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THE BUSINESS REVIEW FEDERAL RESERVE BANK OF PHILADELPHIA FEBRUARY 1, 1943 RATION BANKING 1 HE general objective of rationing is to se plan, each commodity in a group is given a point value based on its scarcity, permitting some ad justment of demand to supply. Everyone is given a specified number of ration points in a book of stamps. Each holder of a ration book is entitled to use a certain number of points each month. He may use them for any commodity in the group. If he chooses to buy scarce articles with high point values he may not buy as many units as if he chooses more plentiful articles with lower point values. War Ration Book Two con tains 96 blue stamps worth 384 points in the The straight coupon system, with which the purchase of certain processed foods, and an country is familiar in purchasing sugar, is a rea equal number of red stamps to be used in the sonably satisfactory method for rationing com purchase of the second group of commodities— modities (1) of which almost everyone is a con as yet undetermined—to be rationed. sumer, (2) of which the supply is adequate for Ration banking. The Ration Banking plan everyone to have a share large enough to be useful, and (3) for which no widely-used sub which began operation on a nation-wide basis on January 27 was established by the Office of stitute is available. Price Administration in cooperation with repre If, however, straight rationing were used on sentative bankers and federal and state super other types of commodities, such as canned visory agencies. It enlisted the administrative peaches, the results would be (1) that every facilities, the accounting knowledge, and the in one, including those who had not used them reg tegrity of the commercial banks in receiving ularly, would receive allotments, (2) that every deposits and handling exchanges by check. It one, including those who had used them in enables the Office of Price Administration to large quantities, would receive only a small ascertain the effective amount of coupons out share, and (3) that there would be a rush to standing at any time and to prevent kiting and buy substitute products such as canned apricots, counterfeiting. It is an efficient method of dis posing of the immense quantities of coupons that pears, etc. will be in existence. Point rationing is designed to insure a fair dis The magnitude of this last feature may be tribution and as much variety as possible of scarce articles by rationing related or inter envisioned when it is recalled that more than changeable commodities as a group. Under this 100,000,000 people hold sugar ration cards, cure an equitable distribution of scarce com modities. A prospective buyer is required to surrender authorizations to purchase, as well as money, when he purchases rationed articles. These authorizations or coupons are distributed free by the rationing authority on such bases as equality for all, for example, coffee and sugar; or relative need, as in the case of gasoline and fuel oil; rather than on such bases as ability to pay or “first come, first served.” Page One each of which covers 10 periods—a total of over a billion coupons. Over 100 carloads of safetypaper are required to print War Ration Book Two in connection with point rationing. The public is not directly affected by the program, which will use the commercial banking system to handle ration coupons after they have passed from the hands of consumers into trade chan nels. At present, it applies only to certain trans actions in gasoline, sugar and coffee. In principle the procedure will parallel that of ordinary checking accounts. Separate ac counts must be maintained for each article in cluded in the program, but the units of account are pounds of sugar, gallons of gasoline, and the like, instead of dollars. When point ration ing becomes effective, additional accounts in point units will have to be opened. Tradespeople and others who come under the program will open ration accounts by filling out signature cards similar to those used in ordinary banking operations. Ration deposit slips in terms of pounds or gallons will be made in du plicate, the original to be kept by the bank for its record, the duplicate, initialed by the teller, to serve as a receipt for the depositor. Nontransferable ration checks may then be written against the account. returned to the bank upon which it is drawn. When the grocer’s bank receives the check through the clearing, it will debit his coffee account. This procedure will eliminate the work of ex changing coupons for certificates now being handled by some 5,500 local ration boards, manned for the most part by voluntary, part time personnel. Banks are specifically author ized to destroy accumulated coupons twice a month. No minimum balance is required and no charge is to be made to the depositors, but an overdraft is a serious federal offense. Ration credits are valid at any time after the deposit is made. Banks are not required to open ration ac counts, but almost all are expected to render this public service. In the field of foods all pri mary distributors, wholesalers, chain stores, and retailers whose December 1942 sales of all foodstuffs totaled $5,000 or more must open ration bank accounts. Retailers whose sales to taled less than $5,000 may do so. In the field of gasoline, all wholesalers, distributors, and dis tributing refiners must open accounts. The Office of Price Administration will com pensate banks in accordance with the following schedule: The operation of the system is illustrated in For opening a ration bank account. . .