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THE SECURITIES BUSINESS AND
CON SCIOUSNESS III
RECOVERY FROM AN
INFLATIONARY RECESSION
REGIONAL ECON OM Y SLIPS
IN 7 0
ANNUAL OPERATIONS AND
EXECUTIVE CHANGES

FEDERAL RESERVE BANK

JANUARY 1971

The Securities Industry
and Consciousness III
. . . The securities industry may be next target
of concerned youth.

Recovery from an Inflationary Recession
. . . Policymakers search for a reasonable
compromise between inflation and unem
ployment.

Regional Economy Slips in '70
. . . Prices rose more here than elsewhere,
but the District slowdown was milder than
the national downswing.

B U S IN E S S R E V IE W is produced in the Department of Research. Ronald B. Williams is Art Director. The authors will
be glad to receive com ments on their articles.
Requests for additional copies should be addressed to Public Services, Federal Reserve Bank of Philadelphia, Philadelphia,
Pennsylvania 19101.

FEDERAL RESERVE BANK OF PHILADELPHIA

The Securities
Business and
Consciousness III*
by David P. Eastburn, President
Federal Reserve Bank
of Philadelphia

A person reading the financial pages these
days might get the impression that the secu
rities business— or some parts of it, at least—
is in trouble. Failures have raised doubts
about how adequately brokerage houses are
capitalized and how well the industry is reg
ulated. There is criticism of the commission
structure. The "third market" is a continuing
threat to the establishment. And the industry
is arguing among itself.
I am not competent to analyze these prob
lems and do not intend to talk about them.
Instead, I should like to look into a develop
ment which could have even greater impact
than these problems on your industry. This is
criticism of the business by those— mainly
young people—who are expressing an active
concern about social justice and the quality
of life. In fact, I am surprised that your in
dustry has so largely escaped such criticism.
After all, for those who profess to believe in
pursuit of the good life rather than the buck,
the securities industry would seem to be a
logical target. Considering the problems of
our times, buying and selling securities, ana
lyzing market trends, determining resistance

levels and breakthroughs might seem to
them rather frivolous and unproductive ways
to spend one's time.
There is, of course, a rationale for securi
ties markets and for those who work in them
that makes good economic sense and is so
cially acceptable. What I want to do this
evening is: (1) to spell out this rationale as I
understand it; (2) to view this rationale (as
nearly as I can) through the eyes of socially
concerned youth; (3) to suggest some impli
cations of this view. At all times I am speak
ing as an outsider to the industry. As such,
I bring to the subject no special expertise
but, hopefully, some objectivity. And I am
not so much interested in preaching conclu
sions of my own as in raising questions to
think about.
RATIONALE FOR SECURITIES MARKETS
‘ Let me now spell out in very simplistic
*An address given before the Joint Meeting of the
Indianapolis Society of Financial Analysts and the Fi
nancial Executives Institute, Indianapolis, Indiana, De
cember 10,1970.

BUSINESS REVIEW

JANUARY 1971

terms the traditional economic role of the
securities markets. The most important one
is to help allocate scarce resources. Con
glomerated Computers Corporation needs
money to build a new safety pin factory and,
through an underwriter, enters the new-issue
market where it competes with others in
need of funds. Investors— intermediaries like
insurance companies as well as individuals—
make decisions about whether to buy and at
what price. Behind all of the financial trap
pings of this operation is a transfer in the
command over real resources. Conglomer
ated Computers gets the wherewithal to buy
materials and hire labor. And in all of this,
the security analyst plays a key role.
Only a small proportion of securities trans
actions, of course, involves shifts in the com
mand over real resources; most of them
involve trading in outstanding issues. There
is a close relationship between trading in
secondary markets and raising new capital;
if investors like Conglomerated Computers
and are willing to pay a high price for its
stock, the corporation finds it easier to raise
new money. But the main function of sec
ondary markets is to provide liquidity. A
good market for Conglomerated enables an
investor to get out easily if he needs cash or
wants to switch to IBM.
In the process of performing their eco
nomic role, securities markets respond to
needs of society. When Conglomerated
Computers raises funds to build its factory,
it is responding to (or anticipating) a need
for its product. If analysts and investors think
the outlook for Conglomerated is good, they
facilitate the shifting of real resources nec
essary to help meet society's needs.
Again, this is a greatly oversimplified de
scription of the traditional role of securities
markets and security analysts. But I think it
is sufficient for us to take the next step and
examine how the young person concerned
with social matters might look at the same
process.

