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THE BUSINESS REVIEW
■raifc:
FEDERAL RESERVE BANK
OF PHILADELPHIA
JANUARY, 1948
1947:
Year of the Slump
That Never Came
HE rear 1947 may well go down in the annals of business as the year of “the slump that
never clme." LookinJg iorvari «» it in «he fall ./ 1946, the qne.Oon ^nemnnyrerpon,
sible observers seemed to be no longer whether a recession would come m 1947, but exactly
when it would come and how severe it would be. It almost seemed as though the ^mposing
rooms had already set up the type and the presses were waiting for the signal to start rolling
out the announcement of the downturn.
*
_
This picture should not be overdrawn: not everyone was wrong. And it is certainly
not in a spirit of ridicule that we look at the mistakes of the past. They should be exam
ined carefully in order to gain greater insight into the present situation, and above all, in
order to achieve greater understanding of the problems which we are now facing.
The predictions of a slump were based upon various factors, among them consumer
resistance to high prices, a smaller export surplus, declining inventory "SS War l
market slump in September 1946, an analogy with the boom and bust after World War I,
and a hunch that business was just too good—that such prosperity simply could not last, that
the only direction we could go from the heights we had achieved was down. No slu™P
curved!and none appears imminent. If, by exercising intelligent hindsight, we can discover
why the expectations of the predictors and, incidentally, the stock market were not fulfilled,
we^may be able to avoid at least one of the countless obstacles to successful prediction from
this point on.
People Spend Freely
In the early months of 1947 a number of signs
appeared which did seem to indicate that busi
ness activity and prices might soon level off
or even decline. One of the most significant
indications came in retail trade, as illustrated
by Third District department store sales and
inventory policy. During the first quarter, al
though sales were well above those of the year
before, they fell somewhat below the level of
late 1946 on a seasonally-adjusted basis. To
store executives who had built inventories to an
all-time high, this disappointing pre-Easter
showing was cause for alarm. Steps were taken
to reduce stocks. Notices of large-scale clear
ance sales, especially in women’s apparel lines,
appeared in newspaper advertisements for the
first time in years. The results of a spring sur
vey of Philadelphia department stores, pub
lished in the Business Review, revealed that
prices in many lines were lower. It was clear,
too, that overdue orders were being canceled
wherever possible and that new orders were
being held to a minimum—below the level of
the previous year.
With rising sales in April and May, however,
the situation changed abruptly. Inventories had
declined and the stores found themselves caught
short in many instances. By June, the Newburyport plan for a 10 per cent across-the-board
price slash and the accompanying publicity
were all but forgotten, and prices were edging
Page 2
upward again. Department store buyers
entered the wholesale markets with h
orders. Beginning in July, new orders begi
exceed those of the previous year. In No
ber, the latest month for which sample fi?
are available, net new orders were greater
those of the same month in 1946 by almo!
per cent. As receipts of merchandise spe
up toward the end of the year, department i.
inventories rose to record levels. But a No
ber stocks-sales ratio slightly lower than
of the previous year, a better balance of ii
tories among departments, a good Chris
season, and good prospects have prevente
currence of last year’s concern over exce
stocks.
During 1947, credit sales and sales in the 1
ment stores constituted an increasing pr<
tion of total sales volume, indicating th
squeeze on consumer incomes might be in
ess. With total sales about 10 per cent h:
for the year, however, these trends may
large extent reflect a return to pre-war bi
habits and the increasing availability of <
ble goods.
In general, Third District department
trends were the same as those for the e
nation. National sales for the year, how
were only slightly more than 8 per cent i
1946 volume, and inventories had not y«
covered to their spring peak by October.
-
Construction was another field in which de
velopments during the early part of the year
gave some reason for pessimism. It had been
hoped that building would take up the “slack”
when employment declined elsewhere as in
ventory demands were met. The precipitous
decline in contract awards late in 1946 and
their slow recovery early in 1947, therefore,
were regarded by many as harbingers of reces
sion. It was not until May that housing starts
showed any improvement over the previous
year. Many industrial and commercial firms
threatened to cancel their expansion plans be
cause of high costs.
9
-
,
.
By the middle of the year, however, it became
apparent that home builders either had been
reconciled to high prices or expected even
higher prices later on. Industry had decided
that increased capacity would pay for itself de
spite high building costs. Throughout the nation
new family dwelling units started during 1947
will probably exceed 850,000, compared with a
total of 670,500 in 1946. Rural and suburban
home building was an unusually large propor
tion of the total. With public construction ac
tivity UP sharply over last year and the late war
years, total nonresidential construction will be
greater in dollar volume than in 1946. The total
value of all types of construction, both public
and private, in 1947 will be close to the 1942
record of $14 billion.
A survey by this Bank in the fall of 1946 re
vealed that Philadelphia manufacturers had
already made $70 million worth of post-war
expenditures for plant construction and new
equipment up to that time, and they also re
ported that they planned to spend an additional
$165 million during the ensuing year. Our latest
survey made in October 1947 discloses actual
expenditures of $153 million between the fall
of 1946 and the fall of 1947, and that further
expenditures of $139 million are to be made
by the fall of 1948. Higher costs for labor and
materials as well as shortages of many mate
rials were obstacles encountered during the
past year; nevertheless, expenditures actually
made were more than 90 per cent of expendi
tures contemplated.
The expansion and improvement program in
Philadelphia is probably typical of what took
place throughout the entire country. According
to reports of the Securities and Exchange Com
mission, total expenditures by all manufactur
ing concerns throughout the country in 1947
amounted to $7 billion. If we add to this the
capital expenditures made by farmers, the min
eral industries, the railroads, public utilities,
commercial enterprises, as well as new home
construction and net changes in business inven
tories, we get the grand total of $30 billion as
the gross private domestic investment during
The flow of materials in the building indus
While construction and improvement of capi
try improved during 1947, and although short tal equipment added a substantial amount to
ages continued to interrupt work on many proj business activity during the past year, at the
ects, average building time decreased. Labor same time it had the effect of limiting the output
costs and labor supply were the most pressing of consumer goods. Today’s investment activi
problems at the beginning of the year. They ties utilize some of today’s productive resources
remain serious, especially in the highly skilled to increase tomorrow’s output of consumer
trades.
goods. In the process, consumers must do with
relatively less goods in spite of the fact that as
workers they receive larger money incomes
Not Enough Productive Capacity
which can be spent for immediate consumption.
