View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Banking Structure:
What Does the Future Hold?
Pennsylvania's Economy:
Cyclically Sensitive and Secularly Sluggish
Will the Four-Day Week Work?

FEDERAL RESERVE BANK of PHILADELPHIA

business rcriew




IN THIS ISSUE . . .
Banking Structure:
What Does the Future Hold?
. . . Significant changes are underway in the
arena of banking structure, with greater com­
petition within the industry and other finan­
cial institutions benefiting the consumer.
Pennsylvania's Economy:
Cyclically Sensitive and
Secularly Sluggish
. . . Pennsylvania's share in the national
economic boom is deceptive partly because
of the wider swings in income and slower
long-run growth resulting from the state's
industrial make-up.
Will the Four-Day Week Work?
. . . The four-day week may not be a wave
of the future, but its many benefits have
started managers and workers thinking about
new ways to arrange their work and leisure.

On our cover: On the banks of the Delaware, near Tullytown, Pennsylvania, stands Pennsbury
Manor. This site and re-creation of William Penn's country estate includes attractive fur­
nishings, herb gardens, orchards, and a spacious lawn. Of all of Penn's dwellings this manor was
the only one planned and built especially by and for him. (Photo courtesy of the Bucks County
Historical-Tourist Commission, Fallsington, Pa.)

BUSINESS REVIEW

is produced in the Department of Research. The authors will be glad to receive comments

on their articles.
Requests for additional copies should be addressed to Public Information, Federal Reserve Bank of Philadelphia,
 Pennsylvania 19101.
Philadelphia,


Banking Structure:
What Does the
Future Hold?*
By Jerome C. Darnell

Let's consider the following: branch bank­
ing, multibank holding companies, nonbank­
ing subsidiaries of holding companies, the
doctrine of potential competition, interlock­
ing managements, the Hunt Commission Re­
port, and the Federal Reserve System.

Some of the most turbulent waters of the
entire banking industry are within the broad
arena we call banking structure. Hopefully,
my remarks do nothing to add to the con­
fusion and maybe they can bring a small
measure of calm to the waters. Let me also
hasten to add that my remarks reflect my
own views and, of course, should not be
construed as any official thinking of the
Federal Reserve System.
I shall refer to some trends and future
changes, primarily national in scope, that are
obvious, and then move on to areas that
become cloudier.

TRENDS AND CHANGES SEEN CLEARLY
WITH THE NAKED EYE
Wider Area Branching on the Way. What
does the future hold in terms of branch
banking? There's going to be more and
more branch banking in the years ahead.
West Virginia became the next to the last
state in the Union in 1972 to authorize de­
tached facilities. (Wyoming does not have
detached facilities but does have multibank
holding companies.) Therefore, the signifi­

* This article is based on a speech given at the
annual convention of the Colorado Bankers Associa­
tion at Colorado SorinRS, lune 9, 1973.



3

AUGUST 1973

BUSINESS REVIEW

However, these classifications are some­
what meaningless. For example, in five of the
13 so-called unit-banking states— Colorado,
Florida, Minnesota, Missouri, and Montana—
multibank holding companies control over
half of the deposits. In two other unit bank­
ing states, North Dakota and Wyoming, the
proportion exceeds 40 percent. Statewide
banking, or the capability of going statewide,
is now the dominant characteristic of the
banking systems in these seven states. In
three of the seven, the change in banking
structure has occurred in the relatively short
span of time since the 1966 Amendment to
the Bank Holding Company Act.
Now only five states have neither multi­
bank holding companies nor full service
branching, at least on a limited geographical
basis. These are Nebraska, Kansas, Okla­
homa, Illinois, and West Virginia. So today,
unit banking is not nearly as prevalent as
before, and the classification of states into
this category is often arbitrary.
Let's look on to 1985. During the next ten
to fifteen years the movement toward wider
area branch banking should increase con­
siderably. In retrospect, we will see that the
rapid growth of multibank holding com­
panies was one of the main driving forces
behind the transition. My best estimate is
that in another ten years there will be no
states remaining that do not have some form
of statewide, multiple-office banking. I think
a number of states will be disposed to look
at the dominant position of holding com­
panies and say that we'd just as well call a
spade a spade, and go all the way to state­
wide branching.
The trend toward statewide branching is
snowballing. New Jersey, after a transitional
period of using holding companies, is now
almost certainly going to statewide branch­
ing.1 New York has legislated this change*

cance of West Virginia's action is that banks
in every state now have the capability of
operating from more than one location.
Granted, a limited service facility falls
somewhat short of being a full service branch
office. But let's face it: A very high propor­
tion of all banking transactions can be han­
dled just as conveniently at a facility as at
a branch office, and it's pointless to draw
fine distinctions between them. The term
“ facility" is just a euphemism that came into
vogue some three decades ago to give the
illusion that there was no branch banking.
Even with the multiple-office capability that
now exists, several states still have a pre­
dominately “ unit banking" orientation. But
it seems obvious that it is just a matter of
time until multiple-office banking of one
form or another is the rule.
Before making some predictions about
what I think will happen in the various states,
let's briefly review where we've been. Cer­
tainly the trend toward more and more
branch banking in this country has been
steady and relentless for many years. The
first great wave of states adopting some
style of branch banking occurred in the two
decades following World War I, culminating
in the mid-1930s. The number of states per­
mitting some form of branching rose from
about 15 to around 30. From then until the
early 1960s, banking structure changed very
little, with less than half a dozen states
moving toward more full-service branching,
but several did add a facility provision. Ac­
cording to a classification of the states put
out by the Federal Reserve Board in 1960,
the lineups were about equal with 16 classi­
fied as statewide branching states, 16 were
limited branching states, and 18 states were
called unit banking. Then things started to
happen. By 1970 statewide branching in­
creased from 16 to 19 states, 16 were called
limited branching (with shifts in the make-up
of the groups), and 15 were unit banking.
By 1973, the numbers are 20 statewide, 17
limited, and only 13 unit.