Perhaps the most up-to-date description
of the state of mind of today's young people
is that by Charles Reich in The Greening of
America. Reich calls this state of mind Con
sciousness III.
Consciousness I, he says, is the traditional
outlook begun in the 19th Century and held
by the farmer, small businessman, and
worker. It was a simple, human view of the
role of the individual. Consciousness II de
scribes the values of organizational society
in which the "corporate state" dominates
everything. These are the values of a non
human, technological, self-seeking, consumeristic society.
Consciousness III began in the mid-1960's.
It is a new view of the promise of life but, at
the same time, a disillusionment with exist
ing conditions. It emphasizes the "discrep
ancy between what could be and what is."
Those who hold this view stress human
rather than material values, quality rather
than quantity, emotion rather than reason,
technology as servant rather than master.
They feel "full personal responsibility" to
take action in matters that need reform.
However, according to Reich, reform will not
take place through violence or politics, but
"revolution by consciousness." In other
words, the kids either will convert the rest
of us or, in any case, will soon take over
anyway.
How might a young person taken with
Consciousness III react to traditional ration
ale for the securities industry? He could do
no better than to go back three and a half
decades for another view of the way the
markets work. This he could find in that
landmark of economics which you are all
familiar with— Keynes' General Theory.
Keynes, who as you know was no babe in
the woods when it came to making a killing
in the markets, had this to say:
It might have been supposed that compe
tition between expert professionals, pos
sessing judgment and knowledge beyond
that of the average private investor, would
correct the vagaries of the ignorant indi-

CONSCIOUSNESS III

FEDERAL RESERVE BANK OF PHILADELPHIA

based on genuine long-term expectation
is so difficult to-day as to be scarcely
practicable. He who attempts it must
surely lead much more laborious days
and run greater risks than he who tries to
guess better than the crowd how the
crowd will behave; and, given equal intel
ligence, he may make more disastrous
mistakes. There is no clear evidence from
experience that the investment policy
which is socially advantageous coincides
with that which is most profitable.

vidual left to himself. It happens, however,
that the energies and skill of the profes
sional investor and speculator are mainly
occupied otherwise. For most of these
persons are, in fact, largely concerned,
not with making superior long-term fore
casts of the probable yield of an invest
ment over its whole life, but with foresee
ing changes in the conventional basis of
valuation a short time ahead of the general
public. They are concerned, not with what
an investment is really worth to a man
who buys it "for keeps", but with what the
market will value it at, under the influence
of mass psychology, three months or a
year hence.. . .
Thus the professional investor is forced
to concern himself with the anticipation
of impending changes, in the news or in
the atmosphere, of the kind by which
experience shows that the mass psychology
of the market is most influenced.. . . The
social object of skilled investment should
be to defeat the dark forces of time and
ignorance which envelop our future. The
actual, private object of the most skilled
investment to-day is "to beat the gun", as
the Americans so well express it, to outwit
the crowd, and to pass the bad or depre
ciating, half-crown to the other fellow.
. . . it is, so to speak, a game of Snap, of
Old Maid, of Musical Chairs— a pastime
in which he is victor who says Snap
neither too soon nor too late, who passes
the Old Maid to his neighbour before the
game is over, who secures a chair for him
self when the music stops. These games
can be played with zest and enjoyment,
though all the players know that it is the
Old Maid which is circulating, or that
when the music stops some of the players
will find themselves unseated.

. . . The measure of success attained by
Wall Street, regarded as an institution of
which the proper social purpose is to
direct new investment into the most prof
itable channels in terms of future yield,
cannot be clamied as one of the outstand
ing triumphs of laissez-faire capitalism—
which is not surprising, if I am right in
thinking that the best brains of Wall Street
have been in fact directed towards a dif
ferent object.

