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BUSINESS REVIEW FEDERAL RESERVE BANK OF PHILADELPHIA JANUARY 1, 1914 ** I ndustry, labor and finance of the Third Fed eral Reserve District have contributed their share toward the remarkable achievements of the nation during the two years of our par ticipation in total war. » > Construction for war purposes, a vital fac tor in the initial phases of the war, has now been virtually completed. Since Pearl Harbor, industries in this district have increased their total output by more than one-fourth and ex panded production of durable goods for war by two-thirds. The value of war contracts and project orders placed in this district represents about 5 per cent of total national placements. To accomplish this high level of production huge demands were made on the available labor force. Over 1,250,000 persons, an increase of 106,000 in two years, are now employed in Pennsylvania factories; and in addition, labor supply has been stretched through increasing average hours from 41 to 45 a week. But the inevitable result of increased war production has been a basic readjustment of our economy. Under the stimulus of war ex penditures, incomes have risen to unprecedented levels so that factory payrolls in Pennsylvania which were at a weekly level of $38 million in December 1941 are now more than $55 mil lion; and workers, who received $35 weekly at that time, are now receiving $46. Farm in comes have risen to record levels as a result of increased production and higher prices. Part of these swollen incomes has been ap plied to the purchase of consumers’ goods with the result that department store sales in this district have expanded 23 per cent. Yet the available supply of these goods has been shrink ing constantly. The same factors have operated in other civilian markets and as a consequence the cost of living in Philadelphia has risen 13 per cent. The inflationary pressure exerted by these forces has mounted steadily over the past two years and will become even greater in 1944. The most effective means of combating fur ther aggravation of the inflationary spiral is to drain off excess purchasing power. During the first three War Loan Drives individuals and organizations other than banks in the Third District purchased $1.9 billion of Government securities, or 4.8 per cent of the national total. Member banks increased their holdings by 187 per cent from December 1941 to October 1943. During the coming year, beginning with the Fourth War Loan in January, it will be es sential that the greatest possible amount of funds be obtained from nonbank sources. The available supply of funds held by individuals and businesses is plentiful: their demand de posits are more than one-third greater in this district than when we entered the war; sav ings are at record levels; currency in circula tion continues to mount and now stands far above all previous levels; and liquidity of both individuals and businesses has been increased as a result of debt payments. The amounts of our resources, material and financial, are with out precedent. Page One The Economy of the Third Federal Reserve District T HE attack upon Pearl Harbor marks a turn ing point in American economic history. Throughout most of the decade preceding this event business and industrial leaders were pre occupied with the task of finding productive employment for our idle manpower and equip ment. Economic activity as measured by na tional income had collapsed from 83 billion dollars in 1929 to 40 billion dollars in 1932. Despite a variety of remedies designed to bring about industrial recovery, business activity failed to attain its former level until 1941, when the United States was forced into the Second World War. In that year total national income reached 96 billion dollars, resulting in part from the stimulus of English government orders for war materials and also in part from a be lated inauguration of our national defense program. the war. This is not to say that an immediate post-war recession is inevitable. In fact, a post-war boom might be expected if history were to repeat. After the close of the war of 1812, after the Civil War, and again at the close of World War I there was in each instance a short period of hesitancy followed by a replace ment boom. The magnitude and complexity of the present war, however, have disrupted the economy to an even greater degree than in former wars. In any event there is no escape from difficult problems of post-war readjust ment. The Regional Approach While it is a matter of common knowledge and observation that the war has quickened most branches of economic activity and every geographic area throughout the country, it has affected different regions in different ways. Some regions have gained population, others have lost; some regions have acquired new in dustries, others have not; some regions received their greatest stimulus in agriculture, others in mineral extraction. Practically every region will emerge from the war with its economy considerably altered. Recognizing the un equal impact of the war upon the various parts of the national economy, the Federal Reserve Bank of Philadelphia has undertaken to ascertain the effects of the war upon the econ omy of its own district, and to indicate possible implications of the current and prospective changes to the economic well-being of this dis trict. The declaration of war placed unprecedented demands upon American industry for war ma terials. The aircraft industry may be cited as one example of the huge gap that developed between demand and productive capacity. In the spring of 1940 when this industry was geared to producing about 5,000 planes a year, the President, in a message to the Congress, requested the production of 50,000 planes a year as part of the national defense program. After the declaration of war, sights were raised still higher in this as in practically every other industry. The resulting wartime expansion is familiar to all. Vast construction of new plants and facilities, expansion of the old ones, and rapid conversion of human and material re sources from employment for peace to employ ment for war transformed this country in two Scope of the Survey years into a veritable “Arsenal of Democracy.” The central purpose of this study is to ap At least two-thirds of its activity at present is praise the impact of the war upon our economy. devoted to the production of war