*A statewide branching bill has passed the Legis­
lature and is awaiting the Governor's signature.
4

FEDERAL RESERVE BANK OF PHILADELPHIA

have typically been opposed to branching,
are not going to be as influential as they
once were. In another decade the transition
to statewide branching or holding companies
will be virtually complete.

to start in 1976. Pennsylvania is holding
hearings on statewide branching now. The
bill's prospects of passage appear slim this
year, but my guess is that Pennsylvania will
probably have either statewide branching or
multibank holding companies or possibly
both not too many years down the road.
Ohio and Massachusetts are two more lead­
ing candidates for statewide branching in the
not-too-distant future. Iowa and Arkansas
have gone to limited area branching. Several
other unit banking strongholds are now talk­
ing about liberalizing their facility laws. One
might go down the list and find other states
priming themselves for a change.
Two observations are pertinent on changes
in the banking structure code. First, when
study commissions are appointed to review
the law, it is a clear sign that change is in
the wind. Right now over half the states
that do not have either statewide branching
or multibank holding companies are cur­
rently reviewing their banking codes to see
if changes are desirable or warranted. In
some cases the study commissions have
come long after holding companies became
firmly entrenched and established a de facto
statewide branching network.
The second observation is that there seems
to be about a ten-year cycle at work. From
the time the yeast of change starts to ferment
until something is accomplished may take
about ten years. New York is perhaps the
best recent example of this ten-year cycle
theory.
State legislators, like some bankers to a
certain extent, feel a great pressure to con­
form with the group. As the switch to state­
wide branching gathers steam, legislators
will be under increasing pressure to jump
on the bandwagon and not have the unique
distinction of being the last state in the
Union to prohibit statewide branch banking
or holding companies. Reapportionment of
state legislatures has been shifting the power
base from rural legislators to the city repre­
sentatives. Smaller country banks, which



Decline in Number of Banks. One result
of wider branching will be a corresponding
reduction in the number of independent
banking units and larger-sized banks. Figures
on the number of banks nationally show that
the number has been rising, currently stand­
ing at 13,900 and about 500 above the low
point in 1962. This number is a statistical
illusion. Set aside the banks controlled by
multibank holding companies and count
them as branch offices, and you'll see that
around 1966 the number of independent
banking organizations peaked. It's down
now to slightly over 12,000, the lowest num­
ber since before World War I. In years to
come the number of separately operated
banking institutions will be falling much
faster because of mergers and acquisitions.
My guess is the number might eventually
stabilize at something less than 10,000.
More Concentration. If you like to play
around ‘ with concentration ratios,2 you'll
probably find that, in the future, concentra­
tion of banking resources in most states will
be going up. It's a well-documented phe­
nomenon that when wider area banking
takes over, especially statewide branching,
concentration ratios for the state usually go
up. This seems to be an inevitable side
effect of having more widespread banking.
Over the past 15 years, statewide branching
states have shown, with few exceptions, that
concentration was increasing while it was
declining in limited branching and unit bank­
ing states. However, the relevant question
may be: What is happening to concentration
in the local banking markets? Here we find

2 Concentration ratios refer to the deposit share of
the largest bank or banks in a geographical area.
5

BUSINESS REVIEW

that the concentration increase is not so
pronounced, but it can be observed. The
regulatory agencies over the years have be­
come more watchful and are less likely to
let concentration in local markets or for the
state as a whole get out of hand.
Technology Will Hasten the Branching
Movement. The movement to wider area
branching will be hastened by the sophisti­
cated electronic hardware that is now be­
coming available for a high proportion of
the run-of-the-mill banking transactions.
Because of this trend, a very crucial legal
decision is coming soon in a number of
nonbranching states as to whether free­
standing, automated tellers should be con­
sidered branches. Clearly, we're on the verge
of substituting automated tellers for live
ones. Point-of-sale terminals3 are moving
rapidly beyond the experimental stage. Sys­
tems are coming that will link banks with
customers and business firms, and the need
to set foot in a bank is going to diminish.
As we move closer to the "less check"
society, investment in a traditional banking
office composed of brick, mortar, and
people will become more and more suspect.
We'll not need so many of the typical bank­
ing offices, but they'll need to be more
strategically located.
The Future of Multibank Holding Com­
panies. A good question at this juncture is:
What will multibank holding companies do
when given the opportunity to convert to
branching? Many holding company bank­
ers readily admit that they prefer branching,
but resort to the holding company device
because of branching restrictions. However,
some holding company bankers recently

“ These are computer terminals located in retail
establishments. Such terminals are used to provide
instant transfers of money from the customer's account
to the retailer.

http://fraser.stlouisfed.org/
6
Federal Reserve Bank of St. Louis

AUGUST 1973

claimed that they prefer the holding com­
pany over branching because smaller affili­
ated banks can be kept out of the Federal
Reserve System and avoid the higher reserve
requirements associated with membership.
It will be interesting to see what transpires
in New Jersey and New York when they
permit statewide branching. At least one
large New York holding company has an­
nounced that it will convert to branching.
Since holding company operations are gen­
erally believed to be more cumbersome than
branching, I would expect most of them to
convert to a branching system.
Multibank holding companies really took
off after the 1966 Amendment to the Bank
H olding C om p any A ct. Consequently,
they're now in the midst of their greatest
growth era. But I detect some signs that
make me believe the growth will be slowing
down in a few more years, perhaps as early
as 1975 or 1976.
One of the brakes on growth will be states
like New Jersey and New York going to state­
wide branching. Another reason for slowing
is that in many states the eligible banks for
acquisition have been pretty well culled.
Some holding companies are finding out that
acquisitions are not panning out as they had
thought. The Justice Department has started
flexing its muscles on a number of holding
company acquisitions, as some bankers are
painfully aware. And the Fed is doing more
homework and looking at some acquisitions
with more skepticism that it ever has in the
past.
It has been my observation that when a
half dozen holding companies get over half
of the deposits in a state, they are forced to
be more cautious in their expansion pro­
grams. Therefore, combining all of these
factors, I would expect that the rush toward
holding companies is going to be slowing
down.
Furthermore, no virgin territory is left
where holding companies can spring up
without law changes. Multibank holding

FEDERAL RESERVE BANK OF PHILADELPHIA

Nonbanking Subsidiaries. The Board of
Governors of the Federal Reserve System
has now settled on about 15 activities
"closely related" to banking that holding
companies can engage in. No doubt the list
will be expanded in the future, but I have
no special insight into what the areas may
be. It seems banks have achieved essentially
what they sought— an opportunity to diver­
sify, to smooth their earnings stream, and
to offer more services. Banks now have lati­
tude in the things they can do and in the
places they can operate. Certainly the geo­
graphical barriers are being broken down in
terms of nonbanking activities which, in my
view, will hasten the erosion of state bounda­
ries on more traditional banking functions.
The decisions on nonbanking acquisitions
suggest some clear guidelines to me. Choose
one of the items from the list of approved
activities (if you want to be a trailblazer, be
prepared for a longer delay). To minimize
regulatory red tape, start from scratch. De
novo applications usually sail through with
fewer problems. If it's going to be an acqui­
sition of an existing firm, stay out of your
own backyard. Ordinarily out-of-state ac­
quisitions of nonbanking subsidiaries cause
fewer problems since it is less likely there
will be any competitive harm. If you should
seek an acquisition in your own market, say
a consumer loan company, be certain the
bank and the loan company do not have a
substantial share of the local consumer loan
market.

