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THE BUSINESS REVIEW FEDERAL RESERVE BANK OF PHILADELPHIA JANUARY 1, 1945 f^EPERCUSSIONS of the continued heavy fighting in Western Europe are becoming in creasingly apparent on the home front, as evi denced by steeply rising munitions schedules, the tightening of rationing regulations on commod ities essential to the civilian economy, and a growing realization that still broader measures may be necessary to assure an adequate supply of manpower in war industry. Prospects of early reconversion under the Spot Authorization Plan have diminished considerably in the past few weeks with emphasis shifting overwhelmingly to both the immediate and the future needs of our armed forces for munitions, materials, and pos sibly personnel. Even before the German counter-offensive, the monthly goal for over-all production of war goods had been revised upward by several hun dred million dollars. A tremendous increase in requirements for ammunition and truck tires prompted the War Production Board in early December to authorize the construction of addi tional units of productive capacity. Latest developments in Belgium and Luxembourg sug gest that further increases in 1945 production goals may become necessary. Merchant ship building, previously scheduled to decline sharply over the coming twelve months, will be main tained at the current level until mid-year at least, and subsequently may be expanded, re ports from the Maritime Commission indicate. Increased requirements for munitions, some reflecting a reappraisal of the military situation made a month or more ago, others stemming from the most recent developments in Europe, have added to the uncertainty of the business situation. The plans of many small producers, whose facilities might have been released from munitions making, may have to be revamped or changed drastically. The fact that numerous small units of heavy industry lines are located in the Philadelphia area and in nearby counties suggests that the effects of the stepped-up muni tion program may become apparent on a broad front in this Federal Reserve District. In the case of establishments which already have shifted to civilian goods output under the Spot Authorization Plan, next year’s programs must be readjusted in line with a War Produc tion Board directive issued about mid-December. This order froze production at the levels pre vailing during the final three months of 1944, as indefinite, or so-called “open end” schedules were replaced by quarterly quotas expressed either in dollars or in units of finished goods. As a further check to uncontrolled civilian produc tion, earlier plans to relax long-standing limita tion orders for raw materials were abandoned indefinitely; priorities will be issued only for the quantity of material needed to meet manufac turing quotas. In the light of sharply increased demands for a wide range of munitions items, the supply out look for steel, some nonferrous metals, and cer tain other raw materials appearing on the crit ical list from time to time throughout the war is somewhat less promising than a few weeks ago. Similarly, the manpower situation, which had eased to some extent, again has become tighter. The over-all supply picture has not changed significantly, but the shortages which (Continued on page 8) Page One The Economy of the Third Federal Reserve District An Inventory of Agriculture 1939-1940 Over the past four decades, agriculture in the Third District has declined in relative impor tance as an economic activity. Over the same period, however, it has completed its evolution from a general self-sufficing variety to a highly specialized type, supporting the nearby urban populations of the large industrial centers. Its true place in the economy of the district as a whole is more adequately measured by this func tion which it performs than by the 170 thousand persons, or 6 per cent of the employed popula tion, engaged in agriculture. However, from the standpoint of the economy of many individual counties of the district, agriculture is of prime importance as a source of livelihood. In almost a third of the counties, more persons are en gaged in agriculture than in any other economic activity. This analysis is in the nature of an in ventory of the pre-war agricultural pattern of the Third District intended as a basis for an evaluation of wartime changes in agriculture. Land in Farms In 1940, 48 per cent of the land area of the Third District was in farms as compared with 56 per cent in the nation as a whole. Within the district this proportion varied from a low of 6 per cent in Cameron County to a high of 84 per cent in Lancaster County. Sixty per cent or more of the land area of the southern counties— Franklin, Adams, York, Lebanon, Lancaster, Chester, Berks, Lehigh, and Northampton—was in farms. Within these counties are some of the most fertile and productive soils of Pennsyl vania, namely those of the Hagerstown and Chester series, noted for their small lime re quirements. The terrain in this area varies from flat to gently rolling contours while the annual frost-free period is between five and seven months. An equally high proportion of the land is in farms in the three counties of Delaware and in Burlington County, New Jersey, where a flat terrain combined with light sandy soils and a long growing season is conducive to a highly productive agriculture. Other counties with 60 per cent or more of their land in farms include Montour, which has a very rich alluvial soil, and Bradford, Susquehanna, and Wayne, where Page Two agricultural resources are diverted to dairy and poultry farming owing to the proximity to the large New York marketing area. At the other extreme, with less than 30 per cent of their land in farms, are the northwestern counties of McKean, Elk, Cameron, Clinton, and the northeastern counties of Pike, Monroe, Car bon, Luzerne, and Sullivan. A combination of generally poor soil, often rough and stony, a short frost-free season, and an exceptionally rugged topography, with the Allegheny moun tains in the west and the Poconos in the east, explain this situation. Source of Farm Income The largest source of farm income (exclud ing products consumed on farms) in the Third District in 1939 was dairy products, which ac counted for 29.2 per cent of the total. Poultry and poultry products ranked second and field crops were third, representing 22.7 and 18.4 per cent of the total respectively. Livestock and livestock products amounted to $128 million which was considerably in excess of the value of total crops sold or traded worth $73 million. In Table I the per cent of the total farm income contributed by each of the principal products is shown separately for the counties of Penn sylvania, New Jersey, and Delaware as well as for the district as a whole. This reveals the variety of specialized agriculture in different sections of the district. FIGURE. I PRINCIPAL SOURCE! OF FARM INCOME-1939 w---- THIRD FEDERAL RESERVE DISTRICT CVS HORTICULTURAL till SPECIALTIES H POULTRY AND £J POULTRY PRODUCTS E Dl DAIRY PROOUCTS PTjB MU VEGETABLES F=3 E3 HELD CROPS E3 TRUlT AND NUTS 82 LIVESTOCK tf fz ft TABLEJI SOURCE OF FARM INCOME—1939 cbounties in Third District Penn sylvania New Jersey Dela ware Per Cent Livestock......................................... Dairy products............................ Poultry and poultry products Other livestock products... 12.9% 32.9 18.8 3.8% 19.8 26.8 .4 3.7% 13.7 51.4 .3 10.6% 29.2 22.7 Total livestock and products.. 65.8% 50.8% 69.1% 63.5% $128 FieldScrops*................................... Vegetables....................................... Fruits and nuts........................... Horticultural specialties.... Forest products........................... 20.1% 13.8% 23.1 11.3% 9.1 $ 37 8.1 6.6 18.4% 7.6 4.9 5.2 Total crops....................................... f counties poultry and poultry products and vege tables comprise about half of farm income; in Delaware poultry and poultry products alone represent 51 per cent of total farm income. 34.2% 1.2 4.0 4.0 5.6 .5 4.1 .1 30.9% The two principal farm products of each county are shown in Figure 1. The overwhelm ing importance of dairying and poultry is readily apparent, but at the same time the diversity of the district’s agriculture is also evident. Dairy ing, poultry, and livestock are the predominant sources of farm income where soil and climate or topographical considerations do not favor intensive land cultivation and where proximity to large cities promises a large market for these perishable products. Proximity to large mar kets is also the factor explaining the importance of vegetable production in the southeastern counties. Field crops are important in those counties drained by the Susquehanna and its $ 21 59 46 1.0 3.6 .3 49.2% Millions 2 15 10 10 1 .4 36.5% $ 73 $201 * Includes Irish and sweet potatoes. 4 Dairy products and field crops account for over 50 per cent of farm income in the Penn sylvania counties, while in the New Jersey FIGURE! II THIRD FEDERAL RESERVE DISTRICT n*KCAN l y R AD FO R VJrS.SUS'QU EHANN,A TIOGA POTTER WAYNE WYOMING l ACKA SULLIVAN ICAMERON * PIKE LYCOMING MONROE CLEARFIELD ONION CARBON CENTRE NYDER CHUYLK CAMBRIA ■ BERKS ERRY ► CUMBERLAND BEDFORD / LANCASTER /FULTO / /FRANKLIN cel. YORK VALUE OF FARM PRODUCTS PRODUCED PER ACRE OF LAND IN FARMS 6 YmMo ATLANTIC DOLLARS PER ACRE KENT □ 0 10.0 - 10.1-15.0 15.1-25.0 AND OVER w 1 52 Page Three tributaries. Irish potatoes, hay, corn, wheat, and oats are the biggest field crops, although in Lancaster tobacco outstrips all the rest. Horticultural specialties, such as mushrooms, flowers and other plants grown under glass are the principal sources of farm income in Phila delphia, Chester and Delaware Counties. Fruits are a major source of income in Adams County where apples are the most important crop and in Ocean and Atlantic Counties which specialize in cranberries and peaches respec tively. In all three of these counties poultry products are also raised to serve as a sort of hedge against the uncertainties of fruit crops. Value of Farm Products The general high productivity of the district’s agriculture is emphasized by a comparison with the United States. In 1939, the value of the district’s farm output per acre in farms was al most three times that of the United States as a whole—$20 per acre in the district in contrast to $7 in the country at large. However, within the district, variations in climate, soil, topography, and type of agriculture produce equally great variations in dollar value of output. Figure 2 shows that the counties with the high est value of product per acre—over $25—were concentrated in the southeastern section of the district. Philadelphia ranked first with a value of $95 per acre owing to its specialization in crops requiring a small growing area. Ocean County is second with a value of $68 per acre followed by Atlantic, Cumberland (N. J.), Gloucester, Mercer, Lancaster, and Delaware, in that order. The east-central and south-cen tral counties had the next highest value of product per acre, between $15 and $25, which was about the average of the district. West and north of these counties were those producing $10 to $15 of revenue per acre. Finally in the northwestern and southwestern corners of the district—in Sullivan, Pike, and Monroe—the value of farm product per acre was less than $10 in 1939. In this last group are some of the coun ties that have a small proportion of their land area in farms. The job of gearing agriculture into the war effort is similar in some respects to that of manu facturing and dissimilar in other respects. War time demand for agricultural products was in creased tremendously—like the increased need for manufactured products—but efforts to in crease production meet with peculiar obstacles in agriculture. Agricultural resources are rela tively fixed and afford rather limited opportu nities for alternative use. Owing to the length of the growing season, the nature of soils, cli mate, specialized labor, specialized farm equip ment and machinery, and availability of mar kets, it is often easier for the farmer to produce more of his customary products than to shift into products temporarily in greater demand. Wartime Changes in Agriculture 1939-1943 Pennsylvania, New J ersey, and Delaware* Wartime developments have completely re versed the status of the farmer. Formerly he could produce far more than he could sell at profitable prices, now demand greatly exceeds the means of production. The 11 million men in our armed services require 66 per cent more food than in civilian life; some of our allies, cut off from their regular sources of supply, are more dependent upon us for food shipments; and our civilian population, with greater money income, is demanding more and better food. At the same time, farmers like manufacturers, are handicapped by labor, ma * Since figures for the Third Federal Reserve District are not avail able, data for the three states partially or wholly included in the Third