implements and supplies for our own armed forces as well To accomplish this purpose requires at the out set a thorough knowledge of the economy as as those of our allies. it was before the outbreak of hostilities. How The transition of our economy from one ex did the people earn their livelihood? How treme of industrial stagnation to the opposite did they utilize their resources? What stand extreme of over-strained activity all within the ards of consumption had they attained? What short compass of a decade suggests significant were the sources of their income? What in implications as to the course of industrial ac dustries had they developed? What economic tivity and employment in the post-war period. activities offered expanding opportunities for Since war was upon the horizon before full employment? We must know the answers to recovery from the preceding recession had been such questions in order to understand how the attained, there is some apprehension that an war is affecting our economy and what adjust other business relapse may follow the end of ments must be made at the end of the war. Page Two The first part of this study is an over-all dis trict appraisal of the pre-war trends of popula tion growth and the development of the basic industrial activities—manufacturing, mining, and agriculture. The second part will contain a more detailed exposition of these activities and how they have been affected by the Second World War. Subsequent parts of the study will be directed to an analysis of subdivisions of the district. In order to understand thoroughly the district as a whole it is neces sary to comprehend its parts, as each part contains certain background against which industry, trade, farming, and banking are oper ating. It is therefore proposed to make an analysis of the economic development of in dividual counties that contribute most to shap ing the economic pattern of the district. Basic Characteristics of the Third Federal Reserve District The Third Federal Reserve District embraces the eastern two-thirds of the State of Pennsyl vania, the lower half of New Jersey, and the State of Delaware. The western boundary of the district is an approximately straight northsouth line through Johnstown, Pennsylvania. Similarly, an east-west line through Trenton marks the northern boundary of the New Jersey part of the district. The district has a total land area of 37,023 square miles, which rep resents about 1.2 per cent of the land area of the United States. In 1940 the district had a population of 7,777,910 which was 5.9 per cent of the total United States population. The population density of the district is 210 per square mile, in contrast with 44 for the United States. THIRD FEDERAL RESERVE DISTRICT The district is well represented in all three basic economic activities—agriculture, mining, and manufacturing. The agricultural develop ment of the district is founded upon generally favorable climatic, soil, and topographic con ditions. The climate is, for the most part, of the humid, continental type characterized by prevailing westerly winds, adequate rainfall, and sufficient frost-free days to grow grains. The soils of the region are exceedingly varied, ranging from the rich limestone soil of the Penn sylvania Piedmont to the poorest of soil for agricultural purposes, good only for forestry, recreation, and part-time farming. The land surface is almost as varied as the soil. Proceed ing westward from the Atlantic seaboard, the major physiographic formations are, in order, the Atlantic Coastal Plain, the Older Appa lachians characterized by fertile valleys inter spersed between gently rolling hills, the Newer Appalachians, characterized by sharper ridges and deeper valleys, and the Allegheny Plateau on the western boundary. The mineral wealth of the district consists chiefly of coal, both anthracite and bituminous, some petroleum and natural gas, and a variety of other minerals. Limestone is the most im portant of the quarry products. Manufacturing is the most important eco nomic activity of the district. In 1939 the dis trict contributed a total value increment—that is, the amount by which its manufactures en hanced the value of raw materials processed —of almost $2 billion. This was about nine times the value of the district’s agricultural output, and also nine times the value of its combined anthracite and bituminous coal out put. Although the district has only 1.2 per cent of the land area and only 5.9 per cent of the population of the United States, it con tributed 8 per cent of the country’s dollar value added by manufacturing in 1939. Manufacturing has assumed such large pro portions because the district was well endowed originally with the basic raw materials of in dustrialism—wood, coal, limestone, and iron ore. The virgin stand of timber in Pennsylvania was the most obvious and most accessible raw material when the region was settled. It pro vided the original settlers with a raw material for constructing their homes, and it was the basis for one of the district’s earliest industries —shipbuilding. Another and more important factor contributing to the industrialization of the region was the early development of the Page Three iron and steel industry. About the middle of the 19th century when the growing scarcity of charcoal caused a shift to anthracite as a fuel for smelting iron, the anthracite deposits of eastern Pennsylvania gave rise to iron and steel manufacturing in the Delaware, Schuylkill, Lehigh, Lebanon, Susquehanna, and Juniata valleys of Pennsylvania. The growth of the industry was aided also by the presence of rich limestone deposits, which supplied the iron and steel industry with a cheap fluxing material. Local deposits of iron ore were also abundant in that period. One of these mines is still being operated despite the later discovery of the larger and richer deposits in Minnesota. After 1850, coke, made from bituminous coal, began to replace anthracite as a blast furnace fuel. This change to a technically superior fuel caused the steel industry to shift its center of gravity from eastern to western Pennsyl vania. The iron and steel industry of what is now the Third Federal Reserve District did not decay; it merely grew less rapidly as a result of more favorable conditions in the West. How ever, the early growth of iron and steel served as a basis for the industrial diversification now characteristic of the region because of the im portance