$.30 the following example. The grocer builds up For each additional account opened for his account by depositing coffee coupons in his the same depositor at the same bank bank. He then draws a check against this cof office.............................................................. 05 fee coupon account covering the exact quantity Monthly service fee for each account .10 he orders from his supplier. Receipt of this For each deposit made.............................. 05 check authorizes the supplier to furnish so many For each item included in thedeposit. .005 pounds of coffee to the retailer; actual payment For each ration check charged..............04 of course is in dollars. The supplier deposits the check with his bank and receives credit in Each coupon sheet or stamp card is consid his coffee account. If the grocer happens to ered one deposit item. have his deposit at the same bank, it will debit his account. If, as is usually the case, the grocer has his deposit at another bank, the check travels back to his bank. Local items, drawn BUSINESS SUMMARY on banks participating in a local, state, town, county, or group clearing arrangement, are to Rapid progress was made during 1942 in be cleared through the same channels as regular transforming the economy of the country from dollar checks. Ration checks drawn on corre peace to war. Many new plants were built and spondent banks may be sent directly to such equipped, and existing facilities were converted. correspondents. All other ration checks must Before the close of the year, however, building be forwarded by every bank, whether or not a activity declined somewhat. Industrial produc member of the Federal Reserve System, to the tion expanded sharply, as increases in the out Federal Reserve Bank or branch in the district put of heavy industries, largely for war, more in which the sending bank is located. The Fed than compensated for declines in the output of eral Reserve Bank, in turn, sees that the check is consumer’s goods. Page Tm It is clear, however, that the transition is not complete. Retail trade increased considerably in the year as employment and wage payments continued to advance almost without inter ruption. Among the more important adjust ments still to be made are those relating to an equitable distribution of the decreasing supply and production of essential civilian goods. Expanding war require ments are largely responsible for the continued heavy demand for the manufactures of this dis trict. In the early weeks of 1943, orders for most durable goods approximated the peak lev els reached last year, and sales of certain tex tiles and leather products increased. A further decline in new commitments for building ma terials reflected renewed efforts of the Govern ment to conserve supplies of critical items for direct war needs. PRODUCTION AND PRICES PERCENT PRODUCTION * fMILA. FtOCTAL RUERVE "COST OF LIVING IN PHILADELPHIA Manufacturing. Factory operations generally showed only temporary declines at the turn of the year, and in some lines new production records have been established through increases in working time and completion of additional manufacturing fa cilities. Unfilled orders for the products of both durable and consumers’ goods industries remain heavy. WHOLESALE COMMODITY PRICES US jjK Adjusted for 8«« 1937 1938 1939 1940 Output of factory products in this district was unusually well maintained in December and was 17 per cent above 1941. Operating for some time past at near-capacity levels, the dur able goods industries did not show the usual seasonal gain, but in the case of lighter products an increase of 7 per cent on an adjusted basis was reported. Over the past twelve months, output in the heavy industries has shown an average gain of 45 per cent, as against a decline of 4 per cent in consumers’ goods lines. Coal and other fuels. The market for all Employment and wage payments in Pennsyl fuels remains exceptionally strong. Sales of vania factories advanced slightly further from anthracite were large throughout December, November to December. The number of wage but declined in early January, when suspension earners, estimated at a new high of over of operations at a number of mines as a result 1,200,000, was 5 per cent greater than a year earlier. Payrolls, which reached a record level of labor disputes reduced the supply. Pur of $46 million a week, showed an increase of chases of bituminous coal by manufacturing plants have increased further, and takings of 25 per cent