In effect, Keynes in the thirties argued that
the way in which the market was supposed
to work in performing its two main functions
— providing liquidity and allocating re
sources—was quite different from what
really happens. It might provide liquidity for
the individual investor but not for all in
vestors combined, and preoccupation with
short-run gains gets in the way of allocating
resources according to long-run needs. To
day, a casual glance around might suggest
to our committed youth that "the best brains
of Wall Street" are still pointed in the direc
tion they were when Keynes observed them.
Performance may not be quite the standard
of success it was before recent chastening ex
periences, but it is still very much there. And,
in contrast to the situation in Keynes' day,
with the growth of mutual funds and other
such investors, it has become deeply in
grained institutionally.
The young person imbued with Conscious
ness III might well question not only the
ethics of spending one's adult life trying to
beat the other guy but whether there is
something an industry might do that is so
cially more productive. Is it all worth the
millions of manhours poured into analysis?

If the reader interjects that there must
surely be large profits to be gained from
the other players in the long run by a
skilled individual who, unperturbed by
the prevailing pastime, continues to pur
chase investments on the best genuine
long-term expectations he can frame, he
must be answered, first of all, that there
are, indeed, such serious-minded individ
uals and that it makes a vast difference to
an investment market whether or not they
predominate in their influence over the
game-players. But we must also add that
there are several factors which jeopardise
the predominance of such individuals in
modern investment markets. Investment

BUSINESS REVIEW

JANUARY 1971

Do the sharp fluctuations in stock prices
serve a worthwhile social purpose? And, be
hind it all, are real resources being directed
to socially worthwhile uses?

are considered more socially desirable
directions. In recent years, young
people have used their influence on
universities to vote proxies with certain
social ends in view. It is now fashion
able to talk of the social responsibility
of business; corporations are being
urged to look beyond short-run profits
to the longer run impact of their ac
tions. Similarly, security analysts might
be urged to pay more attention to so
cial costs which certain industries may
impose pr social benefits which certain
industries may confer. These costs and
benefits would require analysts to de
velop unconventional accounting and
analytical techniques.
Possibility # 4 . Government action (either by
incentives or restraints) to deal with
social problems might influence the
profitability— in the conventional sense
— of certain industries. The hope would
be that if Government could take steps
to induce corporations to undertake
socially desirable action because it is
profitable for them to do so, the tradi
tional market process might be made to
work better.
Possibility # 5 . Consciousness III may turn
out to be limited to relatively few
people or just a passing phase. In either
case, there might be little or no impact
on the securities industry at all.

IMPLICATIONS
I don't really know what all the implica
tions (if any) of such an attitude might be,
but let me suggest some possibilities.
Possibility # 1 . A belief that your industry is
failing to perform a worthwhile social
function could lead to the kinds of
criticism which some other industries
have felt recently and which is forcing
reforms. The automobile industry has
been criticized for disregarding auto
safety; it has been responding. Utilities
and others have been criticized for pol
luting the environment; they have been
responding. If the securities industry is
criticized, say, for favoring large insti
tutional investors over small investors,
or for undue secrecy in its operations,
it too might have to respond. These and
other kinds of criticism, of course, are
coming from several quarters. But they
might well be extended by another
kind, directed toward the preoccupa
tion of the industry with short-run gains
and toward the impact on allocation of
resources. The result of both kinds of
criticism might be that the industry's
freedom of action could be consider
ably more constrained in the future
than it has been.
Possibility # 2 . An indifferent public could
slow the growth of the securities indus
try. This might happen if, as today's
youth take over the economy, they
were to decide that analyzing, trading,
and even investing in securities is really
not worth all the time and effort it
takes. At the same time, the industry
might have difficulty recruiting enough
interested people.
Possibility # 3 . Ways might be sought to
guide the securities industry into what

CONCLUSIONS
Which of these possibilities do you prefer
and what might the securities industry do to
influence the outcome? First, you might be
tempted to hope the problem will not
amount to anything (Possibility # 5 ). If you
want to take this tack, I suggest the first
thing to do would be to burn all copies of
Adam Smith's The Money Game. I can
imagine the dismay and indignation of a
sincere Ralph Nader-type as he stumbles
onto the book for the first time. Chapter 17
on "Losers and Winners" might hit him
6