companies are now in every state which does
not have a law prohibiting their operation.
The last three states without holding com­
pany legislation and with no active holding
companies are Arkansas, Alabama, and Texas.
In 1970 large banks in these states discovered
almost simultaneously that there was no state
restriction on their acquiring other banks.
However, before the process could get very
far off the ground in Arkansas, the legislature
closed the door.
CHANGES THAT ARE NOT SEEN
SO CLEARLY
Let us move on now to some structural
changes that do not come into focus as
sharply as those previously discussed.
Interstate Branching. How far will we be
from branching across state lines by 1985?
I don't think interstate branching will be here
by that time, but it will not be too far away.
Ohio's study commission proposed to allow
out-of-state banks into the Buckeye State
if the same privilege would be extended to
Ohio banks. New York has made this offer
for holding companies. Others will probably
follow. The process will start in the metro­
politan areas that straddle state lines and
spread from there. Already foreign banks can
set up offices in more than one state as long
as they play by the local rules.
In terms of moving toward regional inter­
state branching, I think the 1970 bank hold­
ing company amendments, opening the
gates for banks to expand nationwide
through nonbanking subsidiaries, will prove
to be the catalyst that started us toward in­
terstate banking. The real question facing us
is this: If we are going to let a Pennsylvania
bank operate consumer finance companies
in Delaware, Maryland, Ohio, and Puerto
Rico, and industrial banks in Colorado, what
is the rationale for confining its retail bank­
ing operations to the state of Pennsylvania?




The Doctrine of Potential Competition.
While we are on the subject of competition,
let's talk about the doctrine or theory of
potential competition. I would submit to
you that while the Justice Department was
suffering a string of some seven consecutive
defeats4 in the lower courts and one setback

4 The Justice Department has now lost its eighth
consecutive potential competition banking case in an
7

AUGUST 1973

BUSINESS REVIEW

ing and Currency Committee held hearings
on this very issue. There seemed to be
widespread agreement among those testify­
ing, of which I happened to be one, that
interlocking managements and common
ownership had long outlived their usefulness,
whatever it may have been, and it was time
to stop the practice because of the obvious
potential for competitive abuse. The bill
never left Committee, but the seeds have
been sown.
The Ohio Legislature has a bill that would
eliminate interlocking managements among
all financial institutions operating in contigu­
ous markets. Maine has just passed a law
banning interlocking directorates among fi­
nancial institutions. The New York State
Department of Banking has made a similar
recommendation to its legislature. And now
the Justice Department has tried its first case,
a Texas case which it lost in the lower court.
Noise is being made on this matter, and I
would predict that a ten-year cycle probably
holds here also. By that time, we may see
interlocking managements between compet­
ing banks outlawed and possibly even a lid
put on the amount of investment you may
hold in another independent bank. The Jus­
tice Department has already announced that
common ownership ties must be at least
half or it will view the banks as separate
legal entities, which will have to pass muster
under the antitrust standards.

in the Supreme Court with the Greeley case;5
actually, it has won the potential competition
war. I say this because the Fed, the busiest
application processor of all, is now regularly
applying the doctrine of potential competi­
tion to the cases it reviews. It is my under­
standing that the Federal Deposit Insurance
Corporation also does the same thing, and
just last year axed a proposed merger be­
tween a couple of fairly large Pennsylvania
banks on the grounds of potential competi­
tion.
Because of attention to the potential com­
petition issue, a number of talked-about
mergers and holding company acquisitions
never even reach the application stage. Thus,
I would argue that the Justice Department
has been successful in its battle to establish
potential competition as a viable concept.
Moreover, one of these days the right case
will come along, and they will be able to
convince the Supreme Court. Potential com­
petition will be used more and more for
both banking and nonbanking acquisitions.
You should be prepared to act accordingly.
Interlocking Managements and Common
Ownership. Another topic to consider is the
status of those banks having common own­
ership links and interlocking managements.
The statutory restrictions are drawn so
loosely that banks operating across the street
from each other could, with no more than
a sixth-grader's ingenuity, have common di­
rectors, presidents, officers, and what have
you.
Now there are rumblings in Congress and
in the state houses to take a closer look at
the matter. Two years ago the House Bank­

Hunt Commission Report. No discussion
of banking structure would be complete
without mentioning the President's Commis­
sion on Financial Structure and Regula­
tion, better known as the Hunt Commission.
This Commission came into being at a time
when there was concern about the perfor­
mance of the financial system. The Commis­
sion turned in a useful piece of work. How­
ever, many of their recommendations did not
go much beyond those made by three other
study groups some ten years ago. Unfortu­

antitrust suit that sought to block the proposed merger
of two large Connecticut banks. See American Banker,
June 26, 1973.
5 United States v. First National Bancorporation, Inc.
On February 28, 1973 the U. S. Supreme Court in
a 4-4 vote sustained a lower court ruling against the
Justice Department.



8

FEDERAL RESERVE BANK OF PHILADELPHIA

nately, little of legislative substance ever
came from those studies. And, based on this
experience, it is unlikely that we will see a
major restructuring of the financial system
coming from the Hunt Commission's efforts.
Nevertheless, I do think several recom­
mendations in the Report have merit and
will likely be implemented on a piecemeal
basis in the years ahead. For example, I think
Regulation Q stands a good chance of being
suspended and put on a standby basis.6 Prob­
ably explicit interest payments on demand
deposits is another good prospect the further
we get away from the Great Depression era.
Thrift institutions are likely to gain the right
to offer third-party transfers via household
checking accounts, as mutual savings banks
now do in some half dozen states. The
tax burden on all financial institutions will
tend to be equalized as they take on more
common characteristics. Finally, thrift insti­
tutions, especially savings and loan associa­
tions, are likely to get broadened consumer
lending powers and an opportunity to loosen
their close ties to residential mortgage
markets.
The point is many of the recommendations
in the Hunt Commission Report have virtue
and will eventually find their way to the sur­
face. But my guess is that implementation
will likely be on a fragmented basis and not
through a comprehensive legislative package.