Increased investment activity not financed out
A part of the construction boom and a power of current savings, during a period when all
ful element contributing to high level busi productive facilities are fully utilized, has the
ness activity during the past year has been effect of intensifying demand without immedi
liberal expenditures by businessmen to enlarge ately increasing the flow of end-products for
and improve productive facilities through in consumers and therefore exerts upward pres
stallation of new machinery and equipment and sure upon prices. In the same way, upward
construction of additional plant capacity. This pressure upon prices was intensified still fur
is illustrated by the volume of expenditures ther
by the year’s $8 or 9 billion surplus of
made by Philadelphia manufacturing concerns. exports over imports.
Page 3
Producing under Forced Draft
plus and a deficiency of labor. A surplus of male
labor was apparent in some of the hard-coal
producing communities because of the rapid
shift from coal to oil for household heating and
the unwillingness on the part of younger men
to enter the mines. Yet in the same communities
there was a shortage of female labor for the tex
tile and apparel manufacturing establishments.
High levels of consumer spending and busi
ness spending are reflected in high rates of in
dustrial activity, that is, as high as availability
of materials and labor permitted. During 1947
the physical output of factories in the Philadel
phia Federal Reserve District was one^third
more than pre-war. At the year's end the flow of
Labor in the highly industrialized Philadel
goods was slightly lower than at the outset, but
phia
area was generally scarce throughout the
for the year as a whole the level was well above
year,
and by the end of the year unemployment
that of 1946. In four-fifths of our major indus
had
almost
reached the vanishing point. Labor
tries the 1947 output was greater than the year
before by various amounts ranging from one to deficiencies were reported in numerous lines,
seventy per cent. The greatest gains were made both in soft goods such as apparel and in the
by industries producing durable goods, such as metal trades. Skilled labor was especially hard
steel, electrical equipment, and motor vehicles. to find.
Only about a half dozen industries produced a
Conditions in the national labor market were
smaller volume last year than the year before,
similar
to those in the local labor market. Em
and in most instances the reason was not lack
ployment
is still near the 60 million level and
of demand for their products but rather short
unemployment,
arising from seasonality and
ages of raw materials, such as steel, nylon,
other “frictional” factors, has declined to less
rayon, or cotton. During part of the year some than 2 million—a mere 2^ per cent of the
of our hosiery mills were forced to operate on labor force. We have “full employment” in
a part-time basis for lack of sufficient nylon
yarn. Similarly, some of our plants turning out the sense that virtually all who can and are
metal fabricated products, such as mechanical willing to work are able to find jobs. A reserve
refrigerators, had to slow down occasionally to labor supply is extremely difficult to find.
50 per cent of capacity because they could not
Money, Money Everywhere
get enough sheet steel.
The high rate of industrial activity in this dis
Industrial plants throughout the country, like
trict,
which is primarily an industrial area, na
those in the Philadelphia area, made great
turally spelled high money incomes during 1947.
strides during 1947 but most of them were un
able to meet all the demands for their products. The combination of rising employment, increas
Most industries succeeded in producing a ing output, and higher wage rates produced a
greater physical volume of output last year in huge amount of spending power. Last Novem
contrast with the year before. Generally, manu ber, pay roll disbursements by Pennsylvania
facturers of nondurables, such as food, tobacco, manufacturing establishments soared to $55 mil
apparel, and paper products, were able to satisfy lion a week—15 per cent higher than the pre
their markets after a fashion, but most pro ceding November and actually higher than the
ducers of durables such as automobiles, elec wartime peak. Late in the year, average weekly
tric ranges, and other home appliances, failed earnings ranged from $35 in the apparel indus
to make much of a dent in their unfilled orders tries to almost $58 in the electrical machinery
industry. Average weekly earnings of all in
despite substantial increases in output.
dustrial workers in Pennsylvania were just
slightly below $50.
A Seller’s Market for Labor
Employment throughout most of the district
was maintained at a level substantially higher
than that of a year ago. Labor-management
relations were generally harmonious, unlike the
early part of 1946, and job opportunities were
plentiful in all except a few isolated localities.
Curiously, in some areas there was both a sur
Page 4
High agricultural income also contributed to
the flood of spending in this area. Milk and eggs
are the principal sources of farm income in
Pennsylvania. Throughout the first half of 1947,
farmers sold their fluid milk at substantially
higher prices than in 1946, and prices received
for eggs were also considerably higher through
virtually the entire year. The 1947 cash income
from farm marketings in Pennsylvania, New
Jersey, and Delaware—the three states repre
sented in the Third Federal Reserve District__
was about 20 per cent above the 1946 level.
The record of corporate earnings is not yet
complete, but on the basis of incomplete reports
it appears likely that earnings will exceed those
of previous year by about 50 per cent. Durable
goods industries made especially large gains.
Prices Soar
Rapidly rising prices during 1947 gave a sem
blance of greater material prosperity than in
fact existed. Prices advanced on all fronts. The
year opened with price advances in wholesale
markets, which were sustained for the first
three months of the year. Temporarily lagging
prices during the second quarter gave rise to
a widespread feeling that the boom had run
its course; but an upturn during the summer
followed by another bulge in the fall carried
the price level to a point 15 per cent above that
of the beginning of the year.
Unlike 1946, when prices of foods and farm
products led the race, in 1947 wholesale prices
of industrial products rose just as fast. The
greatest gains in prices were made in building
materials, which rose about 25 per cent during
the year. Prices of other manufactured prod
ucts such as textile and leather products also
rose substantially.
Although 1947 was a year of “catching up ”
greater output did not seem to deflate high
prices. Even in some of the industries manu
facturing non-durable goods, such as men’s and
women s apparel, shoes, and automobile tires,
where supplies were frequently alleged to have
caught up with demand, prices rose never
theless.
Rising prices in wholesale markets caused
substantial, though somewhat more moderate,
increases in consumer prices. After relaxation
of controls, rents—at long last—joined in to
push up the cost of living. In October, consumer
prices in Philadelphia were 12 per cent higher
than a year earlier. During the same period the
consumer’s clothing bill rose 13 per cent and
his food bill, 16 per cent. As in the year before,
rising food prices continued to cause the most
serious problems in family budgets.
Rapidly rising prices inevitably bring about
serious strains because of the fact that prices
of some commodities End services EdvEnce
much more rapidly than others. With respect
to each commodity or service, the effect upon
an individual depends upon whether he is a
buyer or a seller. Three-dollar wheat has put
the Kansas farmer on “Easy Street,” but the
cost of bread in the lunch pail of a Philadel
phia knitting machine operator has had an
entirely different effect. Or again, $2.60-corn
is rapidly reducing mortgages on Iowa farms,
but many Scranton miners are eating their
eggs without bacon, at ninety-five cents a
pound. Similarly, cotton manufacturers are
making handsome profits, but at present
apparel prices the Harrisburg housewife has
less money to buy savings bonds. Our highlypaid, highly-organized industrial workers, of
course, are in a better position to cope with
the rising costs of living, but there is a vast
number of salaried workers who, like those
living on pensions, certainly cannot look back
upon 1947 as a year of prosperity.