over December 1941. Working time has been rising steadily since last spring, other industrial consumers continue heavy. and increased about 12 per cent during 1942. Production of anthracite declined sharply in Throughout the year, gains in employment, December, but remained above the 1941 level. wage disbursements, and total employee-hours were due chiefly to expanding activity in muni A substantial increase anticipated in early Janu ary, when operations at the mines were ex tions and other heavy industries. tended to six days a week, did not materialize, as many collieries were closed down by strikes. Weekly income of factory workers in Penn The total output of nearly 60 million tons in sylvania increased to a new high in December, 1942 was 6 per cent greater than in 1941 and averaging $41.73, as against $41.40 in Novem the largest since 1930. Requirements for 1943 ber, and $34.87 a year earlier. In the two and have been set tentatively at 65 million tons. one-half years of defense and war activity, aver age weekly income advanced about 57 per cent. Output of bituminous coal in Pennsylvania Hourly earnings rose to an average of 96 cents, declined more than seasonally from November from 951/2 in November, and 85 in December 1941. Working time increased slightly in the to December and was substantially smaller than month to an average of 44 hours a week, the a year earlier. Production increased somewhat in the first half of January, when considerable highest reported since the middle of 1930. Page Three METAL PRODUCTS DEPARTMENT STORE SALES AND STOCKS EMPLOYEE-HOURS IN PENNSYLVANIA PERCENT third federal reserve district PERCENT STOCKS I i IRON AND STEEL NON-FERROUS ' METALS - 1937 I93B 1939 SALES AP-WyCO TOR SEASONAL VARIATION 1941 1942 quantities of the fuel were required to meet the needs of those who were unable to secure an thracite. Colliery output in 1942 reached a thirteen-year peak of 140 million tons and was 10 per cent greater than in the preceding year. Building. Activity in the construction indus try in this district was above 1941 levels over most of last year. Operations against contracts for war facilities and essential nonmilitary pro jects rose steeply throughout the first six months, more than offsetting substantial de clines in other types of construction resulting from restrictions on the use of critical materials. Building declined toward the close of the year, when further efforts were made to conserve materials, manpower, and facilities for direct war needs. Contracts awarded in December decreased only 10 per cent from the thirteen-year peak in November, and were the largest for the month in records back through 1923. Placements to taling more than $57 million were 72 per cent greater than in December 1941, reflecting sub stantial gains in contracts for all types of con struction except small houses, commercial struc tures, and educational buildings. Aggregate awards in 1942 exceeded $423 million, were one-fourth greater than in 1941, and the largest since the all-time high of $503 million reported in 1928. Contracts for fac tories, public works and utilities, multiple-fam ily dwellings, and unclassified construction re lated to the war effort showed exceptionally large increases during the year. Trade. Heavy Christmas buying raised the Page Four 1937 1938 93 9 194 1 I 942 value of retail sales in this district to an all-time high in December. At department stores the gain over 1941 was 10 per cent, and in other reporting lines increases were substantial. For the year 1942 sales exceeded those of a year earlier by more than 10 per cent in all lines except men’s apparel. Retail inventories decreased considerably in December, but at the end of the month were substantially larger in dollars than a year earlier at both department and women’s ap parel stores. Outstanding orders for merchan dise by department stores decreased slightly further in December, but were much larger than at the close of 1941. The rate of collections on charge and instal ment accounts at department stores showed a pronounced increase during the second half of 1942, reflecting in part the influence of meas ures taken in the spring to broaden the scope of Regulation W and tighten certain restrictions already in force. Collections on charge accounts were unusually well maintained in the heavy selling month of December, and were much more rapid than a year earlier; substantial im provement over December, 1941 also was shown in the case of instalment accounts, reflecting larger down payments and shorter maturities. Aggregate sales in eight branches of whole sale trade in December were 6 per cent smaller than a month ago and a year earlier. The only increases over 1941 were in shoes and groceries; declines of over 10 per cent were reported in sales of paper, hardware, electrical supplies, and jewelry. Despite this unfavorable com parison for December, total dollar volume in 1942 was 12 per cent greater than a year earlier. Inventories at wholesale establish ments decreased somewhat further in December and were