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‘‘'til i,i„1 BUSINESS REVIEW t-IBR ;t333n: tjpa5jr.| FEDERAL RESERVE BANK OF PHILADELPHIA FEBRUARY 1, 1946 Prices Adrift BUSINESS is sensitive to price change. Rising prices are go-ahead prices; falling prices are slow-down prices. During the war years when prices were tugging at the leash they had to be held in check by the strong hand of the Govern ment. Instead of allowing unregulated prices to dictate the disposition of productive re sources, the Government used price control as an instrument of war—first, to prevent run-away prices; and second, to assure production of things most urgently needed for national defense. ^ ' In normal times, production of goods and services responds to the call of prices. The markets register rising prices for goods in in creasing demand and falling prices where de mand lags. Ordinarily, production is quick to respond to these price changes. Labor and cap ital go where the returns are the greatest, whether it be motor cars, tobacco, jewelry, or mouse traps- If left to the free and open forces of the market, prices operate like a silent and impersonal dictator over all economic activity; they determine what is produced, how much is produced, and how goods and services are dis tributed among consumers. In wartime, if prices have free sway, the country’s most urgent needs are not met. War upsets normal relationships. Widespread short ages develop, more in some lines than in others, with the result that great price distortions occur. Limitations in the supply of money are not per mitted to interfere with the program of financ ing the war. Production for war increases gen eral buying power, but as output of war materials becomes a large proportion of total production, increased purchasing power spills into the markets for consumer goods and prices rise. The result is higher costs of living and pressure for higher wages. Rising wages spell higher prices because one man’s selling price is another man’s cost, and so the spiral goes. Inflation and run-away prices are characteris tics of major wars. The value of the dollar shrank to 33 cents in the Revolutionary War; to 44 cents in the Civil War; and to 40 cents in the First World War. It is estimated that $13 billion of the $32 billion cost of the First World War was the result of inflation—some commodities rose twofold, others fourfold, and still others sixfold. Prices in Two World Wars World War I. Under the stimulus of Allied purchasing, considerable inflation had already occurred by the time we had entered the First World War. Attempts to control prices were “too little and too late.” There was no compre hensive program and the few controls that were hastily improvised had dubious legal authority. Responsibility was divided- When coal prices soared the Fuel Administration was established; when food prices got out of hand the Food Page 13 CONSUMERS' PRICES IN TWO WORLD WARS WHOLESALE PRICES IN TWO WORLD WARS AVERAGE FOR LARGE CITIES ALL COMMODITIES 1914 1915 1914 .1915 1916 1917 1916 1919 INDEX WORLD WAR YA 1939 1940 1944 1946 SOURCE1 U. S DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS Administration was created; and the Price Fix ing Committee was appointed only eight months before the war ended. Controls were limited chiefly to wholesale prices of basic commodities bought by the Government in large quantities. The ineffectiveness of price control in World War I is shown in the accompanying charts. Between Sarajevo and the Armistice, the whole sale price index rose 103 per cent. Wholesale prices of foods, metals, and building materials almost doubled; farm products and chemicals more than doubled; and textiles rose almost 150 per cent. Soaring retail prices lifted the cost of living. The price index of consumers’ goods and serv ices rose 62 per cent. Rents advanced only 3 per cent but substantial increases took place in all other major lines of consumers’ goods. Fuel rose 35 per cent, food 65 per cent, house fur nishings 75 per cent,' and clothing 83 per cent. Page 14 1939 1940 SOURCE- U.S. DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS World War II. Profiting by our experience in the First World War, a determined effort was made to hold prices in check during the Second World War. Before our entry into the war a central price control authority had been created, and ceiling prices had been established on a few commodities. Within five months af ter our entry into the war, the President, in a message to Congress, outlined a comprehensive price control plan. To keep the cost of living from spiraling upward, a seven-point program was proposed. It embraced: (1) heavy taxa tion;-(2) imposition of ceilings on prices which consumers, retailers, wholesalers, and manufac turers pay for things they buy, and ceilings on rents for dwellings; (3) stabilization of remu neration received by individuals for their work; (4) stabilization of prices received by growers for products of their lands; (5) purchase of war bonds; (6) rationing of all essential com modities; and (7) restrictions on credit and in