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fo ^ %/ THE BUSINESS 76 ' FEDERAL RESERVE RANK OF PHILADELPHIA DECEMBER, 1947 REBUILDING AMERICAN INDUSTRY I. The Industrial Outlook for Philadelphia Manufacturing concerns in Philadelphia are pushing ahead vigorously on a program to ex pand industrial capacity. Plans for the next year call for expenditures of $139 million, ac cording to a survey just completed by this Bank. Almost half of the proposed expenditures are for new machinery and the remainder for con struction of additional plant facilities. During the past year, manufacturing concerns installed $77 million in new machinery and con structed $76 million of additional plant facili- SEPT. 1946 SURVEY AND IN THE ENSUING YEAR PLANNED TO SPEND OCT 1947 SURVEY IN THE PAST YEAR THEY SPENT *165,000,000 *153,000,000 AND IN THE COMING YEAR THEY PLAN TO SPEND AN ADDITIONAL *139,000,000 1944 SURVEY % y EQUIPMENT / ANTICIPATED POST-WAR EXPENDITURES TOTALED ONLY *75,000,000 / / EQUIPMENT ^ / *77,000,000 / / EQUIPMENT / *98,000,000 . *61,000,000 / MANUFACTURERS HAD ALREADY SPENT 570,000,000 / EQUIPMENT / &61,000,000 / y EQUIPMENT / ' CONSTRUCTION *37.000,000 546,000,000 / W& CONSTRUCTION 590,000,000 CONSTRUCTION CONSTRUCTION *76,000,000 *78,000,000 | CONSTRUCTION | I 524,000,000 I Page 133 ' ties, making a total of $153 million of additions and improvements. This was more than double the amount of post-war capital expenditures that had been made up to September of last year, as reported in the November 1946 Busi ness Review. Post-war expenditures for plant and equip ment are running far above the original estimates made back in the fall of 1944 when production for war was running down and manufacturers were planning their peacetime production schedules. At that time they re ported post-war capital expenditures just short of $100 million. That appeared to be bold in view of the sizable estimates of incipient un employment so prevalent in those days. Since that time, Philadelphia firms actually have spent $223 million, more than twice the original estimate, and now they are planning an addi tional $139 million for 1948; and instead of unemployment, business is buried under an ava lanche of unfilled orders for goods and services. The Need for Greater Capacity Our economy is operating near the peak of its capacity, and after two years and three months of peacetime catching up, demand is still setting the pace. Consumers are spending at an annual rate of $166 billion—a torrential flow of money in contrast to the moderate flow of goods. Almost everything costs twice what it seems to be worth, but thus far buyers have not been scared off by high prices. Retailers are selling most of their goods as fast as they can buy them. True, women no longer stand in line on the sidewalk to buy stockings, but part-time operations at some hosiery mills is not for want of a market—it is for lack of sufficient raw material. In the scramble for goods, retailers are not much ahead of last year. Yes, their books show larger inventories, dollar-wise, but their shelves are not breaking down with over-loads of merchan dise. New orders placed with suppliers have increased substantially in recent months, but demand cannot be satisfied with goods on order. The tallest stacks of unfilled orders are for those goods that take the longest time to pro duce, that is, durables like automobiles, housing, household furnishings and appliances, farm equipment, industrial machinery, freight cars, Page 134 and the basic raw material needed for all of these—steel. The steel industry is the king-pin of our entire industrial machine, but that in dustry’s 3-million ton expansion program can not ease the situation materially before 1949. In the absence of sufficient durables, consumers are spending larger than customary proportions of their generous incomes for nondurables. • The huge gap between demand and output is reflected in recent price changes. Wheat which sold at $2.20 a bushel a year ago is now above $3.00; scrap steel, an important raw material for making steel, rose from $24 a ton a year ago to $42 at present. Prices of cotton, wool and other basic raw materials are also substantially above levels of a year ago. . Men and Machines Rapidly rising prices show how desperate we are for greater output. But how can this be accomplished? At the moment there is little hope for in creased production by hiring more workers because the 59 million now at work has practically exhausted the labor supply. Another suggestion heard occasionally is that hours of work be increased. That has some merit on theoretical grounds, but it also has a number of very real obstacles. In certain industries, like steel and cement, the furnaces operate twenty-four hours a day and other divisions have to be keyed into the flow of output from these basic departments. If all the furnaces are in blast there is no point to hiring more workers. In other lines, output of a finished product such as apparel, for example, may be retarded by insufficient cloth production from the antece dent textile manufacturers. Where longer hours are feasible from the standpoint of industrial technology, organized labor might object; and even if labor had no objections, management might take issue because of the higher labor costs involved in overtime rates in excess of forty hours a week. Since it is virtually impossible to increase the current output of goods by throwing more labor effort into production, manufacturers are bending every effort toward increasing the productivity of those on the job. More machines and modern machines for the present labor force will accomplish as much or more than a ■ • + PROPOSED CAPITAL EXPENDITURES PAST CAPITAL EXPENDITURES MILLIONS S 0 10 20 30 MILLIONS S 40 50 60 -----------------1----------------- 1----------------- r--------------- 1-----------------1----------------CHEMICALS AND PETROLEUM gggfUUUfftizzzzzzi CHEMICALS AND PETROLEUM PAPER AND PRINTING PAPER AND PRINTING MACHINERY MACHINERY FOOD AND TOBACCO FOOD AND TOBACCO TEXTILES TRANSPORTATION EQUIPMENT igp TRANSPORTATION EQUIPMENT MISCELLANEOUS MISCELLANEOUS IRON AND STEEL IRON AND STEEL APPAREL APPAREL SPENT DURING YEAR D/A ENDED OCT. 1947 1//* NONFERROUS METALS BEFORE SEPT.'I 946 NONFERROUS METALS TO BE SPENT IN YEAR ENDING OCT. 1948 FROM SEPT. 1946 TO OCT. 1947 LUMBER AND FURNITURE LEATHER LEATHER __________ 1___________ 1___________ L__________ 1___________ 1___________ larger body of workers using outmoded and run down equipment. Greater efficiency lays the foundation for lower costs and paves the way for lower prices. That is why Philadelphia spent $77 million on new equipment during 1947 and is now planning to spend an additional $61 million next year. Additional construction goes hand in hand with new equipment. In many instances new machinery requires a new plant lay-out to ob tain the most effective utilization of resources. Formerly