District are used throughout this analysis. Page Four terial, and equipment scarcities. Wartime changes in agriculture of Pennsylvania, New Jersey, and Delaware may be portrayed by an appraisal of production, income, labor supply, and farm real estate values. Production Expansion of agricultural production in these three states between 1939 and 1943 has not kept pace with expansion of agricultural production in the country as a whole. One explanation is the proximity of war centers which has given rise to the abandonment of farms. The Pennsyl vania Department of Agriculture estimates this wartime decline in Pennsylvania to be about PRODUCTION OF SELECTED AGRICULTURAL PRODUCTS IN PA, N.J., AND DEL. AND IN THE U.S. INDEX CATTLE 100 60 140 -------- TURKEYS -TOBACCO 140 PEACHES '3 STATES 120 100 BROILERS 60 60 40 EGGS (CHICKEN) 140 WHEAT — IRISH POTATOES CHICKENS 120 100 80 60 '39 40 4l 42 A3 '39 '40 '41 42 43 '39 40 '41 42 43 13,000 farms, representing a loss of 870,000 acres or about 6 per cent of 1940 farm acreage. The fact that farms in this area are smaller and generally more diversified than those in many other parts of the country may be another reason why this area has not responded as effectively to increased demands for agricultural products. Output of large specialized cash-crop farms can be increased more readily than that of small farms producing diversified products. The less than average expansion in output cannot be attributed to a less favorable cost-price struc ture because it was, if anything, more favorable in this area than in the country as a whole. m The extent to which farm output in Pennsyl vania, Delaware, and New Jersey lagged behind that in the United States during the war years is shown in the accompanying charts. These in dexes are based on production of commodities* representing 90 per cent of the gross farm in come of the three states. Production of truck crops and turkeys showed greater increases in output than those of the United States. Output of hogs, commercial broilers, and milk kept pace with that of the country. The output of tobacco declined but the decline was less in the three states than nationally. Production of commercial broilers, which is heavily concentrated in Delaware, showed the greatest increase (141 per cent) over 1939. Hog production, showing an increase of 41 per cent, ranked second. A large increase in price * Include all commodities representing one per cent or more of gross farm income in either 1939 or 1943. % '39 40 4l 42 43 39 40 41 42 43 39 40 41 42 43 and a vigorous Government program have stim ulated the phenomenal increase in broilers while exceptionally favorable price ceilings on pork products in 1943 were responsible for the large hog production. Wheat acreage harvested declined 15 per cent and corn 6 per cent between 1939 and 1943; and with lower yields per acre due to weather conditions, production of these commodities de creased. These crop acreages were reduced along with those of barley, oats, tobacco, and rye. The feed shortage in the three states was intensified in 1943 by the contraction in grain production. In fact, the number of grain-con suming animals on farms in this area increased, and grain shipments from the corn belt declined because farmers in that area found it more ad vantageous to feed their corn to their hogs than to sell it at the prevailing price ceilings. Production of peaches, apples, and other tree crops also declined in the three-state area, owing largely to unfavorable weather conditions including a late wet spring, a hot dry summer, and an early killing frost, and to the labor shortage. The wartime expansion in production of live stock and livestock products at the expense of crop production is a continuation of the trend evidenced in this area over the thirties. This wartime gain is-particularly significant in view of the fact that labor requirements per unit of output are greater for livestock than for crop production. Page Five Income Only the general pattern of these changes in output may be traced in gross farm income, as advances in agricultural prices obscure the ex tent to which increased income is caused by changes in physical volume of production. As may be seen in Table II, gross agricultural in come in Pennsylvania, New Jersey and Delaware was $444 million in 1939 and $854 million in 1943, an increase of 92 per cent. This, however, is considerably below the national increase of 121 per cent. Gross income from livestock and livestock products in the three states rose by $300 million or 106 per cent, in contrast to an in crease in gross income from crops of $100 million or 68 per cent. For some of the commodities, production was lower in 1943 than 1939 but in every instance dollar value was higher in 1943. However, the divergent rates of increase sub stantially altered the proportion of total gross in come which the various components contributed. Livestock and livestock products increased their share from 65 per cent to 69 per cent while crops declined from 33 to 29 per cent. Com mercial broilers registered the greatest increase in gross income—362 per cent since 1939. Sub stantial gains were made also by other poultry products—eggs, chickens, and turkeys. Cattle and dairy products were the only commodities of the livestock group whose share declined; and of the various crops, only truck crops increased their proportion. TABLE II AGRICULTURAL GROSS INCOME Pennsylvania, P f ew Jersey, and D elaware ($ mi [lions) % dist •ibution 1939 1943 1939 12.3 17.7 26.8 55.7 3.6 56.7 45.1 63.8 130.7 8.3 2.8 3.5 32.6 136.4 8.1 56.1 224.2 7.3 30.7 Total livestock and products 288.5 593.0 Truck crops............................. Peaches....................................... Potatoes..................................... Corn.............................................. Apples.......................................... Tobacco...................................... Wheat.......................................... 42.8 4.4 21.3 5.1 14.8 4.6 9.6 9.2 3.6 39.7 4.8 8.2 1.1 Total crops................................. 147.3 Total Government payments TOTAL GROSS FARM INCOME............................. Commercial broilers........... Hoga.............................................. Chickens.................................... Eggs (chicken)........................ Turkeys....................................... Other livestock and products................................ Cattle and calves.................. Dairy products....................... 1943 6.6 United States .