stalment buying. One of the immediate steps taken to put this program into effect was the issuance of the Gen eral Maximum Price Regulation. This order froze prices of goods and services at retail, wholesale, and manufacturing levels at the high est prices which sellers offered them in March 1942. The price-freezing technique was a practical and effective way of securing some control over a great variety of business con cerns handling an almost infinite variety of products and services. It affected approxi mately 184,000 manufacturing establishments, 200,000 wholesalers, 1,770,000 retailers, and 1,000,000 service establishments. By this regu lation, price ceilings were established immedi ately for practically every commodity. The list of some 1,200 commodities in consumer dura bles embraced not only major items, such as refrigerators, automobiles, and pianos, but also a multitude of minor items, such as pot racks and pins. Although this was an extensive attack upon the difficult problem of price control, it excluded both wages and prices of agricultural products which have an important influence on the cost of living. To increase agricultural output, pro ducers of most farm products received some form of Government aid, such as agricultural loans and subsidy payments. These agricul tural programs naturally raised the prices of farm products and thereby clashed with the OPA program designed to prevent increases in the cost of living. Since higher prices were allowed to farmers as a stimulus to greater agricultural output, some food processors were squeezed between rising raw material costs and OPA price ceil ings. These processors received help from the Government in the form of subsidies. Equitable and effective price control, how ever, could not be achieved until wages were stabilized. Wages and salaries account for twothirds of the national income and as long as labor costs were rising, increasing pressure was exerted on price ceilings. The job of wage stabilization was placed in the hands of the War Labor Board, which had previously been responsible for settlement of wage disputes in war industries. In July 1942, when the War Labor Board gave its decision in the “Little Steel” case, it set the standard for evaluating claims for wage increases. The upper limit for increases of wage rates was fixed at 15 per cent of the January 1941 rates, which was equal to the rise in cost of living from Jan uary 1941 to May 1942. Subsequently, some increases in basic wage rates were allowed to correct inequities among plants and industries and to raise substandard wages. However, higher wage rates accounted for about only a quarter of the increase in payrolls. Upgrading and overtime contributed much more than in creased hourly rates to larger payrolls. Despite these controls, the rise in the cost of living was not halted until after the President issued the “hold the line” order in April 1943, which prohibited wage increases that would have the effect of increasing prices. The War Manpower Commission was authorized to for bid workers shopping around for higher wages. Without rationing, the problem of control of retail prices would have been much more com plicated. Rationing restricts market demand and brings it in line with the supply situation. Since rubber was one of the most critical items, automobile tires were rationed immediately af ter our entry into the war, and subsequently sugar, canned goods, meat, shoes, and some other commodities came under rationing control. The mechanism of price control was rein forced by heavier taxation, sale of Government bonds to individuals, and curtailment of con sumer credit through Regulation W of the Fed eral Reserve System. Heavier taxes and sale of bonds siphoned excessive purchasing power from the markets for consumer goods and cur tailment of credit reduced the pressure to pro duce consumers’ durable goods. Furthermore, individuals who bought Government bonds built a large backlog of buying power through sys tematic saving. In view of the magnitudes of production and income in the present war, price control has been remarkably successful. Wholesale prices rose only 41 per cent during six years of World War II, compared with a rise of 103 per cent during four years of World War I. Be tween August 1939 and August 1945, when the war ended, metal prices rose only 12 per cent, chemicals 28 per cent, building materials 32 per cent, and textiles 47 per cent. Farm products, under special dispensation, rose more than any Page 15 other major group. At the end of the war, the index of farm products was 108 per cent above the pre-war level. Retail prices of consumers’ goods rose only 31 per cent during the six years of World War II, compared with a rise of 62 per cent during the four years of World War I. Rents rose only 4 per cent, fuel 14 per cent, house furnishings 45 per cent, clothing 46 per cent, and food 51 per cent. Rents in the recent war did not rise much more than in the former World War but regulatory controls were required because the problem was more difficult owing to the heavy migration of workers