Even the farmers in this area, particularly
those who specialize in dairy and poultry prod
ucts, are complaining about rising costs. This
is a feed deficit area; local agriculture being
highly diversified, poultrymen and dairy
farmers are partly dependent on other areas
for their feed requirements. Rising costs of pur
chased feeds naturally whittle down the income
of local farmers by increasing the overall costs
of production.
Rapidly rising prices and apparent pros
perity likewise brought about strains in still
other areas of our economy. Our railroads and
other public utilities were confronted by ever
rising costs of operation but were unable to
obtain rate increases sufficient to offset higher
costs for labor and materials. This situation is
clearly reflected in their periodic reports of
earnings.
Apart from the development of these and
other distortions which were very much in evi
dence by the end of the year, there were two
predominant developments characterizing 1947.
About mid-year there appeared a very definite
change in the general business outlook and pre
vailing attitudes. It was a shift from apprehen
sion and uneasiness to confidence and optimism.
Although it is not clear which was cause and
Page 5
which was effect, the change in attitude was
accompanied by, first, renewed activity in in
ventory accumulation on the part of both manu
facturers and distributors; second, a very defi
nite resurgence of a seller’s market in those lines
where some uneasiness had prevailed in earlier
months of the year; and, third, renewed activity
in most lines of retail trade and also a vigorous
revival of building activity, particularly in the
construction of homes and the expansion of
facilities by public utilities.
First of all was the growth of private credit
extended by banks. During the war, of course,
banks had been busily occupied with supplying
public credit through their own purchases of
Government securities and through loans to fi
nance the purchase of such securities by others.
As the country turned back to peacetime pur
suits, banks devoted their efforts to supplying
credit to the private sector of the economy. In
1947, banks expanded their loans to an all-time
peak.
Business needed credit to build up inventories,
to finance larger receivables, and to replace and
expand plant. Farmers borrowed to buy land
and machinery, to construct buildings, and to
meet current production costs. Individuals, par
ticularly veterans, were buying homes and build
ing new ones with the use of bank credit. And
they used more credit than ever before to pay
for consumption goods; total consumer credit
rose to a new peak of possibly $13 billion. Banks
were not the only lenders participating in this
credit expansion, but they were getting an in
creasing share of the business. Moreover, the
expansion of commercial bank lending was par
ticularly significant because it contributed di
rectly to the growth of bank deposits. As loans
Money Supply a Basic Problem
rose the money supply expanded. Since the
economy was working practically at capacity,
A correct appraisal of the dominant strength the larger money supply exerted pressure on
of demand forces would have gone far toward prices, and higher prices meant larger loans.
unclouding the crystal ball one year ago. Under
lying demand was the money supply. Individuals
Another type of private credit extended by
and businesses held $143 billion of money— banks in 1947 was the purchase of securities
currency and bank deposits—which they could other than those of the Federal Government.
use to purchase long-awaited goods and serv Corporations and municipalities financed in
ices. The rate at which they were using their creasing amounts of their capital expansion pro
money—the velocity of turnover—was still at grams by floating bonds in the securities mara low point. Moreover, they held $80. billion
of “near money” — Government securities — CHANGES IN PUBLIC AND PRIVATE CREDIT OF BANKS
IN 1947*
which could easily be converted into money. So
(Weekly Reporting banks—United States)
the one essential part of demand—need—was
Per cent
Billions
accompanied by the other—ability to pay. The
chango
of dollars
existing money supply alone, a supply built up
- 9
- 3.5
+111
by years of financing a large part of the war U. S. Government securities........................................ + 0.7
-50
- 3.1
costs through the banking system, suggested a
-19
- 0.7
- 1
- 0.4
Bonds and guaranteed issues..;........................
-53
boom in 1947.
0.9
Loans on U. S. Government securities....................
The second major characteristic has to do
with prices. Although our productive resources
were utilized almost to capacity and the flow of
goods and services was increased at almost
every stage of the productive process, it was
rising prices that repeatedly made the head
lines. Rising prices in the face of increasing
production were possible only because the size
and effectiveness of the money supply were in
creasing even more. Despite all of our efforts,
we failed to achieve a stable balance between
the flow of goods—supply—and the flow of
money—demand.
On top of this, the volume of money expanded
further during 1947. Approximately $5 billion
of money was added to the holdings of indi
viduals and business during the year. As shown
in the chart, the financial picture for 1947 is
essentially a picture of the various forces affec
ting the money supply.
Page 6
Loans (excluding Gov’t, securities loans).................
Commercial, industrial, agricultural....................
Total loans and investments..............................
♦Year ended December 24, 1947.
- 4.4
-10
+
4+
+
4-
0.7
0.2
+28
+29
+39
+18
+ 6
+ 5.2
+24
4- 0.8
+1
5.0
3.3
l.o
ket. Banks were attracted to this market by ment spending added impetus to inflationary
higher yields and the tax-exempt status of
pressures. Yet when it came to the concrete
municipal issues. Although the expansion of task of reducing the scale of Government spend
bank holdings of these securities was nowhere ing, very real difficulties arose. The most
near as large as the growth in their loans, it troublesome was the fact that a great part of
affected bank deposits and the money supply in total expenditures during 1947 were going for
exactly the same manner.
war and defense activities, including the
veterans' program, foreign aid, and interest
The expansion of private credit was not new on the debt.
in 1947. But another stimulus to the growth of
the money supply became a serious considera
Fortunately, record incomes maintained Gov
tion during 1947—for the first time in years ernment receipts at high levels. Income taxes
large amounts of gold flowed into the country. of individuals and business and excise taxes on
Foreign countries were importing far more than luxury items were held unchanged despite ef
they were exporting to us, and were using gold forts in Congress to ease the tax burden. Dur
to pay for part of the difference. During the ing the year, the Treasury took in budget
year, our monetary gold stock rose $2^4 billion, receipts of about $43 billion—$2 billion above
directly increasing bank deposits and bank re 1946 receipts and not far below the unprece
serves.
dented intake during the war years. For the
first time in years the Treasury enjoyed a sur
These, then, were the dominant factors build plus of receipts over expenditures. A better in
ing up our already excessive money supply: a dication of the anti-inflationary nature of the
growth of private credit, both loans and non- Treasury’s position is that cash income in the
Federal Government securities, and an inflow first eleven months exceeded cash outgo. The
of gold. But not only were powerful forces push excess in operations other than borrowing was
ing up the money supply; individuals and busi about $5 billion.
