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THE BUSINESS REVIEW -ccryn^i^gs FEDERAL RESERVE BANK OF PHILADELPHIA DECEMBER 9, 1946 * CROSSROADS FOR AGRICULTURE Agriculture is entering a crucial period. Events of the near future will have an important influence on farm conditions for years to come. The time is ripe, therefore, to reappraise past trends, take stock of the present situation, and sift out the many factors which will hear upon the future. The turning, point involves not only the problems faced by farmers in reconverting to peace, but also ques tions of farm loan policy which confront banks. These problems are interrelated. The use of bank credit, provided it is extended under proper safeguard, can strengthen both agriculture and banking. Agriculture Reconverts To Peace Agriculture has remained on a war footing opment of agriculture and upon the effects of longer than other segments of our economy. wartime conditions and the special problems World-wide scarcity of food and the depletion raised by them. of stocks have required that there be no let-up in farm production. But now the signs of recon The Long-term Trends version are beginning to appear. The farmer faces them while standing atop a pinnacle of Agriculture as an industry contains elements prosperity, the height of which is far greater of both expansion and decline. Its physical out than any he has attained in past years. His put has risen rather steadily; during the forty problems are not so much concerned with a years preceding World War II it increased by 50 physical changeover to different products, per cent. Yet the expansion of physical output though this may be important in some areas; did not keep pace with population growth. This they are mainly the problems of adjusting exist was possible not because people have learned ing techniques to changes in his economic en to eat less nor because net exports were much vironment. The nature of those adjustments smaller in 1940 than they were some decades will depend upon long-term trends in the devel earlier, though exports have been a factor. It Page 123 happened mainly because farmers have been producing more food relative to non-food crops and different kinds of foods with higher nutri tional value. Poultry, eggs, and milk have ac counted for a growing share of farm output. Cotton, grains, and meat animals have become less important. implications. The average farmer has not been able to buy much of the physical goods that are usually thought of as part of the American standard of living. His earnings have fluctuated widely but they have been much smaller than those of city people for many years. Farm output might have had room for further The Impact of the War expansion if higher incomes had allowed more The most striking feature of the war period people to have better diets. It must be recog nized, however, that the rate of agricultural for agriculture has been the great increase in expansion is closely tied to population growth. gross farm income—from $10 billion in 1940 to While a higher level of income does induce over $24 billion in 1945. The biggest factor in greater expenditures for food, especially the the increase was the doubling of prices, but the higher priced foods, it is clear that the food ca physical volume of production actually rose 20 pacity of the human being is limited. Agricul per cent. Costs shot up, too. In 1945, wage rates ture cannot possibly expand in the manner of were 175 per cent above the 1939 average, and the manufacturing industries, the desire for the annual wage bill had risen from $1 billion whose varied and changing products is prac to $2.3 billion. Machinery prices—for machin ery that was available—increased 40 per cent. tically unlimited. Fertilizer jumped 90 per cent. This is, of course, The number of persons occupied in farming a familiar picture in every part of the economy. has declined steadily since 1910 except for a It is of special significance for agriculture only temporary rise during the thirties. In thirty because in that industry costs lagged consider years—from 1910 to 1940—the farm population ably behind farm prices. Net income of farmers declined by 2 millions. It took one-third of the rose from $6 billion in the pre-war period to population of the United States to feed the nation $17 billion in 1945. Agriculture’s share of the in 1910, only one-fourth in 1940. From the national income, which had been cut nearly in standpoint of jobs it may be said that the relative half during the twenty years between the two world wars, rose from 7.2 per cent to 9.2 per importance of agriculture is declining. cent. A larger volume of production with a smaller Despite increased income, farm population work force has been made possible by greater continued to decline during the war; in fact, productivity. From 1910 to 1940, output per high wages at war plants accelerated migration. worker increased 70 per cent. This was due The farms had lost 2 million people in the pre mainly to mechanization and partly, especially ceding thirty years: from 1940 to 1945 they lost in later years, to increased yield per acre and 5 million. In the latter year only 18 per cent of per animal. our total population remained on the farms and agricultural employment had declined by a mil Despite steady emigration from the farms, lion workers to 8.1 million. income figures imply that they have been over crowded. In 1940, a year which is fairly typical How did 11 per cent fewer workers produce of the thirty years that preceded it, U. S. De 20 per cent more? By an accelerated increase partment of Commerce data show that farm in in output per worker. In contrast to an average come per capita was only $185, compared with gain of about 2.5 per cent a year in the pre $711 for non-farmers. Of course, this is not a war decade, output per worker shot up 35 per complete measure of the comparative well-being cent in five years during the war period. This of farm and nonfarm families. Because there was made possible by three factors: first, are certain intangibles which might be included longer hours of work for those who remained; in agricultural income, the farm figure may be a shakeout of farm unemployment which had comparatively understated. The gap between been hidden by part-time work and “subsistfarm and non-farm income per capita is so large, ance” farming; second, greater yields per acre however, that there can be little doubt as to its and per animal due to good weather and imPage 124 -* ». , r , ▼ , proved farming practices—greater use of ferti Agriculture in the Third Federal Reserve lizer and hybrid seeds, better balanced feed District ing; third, continued mechanization of farm It is easy to overlook the importance of agri operations. The last is probably the most impor tant. The value of farm machinery and attach culture in Pennsylvania, New Jersey, and Dela ments produced in 1941—$460 million—was a ware because these states are so prominent in new record, half again as large as the 1935-1939 the Middle Atlantic industrial area. In the Third average. Production of farm machinery was Federal Reserve District agricultural products reduced when the United States entered the war, accounted for only 9 per cent of the area’s total but machinery on farms continued to increase, output, which stands in marked contrast to the particularly such units as combines, pick-up importance of agriculture on a national basis— balers, and milking machines. Another factor 21 per cent. But percentages sometimes conceal making for greater efficiency was the elimina as much as they reveal. In 1939 this district had tion of many small, marginal farms. The number 132,000 farms. It employed 170,000 farm work of farms declined—in some areas as much as 10 ers and