into the leading war manufacturing centers. The freeze technique was applied to hold rents at early 1942 levels. Contrasted with other items in the consumers’ budget, rent has proven more amenable to control. However, the apparent stability of rent does not take into consideration the disappearance of rentable dwellings. Caught between the squeeze of rent ceilings and rising cost of maintenance, many landlords sold their properties. Food and clothing were the most difficult items to control. Foods presented numerous ob stacles, chief of which were the multiplicity of producers and distributors, the great variety of products, and the price support program for basic agricultural commodities. Clothing prices were hard to control for a number of reasons: the products are extremely heterogeneous; style causes frequent changes in model and pat tern; thousands of manufacturers and distrib utors operate with varying costs; producers have little opportunity to control the cost of their raw materials; and there is the further difficulty of integrating prices of raw materials, half-finished products, manufactured products, wholesale and retail prices. In Philadelphia, the wartime rise in prices of consumers’ goods closely paralleled the na tional changes. The November index for all consumers’ commodities in Philadelphia, accord ing to the Bureau of Labor Statistics, was 81 per cent above the August 1939 level. Rents were up only 4 per cent but other items in the cost of living were substantially higher. Food and clothing prices rose 48 and 50 per cent, re spectively, above their August 1939 levels. Prices of household furnishings, as the accom panying table shows, rose almost as much as food prices. Page 16 PRICE CHANGES IN CONSUMERS’ GOODS— PHILADELPHIA (August 1939 = 100) November 1945 Clothing................................................................. Rent (September).............................................................. Fuel, electricity and ice............................................... Miscellaneous........................................................................... Per cent, change 1-30.7 [-48.3 [-50.2 h 4.1 [-17.5 [-46.0 [-19.4 Everyone is of course aware of the fact that the wartime indexes understate the actual rise in cost of living. Indexes do not measure qual ity deterioration which affected practically all civilian goods and services. During the war there was considerable uptrading, owing to the expansion of purchasing power on the part of most buyers. There was also a widespread dis appearance of low-cost items which forced buy ers into involuntary uptrading. Rationing and price control also gave rise to trading in the black market, which is not reflected in the con sumers’ index. Some of the swollen wartime income is spill ing over into real estate and security markets. It is estimated that urban real estate prices rose about 40 per cent during the last three years of the war, and farm values have appreciated from 50 to 75 per cent. Security prices, which have been rising for a long time, are now higher than at any time during the war. It would be a mistake to assume that the end of the war means the end of high prices. The accompanying charts show that a large part of the World War I inflation came after the Armistice. In the case of wholesale prices, about one-third of the inflation occurred after the war ended, and in the case of living costs almost one-half of the inflation occurred in the post-war period. Realizing the danger of post-war inflation, the OPA, last August, announced a five-point program to stabilize the national economy dur ing the period of transition. The program in cluded: (1) keeping the lid on food prices; (2) maintaining price controls on clothing; (3) the establishment of retail prices at or close to the 1942 levels for reconversion goods not made during the war, such as automobiles, refrigera tors, washing machines, and related items; (4) rentals to be held firm until tenants have an opportunity to bargain with their landlords as they did before the war; and (5) vigorous en forcement of price and rationing controls. Subsequently, all commodities except sugar have been removed from ration control. Price controls are also being removed on a selective basis as rapidly as “de-controls” can be effected without a price rise, and in commodities of mi nor importance in the cost of living or business costs. The OPA has continued its “cost absorption policy” under which price increases at the man ufacturing level must be absorbed by wholesal ers and retailers insofar as possible. Since the end of the war, price increases have been granted for numerous manufactured items be cause of higher wage and material costs. The OPA has allowed such increases to be passed on to the retailer in many instances. The Problem of Inflation The current situation is fraught with un wholesome inflationary dangers. Practically all rationing has been discontinued and price con trols are being relaxed. The basic inflationary potential, however, is the huge buying power accumulated as a consequence of war financing. People