ness were using their money at an increasingly
rapid rate. The velocity of money rose. People
It was largely because of this cash surplus
saved less and spent more than they did during that the Treasury was able to reduce the debt.
the war. They were generally optimistic about A large volume of securities had already been
the future, and may also have felt, particularly retired during 1946, but these operations had
in the second half of the year, that the prospect been accomplished for the most part by use of
of high prices called for immediate buying. an abnormally large cash balance built up dur
Money is not yet being used as rapidly as before ing the Victory Loan Drive. Retirement of
the war, but there is inflationary dynamite latent securities by drawing on these funds had less
in money velocity—a one dollar bill used ten anti-inflationary effect than the use of a current
times can bid up prices just as effectively as a cash surplus. The cash surplus in 1947__an
$10 bill used once.
excess of Treasury collections over payments
to the public—temporarily reduced the pri
While expanding private credit and the gold vately-held money supply; and this reduction
inflow were building up the money supply, became permanent to the extent the surplus was
shrinking public credit of banks was tending used to redeem bank-held securities.
to pull it down. But the decline in public credit
only partly offset the increase in private credit
During 1947, the Treasury retired more than
and did not compensate for the gold inflow.
$10 billion of marketable issues. Of course, the
total Government debt did not decline as much
Treasury finances, which provided a substan as these figures might suggest because non-martial cash surplus for debt retirement, were the ketable and special issues of the Treasury in
most important anti-inflationary force apparent creased. Sales of E, F, and G Savings Bonds
during 1947. True, expenditures of $41 billion exceeded redemptions, and the total outstand
were, with the exception of 1946 when the ings, including earlier issues, rose from $50 bil
return to peace was just beginning, the largest lion to $52 billion during the year. But by con
in our peacetime history. And coming at a tinuing to push the sale of these bonds the
time when demands by private sectors of the Treasury siphoned money out of the private
economy were also heavy, the force of Govern income stream and was able to use the funds to
Page 7
BUSINESS DEVELOPMENTS IN 1947
THIRD FEDERAL RESERVE DISTRICT
INDEX
I94S-IOO
INDEX
INDUSTRY PRODUCING
ABOVE LAST YEAR'S
LEVEL...
WITH BIGGER
INCOMES...
120
CONSUMERS
MORE...
SPENT
DEPARTMENT STORE SALES
KEPT FACTORY
EMPLOYMENT
HIGH...
BUSINESS REBUILT
INVENTORIES...
ANO PAYROLLS
RISING.,
DEPARTMENT STORE STOCKS
CAPITAL EXPENDITURES
PHILADELPHIA MANUFACTURERS
SEPT/46
TO OCT.'47
SI 53,000,000
POST-WAR
TO 5EPT.4G
S 70,000,000
ALL THESE OEMANDS
COMBINED TO FORCE
PRICES STILL HIGHER.
WHILE FARM INCOME
HIT RECORD LEVELS.
WHOLESALE PRICES
CONSUMER PRICES
1947
Page 8
ANO SPENT MORE
FOR CAPITAL
EQUIPMENT.
1947
FINANCIAL DEVELOPMENTS IN 1947
UNITED STATES
BILLIONS
BILLIONS
s
THESE INFLATIONARY
FORCES WERE PARTLY
OFFSET AS...
THE MONEY SUPPLY
ROSE...
THE TREASURY TOOK
I N MORE CASH THAN
IT PAID OUT...
TOTAL OEPOStTS
(REPORTING BANKS- U.S.)
PRIVATE DEPOSITS
AND CURRENCY
AS DEBT RETIREMENT
REDUCED PUBLIC
CREDIT OF BANKS.
GOV'T SECURITIES &
LOANS ON GOV'TS
U.S. GOV'T
DEPOSITS
LOANS (EXCEPT GOV'T SECURITY
LOANSHNON-GOVrT INVESTMENTS
AND FEDERAL
RESERVE CREDIT.
AS BANKS EXPANDED
PRIVATE CREDIT.
(REPORTING
BANKS-U.S.)
Am. CORPORATES
ON THE BASIS OF
GROWING RESERVES.
LONG-TERM GOV
AND AS INTEREST
RATES ROSE.
MEOIUM-TERM GOV'TS
FED LARGELY- BY AN
INFLOW OF GOLD.
1947
COMMERCIAl^t
PAPER
1947
IP
Page 9
retire bank-held debt, both of which had anti
inflation effects.
Efforts to Control Money Supply
The year 1947 brought more action in the
field of credit control than has occurred in the
past several years. And as is so frequently true,
conditions required choosing to some extent be
tween two somewhat conflicting objectives. An
expanding money supply, capacity production,
and rising prices spelled out the need for posi
tive action to restrict further credit expansion.
But the existence of close to $260 billion
Federal debt, which was widely held and which
constituted a major part of bank assets, called
for caution in using the traditional methods of
control lest rising interest rates and falling bond
prices precipitate a wave of liquidation of Gov
ernment securities. Thus, credit policy was
directed toward a two-fold objective: maintain
ing a stable market for Government securities,
and restraining credit expansion.
Recently the Treasury announced that the cer
tificates maturing January 1, 1948, would be re
funded into a li/8 per cent, one-year certificate.
Thus, by a series of direct and indirect steps,
the rate on the one-year certificate of indebted
ness has been raised from % to 1 Ys per cent.
The rise in short-term rates made such secur
ities more attractive relative to the longer-term
issues, but additional steps were taken to relieve
the downward pressure on the long-term rate.
The Treasury made heavy sales in July from its
trust and investment accounts and diminishing
but continued large sales were made in August
and September. Total sales of the three-month
period exceeded $1 billion. The second step
was the offering of the long-term non-marketable investment bond issue in September to in
vestment institutions, savings banks, and com
mercial banks holding savings deposits. This
issue was made to absorb some of the long-term
investment funds of these financial institutions,
and the non-marketable feature was designed to
insulate the new issues against market reper
There were two major approaches to the con cussions and to forestall later shifting of these
trol problem: the Treasury’s cash redemption securities to the banking system.
program, and the rise in short-term interest
rates. The former was designed to reduce the
The sale of the long-term, non-marketable
amount of bank-held public debt and to bring
bonds,
the prospects of a further rise in short
pressure on bank reserves. The latter was de
term rates, an increasing supply of mortgages,
signed to make short-term funds more expen corporates, and municipals, and other factors,
sive and to discourage monetization of the debt
by reducing the spread between the yields on resulted in a substantial decline in Treasury
bond prices and support was given the market
short and long-term securities.
in November and December. In November, net
purchases for Treasury accounts exceeded $200
The cash redemption of approximately $8 million, in contrast to heavy net sales during the
billion of maturing marketable Treasury securi third quarter. The Federal Reserve Banks also
ties was the only restrictive action taken during provided support in November and December by
the first half of the year. However, continued adding substantially to their holdings of bonds
inflationary pressures made additional steps maturing in over five years. During the last
desirable.
week of December, Government bond prices
dropped to new and lower levels.