of ferrous metals in our present-day, highly mechanized economy. Coal contributed to the district’s diversified pattern in still another way. As a fuel it fur nished the necessary power to operate the in dustrial machinery of practically all the industries now represented in the district. The growing mechanization of industry placed an ever increasing reliance upon mechanical power. A region rich in coal deposits, con sequently, enjoys an advantage over other areas as long as coal is the principal industrial fuel. While it is recognized that numerous other factors contributed to the development of manufacturing in the district—such as trans portation facilities, tariff protection, labor skills and immigration—it cannot be denied that natural resources were basic in shaping the form and general character of the industrial growth of the district. The Third Federal Reserve District in Historical Perspective The impact of the war upon the Third Fed eral Reserve District and the readjustments that will have to be made after the cessation of hostilities can be appreciated only in the light of proper historical perspective. Merely Page Four to describe the economy and to analyze how the war is changing it is not enough, because economic phenomena are never static—they undergo endless evolutionary change. The process of change, however, is not haphazard. Upon close scrutiny it manifests unmistakable trends and tendencies. It is imperative, there fore, to ascertain the major trends of the dis trict, because the social and economic forces that have forged the present may be expected to shape its immediate future development, despite the disruptions of a major war. The past growth of the district is inseparable from the past growth of the national economy. The district is not a discrete entity—it cannot be completely isolated. Developments of na tional scope are reflected in the district but not necessarily in the same degree as in other areas. The fact that Pennsylvania, New Jersey, and Delaware were among the original 13 colonies means the district now exhibits many of the characteristics associated with advanced economic development, such as greater stability of population growth, higher urbanization, and a greater industrial develop ment relative to agricultural development. As the country extended its boundaries westward, additional natural resources were obtained. To develop these new resources the older areas contributed generously of their labor and capital at some sacrifice of their own rates of growth. Although the older areas in the East likewise profited by their ability to tap the virgin re sources of the West, the newly opened areas grew faster because their entire industrial de velopment was yet to take place. The relation between the district economy and the national economy is reciprocal. The past development of the district was not only influenced by but in turn contributed to the development of the national economy. Under a system of substantially free enterprise, this district has contributed throughout its past his tory a vast flow of goods and services. Crude raw materials have constituted a constantly shrinking proportion, and refined products a steadily growing percentage of the total stream. When a nation is plunged into war, survival demands the allocation of all possible resources to the war effort. Since the transition to a war basis must be made with the greatest possible dispatch, economic and social activities are seriously disrupted. These changes are na tionwide, affecting unequally all parts of the national economy. The immediate impact of the war is discernible, but what the lasting effects will be are less obvious. It is reason able to suppose that some changes wrought by the war will be permanent and others only temporary, and this is where a clear under standing of past trends should be helpful. Trends of long standing are prone to persist after the war. During the war period, such trends may be temporarily arrested, acceler ated, or even reversed, but if analysis of the past reveals unmistakable trends, such obser vations will be of inestimable value in anticipating the probable course of post-war developments. Acknowledging the value of an historical ap proach to a study of the effect of the war upon the Third Federal Reserve District, the first task is to ascertain its major economic trends since the turn of the century. grows at a decreasing rate until ultimately a point is reached when further growth practi cally ceases. The population trend of this district portrays the district’s age. This is revealed by a com parison of the population increases, decade by decade, in the district and the nation, shown in Table 1. The rate of increase of the dis trict’s population is consistently less than that of the nation’s population. Since the district increases are uniformly lower it may be in ferred that the district is closer than the country to the ultimate peak of population. TABLE 1: POPULATION, AMOUNT AND RATE OF INCREASE Third District Population Increase (Thous.) (Thous.) POPULATION TRENDS IN THE THIRD FEDERAL RESERVE DISTRICT Population changes provide the simplest and most comprehensive index of economic change. In 1900, slightly over 5 million, or 6.6 per cent of the nation’s population of 76 million, lived within the area that later was included in the Third Federal Reserve District. During the next four decades, district population increased to 7.8 million and national population rose to 132 million. Thus the district population increased 54 per cent, in contrast to a 73 per cent in crease of the country. The slower rate of growth in the district is a reflection of its earlier development. When an area is young and natural resources are plentiful, population grows at a mounting rate of increase. Later, as population pressure builds up, population POPULATION THIRD FEDERAL RESERVE DISTRICT MILLIONS TOTAL URBAN RURAL 1920 1940 United States Year 1900___ 1910... 1920.... 1930.... 1940.... 