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DECEMBER 1953
J.
business
review
.OERAL RESERVE
ANK OF
. HILADELPHIA
RDENERS OF THE SEA
wing oysters is like g a rd en in g — under the se a . M aurice River
e is a 3 8 ,0 0 0 -a c re oyster reserva tion . If yie ld s a $3 million crop
Ives annually. C leaning up the D elaw are and its
should reverse the dow n-trend o f oyster production.
ILDING SPACE IN PHILADELPHIA
ains high; rental tren d s are firm; and
m odernization program s in dow ntow n office buildings are
in creasin g. O pinions d iffe r on the extent o f decen tralization .
CURRENT TRENDS
Departm ent stores seem likely to have a g o o d Christmas season.
GARDENERS OF T
Growing oysters is like gardening. First the “ soil,”
of Delaware Bay into which the Maurice River
which is under the sea, must be prepared; then
the oyster seed must be planted; and, for best re
(pronounced Morris) wriggles out of the south
western New Jersey flats. In this section of the
sults,, oysters must be transplanted. Rakes and
bay are 38,000 acres of oyster grounds— the fa
shovels are common tools of the trade. Unlike the
mous Maurice River Cove, always under water,
tiller of the soil, however, the tiller of the sea also
needs a boat. Like gardeners of the land, garden
never without oysters. Just a short way up the
Maurice River is Bivalve, a small Cumberland
ers of the sea must be forever on guard against
County community of about 350 inhabitants who
predators. The crop makes a most succulent dish
make oystering their living. It is a community of
— if you like oysters.
captains, cooks, and canners; boats, bushel bas
What peculiar fish oysters are!
They swim
kets, and barrels; oyster shells, ice, and more
without a fin, walk on one foot, change their sex,
oyster shells. It has charm, history, and a post
live a sedentary but sociable life. Endowed with
a higher I.Q. than the clam, the oyster, neverthe
office. As you might expect, Bivalve also has a
laboratory for bivalves. Shells reflect a long
less, just sits and eats. All it does is ward off
past, a laboratory for oyster bivalves suggests
enemies, pump water, and eat until it is eaten.
a promising future.
Oysters not gobbled up by marauders of the sea
grow to maturity in about three years, and then
Oystering in the Cove
they are gobbled up by that voracious land enemy
The best way to the oyster gardens of Delaware
that walks on two prongs— man. What the oyster
Bay is to go by boat out of Bivalve, as we did.
thinks might be what Leigh Hunt’s fish thought
The day dawned swathed in mist which the sun
about man:
“ With a split body and most ridiculous pace,
quickly penetrated and soon the sky was clear.
Our “ Down East schooner” was manned by a
Prong after prong, disgracer of all grace,
captain with a crew of three or four, including a
Long-useless-finned, haired, upright, unwet,
cook, and ten or twelve oystermen to do the “ har
slow! ”
vesting,” and the captain’s dog who objected to
sea gulls perching on the masts. Receding from the
38,000 acres under the sea
forest of masts studding the sky over the harbor
Look at the map of south Jersey. A straight line
of Bivalve, we cruised leisurely down Maurice
from Cape May Point northwestward to Egg
River on a low throttle. The water heaved with
Island Point encloses a sort of half-moon section
a perceptible swell, and scarcely beyond the en
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business review
trance to the bay we were met by the ever-present
oak saplings about four or five “ chains” apart,
winged pilots, the sea gulls, who accompanied us
each sapling protruding 8 to 10 feet above the
to our destination. We headed for oyster ground
water. All branches had been neatly trimmed off
number 363, where an oyster schooner was dredg
except for a cluster at the top. After some more
ing— a fact confirmed by the captain over marine
pitching and rolling, we approached a wilderness
telephone.
of saplings which the captain described as “ cor
En route, we passed numerous oyster tongers.
ner stakes” — marine fenceposts, so to speak,
Tonging is adapted to shoal areas and to natural
outlining the corners of each oyster gardener’s
beds where dredging is not allowed. Tongers are
acreage.
oyster men who operate alone or in pairs— one
Turning the wheel over to his son, the captain
to man the oars of the skiff especially designed for
took us into his cabin and opened a map of the
oystering and called a deadriser, and the other
oyster grounds. The map bore a subscript, “ New
to man the tongs. Grappling for oysters is done
with long-handled tongs consisting of two poles
Jersey Department of Conservation and Economic
(12 to 20 feet long) crossed in scissors fashion
looked like a map of a real-estate development not
with an iron rake about three feet wide at the end
too carefully laid out— a crazy quilt of odd shapes
Development, Division of Shell Fisheries.” It
of each pole, arranged so as to form a basket when
and irregular sizes full of numbers, all of which
brought together. A good tonger operating over
meant something to the trained eye ( acreage, de
a good shoal may harvest 20 to 30 bushels of oys
grees, minutes, and seconds). Oyster farms vary
ters a day.
in size from 8 or 10 acres to several hundred
Approaching the wider reaches of the bay, on
a higher throttle, we saw at a distance a line of
acres. After a squall or heavy ice on the river,
said the captain, all these markers may be blown
DELAWARE BAY OYSTER GROUNDS
eries has a big surveying job to reestablish the
or washed away and the Division of Shell Fish
“ fenceposts.” The captain returned to his wheel,
raised the throttle, and soon we were on top of
farm number 363.
