changed picture when their the rise in contractual payments is larger than sales are compared with uncommitted income. the gain in income. Here at least is a partial So far in 1954, retail sales of food represent explanation of the paradox that has been worry a smaller part of income than in 1953; how ing businessmen— why sales have declined in the ever, when fixed costs face of increased disposable income. are subtracted from NEW INDUSTRIAL STATISTICS Last month’s issue of the Review featured an mates of employment, average weekly and hourly article on “ Manufacturing in the Federal Reserve earnings of production workers, and average District of Philadelphia” which was based to a weekly hours worked in all manufacturing in large extent upon newly developed statistics on dustries combined and in twenty major industry industrial activity in the District. These new data divisions. The new report for the Third District are now available for regular monthly release and is similar to those also available separately for can be obtained upon request. They include esti Pennsylvania, Delaware, and eleven labor market 12 b usin ess re v ie w on manpower requirements to meet the demand for products of Third District factories. The rest of the tale is in the average hours worked per week, indicated by the second line on the chart. In general, expansions and contractions in the work-week accompanied expansions and contrac tions in the working force blit the timing often differed. For example, working time preceded employment on the upturn in 1949 by three months and last year on the downturn by seven months. The average factory worker’s weekly income increased from $53.59 in January 1949 to a high of $70.38 in October last year and currently is $68.92 (the third line on the chart). Weekly earnings reflect changes in both hourly earnings and working time. The recent decline in weekly pay reflects a reduced work-week rather than areas. On the statistical page of the Review-— changes in hourly earnings. “ For the record . . . — the Federal Reserve Dis Hourly pay, shown on the fourth line of the trict figures now replace those formerly shown for Pennsylvania. chart, is derived by dividing the total pay of all production workers by the total hours they work. To provide some historical comparison, the new It represents the average hourly pay including series have been compiled from January 1949 to premium pay for overtime hours, etc., and not date. The accompanying chart shows the trend of the four series on total manufacturing activity hourly wage rates. Hourly earnings rose from $1.37 to $1.78 from January 1949 to date, an over this five and a half year period. increase of 30 per cent. Both weekly and hourly Factory employment declined during the first seven months of 1949, then began an upward trend that continued for four years. The stimulus pay showed greatest gains following Korea and the steel strike. These trends of aggregates in manufacturing of the Korean War in mid-1950 and the interrup activity are a composite of widely varying de tion from the steel strike two years later are the velopments in the many industries and areas that most obvious interim developments. Employment comprise the industrial strength of the district. reached a peak last August then declined steadily More of the details are contained in monthly for nine consecutive months, turning upward reports compiled and published by this Bank in again in June. The recent reductions in employ cooperation with the United States Bureau of ment involved 142,000 workers compared with Labor Statistics and the Pennsylvania Department 227,000 additions in the preceding four years. of Labor and Industry, and made possible by the Latest figures show 1,200,000 still employed. generous cooperation of more than 3,000 manu The employment trend is only half of the story facturing firms who report each month. 13 b u sin ess re v ie w CURRENT TRENDS Most observers of the business scene apparently mand. As week-end guests began arriving, res feel that the recession has “ bottomed out.” Pro taurant, retail store, and amusement receipts duction has been around the same level for several started a steady climb. By the end of July, com months; unemployment has stopped rising; con parisons of total business volume with a year sumer buying is holding rather steady; and in ago were increasingly favorable, and much of the ventory liquidation is slowing down. Except for construction and the stock market, things seem early-season gloom was forgotten. Reservations run for shorter periods pretty quiet. This is business as usual for the vacation sea An outstanding characteristic of the present sea son. People are not watching the economy so son is the prevalence of shorter reservation per closely; they have the weather, fishing and other iods. This was mentioned in every resort area we things to think about. As they relax before having contacted; it was emphasized in a significant another go at earning a living, one senses that the number of popular places. In the Pocono region economy, too, is coasting along, re-building its generally, both juvenile and adult camps were forces for a fall pick-up. Of course, in some areas this is the peak season. said to have fewer reservations for the entire The Third Federal Reserve District has many and visits to smaller incomes. Others spoke of it as varied vacation spots— in the mountain and lake the continuance of a long-time trend away from regions of Pennsylvania and along the shores of spending a substantial part of vacation time in New Jersey and Delaware. Here, spending by any one