On July 2, an announcement was made of the
withdrawal of the commitment to purchase
The Treasury resumed its cash redemption
Treasury bills at a discount of % Per cent>
program
on October 15 with the retirement of
effective for bills issued on or after July 10.
$759
million
of 4*4 per cent bonds. On Novem
The repurchase option agreement was also
terminated at this time. This was followed by ber 1, the Federal Reserve Banks presented for
steps designed to increase the rate on Treasury cash redemption the $203 million of maturing
certificates of indebtedness. At first the ap certificates which they held. On November 6,
proach was indirect and consisted of shortening the Treasury began redeeming for cash approxi
the maturity of refunding issues without disturb mately $100 million of each weekly maturing
ing the stated rate of % Per cent. In September, issue of Treasury bills, and by December 11,
the transition to a higher stated rate was begun $600 million of bills had been so retired. Since
with the issue of a 1 per cent, 1214-month note. most of these bills were held by the Federal
Page 10
Reserve Banks, considerable pressure was ex
erted upon member bank reserves.
in their Government deposits and their holdings
of Government securities.
Another step to combat an excessive expan
The net direct effect of the cash redemption
sion in bank credit was taken in the latter part of Treasury securities depends, therefore, upon
of November. A joint statement by Federal the extent to which the payments to the security
and state bank supervisory authorities urged holders offset the deflationary effects of the
banks to screen all loan applications carefully, tax payments to the Government and their trans
to curtail loans for speculative purposes, to fer to the Federal Reserve Banks. To the ex
guard against over-extension of consumer credit tent the redeemed securities are held by the
and, in general, to exercise great caution in their Federal Reserve Banks the net effect on the com
lending policies.
mercial banks is an equivalent decrease in their
total deposits and reserves; to the extent held
It is not possible to measure precisely the by the commercial banks there is an equivalent
effects of the policies pursued by the Treasury decrease in their deposits and Government se
and Federal Reserve authorities, and it would curity holdings; and if held by non-bank owners
be unrealistic to attribute to them all of the there is merely a shift of deposits from tax
changes which followed. However, some re payers to security holders.
sults can be indicated with reasonable certainty.
It is apparent that through the selection of
The influence of fiscal policy and debt man issues held largely by different types of investors
agement on the money supply may be more the Treasury can vary the deflationary effects of
readily observed by considering three steps its cash redemptions. Of the total cash redemp
involved in redeeming securities out of a cash tions during 1947, it is estimated that about $3
surplus. First, via tax payments, personal billion were held by the Federal Reserve Banks,
and business deposit accounts in the commer over $3 billion by the commercial banks, and the
cial banks are decreased and that of the Gov remainder by non-bank investors. The effect
ernment is increased. The net effect is to re of debt retirement, therefore, on the commercial
duce the spendable funds of the public and to banks, other things being equal, would have
increase those of the Government. The second been roughly a decrease of $3 billion in reserves,
step is the transfer by the Treasury of some a decrease of about $3 billion in Government
of its deposits in the commercial banks to the security holdings, a decrease of about $6 billion
Federal Reserve Banks. As a result of this in total deposits, and a reduction of around $1
transfer, the commercial banks lose Govern billion in required reserves. However, the ef
ment deposits, and reserves which are kept in fects of debt retirement have been nullified by
the form of deposits in the Federal Reserve an inflow of gold and by Federal Reserve support
Banks are reduced. The deflationary effects of of the Government securities market.
debt retirement lie in these two phases of the
process; the decrease in private deposits in
During the first half of the year, total Reserve
the commercial banks via tax payments, and Bank credit dropped $2 billion, but additions
the loss of reserves as the Government transfers from other sources, primarily a return flow of
deposits from the commercial banks to the Fed money from circulation and an inflow of gold,
eral Reserve Banks.
left member bank reserves unchanged. Since
mid-year, Reserve Bank credit has been expand
The final step is the payment of the holders ing, and on December 30 was about $1.3 billion
of the securities by means of checks drawn on higher than on June 25. Despite the retirement
the Federal Reserve Banks. If these checks of nearly $1 billion in securities held by the
go to non-bank owners, they soon show up as Federal Reserve Banks since mid-year, total
private deposits in the commercial banks and Reserve Bank holdings of Government securi
the latter regain reserves when the checks are ties were $1 billion larger on December 30 than
collected. If the redeemed securities are held on June 25. A net decrease of 2yA billion in
by the commercial banks, their holdings of bill holdings was more than offset by net in
Government securities are decreased and their creases of over $700 million in certificates,
reserve accounts increased. If the Federal Re over $1 billion in Treasury notes, and nearly
serve Banks are the holders, there is a decrease $2 billion in bonds.
Page 11
The deflationary effects of interest rate policy
are very difficult to weigh. The policy was
quickly reflected in a rise in the rate on short
term Government securities. The average place
ment rate on Treasury bills nearly doubled in
July, and at the year-end was about 0.951 per
cent. The yield on certificates of indebtedness
began to rise in September and was 1 % Per cent
for one-year certificates at the end of the year.
Treasury bond yields turned upward also. The
average yield on medium and long-term Gov
ernments rose during October and November
and remained about stable until the latter part
of December, when the Open Market Committee
reduced the prices it was willing to pay for
Government securities.
The trend toward higher rates on Govern
ment securities soon spread to the private capi
tal market with some firming in the rates on
commercial paper and securities. Corporate
security prices weakened in September and
municipals in October and continued to decline
during the remainder of the year. The greater
weakness in corporate security prices widened
the spread between the yield of corporate and
long-term Government securities.
matter of growing concern. And the inability of
certain utilities, such as transportation, to carry
a much greater load very soon is also a limiting
factor in every field.
There appears to be, then, a continuing dis
crepancy between demand and supply poten
tials—between our ability to create purchasing
power and our ability to create goods. The
fact that shortages still exist, that most markets
are still “sellers’ markets,” and that a high level
of capital expenditure continues to add to in
tense competition for productive resources, indi
cates that the desire for credit—for newly cre
ated money—will remain strong. More money
in the hands of buyers, arising from consumer
credit, or commercial loans or bank purchases
of municipal bond issues, and the higher wages
now being anticipated in a forthcoming “third
round,” will mean higher prices. The expecta
tion of high prices itself tends to generate still
greater demands for credit and still higher
prices.
The forces exerting upward pressure on
prices are of the same kind, though possibly
different in degree, that existed a year ago.