Dredging
Pulling alongside the oyster schooner (a twomaster about 100 feet from stem to stern), we
scrambled aboard. The oyster dredge is a harrow
with a toothed bar supported by a triangular steel
frame to which is attached a bag made of iron
rings and links. The dredge drags bottom as the
schooner moves very slowly and when the dredge
is full it is raised with a power winch and the haul
is spilled on the deck. First to emerge from the pile
of oysters, shells, and general bay-bottom debris
are the crabs. They start off briskly for quarters
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business review
unknown as if to say, “ This is no place for us.”
tally sheet to the credit of the shucker, for he is
The crayfish lift up their arms in helpless distress.
paid on a piece-work basis. With the aid of a
The oysters are picked out of the muck by a busy
colander the oysters are transferred to the blower
crew of sorters and cast on the oyster pile. All of
( a huge stainless steel tank supplied with a con
the refuse is then shoveled overboard.
tinuous stream of cold water from one of the three
While the starboard dredge is unloading, the
wells that go down 265 feet). Air is blown up
larboard dredge is dragging bottom. All after
through the tank to tumble the oyster meats about
noon schooners returned to Bivalve loaded with
in the water, and so the salt, slime, and sand are
oyster piles ranging from several hundred bushels
to as much as 3500 bushels when fully laden with
washed away; then into the cans bearing the
shucker’s license number and the distributor’s
a bumper harvest. At $4 a bushel delivered to
trademark. Cans come in various sizes— gallon,
the canneries at Bivalve, it looks like easy money;
quart, pint, or half pint. The cans of oysters are
but don’t make immediate application for a
dredger’s license— oystering is like gardening,
packed with shaved ice into barrels which are
covered with canvas tops, and the barrels are
and gardening is not all harvesting.
rolled out to the shipping platform where trucks
from New York, Philadelphia, or Detroit are
Shucking and canning
waiting impatiently.
Oysters for the hotel and restaurant trade go to
market in their shells, but most Bivalve oysters
BIOGRAPHY OF AN OYSTER
are shucked and canned in one of the dozen
As shellfish, oysters reproduce like fish. Mating,
canneries in the area.
The outside of the cannery has a wharf to re
ceive oysters from the schooners, a shipping plat
if it may be called that, takes place when water
temperature, salinity, turbidity, stage of tide, and
purity of water are most favorable.
form to load the ice-packed barrels of canned
oysters for market, and piles of oyster shells. The
Spawning
inside of a cannery is a clatter and a clutter of
In Delaware Bay, female oysters are “ ripe” for
shells and shells and shells. Rows of shuckers in
reproduction or “ in milk,” as oystermen say,
little open booths— knives busily prying open the
bivalves— oyster meats flipping into the pots—
ture reaches 70 degrees Fahrenheit, which usually
about the first of May. When the water tempera
shells dropping on the floor— wheelers delivering
occurs about the first of June, the oysters are
oysters to the shuckers— shuckers shucking them
ready to begin spawning, but the maximum rate
selves into a barricade of shells, and wheelers
of spawning does not take place until the water
wheeling the shells out onto the ever-growing
temperature is 75 to 85 degrees. Under ideal
shell pile.
When the shucker delivers a pot full of oyster
conditions, the female emits clouds of eggs by
opening and closing her shell. The water in the
meats they are dumped into a shallow stainless
immediate surrounding area actually becomes
steel receptacle called a skimmer which has a
milky white by reason of the profusion of micro
perforated bottom to drain off the liquor. The
operator (also called a skimmer) measures out
scopic eggs. At the peak of spawning, the female
oyster produces approximately 100,000 eggs at
a gallon of oyster meats and enters a mark on the
each shell pulsation (which occurs about once
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business review
every thirty seconds or so) and the total number
of 40 per cent of the oysters removed from the
of eggs produced by a female ranges from 16
bay must be turned over to the state for planting
million to 60 million. Simultaneously, the male
clutch.
emits sperm for fertilization.
Each sperm is
canneries to plant clutch, and shells are also in
equipped with a whip-like tail enabling it to swim
demand by poultrymen for poultry grit, by lime-
Dredgers buy oyster shells from the
in search of an egg to which it becomes attached.
burners, cement manufacturers and by steelmen
Fertilization takes place within an hour.
who use lime as a flux in their furnaces.
Spawning occurs during the late flood tide to
good advantage. It assures fertilization of eggs
Enemies
in water of higher density, purer quality, and
The oyster is a peace-loving animal but lives
higher oxygen content than in ebb tide. Also,
among a host of enemies which he must ward off
flood tides carry eggs upstream where their
as best he can. There is little he can do when
enemies are not so abundant as in the sea.
in the small microscopic larval stage and just
another form of plankton to be screened by the
Larvae
gills of fish. As the oyster grows older, his best
Within the course of a day or so the embryo
protection is the calcareous house in which he
develops into a larva— a complete little purse
lives. But that armor is not enough protection
shaped animal having a mouth, gullet, stomach,
against the oyster drill— a hard-shelled snail
intestine, liver, pancreas, heart, simple nervous
equipped with a radula similar to a file with
system, and a muscle for closing the shell. Under
which he drills through the shell of the oyster.