an already heavily burdened Board of Gov­
ernors. Consequently, more and more of the
workload on holding company cases is being
delegated to the 12 Federal Reserve Bank
staffs. In one sense this is a move in the right
direction, but in another sense it could cause
problems because inconsistency may de­
velop among the staffs in their handling of
cases.
Even with a lot of delegation, the Board
still may have to spend a substantial amount
of time in deciding holding company cases
of a borderline nature. Therefore, it may be
appropriate to give some consideration to
creating a new body, perhaps a committee
within the existing System, that would be
charged with handling most of the holding
company decisions. In this way, the Board
can maintain sufficient time to meet its other
responsibilities.
THE FUTURE: WHAT NEW CREATIONS?
I wish my vision were good enough over
the next 10 to 15 years to foretell of stunning
revolutions in banking lurking somewhere
on the near horizon. But it isn't.
My view is that the one-bank holding com­
pany movement was a revolution, and in­
deed the major one of the past decade.
Perhaps in retrospect the real surprise is that
it took so long for the movement to be born
in the first place because the option was
always there. No doubt time will bring on
changes that are mere pipedreams today.
In sum, an acceleration toward wider area
branching and a slowdown in multibank
holding companies appears inevitable. Surely
there will be more and more national and
even international financial conglomerates.
Above all else, competition within the bank­
ing industry and other financial institutions
will become much more intense, ultimately
benefiting the consumer.
■

Changes in the Federal Reserve System.
Increasing holding company activity has
placed still more work on the shoulders of

8The Fed has the authority to establish ceilings on
the rate of interest commercial banks can pay on
time and saving deposits. This authority is imple­
mented through Regulation Q. On May 16 the Board
suspended interest rate ceilings for all single maturity
time certificates of deposits (negotiable and nonnegotiable) in denominations of $100,000 or more.




9




Pennsylvania's
Economy:
Cyclically Sensitive
and Secularly
Sluggish

FEDERAL RESERVE BANK OF PHILADELPHIA

CHART 1
L I K E T H E N A T IO N A S A W H O L E , P E N N S Y L V A N I A
T H E C U R R E N T BOOM
Billions of Dollars

IS S H A R IN G

IN

Billions of Dollars

TOTAL N O N FAR M P E R S O N A L INCOM E

1000

70

950
900

8.9 P E R C E N T (A N N U A L RATE)

U. S. 850

55

PA.

800
8.1 P E R C E N T (A N N U A L RATE)
750

* __________
1970

1971

1972

1973

(Seasonally Adjusted Annual Rate)
CHART 2
H O W E V E R , T H E K E Y S T O N E S T A T E IS M O R E H E A V IL Y C O N C E N ­
T R A T E D IN M A N U F A C T U R I N G T H A N T H E C O U N T R Y A S A W H O L E . . .
Percent
M A N U FA C T U R IN G INCOM E A S A P E R C E N T
OF TOTAL N O N FARM INCOM E
□

UNITED STAT ES

□

P E N N S Y L V A N IA

Source:




U. S. Department of Commerce, Bureau of Economic Analysis
11

BUSINESS REVIEW




AUGUST 1973

CHART 3
A N D S IN C E T H E D IF F E R E N C E B E T W E EN T H E GRO W TH R A T E OF
I N C O M E D U R IN G E X P A N S I O N S A N D IT S R A T E O F C H A N G E D U R IN G
R E C E S S I O N S ( C A L L E D “ C Y C L I C A L S E N S IT IV IT Y ” ) IS G R E A T E R F O R
T H E M A N U F A C T U R IN G
SECTO R THAN TH E ECO NO M Y AS A
W H O LE . . .
Percent
RAT E OF INCO M E GROWTH D URING EX P A N S IO N S M IN U S
ITS RATE OF CH A N G E D URING R E C E S S IO N S *

* Mean quarterly percent change at annual rate for four postwar cycles,
1948-1V to 1969-111.

CHART 4
P E N N S Y L V A N I A ’ S G R O W T H E X P E R I E N C E S W ID E R S W IN G S IN IN ­
C O M E T H A N T H O S E O F T H E R E S T O F T H E N A T IO N ’ S E C O N O M Y
Percent Change
8

□
□

EXPAN SIO N S*
R EC ES S IO N S*

TO TAL N O N FAR M P E R S O N A L INCO M E

UNITED STATES
PENNSYLVANIA
* Mean quarterly percent change at annual rate for four full postwar cycles,
1948-1V to 1969-111.

12

FEDERAL RESERVE BANK OF PHILADELPHIA

CHART 5
M O R E O V E R , M A N U F A C T U R I N G IN C O M E H A S G R O W N A T A S L O W E R
P A C E T H A N T O T A L N O N F A R M IN C O M E . . .
Billions of Dollars (Ratio Scale)
goo

U. S. ECO NO M Y

700

1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972

CHART 6
SO, U N F O R T U N A T E LY , P E N N S Y L V A N IA ’S GRO W TH T R A IL S T H A T OF
T H E R E S T O F T H E N A T IO N ’ S E C O N O M Y
Percent
A N N U A L GROWTH OF N O N FARM P E R S O N A L INCOM E*

8

6

UNITED
STATES

P E N N S Y L V A N IA

Compound Annual Percent Change, 1948-72.




Will the
Four-Day Week
Work?
By Curtis R. Smith

it's a day off in midweek and a two-day
weekend. Still others enjoy a three-day mid­
week "weekend." Private industries, govern­
ments, and nonprofit institutions are among
those adopting the four-day schedule; esti­
mates are that upwards of a million workers
are now involved. Although these workers
are employed in a relatively limited number
of firms, proponents of the reshuffled work­
week are predicting widespread conversion
in the not-too-distant future.

The last several years have been especially
trying times for managers and executives as
well as for workers on the assembly line.
Corporate officers and small businessmen
alike, under intense pressure to hold the line
on costs, have been looking for ways to
boost productivity. Labor, faced with ever
more specialized and repetitious tasks, has
been seeking ways to improve life on the
job. One solution for both parties may be
new approaches to arranging the workday.
A plan known as "flexitime" has been win­
ning converts, especially in Europe (see Box).
The major thrust in the U. S., however, has
been toward the four-day workweek.

ECONOMIC ADVANTAGES OF THE
FOUR-DAY WORKWEEK
For an innovation of this nature to spread
throughout the economy, it must offer ad­
vantages to all concerned. There are some
strong reasons for believing that many firms
can realize productivity gains and that work­
ers will be more satisfied on a four-day
schedule.