Although they are general in nature and do not
determine what will happen in any particular
segment of the economy, they do indicate the
Implications and Prospects
possibility of growing total money-demand for
It is obvious that the availability of reserves goods and services of all kinds. Some of last
to the banking system is sufficient to create an year’s errors of prediction might have been
enormous credit potential. It is clear, too, that avoided had greater emphasis been given to
the speed with which additional money could factors bearing upon the money supply—the
be created is greater than the rate at which pro forces of over-all demand—rather than to in
ventory development or to some other particular
duction can be increased.
segment of a system which is in reality closely
Undoubtedly, productive capacity will con integrated, and in which aggregate demand can
tinue to increase gradually during the coming grow as well as supply.
months. Not only will more new plant and
The outlook for 1948 hinges upon the relative
equipment come into operation, but a smoother
flow of materials, renovized and modernized strength of upward pressure on prices, on the
machines, and new methods will make possible one hand, and the inequities and distortions—
a more extensive increase in output per man in income and price relationships—that inflation
hour such as that which characterized the pre itself generates, on the other. At this stage
war years. The increase will be limited, how the drag of distortions does not appear sufficient
ever, by the lack of available labor and shortages to offset the tremendous strength underlying
of certain materials which will continue to act as demand. And while it is possible that increas
ing stresses and strains within the economy may
bottlenecks.
bring a downturn sooner than is now apparent,
In agriculture and the extractive industries,
especially, the drain on our basic resources is a
Page 12
the weight of evidence at this time seems to
lean toward more inflation.
l CRAOFOUO
LVCOHInu
CUMTO(t“7
S
PEN
,.'V'
^yV/^^_
/»
HUHTinuax
>
/»H«I»
V/
larfC”™
^-'•'OkMOkareii \
THE THIRD FEDERAL
RESERVE DISTRICT
Ptfg* 13
BUSINESS STATISTICS
Production Workers in Pennsylvania
Factories
Production
Philadelphia Federal Reserve Districl
Adjusted for seasonal variation
Not adjusted
Per cent change
Nov. Oct. Nov.
1947 1947 1946
Indexes: 1923-5 *=100
1947
Nov.
‘rom Nov. Oct. 1946
1947 1947
11
Year mos.
ago 1946
Nov. L947
froin
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.............................................
Iron castings..............................
Steel castings ...........................
Electrical apparatus................
Motor vehicles...........
Automobile parts and bodies,
Locomotives and cars.............
Shipbuilding...............................
Silk and rayon..........................
Woolen and worsteds..............
Cotton products........................
Carpets and rugs......................
Hosiery........................................
Underwear..................................
Cement........................................
Brick......... •••••■........................
Lumlier and products. .........
Broad and bakery products.,
Slaughtering, meat packing..
Sugar refining........................
Canning and preserv ing.........
Cigars.. ------- • • • • .................
Paper and wood pulp............
Printing and publishing. . ..
Shoes....................•; • .............
leather, goat and kid...........
Explosives
Paints and varnishes.
Petroleum products
Coke, by-product,
COAL MINING...
Anthracite............
Bituminous...........
CRUDE OIL.................^
ELECTRIC POWER—Output
Sales, total. . ...........................
Sales to industries................
building contracts
TOTAL AWARDSt..................
Residentialf_................ ............
Nonresidentialf • • • •...; • •• •
Public works and utilities!-. •
113p
114p
124p
103p
143
72p
140p
134p
113
54p
176p
12 Op
120
110
110
119
100
137 r
70
144
125
114
50
156
100
122
108r
109r
117
101
135
71
144
134
113
50
149 r
90
118
3
3
4
3
4
2
3
8
1
+ 9
+ 13
+21
- 1
+ 4
+ 4
+ 5
+ 2
+ 6
+ 1
- 3
0
0
+ 8
+18
+34
+ 2
110
121
80
96
205
53
145
64
107 r
116r
82
115
191 r
48 r
139 r
60
95 + 3
110 + 4
79 - 2
112 -17
202 + 6
34 +10
133 + 4
71 + 7
+16
+10
87 ' 85
73p 71
39p 38
92p 90
72
148 134
91p 77
60
60
29
29
112
156
218p
113
98
125
116
124p
106
103
242p
184p
+
+
+
-
88
70
50
73
68
146
81
59
27
104
124
191
115
94 r
128
102
98
87
100
208
176
+ 1
- 1*
+ 9
122
161 +26
200 + 14
113 - 1
92 + 4
124 - 2
110 +14
70 +27
82 +22
92 + 4
205 r +16
158 + 5
282
467
298
470
471
166
340
132
109
168
125
128
103
93
162
138
103
97
117
75'
93p
81
79
99
76
6
5
7
5
1
1
8
+ 3
+ 17
+ 3
-10
115p 115
116p 116
110r
i.44
75p
133 r
137p
135
54p
176p
115p
121
142 r
73
137
139
140
53
158
106
123r
136
74
138
136
135
50
149 r
85
119
111
116
81
89
218
46
134
60
105r
116r
87
109
2L2r
44 r
132 r
57
105
80
104
214
30
122
66
+19
+21
+ 1 +11
-15 + 4
+ 2 +33
+ 56 +67
+10 +21
- 9 + 6
112
87 r 89
76
78
53
40
81
98
79r 78
146 148
80
86
59
60
27
30
114 118
135
108
105 105
217
136
141
92
96
129 125
110 103
68
102
82
87
95
107
210 205 r
173 152
77
82
78,
77
75
79
77
102{ 106
274 298 303 r
87
79p
41p
lOlp
82
150
89p
59
30
+ 11
- 4* - 3* 113
123
- 8 + 4
- 3 +25
102
+ 9 +15 237p
0
0 136
98
+ 7 + 5
126
+ 1 + 2
109
+ 6 -11
121 p
+77 +61
106
+29 +23
106
+ 12 +14
+18 +10 242i
1771
+24
+17
- 2
+ 2
-16
+26
- 3
- 5
+12
+ 7
+ 5
-1
+ 4
-23
3 +25
1 + 5
+11 + 1
+19 +12
+ 1 + 1
2
2
1
+
+
+
+
-
77 70 3121 4301 437 +
327 +
77p
+ 5
+ 6
+ 7
+ 4
+26
- 1
-25
+ 7
+ l
+10
+ 13
+16
+ 2
- 4
- 6
+ 1
- 3
+16
+33
-10
+ 9
+ 8
+13
+
+
+
6
9
9
9
- 4
-21
0
+28
+ 7
+72
+ 8
+62
486
484
447 r
485
375
466
330
450
333
143
123
168
144
132
112
115
97
134
107
156
145
p—Preliminary,
r—Revised.