It is estimated that drills kill a million dollars
the microscope, the larva is slightly greyish and
almost transparent. Small hair-like cilia on the
anterior lash the water, providing locomotion.
During the second week a foot develops which
worth of oysters each year in Delaware Bay. In
the absence of oysters, drills drill into each other
— almost human!
aids the larva to move about in search of a place
Public Enemy No. 2 in the oyster kingdom is
of permanent attachment. Once the organism is
the starfish. He wraps his arms around the oyster
attached somewhere, the foot disappears.
and exerts a steady pull to open the shell. With
his adductor muscle, the oyster resists mightily.
Spat on the clutch
He can resist a steady pull of over two pounds
When the larval oyster has found a spot free of
for better than seventeen days but ultimately
mud, slime, or other impurity, it wastes no time
in attaching itself and stays attached for good.
Almost any object will do— an old boot, a sunken
anchor, a clam shell, or an oyster shell. Colonies
of attached baby oysters are referred to as spat,
and the objects upon which oysters attach them
selves are collectively known as clutch. Thus when
oystermen speak of a “ heavy set” they mean a
great profusion of spat on the clutch.
The state of New Jersey requires that the shells
WHEN OYSTERS “ R” IN SEASON
Perhaps you have heard it said that oysters are
good to eat only in months that have the letter
"r," but this is one of those half truths. Oysters,
being highly perishable, are naturally more easily
delivered to the consumer in fresh condition dur
ing the colder months of the year, but if properly
iced or refrigerated, good oysters are edible in
any month of the year.
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business review
the starfish wins the battle and is rewarded
with oyster-on-the-half-shell. Not until you have
OYSTER PRODUCTION IN THE
UNITED STATES — 1950
shucked a bushel of oysters will you appreciate
the oyster’s strength.
Transplanting
Year-old oysters are about the size of a quarter
and they usually grow faster and fatter if dredged
from their natural seed beds and replanted below
the Southwest Line in the growing grounds. ( See
the accompanying map.) Over-populated clusters
of clutch are broken apart in the process of
transfer, which affords better facilities for obtain
ing food and oxygen. Sometimes they are trans
Oyster meats
(thous. lb.)
Area
Value
(thous. $
New England .............................
New Y o r k ...................................
Delaware ...................................
New Jersey ...............................
Maryland ...................................
V irg in ia .......................................
North Carolina .........................
South C a ro lin a ...........................
A la b a m a .....................................
Louisiana ...................................
Washington ...............................
4,728
8,787
2,141
7,242
14,406
15,548
1,322
1,374
2,070
8,715
7,225
1,681
5,800
912
2,897
5,221
5,574
556
336
534
2,843
1,970
Other states
.............................
73,558
2,857
28,324
1,273
Total United S t a t e s ............
76,415
29,597
Source: "Fishing Statistics of the United States, 1950," Fish
and Wild-Life Servi ce.
planted more than once to give a final fattening
— like cattle fattening up in the Corn Belt before
quantities produced along the tidal estuaries of
marketing. Some Maurice Cove oystermen bring
Cape May,
oyster seed up from Virginia.
counties, amounted to about one-tenth of the
Oysters feed on diatoms, peridinians (a form
of marine microplankton), bacteria, and other
microscopic
organisms known collectively as
Atlantic,
Burlington, and
Ocean
country’s oyster harvest.
Across the bay, on the Delaware shoreline,
oystering is like that along the Jersey shore. As
plankton, which oysters strain out of the water.
the table shows, Delaware produces a sizable
To us, the ocean is a great body of water but to
crop and rates eighth among the country’s oyster
oysters and other denizens of the deep the ocean
states.
is a great bowl of plankton chowder. As much
The Eastern oyster thrives in the in-shore
as 35 quarts of water will pass through the gill
waters of almost the entire Atlantic and Gulf
chambers of an adult oyster per hour.
coasts from Wellfleet, Massachusetts, to the south
Ordinarily, oysters are ready for harvest in
western shores of Texas. It thrives in sea water
three to five years, but earlier cropping is some
of reduced salinity (8 to 28 parts per thousand).
times done by farmers badly in need of cash.
It manages to survive in water of the open ocean
with a salinity up to 35 parts per thousand. The
OYSTER ECONOMICS
oyster can also get along in greatly diluted
Land, labor, and capital are the elements of
coastal waters near the mouths of rivers with a
elementary economics. So are they likewise of
salinity as low as three parts per thousand.
oyster economics.
The Pacific Coast grows two species of com
mercial oysters— the so-called Olympia, which is
Oyster lands
considerably smaller than the Eastern oyster, and
Maurice River Cove yielded 7 million pounds of
another species imported from Japan in 1905
oyster meat, worth almost $3,000,000, in 1950—
which flourishes in the waters along the shores of
to take a recent year. This, along with the small
the state of Washington.
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business review
An oyster is the product of its environment. Its
turned to the natural seed beds. During August,
size, shape, firmness, and flavor are determined
the boats are reconditioned for the harvest,
largely by the available diet, which varies from
which begins in September and runs through the
one cove to another. One gourmet will have a
following April.