substantially below the 1941 level. Banking conditions. The investment port folios of member banks in this district reflect active support of the Treasury’s financing pro gram. Preliminary figures show that these banks held $1,840 million of Governments at the end of December, an amount equal to 56 per cent of their earning assets. The increase dur ing 1942, in which Philadelphia banks and coun try banks participated about equally, was in ex cess of $800 million. In other classes of loans and investments the trend was downward last year. Loans were reduced $203 million to $915 million as commercial borrowing declined, less consumer credit was extended, and supplies of open market paper shrank. Holdings of securi ties other than Governments also decreased somewhat, continuing the decline that has been in progress since 1936. Changes in earning as sets since 1929 are shown in the chart. Member banks have gained reserves in the past month. Balances totaling $673 million on January 20 were $20 million larger than on De cember 23; at Philadelphia banks reserves ex ceeded requirements by an estimated 18 per cent and at banks outside of the city by about 38 per cent. Funds came principally from opera tions of the Treasury; expenditures were $37 million more than receipts, despite substantial withdrawals from Government depositaries. Currency demand declined somewhat in this period. A moderate loss was sustained in transactions with other districts, and expansion in reserves was further restricted by a decline in float. Treasury bills held by the Reserve Bank under the repurchase option increased some what in the month, but borrowings of member banks continued very light. The investment in Governments was further increased by a larger participation in securities held by the System. Expanding deposits of individuals and busi ness concerns at reporting member banks re flected the disbursements of the Treasury. Total deposits, including Government balances, have been at record high levels recently. Investments of these banks were increased $45 million to $1,327 million in the four weeks ended January 20, chiefly by the delivery of a new issue of cer tificates of indebtedness toward the close of De LOANS AND INVESTMENTS OF ALL MEMBER BANKS PHILADELPHIA FEDERAL RESERVE DISTRICT MILLION? $ 1500 LOANS 1000 OTHER SECURITIES 500 U S. GOVERNMENT OBLIGATIONS (direct and guaranteed) 0 ’29 '30 '31 '32 '33 '34 '35 '36 ’37 ’30 I 39 40 41 '42 cember. Loans declined further, with decreases in all classifications. Commercial loans are only slightly smaller than a month ago, but over a twelve-month period have declined 16 per cent. Treasury finances. Final figures for the Vic tory Fund drive of December show that $596 million of securities was allotted in the Third Federal Reserve District. This comprised $186 million of bonds and certificates and $80 mil lion of Treasury bills taken by commercial banks, and $330 million of securities purchased by others. This participation in the efforts of the Treasury to meet its financial requirements is encouraging in view of the outlook for in creasing war costs in the next fiscal year. Ex penditures of the Federal Government and its corporations are expected to total $109 billion in the year beginning next July; in the absence of a change in the tax laws, net public borrow ing may reach $70 billion, according to the budget message of the President. Major financing requirements temporarily were met by the Victory Fund drive, but certain classes of securities are continuously on sale. Offerings of Treasury bills were raised from $600 million to $700 million a week during January; the weekly average of about $18 mil lion allotted in this district was larger than in December. Sales of savings bonds totaled $58 million, maturity value, in the first 25 days of the month, as compared with $46 million in the corresponding period of December, while sales of tax savings notes declined. The district sub scribed $220 million and was allotted $73 mil lion of an issue of certificates of indebtedness, offered primarily to provide funds for the re demption of certificates maturing February 1. Page Five BUSINESS STATISTICS Production Employment and Income Philadelphia Federal Reserve District in Pennsylvania Industry, Trade and Service Adjusted for seasonal variation Not adjusted Employment Payrolls Per cent Per cent Dec. chargefrom Dec. change! rom 1942 index Nov. Dec. index Nov. Dec. 1942 1941 1942 1941 Per cent cl iange Indexes: 1923-5 = 100 INDUSTRIAL PRODUCTION MANUFACTURING................ Durable goods........................... Consumers’ goods.................. Metal products.......................... Textile products........................ Transportation equipment.. . Food products. . .................... Tobacco and products............ Building materials.................... Chemicals and products......... Leather and products............. Paper and printing.................. Individual lines Pig iron........................................ Steel.............................................. Silk manufactures.................... Woolens 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........................................... Paper and wood pulp............. Printing and publishing......... Shoes............................................ Leather, goat and kid............. Paints and varnishes............... Coke, by-product...................... COAL MINING.......................... Anthracite................................... Bituminous................................. CRUDE OIL................................. ELEC. POWER—OUTPUT.. Sales, total.................................. Sales to industries.................... BUILDING CONTRACTS TOTAL AWARDSf................... Residential!............................... Nonresidentialf......................... Public works and utilities! • •. Dec. 1942 from Dec. Nov. Dec. 1942 1942 1941 143p 147p 231p 91p 173 69p 585 103p 141 56p 143p 108p 94 142 145 233 85 166 63 612r 101 104 54 145 110 93 124r 126 166 99 r 156 83 r 294 94 151 61 163 134r 97 104 109r 111 140 139 133 82 80 r 72 59p 57 86 58 58 52r 50p 50 109 83 70 90 160 155 145 87p 81 95 70 70 72 30 29 34 Indexes: 1932 = 100 1942 from 12 mos. 1941 Dec. Nov. Dec. 1942 1942 1941 Mo. ago Year ago +1 + 2 - 1 + 7 + 4 + 6 - 5 + 2 +35 + 4 - 2 - 2 +1 + 15 + 17 + 40 8 + 10 — 17 + 99 + 9 7 — 8 12 — — 19 — 3 + + 4_ + 19 20 45 4 15 12 +113 + 7 + 7 0 — 6 — 11 0 141p 143 145p 146 120 122 165 68p 605 102p 102 51p 141p lOOp 95 149 80r 300 92 109 55 160 128r 98 _ + + — + — — + — — — + + + + — — 6 5 14 31 11 54 8 10 8 3 12 + + + 103 HOr 110 131 133 125 80 83 73 57p 61 80 62 61 56r 51p 53 105 80 80 88 158 156 144 71 p 79 78 68 69 70 29 29 33 + — + + + 2 5 7 7 8 2 3 40 7 1 5 9 13 4 10 11 17 1 20 + 13 + 7 2 0 — 10 — 11 — 7 + 6 + 6 + 6 + 10 + 11 + 10 + 11 + 15 112 73 HOp 101 84 97 128 74p 90 153p 69p 67p 86 432 399 392 294 119 48 112 124 83 96 131 80 89 160 80 78 95 r 436 379 385 311 99 r 448 362 352 252 + 90 + 9 + 66 +223 + 21 — 31 + 40 + 75 203 58 252 511 188 54 277 375 107 54 152 158 104 112 106p 140 83 96 151 68p 93 158p 65p 63p 82 459 373 381 310 107 73 102 103 83 05 139 83 86 166 77 76 86 r 449 365 374 305 102 106 99 151 90 99r 156 113r 101 159 62r 58 r 95r 477 339 342 266 - 4 +1 + 3 + 4 + 1 0 +18 + 3 + 8 + 1 + 3 4- i* - 3 +52 + 4 +35 0 + 1 + 9 -18 + 8 - 5 -16 -17 - 4 + 2 + 2 + 2 + 2 183 60 234 426 173 48 277 326 96 55 140 132 + 6 +26 -16 +30 — — — — — + + + — + + + 9 9 2 18 4 50 11 1 2 3 4 166 68 605 r 102 125 53 145 105 94 109 69 100 109 91 lOOr 132 123 r 97 155 66 r GENERAL INDEX........... Manufacturing...................... Anthracite mining............... Bituminous coal mining.... Building and construction. Quar. and nonmet. mining. Crude petroleum prod......... Public utilities...................... Retail trade........................... Wholesale trade.................... Hotels...................................... Laundries............................... Dyeing and cleaning........... Nov. 1942 Allentown........... 0 Altoona............... Harrisburg......... - 1 Johnstown.......... 0 Lancaster............ Philadelphia.... +1 Reading............... It* 0 Scranton............. + 2 Trenton............... 0 Wilkes-Barre.... + 1 Williamsport... . + 1 Wilmington........ + 3 York..................... + 1 ♦Area not restricted to Dec. 1941 Nov. 1942 Dec. 1941 Building permits value Nov. 1942 - 3 h22 + 72 +10 - 4 + 2 h 2 - 15 -13 - 3 %i- H14 -100 - 7 - 5 - 2 + 28 + 7 1+ 3 i-b34 + 36 +16 + 2 H45 +P1 -10 + 18 - 7 I+Jl +1 + s «+18 - 14 + 3 - 6 - 18 - 29 +24 +16 -57 - 34 + 9 + 3 4-31 - 75 +42 + 3 4-83 +119 + 3 - 2 H-21 - 43 the corporate limits of cities Page Six Dec. 1941 Debits Nov. 1942 Dec. 1941 Nov. 1942 Dec. 1941 - 88 +49 - 74 +44 - 95 +43 - 81 +51 - 96 +52 + 26 +42 +45 - 20 - 77 +62 - 52 +57 - 55 +46 -100 - 15 +61 - 78 +61 given here. + 8 -13 +10 -11 +15 +12 + 14 - 1 +17 + 8 +15 +20 +29 + 9 +20 +24 + 17 +11 +28 +13 +10 +96 +28 - 1 - 5 + 3 - 9 + 3 - 5 + 3 -14 + 7 0 +33 + 1 + 8 + 8 +17 + 2 + 1 + 1 +11 -10 - 6 +1 0 +16 ~ I + 2 - 1 - 4 +18 +25 +39 + 3 + 2 +13 + 3 - 3 - 2 +12 + 1 + 5 Payrolls* Per cent Per cent Dec. change from Dec. change from 1942 1942 index Nov. Dec. index Nov. Dec. 1942 1941 1942 1941 Indexes: 1923-5 = 100 TOTAL..................................... Iron, steel and products.. . . Nonferrous metal products. Transportation equipment. Textiles and clothing........... Textiles................................. Clothing................................ Food products....................... Stone, clay and glass.......... Lumber products.................. Chemicals and products. . . Leather and products......... Paper and printing.............. Printing................................. Others: Cigars and tobacco........... Rubber tires, goods........... Musical instruments......... +1 117 128 192 131 88 80 118 118 93 51 119 93 103 94 +1 +1 + 3 + 1 + 1 0 0 - 1 - 1 + 1 0 + 1 + I - 5 - 5 - 2 174 243 366 223 117 109 155 154 125 72 180 127 135 119 68 117 78 0 + 1 - 5 - 8 +22 + 7 87 194 124 + 5 + « + 5 +32 - 6 - 6 - 7 +1 - 6 -21 +1 + 3 0 - 1 +25 +26 +27 +63 +11. +12 + 7 + 14 + 3 - 1 +18 +11 + 2 + 3 + 2 + 1 - 9 +17 +46 +28 +1 + 2 + 3 + 2 + 2 + 3 0 0 + 3 ♦Figures from 2911 plants. Factory workers Averages December 1942 and per cent change from year ago Retail sales 297 427 86 331 113 323 205 131 188 145 145 162 143 Hours and Wages Local Business Conditions* Payrolls 0 + 5 - 9 -13 -18 - 7 +1 - 5 - 4 -13 - 3 - 5 - 6 Employment* # Employment + 3 + 1 - 4 - 1 -11 - 3 - 1 - 1 +20 - 1 0 - 2 - 3 Manufacturing ♦Unadjusted for seasonal variation. p—Preliminary. !3-month moving daily average centered at 3rd month, r—Revised. Percentage change— December 1942 from month and year ago 140 182 59 92 49 111 142 101 149 111 96 109 98 Weekly working time* Hourly earnings* Weekly earnings! Aver age Ch’ge Aver Ch’ge Aver Ch’ge hours age age TOTAL............................. 43.8 Iron, steel and prod.. .. 44.3 Nonfer. metal prod.. . . 44.2 Transportation equip.. 48.5 Textiles and clothing. . 39.8 Textiles........................ 40.6 Clothing....................... 37.9 Food products............. 42.2 Stone, clay and glass. . 38.7 Lumber products......... 44.3 Chemicals and prod.. . 41.7 Leather and prod......... 40.4 Paper and printing . . . 41.8 Printing........................ 39.4 Others: Cigars and tobacco . . 41.5 Rubber tires, goods.. 42.9 Musical instruments. 47 6 ♦Figures from 2724 plants. + + + + + + + + + + + + 6 $.960 +13 $41.73 5 1.039 + 11 46.06 5 .910 +20 40.27 6 1.110 + 15 53.78 6 .670 + 10 26.38 6 . 694 +11 28.16 6 .609 + 10 22.82 3 .721 +11 30.66 2 .858 + 8 33.21 9 .667 +11 29.37 5 .992 + 8 40.78 5 .671 +10 27.18 0 .835 + 8 35.44 0 .971 + 4 38.99 + 10 + 7 + 4 .557 .863 .869 +15 +11 +14 23.15 37.04 41.36 !Figures from 2911 plants. +20 +lo +27 +21 +17 +18 +14 +14 + 10 +21 +14 +15 + 8 + 5 +26 +20 +19 Distribution and Prices Per cent change Wholesale trade Unadjusted for seasonal variation Total of all lines..................... Boots and shoes.................... Drugs....................................... Dry goods............................... Electrical supplies............... Groceries................................. Hardware............................... Jewelry.................................... Paper........................................ Inventories - 6 +26 - 6 -22 -10 + i -16 -10 + 2 — 6 +63 - 1 - 2 -28 + 8 — 14 -41 -34 - 5 - 9 0 - 2 - 2 —12 + 2 -17 - 9 -25 -18 -30 —33 + S Not adjusted Adjusted for seasonal variation 1942 from 12 Month Year mos. ago 1941 ago Dec. 1942 from Per cent change Indexes: +12 +25 +11 +27 -12 Dec. Nov. Dec. 1942 1942 1941 1935-1939 = 100 Month Year ago ago 1942 from 12 mos. 1941 +n +13 +13 + 7 +22 Dec. 1942 from RETAIL TRADE Sales +Ii> +13 - 2 +22 Dec. Nov. Dec. 1942 1942 1941 261p 263 211p 242 173p 182 184 147 141 137 237 235 174 134p 136p 144p 105p 176 180 178 112 114 106 117 100 0 - 4 -20 + 6 +12 + » 0 + 1 +14 121 119 76 125 81 203 93 121 141 136 127 82 138 230 201 121 118 129 136 140 106 128 107 196 110 122 109 -43 -17 90 92 159 - 5* + 6* +22* +29" +10* 120 +14* 155 127 146 93 119 —43* - 9* + 4 -75* -66* - 3 -39" -58* + 4 42 16 162 97 44 176 139p 138 128p 145 145p 142 138 131 128 141 127 123 106 136 129 - 2 0 - 2 +14 + 3 +10 +12 +20 + 7 +12 146p 145p 148p 113p 145 148 151 105 125 113 121 108 + + I 2 2 7 +17 +28 +23 + 5 143 139 80 118 339 193 106 118 132 136 129 79 127 295 195 127 104 112 163 162 111 121 446 187 125 120 102 + 5 + 8 + 1 - 7 +15 - 1 -16 +14 +18 -13 -15 -28 - 2 -24 + 3 -15 - 1 +29 86 86 152 - 1 Inventories Paper........................................ Source: U. S. Department of Commerce. 154 FREIGHT CARLOADINGS Per cent change from Prices Dec. 1942 Month Year ago ago Aug. 1939 Basic commodities +1 + 8 +72 (Aug. 1939 = 100). . 172 Wholesale +1 + 8 +35 (1926 - 100)........... 101 + 3 +20 +87 Farm........................... 114 + 15 + 1 +55 Food............................ 104 0 +20 + 2 Other........................... 96 Living costs (1935-1939 = 100). . + 1 +22 United States........... 120 + 9 + 1 +10 +22 Philadelphia............. 120 + 2 +40 Food.......................... 130 + 19 0 +10 +27 Clothing.................. 126 0 + 4 Rent.......................... 107 + 1 0 0 + 7 Fuels......................... 104 + 6 +22 0 Housefurnishiugs. . 122 0 + 5 + 13 Other. ....................... Source: U. S. Bureau of Labor Statistics. MISCELLANEOUS Hotels—(1934 = 100) Business liquidations 152 158 ♦Computed from unadjusted data. 163 24 15 171 p—Preliminary. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Jan. Reporting member banks (000,000 omitted) 20, 1943 Assets Commercial loans................... $ 244 18 Open market paper................ 27 Loans to brokers, etc............. 29 Other loans to carry secur... 46 Loans on real estate.............. Loans to banks........................ 80 Other loans............................... Four weeks -$ - 1 4 2 1 - 1 - One year -$ 45 - 24 t- 3i -2-30 $ 444 -$11 -$105 Government securities..........$1022 Obligations fully guar’teed .. 69 Other securities....................... 236 +$47 + 4 6 +$530 35 31 Total investments............... $1327 +$45 +$464 Total loans. Total loans & investments $1771 444 Reserve with F.R.Bank. . . . 