it produced $200 million worth of agri per cent—and the average size of farms cultural products. Furthermore, numerous com munities and even whole counties within the increased. district are almost wholly dependent upon agri culture for their livelihood. Higher profits and fewer farmers meant greater per capita farm income. From $185 in 1940 it rose to $587 in 1945, advancing, propor Agriculture in this area may be characterized tionately, two and a half times as fast as non as general farming with dairying and poultry farm incomes, though remaining less than half raising predominating. This type of agriculture as large. Of course, these income figures are is an adaptation of local resources to local condi national averages, and there is considerable tions. The farmers in the hinterland of the heav regional disparity. Delaware farm operators, ily populated North Atlantic Seaboard produce for instance, averaged $3,972 per farm com those products which yield the highest value in pared to an average of $1,375 for Georgia in relation to the high costs incurred. Land values 1945. But it would be unrealistic to exclude are comparatively high and so are labor costs, the low income areas from consideration, since since farmers must compete for labor with near most of the nation's farmers live within them. by industries. Farm labor must be used to best advantage the year round, an important factor Prosperity has placed the farmer in a strong in the area’s diversified agricultural activities. financial position. During the war he reduced the size of his mortgage indebtedness; he All this is reflected in the accompanying table quadrupled his holdings of liquid assets. As a showing sources of farm income in this area con consequence of higher prices, his land is worth more. By the end of 1945, farm land had risen trasted with those of United States agriculture in value by an average of almost 60 per cent over generally. Agricultural land in the district has 1940. But this position has not been gained with out sacrifice. In some areas the soil is tired, SOURCES OF FARM INCOME—1939 worked out. War programs required more inter tilled crops. Soil-conserving crops gave way in Counties in some instances to oil-bearing or high protein Third United Pennsyl New Delaware District States products. Flaxseed acreage tripled. The pro vania Jersey duction of hemp, an urgently needed fiber, ex Livestock................................... 12.9% 3.8% 3.7% 10.6% 26.5% products........................ panded more than a hundredfold. In many cases Dairy 32.9 19.8 13.7 29.2 16.7 Poultry and poultry products. 18.8 26.8 51.4 22.7 8.3 war requirements upset crop rotation systems. Other livestock products.... 1.2 .4 .3 1.0 1.6 A large quantity of machinery and equipment is Total livestock and products. 65.8% 50.8% 69.1% 63.5% 53.1% obsolete or rundown by years of hard use with Field crops*............................... 20.1% 13.8% 11.3% 18.4% 37.0% 4.0 23.1 9.1 7.6 3.0 out adequate replacement. In other words, Vegetables................................. Fruits and nuts........................ 4.0 8.1 6.6 4.9 4.4 Horticultural specialties........ 5.6 4.1 3.6 5.2 1.9 though the amount cannot be measured, a por Forest products........................ .5 .1 .3 .4 .6 tion of the new “savings” has arisen out of de Total crops................................ 34.2% 49.2% 30.9% 36.5% 46.9% pletion of assets, and money must now be set ♦Includes Irish and sweet potatoes. aside to replenish the soil and renew equipment. Source: Census of Agriculture, 1940 Page 125 to be utilized intensively. Relatively few farmers specialize in field crops such as wheat or pota toes ; they utilize their capital and labor to best advantage by producing that combination of field and animal products which yields a large net income per acre. The proximity of large metropolitan markets puts a premium on high-grade products which are perishable, such as fluid milk, eggs, and fresh vegetables. Some farmers within the area increase their revenue by the production of “fancy” products commanding premium prices. Such products have a ready market in New York and Philadelphia among income groups which demand quality regardless of price. Changes During the First Year of Peace Huge domestic demand for farm products at home and hoards of hungry people overseas, kept agriculture in a state of war during 1946. The agricultural situation during the first year of peace remained substantially unchanged. Land rehabilitation generally had to be post poned. In 1946 the physical output of agricul tural products is expected to be only slightly below that of 1945. Crop production is expected to be about 3 per cent above the peak year of 1942 and livestock production only a little below the 1943 record. Exports rose almost a billion dollars during the year and domestic consump tion of most foods remained close to wartime levels. Surplus stocks of basic staples are small. Development of Third District agriculture since 1900 reflects the industrialization and Farm prices continued to rise during the year urbanization of the area. Land in farms has —faster than nonfarm prices. Prices received been decreasing steadily while acreage devoted by farmers in November 1946 were 28 per to agricultural products throughout most of the cent above last year’s level. The Department country has been increasing. In this area the of Agriculture estimates average prices for number of farms has declined so that the aver the whole year at 15 per cent above 1945. age size of farms has remained practically un Prices of commodities which farmers sell have changed. The size of farms throughout the risen faster than prices of things which farmers country has been increasing. In 1940 farms in buy. In November 1946 farm prices were soar this district averaged 86 acres in contrast to 174 ing at an altitude 24 per cent above parity, the acres for the United States. 1910-1914 relationship between prices received During the first two decades of this century and paid by farmers. However, the removal of farm employment in the district declined more all price controls last October has made the fu rapidly than elsewhere. Workers left the farms ture trend of the parity ratio uncertain. Despite in large numbers for jobs in the cities. With this recent advances in farm prices generally, weak marked migration came a shift from field crops nesses have developed in cotton, corn, butter, to livestock products. Of course, similar produc and poultry. Potatoes and peanuts have touched tion changes took place throughout the country support levels. These developments have con as a whole, but it was accentuated in this area vinced some observers that farm prices have because of the rapid strides in industrialization. already reached their peak. If this is true, then Farmers adapted shrinking labor and land re agricultural reconversion is at hand. sources to market opportunities. During the first year of peace the downward Wartime changes within the district did not trend of farm population was reversed. Em quite parallel those of the nation in that the ployment began to show an increase in April increase in agricultural production here did not 1946 and is still above the level of last year. The keep pace with the rest of the United States. number of family workers has increased more Wheat, corn, cattle, and fruit production de consistently than the number of hired workers. clined in Pennsylvania, New Jersey, and Dela One million veterans have returned to the farms. ware in the early years of the war, but increases These men not only are swelling the total farm in truck crops, fluid milk, eggs, and poultry labor force but also are replacing many older paralleled gains in the larger agricultural areas farmers seeking