5,042 5,962 6,754 7,557 7,778 920 792 803 221 Decennial Decennial Per cent Population Increase Per Cent (Thous.) (Thous.) Increase Increase 118.2 13.3 11.9 2.9 75,995 91,972 105,711 122,775 131,669 15,977 13,739 17,064 8,894 2i.O 14.9 16.1 7.2 Source: United States Department of Commerce, Bureau of the Census. The Pennsylvania State Planning Board has estimated that the state’s maximum population will be attained by 1960, whereas authorities on United States population trends estimate that the peak United States population will be attained about 1980. The Trend of Urban Population Growth Most of the district’s population growth dur ing the period from 1900 to 1940 has been urban, as the chart reveals. During this period the total population increased by 2,736 thou sand, of which 2,395 thousand, or 87.5 per cent, was urban population growth. For the coun try as a whole, 79.5 per cent of the population increase was urban during this same period. It was during this period that the district at tained its greatest industrial development which was accompanied by the rise of numer ous urban areas. The trend toward urbanization within the district, though quite impressive, has slackened considerably during the latter part of the 40year period under review. The decennial in creases, shown in Table 2, are successively less pronounced owing largely to the declining rate in total population growth. Although the fact that the urban increase was less than 1 per cent in the last decade might suggest that ur banization has run its course, this is doubtful Page Five because the period from 1930 to 1940 was one of widespread industrial unemployment, caus ing a marked decline in country-to-city migra tion. In fact, during the business depression of the thirties, this shift was temporarily re versed. In 1932 there was a net migration from city to country. Thus the abrupt decline in urbanization during the last decade was primarily of cyclical origin. TABLE 2: URBAN POPULATION, AMOUNT AND RATE OF INCREASE Year Third District United States Decennial Population Increase Per Gent (Thous.) (Thous.) Increase Decennial Population Increase Per Cent (Thous.) (Thous.) Increase 1900.... 1910.... 1920___ 1930.... 1940___ 2,877 3,724 4,491 5,226 5,272 847 767 735 46 29.4 20.6 16.4 0.9 30,160 41,999 54,158 68,955 74,424 11,839 12,159 14,797 5,469 39.3 29.0 27.3 7.9 sponse to better urban employment oppor tunities. However, the migration from con gested urban areas to rural communities during the decade ended in 1940, previously men tioned, is reflected in the 7.5 per cent increase in the district’s rural population. A comparison of changes in rural population of the district, and of the country, is shown in Table 3. Decen nial percentage increases in rural population of the district were consistently smaller than those of the country, except for the last decade. This suggests a relatively smaller expansion of economic opportunity in rural areas of the dis trict than in rural areas of the United States, except during the last decade, for reasons pointed out above. TABLE 3: RURAL POPULATION, AMOUNT AND RATE OF INCREASE Source: United States Department of Commerce, Bureau of the Census. It is apparent from Table 2 that the decennial increases in urban population of the district parallel but are consistently lower than the decennial increases of the country’s urban population. The parallel is to be expected, since the period was one during which both the district and the country were undergoing rapid industrialization. The consistently smaller per centage increases in urban population of the district in contrast to the United States are accounted for by the fact that the district had a larger proportion of urban to total population at the outset of the period—a reflection of its earlier industrialization. The Trend of Rural Population Growth The changes in rural population of the dis trict since 1900 are, of course, complementary to the changes in its urban population. Through out the four decades, the rural population in creased by 341 thousand, which was only 12.5 per cent of the district’s total population in crease. This is not due to a lower natural in crease of the population in rural areas, as it might appear. In fact, birth rates are generally higher in rural than in urban areas as revealed by the ratios of children under 5 years of age per 1,000 women of child-bearing age. Chang ing proportions between rural and urban population reflect two underlying phenomena— (1) differences between birth and death rates which measure the natural change in popu lation, and (2) net migration. The small in crease in rural population reflects throughout most of the period since 1900 a substantial drift of people from rural to urban centers in re Page Six United States Third District Year 1900----1910.... 1920.... 1930.... 1940... Decennial Decennial Population Increase Per Gent Population Inqrease Per Gent (Thous.) (Thous.) Increase (Thous.) (Thous.) Increase 2,165 2,238 2,263 2,331 2,506 73 25 68 175 3.4 1.1 3.0 7.5 45,835 49,973 51,553 53,820 57,246 4,138 1,580 2,267 3,425 9.6 3.2 4.4 6.4 Source: United States Department of Commerce, Bureau of the Census. Proportion of United States Population in the District The proportion of the United States popu lation residing in the Third Federal Reserve District has been declining since the beginning of the 20th century. This is to be expected in view of its settlement long in advance of other parts of the country. The point to be observed here is how much the westward migration has affected this district. Between 1900 and 1940 PER CENT 1900 ’10 '20 ’30 ’40 URBAN RURAL 1900 '10 '30 ’30 '40 1900 '10 '20 '30 40 the district’s proportion of the United States population declined from 6.6 to 5.9 per cent. This decline suggests that the dispersion of pop ulation throughout the entire country is still taking place. Further shrinkage may be ex pected owing to higher birth rates in other areas and continued migration out of this district. Between 1900 and 1940 the district’s pro portion of the country’s urban population has declined from 9.5 to 7.1 per cent. The regular ity of this decline is shown in the preceding chart. The decline is accounted for by the rise of numerous industrial centers outside of the district. As newer industrial centers continue TABLE 4: DISTRICT PROPORTIONS OF THE UNITED STATES POPULATION Year Total Population (Per cent) Urban Population (Per cent) Rural Population (Per cent) 6.6 6.5 6.4 6.2 5.9 9.5 8.9 8.3 7.6 7.1 4.7 4.5 4.4 4.3 4.4 1900....................................... 1910....................................... 1920....................................... 1930....................................... 