% „% change change 1939-43 1939-43 +362 +155 +138 +135 +134 +324 +238 +159 26.2 6.6 +130 + 72 + 64 + 96 + 98 + 98 65.0 69.4 +106 +141 9.7 10.7 +106 + 90 Labor The predominant wartime problem with which farmers have had to contend is the farm labor situation. Military service and the attrac tion of higher wages in war centers have reduced the supply of regular farm labor. On January 1, 1939 the index of farm labor supply (193539=100) for Pennsylvania was 105 while the index of labor demand on the same base was 95. By January 1, 1943 the index of labor supply had declined to 56 and the index of demand was 119. The normal supply has had to be supple mented, particularly at harvest time, by inex perienced recruits from nearby towns, penal institutions, and from the armed services. Con scientious objectors and prisoners of war have also been pressed into service. In Bucks, Berks, Lancaster, Franklin, and Potter counties, 11 farm labor camps were set up in 1943 to house workers recruited for the fall harvest. The over-all decline in farm employment be tween 1939 and 1943 has been somewhat less severe for the three states than for the country as a whole, as is shown in Table III. However, the local situation was considerably worse in 1941 when employment was down almost 10 per cent compared with 6 per cent in the United States. The increase since that date may be at tributable to the efforts of the local Emergency Farm Labor Committees in recruiting additional +107 +104 +144 + 96 6.1 4.0 12.5 5.3 7.5 15.3 .8 1.0 .8 .9 +200 +127 3.3 2.8 .7 10.2 1.0 2.2 1.2 +114 + 96 + 87 + 63 + 62 + 27 + 6 248.0 33.2 29.0 + 68 +123 8.2 13.2 1.8 1.6 + 61 - 16 444.1 854.3 100.0 100.0 + 92 +121 24.0 5.8 Over the war period, net income payments to farm operators in the three states (a more ac curate measure of farmer welfare than gross income) increased 110 per cent, in contrast to an increase of 183 per cent for the country as a whole. In both instances, the increase in net income payments to farm operators was greater than the increase in income payments to all in dividuals. Total income payments to all indi viduals rose 76 per cent in the three states and 96 per cent in the nation as a whole. 1.0 1.0 4.7 .9 TABLE III ESTIMATED FARM EMPLOYMENT ON JUNE 1 (Thousands) Pennsylvania, New Jersey, and Delaware +120 388 385 353 372 371 Per cent change 1939-1943........................... Page Six 1939........................................................................ 1940................................................................. 1941...................................................................... 1942........................................................................... 1943................................................ -4% United States -6% workers, and legislation deferring necessary farm workers from military service. The relative attractiveness of jobs in industry and agriculture is revealed by a comparison of wage rates. Although farm wage rates have increased tremendously over the past four years, in 1943 they were still far below the 1939 com mon labor entrance rate for industrial workers in each of the three states and in the country as a whole. This comparison is shown in Table IV. Table V, has become increasingly brisk through out the country although it has been somewhat less rapid in the three states. TABLE V VOLUNTARY SALES AND TRADES PER 1,000 OF ALL FARMS Pennsylvania New Jersey Delaware United States 27.4 25.4 27.9 34.4 37.6 24.6 26.5 28.1 27.6 17.9 20.4 19.9 22.1 26.9 29.7 30.2 34.1 41.7 44.4 1939....................... 1940....................... 1941....................... 1942....................... 1943........................ 20.0 U. S. Dept, of Agriculture, Bureau of Agricultural Economica. TABLE IV WAGE RATES JULY 1 Agricu Itural—without board 1939 Approximate hourly 1943 Approximate hourly .22 Per cent increase 1939 Hourly entrance rate* Farm real estate prices have risen 21 per cent in the United States as a whole between 1939 and 1943, 18 per cent in Pennsylvania, 17 per cent in New Jersey, and 21 per cent in Dela ware. Since the trend of farm land values seems FARM REAL ESTATE - VALUE PER ACRE Common labor Pennsylvania... New Jersey. . . . Delaware............. .24 .18 .36 .34 .28 +64 +42 +55 55 54 .45 United States. . .15 .23 +42 .50 ■WORLD WAR I0»i4»ioo) ■WORLD WAR n (I939.IOO) INDEX * Unweighted aver®ge of 16 manufacturing industries, three public utilities! ana building and construction. * Sources: TJ. S..Dept, of Agriculture, Bureau of Agricultural Economics U. S. Dept, of Labor, Bureau of Labor Statistics. UNITED STATES 160 150 No ceiling has been placed on farm wage rates up to $2,400 per year; in fact, reductions in rates below the highest rate paid between January 1, 1942 and September 15, 1942 have been prohibited. Equipment To offset the inadequate labor supply, the farmer has tried to increase worker productivity through greater use of labor-saving equipment. A survey of 190 Pennsylvania farmers made by Pennsylvania State College revealed that trac tors, cultivators, plows, milking machines, and power mowers have been in great demand. However, most of the demand for labor-saving machinery, such as hay loaders, side-delivery rakes, and corn binders, had to go unsatisfied in 1943 owing to the shortage of such equipment. Many farmers for the first time found it neces sary to rent or borrow machinery from their neighbors. 140 130 120 110 100 PENNSYLVANIA 130 120 110 100 NEW JERSEY 120 no 100 DELAWARE 130 Farm Real Estate Over the war years, activity in the farm real estate market has increased noticeably, both nationally and in Pennsylvania and Delaware, accompanied by a rise in farm real estate prices. Turnover of farm property, as shown in 120 no 100 1914 1939 1915 1940 1916 1941 1917 1942 1918 1943 1919 1944 1920 1921 Page Seven to be duplicating that of 1914-1922, which cul minated in wild speculation with catastrophic results, it has caused considerable concern. How ever, surveys made by the Bureau of Agricul tural Economics and by the Farm Credit Administration indicate that speculation, as evidenced by purchase solely for resale at a profit, is not an important factor in the current price increase, particularly in the three states. The wartime expansion in farm income has enabled farmers to accumulate liquid funds even after substantial reduction of their indebt edness. Thus, tenants have found it possible to become farm owners, and pre-war owners are enlarging their holdings. Farm real estate has also been purchased