Under a variety of plans that rearrange the
workweek without shortening it, each
worker labors the same total number of
hours per week but spends fewer days on
the job. For some, it means four days on the
job and a three-day weekend. For others,



14

FEDERAL RESERVE BANK OF PHILADELPHIA

EUROPE TRIES FLEXITIME— H O W ABOUT AMERICA?
Plans going under the banner of flexitime, or gliding time, are rapidly being
accepted in Europe. Designed to give workers flexibility in arranging their own work
schedules, the arrangements divide the workday into “ fixed" and "flexible" periods.
Employees must work the fixed core time— usually mid-morning to mid-afternoon.
But within the arrival and departure "windows," they start and stop each day when­
ever they please.
Each plan is tailored to meet the individual firm's needs. Most flexitime arrange­
ments allow workers to determine the length of their day, as long as a certain amount
of time is worked each month (or week). Other firms, especially in production, ask
work teams responsible for specific jobs to set arrival and departure hours for the
team.
Gliding time was first tried in clerical, professional, and managerial-type jobs but
has spread to almost all kinds of work. The only infeasible areas seem to be those
in production-line work where the components are large and cannot be easily in­
ventoried and in custodial, security, and cafeteria jobs where workers must be on
their jobs at certain times.
Flexitime proponents indicate that both workers and management are happy with
the plan. Workers are not subject to a fixed schedule; they have time to tend to
personal business needs without taking time from work. Family emergencies can be
more easily handled. Probably the most important, and enduring, benefit is the
feeling of responsibility that workers get. This frequently translates into increased pro­
ductivity which management likes. The productivity gains seem to stand up over time,
a question still unanswered by the four-day week. Flexitime also helps companies
recruit in tight labor markets and alleviate traffic jams around the plant.
In Europe, Switzerland has the highest concentration of gliding time workers— close
to 30 percent of the workforce. Germany and Britain are also heavily involved with the
plan. While subsidiaries of European firms were among the first to introduce flexi­
time schedules in the United States, a sprinkling of companies and other organi­
zations are now experimenting with various flexible schedules. Flexitime bears watch­
ing as another means of boosting productivity and workers' interest in their jobs.

Firms Stand to Gain. Firms are interested
in the specific benefits of the four-day week
that will reduce costs and translate into
higher profits. For most businesses the big­
gest potential benefit is increased produc­
tivity of both labor and capital. Breaking
out of the eight-hour, five-day mold may
allow firms to schedule their work loads to
meet their own particular demand, person­



nel, and machine requirements.
Many businesses have a large investment
in their machines and want to keep them
running as much, and as efficiently, as possi­
ble. Most machines take time to get keyed
into their most productive speed and cali­
bration. Production is lost each time one is
started up or shut down. During a five-day
week there are five start-up and shut-down
15

AUGUST 1973

BUSINESS REVIEW

periods. The four-day, 40-hour week cuts
these losses by 20 percent.1 Savings can also
apply to labor. Worker preparation ranges
from the morning cup of coffee to the don­
ning of special equipment; end-of-day shut­
down often involves substantial clean-up
time.
Another "four-day" advantage can be
easier maintenance. Taking care of compli­
cated machinery frequently requires consid­
erable downtime. For machines where
maintenance can't be completed over week­
ends, the "four-day" can avoid the loss of
a day's production. Even for firms with less
time-consuming maintenance requirements,
there are advantages. Having a weekday
available for repairs may speed things up
since suppliers are likely to be open to
provide needed parts.
Keeping labor costs under control is just
as important as the efficient use of capital.
One key aspect of this campaign is the battle
to boost labor productivity. Workers often
prolong their weekends by calling in sick,
and the Monday and Friday "blues" are a
common problem of the present workweek.
If employee morale is improved by the fourday week, inefficiency, absenteeism, and
tardiness all should be reduced. Costly turn­
over should be less likely and recruitment
easier. Other productivity gains are possible.
Top management can work on the fifth day
when production is not scheduled. Staff
meetings, planning, and consulting can be
effectively conducted without interruption.

The Worker's Viewpoint. In principle, the
average worker might be indifferent between
the rearranged four-day week and the stan­
dard five-day week.2 However, there's evi­
dence that workers prefer their "off" time in
long blocks. Since I960 the trend has been
away from reducing the number of hours
worked each week and toward having longer
blocks of time away from the job. The aver­
age workweek, which dropped steadily until
the late 1950s, has stabilized around 40
hours. In contrast, paid holidays and vaca­
tions spread rapidly in the '60s. Over the
decade full-time workers saw their average
vacation time rise from 1.8 to 2.2 weeks.3
Furthermore, workers have overwhelmingly
accepted the recent designation of five na­
tional celebrations as Monday holidays.
People seem to favor blocks of leisure
time because they can do a variety of things
more pleasantly— shop when stores are less
crowded, keep appointments, work around
the house, or just loaf. Necessary chores
can be done on the extra day off, freeing
the weekend for "fun" things. Not only that,
the four-day week cuts a worker's job-re­
lated costs by up to a fifth. Commuting costs,
restaurant lunches, and traveling time would
drop, and family child-care expenses could
be lower.
Although it is not as apparent, the fourday plan offers a further benefit to workers.
Over the long run, economic theory suggests
that wage movements reflect increases in
productivity. If firms garner productivity

1
For example, these savings may be garnered in the
following manner. If there is a half hour start-up and
a half hour shut-down time, each eight-hour day re­
sults in seven hours production or a total of 35 hours
a week. On the four-day schedule, however, there are
only four hours of downtime. This results in nine
hours of production each day and 36 in the week.
The firm realizes an extra hour of production each
week in addition to the longer continuous running
time of both labor and capital.

2 Economic theory tells us that workers' acceptance
of the four-day week will hinge on monetary consid­
erations as well as personal tastes. If workers preferred
a five-day schedule, firms could conceivably get them
to work four days by raising wages. Since firms are
trying to keep costs down, it is essential for wide­
spread acceptance that workers be willing to agree
to the plan without monetary inducements.
3 Geoffrey H. Moore and Janice N. Hedges, "Trends
in labor and leisure," Monthly Labor Review, February
1971, pp. 4-5.




16

FEDERAL RESERVE BANK O F PHILADELPHIA

industry is also beginning to use this inno­
vation. Some paint firms find that the re­
arranged week boosts the efficiency of their
batch processing. In other industries, such
as machine tool production, the four-day
week with two ten-hour shifts has resulted
in better capital utilization than the 16 hours
of two traditional shifts.
Many production-oriented firms have al­
ready realized the expected reduced labor
costs associated with the four-day week.
Increased worker interest has paid substan­
tial dividends in cutting lost work time.
Many businesses also find it easier to attract
workers with a four-day plan. In textile pro­
duction, for example, some firms have been
able to fill relatively unattractive jobs more
easily by scheduling two ten-hour shifts four
days a week. Further, they are able to utilize
their equipment fully by offering a four-hour
evening shift that attracts students and
women.
Despite the potential savings resulting
from the four-day/40-hour week, there are
problems that may limit its applicability in
production-oriented industries. For many
three-shift firms, scheduling problems make
the "four-day" impractical. Obviously, three
eight-hour shifts divide evenly into 24 hours
where ten-hour shifts do not. Moreover, the
four-day week presents difficulties for some
businesses providing products and services
to other firms and for companies producing
perishables (such as food products and
building materials) that must be shipped for
immediate use. Because these businesses