FEDERAL RESERVE BANK OF PHILADELPHIA

particularly hard. You may remember the
part about Poor Grenville, the fund managier
whose "nails are bitten down to the nubs"
because he is in the awkward position of
holding $25 million in cash with the market
going up. It finally was decided that he
should get

perfectly consistent with the profit motive if
one takes the long view; corporations may
not have any profits if they do not do some
thing about the core city. But this solution
requires such radical changes in orientation,
in calculating profits, that it may be expect
ing too much.
Perhaps a more feasible approach is that
in Possibility # 4 ; that is, for the securities
industry to work with Government in provid
ing whatever inducements are necessary to
make social action by business profitable
even in the short run. If this can be accom
plished, the securities industry might, with
some modifications, still act in its traditional
ways and come closer to meeting social
needs. For example, suppose the Govern
ment were to devise means— say, by tax
incentives— to make investment in anti
pollution devices profitable. Analysts would
recognize this, the market would reflect the
analysts' judgment, and shifts of resources
to this kind of effort would be facilitated.
There would be no need for business and
analysts to make elaborate calculations of
social costs and benefits, trying to factor
them into their evaluation of securities, and
then trying to convince everybody that a
security is really worth something other than
the market thinks it is.
Finally, to the extent you succeed in reex
amining and justifying your reason for exist
ence in today's world of social concerns, I
suspect you can minimize Possibility # 2 —
that is, a diminishing role in society. You may
find gunslinger types like Poor Grenville be
coming a rarer breed, and you may find
fewer people on commuter trains preoccu
pied with the day's closings; but this is pure
speculation. In any case, the industry should
be on a sounder basis for growth if it can
feel comfortable with itself that it is fulfill
ing a worthwhile social purpose and if it can
make that purpose understood and accept
able to the people who, before very long,
will be running things.
■

. . . back in the market, $25 million in one
big gulp. He bought a mixture of high fly
ers like Xerox, Polaroid, and garbage. And
that was part of the reason for the roilyboily market we had a while ago. The
cyclical stocks reflecting business were
sold down all they would go. Then along
came Poor Grenville and his gunslinger
competitors selling stocks because stocks
were going down, riding with the trend in
stead of against i t. . . . When the gunsling
ers hit the volatile stocks, Fairchild and
Xerox and Polaroid and what have you,
they knocked them down so hard that the
x's on the chart made downtrend lines and
then the downtrend said sell, and then
you just didn't want to show a bombedout stock in your portfolio; it made you
look dumb. So out went all the bombedout stocks. Somebody has to be last at
this sort of game.

Since I doubt if you can cover up all as
pects of the game, you might be better ad
vised to prepare yourself for some criticism
(Possibility #1). Chances are already good
that you will be reading headlines like:
"Congressional Report Recommends Drastic
Change in Commissions." But in addition,
there could be others: "Students Stage
Sit-in; Demand Voice in Running Stock Ex
change." You may be harder pressed than
ever before to justify your existence, to ex
plain just how the pursuit of short-run capi
tal gains helps solve problems of the poor,
the city, and the environment.
As you prepare your case, I suspect you
may find it difficult to show a clear and di
rect relationship between the search for
profit and social welfare. (Possibility # 3).
One can argue, as many do these days, that,
say, corporation investment in the ghetto is

BUSINESS REVIEW

JANUARY 1971

Recovery From an
Inflationary Recession
by Edward G. Boehne

upward-sloping line. It slopes upward be
cause the capacity of the economy to pro
duce goods and services expands over time
with the addition of more and better skilled
workers as well as enlarged and more effi
cient plant and equipment. The jagged line
represents actual output. It represents what
consumers, business, government, and for
eigners actually demanded from the econ
omy. Over the past year, real output has
remained essentially unchanged, largely be
cause of restrictive monetary and fiscal poli
cies of 1969. The result is a gap between
actual and potential GNP of about $45 bil
lion. As shown in the bottom panel of Chart
1, this growing gap has also meant swelling
unemployment.
What kinds of growth rates in GNP, real
growth rates that abstract from inflation,
would it take to close the gap and bring
the rate of unemployment down to 3.8 per
cent? The chart shows three possibilities:
closing the gap by the end of 1971, 1972, or
1973. For full employment to be restored by
the end of '71, assuming average productiv
ity gains and increases in the labor force, the
economy would have to expand in real terms