* Unadjusted for seasonal variation,
t 3-montli moving daily average centered at 3rd month.
Local Business Conditions*
Percentage
change—
November
1947 from
month and
year ago
Allentown...........
Altoona................
Harrisburg..........
Johnstown..........
Lancaster.........
Philadelphia....
Reading...............
Scranton.............
Factory
employment
Builtling
pernlits
val ue
Factory
payr oils
Ret ail
sal ns
De )its
Oct.
1947
Nov.
1946
Oct.
1947
Nov.
1946
Oct.
1947
Nov.
1946
Oct.
1947
Nov.
1946
Oct.
1947
Nov.
1946
+ 1
0
- 1
0
+ 2
+ 1
0
+ 1
+
+
+
-
2
8
1
6
1
0
- 6
+ 7
+
+
+
+
+
+
+33
+ 3
+14
+41
+17
+12
+14
+26
- 5
-10
- 1
- 3
+ 2
+ 2
- 1
-48
-68
+86
-31
+88
- 9
+16
0
-82
-17
-51
+14
+48
- 4
+ 6
+456
- 35
+557
+299
+217
-16
+ 98
+150
- 16
+104
+ 54
+26
+35
+38
+37
+40
+29
+49
+29
+38
+33
+21
+ 5
+14
+25
+ 12
+17
+13
+12
+23
+13
+18
+39
+28
+ 2
-12
-11
- 8
- 8
-18
-15
- 6
-10
+ 3
+ 2
- 6
-18
- 4
- 2
+ 1
+14
+13
0
+ 4
+ 12
- 6
+10
+22
+10
- 6
+13
+ i
Wilkes-Barre---Williamsport.... + i
Wilmington........ + i
York..................... + i
* Area not restricted to
4
2
5
4
2
3
1
2
+
+
+
+
7
5
5
5
the corporate limits of cities given here.
Page 14
Summary Estimates—November 191ft
Durable goods industries.
Nondurable goods
Weekly
Man-Hours
Worked
Employ
ment
Weekly
Payrolls
1,123,000
634.000
$55,230,000
34.450.000
45.064.000
25.640.000
489.000
20.779.000
19.424.000
Changes in Major Industry Groups
Payrolls
Employment
Per cent
Nov.
change
Nov.
from
1947
1947
In
In
dex Oct. Nov. dex Oct. Nov.
1947 1946
1947 1946
Per cent
change
from
Indexes
(1939 average =100)
All manufacturing. .....
Durable goods industries...
Nondurable goods
industries.......................
Food.....................................
Tobacco...............................
Tex tiles...............................
Apparel......................................
Lumber................................. .. •
Furniture and lumber prods.
Paper..........................;.............
Printing and publishing. . . .
Chemicals........................... • • •
Petroleum and coal prods...
Rubber.......................................
Leather......................................
Stone, clay and glass.............
Iron and steel..........................
Nonferrous metals... .........
Machinery (excl. electrical).
Electrical machinery.............
Transportation equip.
(excl. nutol........... ...............
Automobiles and equipment
Oilier manufacturing............
131
157
0
0
+1
- 1
287
328
+i
+2
+15
+16
108
134
104
86
96
96
102
152
141
122
148
159
98
136
139
151
209
235
+i
0
0
+1
+1
+3
+2
+1
0
0
-1
0
+1
0
0
-2
+2
+1
+ 3
+ 7
+ 6
0
+ 5
+ 5
- 1
+ 1
+ 6
- 2
+ 4
-12
+ 5
- 1
- 1
- 9
+ 7
- 1
238
250
233
209
233
204
236
258
273
243
272
343
205
281
288
300
435
494
+1
-1
+2
+2
-1
0
+1
+4
-1
+2
+2
-1
+1
-1
+1
0
+3
+3
+13
+17
+12
+13
+10
+25
220
185
137
+3
0
+1
-16
+ 3
- 3
415
394
269
+5
+4
+4
- 6
+n
+15
+17
+12
+19
- 3
+17
+12
+18
+ 3
+19
+17
+38
+ 7
'4
Average Earnings and Working Time
November 1947
Per cent change
from year ago
Week y
Earnix ga
Hourly
Earnings
Wee kly
Hoiirs
Aver
Aver
Aver
Ch’ge age Ch’ge
Ch’ge age
age
+ 2
All manufacturing.... $49.18 +14 $1,226 +12 $40.1
+ 4
Dura hie goods ind us. 54.38 +17 1.344 +13 40.5
Nondurable goods
— i
industries............. ••• 42.45 +11 1.070 +11 39.7
— 2
Food................................ 41.77 + ? 1.018 +12 41.0
+ 4
.746 + 1 39.5
Tobacco.......................... 29.48 + 5
+ 1
+13
39.9
1.091
+14
43.55
Textiles...........................
.892 + 5 38.4
— 1
Apparel........................... 34.23 + 4
+ 6
+12
40.5
.986
+19
Lumber ............. 39.93
Furniture and lumber
+ i
+11
43.5
+12
.979
42.56
products.....................
+ 2
Paper................ 45.68 + 14 1.029 +12 41 4
+16
38.2
1.429
— 5
Printing & publishing 54.58 +10
+ 1
Chemicals............. .. • • ■ 47.37 +13 1.160 + 12 40.8
0
+
14
39.3
1.423
55.95 + 14
Petrol. & coal prods..
+ 1
+
9
40
2
+10
1.334
53
59
Ruhlicr......................... .
+13
37.0
.971
35.92 + 12
— 1
Leuther..............
+ 1
Stone, clay and glass.. 47.45 + 13 1.175 +12 40.4
+ 4
40.0
+
14
1.396
55.84 +19
Iron and steel........
0
52.02 +13 1.310 +13 39.7
Nonferrous metals
0
40.9
1.292 +11
Machinery (excl. elec.) 52.91 + 11
+ 4
58.71 +18 1.436 +13 40.9
Electrical machinery
Transportation equip,
+ 4
57.56 +12 1.451 + 8 39.7
(excl. auto).......
+16
Automobiles & equip.. 58.48 +34 1.366 +16 42.B
u
1.072 +11 38.3
Other manufacturing. 41.08 + 11
Distribution and Prices
Per cent change
Wholesale trade
Unadjusted for seasonal
variation
1947
from
11
mos.
1946
Nov. 1947
from
Month Year
ago
ago
Indexes i 1935-1939-100
Sales
Total of all lines...................
Dry goods.............................
Electrical supplies. .. .
Groceries......................
Hardware.....................
Jewelry.............................
Paper.............................
— 1
— 4
- 3
— 6
+13
+ 2
+11
+ 7
+ 4
+10
+ 4
Electrical supplies..............