Peconic Bay oyster or nothing; another epicure
On board an oyster schooner, it takes a good,
will prefer a Blue Point grown on a nearby Long
strong back to man the dredges, cull the oysters,
Island cove. Also from Long Island comes the
and swing the shovels to clear the decks. In the
Robbins Island Salt. Some consumers prefer the
cannery, shuckers stand on their feet all day long
Lynnhaven from Virginia or the Chincoteague,
and work at a fast pace. In Maurice River Cove,
also from the shores of that state, just below the
Maryland line. Generally, the farther north you
per 8-hour day, and the all-time champion is said
go the better the quality of the oysters, or so it is
to have had an “ oyster in the air” constantly for
alleged— and denied.
a record production of 50 gallons in one day.
Labor
Growing oysters is no cinch; it is hard work.
For those who follow “ oysterin” there is a lot of
stooping work. Unlike gardening on the land,
where you stoop only to the ground, in gardening
the sea you stoop (so to speak) as far as forty
feet under the surface.
In Maurice River Cove, the season begins in
May when the young oysters are taken from the
seed beds operated by the state, and replanted
on grounds which are leased from the state. That
operation lasts through June. In July, the dis
carded shells from the shucking houses are re-
shuckers average 15 to 18 gallons of oyster meats
We are in no position to prove or disprove the
allegation.
Technology in the oyster industry has not
changed very much over the years. In our day,
oyster schooners are propelled by motor power
instead of sails, dredges are operated by power
winches instead of by hand, and unloading at
the wharf may be facilitated with moving belts;
nevertheless there is still a lot of handling and
shoveling. Oyster literature tells about mechan
ical shuckers, but we saw only hand shucking.
When oyster schooners were under sail, un
shucked oysters went directly to market by way
of the Central Railroad of New Jersey and the
Pennsylvania Railroad. In the fall of the year,
FOOD VALUE OF THE OYSTER
at the height of the season, 30 to 40 carloads left
From the point of view of nutrition, oysters are
better balanced than possibly any other single
food, according to one of the country's leading
authorities on oysters (one who has no oysters for
sale). Oyster meats contain copper, iron, and
manganese, which are useful in preventing nutri
tional anemia. They also contain calcium and
phosphorous necessary for bone growth, and
iodine to make the thyroid gland function
properly. Oysters contain most of the essential
vitamins— A, B, C , D, and G . They also contain
glycogen, a substance similar to starch and readily
digestible. Their caloric value, however, is low.
daily, each carrying 100 sacks or barrels averag
ing a thousand oysters. Thus three to four million
oysters left Maurice River Cove daily for markets
in Philadelphia and New York. Old sea captains
who survive that era tell tall tales of “ big
ketches.” When their tales become too tall they
are accused of using “ too many teeth in their
dredges.”
Before the railroad era, back in the
sixties, oyster boats sailed up the Delaware
to the Philadelphia market, which was a two-day
journey.
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business review
Capital
such as the grade, the type, and the place of sale.
second-hand
It is difficult to make price comparisons of oysters
schooner, together with the necessary oyster gear,
in the shell, which are usually measured by the
Oystering runs into money.
A
costs $20,000 to $30,000. A boat license of $3
bushel, because the New Jersey bushel differs in
per ton would cost $100 to $200 depending on the
size from the Virginia bushel which differs from
size of the vessel. Then the oyster grower must
the Maryland bushel, and so on. The Georgia
lay out big money for oyster grounds. The pur
bushel is about two and a half times the size of
chase price for good ground may run as high as
$400 an acre. Thus 200 acres would cost $ 80 , 000 ,
the Massachusetts bushel, for example; hence it
and an annual rental of $1.50 an acre must be
gallon, using the standard United States gallon.
is better to stick to prices o f oyster meats per
A 200-acre
Before we talk prices, it should be pointed out
garden would require about 100,000 bushels of
that oysters come in four rather well-recognized
oyster seed which, at $2 a bushel, would require
grades,
paid to the state of New Jersey.
ranging
from
counts
(the
largest)
$200,000. Consequently, a 200-acre oyster garden
through successively smaller grades called extra
would tie up approximately $300,000 of capital.
selects, selects, and standards. The latest price, as
Remember it takes three years before there are
of November 1953, for wholesale standard grade
oysters of the Norfolk area was $5.25 a gallon.
marketable oysters of good quality. Naturally,
the best prices are commanded by the fattest and
How prices ranged prior to that is shown in the
fittest oysters. Remember also that gardeners of
accompanying chart.
the sea have hazards similar to gardeners of the
For the period covered in the chart, the peak
land— some years oysters do not set well or grow
occurred in June 1948, and the lowest price in
fast or the ravages of enemies may be especially
early 1950, when oysters sold at $3.50 a gallon.
bad, so you cannot count on good revenue every
Prices change because the supply coming on the
year, even after the beds start bearing.
Bankers in the area frequently stake the oyster
grower with money for working capital or with
longer-term capital for major pieces of equip
ment. The risks that the banker takes in such
loans are somewhat similar to the risks of agri
cultural loans.
Consequently, oyster loans are
usually confined to what might be called “ oyster
bankers.”
The current season (1953-1954) thus far has
been very good. Oysters grew well during the
summer, the set was heavy, the harvest is large,
and prices are good for the oyster grower.
What is an oyster worth?
An oyster is worth, of course, what you can get
for it. That depends upon a number of things,
8
WHOLESALE OYSTER PRICES
Standard Grade, Norfolk Area
business review
market changes, just like the supply of any garden
crop.