by urban residents with enlarged incomes, in some cases to assure a source of livelihood after the war, in other cases as a hedge against inflation. Many of the farms offered for sale are those of aged farmers un able to obtain sufficient labor to operate their farms. It is noteworthy that the situation in respect to farm mortgage debt is at present running contrary to that of the last war. Between 1914 and 1918 total farm mortgage debt outstanding increased 38 per cent while between 1939 and 1943 (a comparable period) farm mortgage debt actually declined 10 per cent. Nevertheless, whatever the present cause of the trend towards rising farm real estate prices, if it continues to duplicate that of the first World War and thereafter, inflation and subsequent collapse of farm values may prove as disastrous as after World War I. Business and Banking Continued from page 1 had persisted throughout certain industries and in a few areas have grown more acute. In Philadelphia and in some other critical labor markets in this district the manpower require ments of war plants have been revised upward since early December, with the demand for additional workers most pressing at the several Government establishments making top priority items. Industry. Industrial production in the Philadel phia Federal Reserve District on an adjusted basis was maintained from October to November but showed a decline of 7 per cent from a year earlier. Some decrease in the output of dura ble manufactures in the month was offset by a higher rate of operations in nondurable goods industries. Total production of coal was less than in October. Over-all productive activity for the year through November was down about 3 per cent from 1943. Activity in heavy industry lines showed a decrease in this period, reflecting in part cut-back production schedules in certain munitions categories during the summer; the output of lighter products was somewhat above the first eleven months of 1943. Employment in Pennsylvania factories has not changed significantly in recent months. The Page Eight number of workers in November was estimated slightly in excess of 1,200,000, about the same as in October, but 6 per cent less than a year ago. Payrolls and total working time have fluc tuated somewhat since last summer, although for the most part changes have not been pro nounced. Wage payments approximating $54)4 million a week, showed a small decrease from October and were down 2 per cent from No vember 1943. Total employee hours declined 2 per cent in November to a level 7 per cent below last year. During peacetime it is cus tomary for employment and payrolls to decrease about 1 and 4 per cent respectively from Octo ber to November, as seasonal influences affect numerous industry lines. Over a period of many months of wartime operations, however, these factors have disappeared in some instances, and have been modified in others. The weekly income of wage earners at re porting plants in Pennsylvania, averaging $48.44 in November, was somewhat below the October peak, but $2.00 more than a year ago. The decrease in the month was attributable to a reduction in average working time from a wartime high of 46 hours a week to a little over 45. Average hourly earnings continued to advance in November to almost $1.08, the high est on record since 1927. larly those of lesser importance to the war effort, may continue greatly restricted on the prospect that the conflict in Europe will last longer than had been anticipated. PRODUCTION AND PRICES PRODUCTION * WHOLESALE COMMODITY PRICES US ' COST OF LIVING IN PHILADELPHIA 1939 1940 1941 1942 1943 1944 ... Output of anthracite slackened somewhat in November, following a substantial increase in the preceding month. The tonnage mined was more than one-fifth greater than in November 1943, and exceeded that of any November in well over a decade. Production has approxi mated or substantially exceeded 5 million tons in each of the past eleven months, establishing a fourteen-year record for sustained high op erations. Almost 60 million tons were mined in eleven months of 1944, several million more than in any full pre-war year back to 1931. The production of bituminous coal in Pennsyl vania also decreased a little in the shorter month of November, although on a daily basis volume was slightly greater than in October. Colliery output showed a gain of 19 per cent over 1943, and was 8 per cent greater in the first eleven months this year than last. Building activity nationally and locally has continued at much reduced levels this past year. Preliminary estimates indicate that new con struction valued at some $3.8 billion was put in place throughout the country during 1944. The total, which was within 2 per cent of the dollar volume programmed by the War Production Board, was just under one-half of the amount completed a year earlier, and less than onethird that of the peak war year 1942. The out look for 1945 remains highly uncertain, as the scale of activity will be regulated in large part by war developments. Some substantial addi tions to munitions-making facilities, only recent ly planned, are scheduled for completion by late summer. Activity in other categories, particu In the Philadelphia Federal Reserve Dis trict, the value of contracts awarded decreased 40 per cent from October to November to a level 35 per cent below a year earlier. The decline in the month reflected much smaller awards for family houses, factory buildings, and public works and utilities. Reductions from November 1943 also were sharp in both the residential and industrial fields. Total place ments in the first eleven months of 1944 were approximately one-third less than a year earlier; they were the smallest for the period since 1935, and only 30 per cent of the peak year 1942. Freight-car loadings in this section on an ad justed basis increased 5 per cent from October to November, and were slightly larger than a year earlier. Gains in the month were reported in all the principal freight classifications except coal and grain products. A small decrease in loadings of coal was about in line with expec tations, but a reduction of more than one-fifth in the case of grain products was contrary to seasonal tendency and reflected the unusually high levels prevailing earlier this year. In the eleven months ended November, total loadings were 5 per cent greater than in the 1943 period. Trade. Business at wholesale increased some what further from October to November, re flecting larger sales of electrical