the manufacturer adapted his ma chinery and equipment to his plant. Now the process is reversed—he gets the best equipment and machinery, sets up an ideal lay-out for the most efficient and continuous flow of production and then builds a plant around the plan. That is why Philadelphia manufacturers who spent $76 million on new construction this year are going ahead with plans for spending $78 mil lion for new construction in the next year. Which Industries Are Spending the Money? Over three-quarters of the contemplated ex penditures for the coming year are planned by industries making nondurable goods such as apparel, textiles, chemicals and petroleum products, food, tobacco, paper and printing, shoes and leather products. These are also the industries that have already made the heaviest capital expenditures since the end of the war. One very obvious explanation is the fact that we have more plants of this kind in Philadel phia than plants making durables. Another reason is that plants in the nondurable category had less opportunity to expand and to modern ize during the war when scarce materials were allocated to the metal and machinery people engaged in producing essential arms and muni tions. Less than one-quarter of the expenditures planned for the coming year are to be made by the producers of durable goods, such as indus trial equipment, electrical machinery, and trans portation equipment. Most of the expenditures by firms in this category are for equipment and ESTIMATED POST-WAR CAPITAL EXPENDITURES MANUFACTURING INDUSTRIES IN PHILADELPHIA (In thousands of dollars) Spent prior to September 1946 Spent in year ended October 1947 Con struc tion Equip ment Con struc tion Equip ment Con struc tion Equip ment 46,570 25,227 75,962 11,634 76,843 27,864 77,296 9,291 61,300 17,317 21,343 2,745 5,925 684 366 6,151 2,001 403 3,011 423 12,114 9,132 3,615 64,328 48,979 4,921 9,211 2,415 8,441 1,885 944 122 733 21,875 ’14,276 31,288 9,496 206 420 1,286 4,264 1,022 1,079 7,675 11,690 1,325 9,166 1,942 7,123 68,005 8,509 12,989 6,002 302 16,348 23,667 191 3,146 163 2,542 2,006 1,431 43,983 9,247 10,782 1,303 347 16,100 3,902 212 4,452 813 5,635 5,089 3,418 All manufacturing........ 2.1,913 Durable goods industries. 9,394 Nondurable goods industries......................... 14,519 Food and tobacco.......... 1,367 Textiles............................... 3,433 472 Lumber and furniture.. 259 Paper and printing........ 2,494 Chemicals & petroleum. 5,278 leather............................... 134 Iron and steel.................. 1,082 Nonferrous metals......... 355 Machinery (inch elec.).. 5,926 Transportation equip... 1,640 Miscellaneous................... 1,473 To be spent within the next year Page 135 only a small amount for additional plant. In our survey made a year ago, producers of dur able goodjs reported plans for moderate expen ditures about equally divided between construc tion and equipment. But the latest report shows that well over half of their expenditures were for new equipment. Next year’s plans of producers of nondurables differ from those making durables not only in the fact that they are going to spend more money, but also a larger proportion of their expenditures are for construction than for equipment. Over 60 per cent of their proposed expenditures for the coming year are for con struction—about the same proportion went into construction during 1947. Where Is The Money Coming From? Most of the money for capital expansion is to come from resources of firms making the expenditures. According to the survey, 81 per cent will be paid out of their own funds, 18 per cent is to be obtained from banks, and the remainder from other sources. The proportion to be supplied by banks is relatively small, but they might participate indirectly to a greater extent than is indicated by the figures. In fi nancing their own capital expansion, some firms may run short of working capital, for the re plenishment of which they might later turn to the banks. Nevertheless, industrial concerns seem to be in a strong financial position since they plan to supply the lion’s share of funds for their own expansion programs. Interpretations of the Estimates Is the estimated capital expenditure of $139 million for 1948 a forecast? It is something better than a forecast; it is an appraisal of total capital outlay by manufacturing firms in Philadelphia based upon a large sample of reporting firms representing all the major in dustries. Moreover, many of them have already made commitments, and projects are in various stages short of completion. Perhaps the best evidence of the reliability of the estimates is to compare last fall’s estimates with actual re sults. In the September 1946 survey, proposed expenditures amounted to $165 million. Actual expenditures were $153 million. Shortages of materials and rising costs during the interim may have caused cancelation or postponement Page 136 SOURCES OF FUNDS FOR CAPITAL EXPENDITURES TO BE MADE WITHIN THE NEXT YEAR (In thousands of dollars) All manufacturing....................... Durable goods industries............ Nondurable goods industries... Food and tobacco........................ Textiles............................................ Apparel............................................. Lumber and furniture................ Paper and printing...................... Chemicals and petroleum......... Leather............................................. Iron and steel................................ Nonferrous metals...... ... Machinery (including electrical) Transportation equipment.. .. Miscellaneous................................. Total Own Banks 138,596 26,608 111,988 17,756 23,771 7,305 649 32,448 27,569 403 7,598 976 8,177 7,095 4,849 112,249 20,574 91,675 16,335 22,868 7,226 649 21,743 20,374 403 2,827 734 7,608 7,095 4,387 18,268 5,696 12,572 1,077 880 i o 0 10,579 26 0 4,771 242 457 0 236 Other 8,079 338 7,741 344 23 79 0 126 7,169 0 0 0 112 0 226 of some projects, but the fact remains that over all results amounted to more than 90 per cent of the announced plans. Certainly, when the latest estimates were made in the fall of 1947 the business outlook was no less favorable than it was a year earlier. Increased industrial capacity in Philadelphia will require more workers. In September a year ago, manufacturing concerns employed 331,000 workers. Last October, industrial employment was up to 348,000. By April 1948, according to our survey, it is expected to be up to 354,000, and by October 1948 up to 360,000. In other words, by next October, Philadelphia’s manufac turing industries are planning to employ 12,000 more workers than were on the pay rolls last month. The difficulty is, where will they get them? The normally increasing labor force out of a 2 million population ought to provide enough new workers during the ensuing year, but manufacturers are not the only employers. They must compete with distribution and other ESTIMATED EMPLOYMENT PHILADELPHIA MANUFACTURING FIRMS (In thousands of persons) Last year (Sept. *46) All manufacturing................ Durable goods industries. . . Nondurable goods industries Food and tobacco................. Textiles...................................... Apparel.............. ...................... Lumber and furniture......... Paper and printing............... Chemicals and petroleum.. Leather.................................... Iron and steel......................... Nonferrous metals................ Machinery (incl. electrical) Transportation equipment. M iscellaneous.......................... 331 136 195 34 40 35 6 44 18 8 37 6 47 36 20 Current (Oct.’47) 348 140 208 38 42 36 6 47 18 9 35 7 57 32 21 6 months from now (Apr.’48) 354 140 214 39 43 39 7 47 18 9 35 8 58 29 22 1 year from now (Oct.’48) 360 140 220 40 44 42 6 48 19 9 35 8 58 29 22 A service industries that customarily employ 65 per cent of all workers and the labor require ments in the service industries will presumably rise also. A shortage of labor could be alleviated by drawing upon the labor surplus in certain sections of the nearby anthracite region, pro viding we can supply the housing. * A Preview of United States Capital Expendi tures in Manufacturing 4 ' v Manufacturing industries of the United States have been stepping up expenditures on new plant and equipment at a rapid rate since the end of the war. According to reports of the Securities and Exchange Commission, plant and equipment expenditures rose from $3.2 billion in 1945 to almost $6 billion in 1946, and 1947 outlays are expected to reach almost $7 billion. If the country goes as goes Philadelphia, total expenditures in 1948 might be expected to be somewhere in the neighborhood of $6.5 billion —that is, about 93 per cent of this year’s ex penditures. Of course this is drawing “a boy at a venture,” but Philadelphia is a large industrial city and its manufacturing is highly diversified. Manufacturers may encounter difficulties in carrying out their plans next year because they will have to compete for labor and materials with others who are also engaged in moderni zation and expansion programs. The mineral industries, railroad and other common carriers, electric and gas utilities, trade, service, finance, and communioation industries spent approxi mately $8 billion this year. No estimates are available on what they plan to spend next year, but we know that their projects are by no means near completion. Then there is the private hous ing program. Public expenditures are also in creasing. Under pressure to improve and enlarge their facilities, local and state governments are likewise spending large sums of money. Latest official estimates indicate that new construction of all kinds in 1948 will probably aggregate $15 billion—20 per cent more than this year. "With renewed construction activity in prac tically all lines, we can expect another crop of shortages and in all probability higher costs. In fact, they are upon us already. Plaster-board, heaters, plumbing supplies, and hardwood floor ing are hard to get now, and nails, the com monest of all building materials, are extremely scarce. Prices of lumber and some other ma terials are rising, and labor costs may also go higher. It is impossible to say what effect rising con struction costs will have upon the present ex pansion program of manufacturing concerns, both locally and nationally. However, we do know that construction costs rose during the past year and that it had little adverse effect upon the plans as laid out a year ago. The chances are that present plans will be carried through to completion; many of them are be yond the stage of arrest. However, if costs should rise considerably above present high levels, it is entirely possible that this would act as a brake upon the development of new plans for expansion. II. Financing Capital Expansion Funds required by a business firm for financ ing the expansion of its production or distribu tion facilities may be obtained from several sources. The money may come from earnings, past or current, which are retained in the busi ness. If internal sources are inadequate, the enterprise may acquire funds from outside sources. To the individual firm, financing is pri marily a problem of choosing that source which is cheapest and most appropriate from the busi ness point of view. The businessman does not look beyond the immediate sources of the funds. To him, money is money. From the viewpoint of the entire economy, however, the effects of alternative methods of obtaining capital funds have important implications. The ultimate sources of money for investment have a direct bearing upon the price inflation facing us now. In a free economy the monetary-financial system, including prices, is the means by which production resources are allocated. Those who have money have control over resources. It is important, then, to know whether the money in the industrialist’s hands represents a transfer of claims to goods and services or an addition to the total number of claims. Page 137 ill The history of industrial expansion in the United States shows that the bulk of new cap ital equipment has been put in place during boom periods, when consumers were also in creasing their expenditures for goods and serv ices. As long as we had unutilized productive resources—idle men and machines—as was frequently the case, it was possible to increase the output of producers’ goods without curtail ing consumption. Our post-war economy, how ever, is different from its easy-going 1935-39 predecessor in this respect. For some time we have had virtually no unutilized capacity. “Full employment” is a reality. Increases in the rate of output come slowly, and although more mod ern machinery and additional plant now build ing will expand production some time in the future, there is slight immediate response in output to present demands for more goods. The process of transforming basic resources into operating industrial enterprises is time-con suming. The record of Philadelphia manufacturers, indeed, the record of all industry throughout the nation within the last two years, shows that capital outlays have been greatly expanded. Private domestic investment during the fourth quarter of 1945 (including housing, which is a form of consumers’ capital) was taking place at a rate of $12 billion a year. The current rate is about $30 billion a year. Expenditures for pro ducers’ durable equipment alone for the two periods, were $9 billion and $18 billion a year, respectively. Obviously, once production is going full blast—as it has been for some time— the accelerating production of capital goods re quires that the output of consumption goods be relatively curtailed. For a high rate of capital formation to continue, consumers must give up some goods-right-now in return for the promise of more goods-later-on. The choice