retirement. It appears that the of the country. This is evidence of a continuing return of farmers who had found industrial concentration on the production of products of employment during the war is as yet a minor high unit value. Farm wage rates in the three factor. In the Middle Atlantic states, contrary states did not increase as much as in the larger to the situation for the nation as a whole, the agricultural areas partly because they had number of persons employed on farms is now greater than the 1935-39 average. already been relatively high before the war. Page 126 -» 4 # t Wage rates for hired farm workers in the United States continued to rise during 1946. In October farm wages were 10 per cent above the preceding year and about triple the pre-war level. Although wages have risen substantially percentagewise the average wage rate for farm workers in the United States is still less than $5 a day. With production continuing at a high level and prices still rising, farm operators’ income in 1946 is expected to be more than 10 per cent above last year—a continuation of the trend of the last seven years. Of course, production ex penses are up also, but gross farm income of $27 billion will allow net income of about $15 billion —an all-time high. per cent during 1946 and the cow population declined 4 per cent. The production of farm machinery for the year ending June 30, 1946 was about 5 per cent below that of 1945. As in the case of most dur able goods, and particularly automobiles, mate rial shortages and labor difficulties have kept the farmers waiting for machines they want to buy, even though they are able and willing to pay high prices. Production of agricultural machin ery is increasing but there is still too little available. In view of the difficulties confronting farmers in making improvements in buildings and ma chinery and the natural desire to take advantage of high agricultural prices by expanding produc The farm income pattern in Pennsylvania, New Jersey, and Delaware differs from that of tion, there is considerable danger that savings the country. Both gross and net income appear of farmers will continue to overflow into farm to have increased only slightly in Pennsylvania real estate. Land values continued to rise after from 1945 to 1946; and in New Jersey and Dela the end of the war and the number of voluntary ware it is estimated that there has been a decline sales rose. There is some indication also that the average size of farms sold is decreasing. The —substantial in the case of Delaware. implications of a continuation of a land boom are serious. Wartime savings which should be set GROSS AND NET FARM INCOME PENNSYLVANIA, NEW JERSEY, AND DELAWARE aside for improving buildings, soil, and equip ment can be dissipated quickly by land purchase 1940 1945 1946 at inflated prices. Many farmers may assume (Estimated) debt burdens which cannot be supported if and Millions Gross income* when prices of-farm products decline. Total gross income... $352 121 37 $ 705 230 108 $ 721 226 89 $510 $1,043 $1,036 $126 38 12 $ 302 75 37 $ 309 74 31 $176 $ 414 $ 414 Net income Total net income.... ♦Includes Government Payments. Pennsylvania, New Jersey, and Delaware are in an area which produces less feed than it uses, and the tight feed situation which prevailed during 1946 undoubtedly contributed toward the reduction of gross farm income. In an area where more than half of the value of agricultural products is derived from livestock products such as milk, eggs, and poultry, feed prices are cru cial. Both the milk-feed ratio and the egg-feed ratio were lower during 1946 than in the preced ing year—it took more eggs to buy a given amount of feed this year than last. This is par ticularly important in the case of Delaware, where over half of the farm income is derived from poultry and poultry products. Nationally the number of chickens raised on farms fell 18 The Outlook The implications of rising land values are most significant when viewed in the light of the fu ture. Although several reversals of wartime trends have appeared during 1946, it is clear that the major problems of agriculture’s read justment to peace are still ahead. The physical changes such as the repair of equipment and the replanting of soil-conserving grass and legume crops can be accomplished gradually as mate rials become available and as stocks of certain foods are replenished. The method of accom plishing these tasks is clear. However, the eco nomic problems that have to be solved—much less their solutions — are neither clear nor simple. A problem of first magnitude is the probable readjustment of farm prices. As has been pointed out, the prices which farmers received for the goods they produced have increased about twice as much since the beginning of the war as the prices of commodities which they Page 127 have had to buy. Farm prices increased three to four times as much as those of manufactured goods. The farmer has gained a larger share of the national income. If, as was the case during the pre-war decade, American prices are high relative to world prices, the prospect for large-scale export of farm products would not be favorable. To the extent that these gains are the result The supply of farm products is difficult to pre of a permanent enlargement of the demand for dict for any particular year, but all indications food and farm products, they may be retained. point to the fact that agricultural production It seems, however, that the main factors re will not decline in the near future. In all prob sponsible for the extremely high level of farm ability it will continue to increase. The same prices are wartime distortions which may soon physical factors which permitted record expan disappear. The first of these concerns price sion during the war are operative now. They control regulations. Farm prices were not con may become even stronger. The supply of fer trolled to the same extent as other prices. In tilizer, for instance, will be slightly larger next some cases farm products were not regulated year; pre-war usage will be more than doubled. until late in the price control program. In Farm management practices will continue to others control was ineffective. In many instances improve. Production of farm machinery is ex certain statutory limitations applied which were pected to lag for the next six months, but should frankly designed to bring farm prices into a improve rapidly after that. It is possible that more favorable relationship with nonfarm there will be 2y2 million tractors on farms in prices. In general, agricultural commodities 1947 compared to iy2 million in 1940 and a little were released from price control somewhat be over 2 million in 1945. The farm labor supply fore manufactured goods. With virtually all will be larger and of better quality, including prices now decontrolled, manufactured goods many veterans with mechanical know-how ac are free to rise, and it is entirely possible that quired in the service. It is true that wartime pro the present relationship between farm and non duction incentives will be gone and that prices farm prices will be changed. are generally expected to decline, but experience has shown that farmers tend to stay in full pro Despite rationing, food was available in large duction regardless of business fluctuations. quantities. During the war it seemed that con sumers were willing to spend a disproportion The Department of Agriculture estimates that ately large share of their purchasing power on prices received by farmers in 1947 will average food since they were unable to buy durable about 10 per cent below those of 1946, with a goods. With refrigerators, furniture, and other definite downturn taking place in the second hard goods back in the market, food will