supplies, jewelry, hardware, and groceries. Total dollar volume in eight reporting lines was 7 per cent greater than in November of last year, with the most pronounced gains occurring at estab lishments handling electrical supplies and shoes. Sales of paper, groceries, and hardware were larger in the first eleven months of 1944 than a year earlier, raising the total of all lines for the period to a level 3 per cent above 1943. Inventories showed mixed changes in the month, although in the aggregate stocks were little lower than in October; they were down 2 per cent from November of last year. Christmas buying appears to have exceeded all previous records in this district, on the basis of reports received thus far from department and women’s apparel stores. Total dollar sales by these establishments in each of the three Page Nine . weeks immediately preceding the holiday showed increases ranging from 19 to 29 per cent over comparable periods of 1943. More complete reports covering the month of Novem ber indicate that department store sales were up 14 per cent from a year earlier; business at both men’s and women’s apparel stores ex panded 17 per cent; and the value of sales by shoe stores rose one-fifth above the 1943 level. Sales for the year through November showed increases over a year ago ranging from 8 to 11 per cent, except at establishments specializing in shoes, where dollar volume was virtually un changed. In all reporting lines increases in sales from October to November exceeded seasonal expectations for the period. Retailers’ inventories declined in November, except at establishments specializing in women’s apparel, where they showed a contra-seasonal increase of 6 per cent. Stocks at the end of the month were somewhat larger than a year earlier at department and women’s apparel stores, but they were down about one-tenth at shoe stores. Banking conditions. With tabulations still in complete, the record of sales for the Sixth War Loan shows that individual as well as corporate goals were exceeded in each of the three states of this district. For the nation as a whole total sales ran more than $6 billion ahead of the $14 billion quota. Changes in banking figures over the past month reflect the familiar pattern of loan drive periods, with the added influence of heavy in come tax payments in the final week. Custom ers’ demand deposits at reporting banks in the Third Federal Reserve District declined from a high of $1,896 million on November 22 to $1,694 million on December 20. At the same time there were heavy transfers to war loan ac counts, carrying total deposits up $160 million to record levels. Expansion in assets of the reporting banks over the four weeks was principally in holdings of Government securities, which increased by $139 million to $1,833 million. Purchases of certificates were substantial, but holdings changed little as certificates maturing on Decem ber 1 were exchanged for notes under the terms of a Treasury refunding offer. One-half of the Page Ten 9A5 JAj increase in Governments was in United States bonds, which constitute nearly three-fifths of total holdings of direct Federal obligations. This proportion was about the same a year ago, when aggregate holdings were materially smaller. Loans were increased $38 million over the past month, reflecting extension of credit to carry Governments, together with advances to business concerns and banking institutions. Following some decline earlier in the period, Reserve Bank credit extended locally increased sharply during the final week, as funds moved actively to the Treasury in payment of income taxes. Increase of $44 million over the four weeks ended December 20 took the form of ex pansion in float and in Treasury bills held by this Bank under repurchase option. Despite the funds so supplied and a large favorable balance in interdistrict commercial transactions, the reserves of member banks declined some $20 million to $710 million. On balance, approxi mately $170 million was absorbed by Treasury operations and $35 million by withdrawals of currency and coin. Reserve positions of the member banks in this district have not varied materially over the past year. Semi-monthly figures for banks in Philadelphia have shown reserves averaging from 2 to 6 per cent over requirements, with propor tions generally highest during the loan drives, when requirements were reduced by shifts to reserve-free war loan accounts. Banks else where in the district, taken as a whole, have been less fully invested, as indicated by ratios of excess to required reserves ranging for the most part from 21 to 26 per cent. On the basis of regular reports from a group of banks and the more complete data available from call reports, the Board of Governors has prepared monthly estimates of consumer in stalment credit outstanding at all commercial banks in this district. From $147 million at the close of 1941, outstandings declined steadily to about $34 million last spring. This sharp reduc tion, found also in nation-wide figures, reflected restrictions upon the manufacture of consumers’ durable goods, improved cash positions of indi viduals, and the regulations imposed upon con sumer credit. In later months of the year there was a slight recovery, with outstandings reach ing nearly $37 million by the end of October. -v . !x(~ BUSINESS STATISTICS Production S\0E^ Employment and Income Philadelphia Federal Reserve District in Pennsylvania Adjusted for seasonal variation Not adjusted Industry, Trade and Service Per cent ch ange Nov. Oct. 1941 1944 INDUSTRIAL PRODUCTION MANUFACTURING................. 140p 144p 221p Chemicals and products.... Leather and products............. Paper and printing................... 91p 176* 67p 516 120p 89 37 171p 108p 96 Individual lines Pig iron............................................. Steel.................................................... Silk manufactures...................... Woolen and worsteds.............. Cotton products.......................... Carpets and rugs........................ Hosiery............................................. Underwear. ................................... Cement............................................. Brick.................................................. Lumber and products............. 96 142 85 56p 42 53p 60 141 39 48 30 111 Metal products............................ Textile products.......................... Transportation equipment. . Food products.............................. Tobacco and products............ Slaughtering, meat packing. Sugar refining............................... Canning and preserving.... Cigars................................................ Paper and wood pulp.............. Printing and publishing.... Shoes.................................................. Leather, goat and kid............. Paints and varnishes............... Coke, by-product....................... COAL MINING ............................ Anthracite....................................... Bituminous..................................... CRUDE OIL.................................... ELEC. POWER—OUTPUT... Sales, total...................................... Sales to industries..................... BUILDING CONTRACTS TOTAL AWARDSf..................... Residential t................................... Public works and utilitiesf. . 142 142p 87 86 98 131 Nov. 1943 Employment 141 144 225 89 173r 66 578 113 81 36 r 168r 97 97 150r 156r 248 r 90 r 182 69 684 r 118r 89 — + + + - 5 + 7 + 9 351 423 0 3 + + 3 4 3 172p 103p 97 _ 5 33 7 44 56 65 46 80 34 53 56 9 + 17 3 11 65 - 6 64 - 6 76 r - 3 380 + 2 33 7 0 1 1 + + 10 — 8 + 12 9 36 17 _ -j+ + + _ — 12 — 2 + 6 * 4. 9 + 20 + 1 + 1 1 1 11 Q* 16 21 9 14 0 + 7 7 — 5 + 9 + 23 3 3 5 3 5 + _ + + + + + + 23 + 19 8 + 2 + 1 - 2 + 4 +1 - 6 +20 — 25 — 80 4- 5 + 16 * Unadjusted for seasonal variation. t 3-month moving daily average centered at 3rd month. 180 183 70 674r 553 122 120r 106 99 38 170r 166 103 102r 98 97 68 97 r 108r 141 r 139 87 87 86 58 r 60p 60 49 44 44 56p 51 53 77 69 69 154 142 142 34 38 39 r 54 47 49 31 30 31 125 133 131 122 114 135 77 92 76 154r 159p 164 105 104 97 85 87 86 lOlr 100 99 116 123 127 83p 8lr 90r 95 96 100 172p 168 r 159 8 81 86 66 7 79 84 64 84 r 369 8 11 100 100 6 341 440 343 428 4 4 439 348 423 339 — 47 — 67 — 35 35 4 — — -18 147 36 8 34 8 56 75 44 84 + + + 8 423 458 377 r 48 38 53 65 Factory employment Oct. 1944 Allentown............. Harrisburg............ Johnstown............ Lancaster v .... Philadelphia.... Reading.................. Scranton................ Wilkes-Barre.... Williamsport.... Wilmington.......... York......................... + + - 0 0 2 1 1 1 0 0 0 + 1 — 2 0 Nov. 1943 - 6 + 2 0 - 4 - 9 Factory payrolls Oct. 1944 - 2 - 4 0 - 3 - 1 -10 - 6 +12 0 - 2 - 1 0 -11 -10 - 3 - 3 Nov. 1943 - 1 + 8 + 3 - 1 - 5 - 7 - 3 +30 0 +12 -10 0 - 7 + 4 + 3 Building permits value Oct. 1944 + 56 + 54 + 85 - 23 +667 Nov. 1943 74 63 69 31 94 71 60 Oct. 1944 - 85 + 51 +250 + 83 +192 - 66 - 94 - 67 + 19 +115 - 89 - 48 * 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.............. 133 179 47 73 49 81 133 97 130 103 - 5 - 6 - 4 - 4 - 2 - 1 329 491 -10 - 2 +1 0 - 1 - 1 317 124 240 254 147 169 151 176 178 163 86 - 2 - 1 -14 +1 - 2 +54 +45 + 4 -19 -10 - 6 -10 +30 +24 +26 +28 +26 +25 +14 +18 +20 +18 +29 Nov. 1943 +10 +24 +13 +32 +u +13 + 9 +23 + 6 +26 +12 +17 102 100 95 -13 - 3 - 1 + 3 - 3 + 3 - 2 - 2 0 + 8 0 - 1 0 - 2 + 3 + + + - +10 + + + + 0 2 2 2 1 5 2 3 8 +11 5 + 3 Manufacturing Employment* Payrolls* Per cent Per cent Nov. changefrom Nov. changefrom 1944 1944 index Oct. Nov. index Oct. Nov. 1944 1943 1944 1943 Indexes: 1923-5 =100 TOTAL............................................. Iron, steel and products... . Nonferrous metal products. Transportation equipment. Textiles and clothing............. Textiles........................................ Clothing..................................... Food products............................ Stone, clay and glass.............. Lumber products..................... Chemicals and products... . Leather and products............ Paper and printing.................. Printing....................................... Others: Cigars and tobacco............... Rubber tires, goods.............. Musical instruments........... 115 0 124 207 155 78 72 103 128 83 50 116 72 - 1 +1 - 1 - 6 - 6 + 8 -14 - 5 - 5 - 7 + 3 - 9 - 2 - 6 - 6 - 3 - 1 0 +1 - 1 +1 0 - 1 95 0 0 0 0 50 150 91 + 8 101 0 0 200 -14 +1 - 7 76 326 133 273 463 290 123 114 164 196 127 8L 209 116 153 135 - 1 - 2 +1 0 - 2 - 2 +12 - 9 - 1 0 - 2 - 1 - 3 4 1 2 1 2 0 + i +12 0 0 - 1 + 8 - 4 0 0 + 5 + 3 + 3 - 7 +14 -27 * Figures from 2826 plants. Hours and Wages Factory workers Averages November 1944 and per cent change from year ago Retail sales +20 - Per cent Per cent Nov. changefrom Nov. changefrom 1944 1944 index Oct. Nov. index Oct. Nov. 1944 1943 1944 1943 Indexes: 1932 =100 p—Preliminary, r—Revised. Local Business Conditions* Percentage change— November 1944 from month and year ago Payrolls 97 137 10 + 118 +55 141r +13 88 + 9 85 + 1 99 - 2 123 +12 92r +n 97 + 3 165 + 5 444 370 68p 538 123p 106 122 407 177 — 10 + 10 14 109 91 125 79 85 415 151 r 157r 0 0 55r + 2 47 0 49 r + 5 68 - 4 153 + 8 35 + 12 55 - 1 30 0 423 349 6 2 2 3 _ 10 — 3 _ 1 + 3 426 341 144 142p 146p 3 4+ Nov. 1943 0 107r - 1 146 + 3 117 77 90 171r 3 _ — _ 3 — 4 — 20 + 2 84 93 r 343 91 8 11 0 98 r 139 85 55 42 51 63 130 34r 49 30 86 Nov. Oct. 1944 1944 11 7 - 0 0 2 2 2 1 + 85 80 79 mos. 1943 Year ago 166 + 2 107 r +11 97 - 1 100 86p 92 180p 1944 from Mo. ago Indexes: 1923-5 =100 Nov. 1944 from Debits Oct. 1944 +10 + 5 + 5 +10 - 1 +34 +29 + 3 +28 +13 + 3 +14 + 3 Nov. 1943 +24 +41 +11 +26 +32 +42 +45 +20 +24 +27 - 4 +24 +26 TOTAL.................................. Iron, steel and prods... Nonfer. metal prods.. . Transportation equip.. Textiles and clothing. . Textiles............................. Clothing........................... Food products................. Stone, clay and glass. . Lumber products.......... Chemicals and prods.. Leather and prods......... Paper and printing... . Printing............................ Others: Cigars and tobacco... Rubber goods, tires. . Musical instruments. . Wee dy work mg tim 3* Hourly earnings* Week K earnin gsf Aver age Ch’ge Aver Ch’ge hours age 0 $1.076 + 5 $48.44 0 1.130 + 4 52.89 0 1.007 + 4 47.00 45.2 46.8 46.7 46.0 40.1 41.3 37.3 44.2 41 6 43.1 46 1 42 0 44.2 40.9 42.6 46.1 41 .7 * Figures from 2679 plants. Aver age - 4 0 0 - 1 0 + + + + 4 3 2 6 2 0 + 1 + 5 -16 1.304 .789 .803 .751 .810 .917 .776 1.056 .764 ...916 1.063 3 4 7 5 4 60.00 31 67 33 23 28.36 36 14 38 02 33 22 48 77 32 17 40 78 43.73 .643 + 6 1.049 + 7 .912 - 7 27.36 48 33 38 05 + 9 + 6 + 5 +10 + + + + + + + 3 2 Ch’ge + + + + + + + + + + + 4 4 4 4 6 S 9 4 6 1 6 +13 + 6 + 4 + 8 + 13 -22 t Figures from 2826 plants. Page Eleven Distribution and Prices Per cent change Adjusted for seasonal variation Nov. 1944 from Sales Total of all lines..................... 