Moving from the superheated, inflationary
economy of the late 1960's to a more evenly
paced and balanced economy of the 1970's
has proved to be no easy task. Inflation is
turning out to be less sensitive and unem
ployment more sensitive to a slack economy
than previously hoped. With rising unem
ployment, therefore, the focus of policy
makers has shifted over the past year from
slowing down the economy to combat in
flation to speeding up economic growth
without sidetracking whatever disinflationary
momentum there is.
This shift in emphasis raises two important
questions: first, how rapidly can the econ
omy recover without setting off additional
rounds of inflation; and second, how long
will it take to regain high levels of employ
ment?
WHERE IS THE ECONOMY NOW?
After over a year of no growth, a sizable
gap has opened up between what the econ
omy actually produces and what it is capable
of producing. In the upper part of Chart 1,
potential GNP is represented by the straight,

FEDERAL RESERVE BANK OF PHILADELPHIA

CHART 1
A C T U A L AND PO TEN TIAL G RO SS NATIONAL
P R O D U C T (1958 D O L L A R S )

A sizeable gap has opened up between what the economy
actually produces and what it is capable of producing. As a
result, the rate of unemployment has been rising. To close the
gap and reduce the unemployment rate to 3.8 per cent in 1971
would require a whopping growth rate of 11 per cent. A more
reasonable growth rate of 6.5 per cent would close the gap by
the end of 1973.
Billions of Dollars

880
860
840
820
800
780
760
740
720
700

I II III IV I II III IV I II III IV I II III IV I II III IV

1969

Per Cent

1970

1971

1973

RATE O F UNEM PLOYM EN T

S .A .; A .R

i- i

|-i

1
i— "™ f“

o
1

I II III IV I II III IVe | || III |V

1969

1972

1970

1971

O
1

I II III IV I

1972

II III IV

1973

*Trend line of 4 per cent from 1st quarter 1969 to 4th quarter 1969, 4.3
per cent from 4th quarter 1969 to 4th quarter 1970, 4.4 per cent from 4th
quarter 1971 and 4.3 per cent from 4th quarter 1971 to 4th quarter 1975.

e = estimated
Sources: Department of Commerce,The Council of Economic Advisors
and the Department of Labor

BUSINESS REVIEW

JANUARY 1971

at a rate of 11 per cent; full employment by
the end of 72 means a growth of 7.6 per
cent; and closing the gap by the end of 73
implies a growth rate of 6.5 per cent. The
answer appears simple enough: let's get on
with getting the economy growing again, the
sooner the better.

to unwind inflation. And the results so far
of curtailing inflation have been mixed, mod
est, and certainly disappointing.
At the wholesale level, a basic indicator
of inflation is the price index for manufac
tured goods. For the first three quarters of
1970, the rate of increase for industrial com
modity prices trended downward, as shown
in Chart 2. As in 1969, however, this trend
was not sustainable through the fourth
quarter. In part, this may reflect a normal
seasonal pattern. Even on a year-to-year
comparison, however, the price behavior of
manufactured goods at wholesale is not
encouraging.
Consumer prices have shown modest im
provement in recent months. From a first
half rate of over 6 per cent, the pace slack
ened to 5 per cent during the last two quar
ters of 1970. However, much of the improve
ment in the consumer price index stemmed
from reductions in food prices. Further im
provement, therefore, is threatened by ad
verse effects on food prices that may flow,
for example, from the "corn blight."
A more comprehensive measure of infla
tion is the private GNP price deflator. This
index measures the rate of inflation for the
entire private economy and, in addition,
reflects the changing composition of GNP.
As can be seen in the bottom panel of Chart
2, little, if any, progress has been made dur
ing the last two years.
Why has inflation proved so stubborn to
bring under control? One reason is that it
is the worst inflation in two decades. It has
been going on for over five years and has
reached levels unsurpassed since the Korean
War. The result is that inflationary expecta
tions permeate the economy. Labor seeks
wage increases which far outstrip productiv
ity gains in an attempt to catch up with past
inflation and to stay ahead of anticipated in
flation. Most businessmen continue to bet
that rising costs can still be passed along to
consumers through higher prices. Lenders in
sist on an inflation premium from borrowers.
So, once built into the fabric of the system,

What About Inflation? The only reason
for creating slack in the economy has been
CHART 2
Q U A RTER LY CH A N G ES
P R IC E S

Progress against inflation has been mixed,
nodest, and disappointing.
IN D U S T R IA L W H O L E S A L E P RICES
Per Cent