Groceries...........................
+ 3
+10
Paper........................
-12
+20
+42
+31
+17
+47
+36
Inventories
Department stores—District.........
__
,
Philadelphia.
Women s apparel....................
Source: U. S. Department of Commerce.
shoe.....................;;;;;;;
Furniture..... ................'
Prices
Basic commodities
(Aug. 1939-100)....
Wholesale
(1926=100)................
Farm...............................
1 ood............................
Living costs
(1935-1939=100)... .
United States.............
Philadelphia................
Food............................
Clothing.....................
Rent............................
F uels...........................
Housefurnishings.. .
Other..........................
Per cent change from
Nov.
1917 Month Year Aug.
1939
ago
ago
352
+ 4
+21
+252
160
188
178
142
+ 1
- 1
0
+ 2
+14
+11
+ 8
+18
+113
+208
+165
165
164
198
186
116
130
189
141
+
+
+
+
+
+ 8
+ 9
+ 9
+12
+ 8
+ 8
+10
+ 9
+ 67
+ 68
+112
+ 87
+ 13
+ 35
+ 88
+ 40
1
1
1
1
5
0
+ 1
+ 1
Not adjusted
Per cent change
Nov. 1947
Nov Oct. Nov.
1947
from
1947 1947 1946
from
11
Month Year
mos.
ago
ago
1946
Nov. Oct. Nov.
1947 1947 1946
278p
250
281
307
228
253
234
238
236
203
239
213
250
264
209
+10
+ 6
+ 18
+30
+12
+12*
370p
347
321
350
225
280
267
264
253
215r
318
294
285
302
207
238p
225p
225
148
231
216
226
151
220
206
259
93
+ 3
262p
248p
259
149
263
249
264
154
242
226
297
94
145
133
140
133
140
135
102
125
193
147
+3 + 4 +
0 -- 141 +
+ 20 + 20 +
146
137
90
162
184
206
96
137
105
151
111
93
162
245
196
111
144
92
141
139
105
136
193
165
100
147
143
206
207
RETAIL TRADE
Sales
Department stores—District.........
_r
,
Philadelphia.
Women 8 apparel..............................
Men’s apparel.......... ..............
Shoe.......................................................
Furniture........................ * * ’
-10
+19
Inventories
Total of all lines...................
Adjusted for seasonal variation
77
FREIGHT-CAR LOADINGS
Total....................................................................
Merchandise and miscellaneous.*.'.!! !!!.*!
Merchandise—l.c.l.........
Coal..........................................*...................
Ore............................................
Coke........................................... ;;;;;;;;;
Forest products...................... !!!!!!!!!!
Grain and products......................!!!!!!!
Livestock..............................
MISCELLANEOUS
Life insurance sales....
Business liquidations
Number........................
Amount of liabilities.
Check payments............
88
150
184
184
88
121
92
147
170
172
95
144
79
130
125
221
198
183
100
232
+
+
0
+
+
8
9
- 13
+ 58
1* + 28*
+4
20
-
8
8
+ 7
+6
-16
+17
- 5
+ 25
- 4
- 7
- 27
10
8
5
10
+ 31
+ 27
- 4
+ 6
- 23
+11 + 21 - 6 250
+ 5* +248* +243* 31
-38*
*■ + 179* 104
- 6
+ 9 + 5 249
248 r 214
* Computed from unadjusted data.
p—Preliminary.
Increase of 1000% or more from the low level.
Sourco: U. S. Bureau of Labor Statistics.
101
+ 10
+
- 10
3
30
9
168
5
243 r 229
r—Revised.
BANKING STATISTICS
MEMBER BANK RESERVES AND RELATED FACTORS
Reporting member
hanks
(Millions $)
t Assets
Commercial loans..................
Other loans to carry secur. .
Loans on real estate..............
Loans to hanks.......................
Dec.
24,
1947
Changes in—
Four
weeks
One
year
+11
+ 97
- 1
+
+
+ 3
+ 5
+ 47
872
+17
+146
1444
269
+ 7
-200
+ 19
1713
+ 7
-181
1
9
Dec. 3
Dec. 10
Doc. 17
Dec. 24
Chnuges
in four
weeks
Sources of fundst
Reserve Bank credit extended in district.........................
Commercial transfers (chiefly interdistrict).....................
Treasury operations...................
- 8
+37
-18
-14
+15
-16
+51
- 2
- 9
-14
+36
-10
+15
+86
-53
+u
-15
+40
+12
+48
+ 3
+ 8
+ 7
-22
+1
+39
+11
-15
+40
+12
Dec.
24,
1947
Four
weeks
Changes in weeks ended—
Total...............................................
Uses of funds i
Currency demand..........................................
Member bank reserve deposits.................. T,
++I
511
26
20
77
4
234
Third Federal Reserve District
(Millions of dollars)
1
+24
+26
- 1
- 1
Government securities..........
Other securities.......................
Total loans & investments. 2585
Reserve with F. R. Bank...
503
Cash in vault...........................
42
Balances with other banks..
108
Other assets—net...................
53
Liabilities
Demand deposits, adjusted.. 2176
Time deposits....................
399
U. S. Government deposits..
17
360
Borrowings...............................
9
Other liabilities.. .
29
Capital account....................
301
+24
+16
- 35
+11
-
+79
-18
+ 9
-15
+ 4
1
+ 13
+ 8
- 68
+
1
Total.....................................
Member bank
reserves
(Daily averages;
dollar figures in
millions)
Phila. banks
1946: Dec. 1-15. .
1947: Nov. 1-15..
Nov. 16-30..
Dec. 1-15..
Country banks
1946: Deo. 1-15..
1947: Nov. 1-15.
Nov. 16-30..
Dec. 1-15.
Ratio
of
excess
to re
quired
Re
Held quired
Ex
cess
$419
433
431
428
$ 9
5
5
4
2%
1
1
1
$47
50
46
41
14%
14
13
12
Federal Reserve
(Dollar flgurcs in
millions)
+48
Chung bs in—
One
year
Discounts and advances. $
$387
398
395
392
$410
428
426
424
$340
348
349
351
12.3 $-16.2 $- 10.9
1 4
—38^4
1516.3
$1530.0 $-54.7
Federal Reserve notes... $1698.5 $+26.8 $- 13.4
Member bonk deposits. .
850 6
+26.1
+ 7.9
U. S. general account. ..
57.2
-85.0
+ 26.5
Foreign deposits...............
32.3
+ 2.4
- 8.5
Other deposits...................
1.5
- 0.5
- 1.9
Gold certificate reserves. 1081.1
-10.6
+166.1
Reserve ratio..................... 40.6%
— 0.2% +5.8%
Page 15
@FedFRASER