between output of consumers’ and producers’ goods is not made in terms of the goods themselves, however, but in money terms. By their money expenditures, both businesses and individuals make their preferences felt in the markets. The choice of consumers is re flected in their decisions on how much to spend for immediate consumption, how much for dur able goods or homes, and how much to save out of current income. Since the end of the war, for instance, individuals have been spending a larger proportion of their expanding incomes. Consumers spent only 76 per cent' of their incomes during the fourth quarter of 1945. They now spend about 83 per cent. The rate of personal saving declined from $20 billion a year to about half that amount. Now, eager for automobiles, clothing, and other goods and ser vices of all kinds after years of wartime stint ing, consumers are spending more, saving less. Business firms likewise have to decide how much to save and how much to spend — how much to allow for depreciation, how much of earnings to retain, and how much money to invest in new capital equipment. Having sacri ficed new improvements to war production for several years, and anticipating high profits, pro ducers have doubled their rate of expenditure on plant, equipment and inventories since the end of 1945. Thus with decisions to save being made by countless numbers of individuals and business firms and with decisions to invest in plant and equipment being made by millions of entrepre neurs, the volume of saving may not be equal to the total amount entrepreneurs plan to invest. If current savings outrun investment, money is removed from the income stream and a lower level of income and employment may result. If investment outruns current savings, however, the businessman who intends to buy plant and equipment or additional inventory must obtain funds from other sources. When he makes his purchases with funds which otherwise would have been inactive, or from an expansion of bank credit, the flow of money income in the economy is enlarged. If industry is already working at capacity and the output of goods and services cannot be readily increased, competition among buyers will force prices up. In the process, the expanding firm will get new equipment and additional labor, though it may cost more than had been planned, but higher prices will make consumers do without some of the goods-right-now that they had intended to buy. ‘ ^ * ' * Where the Funds Are Coming From ' Business customarily finances a large part of its capital needs from its own resources. Phila delphia manufacturing concerns, for example, plan to pay for four-fifths of their expenditures during the coming year by utilizing deprecia tion allowances, current profits not paid out to stockholders, and past earnings placed in liquid assets. 4 Page 138 In the past, depreciation allowances have been by far the largest and most stable of these internal sources of funds. But since the war, they have increased very little compared with the volume of capital outlay. Indeed, it is a se rious question whether some businesses are making adequate provision for replacing wornout machinery and other capital assets at today’s high prices. On the other hand, business con cerns are making greater profits than ever before. And while they are paying out divi dends in record amounts they are retaining a larger proportion of current earnings to finance, among other things, expansion of plant and equipment. Businesses also are financing part of their capital expansion by drawing on sav ings in the form of Government securities and idle bank deposits. These were acquired during the war when industry was unable to make many of its customary capital expenditures. Financing capital expansion out of internal funds has certain advantages to the business firm, such as the avoidance of borrowing costs now when expenses are rising and holding down fixed charges which will become more burden some when earnings decline. From the point of view of the economy, however, internal financ ing may or may not have inflationary effects. If the business reinvests current earnings, it diverts to the purchase of producers’ goods funds which otherwise would have added to consumer in comes. Total demand for goods and services re mains the same. But on the other hand, if the business sells Government securities which find their way into the banking system, the money supply is increased. To the extent that they are bought by nonbank investors out of accu mulated deposits, or when businesses draw upon their own accumulated deposits, money which previously had been idle becomes active. In these instances, demand for resources is not just diverted from one use to another, but total de mand is increased, forcing prices still higher. Despite their rapid growth, internal sources of funds available for financing capital expan sion have been inadequate and many businesses have turned to banks. Business borrowing has risen to an all-time peak. During the next year Philadelphia manufacturers expect to borrow from banks to pay for one-eighth of their cap ital expenditures. Actually, they may rely more heavily upon bank funds than this figure would indicate. By borrowing for working capital pur poses they may free other funds for fixed cap ital purposes. Bank'loans for capital expansion may play a vital role in increasing the nation’s capacity to produce. But when the economic system is oper ating at capacity, such loans add to the already excessive money supply without adding to the quantity of goods available. Regardless of what use is made of the funds initially, their inflation ary effect is the same, because such credit ex pansion intensifies competition among buyers. A relatively small part of capital expansion is customarily financed from sources other than businesses themselves or banks. As an example, only 6 per cent of the funds needed by Philadel phia industries over the next year will be so raised. Yet businesses have resorted increas ingly to such financing since the war. Issues of securities for new money have recently been made in the largest amounts since 1930. If in dividuals and other nonbank investors buy these securities out of current savings the effect is not inflationary for the funds merely pass from in vestors to business. But if corporate bonds are bought by banks, either immediately or later, the money supply is increased by the same process as through bank loans. And if they are bought by non-bank investors out of past sav ings, the resulting activation of unused deposits may add to inflationary pressures. Ends and Means Although it is not possible to measure accu rately the part being played by the various methods of financing capital outlay described above, it is obvious that inflationary methods are widely prevalent. Producers have obtained additional funds with which to buy materials and labor for new plant without a