have half of the year. On the other hand, prices paid increasing competition. Food budgets may not by farmers, according to the Department, will be be drastically affected by this development, but higher next year and the parity ratio may fall even a small reduction in food expenditures by from its present level of 132 to about 100—per large numbers of people will bring strong pres haps less in the second half of the year. Pro sure to bear on farm prices — especially the duction expenses will be higher. Labor costs prices of relatively high-cost food. may continue to rise and property taxes may in crease slightly. Net farm income in 1947, there A third wartime distortion took place in inter fore, may be as much as 10 to 15 per cent below national trade. Agricultural exports rose from the current year. less than $1 billion in pre-war years to about $3 billion in 1946. Nearly half of current food The farmer will be a big customer for goods exports are Lend-Lease and UNRRA shipments next year, but his income may be shrinking. A which are scheduled to end next year. Foreign large-scale return of workers to the farm, though nations will soon have to do their own buying it is not imminent, would tend further to reduce and will have to use their own limited dollar per capita incomes and more farmers might resources. In the coming year exports will drop out of the middle and high-income groups probably diminish only slightly, but they will which buy large quantities of city-made prod decline further as foreign agriculture is re ucts. The development of a back-to-the-farm habilitated. Ultimately American farmers movement would depend largely upon job op will be in competition with world agriculture. portunities elsewhere. If business is good, workers will continue to leave full-time farming in conformance with the long-term trend. If it is bad, many will return—some to mere subsist ence farming—despite lower prices for farm produce. height, if it occurs, might cause considerable damage. Even if farm prices do recede to support levels and the farmer adjusts to them, there is still the possibility that increasing production within the Farmers in the Third Federal Reserve District next few years may again build up large, chronic are particularly interested in the outlook for surpluses. This could occur if the general sup dairy and poultry products. Estimates of the port level were too high or the relative prices Department of Agriculture indicate that there of various farm products—based on a 1910-1914 will be fewer milk cows and fewer chickens pattern—were distorted. To the extent that sur throughout the nation next year, but although pluses are accumulated under such conditions, production is expected to be lower, pro the immediate impact of drastic readjustments duction per cow should increase and milk pro will be cushioned, but long-range problems of duction should be maintained. Egg prices are over-population and low income on the farm will quite likely to be higher than this year mainly not be solved. because of support price commitments. Prices of dairy products and poultry are expected to be The long-run decline in the share of national firm, but there will be a tendency toward a de income going to agriculture—interrupted by the cline in the second half of the year. Large feed war, but now possibly resuming—reflects our supplies will be a favorable factor in contrast to the tight situation this year. Third District ability to expand the nonagricultural industries farmers have already made a considerable ad and to spend a smaller part of our energies on justment to peacetime conditions and it is pos the production of food and fiber. This need not sible that changes that are yet to come will spell disaster for the farmer. The events of the past five years have proved that he can increase not be felt so sharply here as elsewhere. his efficiency greatly. The acceleration of mech However valid these forecasts for the coming anization has enlarged the productive power of year may be, predictions bearing upon the agri the farm family unit and placed a much higher cultural situation beyond next year would seem standard of living within its reach. It will give to border on pure conjecture. Our past experi the hired farm hand an opportunity to draw ence and knowledge of trends, however, raise even with the city worker. important questions concerning future develop ments. After the first world war, peak farm It is not up to the farmer alone to accomplish prices reached in 1920 were cut in half within a these things. He is dependent upon other seg year with disastrous effect. The Government is ments of the economy for his market and for job now committed to the support of farm prices for opportunities for those who will no longer be two years after the end of the war emergency. needed on the farms in years to come. But he, But that support will not be forthcoming until himself, must meet certain general requirements. prices decline to 90 per cent of parity—the sup He must have better, businesslike farm manage port level. And this means that a decline in the ment which will include provision for soil con general level of agricultural prices could not be servation. In many cases, he needs more capital stopped by Government intervention until a drop equipment—buildings and machinery. In some of nearly 30 per cent from November 1946 levels areas he has to work a larger farm. In his pres had occurred. If nonfarm prices should recede ent position, despite a few danger signs, the to the 1945 average, a drop of 40 per cent is farmer has the best chance for success that he possible before a parity ratio of 90 is reached. has had for years. If he succeeds it will mean a Present legislation does place a floor under farm better market for the products of industry and a prices; nevertheless, a fall from the present better life for farm families. Page 129 Farm Lending by Banks The revival of both short-term and mortgage farm loans since the end of the war brings banks face to face once again with peacetime problems involved in lending to farmers. As agriculture confronts its own peculiar post-war problems of production, markets, prices, and capital ex pansion, banks are concerned primarily with these questions: To what extent will farm loans provide an outlet for bank funds? What loan policies will bring most benefit to both banking and agriculture? important part in the farm activities of their areas. In institutions with less than $2 million of deposits, farm loans account for one-fifth of total loan portfolios. In some respects it might appear that these questions are of little importance to member banks in the Third Federal Reserve District. Farm loans constitute a small proportion of total loans. Except for New York and Boston, they are a smaller proportion of total loans than in any other Federal Reserve district. Banks with total deposits of— But this over-all picture is heavily influenced by the industrial and trade activity of the thickly populated centers of the district. Farm lending problems are a primary concern in many sec tions, and the loan policies pursued by local banks will have a significant influence on the future of agriculture in those areas. In some farming counties, total agricultural loans of member banks represent as much as one-third (and in one case more than one-half) of total loans. As the map indicates, in ten counties they constitute more than 20 per cent of total loans. The small outlying banks of the district play an IMPORTANCE OF FARM LOANS MEMBER BANKS-JUNE 29,1946 THIRD FEDERAL RESERVE DISTRICT RATIO or FARM LOANS (MORTGAGE ANO NON-REAL ESTATE) Page 130 IMPORTANCE OF AGRICULTURAL LOANS BY SIZE OF BANK June 29, 1946 Third F. R. District Member Banks Percentage of Third District Ratio to total loans Real estate 0*7% 4.9 11.7 Third F. R. District.