have money and are willing to spend it. Consumer incomes are being maintained at a relatively high level, as high as they were dur ing much of 1944. Personal holdings of liquid assets—cash, deposits, and Government securities—have expanded about $90 billion since Pearl Harbor to an estimated $150 billion at present. What is also important is the fact that indi viduals, like business enterprises, have greatly reduced their debts so that their credit positions have been vastly strengthened, while money and credit, already over-abundant, are still growing. The shortage of housing facilities by all odds is the most crucial problem. If materials and labor skills were available, the construction in dustry could easily spend in the year ahead from $7 to $8 billion on new projects to meet a portion of the accumulated demand. After four years of steady wear and tear without replacement, manufacturing establish ments are in need of $4 to $5 billion of plant and equipment. Consumers are clamoring for goods—new automobiles, household appliances, and home furnishings. To catch up with this demand alone will require intensive industrial activity for months to come. Strikes and threats of strikes are impeding the production of goods so urgently needed and raising their costs when we get them. Higher labor costs without commensurate increases in labor productivity mean higher prices. Mean while, people buy whatever goods are available and, having the money, they pay almost any price. The inevitable result is price gouging, black markets, and open speculation. The basic problem of inflation is the excess of buying power over goods at existing prices. In creasing the flow of goods and services, though necessary, will not in itself solve the problem if greater output is achieved with further ex pansion of credit. The problem of inflation cannot be solved adequately without control over the supply of money and the exercise of restraints by individuals and business concerns over the volume of their expenditures. The Effect of War on Farm Income How much income the local farmer receives, where it comes from, and how he disposes of it are of special interest to country banks because they have a direct effect upon bank opera tions. They influence the number and average size of deposit accounts as well as opportunities for leans in agricultural communities. Where the cash receipts from farming are relatively low, farmers are less apt to make use of bank accounts; and if they do, the aver age account will be small. On the other hand, banks located in regions where the average farmer receives large cash payments may expect relatively greater use to be made of their facili ties and somewhat larger balances to be left on deposit. The volume of deposits is also closely connected with the amount of net income, i.e., gross income less production expenses, since savings originate from this source. Opportu nities for loans normally will be greater where the scale of farm operations and production ex penses are large; but at the same time, if a large proportion of gross income becomes net income, the farmer may have sufficient savings to finance most of his needs. A study of average farm income recently re leased by the Bureau of Agricultural Econom ics reveals changes in the structure of farm in come in Pennsylvania, New Jersey, and Dela ware during the war years. These data, along with those for the United States, are summarized in the accompanying chart. Even before the war there were substantial differences in average gross income among the four regions. In 1939, gross farm income in New Jersey averaged $4,509 per farm, which was 40 per cent more than the average of $3,216 in Delaware and over twice as large as the average of $2,007 in Pennsylvania. Aver age gross income was greater in each of these states than in the country as a whole, where the average was $1,694. As in the industrial segment of our economy, the wartime expansion of agricultural opera tions and incomes has been decidedly uneven over the Nation. Even within an area as small as the three states represented in the Third Dis trict, there have been large differences. The greatest increase in scale of operations occurred in the poultry-producing state of Delaware, where gross income per farm reached $10,030 in 1944, an increase of 212 per cent over 1939. Gross farm income increased 100 per cent over this period in both New Jersey and Pennsyl vania, reaching $9,015 and $4,015, respectively. The increase in the national average was 153 per cent, raising average gross farm income to $4,280, somewhat higher than that of Pennsyl vania. The principal explanation of the variation in wartime growth of gross farm income among these areas lies in differences in the type of products produced. Delaware has specialized increasingly in poultry and poultry products, which were subject to enormous expansion in demand at rising prices during the war. New Jersey and Pennsylvania have greater variety in types of farming, and not all of their products have undergone as great an increase in demand and price as