II III
1969

II
III
1970

iVe

C O N S U M E R P RICES
Per Cent

1969

1970

G N P PR ICE D E F L A T O R PerCent

P R IV A T E S E C T O R

1969
e = estimated

1970

Sources: Department of Labor and Department
of Commerce

FEDERAL RESERVE BANK OF PHILADELPHIA

that suggest a reasonable compromise. First,
when the economy operates above about 98
per cent of capacity, roughly a 4.5 per cent
rate of unemployment, inflation begins to
escalate. Second, as the economy approaches
98 per cent of capacity, high rates of growth,
say, greater than 6 per cent, tend to be
inflationary.
Chart 3 shows the relationship between
capacity utilization and the rate of inflation.
In the top part of the chart, the rate of
capacity utilization, that is, actual GNP as a
percentage of potential GNP, is shown. Low
rates of utilization, such as occurred in the
recession years of 1958 and 1961, are asso
ciated— usually with a lag—with periods of
declining rates of inflation or periods of
relative price stability. (See the lower part of
Chart 3.) Conversely, periods of high capacity
utilization, as in 1955-56 and 1965-69, are

inflation is very difficult to purge.
Another reason inflation is not responding
quickly to a slack economy is that the present
slowdown is mild compared to previous re
cessions. In essence, the weakest remedy in
over a quarter of a century is being used to
combat the most severe inflation in 20 years.
In hindsight, then, as we look back at 1970,
we should not be surprised that inflation
persisted as it did.
So, speeding up the economy in 1971 to
reduce unemployment is complicated by in
flation. Too rapid a recovery will accelerate
inflation; too slow a recovery in '71 will
mean even more unemployment. Is there a
reasonable compromise?
A REASONABLE COMPROMISE
History provides some useful guidelines

CHART 3
C A P A C I T Y UTILIZATION

(A C T U A L G N P A S A P E R C E N T A G E O F P O T E N T IA L G N P )
High rates of capacity utilization typically precede periods of escalating inflation. Also,
declining rates of inflation follow—often with a lengthy lag—periods when the economy
is operating with unused capacity.
Per Cent

C H A N G E IN G N P P R I C E D E F L A T O R

Per Cent

—

1954

1956

1I n n n n n n n

1958

1960

1962

e = estimated
Source: Department of Commerce and
The Council of Economic Advisors

1964

1966

1968

1970e

BUSINESS REVIEW

JANUARY 1971

more inflation. So, it is difficult to distinguish
between a rapid growth rate and the amount
of excess capacity as the main cause of infla
tion. What does seem clear, though, is that
unless excess capacity in the economy is
considerable, growth rates in excess of 6 per
cent do make the economy vulnerable to
inflation.
What does this mean for 1971 and perhaps
72 and 73 as well? As can be seen in Chart
3, the economy is still operating at about 96
per cent of capacity, considerably higher
than the last time inflation was brought
under control in the late fifties and early
sixties. Because of the mildness of the cur-

associated— again, typically with a lag—with
periods of escalating rates of inflation. So,
experience seems to indicate that whenever
excess capacity in the economy is less than 2
per cent, the pace of inflation is likely to
speed up.
The second guideline— concerning growth
rates— is not so clear-cut. But in only five of
the last 15 years has the real growth rate
exceeded 6 per cent— 1955,1959,1962,1965,
and 1966. In 1959 and 1962, the economy
was operating way below its potential, and
prices remained stable. In the other years,
however, when there was much less unused
capacity, a 6 per cent growth rate did bring

CHART 4
A C T U A L AND PO TEN TIAL G RO SS NATIONAL
P R O D U C T (1958 D O L L A R S )

The goal of 4 V per cent unemployment can be reached by the
2
end of 1973 if the economy grows in real terms at an annual rate
of 5.7 per cent. Higher and probably more inflationary growth
rates would be needed to close the gap between actual and
potential GNP in 1971 or 1972.
Billions of Dollars

1969

1970

1971

1972

1973

Source: Department of Commerce andThe Council of Economic Advisors
12

FEDERAL RESERVE BANK OF PHILADELPHIA

rent slowdown and the severity of the
current inflation, policymakers will have to
move cautiously toward increasing the
amount of capacity utilized.