__ 1.8% Non-real estate! Real estate Non-real estatet 0.4% 4.6 8.9 0-6% 10.8 61.3 27.3 6.8% 68.5 24.7 1.5% 100.0% 100.0% t Includes loans to farmers directly guaranteed by the Commodity Credit Corporation. * Less than .05 per cent. Farm Mortgage Trends Although in many respects the farm credit situation today differs substantially from pre vious boom periods, conditions are sufficiently similar to warrant drawing upon past experi ences in determining post-war lending policies. Total Mortgage Debt The trend of total farm mortgage debt over a period of years indicates the over-all supply of mortgages for which banks compete. Be tween 1912 and 1922, the volume of farm mortgages in the United States rose rapidly with the general expansion of agriculture and with the sharp rise in commodity and real estate prices during and after the war. In Pennsylvania, New Jersey, and Delaware the increase in mortgages was considerably less rapid than in the nation. Agriculture was not growing as fast as in the South and West, land values rose less, and the proportion of mortgaged farms probably increased less. The volume of farm mortgages in the United States reached a peak in 1923. But land values had begun to decline three years before, and income was considerably below the 1919 peak. The consequences of building up a heavy debt structure in expectation of continued high land values and continued high income were felt when farmers’ ability to pay fell off. Voluntary transfers of real estate dropped precipitously * * FARM MORTGAGE DEBT AND RELATED FACTORS Pennsyl vania New Jersey Delaware Farm mortgage debt** Per cent changes— 1912 to 1922................... 1922 to 1933................... 1933 to 1939................... 1939 to 1946... . +68 + 5 -24 -n +64 - 1 - 6 - 8 +41 -29 + 1 + 7 Farm land values tf Per cent changes — 1912 to 1922..................... 1922 to 1933................ 1933 to 1939..................... 1939 to 1946................. +22 -35 +13 +48 +23 - 9 + 5 +41 +19 -33 +11 +54 Farms mortgaged! Per cent of all farms oper ated by owners— 1910.................................. 1920................................ 1930................................ 1940..................................... 30.9 31.6 33.9 34.0 48.9 46.1 51.3 50.8 36.6 33.6 38.5 38.1 Three States +65 + 2 —19 - 9 United States +172 — 19 — 22 - 25 + + + 33.3 33.4 36.2 36.3 43 47 15 69 33.2 37.2 42.0 41.0 t As of March 1. Sources: U. S. Department of Agriculture; U. S. Department of Commerce, Bureau of the Census* and foreclosures and assignments mounted. Mortgage debt expanded between 1920 and 1923 mostly because of distress borrowing and refinancing of short-term debts. Land values settled down to a continuous decline until 1933. Farm income, after recovering during the twen ties, fell off once more between 1929 and 1932. Foreclosures and assignments became even greater than during the difficulties of the early twenties. Mortgages continued the decline which had been practically continuous since 1923. In contrast to the national picture, farm mort gages in this area increased slightly between 1922 and 1933. Land values declined less sharply and the proportion of mortgaged farms increased less noticeably. There probably were fewer distress sales and foreclosures of real es tate, and there may have been less scaling down of debt inasmuch as the mortgage burden was not as high and incomes were more stable in this section than in most farming areas. During the remainder of the thirties, mort gages declined at similar rates both locally and nationally. Land values rose, voluntary trans fers increased, and foreclosures declined, but more farmers were able to reduce debt struc tures by prepayments of principal out of ex panding incomes and by negotiating debt ad justments. The wartime increase in agricultural earning power was reflected in a sharp rise of farm land values and more rapid turnover of property. But mortgages continued to decline. Contrary to the situation in World War I, a large propor tion of the farm transfers were accomplished with cash. As the war progressed the propor tion of cash purchases rose and down payments became larger. Moreover, farmers were steadily reducing debts incurred earlier. Probably be cause land values and farm incomes rose less rapidly in this area than nationally, the reduc tion of outstanding mortgage debt was smaller. A new trend, possibly indicative of future movements in mortgage debt, became evident in the first half of 1946. For the first time in twenty-three years, farm mortgages in the United States increased. These changes resulted from lower debt payments and an increased volume of new debt. Banks in the Mortgage Field While the trend of total mortgages is im portant to banks, the answers to their post-war problems of farm lending will depend upon the manner in which they meet the competition of other lenders in the farm mortgage field. The past experiences of banks in this area have been relatively favorable. In the face of a declining volume of mortgages from 1930 to 1945, banks increased their holdings slightly. This is all the more remarkable in view of the greater role played by Government lending agencies. Where as the share of total mortgages held by public lenders in 1930 was only 10 per cent, by 1941 the proportion had risen to 24 per cent. The experience of banks, as the chart on the follow ing page shows, is also in direct contrast with that of “individuals and other" lenders. Compared with the competitive situation in the country as a whole, the position occupied by banks in this area is relatively much more im portant. Their share of total mortgages is more than half again as great. The proportion held by private lenders in general is larger. The growing importance of public agencies has not been so noticeable here, possibly because the mortgage situation during the depression was less acute, and there probably was less need for refinancing of debt and rehabilitation of farm areas, the principal purposes of Government credit. Trends in Non-Real Estate Loans Non-real estate farm loans were influenced by the same basic forces governing the trends of mortgages during the first world war, the 1920’s, and the Great Depression. Loans for Page 131 FARM MORTGAGE LOANS OUTSTANDING PRINCIPAL LENDER GROUPS PENNSYLVANIA, NEW JERSEY DOLLAR VOLUME AND DELAWARE PERCENTAGE DISTRIBUTION MILLIONS % 72 TOTAL MORTGAGES* 60 NDIVIDUALS AND OTHERS 48 INDIVIDUALS AND y~ OTHERS * * 36 FEDERAL LAND BANK FEDERAL LAND BANK -n 24 COMMERCIAL BANKS ^ COMMERCIAL BANKS* « FEDERAL FARM MORTGAGE CORPORATION 12 FEDERAL FARM MORTGAGE CORPORATION 0 J___I___l ’35 ’40 ’45 *Also includes loans of joint stock banks, Farm Security Administration, and life insurance companies not shown separately. ** Partly estimated before 1935. Source: U. S. Department of Agriculture. production purposes expanded rapidly during World War I and the boom which followed. In flated farm commodity prices swelled the vol ume of farm loans. When prices broke and in comes fell, widespread liquidation of loans en sued. Some were refinanced into mortgages, but many banks found themselves with frozen loans and were obliged to charge them off. Bank failures mounted. The limited information available suggests that during this period the loans of banks in this section of the country rose less in the boom and dropped less in the recession. Although the increase in farm prices in this area during World War I was about the same as for the rest of the country, average prices did not shrink as much later on. Bank failures were less nu merous. When farm prices again declined after 1929 the drop was less severe in this area and Page 132 it is probable that the volume