1944 Month Year ago ago Wholesale trade Unadjusted for seasonal variation 11 mos. 1943 Drugs....................................... Dry goods............................... Electrical supplies............... Groceries................................. Hardware............................... Jewelry.................................... Paper........................................ + 3 - 6 0 - 2 +20 +1 + 2 + 9 - 8 Inventories Total of all lines..................... Dry goods............................... Electrical supplies................ Groceries................................. Hardware............................... Paper........................................ - 1 -13 + 5 + 5 0 - 3 Indexes: 1935-1939=100 + 7 +34 + 3 + 6 +40 - 2 - 8 - 1 - 7 - 2 -20 +29 - 3 + 4 + 7 Nov. 1944 from Nov. Oct. Nov. 1944 1944 1943 - 1 - 2 0 + 6 + 4 0 + 8 Other............................ Living costs (1935-1939=100).. . . United States............. Philadelphia............... RETAIL TRADE Sales Department stores—district.............................. Philadelphia.................. Women’s apparel...................................................... Men’s apparel............................................................. Shoe................................................................................... Shoe................................................................................... Clothing..................... Fuels........................... Housefumishings. . . Other.......................... - 1 + 2 + 81 104 124 105 99 0 +1 +1 0 + + + + 39 +104 + 56 + 23 126 125 133 143 107 109 139 120 0 0 0 0 0 0 0 0 + + + 2 2 2 9 0 + 3 +11 + 3 Nov. Oct. 1944 1944 Nov. 1943 ./ 1943 183 170 189 187 170 168 167 169r 183 134 161 r 152 r 162 160 142 134 128 187p 84* 143 136 175 r 85 144 134 90 142 189 174 107 126 136 137 128 87 141 184 172 118 + 9 + 2 +14 + 2 +27 + 2* +10 +11 +17 + 8 +20 0 +12* 230 228 213 214 168 132 130 182 92 — — + — - + 2 — 1 + 3 — 10 — 7* 163 156 141 135 90 118 228 175 + 5 + 5 + 8 +12 +17 +11 190 187 194r 195 142 202r 202r 183 182 140 Inventories 181p 1 2 1 1 11 mos. + 3 Per cent change from Nov. 1944 Month Year Aug. 1939 ago ago Basic commodities (Auk- 1939=100)... . Wholesale (1926 =100)................ Farm......... ................... 1944 from Month Year ago ago Source: U. S. Department of Commerce. Prices Not adjusted Per cent chimge + + + + + + + + 28 27 43 44 4 13 38 19 FREIGHT-CAR LOADINGS Total.................................................................................. Merchandise and miscellaneous...................... Merchandise—l.c.l.................................................... Coal................................................................................... Ore..................................................................................... Coke.................................................................................. Forest products......................................................... Grain and products................................................. Livestock....................................................................... 168 162 214r p 84 87 221 Check payments....................................................... 207 102 112 164 152 + 3 + 1 + 6 -23 -17 +13 + 1 + 6 + 3 + 9 133 133 + 2 + 2 +14 145 138 93 153 189 195 103 142 155 118 105 - 1 +13 +14 134 122 —67* MISCELLANEOUS Life insurance sales................................................. Business liquidations * Computed from unadjusted data. Source: U. S. Bureau of Labor Statistics. 6 6 6 2 2* + 2 - 1 0 +20 -17 0 - 4 —86* * —70* -86* + 9 1 0 175 0 * 152 r '+16 178 p—Preliminary. + 4 93 4 + 4 + 5 + 2 160 +36 222 148 135 92 155 265 196 119 164 155 142 139 93 127 228 196 107 172 152 118 7 163 r—Revised. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changes in— Reporting member hanks (Millions $) Dec. 20, 1944 Assets Commercial loans................ $ 246 44 Loans to brokers, etc............ 31 Other loans to carry secur... 38 10 Loans to banks..................... 106 Other loans............................ Four weeks One year +$ 9 1 + 19 3 + + 8 3 + + 10 2 +$ 38 +* 23 +$139 4 +*291 9 23 Total investments............. $1986 +*135 +*259 Total loans & investments. $2461 Reserve with F. R. Bank... 410 36 Balances with other banks.. 92 47 Other assets—net................. +*173 - 31 + 7 + 13 7 +$282 + 33 + 4 + 7 11 Page Twelve Dec. 13 Dec. 20 Changes in four weeks -13.3 +25.3 - 8.9 + 7.6 +10.7 -31.5 -13.8 +45.6 -35 0 +63.9 +52.4 -95.0 + 44.4 +134.0 -170.4 + 3.1 -13.2 - 3.2 +21.3 + Member bank reserve deposits.............................................. “Other deposits” at Reserve Bank........................................ Other Federal Reserve accounts............................................ + 6.3 + 2.6 - 5.8 + .o +10.4 -24.4 + 1.0 - .2 + 8.0 - 9.2 - 2.0 - .0 +10.6 + 9.2 + 1.5 - .0 + 35.3 - 21.8 - 5.3 .2 Total............................................................................................ + 31 -13.2 - 3.2 +21.3 + -* 9 + 3 + 20 Total loans...................... .... $ 475 Dec. 6 Changes in weeks ended— Sources of funds: Reserve Bank credit extended in district........................... Commercial transfers (chiefly interdistrict)....................... Government securities.... $1771 Obligations fully guar’teed. 62 153 Other securities.................... Liabilities Demand deposits, adjusted. $1694 186 U. S. Government deposits. 542 366 Interbank deposits............... 6 Borrowings............................. 18 234 Capital account.................... Nov. 29 Third Federal Reserve District (Millions of dollars) — -*202 + 356 + 6 4 - 1 Hb$ 55 b 20 b 194 b h 28 6 4 a 8.0 Uses of funds: Member bank reserves (Daily averages; dollar figures in millions) Re Held quired Phila. banks 1943: Dec. 1-15 .. $371 1944: Nov. 1-15.. 407 Nov. 16-30.. 419 Dec. 1-15.. 393 Country banks 1943: Dec. 1-15 .. 1944: Nov. 1-15. . Nov. 16-30.. Deo. 1-15.. 263 307 311 310 Ratio Ex of cess excess to re quired $360 395 406 377 *ii 12 13 16 213 250 252 247 50 57 59 63 3% 3 3 4 24 23 23 26 Federal Reserve Rank of Phila. (Dollar figures in millions) 8.0 Changes in Dec. 20, 1944 Four weeks Disc, and advances . * 7.6 Industrial loans. ... 2.8 U. S. securities......... 1278.9 -$ 4.4 0.4 + 46.7 +* 6.0 1.5 + 417.9 Total......................... *1289.3 Note circulation... . 1431.0 Member bk. deposits 710.5 U. S. general account 120.1 Foreign deposits.... 105.8 Other deposits......... 6.5 Total reserves.......... 1061.4 Reserve ratio............ 44.7% +* 42.0 + 33.9 - 21.8 + 109.1 6.1 5.3 + 40.0 0.4% +$422.4 + 282.1 + 96.2 + 51.9 - 26.1 4.5 - 31.1 - 10.6% One year
@FedFRASER