poultry and poultry products. Fur thermore, output per farm could not always be increased as readily as in the case of poultry farming. In all areas, receipts from cash marketings have increased even more rapidly than gross farm income. This has happened because home consumption remains relatively constant after a certain scale of output has been reached. Hence, as farm output increases, the proportion sold for cash also tends to increase. Government payments are another source of cash income. Although such payments in creased slightly in amount, they decreased rela tive to gross income in the country and in Dela ware. In Pennsylvania and New Jersey, on the other hand, average income from Government payments increased sixfold in dollar amount and doubled and quadrupled, respectively, in proportion to total farm income. The bulk of this increase came in 1944. In New Jersey, for example, income from Government payments increased from an average of $63 per farm in 1943 to $327 in 1944. Subsidy payments on dairy production beginning in the latter part of 1943 probably accounted for much of the in- ORIGIN AND DISPOSAL OF GROSS FARM INCOME PER FARM 1939,1942, 1944 THOUSANDS THOUSANDS 10 8 6 4 2 0 24 6 I * I I I 1 I I |------------- 1------------- r -ORIGIN. | PENNSYLVANIA ///A RECEIPTS FROM CASH 2%"1l?l/?6?/E64%^| 36*1 8 10 * DISPOSAL 1939 MARKETINGS J VALUE OF FARM PRODUCTS CONSUMED BY FARM 39% 1942 HOUSEHOLD GOVERNMENT PAYMENTS 4%^|177,////79%V/ClSX5?\\S^ 42% L\\\ PRODUCTION EXPENSES ] NET REALIZED INCOME FROM AGRICULTURE AND GOVERNMENT PAYMENTS 1944 NEW JERSEY !w///r7///, sWejl WN I 33% T. ^ //////, jo %//////, SS\\\X 1 1939 30% r*» V///////A&- ///////a 1942 32% 1944 DELAWARE 3»14X//W/A XXTX1 33% | 1939 "■W/////&V//////// ^■\'-<//////////^y//////////. 33% 1942 36% 1944 UNITED STATES 7%'l?K76%/ 57^43% 4 ^49%M 3^lWZZZz&ZZZa crease. Total Government payments in 1944 amounted to one per cent of gross farm income in Delaware and 4 per cent in Pennsylvania and New Jersey. The wartime growth in cash receipts and net income of the average farmer has greatly accel erated the growth in farmers’ bank deposits. With much larger sums of cash passing through their hands, more farmers are using bank ac counts today than in 1939, and the average account undoubtedly is larger. Even though gross farm income and cash receipts should shrink, many farmers who have become bank customers during the war may continue to carry deposit accounts and thus cushion some what the drop in total farm deposits. 1939 mZsUi. 0 <r 51% | 53% 1942 | 1944 The chart also shows the effect of war on the relationship of production expenses and net in come to gross income. Production expenses in creased both because of higher prices on things farmers purchased and because more units were being produced. The only expense which de creased in absolute amount was mortgage in terest—a result of the reduction in average farm mortgage debt. A few costs may have de clined on a unit basis with increased volume of output, but these were more than offset by in creases in other cost factors. Production expen ditures per farm increased 82 per cent from 1939 to 1944 in Pennsylvania, 102 per cent in New Jersey, and 200 per cent in Delaware, compared with a rise of 110 per cent for the country as a whole. Page 19 Normally, such an expansion in farm opera tions would cause farmers to rely more heavily on credit. But because they now had larger profits, and because they could not purchase much-needed but unavailable capital equip ment, farmers were able to finance a constantly increasing part of their production expenses from their own resources and at the same time accumulate large amounts of liquid funds. Average net income per farm increased over the war period in all areas covered in the chart. Net income increased relative to gross income in all of these areas except New Jersey. A more rapid rise in prices received than in the prices paid by farmers, accounts for the declin ing share of gross income absorbed by produc tion expenditures and the corresponding rise in the share remaining as net income. GROSS AND NET INCOME PER FARM 1939 1942 1944 United States Gross income.................................................. Net income...................................................... $1,694 735 $3,133 1,591 $4,280 2,269 Pennsylvania Gross income.................................................. Net income..................................................... 2,007 723 2,959 1,144 4,015 1,681 New Jersey Gross income.................................................. Net income...................................................... 