NEW JERSEY OYSTER PRODUCTION —
SELECTED YEARS
M IL L IO N S
OF
PO U N D S
How will you have your oysters?
Oysters are like olives— either you like them or
you don’t. If you like oysters, the chances are
that you live within a few hundred miles of the
seacoast, that you are in excess of 35 years of
age, and that you don’t remember when you ate
your first oyster. If you don’t like oysters, no
doubt you live in or originate from the Midwest,
somewhere between Harrisburg, Pennsylvania,
and Mt. Whitney, California. Oysters are at their
best when they are fresh. In days gone by they
did not always penetrate to the interior of the
country in best condition or if they did, the cooks
may not have known how best to prepare them
for the table.
Oysters lend themselves to a great variety of
Source: Fish and W ild life Service
output, likewise declined. If oysters are as good
as we say they are, why is production going
appetizing dishes. In addition to the most com
down hill?
mon dishes, such as oyster cocktail, oysters on
the half shell, fried oysters, oyster stew and
and to the point, is another chapter in the mis
oyster chowder, are special dishes like “ Angels
The decline of oyster production, to be blunt
on Horseback,” “ Pigs-in-Blankets,” broiled oys
management of a natural resource. State govern
ments have been careless in enforcing laws
ters, “ Oysters Rockefeller,” creamed oysters,
oyster pie, scalloped oysters, oysters au gratin,
maintain their population. Oyster gardeners have
and oyster stuffing for roast chicken or turkey.
been careless in harvesting oyster clusters and
designed to give oysters a fighting chance to
For ten cents paid to the Superintendent of
in failing to return the small undersized ones
Documents, the United States Government will
to the grounds. Up-stream municipalities polluted
supply a booklet of recipes entitled “ How to
the rivers with sewage and industrial concerns
Cook Oysters.”
poisoned the waters with factory wastes. As a
Oyster production is going down hill
destruction by natural enemies of the oyster,
The United States is the world’s largest producer
some
and consumer of oysters. Annual production in
destroyed.
result of such malpractices, along with the
oyster
beds
have
been
almost totally
the order of 75 million pounds of oyster meats is,
Legislation is not the answer, for there has
nevertheless, only about one-third of the pro
been no end of legislation. As early as 1661,
duction in the early years of the century. During
Massachusetts passed a law imposing a fine of
the same period, production in the Maurice River
five shillings per barrel of oysters to curb bad
Cove, which accounts for most of the New Jersey
harvesting practices. Over the past century, Mary
9
business review
land is said to have passed more laws designed
public reefs from which to obtain seed for plant
to protect her oyster beds than all other forms
ing on privately owned beds. The state of New
of legislation together; yet her oyster beds are
producing less than one-fourth of their former
Jersey polices its seed beds and also maintains a
laboratory with a corps of scientists who have
yield.
made notable progress in helping oyster growers
At the present time, under the most favorable
to fight the natural enemies of the oyster.
conditions the rate of natural propagation and
It is not to be assumed that the oyster industry
growth of oyster population is too low to replace
stock taken by commercial fishermen; neverthe
has returned to robust good health, but con
less, the productivity of oyster beds can be in
creased substantially by establishing spawning
reserves, enforcing cull laws, planting clutch, and
servation has progressed far beyond the stage
of mere talk. An element in favor of oystering
in Delaware Bay is the very real progress that
has been made by Pennsylvania, New Jersey,
helping oysters to fight their marine enemies.
Delaware, and the United States Government in
Fortunately, oyster culture in New Jersey and
cleaning up the Delaware River and its tribu
Delaware is in a much better condition than in
taries. With equal candor, it must also be said
some other areas because growers in Delaware
that very real progress still remains to be made,
Bay are partly dependent on the existence of
especially by some industries along the Delaware.
OFFICE-BUILDING SPACE
IN PHILADELPHIA
One area of the economy which is frequently
particularly into older buildings carrying lower-
sensitive to changes in the over-all level of busi
rental price tags.
ness activity is the market for space in metro
Neither of these tendencies has appeared in
politan office buildings. In periods of readjust
Philadelphia thus far in the current period, when
ment in the past— the 1949 setback, for example
many businessmen anticipate some readjustment.
— occupancy in city office buildings across the
On the contrary, occupancy in central-city office
country decreased moderately with the slacken
buildings is holding at a near-record high of
ing in economic activity. Philadelphia was no
almost 98 per cent.
Moreover, local building
exception to the general rule, although the impact
managers and realtors tell us that preference in
here was less noticeable than in some cities where
office-space leans heavily toward modernized, air-
substantial office-building programs had been in
conditioned buildings, making the over-all occu
progress. Vacancy rates rose and some businesses
pancy figure somewhat of an understatement in
moved into smaller, less pretentious quarters,
the case of these higher-rental structures.
10
business review
Demand and supply are well balanced
generally is regarded as about normal.