gains upon conversion to the four-day week,
it's likely that some of those gains will be
passed on to the worker in the form of
higher wages.
THE FOUR-DAY WORKWEEK IN PRACTICE
The four-day workweek sounds good in
theory, but how practical is it? Which profit­
ability considerations apply to which type of
firms? Is its applicability widespread enough
to be a valuable tool in keeping costs and,
therefore, prices down?
Some industries have particular produc­
tion constraints which make it highly unlikely
that the "four-day" will be adopted. Others
are more able to garner its efficiencies. Fur­
ther, even within a firm there are differences:
some departments are well suited to four-day
operations; others face insurmountable
problems. Although each industrial unit must
evaluate the four-day week in light of its
own requirements, in general the economy
can be divided into three groups of firms
with common characteristics. Within each
category, the "four-day" offers important
advantages.
Production Industries. Firms in produc­
tion-oriented industries such as manufactur­
ing, m in in g , and co n stru ctio n seem
particularly well suited to the four-day week.
They frequently have a heavy investment in
machinery and tend to use skilled workers.
Because these firms employ nearly a third
of the labor force and face the toughest
international competition, more efficient use
of both capital and labor is quite important.4
For instance, manufacturing firms using
metal- and plastic-molding equipment real­
ized economies by avoiding a day's lengthy
heat-up and cleaning time. The chemical

4 For a more detailed discussion of the efficiencies,
see The Research Institute of America, What's Happen


17

ing to the Workweek, April 1972; Eugene Murphy,
"4 Days, 40 Hours: Palliative or Panacea?" New Jersey
Business, February 1972, pp. 57-64; Kenneth E. Wheeler,
The Four-Day W eek: An AMA Research Report (New
York: American Management Association, 1972); L.
Erick Kanter, "An Industrial Pioneer Rescued by the
4-day Week," in Riva Poor, ed., 4 days, 40 hours
(Cambridge, Mass.: Bursk and Poor Publishing, 1970),
pp. 39-46.

BUSINESS REVIEW

AUGUST 1973

can't ask their customers to reshuffle their
needs, longer hours and fewer days would
be sensible only if the customers were on
four-day schedules themselves. Further, at
some firms, service requirements dictate that
certain departments remain on the tradi­
tional five- or six-day schedule even if the
rest of the plant converts. Sales staffs and
shipping and receiving departments are the
most common examples.
Labor may present the biggest obstacles in
this sector. For some types of work the tenhour day is too long. Many jobs in mining,
construction, and heavy manufacturing are
physically demanding and hazardous. Both
workers and firms in these industries can be
expected to resist a longer day. Workers will
not want to endanger their health. Most
firms realize that once fatigue sets in, em­
ployee productivity drops and, in the case
of the dangerous job, more accidents may
result. Consequently, unit costs rise and
profits suffer.

The four-day week is also proving useful
in those areas where competition is forcing
businesses to remain open longer. This is
particularly true among large retail outlets
and increasingly the case in banking. The
four-day week can help them efficiently
arrange their operations. With the addition
of part-time workers, the traditional five-day/
40-hour schedule can be arranged to cover
six- or seven-day operations. Flowever, a
staggered four-day week has two distinct
advantages. It allows the store to be manned
full-time by persons more familiar with a
firm's products, customers, and methods of
doing business. Moreover, it aids in recruit­
ing weekend help by offering a third day off.
Other customer contact industries have
been able to adapt the four-day schedule to
their particular needs. For example, auto­
motive services firms, with a heavy capital
investment in equipment, have been able
to please old customers, attract new ones,
and more fully use their equipment by ex­
panding their hours. Mechanics can work
a rotating four-day week, trading longer daily
hours for an extra day of leisure. A chain of
retail and wholesale tire stores in California
is open Thursday, Friday, Saturday, and Sun­
day each week. It found that these are the
days when tire demand peaks and decided
to concentrate its personnel on those days.

Customer Contact Industries. Many indus­
tries directly serve the public and, therefore,
rely on people rather than machines. There­
fore, they have a heavy stake in any innova­
tion that makes more efficient use of labor
and helps control labor costs.
Public service operations are prime exam­
ples. Since 24-hour staffing is a basic prob­
lem, some hospitals have adopted two
ten-hour shifts and one five-hour evening
shift with employees working only seven out
of every fourteen days. Recruitment of
both full- and part-time personnel is easier
with this schedule. Likewise, police and fire
departments find the four-day week enables
them to schedule their work force more
efficiently, thereby providing the citizen with
more protection for his tax dollar. Overlap­
ping ten-hour shifts help police cover rush
hours and the late-night high crime period.
Many fire departments work a 48-hour week
composed of two ten-hour day shifts and
two 14-hour night shifts.



Paperwork Industries. Industries that deal
with "paperwork" are in an ideal position
to take advantage of the four-day workweek.
There is no need to set specific hours of
operation, and most employees are con­
cerned with continuing functions such as
record-keeping, personnel matters, and re­
search. Physical exhaustion is generally not
a factor, and the longer day does not rou­
tinely entail problems of mental fatigue.
Moreover, there are usually no shift-schedu­
ling problems.
For instance, insurance firms can turn the
four-day week to their advantage. Processing
18

FEDERAL RESERVE BANK OF PHILADELPHIA

of applications can easily be squeezed into
four days. Publishers could surely rearrange
the week in a similar manner. Perhaps the
largest work force eligible for the four-day
change is that of governments — Federal,
state, and local. Bureaucratic activities such
as court cases, studying the economy, pro­
curing airplanes, and road building are
usually not tied to any set schedule.
The rearranged workweek is the rage in
computer and data-processing operations.
This is an excellent example of optimal
machine and labor utilization allowing an
efficient shortening of the workweek — as
few as three extended days each week is
common. Companies have come up with a
seven-day schedule using two 12-13 hour
shifts each day as each employee works a
three-day/36-39 hour week.

it impractical to utilize the plan in many of
the same firms, but estimates indicate that
only 5 to 10 percent of the labor force is
employed by three-shift companies.68 Al­
though it's difficult to say exactly, firms that
produce perishable products and have strin­
gent shipping requirements probably consti­
tute an equally small group.
In addition, there are substantial numbers
of employees in all enterprises whose func­
tions are incompatible with a rearranged
workweek. This is the most difficult group
to enumerate. Nevertheless, it seems that
the four-day workweek applies to a large
number of American workers. Half (perhaps
more) of all employees have jobs in firms
and industries that could use a rearranged
four-day week.
SOME MAJOR OBSTACLES TO OVERCOME