26 Cash in vault..................• • • 108 Balances with other banks. 63 Other assets—net................. Liabilities Demand deposits, adjusted. $1479 168 Time deposi ts................... • • • 163 U. S. Government deposits. . 371 Interbank deposits.......... Borrowings. ....................... 11 Other liabilities................ 220 Capital account................ - +$34 + 17 - 4 + 1 + 2 +$38 + - 12 2 + 3 +$359 - 22 + 1 +$225 - 32 + 132 2-2 - + 1 + 4 Jan. 13 Jan. 20 Changps in four weeks Changes in weeks ending— Philadelphia Federal Reserve District (Millions of dollars) Changes in— Dec. 30 Jan. 6 Sources of funds: , Reserve Bank credit extended in district. . Commercial transfers (chiefly interdistrict). Treasury operations........................................... - 0.9 - 6.1 + 7.7 - 8.4 - 2.0 +26.0 + 0.9 -15.9 + 1.5 - 5.0 + 5.3 + 2.1 -13.4 -18.7 +37.3 Total..................................................................... + 0.7 +15.6 -13.5 + 2.4 + 5.2 + - 0.6 1.0 2.4 0.1 - 5.5 +28.3 - 6.1 - 1.1 - + + + - + 0.7 +15.6 -13.5 Uses of funds: Currency demand.................. t........................... Member bank reserve deposits...................... “Other deposits” at Reserve Bank............... Other Federal Reserve accounts.................... Total. Federal Reserve Bank of Phila. (Dollar figures in millions) Bills discounted . . . Bills bought............ Industrial advances U. S. securities.. . . Jan. 20, 1943 l 0.4 0 4.3 442.2 Changes in— One year Four weeks -$ 0.6 0 - 0.7 + 21.4 +$20.1 Total........... ........... $446.9 - 3.2 849.2 Note circulation.. . + 20.0 Member bk. deposits 672.9 + 22.1 23.0 U. S. general account + 1-2 70.4 Foreign deposits. ... |5.9 7.5 Other deposits......... . 1+29.9 Total reserves...........1185.3 Reserve ratio............I 73.0%1 +' 0.3% -$ 0.4 2.7 8.1 2.6 0.1 + 2.4 +$264.8 + 274.3 + 4.5 3.8 + 2.6 - 17.6 19.5 15.4% - 7.6 +20.0 - 5.9 - 1.3 1 + 5.2 Held Re quired Ex cess Ratio of excess to re quired $449 424 410 418 $294 347 351 358 $155 77 59 60 53% 22 17 17 Country banks: 1942: Jan. 1-15... $224 241 Dec. 1-15... 246 Dec. 16-31... 256 1943: Jan. 1-15... $145 174 180 184 $ 79 67 66 72 55% 39 37 39 Member bank reserves (Daily averages: dollar figures in million^) 0 + 0.7 + 264.5 1-2 0.8 0.4 0.0 1942: Jan. Dec. Dec. 1943: Jan. 1-15... 1-15... 16-31... 1-15... ♦Reciprocal bank balances now reported net. Page Seven National Summary of Business Conditions INDUSTRIAL PRODUCTION Industrial activity continued at a high level in December and the first half of January and distribution of commodities to consumers was sustained. Prices of farm products and retail foods advanced further, while prices of ~7 / 180 most other commodities showed little change. Production. Industrial production in December showed less than the usual / s (“--decline from November and the Board’s seasonally adjusted index rose two y / points further to .196 per cent of the 1935-39 average. Munitions output con , / tinued to increase, raising total durable goods production to a level 33 per cent / kt higher than in December a year ago, while for the same period production of " V nondurable goods was only 4 per cent larger and mineral output was some yJ \ what lower. \ J Steel production in December and the first half of January averaged 97 V per cent of capacity, down slightly from the October and November levels. 1936 1937 1938 1939 1940 1941 1942 Total steel production for the year showed a 4 per cent increase over 1941 while the output of steel plate, important in shipbuilding and tank production, Federal Reserve monthly index of physical rose 90 per cent over the previous year. This increase over a year ago was volume of production, adjusted for seasonal variation, 1935-39 average = 100. Latest largely obtained by conversion of existing facilities. Output of lumber, and figures shown are for December 1942. stone, clay and glass production in December showed larger declines than are usual at this time of year. Output of nondurable goods showed little change from November to WHOLESALE PRICES December. Textile production continued at the high level which has pre 120 vailed for the past year and a half. Meat packing increased sharply, reflect ing exceptionally large hog slaughter and output of most other manufactured J no no X. foods was maintained at a high level. 100 Mineral production was lower in December, reflecting a decline in coal too output from the peak reached in November. Bituminous coal production in 90 90 1942 was the second largest in the history of the industry, averaging 13 per cent greater than 1941. Crude petroleum production in December continued 00 8® at the level of earlier months and for the entire year was slightly lower ALL COMMODITIES than 1941, reflecting transportation shortages. In the first half of January 70 production of bituminous coal and petroleum was maintained, but a number 60 60 of anthracite mines were closed by an industrial dispute. ----- — Value of construction contracts awarded in December, according to the 50 1936 1937 1938 1939 1940. 