The
It is hard to tell during a boom if space is
Building Owners’ and Managers’ Association of
becoming excessive for the longer run; it usually
Philadelphia anticipates no significant change in
does not become excessive until demand falls
this supply-demand relationship in the months
off. There are no indications that the demand
ahead. As reported in the Association’s latest
for space in Philadelphia office buildings is about
News Letter, their Committee on Office Rentals
to fall off. As the accompanying chart shows,
was of the unanimous opinion that “ there will
the supply-demand relationship here has con
be no difficulty in maintaining 95 per cent
tinued in far better balance through the boom
occupancy at current sheduled rates for at least
one year.”
years since World War II than at any time in
the preceding two decades; and those twenty
years included a period of great economic activity
Rental rates are rising slowly
as well as the most severe depression we have
The trend of rentals in Philadelphia office build
ever experienced. The over-all supply of space
ings has been upward since 1938. This has been
in office buildings has decreased since the end of
a gradual rise, however, starting from a depres
the war; so has occupancy, and at about the same
sion low average of only $2 per square foot
rate. Consequently, vacancy rates have fluctuated
within a narrow range of from 1 to 4 per cent.
prevailing from 1934 to 1938 to the present-day
In large office buildings, a 10 per cent figure
level of approximately $3.50. Back in 1922, when
the vacancy rate was only 1.5 per cent and we
had less than one-half the floor space that is avail
able currently, the going rate was just about what
SPACE IN PHILADELPHIA OFFICE BUILDINGS
it is today. The process of increasing rentals from
M IL L IO N S
their depression-induced lows has been a very
OF
SQ U A RE
FEET
slow one, with most schedules advancing only
upon the expiration of leases. Aside from the
substantially higher rates implicit in air-condi
tioned and modernized buildings,, rental trends
appear likely to continue their slow upward trend,
according to the Building Owners’ and Managers’
Association of this city.
We are far from over-built in office space
Unlike some other large cities, including New
York, Washington, and Pittsburgh, Philadelphia
has experienced no booms in office-building con
struction since the late 1920’ s; in fact, there have
been very few major completions for the rental
lists in the past twenty years. Quite a number of
Source: Building Owners’ and Managers' Association
old buildings have been demolished, many of
of Philadelphia.
them to make way for civic improvements. Since
11
business review
the end of World War II, single companies have
outlays. More and more, modernization is com
tended more and more to occupy entire buildings,
ing to mean the inclusion of air-conditioning or
thus further reducing the total space available
at least air-cooling facilities. Very few of the
to the market.
city’s older office buildings have been air-condi
These developments have left
Philadelphia with an estimated 9.8 million square
tioned throughout, but the number is growing.
feet of office-building space, compared with 11.5
A significant number, however, have installed—
million for the rental lists two decades ago, when
or at least have programmed— large units capable
requirements were so much smaller.
of providing “ tailor-made weather” for a sizable
Little additional construction
is in early prospect
Many, many more individual offices now have
single-room air-conditioners. According to those
At the present time a 20-story office building is
in the office-building business, “ the handwriting
block of space and sometimes an entire floor.
under construction that will add some 400,000
is on the wall” and within five years air-condi
square feet of floor space to the rental lists of
tioned office space will be a “ must” if building
local building managers. This structure, the first
owners are to preserve their investments.
to be started in Penn Center, will be air-condi
The impetus behind the modernization move
tioned throughout and equipped with automatic
elevators, fluorescent lighting, and sound-proofed
ment is the clients themselves, even though it
means higher rentals. Air-conditioning, the latest
ceilings. A second skyscraper, also contemplated
in lighting equipment, redecorating, etc., usually
for Penn Center, but only in the early planning
add upwards of 80 cents a square foot to rental
stage, would provide an equal amount of rental
rates. But a growing number of employers, still
When the new Bulletin Building
facing a scarcity of clerical help, appear willing
( The Evening Bulletin) is finished some time in
to accept the higher overhead that goes with more
office space.
1955, the publication’s present offices will be
modern office quarters. In the interest of summer
placed on the market. To be sure, these additions
time efficiency too, the added cost seems to them
will provide considerably more “ elbow room”
worth while.
for those seeking office space and will sharpen
ings even now. But, substantial as the additions
Older buildings still are
“ holding their own”
are, their impact on the local market cannot com
Although older office buildings in this city are
pare with the influence exerted by the 6 million
experiencing some competition from modernized
the competition experienced in some office build
square feet of floor space built in the years im
structures, their lower rentals have had a level
mediately preceding the Great Depression.
ing effect and occupancy has not suffered much.
Nor have landlords had to reduce rates in order
Emphasis is on modernization
to retain tennants. The current over-all vacancy
In the past several years, modernization of exist
rate of around 2 per cent is low enough to suggest
ing office buildings in Philadelphia has been on
that there still is insufficient room to move about
the increase. Property managers tell us that this
freely.
trend is continuing. In some instances, the altera
modernized and old building office space remain
tions have been extensive, involving large capital
definitely scarce. Then, too, there are those who
12
In the more desirable locations, both
business review
feel that now may not be the most appropriate
point to the transportation problem created for
time to make a change in view of a possible de
present working forces and the added difficulty
cline from present high levels of business activity.
of meeting normal labor turnover or expanding
clerical employment whenever it should become
A trend toward decentralization?
necessary. They also recognize the fact that some
Opinions differ widely on the significance and
types of business stand to benefit from occupying
possible future trend of an outward migration
space in outlying areas better adapted to their
of business offices into the suburbs.