Taking Stock. The four-day workweek
offers numerous cost-cutting advantages, but
it also faces some practical obstacles. Lurk­
ing in the background is the possibility that
all of the expected gains in productivity will
not last.5 This issue will not be decided,
however, until industry has had sustained
and widespread experience with the plan.
Of immediate concern are the practical limi­
tations of implementing the plan at all.
The biggest difficulties are in productionoriented firms. Health and fatigue may
involve substantial problems in businesses
employing as much as 15 percent of the total
work force. Scheduling difficulties also make

Although the four-day plan appears to be
a promising cost-fighting tool in a large seg­
ment of the economy, forces such as legal
restrictions, union opposition, and social
conventions loom as major obstacles. These
forces, which involve emotional and subjec­
tive reactions, are crucial to the concept's
acceptance.
Legal Constraints. As the eight-hour day
and five-day week became accepted as
norms, they became embodied in both law
and custom. Federal statutes, as they now
stand, impede adoption of the four-day
week. Over 2.5 million Federal employees
receive, by law, time-and-a-half pay for
any work in excess of eight hours each day;
the same provisions blanket another 3.7 mil­
lion employees of Government contractors.
While some states have laws providing for
compulsory overtime pay after eight hours,

5 The so-called Hawthorne experiments indicate that
almost any work innovations introduced in a plant
boost productivity in the short run, but that after a
while things return to normal. Workers, finding that
more attention is paid to them, become interested in
the experiment and work better for a time. Soon the
fuss dies down and then they return to their normal
speed and work patterns. Some reports have indicated
that this phenomenon may apply to the four-day week
8 Derived from statistics on workers on third shifts,
also, causing a few firms to return to a standard fivefrom U. S. Department of Labor, Bureau of Labor Sta­
day schedule.
tistics, Area Wage Surveys, Bulletin 1660-92, 1972.

http://fraser.stlouisfed.org/
19
Federal Reserve Bank of St. Louis

BUSINESS REVIEW

a larger group restricts the number of hours
that can be worked each day. However,
most of the maximum hours legislation and
many of the overtime laws at the state level
apply almost solely to women, and are being
challenged in equal opportunity cases.
The influence of these laws spreads far
beyond the relatively small number of
people legally covered. Both union and non­
union workers have pushed mightily to attain
similar overtime provisions in their agree­
ments with business. Any employer will be
less interested in converting to the "fourday," if he has to pay two hours of overtime
each working day. Thus, in order for the
four-day workweek to become widespread,
both laws and implicit agreements will have
to change.
The Unions' Stand. Unions are interested
in more than just money. Management at­
tempts to change work rules usually require
labor's consent. And many unions oppose
the four-day/40-hour week. Long concerned
with working conditions, organized labor
played an integral part in the battle to reduce
the workday to eight hours. Even when
coupled with only four days of work each
week, the ten-hour day is viewed by many
labor leaders as retrogressive.7
Unions contend that four-day advocates
have stressed cost-cutting aspects but have
ignored the fact that long exposure to indus­
trial hazards will more than proportionately
add to safety and health problems. Noise is
often cited as an example. Threshold limits
of allowable noise are presently based on
eight hours of exposure. Unionists feel that
7 A demonstration of union attitudes toward the
four-day week surfaced during Department of Labor
hearings in 1971. Four-day proponents had requested
that the daily overtime requirements for Federal con­
tractors be dropped. The AFL-CIO Executive Council
urged the rejection of any change, stating "the eighthour day standard was achieved after decades of trade
union efforts and we believe that Federal laws must
continue to protect workers against excessive hours
of work per day, as well as excessive hours per week."

http://fraser.stlouisfed.org/
20
Federal Reserve Bank of St. Louis

AUGUST 1973

it's not necessarily true that ten hours of the
same tolerance will be safe. They point out
that the exposure problem also exists with
other hazards such as toxic chemicals and
materials and adverse temperatures.8
Union opposition is a serious obstacle be­
cause nearly 30 percent of the nonagricultural labor force are union members.8 Since
9
production-oriented industries are highly or­
ganized, union objections will curtail imple­
mentation in an area where the four-day
week can be particularly beneficial. While
less of an obstacle in other industries, union
influence is also growing in retail trades and
Government and must be reckoned with in
the future.
Social Considerations. Workers may not
realize that the different schedule may seri­
ously disrupt their existing social relation­
ships and lifestyles. A ten-hour day means
up to 12 hours from door to door. Car pools
will be harder to coordinate if friends and
neighbors are on different four-day plans.
Public transportation may not be as frequent
and convenient, since transit schedules will
be spread out to accommodate staggered
work patterns.
Other dislocations would occur. The tenhour day limits what a worker can do after
work, and may isolate him from family and
friends. Scheduling peculiarities might mean
that a husband and wife would be on dif­
ferent four-day schedules, or that one might
work a four-day and the other a five-day
week. This might lead to less time with each
other and the family during the week. Com­
munity activities such as Little-League, church
groups, political participation, and dozens of
other volunteer organizations could suffer.

8Jacob dayman and Thomas Hennigan, "The 4-40
Workweek: Two Views," Manpower, January 1962,
pp. 14-19.
9 U. S. Department of Labor, Bureau of Labor Sta­
tistics, Directory of National Unions and Employee
Associations 1971, Bulletin 1750, 1972.

FEDERAL RESERVE BANK OF PHILADELPHIA

for the same pay; this obviously discourages
many firms by offsetting whatever cost re­
ductions might result from the four-day
week. Over the long haul, though, this may
not be an insurmountable problem. Projec­
tions show that productivity gains in the next
decade will be substantial enough to allow
for continued economic growth and a short­
ening of the workweek.10 Possibly, man­
agement and labor will channel some of
these gains into a four-day workweek of
mutually acceptable length.
Taking all this into consideration, it seems
unlikely that the four-day rearranged work­
week will sweep the country. For some
production firms it may prove to be a crucial
weapon in the struggle against rising costs.
Further, as an experiment the plan will surely
spread, particularly in the growing service
sector. For the present, however, it must
share the stage with other efforts to increase
worker productivity and satisfaction. Never­
theless, the four-day workweek has started
managers and workers thinking about new
ways to arrange their work and leisure.