of non-real estate farm loans of banks fell off less rapidly. The rapid rise of federally-sponsored lend ing agencies dated from the agricultural reces sion of the early thirties. Prior to that time banks carried on the lion’s share of short-term farm lending. As late as 1935 banks in Pennsyl vania, New Jersey, and Delaware accounted for more than 90 per cent of the loans outstanding in the area. Until recently, contrary to experi ences in mortgage lending, their share declined almost continuously. Moreover, the situation has been more unfavorable locally as far as banks are concerned, than in the rest of the country. In contrast to rapid growth nationally, banks in this region have not surpassed their 1935 short-loan volume in any succeeding year. Loans made in this area by Production Credit Associations and the Farm Security Administra- NON-REAL ESTATE FARM LOANS OUTSTANDING PRINCIPAL LENDER GROUPS PENNSYLVANIA, NEW JERSEY AND DELAWARE DOLLAR VOLUME PERCENTAGE DISTRIBUTION MILLIONS S % i \ 30 of agriculture, what are the answers to the farm lending problems of banks in the post-war period? First of all, to what extent will farm loans provide an outlet for bank funds? TOTAL SELECTED LENDERS*) t 80 03 20 BANKS 60 INSURED COMMERCIAL BANKS Xj 40 PRODUCTION CREDIT ASSOCIATIONS 10 20 PRODUCTION CREDIT £ | ASSOCIATION^^^^^^^ ^ ^ 0 1935 * FARM SECURITY '—ADMINISTRATION '40 '45 FARM SECURITY S '35 ^ ’ ADMINISTRATION '40 '45 •Also includes loans of Regional Agricultural Credit Corporation, Emer gency Crop and Feed loans, and Federal Intermediate Credit Bank loans not shown separately. Source: U. S. Department of Agriculture. tion, on the other hand, increased constantly, and at a considerably more rapid rate than in the United States. During the defense period, stimulated by greater demand, farm production expanded and prices and incomes rose. The expansion of nonreal estate loans of member banks in this dis trict was less rapid than in the country as a whole. Later, from mid-1941 to mid-1945, loan volume declined continuously here while rising in other areas. Agricultural production, prices, and incomes expanded less rapidly than else where. In the United States much of the loan expansion was attributable to the rise in loans to farmers guaranteed by the Commodity Credit Corporation. The great bulk of these loans are made on cotton and other products not produced in this district. From mid-1945 to mid-1946, for the first time in four years, the volume of non-real estate loans of member banks in this district moved upward. The increase was substantially greater than in other agricultural areas where loans guaranteed by the CCC fell off sharply because prices of many farm products were above support levels. Prospects for Farm Lending Keeping in mind past experiences in farm lending as well as expectations for the future The future of farm loans will be governed fundamentally by two factors: (1) the volume of agricultural expenditures; and (2) the role which banks, other lenders, and the use of ac cumulated liquid assets play in financing the expenditures. The long-run trend toward greater mechanization of farm operations has revolu tionized agriculture. But mechanization is still far from complete. In 1940, 68 per cent of the farms in the Third District had no tractors and 72 per cent were without motor trucks. Farmers were unable to replace much of their worn-out equipment during the war. New types of ma chinery will become available. There also ex ists a backlog of demand for repairs and im provements. In 1940, 27 per cent of the farm dwellings in the Third District needed major repairs, 60 per cent lacked running water, and 41 per cent were not wired for electricity. The wartime increase in farm real estate values was largely due to price increase; the physical con dition of land and buildings probably declined. A national survey of liquid assets and their probable use indicated that purchases of farm machinery and the construction and repair of buildings were uppermost in farmers’ plans for 1946. Because of the unavailability of many ma terials, expansion and improvement may have to be postponed but the need still exists. In addition to capital and equipment expenditures, farmers plan to spend a substantial amount for automobiles and other consumer durable goods. Expenditures for production will depend, to a large extent, on the trend of demand and prices. If inflation continues, operating costs will be larger. In the event of a general agricul tural slump it is likely that the local situation will be less severe than in other farming areas. Past experiences have been favorable in this respect because production has moved increas ingly toward those products with more stable prices. How will farmers finance their expenditures? During the war the growth of liquid asset hold ings of farmers was more rapid than that of other individuals and businesses. Bank deposits, cur Page 133 rency, and U. S. Savings Bonds owned by the nation’s farmers had risen to $19 billion by the beginning of this year. In the Third District, demand deposits owned by farmers in July amounted roughly to $160 million. If demand deposits constitute the same proportion of total liquid assets of local farmers as prevails in the country as a whole, the total holdings of liquid assets of farmers in this area may be as much as half a billion dollars. The survey of liquid assets indicated that farmers not only plan to make relatively more extensive expenditures than the rest of the popu lation but they expect to use more of their liquid assets. Except in the purchase of some farm equipment, the extensive use of instalment credit, a factor tending to sustain liquid asset holdings of urban consumers, will be less marked in farm communities. There are several indications, however, that a large proportion of liquid assets is concen trated in a few large holders. A national sur vey made by the Bureau of Agricultural Eco nomics revealed that 10 per cent of the farm operators held 70 per cent of all demand de posits owned by this group. About 10 per cent of the farm operators held three-fourths of the U. S. Savings Bonds; half of the farmers owned no bonds. Individual farmers may need credit even though aggregate liquid assets remain large. Moreover, many farmers may prefer to maintain savings intact until they can predict with greater accuracy the future trends of de mand, prices, and income. Whether a demand for credit will be reflected in a greater volume of bank loans to farmers will depend on the answers to the second ques tion with which banks are concerned: What loan policies will bring most benefit to both banking and agriculture? The essential prob lem in the long run is to adapt lending opera tions to the changing needs of the farmer. A study made by the Federal Reserve Bank of Cleveland in 1944 revealed several significant trends in farm lending practices over the pre ceding decade. There was a decided trend to ward lower interest rates, greater use of amor Page 134 tization and multiple payments and longer terms of mortgages. Those banks which par ticipated in these new lending practices and made more extensive use of the chattel mort gage experienced an expansion of farm loans, while those whose policy remained unchanged or moved counter to the trend, experienced re ductions in loan volumes. These practices ap parently increased loan volume directly by at tracting borrowers and enabling banks to meet the competition of other lenders. Some of these practices probably also contributed to a sounder financial position of borrowers and more pros perous agricultural conditions, thus indirectly expanding the volume of loans. The share of the farm lending business which banks will get will also be influenced by gen eral