4,509 1,487 6,684 1,975 3,216 1,070 7,402 2,422 10,030 3,590 Now that the war is over, farmers may soon be spending accumulated savings for durable goods—both producers’ and consumers’. De mands for farm equipment will be heavy, both because of long-delayed replacements and be cause of improvements in mechanical aids to agricultural production and rising standards of rural life. The prolonged pressure for increased output, combined with the labor shortage, has delayed upkeep of the soil and of farm improve ments. Expenditures are needed to fertilize, drain, and otherwise improve the land; repairs and replacements are needed for farm buildings, fences, and the like. Furthermore, a large number of returning veterans and former farm laborers employed during the war at high wages in industrial plants now wish to acquire farms of their own, despite the rising cost of farm land. Even though farm income should remain at present levels, the needs for capital expendi tures which accumulated over the war period may in many cases exceed farmers’ cash re sources and result in a greater demand for agri cultural credit. 9,015 2,921 Delaware Gross income.................................................. Net income...................................................... more rapidly than those of other individuals or of business. Farmers have saved large amounts out of their war incomes. Their holdings of liquid as sets are estimated by the Bureau of Agricul tural Economics to have risen $8 billion between January 1940 and January 1944, and there is evidence that they rose at an even more rapid rate during 1944 and 1945. It is not known what part of farmers’ wartime savings are held in the form of bank deposits, but the Federal Reserve survey of demand deposit ownership indicates that farmers’ deposits have increased Whether average gross farm income and its components will continue at the levels reached during the war depends on international as well as national factors of supply and demand, and upon Government policies with respect to price parities and agricultural subsidies. In the im mediate future it is doubtful that output will be curtailed substantially. To the extent that farm savings accumulated during the war are held as a backlog or are expended wisely in improving the efficiency of farm production the credit standing of farmers will be enhanced. Banks can perform a valuable service to agri culture in urging farmers to maintain their pres ent sound financial position. BUSINESS STATISTICS * Production Employment and Income in Pennsylvania Philadelphia Federal Reserve District Adjusted for seasonal variation Per cent change Dec. 1945 1945 Dec. Nov. Dec. frc m from 1945 1945 1944 12 Mo. Year mos. 1944 ago ago Indexes: 1923-5 =100 INDUSTRIALPRODUCTION 106p 104 MANUFACTURING............... 108p 104 128p 124 92p 87 Metal products........................ 128* 121r Textile products...................... 65p 61 Transportation equipment.. 230 237 Food products......................... 120p 119 Tobacco and products.......... 125 103 Building materials.................. 41p 38 Chemicals and products. . . . 147p 145 Leather and products........... 86p 76 Paper and printing................. no in Individual lines Pig iron...................................... 87 90r Steel............................................ 107 104r Iron castings............................ 75 71 Steel castings........................... 125 146 Electrical apparatus.............. 184 165r Motor vehicles........................ 55 48 Automobile parts and bodies 109 121 Locomotives and cars........... 75 69 Silk manufactures................... Woolen and worsteds........... Cotton products...................... Carpets and rugs.................... Hosiery...................................... Underwear................................ Cement...................................... Brick........................................... Lumber and products........... Slaughtering, meat packing. Sugar refining.......................... Canning and preserving.... Cigars......................................... Paper and wood pulp............ Printing and publishing........ Shoes.......................................... Leather, goat and kid........... Explosives................................. Paints and varnishes............. Petroleum products............... Coke, by-product.................... COAL MINING........................ Anthracite................................. Bituminous............................... CRUDE OIL............................... ELECTRIC POWER............... Sales, total................................ Sales to industries.................. BUILDING CONTRACTS TOTAL AWARDS!................. Residential t............................. Nonresidentialf....................... Public works and utilitiesf. . 