Problems may be particularly extreme for
working mothers. Many want to see their
children off to school or day-care centers
and be home when they return. However,
education is an industry for which the longer
day would probably be impractical; children
could return home before the parent who's
on a ten-hour schedule. Alternatively, the
hours of child-care centers would have to be
geared to the new longer working day.
THE FUTURE OF THE FOUR-DAY WEEK
The four-day workweek has the potential
of becoming the next major innovation in
the work patterns of American industry.
If adoption is widespread, the plan could
result in substantial productivity gains that
will help in the fight against rising costs and
prices. A further bonus could be a reduction
in present congestion and the unpleasantness
of peak-hour commuting patterns.
However, underlying obstacles exist. Many
firms cannot implement the plan because
of technical and worker-health constraints.
Workers may become disenchanted once
they realize how radically their normal life­
styles will have to change. Probably the key
short-run obstacle is the lack of union ap­
proval. Most unions will favor the four-day
week only when it is tied to shorter hours

“ Janice N. Hedges, "A Look at the 4-day Work­
week," Monthly Labor Review, October 1971, pp.
33-36.

SELECTED READINGS
Bolton, j. Harvey. Flexible Working Hours. Wembley, England: Anbar Publications,
Ltd., 1971.
Hedges, Janice N. "A Look at the 4-day Workweek." Monthly Labor Review, Oc­
tober 1971, pp. 33-37.
Hedges, Janice N. "New Patterns for Working Time." Monthly Labor Review, Feb­
ruary 1973, pp. 3-8.
Wheeler, Kenneth E. The Four-Day W eek: An AMA Research Report. New York:
American Management Association, 1972.
Wilson, James A. "The Meaning of the Four-Day Week: Retreat from Work or Assent
to Leisure?" Pittsburgh Business Review, March-April 1972, pp. 1-5, 17-19.
■




21

BUSINESS REVIEW

N OW AVAILABLE
BROCHURE AND FILM STRIP ON
TRUTH IN LENDING
Truth in Lending became the law of the land in 1969. Since
then the law, requiring uniform and meaningful disclosure of the
cost of consumer credit, has been hailed as a major breakthrough
in consumer protection. But despite considerable publicity, the
general public is not very familiar with the law.
A brochure, "What Truth in Lending Means to You," cogently
spells out the essentials of the law. Copies in both English and
Spanish are available upon request from the Department of Bank
and Public Relations, Federal Reserve Bank of Philadelphia, Phila­
delphia, Pennsylvania 19101.
Available in English is a film strip on Regulation Z, Truth in
Lending, for showing to consumer groups. This 20-minute presen­
tation, developed by the Board of Governors of the Federal
Reserve System, is designed for use with a Dukane project that
uses 35mm film and plays a 33 RPM record synchronized with
the film. Copies of the film strip can be purchased from the
Board of Governors of the Federal Reserve System, Washington,
D. C. 20551, for $10. It is available to groups in the Third Federal
Reserve District without charge except for return postage.
Persons in the Third District may direct requests for loan of
the film to Truth in Lending, Federal Reserve Bank of Philadelphia,
Philadelphia, Pennsylvania 19101. Such requests should provide
for several alternate presentation dates.




22

FOR THE R E C O R D ...
W .X (1987 = 100)

IS ig
Third Federal
Reserve District

United States

Percent change
SU M M A R Y

June 1973
from
mo.
ago

MANUFACTURING
Production.......................................
Electric power consumed . . .
Man-hours, total*.....................
Employment, total........................
Wage income*................................
CONSTRUCTION**...........................
COAL PRODUCTION.......................

year
ago

year
ago

June 1973
from

illlS

Manufacturing

Percent change

5
mos.
1973
from

g 1

5
mos.
1973
from

mo.
ago

year
ago

year
ago

+ 3

+10

-

LO C A L
CH AN GES
old 1 0tfl cl
1
Metropolitan
Statistical Areas*

Banking

Employment
Percent
change
June 1973
from

Check
Total
Payments** Deposits***
Percent
change
June 1973
from

Percent
change
June 1973
from

Percent
change
June 1973
from

month year month year month year month year
ago ago ago ago ago ago ago ago

- 1
+ 1
0
- 1
0
N/Af

N/A
N/A
N/A
N/A
N/A
N/A

+ 7
+12
- 1
- 7
+ 2
N/Af

N/A
N/A
N/A
N/A
N/A
N/A

+ 8
+15
+ 1
- 4
+ 3
N/Af

N/A
N/A

N/A
N/A
N/A
N/A
N/A
N/A

N/A
N/A

N/A
N/A
N/A
N/A
N/A
N/A

N/A
N/A

N/A
N/A
N/A
N/A
N/A
N/A

N/A

N/A

N/A

-

N/A

N/A

N/A

N/A

+ 2

Bridgeton......................... N/A
+ 2 + 5 + 5

N/A

N/A
N/A

N/A

N/A

N/A

N/A

-

Trenton............................. N/A

N/A

N/A

N/A

N/A

N/A

- 2

N/A

N/A

N/A

N/A

N/A

N/A

0 +16

Harrisburg....................... N/A

N/A

N/A

N/A

N/A

N/A

0 +17

N/A

N/A

N/A

N/A

N/A

N/A

0 +15

Lancaster......................... + 2

N/A
N/A
N/A
N/A
N/A
N/A

N/A

Atlantic City.................... N/A

Johnstown.......................
BANKING
(All member banks)
Deposits............................................
Loans.................................................
Investments....................................
U.S. Govt, securities...............
Other.............................................
Check payments***.....................

Wilmington...................... N/A
5

+ 6

N/A

N/A

N/A

N/A

0 +16

Altoona.............................

Lehigh Valley................. + 2

+ 4

N/A

N/A

N/A

N/A

Philadelphia.................... N/A

N/A

N/A

N/A

N/A

N/A

Reading............................. N/A

N/A

N/A

N/A

N/A

1 -8 8

0
-

+16

1 +15
+ 3

+14

2

+ 9

N/A

0

+15
+12

PRICES
Wholesale.........................................
Consumer.........................................
•Production workers only
••Value of contracts
•••Adjusted for seasonal variation




ot

+ 6J

+ 5t

+ 2 +15 +11
+ 1 + 6 + 5

fl5 SMSAs
^Philadelphia

Scranton........................... + 2

-

2

N/A

N/A

N/A

N/A

+ 1

Wilkes-Barre..................

N/A

N/A

N/A

N/A

N/A

N/A

0

+27

Williamsport...................

N/A

N/A

N/A

N/A

N/A

N/A

+ 1

+26

York...................................

+ 3

+ 2

N/A

N/A

N/A

N/A

-

+13

1

•Not restricted to corporate limits of cities but covers areas of one or more
counties.
••All commercial banks. Adjusted for seasonal variation.
'♦•Member banks only. Last Wednesday of the month.

!>icn A I

MffHHTJW

F K D K K A L I I K S K R V K H A N K o f I >1 111, A I ) I : I 1*11 1 A
P H I L A D E L P H I A , P E N N S Y L V A N I A 11)101

business review
FEDERAL RESERVE BANK
OF PHILADELPHIA
PHILADELPHIA, PA. 19101




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