commensu rate expansion in the available supply. Claims to existing resources have been multiplied, prices have risen, and the consumer’s dollar buys less. In this respect inflation performs a definite economic function—that of diverting resources to capital purposes. The financial system and the method of ex panding production capacity which it makes possible have undoubtedly helped to make the United States the most productive nation in the world. It is essential today, however, not only to know how the process operates, but to ap preciate its possible consequences and limita Page 130 tions, especially in view of extraordinary for eign demands on our resources. In the first place, obviously, when we make funds available for the producer to expand ca pacity without somehow—by taxation or volun tary saving—reducing the funds available for spending by the consumer, we contribute to the general process of inflation and all the inequities and distortions that are characteristic of it. Secondly, when we do this there is danger of overestimating future consumer demand and, therefore, present capital needs. Waste and un utilized capacity may follow when a reaction to overexpansion contributes to a recession. Third, to continue this method of capital financing adds to inflationary pressures and in creases the danger of an intolerably rapid in crease in prices and credit expansion as a result. As long as there is a belief that a rise in prices is temporary, consumers and business will hold on to past savings and try to save part of their increased current incomes. Once the feeling becomes general, however, that prices will con tinue to rise and will not come down, restraint is thrown to the winds in a rush of buying to beat further price rises. Such a turn of events would frustrate the capital formation process To summarize: the allocation of funds deter mines the allocation of resources. The end we have in view—that of enlarging and moderniz ing our productive plant—must be achieved if we are to increase the flow of goods. The means by which this should be accomplished at the present time is the use of voluntary savings out of current income. If instead we choose to ex pand by piling up money claims to existing re sources, we must realize the possible conse quences. Unquestionably, the fiscal and mone tary authorities have a great responsibility in influencing the choice of the means to be em ployed. However, individuals and businesses should assume their share of the responsibility by saving as much as possible out of current income, and banks should exercise increasing caution and restraint in granting credit. * BUSINESS STATISTICS Production Workers in Pennsylvania Factories Production Philadelphia Federal Reserve District Adjusted for seasonal variation Not adjusted Per cent change Indexes: 1923-5=100 Oct. 1947 INDUSTRIAL PRODUCTION MANUFACTURING.................. Durable goods............................ Consumers’ Goods.................. Metal products........................... Textile products ................... Transportation equipment .. Food products............................. Tobacco and products............. Building materials..................... Chemicals and products......... Leather and products.............. Paper and printing.................... Individual lines a Pig iron.......................................... ▼ Steel................................................ Iron castings................................ Steel castings............................... Electrical apparatus................. Motor vehicles..................... Automobile parts and bodies.. Locomotives and cars.............. Shipbuilding................................. Silk manufactures...................... Woolens and worsteds............. Cotton products......................... Carpets and rugs........................ Hosiery........................................... Underwear.................................... Cement........................................... Brick............................................... Lumber and products.............. v Bread and bakery products. . Slaughtering, meat packing.. Sugar refining.............................. Canning and preserving.......... Cigars............................................. Paper and wood pulp............... Printing and publishing.......... Shoes............................................... leather, goat and kid.............. Explosives.................................... Paints and varnishes................ Petroleum products.................. Coke, by-product....................... COAL MINING............................ Anthracite.................................... Bituminous................................... CRUDE OIL.................................. ELECTRIC POWER................. h Sales, total. .......................... Sales to industries..................... BUILDING CONTRACTS TOTAL AWARDS!.................... Residential!................................. Nonresidential!............ ............. Public works and utilities.. . . Mo. ago Year ago 1947 from Oct. 10 1947 mos. 1946 105r 105r 114r 95 128 70r 148 llOr 109 48 149 r 83 r 117 0 0 0 + 1 0 + i - 4 + 5 + 7 + 4 -12 0 - 2 + 4 + 5 + 2 + 6 + 6 — 1 — 4 + 18 + 5 + 1 + 5 + 11 + 4 + 5 + 7 + 6 + 4 +28 - 1 -28 + 8 + 1 + 9 +13 + 13 + 2 94 102 81 120 191 24 131 69 +19 +22 +12 + 7 +38 +69 +22 + 8 —55 - 2 +1 -15 +26 - 5 - 6 +10 + 8 + 5 3* + 5 +29 +17 + 1 + 5 + 21 -13 +59; +23 +14 +10 +24 - 4 - 6 +15 - 6 + 9 + 9 + 9 - 6 -23 - 5 +66 Oct. 1947 fro m Sept. Oct. 1947 1946 109p 110p 116p 101p 136 7 Op 142p 129p 114 49p 157p 93p 122 109 110 117 100 135 69 148 122 107 47 178 92 125 101 113 82 115 195 49 137 60 109 115r 86 118 187 54 146 59 104 124 209p 115 95 128 97p 89p 87p 100 215p 164p 81 p 79 lOOp 298 470 466 340 103 106 187 106 96 131 90 94 llOr 113r 242 173 80 77 101 286 483 475 329 95 46 165r 109 88 123 101 67 r 85 91 202 r 168 81 78 103r 316r 429 r 433 317 - 8 + 7 - 2 + 11 - 5 + 1 - 2 4 + 4 + 2 - 9 + 104 - 6 + 5 + i — 13 — 2 __ 19 +1 — 3 + 5 + 7 - 4 — 28 - 1 + 27 - 4 0 - 2 + 2 + 3 — 3 + 2 0 + 8 + 6 + 3* + 10* ' 0 + 9 +17 +172 +12 + 27 + 8 + 5 - 1 + 8 - 2 + 4 + 7 — 4 - 6 + 33 -21 + 2 -12 + 9 -11 + 6 - 5 — 2 + 2 + 1 + 3 + 1 - 2 3 + 4 — 5 - 3 + 10 - 2 + 8 + 3 + 7 128 93 162 138 140 91 139 250 115 104 103 147 - 8 + 2 +17 -45 85 83 r 87 72p 68 67 r 38 40 53 90p 91 7Lr 69 70 73 r 134 136 132 7 Ip 69 73 60 58 59 29 27 27 + 12 11 + 57 6 * Unadjusted for seasonal variation. ! 3-month moving daily average centered at 3rd month. Summary Estimate—October 194-7 Sept. Oct. 1947 1946 114p 113 115p 114 109 110r kir 70 139 138 123 51 177 100 124 1.33 73 r 141 121 133 51 151 r 88 r 118 100 113 87 109 213 45 130 57 103 110 87 107 206 47 139 57 93 102 86 114 208 22 124 65 86 79p 40 98p 76 146 80p 60 30 83 r 89 75 73r 38 55 77 r 96 77 73 r 136 143 81 82 59 60 28 28 108 105 274p 141 97 129 104p 92p 87p 107 217p 16 Op 82 p 79 107p 298 484 466 330 107 91 248 123 96 130 103 98 llOr 107 245 166 80 77 103 286 474 470 349 99 38 211r 134 90 124 109 69r 86 98 203 r 164 82 r 78 llOr 316r 442 r 433 307 132 107 156 145 136 108 130 227 118 120 99 154 141 73p 135p 144p 140 52p 160p 98p 124 p—Preliminary, r—Revised Local Business Conditions* Percentage change— October 1947 from month and year ago Allentown............ Altoona................ Harrisburg.......... Johnstown........... Lancaster............ Philadelphia.... Reading................ Scranton.............. Trenton................ Wilkes-Barre.... Williamsport___ Wilmington......... York .................... * Factory employment Factory payrolls Building permits value Retail sales Debits Sept. 1947 Oct. 1946 Sept. 1947 Oct. 1946 Sept. 1947 Oct. 1946 Sept. 1947 Oct. 1946 Sept. 1947 Oct. 1946 - 1 0 0 0 + 2 + 1 + 2 + 1 + 9 - 8 0 + 8 0 0 — 5 +13 + 3 +11 + 2 + 4 + 4 + 2 + 6 + 6 +28 + 8 +12 +26 +20 +n +16 +27 0 + 2 + 1 + 2 - 5 -12 0 - 4 0 + 3 + 1 + 7 + 5 + 2 +11 + 5 -15 - 38 - 25 - 20 +148 + 83 - 19 - 29 + 14 + 9JJ - 43 - 49 - 72 +108 +356 +463 - 7 +837 +102 +217 - 33 +599 +571 + 9 + 32 - 10 + 7 + 1 - 5 - 3 +1 + 7 + 3 + 3 + 9 - 3 +15 0 +12 +16 + 6 + 8 + 8 + 4 +14 + 3 +15 + 2 +16 - 2 +14 +16 + 6 + 9 +19 +21 +13 + 8 +14 + 13 + 11 + 2 +12 +12 + 3 + 19 +22 + 4 +16 + 19 +14 0 +16 +18 + 5 +11 Area not restricted to the corporate limits of cities given here All manufacturing.............. Durable goods industries. Nondurable goods industries........................... Weekly Man-Hours Worked Employ ment Weekly Payrolls 1,115,400 629,200 $54,357,000 33,733.000 44,703,000 25,314,000 486,300 20,624,000 19.389,000 Changes in Major Industry Groups Payrolls Employment Indexes (1939 average =100) Oct. 1947 ln"dex All manufacturing................... Durable goods industries. . Nondurable goods industries................................ Food.............................................. Tobacco....................................... Textiles........................................ Apparel........................................ Lumber........................................ Furniture and lumber prods. Paper............................................ Printing and publishing.... Chemicals................................... Petroleum and coal prods... . Rubber......................................... Leather........................................ Stone, clay and glass............. 1 ron and steel............................ Nonferrous metals.................. Machinery (excl. electrical). Electrical machinery.............. Transportation equip. (excl. auto)............................ Automobiles and equipment Other manufacturing............. Per sent cha nge fro m Sept. Oct. 1947 1946 Oct. 1947 In dex Per sent cha age fro m Sept. Oct. 1947 1946 130 156 +i 0 + 4 + 3 283 321 + 3 + 4 +19 +20 107 134 104 84 95 93 101 121 141 122 146 159 97 136 139 153 204 233 +i 0 +3 +3 +1 +2 +6 +1 +1 +1 -1 -1 +1 +1 0 0 0 +2 + 5 +18 + 9 - 1 + 7 + 4 + 4 + 2 + 8 + 2 + 2 -12 + 2 - 1 + 5 - 5 + 8 0 236 256 228 203 236 203 233 251 275 238 264 336 204 285 284 290 421 482 + 3 + 1 + 5 + 5 + 8 +11 + 9 + 2 - 1 - 1 2 - 2 + 4 + 6 + 4+ 3. + 4 + 4 +18 +37 +14 +12 +20 +20 + 15 +18 +20 +15 + 16 -10 + 14 + 13 +27 + 2 +19 +20 212 185 136 -2 -3 0 -17 +21 - 2 393 374 261 + 3 - 6 + 2 -10 +39 +1 7 Average Earnings and Working Time October 1947 Per cent change from year ago Weekly Earnings Aver age All manufacturing.... $48.73 Durable goods indus. 53.61 Nondurable goods industries.................... 42.41 Food.................................. 42.53 Tobacco........................... 28.93 Textiles............................ 43.04 Apparel............................ 34.99 Lumber............................ 40.89 Furniture and lumber products...................... 42.64 Paper .............................. 44.88 Printing & Publishing. 54.99 Chemicals........................ 46.31 Petrol. & coal prods.. . 54.92 Rubber............................. 52.42 Leather............................ 36.07 Stone, clay and glass.. 47.89 Iron and steel................ 55.14 Nonferrous metals . .. 49.39 Machinery (excl. elec.) 52.27 Electrical machinery.. 57.82 Transportation equip. (excl. auto)................ 56.61 Automobiles & equip.. 55.44 Other manufacturing.. 40.33 Hourly Earnings Weekly^ , Hours $ Ch’ge Aver age Ch’ge Aver-' age Ch’ge +15 +16 a. 216 1.333 +13 +13 40. li 40.2 +12 +16 + 5 +13 +12 +16 1.064 1.014 .743 1.084 .893 .964 +12 +13 + 5 +13 +10 +11 39.9 42.0 38.9 39.7 39.2 42.4 + 2 +iL3 f + 1 + 3 0 0 + 2 + 4 +11 +15 +11 +12 +14 + 1 +12 +15 +20 + 8 +10 +20 .975 1.026 1.409 1.138 1.454 1.334 .965 1.163 1.393 1.283 1.277 1.436 +10 +12 +16 +12 +17 + 7 +12 +13 +15 +12 + 9 +14 43.8 43.7 39.0 40.7 37.8 39.3 37.4 41.2 39.6 38.5 40.9 40.3 + 1 + 3 - 4 0 - 3 - 6 + i + i + 5 - 4 0 + 5 + 8 +15 + 9 1.412 1.322 1.061 + 7 +12 +11 40.1 41.9 38.0 + 1 + 2 - 2 Page 141 Distribution and Prices 4 Per cent change Oct. 1947 from Wholesale trade Unadjusted for seasonal variation Month Year ago ago 1947 from 10 mos. 1946 Adjusted for seasonal variation Indexes: 1935-1939=100 + + Inventories Total of all lines... Dry goods......... .. . Electrical supplies Groceries................ Hardware............... Jewelry.................... Paper....................... 6 4 2 6 +12 + 7 +12 - 6 +19 - 6 +10 -10 + 9 +28 + 5 -20 +10 + + + +27 +31 +45 +25 +50 -20 +51 1 7 1 4 2 2 6 + « + 2 + o -15 +27 RETAIL TRADE Sales Department stores—District......................... Philadelphia................ Women’s apparel................................................. Men’s apparel....................................................... Shoe.......................................................................... 253 234 238 236 203 338 + 5 +34 +238 159 190 178 140 + + + + 18 +15 + 13 +21 +m +211 +165 + 75 + + + + + + + 2 2 4 1 1 2 1 +12 + 12 +16 + 13 + 7 +12 + 9 267 243 251 285 209 . ■L? Oct. Sept. Oct. 1947 1946 * + 10 + 10 — 4 + 7 0 232 r 215 246 243 206 - 5 - 3 - 5 -17 - 3 +10* 217 +11 266p 231 + 5 +12* + 11* 154 + + + 9 9 3 3 1 8* 280 267 264 252 216 267 257 245 245 266 265 246 r ' 233p Aug. 1939 Sept. 164 163 200 183 129 186 139 1947 from r-,10 mos. .1946 Inventories Oct. 1947 Month Year ago ago 1 2 1 1 Not adjust- + 5 Per cent change from Basic commodities (W 1939-100).... Wholesale (1926 -100)................. Farm............................... Food................................ Other.............................. Living costs (1935-1939=100).. . . United States.............. Philadelphia................ Food............................. Clothing...................... F uels............................. Housefurnishings. .. Other............................ Oct. 1947 from Month Year ago ago + 66 + 67 + 115 + 85 + 34 + 86 + 38 235 226 151 195r 252 143 140 133 88 147 170 172 95 144 79 132 126 91 145 163 161 89 119 84 136 130 97 144 152 165 90 140 132 + 6 + 5 - 3 + i + 4 + 7 + 6 +21 - 6 + 2 + 2 - 9 + 2 + 12 + 4 + 5 + 3 - 41 + + + + + + - MISCELLANEOUS Life insurance sales............................................ Business liquidations Number................................................... 198 179 183 + 11 + - Check payments.................................................. 239 ** - 1 Source: U. S. Department of Commerce. Prices Sept. Oct. 1947 1946 Oct. 1947 Sales Total of all lines... Boots and shoes.. Drugs....................... Dry goods.............. Electrical supplies Groceries................ Hardware............... Jewelry.................... Paper....................... ’ Per cent ch ange FREIGHT-CAR LOADINGS Total.......................................................................... Merchandise and miscellaneous.................... Merchandise—l.c.l............................................... Coal................................................................... Ore............................................................................ Coke......................................................................... 1 orest products............................ Grain and products..................................... Livestock.................................................... 240 217 222 r u 151 10 141 3 93 10 162 36 245 28* 196 3 111 8 144 22 92 148 138 94 160 262 171 112 118 101 159 218 188 105 140 155 206 158 191 +151* +242* + 198* +130* 168 + 10 + 5 234 7 216 56 213 8 7, * Computed from unadjusted data. p—Preliminary. r—Revised. ** Increase of 1000% or more from the low level of a year ago. Source: U. S. Bureau of Labor Statistics. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changes in—• Reporting member banks (Millions $) Assets Commercial loans............... Loans to brokers, etc........ Other loans to carry secur. Loans on real estate.......... Loans to banks...................... Other loans............................ Total. Government securities. Other securities............... Total investments................ Nov. 26, 1947 Five weeks 500 27 21 77 +39 — 12 + 1 229 1 + 5 + 76 - 5 - 4 + 11 2 + 47 855 +32 +123 - 1 1706 -44 2561 487 43 97 54 -12 - 4 Liabilities Demand deposits, adjusted., Time deposits.................. .... . U. S. Government deposits. Interbank deposits................. Borrowings. ............................. Other liabilities...................... . Capital account....................... 2097 408 35 351 24 25 302 + 2 -14 - 8 -17 +13 Page 142 -10 + i - 1 -174 - 51 + 21 + 3 - 7 + 58 + 19 -141 + ii + 21 - 3 + i Chang in fix week 4 Oct. 29 Nov. 5 Nov. 12 Nov. 19 Nov. 26 Sources of funds: Reserve Bank credit extended in district. . . . Commercial transfers (chiefly interdistrict)... 1 Treasury operations.................................................. - 7 +45 -44 -17 +15 + 4 -22 +74 -37 +38 - 4 -44 + 8 +20 -10 ‘ +150 -131 - 6 + 2 +15 -10 +18 + 19 Uses of funds: Currency demand......................................................... Member hank reserve deposits............................... “Other deposits” at Reserve Bank....................... Other Federal Reserve accounts............................ - 1 - 5 + 7 - 5 +10 + 5 -10 +22 + 28 - 9 Total................................................................................ - 6 + 2 +15 -10 +18 + 19 -196 1437 Total loans & investments Reserve with F. R. Rank... Cash in vault............................ Balances with other banks. Other assets—net.................... One year Changes in weeks ended Third Federal Reserve District (Millions of dollars) Member hank reserves (Daily averages; dollar figures in millions) Held Phila. banks 1946: Nov. 1-15.. 1947: Oct. 1-15 . Oct. 16-31.. Nov. 1-15 . $412 437 442 433 $406 428 432 428 $ 6 9 10 5 2% 2 2 1 Country banks 1946: Nov. 1-15.. 1947: Oot. 1-15 .. Oct. 16-31. . Nov. 1-15.. $391 400 393 398 $338 349 349 348 $53 51 44 50 16% 15 13 14 Re quired Ex cess Ratio of excess to re quired Federal Reserve Rank of Phila. (Dollar figures in millions) Changes in— Nov. 26, 1947 Five weeks One year 28.5 1.5 1554.7 $+ 7.5 - 0.4 + 34.6 $+ 8.4 + 0.4 - 98.2 $1584.7 $+ 41.7 $- 89.4 $1671.7 Member bank deposits. 824.5 U. S. general account. . 142.2 29.9 2.0 Gold certificate reserves 1091.7 40.8% $+ 23.3 - 9.2 + 108.4 - 1.5 + 0.1 + 89.5 +1-5% $- 9.5 + 37 8 + 96.7 - 21 9 - 0.8 +192 6 +5 8 Discounts and advances $ Distribution and Prices Wholesale trade Unadjusted for seasonal variation Per cent chiinge Octobeirl948 1948 from frt>m 10 Month Year moe. 1947 ago ago Sales Total of all line::................... "■Pry goods............................ laeotriccJ supplies............. Hardware. . ........... ............ Jewelry.................................. Paper..................................... - 2 - 7 +14 - 4 + 5 4*20 - 6 - 3 - 8 +14 —13 - 8 +18 +10 0 2 5 5 4 2 + 7 4-18 - 8 -12 4-15 4-14 4-22 Inventories 44- Paper.'................................... + 3 + + + + + Adjusted for seasonal variation Indexes: 1935-1939=100 2 7 4 4 2 8 1 RETAIL TRADE Sales Department stores—District.......................... Philadelphia................ Women’s apparel —District.......................... Philadelphia................ 307 267 277 268 295 269 277 r 274 264r + 239 — 238 237 — Other............................ Living costs 244p 217* 224 248 Philadelphia.... 238 209 216 240 231 216 226 255 Housefurnishings.. . Other.......................... Oct. 1948 Month Year Aug. ago ago 1939 305 - 2 -10 4-205 165 182 177 153 - 2 - 4 - 5 0 + 4 - 4 0 + 9 4*120 4199 4-164 + 91 174 174 208 196 143 205 152 - 1 0 - 2 0 0 0 + 6 + 7 + 6 + 6 +10 +10 + 9 + 76 4* 78 4-124 4- 97 4- 48 4-104 + 51 + i 4- 3 + 4 4- 4 4 6* 4- 6 +1 - 1 — 3 0* 2 1 - 6 - 7 + 4- (1935-1939=100) United States............. Philadelphia............... Food........................... Clothing..................... +16 4-12 +16 +13 -10* _ Per ceiit changefrom Basic commodities (Aug. 1939=100)... . Wholesale (1926=100)................ Farm............................. 4 1 0 2 7* +10 + a + 4 + 4 Oct. 1948 Sept. Oct. 1948 1947 322 296 307 308 295 269 293 294r 280 267 264 273 279p 250* 262 290 262 234 246 278 263 249 264 299 -16 - 6 + 2 + 1 -10 -12 -23 143 132 80 149 254 196 88 160 76 145 133 78 275 193 102 117 76 151 141 93 162 245 196 111 144 92 0 191 170 206 4-40* 36 4-34* 172 +13 250 24 34 253 168 243 Inventories Source U.S.Department of Commerce. Prices Not adjusted Per cent change October 1948 1948 from from Oct. Sept. Oct. 1948 1948 1947 10 Month Year moe. 1947 ago ago FREIGHT-CAR LOADINGS Total.......................................................................... Merchandise and miscellaneous.................... Merchandise—l.c.l............................................... Coal........................................................................... Ore............................................................................. Coke......................................................................... Forest products.................................................... Grain and products............................................ Livestock................................................................. MISCELLANEOUS Life insurance sales............................................ Business liquidations Check payments.................................................. * Computed from unadjusted data. 132 124 75 136 176 172 75 160 65 130 122 75 141 171 183 82 118 64 140 133 88 147 170 172 95 144 79 + 189 205 204 r — 272 4- 50* -4-403* 253 r - 4 261 p—Preliminary. 1 4 3 6 9 — + 36 + 3 + - 5 - 6 -15 - 8 0 -21 +n -17 7 - 7 4-20* 4- 3* + 3 155 r—Revised. Source: U. S. Bureau of Labor Statistics. BANKI NG STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changi *8 in— Four weeks One year Assets Commercial loans.................. Loans to brokers, etc............ Other loans to carry secur.. . Loans on real estate.............. Loans to banks....................... Other loans.............................. 535 17 10 91 5 275 - 4 - 1 - 2 +1 + 4 +33 -10 -11 +14 + 4 +45 Total grass............................. Total net................................ 933 926 - 2 - 2 +75 +71 Government securities.......... Other securities...................... 1373 273 + 8 - 4 -64 + 4 Total investments............... 1646 + 4 -60 Total loans & investments. 2572 Reserve with F. R. Bank.. . 555 Cash in vault.......................... 45 Balances with other banks.. 100 51 Other assets—net................... Liabilities Demand deposits, adjusted.. Time deposits.......................... U. S. Government deposits. . Interbank deposits................. Borrowings............................... Other liabilities....................... Capital account...................... 2105 448 78 338 22 26 306 + + + 2 1 1 8 i +n +68 + 2 + 3 +12 + 8 +40 +43 -13 - 2 +1 + 4 - 3 -12 -14 +u - 1 + 2 - 3 Sources of funds: Reserve Bank credit extendedin district........................... Commercial transfers (chiefly interdistriot) ... ................... Treasury operations.................................................................. +22 +26 - 8 + 11 -19 -14 + 6 +47 -36 + 14 +103 - 93 -11 +40 -22 +17 + 24 Member bank reserve deposits.............................................. + 8 -19 + 9 +31 - 8 -14 +20 - 4 + 1 + 29 - 6 + 1 Total............................................................................................ -11 +40 -22 +17 + 24 Uses of funds:. Nov. Federal Reserve Bank of Phila. (Dollar figures in millions) 24, 1948 Discounts and advances. $ Industrial loans................ Changes in— Four weeks One year 37.3 $+12.2 $+ 8.8 .5 1.0 + .i +’87.7 -17.8 1642.4 $1680.7 $ - 5.5 $+ 96.0 Fed. Res. notes................. $1661.3 $+24.5 $- 10.4 Member bank deposits. . 946.7 - 6.3 +122.2 - 5.6 - 3.1 139.0 U. S. general account. . . 36.5 + 7.2 + 6.6 Foreign deposits................ 2.7 + 1.6 + .7 Other deposits................... +25.4 + 15.2 Gold certificate reserves. 1106.9 +0.6% -1.1% Reserve ratio..................... 39.7% l+ l Nov. 24, 1948 WO'to Reporting member banks (Millions %) Changes Changes in weeks ended— in four Nov. 3 Nov. 10 Nov. 17 Nov. 24 weeks Third Federal Reserve District (Millions of dollars) Member bank reserves (Daily averages; dollar figures in millions) Re Held quired Ex cesa Phila. banks 1947 Nov 1-15. . 1948 Oct. 1-15.. Oct. 16-31.. Nov. 1-15. . $433 448 453 455 $428 438 444 450 $ 5 10 9 5 Country banks 1947 Nov. 1-15.. 1948 Oct. 1-15. . Oct. 16-31.. Nov. 1-15.. $398 491 487 491 $348 446 443 443 $50 45 44 48 Ratio of excess to re quired i% 2 2 1 14% 10 10 11 Page 143 BUSINESS REVIEW FEDERAL RESERVE BANK OF PHILADELPHIA Contents -1947 Issue Page Agriculture Bank Loans to Farmers........................................................................................... .. The Agricultural Situation....................................................................................... October October 110 105 Banking A Year and a Half of Loan Growth...................... ................................................ Bank Loans to Farmers................................... ......................................................... How Business Borrows From Banks...................................................................... How Is Our Money Behaving?............................................................................... Money and Goods........................................................................................................ Post-War Business Borrowing............... ................................................................. The Changing Role of Short-Term Government Securities.................................. Trends in Bank Deposits Since the War............................................................... April October February August August March September May hi 110 19 84 83 23 97 53 Building Building, Real Estate, and Mortgages—Which Way?................................ June Capital Expenditures The Industrial Outlook for Philadelphia................................................................ Financing Capital Expenditures........... ................................................................. December December 133 137 City Planning New Horizons for Cities...................................................................................... November 121 Consumer Credit Business at Retail Credit Stores in 1946..................... .......................................... Consumer Credit......................................................................................................... June January 69 6 Employment Where Are the Jobs Coming From?........................................................................ July 73 General Business Business in the First Quarter................................................................................... How Well Off Are We?.............................................................................................. Money and Goods............................................................. .......................................... May February August 1$ 13 83 Prices What's Happening To Prices?................................................................................. April 35 Production Output and Work........................................................................................................ August 87 Retail Trade Business at Retail Credit Stores in 194-6............................................................. June Department Store Prices are Lower........................................................................ May Interim Report on Trade........................................................................................... September Trends in Retail Buying................................................................................................ January 59 69 47 100 1 ■■ PEN THE THIRD FEDERAL RESERVE DISTRICT f(,0 * U
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