1940....................................... to grow, further declines in the proportion of urban population in this district to total urban population of the country may be expected. The proportion of this district’s rural popula tion to the total United States rural population shows little change since 1900. However, as a result of the comparative stability of the dis trict’s rural population, the district’s proportion of the country’s rural population declined slightly in each successive decade, except the last. The exception in the 1930 to 1940 decade is accounted for by the net increase of 175 thou sand people in rural population of the district caused largely by the depression migration to rural counties. The Changing Pattern of Rural-Urban Population Distribution The changing pattern of rural-urban popu lation distribution clearly reveals how the dis trict transformation from an agricultural to an industrial economy preceded the industrial ization of the national economy. In 1900, as Table 5 shows, the ratio of rural to urban popu lation in the district was as 43 to 57. At that time, the United States population was divided 60 to 40 as between rural and urban. Thus at the turn of the century when the nation’s population was still predominantly rural the district’s population was already pre dominantly urban. It was not until the decade of the First World War that over half of the nation’s population became urban; and the change was brought about largely by the mi gration to industrial centers, as a result of the war stimulus. TABLE 5: RURAL-URBAN DISTRIBUTION OF POPULATION Urban (%) Rural (%) Year 1900........................ 1910........................ 1920........................ 1930........................ 1940........................ Third District United States Third District United States 42.9 37.5 33.5 30.8 32.2 60.3 54.3 48.8 43.8 43.5 57.1 62.5 66.5 69.2 67.8 39.7 45.7 51.2 56.2 56.5 The decennial changes in rural-urban popu lation distribution since 1900 indicate a de creasing rate of urbanization in the district. The same observation may be made wfth re spect to the national trend of urbanization. A comparison of the urbanization trends between the district and the country is shown in the following chart. In both the district and RURAL-URBAN DISTRIBUTION OF POPULATION PER CENT | TOTAL - BIST US 60 | RURAL ^ URBAN 01ST US DIST US DIST US. I9IO 1920 1930 DIST US - 1900 1940 the United States there was a persistent, though gradually slackening trend toward ur banization. However, the slowing down in urbanization was more pronounced in the dis trict than in the country. The observation has already been made that the decline in the pro portion of urban to total population in the dis trict during the fourth decade is not necessarily a reversal of the long standing trend toward urbanization. Page Seven For the entire period from 1900 to 1940 the trend toward urbanization was the result of the growing industrialization of the district. Since there is no reason to suppose that the dis trict has attained its maximum industrial de velopment, further growth in urbanization may be expected. Redistribution of population is ordinarily a slow process owing to the characteristic im mobility of labor. However, after the outbreak of the war pronounced shifts in population oc curred in response to greatly increased demand for labor in essential war industries. The ex traordinary demand for war material stimu lated production much more in some areas than others which in turn caused extensive migration of people. Large shifts took place both within the Third District and between this district and other industrial areas. The ex tent of these changes and their implications to the development of the Third District will be analyzed in subsequent reviews. Business and Banking Manufacturing. The market for factory products in this district remains exceptionally strong, with demand in some lines reported to be rising to new high levels as the year end approaches. In the munitions industries fre quent changes in war requirements are being met with increasing promptness by a skillful readjustment of production schedules recently made flexible for just such contingencies. Sup plies of many items primarily for civilian con sumption have grown scarce. Certain raw materials are available in somewhat larger quantities than earlier in the year, but a con tinued shortage of manpower prevents any substantial increase in the fabrication of finished products for non-military use. Employment in Pennsylvania factories in No vember was maintained at about the level of the preceding month, while payrolls increased slightly further to a new peak. Gains over a PRODUCTION AND PRICES PERCENT ^-WHOLESALE COMMODITY PRICES US, * ADJ. FOR SEASONAL VARIATION 1939 Page Eight 1940 1941 1942 Output of factory products in this district increased 4 per cent from October to November, reflecting gains in both durable and consumers’ goods industries. Total production was 14 per cent greater than a year ago and nearly onefifth larger in the first eleven months this year than last. In 1943 the sharpest rise has been in heavy goods lines, where activity has expanded 29 per cent, as against an increase of only 3 per cent in the case of lighter products. Coal and other fuels. Restrictions on the use of solid fuels for heating purposes remain in effect, although no formal system of rationing has been instituted. In the case of anthracite, purchases by consumers this season may not exceed 87*4 per cent of the tonnage bought a year ago. Reserves of both coal and coke at industrial plants have been unusually low since early last summer, owing to repeated interrup tions to coal mining operations. Output of anthracite declined sharply in No vember as virtually all Pennsylvania mines were closed in the first week of the month. Pro duction, averaging little more than 170,000 tons a day, was the smallest for November since 1940, and nearly 20 per cent less than a year ago. Colliery output expanded sharply about the middle of the month and was well main tained through the first half of December. COST OF LIVING IN PHILADELPHIA 1938 year ago amounted to 3 per cent in employment and 17 per cent in payrolls. Total working time was about the same as in October but 7 per cent greater than in November 1942. 