farming conditions. In the event of an agricultural slump it might be expected that the importance of banks in the farm lending field would decline relative to public agencies. The objective of Government policy should be to provide credit under circumstances where risks are too great to be assumed by private lenders. Nothing like the situation after 1920 or in the depression is to be expected, however. Farmers are in better financial condition and the banking system is better able to withstand the pressure of deposit losses and distress borrowing. If banks can provide agriculture with dependable credit in both good times and bad, they will do much to strengthen their competitive position. The policies which banks pursue now can have a decided influence on the future condition of agriculture—and, by the same token, the future of their own farm lending. By guarding against the excesses which prevailed after the first world war they can avoid the painful ad justment of the early twenties. It is in this connection that the recent upturn of mortgage and non-real estate debt is signifi cant. A readjustment of land values, farm prices, and incomes is highly probable. When that adjustment comes it will be important that farmers are not in debt out of all proportion to their ability to pay. By following a careful pol icy today banks can do much to assure a larger volume of farm loans in the future. BUSINESS STATISTICS Production Philadelphia Federal Reserve District Adjusted for seasonal variation Indexes: 1923-5 -*100 Oct. Sept. Oct. 1946 1946 1945 INDUSTRIAL PRODUCTION MANUFACTURING............... 4 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 Pig iron...................................... Steel............................................ Iron castings............................ Steel castings........................... Electrical apparatus............ Motor vehicles........................ • Automobile parts and bodies Locomotives and cars........... Shipbuilding............................. Silk manufactures.................. Woolen and worsteds............ Cotton products..................... Carpets and rugs.................... Hosiery...................................... Underwear............................... Cement...................................... Brick.......................................... Lumber and products........... Bread and bakery products. Slaughtering, meat packing. Sugar refining.......................... Canning and preserving. ... Cigars........................................ f 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.............. Sales, total............................... Sales to industries.................. BUILDING CONTRACTS... TOTAL AWARDSf................. Residential!............................. Nonresidentialf...................... Public works and utilities... 105p 105p 117p 95p 128 70p 165p 108p 109 47p 145p 73p 117 107* 107 120 94 131r 70 172 102 102 47 165 71 120 94 101 81 120 194 24 131 69 101 87 r 110 95 r 82 73 124 156 184r 159 26 43 136 100 67 67 102 103r 126 85 r 114r 67 r 258 in 97 36 139r 69r 109 Per cent cl ange Oct. 1946 1946 from from 10 Mo. Year mos. 1945 ago ago -1 - 1 - 3 + 1 - 2 +1 - 4 + 6 + 7 0 -12 + 3 - 2 95 46 157p 109 88 123 lOlp 46p 85 91 I94p 162p 80 78 99 312 433 433 317 32 47 155 102 89 126 92 51 90 105 225 172 82 79 107 310 432 434 321 93 68 136 96 86 114 95 45r 89 85 I94r 120 73 75 58 316 395 396 291 - 7 - 9 - 1 - 4 + 6 - 7 - 4 + 3 — 5 + 4 + 1 - 4 - 2 - 5 - 5 - 1 - 1 + 2 10* +198 - 2 + 2 + 7 0 - 3 +10 - 8 - 6 -13 -14 - 6 - 2 - 1 - 8 + 1 0 0 - 1 115 104 103 147 149 125 142 176 68 13 102 155 -23 -16 -27 -16 87 84 79 68p 67 56 r 53 55 42 72p 74 50r 61 70 74 132 138r 126 70p 71 45 59 59 48 27 27 24 + + + + + — — + + + + + 3 3 7 12 12 6 36 3 12 31 5 5 7 + 8 + 6 + u 23 —+ 22 44 + 31 + 2 50 + 11 + 22 + 27 + 45 + 15 + 4 + 56 + 22 + 13 + 2 33 16 13 3 8 6 4 4 7 0 35 10 4 70 1 9 9 9 _ — + + + + + + _ — + — _ _ — + + + + + + + + 18 19 41 9 30 u 58 2 23 23 11 0 17 11 26 9 50 36 45 10 37 65 5 18 18 36 16 6 87 9 11 + 5 15 + 14 + + 25 + + 6 + + 19 + + 6 + 10 59 — 3 + + + 1 + 16 + + 8 + + 9 + 4 6 _ 1 + _ 2 + _ + - 9 + 70 +132 +678 ** + 1 + 70 5 24 —+ — Employment and Income in Pennsylvania Not adjusted Industry, Trade and Service Oct. Sept. Oct. 1946 1946 1945 110p 109 110p 109 105 106 133 73p 157p 119p 133 50p 147p 78p 118 133r 71 163 113 118 51 163 78 119 118r 68 r 247 121 119 38 140r 74r 110 93 101 86 114 212 22 124 65 95 86 r 105r 95r 82 77 113 148 202 r 173 22 39 129 95 64 64 89 84 81 6lr 74p 74 55 52 43 54r 79p 78 67 77 74 138 r 138 143 50 78p 83 60 60 49 29 28 25 99 38 202p 134 90 124 109p 48p 86 97 l96p 159p 81 78 106 312 446 433 307 34 40 200 118 89 125 105 53 90 99 228 165 82 79 110r 310 423 429 340 97 57 179 118 88 115 103 46 r 89 91 195r 117 74 75 62 316 407 396 282 118 120 99 154 145 147 134 160 70 15 98 163 Employment Indexes: 1932=100 Percentage Factory Factory Building Retail change— Employment Payrolls permits sales Oct. value 1946 from month and Sept. Oct. Sept. Oct. Sept. Oct. Sept. Oct. 1946 1945 1946 1945 1946 1945 1946 1945 year ago ♦Allentown........... - 1 + 3 +16 - 48 - 36 +21 1 Altoona................ - 2 + 8 +17 - 40 - 67 + 8 5 +28 Harrisburg.......... - 1 +12 + 12 +29 - 95 - 86 - 4 +20 Johnstown.......... - 1 +15 +32 + 1 - 37 + 5 +38 1 Lancaster .. + 2 +14 +29 - 10 + 24 + 3 +19 60 +22 +133 + 88 + 6 +19 Philadelphia.... +11 0 Reading............... + 2 +13 + 7 +30 - 65 - 64 + 1 +29 Scranton.............. + 7 + 6 +28 +131 +190 + 1 +27 1 - 35 - 51 + 1 +19 Wilkes-Barre___ +11 +32 + 96 + 42 + 3 +33 2 8 Williamsport___ +14 0 +32 0 +125 2 Wilmington........ +13 - 55 - 72 +11 +37 1 3 3 York..................... +19 +37 + 67 + 19 + 4 +25 1 6 * Area not restricted to the corporate limits of cities given here. + + + + + + + + + + + +n +17 +1 + +277 +38 +48 +21 +31 +45 +11 +11 + 11 + 7 -10 +3 4 +25 + +339 +29 +37 +34 +28 +31 +23 + 12 + 8 +148 + 20 + 29 + 8 + 19 + 8 + 13 - 13 0 + 5 330 430 538 166 399 268 191 223 198 202 220 254 Employment* Indexes: 1923-5 =100 — — + — + 1 2 8 3 1 -f ?a + 20 +373 + 26 + 60 -j- | + 24 + 26 + 22 + 3 + 2 + 1 -20 - 2 + 13 + 5 + 25 Payrolls* Per cent Per cent Oct. change from Oct. change from 1946 1946 index Sept. Oct. index Sept. Oct. 1946 1945 1946 1945 TOTAL..................................... 104 Iron, steel and products___ 106 Nonferrous metal products. 197 Transportation equipment 90 Textiles and clothing......... 84 Textiles................................ 80 Clothing............................... 103 Food products...................... 104 Stone, clay and glass.......... 107 Lumber products................. 55 Chemicals and products. . , 119 Leather and products.. . . , 83 Paper and printing.............. +121 Printing................................. 117 Others: Cigars and tobacco........... 56 Rubber tires, goods........... 146 Musical instruments. .. . , 83 - 2 - 3 +1 - 2 +1 +1 - 1 -13 0 - 3 0 - 1 - 1 - 1 + 8 +12 + 11 -12 +14 +16 +10 -13 +27 +25 +10 +13 + 12 +12 176 213 411 164 161 154 198 173 187 105 214 149 222 210 + 5 + 2 -15 +1 +1 - 2 + 3 0 0 +20 +21 +18 + 3 +33 +34 +27 - 7 H1-41 Hb49 bl8 b20 b25 t-28 + 3 0 -25 +13 +24 -17 100 361 170 + 6 + 5 -15 +26 +36 +15 - 2 4 4 1 + 5 * Figures from 2715 plants. Hours and Wages Debits Oct. 1945 131 - 1 161 - 2 97 - 2 69 0 101 0 145 - 2 118 0 138 + 3 121 +1 97 -25 99 - 6 102 + 3 Manufacturing Factory workers Averages Oct. 1946 and per cent change from year ago Sept. 1946 Per cent Per cent Oct. change from Oct. change from 1946 1946 index Sept. Oct. index Sept. Oct. 1946 1945 1946 1945 GENERAL INDEX. .. Manufacturing.................... Bituminous coal mining. . Building and construction. Quar. and nonmet. mining Crude petroleum prod.. . Public utilities.................. Retail trade......................... Wholesale trade.................. Hotels.................................... Laundries............................. Dyeing and cleaning......... * Unadjusted for seasonal variation. p—Preliminary, t 3-month moving daily average centered at 3rd month, r—Revised. ** Increase of 1000% or more from the low level. Local Business Conditions* Payrolls TOTAL ........................... Iron, steel and prods... Nonfer. metal prods.. . Transportation equip.. 