79 79 69p 56 42 43 59p 49 60r 71 138 134r 57p 50 51 48 r 25 27 112 90 162p 125 88 114 120p 54p 68 97 204 147p 62 59 85 309 394 399 326 113 58 156 101 89 115 103 53 79 90 199r 154 72 70 90 316 399 400 293 141 146 219 96 182 69 r 525 124 127 35r 175 97 94 - 25 - 26 - 42 + 2 + 4 -f- 3 + 6 — + + — + — 30 4 - + 6 + 7 - 3 + + +22 + 8 + 1 +11 - 1 7 56 3 2 16 16 11 16 95 145 76 233 280 75 132 104 - 3 - 8 + 3 - 26 + 6 - 1 -15 - 47 + 12 - 34 +15 - 27 -10 - 17 - 9 - 34 — 3 — 63 86 +1 - 8 66 r +23 + 5 42 - 1 + 1 58 r +20 + 1 71 +18 - 1 145 + 3 - 5 32 +14 + 79 48 r + 4 + 6 31 + 6 - 14 — 2* — 7* 107 0 + 5 160 +56 - 44 155 + 4 + 4 126 +23 - 1 84 - 1 + 5 97 - 1 + 18 128 +16 - 6 67 + 2 - 19 216 -14 - 69 97 + 8 0 208 + 3 - 2 173r - 4 - 15 70 -14 - 12 69 -16 - 14 81 r - 5 + 5 340 - 2 - 9 413 - 1 - 4 426 0 - 6 377 +n - 13 68 79 33 -14 32 26 6 +24 121 60 - 7 112 81 149 53 -45 * Unadjusted for seasonal variation. t 3-month moving daily average centered at 3rd month. Not adjusted Dec. Nov. Dec. 1945 1945 1944 104p 105 106p 106 m - 1 - 5 - 1 - 7 - 6 + 24 - 6 1 0* - 18 - 15 + 6 + 4 + + + - 1 8 16 30 19 5 7 8 14 15 10 11 1 2 6 174 69 r 540 122 92 33 172r 90 95 86 101 70 120 178 44 107 69 - 7 - 14 - 1 - 24 - 23 - 6 - 27 - 19 — 35 - 4 121 63 231 122 122 38 145 74 112 91r lOOr 73 136 175r 42 111 70 94 136 70 224 272 59 130 104 81 64p 46 58p 69 137 47p 49 26 124 120 59 169p 90 89 115 102p 59p 67 94 203 143p 62 59 90 290 422 411 310 80 88 60 62 r 45 45 54 59 r 68 69 135r 144 49 26 48 r 47 25 30 +105 + 62 75 +455 - 23 31 + 88 + 54 121 + 52 +129 98 p—Preliminary, r—Revised. 126r 123 38 169 122 89 116 97 51 79 92 200r 147 73 70 99 307 415 412 299 115 104 157 91 85 98 108 73 213 94 207 168r 71 69 85 320 r 442 439 358 86 29 121 > 171 Factory employment Fac1•ory payi oils Building permits value Retail sales Nov. 1945 Dec. 1944 Nov. 1945 Dec. 1944 Nov. 1945 Dec. 1944 Nov. 1945 Dec. 1944 Nov. 1945 Dec. 1944 2 5 2 4 3 1 1 1 -21 - 6 -16 0 -19 -23 - 8 -22 - 2 + 3 + 1 0 + 9 + 4 + 1 + 3 -35 - 8 -26 -16 -18 -35 -10 -25 Wilkes-Barre.... Williamsport... . Wilmington........ York..................... + + + 1 3 3 1 -23 -15 -40 -12 + + + + -40 -16 -51 -25 + 95 - 59 + 59 + 48 +199 + 31 + 31 - 71 +716 - 61 - 38 + 82 + 4 +756 + 2 + 28 Lancaster............ Philadelphia.... Reading............... Scranton.............. + + + + + + + + 96 +29 +30 +43 +26 +25 +22 +39 +28 +38 +41 0 +22 +10 +14 + 6 + 6 + 4 + 5 +12 +15 +795 +357 +35 +38 + 8 + 4 - 2 +10 -11 + 7 + 3 +23 + 4 - 8 +29 +11 + 2 +42 + 7 + 4 +28 -17 + 4 - 3 + 8 + 1 -25 +40 +15 — 1 - 7 0 Allentown........... Altoona................ Harrisburg.......... 1 s 5 4 +575 +153 +239 +238 * Area not restricted to the corporate limits of cities given here. 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........... 124 152 40 69 55 81 141 102 153 112 111 101 96 + 3 + 2 -16 + 2 - 5 0 +1 + 2 +11 + 2 - 1 0 - 2 - 8 -15 -16 - 5 +21 + 3 + 8 + 5 + 8 + 8 + 9 + 2 + 2 278 327 90 339 123 249 266 166 221 171 210 194 187 + 3 + 3 -14 + 4 - 3 - 3 - 2 + 6 +16 + 3 + 2 + 1 - 1 -16 -24 - 4 + 4 + 5 + 5 + 9 + 13 +13 + 12 + 18 +11 +26 Manufacturing Payrolls* Employment* Per cent Per cent Dec. change from Dec. change from 1945 1945 index Nov. Dec. index Nov. Dec. 1945 1944 1945 1944 Index: 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......... 98 99 178 106 75 71 92 121 79 48 110 77 113 110 + + + + + + - 2 2 1 3 l 2 1 0 2 2 1 3 2 2 -15 -21 -15 -31 - 4 - 2 -10 - 5 - 4 - 6 - 5 + 8 +11 +15 152 183 349 172 125 120 148 197 122 76 191 128 182 167 + 3 + 3 0 + 6 + 3 + 3 0 + 1 + 6 + 5 + 4 + 8 + 1 + 1 -24 -33 -25 -39 0 + 2 -10 - 1 - 3 - 9 -10 + 9 +19 +24 46 129 108 + 2 + 3 + 4 - 7 -13 +16 73 291 172 + 2 + 2 + 3 - 5 - 3 +39 + + + + + + * Figures from 2779 plants. Hours and Wages Factory workers Averages December 1945 and per cent change from year ago Debits Payrolls 4 Per cent Per cent Dec. change from Dec. change from 1945 1945 index Nov. Dec. index Nov. Dec. 1945 1944 1945 1944 Indexes: 1932 =100 37 6 64 64 Local Business Conditions* Percentage change— December 1945 from month and year ago Employment 139 144 122 64p 233 121p 90 38p 145p 80p 16 17 25 4 18 7 33 2 4 3 1 22 7 Industry, Trade and Service Weekly working time* Hourly earnings* Weekly earningsf Aver age Ch’ge Aver Ch’ge Aver Ch’ge hours age age TOTAL............................. 40.7 Iron, steel and prods.. . 40.4 Nonfer. metal prods.. . 41.4 Transportation equip.. 40.8 Textiles and clothing. . 39.3 Textiles........................ 40.6 Clothing........................ 36.1 Food products............... 43.8 Stone, clay and glass. . 40.0 Lumber products......... 42.3 Chemicals and prods.. 41.6 Leather and products.. 41.2 Paper and printing... . 43.3 Printing........................ 40.7 Others: Cigars and tobacco... 41.2 Rubber tires, goods. . 44.9 Musical instruments. 45.4 * Figures from 2634 plants. -10 $1.040 - 3 $42.24 -13 1.099 - 3 44.44 -11 .988 - 4 40.89 -13 1.226 - 4 49.93 - 3 .843 + 6 33.02 - 3 .868 + 8 35.22 .767 + 1 27.89 - 3 - 1 .847 + 5 37.64 .956 + 3 38.25 - 2 - 3 .790 0 33.24 -10 1.135 + 5 47.11 - 3 .798 + 3 33.16 - 2 .994 + 9 43.25 +1 1.156 + 8 47.09 -13 -16 -15 -17 + 3 + 4 - 2 + 4 + 1 - 3 - 6 + 1 + 6 + 8 28.66 49.92 41.54 + 3 +12 +19 - 5 + 5 +16 .696 + 8 1.112 + 6 .915 + 3 f Figures from 2779 plants. Page 21 Distribution and Prices Per cent change ■Wholesale trade Unadjusted for seasonal variation Sales Total of all lines..................... Drugs....................................... Dry goods............................... Hardware................................ Jewelry.................................... Paper........................................ + — + + - + 4 + 6 -10 + 9 +10 + 6 - 7 - 9 +17 +11 +13 +13 +33 -16 3 6 3 5 5 Department stores—District........................ Philadelphia............... © 113 147 120 + 2 + 43 +116 + 62 + 25 FREIGHT-CAR LOADINGS Merchandise and miscellaneous................... 