place. Seashore areas were more keenly families on their annual vacations and over week aware of this development than some of the ends is big business in the hotels, restaurants, mountain and lake resorts. retail shops, and amusement facilities that oper apparent in the length of hotel than cottage ate “ full blast” only a few months each year. To bookings. season than in 1953. Some attributed shorter And it was more get some idea of how this business is going we have made a spot check. Restaurant business is expanding Hotel dining rooms, particularly in the shore The season started late resorts, are not so crowded this season as room Businessmen and bankers tell us that the 1954 resort season started a little later than usual. patronized. Along the Atlantic Coast from Re- registers might suggest. But they are still well There was too much cool, wet weather during the hoboth Beach in Delaware to Toms River in New early weeks. And many schools closed somewhat Jersey many new restaurants, snack bars, and later this year. Consequently, the volume of roadside stands have opened this year. The res early-season reservations was not up to expecta taurant business also has grown in the Poconos tions. and in mountain resort areas of south-central But after the middle of June, business picked up. Hotels experienced a sharp increase Pennsylvania. in bookings. Cottages were in much greater de appear to have attracted too many guests from the 14 But these eating places do not b usin ess re v ie w large hotels in these resorts, their volume being more dependent on transient trade. Restaurant owners complain that their patrons are eating less expensive meals this year; however, in almost the same breath they remark that there are many more people— especially over week ends. Week ends are more important Almost every type of business enterprise in the principal resort areas of this District appears to be counting on the weekenders more heavily this season than in any other post-war year. Better automobiles in the hands of more people, new Amusement receipts are heavy bridges and improved roads, may be changing Some resorts, both seashore and mountain, still the whole character of the summer resort busi rely principally on the natural surroundings for the entertainment of guests. But where amuse ments are an additional feature, they are well patronized. Early-season experience was similar to that of hotel owners and restaurant proprietors — business was disappointing. Then warm, sunny ness. It could be only a temporary development reflecting the smaller family budgets implicit in reduced employment and shorter hours of work. But there are some who attach greater long-run significance to this season’s exceptionally heavy weather brought an influx of week-end guests, and influx of week-end visitors. The thought is that each succeeding period appeared better than the more people may be spending their vacations on last. “ Weekenders carried the ball,” we were told, extended trips, reserving their remaining free time until the arrival of more permanent visitors in and week ends for quick visits to nearby shore substantially larger numbers. and mountain resorts. Additional copies of this issue are available upon request to the Department of Research, Federal Reserve Bank of Philadelphia, Philadelphia 1, Pa. 15 F O R THE R E C O R D . . . INDEX b il l io n s MEMBER BANKS 3RD ER.D. 4 Factory* SUMMARY Third Federal Reserve District U n ited States Per cent change Per cent change year ago 6 mos. 1954 from year ago 2 3 -1 6 +17 -2 7 0 1 -1 0 -1 3 June 195 4 from mo. ago O UTPUT M anufactu ring production . . . + Construction c o n tra cts*........... + C o a l m ining................................ + -1 4 +16 -2 1 + 1 + 1 + 2 - 9 +20 -2 2 - 9 +13 -1 8 - 8 -1 1 0 - - + TRADE** Department store sales............ + + 4 1 + + 3 1 0 - 1 + 3 + 11t - 1 4 - + + + 4" + + 6 5 4 3 10 2t + + + + 4 3 6 0 0 3 6t 9 7 + + 4 1 - 3 5 - + 3 0 1 1 2 9 + 7 + 9 + 10 + 10 + 9 + 6 + + + + + + 4 3 5 5 6 8 1 0 0 1 + + 1 1 + + + + - + n ♦Based on 3-month moving averages. ♦♦Adjusted fo r seasonal v a ria tio n . 16 + 1 tl + 11 f2 0 C ities J P h ila delp hia + Sales Stocks CH AN G ES Per cent Per cent change change June June 195 4 from 195 4 from Per cent change June 195 4 from Per cent change June 19 5 4 from mo. ago year ago mo. ago year mo. ago ago Lancaster. . . . -3 -1 3 -2 -1 8 -1 3 -i-7 -1 9 + 1 - + 1 -1 1 + 3 + 4 -1 0 0 -1 4 - 5 - 0 - 6 P h ila d e lp h ia .. + 1 -1 1 R e a d in g .......... -1 - 9 S cranton......... -1 - 5 T re n to n ........... + 1 W ilk e s -B a rre . -1 5 -1 3 year mo. ago ago - 4 - Per cent change June 1954 from year mo. ago ago 8 + year ago + 14 - 1 + 14 + 1 4 + 9 + 4 - 4 + 10 + 4 5 - 9 - 5 + 14 + 3 3 4 PRICES Consum er................................ Payrolls LO C A L + 3 EM PLOYM ENT A N D IN C O M E Factory em ploym ent.................. B A N K IN G ( A ll member banks) D eposits....................................... Loans............................................ Investments.................................. U.S. G ovt, securitie s.............. O th e r ......................................... Check payments........................ 1 mo. ago 6 mos. 1954 from year year ago ago June 195 4 from Departm ent Store Check Payments Employ ment -3 - 8 -1 2 - 1 - 8 + 14 + 19 - -1 5 +2 - 6 +12 - 9 - 8 - -1 1 -2 -1 3 4 - 7 - 8 -1 7 + 2 2 + - 7 + 15 + 23 W ilm in g to n .. 0 - 8 + 1 - 8 + 8 + 11 - 1 1 - 2 + Y o rk ................. 0 - 6 + 3 - 9 - 6 - - 6 + 19 + 5 -1 2 6 1 -1 8 6 ♦N ot restricted to corp o ra te limits o f cities but covers areas of one or more counties.
@FedFRASER