timetable— a timetable which stretches out
to 1973 the period for getting unemployment
back down to the 4.5 per cent rate. A policy
of gradualism was popular when the econ
omy was slowing down; if gradualism is to
have any hope of success in unwinding in
flation, the nation likely will have to adhere
to it on the way up as well.
But what about getting the rate of unem
ployment below 4.5 per cent? It may be that
aggregate tools, like monetary and fiscal
policies, cannot reduce unemployment be
low 4.5 per cent without reigniting inflation.
To reduce unemployment further, monetary
and fiscal policies likely will have to be sup
plemented in the 1970's with greatly ex
panded programs designed to improve job
training and worker mobility. Indeed, if we
are to achieve high levels of employment
and low levels of inflation in the decade
ahead, they can only come if manpower
policies aimed at reducing structural bottle
necks in the economy are coordinated with
policies aimed at securing a balance between
overall demand and supply.
■

TIMETABLE FOR RECOVERY
How do these guidelines translate into a
timetable for recovery? Chart 4 is similar to
Chart 1; however, the target for recovery has
been changed, in light of these guidelines, to
98 per cent of capacity, or roughly 4.5 per
cent unemployment, instead of 100 per cent,
or 3.8 per cent unemployment. The differ
ence, 2 per cent, is represented by the
shaded area. To close the remaining gap by
the end of 1971 would require a growth rate
of 8.7 per cent. If the gap is to be closed by
the end of 72 , the economy would have to
grow at 6.5 per cent for the next two years.
Or, if the timetable is pushed out to the end
of 7 3 , the necessary rate is 5.7 per cent.
If a reasonable tradeoff between subduing
inflation and reducing unemployment is to
be made in the 1970's, policymakers may
have to think in terms of this latter kind of

BUSINESS REVIEW

JANUARY 1971

Regional Economy
Slips in '70
by Kathryn L. Kindi

Third District residents can find some com
fort in knowing that the slowdown in the
region in 1970 was milder than the down
swing in the national economy. Both pro
duction and sales held up better in the
region than in the rest of the nation. And,
although consumer prices rose a little more
here than elsewhere, the unemployment rate
in the District remained well below the na
tional level.

outstripped wage advances.
Real purchasing power of District workers
actually fell in '70 as price rises of nearly 7
per cent eroded wage gains, which were less
CHART 1
P R I C E S R I S E R A P I D L Y IN ’7 0
|

UNITED STATES

PHILADELPHIA

Percentage Change in Consumer Price Index

PRICES AND UNEMPLOYMENT MOVE UP
Rising costs of housing, clothing, medical
care, and countless other goods and services
held the attention of many Third District
consumers as 1970 pushed to a close. Indeed,
with prices mounting more rapidly in the
region than nationally, shoppers here were
forced to discover even more and better
ways to stretch their buying dollars.
All sectors fell victim to the inflationary
spiral as consumer prices in the Philadelphia
area soared 6.7 per cent in 1970, surpassing
the increases of '68 and '69. Moreover, un
like 1969, when weekly wage gains outdis
tanced price rises, price increases in 1970

1966 1967 1968
*Based on first 11 months
Source: Department of Labor
14

1969 1970*

FEDERAL RESERVE BANK OF PHILADELPHIA

CHART 2
W E E K L Y EARNINGS A D V A N C E
MORE SLO W LY
^

UNITED STATES Q J THIRD DISTRICT

Percentage Change in Average Weekly Earn
ings in Manufacturing in the Third District

1966 1967 1968

1969 1970*

*Based on first 11 months.
Source: U.S. Data, Department of Labor

Job-holders in the Third District did fare
better in one respect than those across the
nation, however, particularly during the first
seven months of last year. Had unemploy
ment in the region climbed to the national

than 4 per cent. Although contract settle
ments in some industries resulted in large
gains in hourly wages, both shorter and
fewer workdays put a damper on earnings
growth.
CHART 3
U N E M P L O Y M E N T IN T H E
TR ICT T R E N D S U PW A R D

DIS

Per Cent

Per ^ent

5
4
3

1966

1968

1970*

F M A M J J A S O N

1970

*Based on first 11 months

Source: U.S. Data, Department of Labor

BUSINESS REVIEW

JANUARY 1971

average, more than 35,000 more members
of the labor force would have been forced
into the already swollen ranks of unem
ployed. As shown in Chart 3, the unemploy
ment rate in the District rose from 2.9 per
cent in 1969 to 3.9 per cent in '70. In the
same one-year period, the unemployment
level nationally jumped from 3.5 per cent to
4.9 per cent, 1 per cent higher than the rate
registered in the District.