1943 Operations at bituminous mines in Pennsyl vania, as elsewhere in the country, also were drastically curtailed early in November. Pro- HOURLY EARNINGS AND WORKING TIME PENNSYLVANIA FACTORIES BUILDING CONTRACTS MILLIONS t 20 IT THIRD FEDERAL RESERVE DISTRICT FACTORY AND COMMERCIAL AVERAGE HOURLY EARNINGS \ HOURS WORKED RESIDENTIAL 1938 93 9 1940 194 I 1942 1939 1940 194 1 1942 1943 OrigiVml tfaia from FI W. Dodge Corp. duction, averaging less than 400,000 tons a day for the entire month, compared with nearly 475.000 in October, and over 450,000 a year ago. The output of collieries did not reach the levels prevailing before the shut-down until after the middle of the month. Building. Activity in building trades has slackened further, continuing the downward trend in evidence locally and nationally over the greater part of this year. The construction of war housing and other essential facilities in newly developed munitions centers accounts for a large part of current operations. The bulk of war construction has been completed. Curtailed operations in all lines of building are reflected in the release of an increasing number of workers for reemployment in other fields. The War Manpower Commission esti mates that between July and November some 260.000 employees in building trades became available for transfer to war industries, well over one-half of them being located in areas of critical shortage of labor. Awards of building contracts in this district declined sharply from October to November and were less than one-fifth the dollar volume reported a year ago. Placements for all classes of construction except factory buildings showed substantial declines in the month; reductions from the 1942 level amounted to more than one-third in all cases. Contracts approximat ing $160 million in the eleven months ended November were over 50 per cent less than a year earlier, and the smallest since 1938. Trade. Christmas buying appears to have exceeded all previous records, according to re ports received thus far from retail stores in this district. Unusually early purchases of holiday merchandise were reflected in heavy sales in certain lines during November. Reports from a limited number of stores indicated that subsequent gains, however, were less pro nounced than a year ago, with the result that sales over part of December were somewhat below the all-time high established in the same period of 1942. Reduced supplies in numerous lines and widespread illness tended to restrict purchases in some of the weeks immediately preceding the 1943 holiday. Dollar sales by department and women’s apparel stores increased more than they usually do from October to November, and at establish ments specializing in men’s apparel and shoes, changes in the month were about in line with seasonal expectations. Gains over a year ago occurred in all reporting lines, although in the case of shoe stores, where sales were limited by rationing, the increase was very moderate. At furniture stores, volume also increased in November and exceeded that of a year earlier. In the eleven months ended November, sales by general merchandise and men’s apparel stores were 7 per cent larger than in 1942; sales by women’s apparel stores increased about one-fifth in the same period, but a small decline was reported by retailers of shoes. Retail inventories showed mixed changes from October to November, but for the most part they continued to reflect the difficulty of accumulating reserves in the face of growing shortages in numerous lines. At the close of Page Nine LOANS AND INVESTMENTS DEPARTMENT STORE SALES AND STOCKS THIRD FED. RES. DISTRICT REPORTING MEMBER BANKS THIRD FEDERAL RESERVE DISTRICT MILLIONS PERCENT STOCKS U. S GOVERNMENT OBLIGATIONS LOANS SALES OTHER Y SECURITIES ADJUST CO fOR SEASONAL VARIATION 1938 1939 1940 1941 1942 1943 the month stocks in all reporting lines except women’s apparel were substantially smaller than a year ago, the sharpest decrease—18 per cent—occurring at furniture stores. The dollar volume of merchandise on order by department stores continues exceptionally heavy. Business at wholesale increased slightly in November but in the aggregate was little larger than in the same month of 1942. The value of sales in eight reporting branches was about one-tenth greater in the first eleven months this year than last, reflecting increases in all lines except hardware, jewelry, and paper. Stocks at wholesale establishments continue be low the level of a year ago in all lines but groceries. Banking conditions. The Fourth War Loan Drive, to raise $14 billion from investors other than commercial banks, will get under way in January. While the marketable issues—2l/2 per cent bonds of 1965-70, 2% per cent bonds of 1956-59, and one-year % Per cent certificates —will be offered only from January 18 to February 15, sales of savings bonds and savings notes credited to the Treasurer’s account dur ing all of January and February will go toward Drive totals. These totals will not, however, include securities sold to commercial banks, which may subscribe for limited amounts of 21/2 and 214 per cent bonds and F and G sav ings bonds. Combined subscriptions of a com mercial bank to these issues cannot exceed 10 per cent of its savings deposits, as defined in Regulation Q, or $200,000, whichever is the smaller; and no more than $100,000 (issue price) may be in F and G bonds. Page Ten 1940 194 1 942 Continuing huge payments for war materials and services, quarterly income tax collections and other fiscal operations of the Government, and the active demand for currency combined to produce an exceptionally heavy turnover of funds in recent weeks. Nevertheless, reserves of member banks in the Third Federal Reserve District increased slightly in the period from November 24 to December 22. Reserves were cut into sharply by net payments of $120 million to the Treasury and a currency outflow ap proximating $50 million, but received support from large gains in inter-district commercial transactions and an increase in Reserve Bank credit. Reserve Bank holdings of Treasury bills under repurchase option moved up another $15 million to $273 million, the largest amount held on any statement date this year. More than $300 million has been withdrawn from United States Government deposits at re porting banks in leading cities of the district since October 20, but gains in customers’ bal ances have been less than half as large. The difference reflects the persistent demand for hand-to-hand money, swollen by the needs of the holiday trade, and in part also funds col lected here by the Treasury and disbursed else where. Funds to meet withdrawals were sup plied by liquidation of securities. Investments of the reporting banks, at $1,727 million on December 22, were still $445 million larger than a year ago. Over the past two months holdings of Treasury bills, notes, and certificates have declined $218 million, and miscellaneous securities also have decreased, but the investment in United States bonds showed a net gain of $42 million. BUSINESS STATISTICS Production Employment and Income Philadelphia Federal Reserve District in Pennsylvania Adjusted for seasonal variation Per cent c range Indexes: 1923-5=100 Nov . 