In many
particular needs than a center-city office building.
respects central-city and suburban areas are com
The premium-collection agencies of life insurance
petitive; but they are also interdependent. The
companies have been cited as one example of an
suburbs provide many of the workers who staff
activity that may be carried on efficiently in a
Philadelphia’s business enterprises and a large
decentralized location.
part of the customers of its stores. In return,
would be the business office visited daily by its
central Philadelphia provides extensive facilities
salesmen, each with his own automobile.
Another case in point
for business, education, and entertainment not
available in suburban communities.
Summary
In the past several years, a number of large
Statistics, and the considered judgment of those
corporations have moved their executive and
in the business, clearly indicate that the office
general offices into suburban areas around Phila
building industry in Philadelphia has continued
delphia. Some building managers and realtors
in a sound economic position over the past
think the city wage tax has been a factor; also
the city 4-mill mercantile tax. Another, and an
decade. The excess space created by the huge
increasingly
thirties has long ago been absorbed.
important
factor, has been the
building program which terminated in the early
Rental
scarcity and expense of parking facilities in
schedules have been rising gradually to more
downtown areas. Others in the business attibute
realistic levels in response to the supply and
the movement to the more pleasant surroundings
demand situation. The pace of current modern
to be found on the city’s perimeter. All, however,
ization programs is indicative
seem to agree that the prospect of lower rentals
is not a major factor. Assessments in the counties
desire for more efficient quarters in which to
conduct business operations. Although there has
adjoining Philadelphia have been rising steadily
been a tendency for some concerns to migrate
as the educational and service needs of the com
toward suburban
munities increased, so that today rate differentials,
central-city locations for a majority of business
if they exist at all, have become quite narrow.
enterprises continue to offer many advantages not
Those who attach little significance to the trend
of a healthy
areas around Philadelphia,
to be found in outlying areas.
13
business review
CURRENT
TRENDS
For some time, businessmen have sensed a
customers to resume buying the same goods on
changed attitude on the part of customers. And
the same terms. Next, re-styling, more attractive
anyone who follows the business press at all
packaging, and other improvements might turn
closely has read repeated statements that business
the trick. Then substantially better values could
men now determine to “ get out and sell.” This,
be offered by providing better products at the
of course, can mean many things; and exactly
how it is translated into action will have an im
same price. If customers still drag their heels,
prices might be cut.
portant bearing on the future level of business
activity.
Businessmen are understandably reluctant to
announce plans for price cuts, for this might only
encourage customers to hold off longer. But they
“ Selling” in a buyer’s market
may find themselves forced to cut prices or else
cut production— perhaps some of both.
The
Businessmen say customers are reluctant to buy
extent of any business “ readjustment” ahead may
the same goods on the same terms as before.
be influenced strongly by how aggressively busi
They can try to overcome this situation in two
nessmen act to give customers more for their
ways— either persuade customers to change this
money rather than cutting production.
attitude, or offer more value (by providing better
products at the same price or the same products
at a lower price). A survey conducted recently
How’s Christmas trade?
It’s beginning to look as though the Christmas
by Business Week magazine suggests what busi
nessmen may have in mind. They plan, for one
season may give retailers a better idea of what
thing, bigger and better promotion and advertis
to do in this buyer’s market— at least if depart
ing. They also intend to bring out new products
ment stores in this Federal Reserve District are
and to improve existing products. But most of
any indication.
them do not expect to cut prices.
trollers of stores here are optimistic— in a pessi
In making his plans, the seller has the difficult
As this is written, the comp
mistic way— about Christmas sales.
job of guessing how much sales resistance the
Through August, this was a good year for
customer is going to offer. This is a problem
department stores. Sales for the year to that point
which he has not had to any great extent in the
were running 4 per cent ahead of a year ago,
past decade.
A wrong guess will show up in
and in some individual months as much as 9
dollars and cents. As businessmen are apt to put
per cent ahead. But beginning with September
it, the period ahead is going to “ separate the men
and continuing through November, sales ran
from the boys.”
behind a year ago. This is clearly apparent in
the chart, which shows seasonally adjusted in
It is quite likely, therefore, that sellers will feel
their way cautiously in this buyer’s market. First,
dexes of District department store sales for each
they might try more intensive advertising and the
month this year and last.
like.
This may be enough to persuade many
14
It is understandable, therefore, that retailers
business review
DEPARTMENT STORE SALES
The
Third, Federal Reserve District
trollers were strongly influenced
IN D E X
NUM BER
department store comp
by these facts when we tele
(1 9 4 7 - 4 9 = 1 0 0 )
phoned them to get their views
on Christmas trade. Based on
their responses, we have made
an estimate of December sales
and have included it in the
Chart. Sales this Christmas
seem likely to equal sales last
Christmas, and may be even
better.
Department store comptrollers
are apt to sound more pessi
JA N .
FEE
M AR.
A PR.
M AY
JU N E
JU L Y
AUG.
SEPT
have approached the Christmas season with some
OCT
NOV.
D EC .
mistic than the situation war
rants. They naturally like to see sales go higher
misgivings. They believe a major factor holding
and higher. But last December was very good
back sales in the fall was the mild weather but, of
— the best on record. If sales are as good this
course, they are never quite sure of these things.
Christmas, business for the year as a whole
Despite efforts to get the Christmas season under
will still amount to 2 per cent more than last
way early, sales thus far have been disappointing.