1941 1942 F. W. Dodge Corporation, was somewhat higher than in November. Contracts for apartment-type buildings for housing war workers continued to rise and Bureau of Labor Statistics’ indexes, 1926 = public works increased sharply, while awards for manufacturing buildings 100. “Other” includes commodities other declined further. than farm products and foods. By weeks, January 5, 1935 to week ending January 16, The value of construction was 3.2 billion dollars in the fourth quarter of 1943. 1942, according to preliminary estimates of the Department of Commerce . , , . , ™s was about 25 Per cent lower than the peak of 4.3 billion reached in the previous quarter, but slightly higher than that ui of the quarter ui of ±»*i. 1941. msLaiiations Installations ror for direct military military use use V . T V. , p’ uncoil me fourth uiuitu ofquctxLei and industrial facilities accounted for almost three-quarters the- total, and residential buildingdirect contributed some ---------^ v^**.,**** *-■ uiiurjif, JJJULtJU. SUiliewhat less than half of the remainder. Por For the the year as a a whole, construction is is valued 13.6 billion dollars—of which year as whole, construction valued at at 13.6 billion dollars—of which almost four-fifths financed—an increase of one-fifth over 1941. The increase increase took place entirely in mili- ------ - was ---- publicly ------- j ——~ed—an ....................... tary and industrial projects, which rose 4.4 billion dollars. All other types of construction declined. Distribution. Distribution of commodities to consumers was maintained at a high level in December and the first half of January, after allowance for the sharp fluctuations that are customary at this time of year The 1942 Christmas buying season exceeded that of any previous year, value of sales at department stores, for example being about 15 ner cent larger in November and December than in the corresponding period of 1941. The increase over the year period reflected in part price advances but there was also an increase in the volume of goods sold. ~ . 1** Lucie 'MS ciiau au niuiea&tj m me volume OI gooas SOIU. , Freight carloadings declined uul about the usual seasonal amount in December, and the Board’s adjusted index re mained at 134 per cent of the 1935-39 average. Grain, livestock, and miscellaneous loadings rose somewhat on a sea sonally adjusted basis, while coal and other products declined slightly. Commodity prices. Prices of agricultural commodities advanced sharply from the early part of December to the middle of January. Maximum prices designed to restrict further increases were issued for some of these commodities including corn and mixed feeds. For certain other products, however, like potatoes and truck crops Federal price supports were increased. Wholesale prices of most other commodities continued to show little change. P From mid-November to mid-December retail food prices advanced 1.6 points to about 133 per cent of the 1935-39 average. Further increases in these prices are indicated in January as a result of advances permitted recently in maximum levels for such items as flour, milk, and poultry. y recently in 200* 200 t Bank credit. Excess reserves of member banks declined sharply in the last week of December, and during the first half of January they averaged about 2.2 billion dollars, as compared with 2.5 billion for most of December Large pay ments to the Treasury for new securities, some increase in currency, and other end-of-year requirements’were respon se16*?1' drains on reserves during the last week of December. There were, however, substantial sales of Treashafaniia8 +uednal Re3e™ Banks under options to repurchase. In the early part of January, reduction in Treasury ?he wn«aLtHletReHerVDBankS |nd,a retUrn fl0W 0f currency supplied banks with additional reserves, and some of the bills sold to the Reserve Banks were repurchased. During this period Reserve Bank holdings of Government securities, which had increased to 6.2 billion dollars by December 31, declined to below 6 billion. hr,is^efl6"VI!rIal'Selyi purchas,es the % Per cent certificates of indebtedness delivered in the week of December 30 holdings of direct and guaranteed Government obligations at reporting member banks in 101 cities increased by 1 8 hiiHna haIw! 28 l”!10'1 ovec tbe four weeks ending January 13. New York City banks took 640 million of the 15 billion dollars of certificates sold to reporting banks. Commercial loans in New York City declined by 90 million dollars outside New York there was little change. Loans to brokers and dealers rose sharply in December during the Victory Fund campaign, but declined correspondingly in the following weeks. Other loans continued to decline ita!CS f;overnmenf sanity prices. Subsequent to the close of the Victory Fund Drive in December prices of H“*ed States Government securities increased. Long-term taxable bonds are yielding 2.32 per cent on the average and long-term partially tax-exempt bonds 2.06 per cent. average, ana Page Eight
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