1943 fr om Nov. Oct. Nov. 1943 1943 1942 Year ago Mo. ago 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 relining.......................... 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............................ ELECTRIC POWER............ Sales, total.............................. Sales to industries.................. BUILDING CONTRACTS TOTAL AWARDSt............... Residential............................. Nonresidentialf...................... Public works and utilities! . . 159p 165p 273p 90p 182 69p 798 119p 89 38 166 109p 96 154 159 261 88 177 r 68 751 r 111 85 39 162r 101 96 142 145 235r 85 168r 65 6I3r 101 104 54 145 110 93 109 109 109 145 143 139 85 83 80 55p 54 57 47 48 58 47p 49 50 68 70 70 153 140 155 35 42 81 54 55 70 30 28r 29 + + + + + + + + + + + 3 + 4 + 14 + 5 + 17 + 3 + 6 + 3 + 8 + 1 + 6 6 + 30 + 7 + 18 + 5 - 15 3 - 30 3 + 15 + 8 - 1 0 + 3 + 0 2 2 1 4 3 4 + 9 -17 - 2 + 7 + 2* 122 107 107 +15 118 121 73 - 3 145p 126 106r +15 88 83 103 + 6 83 84 83 - 1 99 98 r 95 + 1 123 112 139 +10 96p 90 83 + b 97 93r 86 + 4 173p 165 167 r + 5 65 81 79 r -20 64 80 78r -20 74 86 -21 93 380 388 449 - 2 407 4C0 365 + 2 444 440 374 + 1 370 383 305 - 3 44 34 53 56 42 38 38 55 173 48 277 326 1943 from 11 mos. 1942 +11 + + + - + 5 - 9 +39 + 2 0 + 5 + 7 - 4 - 19 - 7 - 4 - 2 - 57 - 22 + 5 + 12* + 14 + 60 + 37 - 15 0 + + + 4- + + - + + + + + - 4 11 15 12 4 - + + - 17 19 29 3 13 2 54 14 10 23 15 7 3 1 7 3 2 6 7 2 3 41 13 7 10* 7 50 30 11 0 6 8 5 3 1 0 5 11 11 15 21 17 18 14 15 + 12 + 19 + 21 + + + - - 39 - 4 - 51 - 45 74 28 81 83 * Unadjusted for seasonal variation, t 3-month moving daily average centered at 3rd month. Not adj us ted - Allentown........... Altoona............... Harrisburg.......... Johnstown.......... Lancaster............ Philadelphia.... Reading............... Scranton............. Trenton............... W ilkes-Barre___ Williamsport.... Wilmington........ York..................... Factory Employment Factory Payrolls Oct. 1943 Nov. 1942 Oct. 1943 Nov. 1942 - 1 0 0 - 2 4- 2 + 1 0 - 1 - 4 +10 - 4 - 6 +12 + 7 - 2 +12 - 2 + 3 - 1 0 0 + 4 + 1 - 3 + 8 +12 + 4 +13 +25 +21 +11 +21 Building permits value Oct. 1943 Nov. 1942 +152 + 61 +125 +325 - 96 - 38 +510 - 4 - 20 - 84 - 63 + 30 - 15 +191 - 26 +137 + 2 - 6 + 4 - 1 - 38 + 33 0 + 4 + 1 +14 - 55 - 24 +10 - 3 + 1 +26 + 61 +363 - 1 - 5 - 1 + 6 + 8 + 19 * Area not restricted to the corporate limits of cities given here. Employment Nov Oct. Nov. 1943 1943 1942 160p 156 167p 161 144r 147r 183 7 Op 787 123p 106 38 167 104p 97 184r 70 719r 120 104 41 164r 107 97 168r 68 605 103r 125 53 145 105 94 110 139 86 58p 49 49p 77 154 34 54 31 125 135 77 162p 105 83 100 116 93p 100 166p 66 64 81 369 423 458 378 108 143 85 58 50 50 77 152 47 56 29 r 122 r 111 102 164 102 86 99 r 121 94 lOOr 162 82 80 100 388 412 440 372 110 133 80 61 61 53 80 156 79 69 29 112 119 48 115r 124 83 96 131 81r 89 160 80 78 95 436 379 385 311 48 38 53 65 43 43 37 58 188 54 277 375 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.......... 139 191 49 81 50 93 138 99 127 106 100 102 95 +1 0 - 1 - 1 - 3 - 3 0 0 + 7 0 - 2 + 2 - 2 324 500 40 199 120 297 232 140 167 148 163 160 158 0 + 3 -20 -14 -10 -19 - 4 - 3 + 2 - 6 + 3 - 9 - 6 - 3 +1 -55 -42 - 9 - 6 + 6 0 + 6 + 1 0 + 2 - 6 + 10 +17 -53 -33 - 5 -13 +14 + 7 + 4 + 1 +15 - 2 + 6 Manufacturing Employment* Payrolls* Per cent Per cent Nov. chang el'rom Nov. chang efrom 1943 1943 index Oct. Nov. index Oct. Nov. 1943 1942 1943 1942 Indexes: 1923-5=100 TOTAL........................ 123 Iron,steel and products.... 132 Nonferrous metalproducts. 192 Transportation equipment. 178 Textiles and clothing 83 75 Clothing.......... 111 Food products. 124 Stone, clay and glauR .... 91 Lumber products............... 51 Chemicals and products.. . 124 Leather and products......... 77 Paper and printing.............. 104 Printing................................ 96 Others: Cigars and tobacco........... 59 Rubber tjres, goods........... 148 Musical instrumen ts......... 98 0 0 - 2 0 0 0 - 1 + 1 + 1 0 0 0 + 1 + 1 + 3 + 3 + 1 +20 - 6 - 6 - 6 + 5 - 4 - 1 + 5 -17 + 3 + 3 204 278 412 317 123 114 164 182 131 82 213 111 149 131 - 1 0 + 6 0 + 1 0 + 1 - 1 0 0 - 2 + 1 + 3 1 +17 +15 +14 +33 + 8 + 8 + 9 +18 + 4 +17 +19 -10 + 9 + 9 0 + 2 - 2 -14 +26 +19 82 287 182 + 2 + 2 + 5 -4 +46 +33 + pi * Figures from 2897 plants. p—Prelimi nary, r—Revised. Hours and Wages Weekly working time* Factory workers Averages and per cent change from year ago Retail Sales Payrolls Per cent Per cent Nov. change from Nov. change from 1943 1943 index Oct. Nov. index Oct. Nov. 1943 1942 1943 1942 Indexes: 1932=100 Local Business Conditions* Percentage change— November 1943 from month and year ago Industry, Trade and Service Debits Oct. 1943 Nov. 1942 Oct. 1943 Nov. 1942 +19 +21 +15 +17 +16 +15 +14 + 8 +22 +10 +15 +16 +10 +16 +21 +11 +10 +23 +20 +14 - +14 +22 +17 +20 +20 +18 +11 + 5 +30 +15 +12 + 6 + 8 +12 -12 +33 +19 3 5 4 2 3 0 - 4 + 5 +11 - 2 - 4 - 4 - 2 TOTAL............................ Irion, steel and prods... Nonfer. metal prods.. . 1 ransportation equip.. Textiles andclothing. . Tex tiles........................ Clothing...................... Food products.............. Stone, clay and glass.. . Lumber products......... Chemicals apd prods.. Leather and prods....... Paper and printing.... Printing........................ Hourly earnings* Weekly earnings! AverAver- Ch’gc Average Gh ge age hours age 45.4 46.5 46.5 48.1 40.3 41.4 37.7 44.1 40.4 44.4 45.1 39.8 43.2 40.8 Cigars and tobacco. . 42.1 Rubber tires, goods.. 43.9 Musical instruments. 49.4 * Figures from 2747 plants. + + + + + + + + + + + + + + 4 $1,028 + 8 $46.36 4 1.086 + 5 50.53 5 .969 + 7 45.05 1 1.201 + 8 57.79 2 .740 +11 29.72 3 .763 +10 31.57 1 .682 +13 25.91 3 .787 +10 34.85 5 .888 + 3 35.83 3 .752 +14 32.96 9 1.029 + 4 46.25 1 .725 + 8 28.75 3 .878 + 5 38.25 4 1.028 + 6 42.06 + 2 + 4 + 2 .604 + 9 .979 +12 .981 +10 25.42 43.01 48.51 + 9 -j-16 +17 + 8 + 6 + 6 +12 +16 +12 f Figures from 2897 plants. Page Eleven Distribution and Prices Per cen$ change Wholesale trade Unadjusted for seasonal variation Sales Total of all lines................... Boots and shoes............... Drugs.................................. Dry goods.......................... Electrical supplies........... Groceries............................ Hardware........................... Jewelry............................... Paper................................... Inventories Electrical supplies........... Paper................................... + 3 -25 + 2 -13 - 4 +n +22 +29 - 3 +1 -15 - 3 -14 -33 +12 +31 + 4 +35 + 1 ' 0 + 5 + 11 - 5 —15 - 8 - 6 —15 -40 +23 - 4 -31 - 9 +10 + 8 + 4 +16 +18 +13 - 7 - 7 - 2 Per cent change Nov. Oct. Nov. 1943 1943 1942 Indexes: 1935-1939=100 RETAIL TRADE Sales Department stores—District........................ —Philadelphia............... Women’s apparel.............................................. Men’s apparel................................................... Shoe...................................................................... 156p 149 162 160 141p Fuels........................... Housefurnishings. . . Other.......................... 141 136 131 125 138 131p 140 148 130 136 153 182 179 r 151 92p 91 lllr ..... + 4 + 1 +10 + 1 0 + 2* +n + + - -11' -15 +21 -16 -18* + 9 +24 +29 + 2 + 4* Nov. Oct. Nov. 1943 1943 1942 + 7 + 7 199p 199 183 182 140p +21 + 7 - 1 171 171 168 169 150 180 182 147 141 137 Merchandise and miscellaneous................... 0 + 5 +78 103 121 106 97 0 - 1 +1 0 + 3 + 10 + 2 + 2 +37 +99 +57 +22 Gokp..................................................................... Forest products................................................ Grain and products......................................... Livestock............................................................ 124 123 135 131 107 106 125 116 0 - 1 - 1 0 0 0 0 0 + + + + +26 +25 +46 +32 MISCELLANEOUS Life insurance sales............................................ Business liquidations +10 +24 +15 Check payments................................................. * Computed from unadjusted data. Source: U. S. Bureau of Labor Statistics. 6 5 2 2 5* 159p 165 158 162 216 219r 93p 93 180 187 178 112 136 127 82 138 230 201 121 118 129 FREIGHT-CAR LOADINGS 178 4 3 6 4 0 + 2 + 2 + 2 150 147 147 158r 141 1943 from 11 mos. 1942 Inventories Per cent change from Nov. 1943 Month Year Aug. 1939 ago ago Basic commodities (Aug. 1939=100).... Wholesale (1926-100)................ Farm............................ Food.............................. Other............................ Living costs (1935-1939=100)... . United States............. Philadelphia............... Food........................... Clothing.................... Nov. 1943 from Month Year ago ago Source: U. S. Department of Commerce. Prices Not adjusted Adjusted for seasonal variation 1943 from 11 Month Year mos. ago ago 1942 Nov. 1943 from 141 135 90 118 228 175 112 152 133 136 129 85 135 185 188 102 152 132 134 124 79 128 230 180 126 105 113 105 105 81 153 167 + 3 + 4 + 6 -12 +23 - 7 +10 0 +1 + 5 + 9 +14 - 8 - 1 - 3 -11 +45 +18 - 2 - 1 - 1 - 1 -10 +1 - 6 + 9 +13 142 139 93 127 228 196 107 172 152 147 137 90 148 266 214 119 152 154 0 +29 +12 118 109 92 -75* —77* +1 -65* +15* +18 10 4 163 15 29 164 42 16 161 -30* —87* - 9 150 p—Preliminary. r—Revised BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changes in— Reporting member banks (000,000’s omitted) Dec. 22, 1943 Assets Commercial loans............... $ 255 41 Loans to brokers, etc.......... 11 Other loans to carry secur.. Loans on real estate........... 41 Loans to banks..................... Other loans............................ 104 Total loans.......................... $ 452 Government securities.... $1480 Obligations fully guar’teed. 71 176 Other securities.................... Total investments......... $1727 Total loans & investments $2179 Reserve with F. R. Bank.. 377 Cash in vault........................ M 32 Balances with other banks. Other assets—net................ i 58 Four week 8 +$ 10 +$ - * Figures not available. Page Twelve 2 + 8 12 - 6 Dec. 1 Dec. 8 Dec. 15 Dec. 22 Changes in four weeks Sources of funds: Reserve Bank credit extended in district.......... ............. Commercial transfers (chiefly interdistrict)....................... Treasury operations.................................................................. + 0.8 - 0.8 +26.4 +10.8 +29.1 -16.9 +18.3 +41.6 -45.4 +11.3 +71.0 -85.3 + 41.2 +140.9 -121.2 +26.4 +23.0 +14.5 - 3.0 + 60.9 + 8.8 +17.3 + 0.3 - 0.0 +14.1 - 5.1 +14.2 - 0.2 +13.0 +15.3 -14.0 + 0.2 +14.8 -24.8 + 7.0 + 0.0 + 50.7 + 2.7 + 7.5 + 0.0 +26.4 +23.0 +14.5 - 3.0 + 60.9 Changes in weeks ended— Uses of funds: 3 Member bank reserve deposits.............................................. “Other deposits” at Reserve Bank....................................... Other Federal Reserve accounts............................................ -$107 +$505 Total............................................................................................ -" i’ + - +$ 9 -$111 -$102 + 4 + 4 x 85 + — Liabilities Demand deposits, adjusted. $1639 Time deposits....................... 166 U. S. Government deposits. 348 Interbank deposits.............. 338 Borrowings............................ Other liabilities.................... 14 Capital account.................... 226 One year Philadelpia Federal Reserve District (Millions of dollars) 8 4 +$ 45 + 3 - 146 + + + 8 3 2 1 -$ 6 66 +$445 +$442 - 50 + 2 22 3 +$198 + 10 + 183 - 30 Member bank reserves (Daily averages: dollar figures in millions) Re Held quired Ex cess Phila. banks 1942: Dec. 1-15. 1943: Nov. 1-15. Nov. 16-30. Dec. 1-15. $424 360 361 371 $347 347 351 360 $77 13 10 11 Country banks 1942: Dec. 1-15. 1943: Nov. 1-15. Nov. 16-30. Dec. 1-15. 241 264 261 263 174 204 208 213 67 60 53 50 Ratio of excess to re quired 22% 4 3 3 39 29 26 24 Federal Reserve Bank of Phila. (Dollar figures in millions) Dec. 22, 1943 Chang es in Four weeks One year Bills discounted.... $ 1.6 Bills bought.............. 0 Industrial advances. 4.3 U. S. securities........ 861.0 -$ 2.5 0 0.1 + 154.4 +$ Total........................ Note circulation.. . . Memberbk. deposits. U. S. general account Foreign deposits.... Other deposits......... Total reserves.......... Reserve ratio............ +$151.8 + 48.8 + 2.7 + 44.2 + 6.7 + 7.6 - 68.8 7.0% +$440.2 + 296.6 - 38.6 + 67.4 + 62.8 2.3 - 62.9 - 17.4% $866.9 1148.9 614.3 68.2 132.0 11.0 1092.5 55.3% 0.6 0 0.7 + 440.3
@FedFRASER