In recent years, people seem to be waiting longer
miss doing better in 1953 than 1952. Sales would
to get their shopping done, perhaps because they
have to be more than 11 per cent less this Christ
know that when they do get around to it the goods
mas than last for the year as a whole to be
will be there.
worse.
year.
For the year as a whole, stores can’t
Additional copies of this issue are available
upon request to the Department of Research,
Federal Reserve Bank of Philadelphia,
Philadelphia 1, Pa.
15
FOR THE RE CORD. . .
Factory*
SUMMARY
Third Fe d e ra l
Reserve District
U nited States
Per cent chang e
Per cent change
10
O c to b e r
1953
mos.
1953
from
mo.
ago
O U TPU T
M anufacturing p rod uctio n. . .
C o a l m ining........................................
EM PLO YM EN T A N D
IN C O M E
Factory employm ent.....................
TR A D E**
B A N K IN G
( A l l member banks)
D eposits.................................................
L o a n s .........................................................
Investments............................................
O t h e r ...................................................
C h e c k paym ents..............................
year
ago
from
year
ago
10
O c to b e r
1953
mos.
1953
from
mo.
ag o
year
ago
from
year
ag o
-1* - 1* + 7* -1
0* + 4* + 15*
+2 - 5 + 3
-1 + 6
0 +
L a n c a ste r. . .
+6§
+ 3
+ 11
- 3
- 4
- 2
- 2§
0+ +
-1
1t
+ 1t
P h ila d e lp h ia .
y e a r mo.
ag o ag o
-1
-2
-2
0
0
0
-2
y e a r mo.
ag o ag o
year
ag o
mo.
ag o
y e a r mo.
ag o ag o
year
ag o
+
2
+1
+
1
-
3
+ 3
-
2
+ 5
+ 1 +
8 +
9
-1
+16 +
8 +4
-
2
-1
+ 1
-2
+
5 +
5
-6
+
3 + 8
-
4
-1
-3
+ 3
-
3 + 13
-7
+ 11 +
7
+
6
0
+
7
+ 5
-
5
-2
-
4 +
5
-8
+
7 -
2
-6
-
1
0
8 +
+ 4
+ 2 + 3
+ 8 + 11
- 1 - 1
- 2 - 2
+ 1 + 3
0 + 7
T re n to n ............
-2
W ilk e s -B a rre
-4
0
-1
-
2 +
7
-3
+ 12
0
+ 2
+ 10
W ilm in gton. .
-5
+ 1
-3
+
5 +
8
+1
+
0
-3
+10
- 2
+ 1
Y o r k ...................
-2
+7
+ 2
+ 14 + 18
-7
+ 12 +11
+7
+ 16
-
0 +
1
1
♦Pennsylvania {P h ila d e lp h ia § 2 0 C itie s
♦♦Adjusted for seasonal v aria tio n . {B a s e d on 3-month moving a verag e s.
16
Stocks
S a le s
6
+3 - 4 + 2
0 + 6
0
+ 4
+ 14 +1
0
- 3
- 3
0
0
0
+10§ + 1
Payrolls
P er cent
Per cent
Per cent
P er cent
P er cent
change
chang e
change
change
chang e
O c to b e r
O c to b e r
O c to b e r
O c to b e r
O c to b e r
1 9 5 3 from 1 9 5 3 from 1 9 5 3 from 1 9 5 3 from 19 53 from
—1
0
0
-2
-2
0
C h e ck
Payments
Employ
ment
mo.
ag o
-1* - 2* + 6*
0 + 1 + 10
+ 3 + 15 + 12 —1 + 8 4- 4
+ 8 -24 -18 - 6 + 14 - 4
PRICES
C o nsu m er.............................................
LOCAL
CHANGES
Departm ent Store
-3
8
♦Not restricted to corpo rate limits of cities but covers a re a s of one or
more counties.
Index - 1953 Business Reviews
January
1953:
What How?
took at Prices
Federal Reserve Bank Directors
A
February
Tailored In Philadelphia
Bank Earnings, 1952: Third Distrlot
Federal Advisory Council
Maroh
Credit Unions: Self-Help Credit
Kew Cost-of-Living Indexes
Selected Federal Reserve Publications,
Films, and Releases
April
Mushrooms and Roses
Banks Pay More for Tima Deposits
What Real Batata Men Tell us
May
Free Markets and the Federal Reserve System
Men and Money on the Move
June
Uniform Commercial Code - A Supplement
Human Aspects of Bank Operations
Bank Lending In the Third Distrlot
July
Business Around the District
Interest Rates in Perspective
Projecting Business Borrowing
Appliances Fight for Consumer Dollars
August
Third District Cornucopia
Korea in Perspective; Guns and Butter
First-Half Banking - Third District
September
Kilowatts Cooperate on the Delaware
County Banking Changes: 1953 vs, 1952
Report from the Farm
Port Progress
October
Mutual Savings Banking
Inoomes in Third DLstrict States
Tax Changes and Take-Home Pay
November
Banks In a Business Civilization
Capital for Industries on the Delaware
Inventories - A Trouble Spott
Industry Looks at Employment
December
Gardeners of the Sea
Office Building Space in Philadelphia
@FedFRASER