1 extiles and clothing.. 1 extiles........................ Clothing....................... Food products.............. Stone, clay and glass. . Lumber products......... Chemicals and prods. . Leather and prods........ Paper and printing... Printing........................ Weekly working time* Hourly earnings* Weekly earnings! Aver age Ch’ge Aver Ch’ge Aver hours age age 39.6 - 4 $1,160 +13 $45.44 39.0 - 5 1.220 +12 47.42 39.8 - 6 1.127 +16 44.79 40.7 - 3 1.312 +13 53.32 39.2 - 1 .979 +17 38.35 40.0 - 2 1.007 +18 40.34 37.0 +1 .895 +14 33.75 40.9 - 7 .937 +14 39.29 39.0 - 4 1.110 +17 43.29 43.1 0 .933 +21 40.00 39.9 - 4 1.227 + 7 48.94 39.4 - 7 .914 +15 35.84 42.8 - 5 1.162 +18 49.83 42.9 - 1 1.331 +17 56.88 Cigars and tobacco... 38.4 Rubber tires, goods. . 42.6 Musical instruments. 47.8 * Figures from 2570 plants. - 9 - 7 + 9 .844 +23 1.239 +12 1.114 +28 32.41 52.74 53.28 f Figures from 2715 plants. Ch’ge b 8 -b 6 b 9 -bio bl6 bl6 bl7 b 8 bll H-21 b 3 -|- 7 -1-12 +16 + 11 + 5 +39 * Distribution and Prices Wholesale trade Unadjusted for seasonal variation Per cent cha nge 1946 Oct. 1946 from from 10 Month Year mos. ago ago 1945 Total of all lines..................... - 3 Dry goods.............................. +27 + 9 -13 +10 - 1 + 8 Groceries................................ Hardware............................... Jewelry................................... Paper....................................... Inventories Paper....................................... - +27 +80 +60 ft +29 +74 +65 +40 +23 +22 + 4 + 6 +16 + 7 - 3 + 3 Indexes 1 1935-1939=100 Month Year ago ago Perceiit chang■efrom Oct. Year Aug. Month 1946 1939 ago ago + 5 +36 +152 134 165 158 116 + 8 + 7 +20 + 3 +27 +30 +49 +16 + 79 +171 +135 + 44 148 148 178 163 121 167 128 + 2 + 1 + 3 0 0 0 + 1 +15 + + + + + + + Other............................ Living costs (1935-1939=100) Clothing.................... Housefumishings. . . Other.......................... +16 +29 + 9 + 7 +14 + 6 Oct. Sept. Oct. 1946 1946 1945 230p 218 239 243 212p 241 220 239 264 212 184 182 206 232 166 - 5 1 0 - 8 0 + 13* + + + + + + 25 20 16 5 28 26* + + + + + 2S9p 245 273 260 225 212p 210 149 203p 198r 143 242 245 178 57 83p 72 + 1 + 3 — 1 + 16 + 13* + + + + + 42 43 36 45 55* 136 130 97 144 152 165 90 140 132 135 128 93 156 154 180 88 107 42 86 107 147 87 89 170 111 + 1 + 2 + 4 - 7 - 2 - 8 + 2 + 31 +217 + + + + + + + + 21 18 13 35 3 89 2 18 19 183 207 132 - 11 + 39 189 28 26 31 31 35 246 227 280 244 251 208 204 236 248 176 Inventories Basic commodities (Aug. 1939=100).... 252 f (1926-100)................ 1946 from 10 mos. 1945 • RETAIL TRADE Sales Department stores—District........................ Philadelphia............... Women’s apparel.............................................. Men’s apparel................................................... Shoe..................................................................... Source: U. S. Department of Commerce. Prices Oct. 1946 from Oct. Sept. Oct. 1946 1946 1945 +42 +31 +43 +65 +19 Not adjusted Per cent ch Etnge +30 +79 +26 +58 +32 +37 Adjusted for seasonal variation 51 51 91 64 26 66 27 Source: U. S. Bureau of Labor Statistics. FREIGHT CAR LOADINGS Total..................................................................... Merchandise and miscellaneous................... Merchand ise—1 .c.l........................................... Coal...................................................................... Ore........................................................................ Coke..................................................................... Forest products................................................ Grain and products......................................... Livestock............................................................ MISCELLANEOUS Life insurance sales........................................... Business liquidations Check payments................................................. 217 235 * Computed from unadjusted data.. ** Increase of 1000% or more from the low level. 113 no 242p 231 170 234p 222 r 164 295* 286r 217r 85p 74 59 151 139 96 172 248 191 i 147 138 102 159 218 188 105 140 155 50 122 117 91 118 211 99 104 170 130 + 64 191 182 137 + 98* +693* +165* 12 ' ** +959* 56 - 7 + 15 + 10 213 6 4 211 1 0 185 p—Preliminary. + + 7 6 8 0 27 23 4 15 no 106 r—Revised. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changes in weeks ended Changes in— Reporting member banks (Millions $) 27, 1946 Five weeks One year Commercial loans.................. 8 396 32 Loans to brokers, etc............. 23 Other loans to carry secur.... 44 Loans on real estate.............. 3 Loans to banks....................... 166 Other loans............................... +$21 + 1 — 6 — 2 + i + 4 +$160 — 9 — 8 + 11 + 2 + 37 Total loans............................. $ 664 +$19 Government securities.......... $1409 Obligations fully guar’teed. . Other securities...................... *2ii —$72 + 4 + "i6 Total investments............... $1620 —$68 -$519 $2284 422 33 92 48 —$49 - 3 - 1 + 6 + 2 -$326 - 33 3 + 2 2 Liabilities Demand deposits, adjusted.. $1836 265 Time deposits.......................... U. S. Government deposits. . 158 Interbank deposits................. 330 1 Borrowings............................... 26 Other liabilities....................... 263 Capital account...................... +$44 - 6 - 53 - 24 - 5 - 1 -$100 + 46 - 260 - 57 — 5 + 6 + 9 Total loans & investments.. Reserve with F. R. Bank... Cash in vault.......................... Balances with other banks.. Other assets—net................... Page 136 Changes in five weeks Third Federal Reserve District (Millions of Dollars) Oct. 30 Nov. 6 Sources of funds: Reserve Bank credit extended in district.......... Commercial transfers (chiefly interdistrict).... Treasury operations................................................. -16 +21 -10 +29 +30 -48 - 3 +27 - 8 + 5 - 2 -21 + 7 + 8 - 4 +22 +84 -91 Nov. 13 Nov. 20 Nov. 27 Total.......................................................................... - 5 +n +16 -18 +11 +15 - 2 - 4 + 1 + 7 + 5 - 1 + 6 +10 0 - 7 -11 +$193 Uses of funds: Currency demand..................................................... Member bank reserve deposits............................. “Other deposits” at Reserve Bank...................... Other Federal Reserve accounts.......................... +19 - 9 + 1 +23 - 9 4* 1 -$535 Total........................................................................... - 5 +11 +16 -18 +11 +15 Ratio of excess to re- Member bank reserves (Daily averages; dollar figures in millions) Held Required Excess Phila. banks 1945: Nov. 1-15.. 1946: Oct. 1-15.. Oct. 16-31.. Nov. 1-15.. $445 410 409 412 $435 403 402 406 $10 7 7 6 2% 2% 2% $357 392 386 391 $295 335 335 338 $62 57 51 53 21% 17% 15% 16% Country banks 1945: Nov. 1-15. . ' Oct.’ 16-31. . Nov. 1-15.. 2% Federal Reserve Bank of Phila. (Dollar figures in millions) Nov. 27, 1946 Five weeks Disc, and advances. . $ 20 Industrial loans......... 1 U. S. securities........... 1653 +$ i Total........................... $1674 Fed. Res. notes.......... 1681 Member bk. deposits. 787 U. S. general account. 45 Foreign deposits........ 52 3 Gold certificate res.. . 899 35.0% Reserve ratio.............. +$35 + 24 - 9 + 17 + 10 + 1 + 2 - 0.5% + 34 One year +$ 6 - 1 + 32 +$37 + 71 - 20 + 20 - 21 + 20 + 0.1% "
@FedFRASER