87 + + 2 + 5 b b 0 0 + 1 0 0 0 0 2 2 3 4 + 4 + 5 0 184p 167 181 176 188 202 183 214 222 207 170r 157r 173 174 177 - 9 + 8 - 9 + 7 -15 + 4 + 1 -21 + 6 - 9 +20* +18* - 4 0 - 3 - 3 -13* 134 120 90 145 154 164 95 145 144 131 134 86 119 113 173 106 111 128 - 8 - 2 -11 -12 -41 + 3 -23 -12 - 1 - 6 -12 - 6 138 106 + 3 189 327p 303 297 323 224 255 245 241 254 205 303 r 284 r 285 317 211 122p 164 U9r 123 160r 115r 174 216 164 72 57 49 + 3 + 8 + 6 -32 + 9* 123 118 81 129 90 169 73 128 143 +10 + 9 +17 +12 +13 -67* -86* -39* —87* - 1 + 6 I Fuels........................... Housefurnishings.. . Other........................... 0 0 0 +1 0 +2 3 + Dec. Nov. Dec. 1945 1945 1944 RETAIL TRADE 144p 149 140r 145“ 145r 135r 178 183 168 55 56 80 Per ceiit chang Dec. 1945 Month Year Aug. 1939 ago ago Basic commodities (Aug. 1939=100) . 187 Wholesale (1926-100)................. 107 Farm............................. 132 Food.............................. 109 Other............................. 101 Living costs Nov. 1935-1939=100: United States............. 129 Philadelphia................ 128 Food............................ 138 Clothing..................... 149 1945 from 12 mos. 1944 Month Year ago ago Source: U. S. Department of Commerce. Prices Dec. 1945 from Dec. Nov. Deo. 1945 1945 1944 Indexes: 1935-1939=100 +16 + 1 +13 +32 +15 Inventories Paper........................................ Per cent chi»nge 1945 from Month Year 1944 ago ago - 3 - 6 -29 - 4 +20 -27 -15 Not adjusted Adjusted for seasonal variation Dec. 1945 from + + + + Coke...................................................................... Forest products................................................. Grain and products.......................................... Livestock............................................................. 31 31 48 50 MISCELLANEOUS Life insurance sales............................................ Business liquidations 143 + 18 + 46 + 19 Check payments.................................................. 200 * Computed from unadjusted data. Source: U. S. Bureau of Labor Statistics. 202 p—Preliminary. -20 - 2 -31 +15 +11 - 6 - 5 - 2 - 8 - 5 -12 -17 + 8 -11 118 112 80 139 45 183 62 133 154 135 123 93 157 154 184 91 163 164 125 127 85 128 57 187 91 115 139 +35 +14 154 156 114 -63* 1 -65* 1 + 5 240 4 2 216 10 9 226 r—Revised. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changes in— Reporting member banks (Millions $) Jan. 23, 1946 Five weeks One year -$ i + i - 5 2 +$ 15 + 8 + 70 2 2 + 36 Total loans............................. $ 549 -$ 3 +$125 Government securities.......... $2082 Obligations fully guar’teed.. 205 Other securities....................... -$ 5 4 -$ l +$232 Dec. 26 Jan. 2 Jan. 9 Jan.16 Jan.23 Change in five weeks Sources of funds: _ ... Reserve Bank credit extended in district.......... Commercial transfers (chiefly interdistrict)---Treasury operations.................................................. +46 +16 -48 -67 +23 +46 + 6 -56 +28 +33 -45 +26 -10 - 1 -18 + 8 -63 +34 Total............................................................................ +14 + 2 -22 +14 -29 -21 Uses of funds: Currency demand...................#................................. Member bank reserve deposits............................. “Other deposits” at Reserve Bank...................... + 9 + 6 - 1 -14 +11 + 5 -14 - 3 - 5 - 7 +19 + 2 - 6 -21 - 2 -32 +12 - 1 +14 + 2 -22 +14 -29 -21 Changes in weeks ending— +$242 — 56 + 46 Total investments................ $2287 Philadelphia Federal Reserve District (Millions of dollars) Assets Commercial loans................... $ 244 44 Loans to brokers, etc............. 85 Other loans to carry secur... 33 1 142 Other loans............................... + + , Changes in— Total loans & investments. $2836 Reserve with F.R. Bank.... 431 Cash in vault.......................... 29 Balances with other banks.. 91 Other assets—net................... 44 -$ 4 - 10 + 1 +$357 + 27 1 + 11 6 Member bank reserves (Daily averages; dollar figures in millions) Dec. 16-31. . 1946: Jan. 1-15.. $388 427 415 423 $373 413 407 411 $15 14 8 12 Country banks 1945: Jan. 1-15.. Dec. 1-15.. Dec. 16-31. . 1946: Jan. 1-15.. $316 372 372 379 $247 291 294 297 $69 81 78 82 1945: Jan. Liabilities Demand deposits, adjusted.. $1814 Time deposits.......................... 226 U. S. Government deposits.. 720 Interbank deposits................. 395 Borrowings............................... 1 20 Other liabilities....................... 255 Capital account....................... Page 22 -$ + + + 8 +$104 7 + 35 2 + 184 8 + 43 6 + 1 2 1 + i + 19 Re Held quired Ex cess 1-15.. Ratio of excess to re quired 4% 3 2 3 $28 28 27 28 Federal Reserve Bank of Phila. (Dollar figures in millions) Jan. 23, 1946 Five weeks Disc, and advances. $ 5 Industrial loans. . . . 2 U. S. securities......... 1602 -$ 7 Total......................... $1609 Fed. Res. notes........ 1614 Member bk. deposits 790 U. S. general account 29 Foreign deposits... . 66 3 Gold ctf. reserves... 883 35.3% Reserve ratio............. +$27 - 23 + 12 - 6 - 4 + 34 One year +$ 5 1 + 365 +$369 + 187 + 97 + 16 - 31 2 - 63 - 99 - 2.2% 8.6%
@FedFRASER