CHART 4
N EW

PASSEN G ER

T R A T IO N S
■

LA G .

CAR

AND

UNITED STATES

R E G IS

. .
^

THIRD DISTRICT

Percentage Change in Registration
of New Passenger Cars

SALES AND PRODUCTION SLOW
Growing unemployment fostering fears of
job insecurity, coupled with rising prices and
more slowly rising incomes, made last year's
worker reluctant to spend his earnings. Ac
cordingly, retail customers did little to brunt
the economic slowdown in '70. Registrations
of new passenger cars (a rough proxy for
new car sales) inched only 1 per cent above
its 1969 level (Chart 4) in the District. Yet
even this minimal advance pushed regional
registrations far over the national rate.
Department store sales, which remained
sluggish throughout 1970, also reflected con
sumer caution. Although sales in some met
ropolitan areas within the District outran
those nationally, no gains were registered in
Philadelphia or Trenton. Retail activity in
Scranton and Wilkes-Barre roughly kept pace
with the nation (Chart 5).

CHART
D EPA RTM EN T

1966 1967

1968 1969 1970*

* Based on first 10 months
Source: U.S. data, Automotive News

This lack-luster performance by consumers
and consequent cutbacks in investment
plans by business halted growth in manu
facturing activity. Last year, output in the
Third District, measured by manhours of
labor used in production,* fell more than 4*
*Manhours used in production is a proxy measure of
output which, because of changes in productivity over
the business cycle, tends to understate movements in
that series.

5
STO R E

S A L E S

W AN E*

LANCASTER, PA.
PHILADELPHIA, PA.
— N .J.
READING, PA.
SCRANTON, PA.
TRENTON, N .J.
W ILKES-BARRE,
HAZELTON, PA.
UNITED STATES

* Based on First 8 months
Source: Department of Commerce, Data,SMSA Basis
16

Percentage
Change

FEDERAL RESERVE BANK OF PHILADELPHIA

CHART 6
M A N H O U R S O F L A B O R U S E D IN
P R O D U C T I O N F A L L IN T H E D IS
TRICT
Percentage Change in Manhours
Used in Manufacturing in the
Third District

1966 1967
*Based on first 10 months

Percentage Change in Manhours
Used in Manufacturing in the
Third District

1968 1969

1970*

F M A M J J
1970

A S O

CHART 7
R E S ID E N T IA L A N D N O N R E S ID E N T IA L BUILDING
S L O W S . . . W H ILE T O T A L PRIVATE AND
PUBLIC CO N STR UCTIO N INCREASES
Percentage Change in Value of
Residential and Nonresidential
Construction Contracts Awarded

Percentage Change in Value of Total
Construction Contracts Awarded

10
0

1966 1967 1968 1969 1970*
*Based on first 11 months
Source: F. W. Dodge Corporation

1966 1967 1968 1969 1970*

BUSINESS REVIEW

JANUARY 1971

per cent, down sharply from 1968 and 1969.
Building construction, too, was squeezed
in 1970. Although nonresidential and resi
dential construction contracts awarded de
clined less in the District than across the
nation, both national and regional building
fell for the first time since 1966. (See Chart
7.) One bright spot did appear in the regional
picture in '70, however. Buoyed by a 75 per
cent rise in public works and utilities, total
construction contracts awarded jumped al
most 20 per cent.

CHART 9
B A N K IN V E S T M E N T S A R E C U R
T A ILED ^
I

UNITED STATES O

THIRD DISTRICT

Percentage Change

BANKING REACTS
The weakened business climate, accom
panied by attempts by corporate borrowers
to improve their liquidity positions, was
reflected in banking activity. Although loans
by member banks in the Third District rose
7.2 per cent in 1970, a notch ahead of the
national rate (Chart 8), their advance trailed
last year's increase by several percentage

1966

1967

1968

1969 1970*

♦Investments include U .S. Government obli
gations and other securities

CHART 8

fMember banks only— data for last Wednes
day of each month

LO A N S A D V A N C E W E E K L Y *1
"

♦Based on first 11 months

■

Source: U.S. Data, Board of Governors of the
Federal Reserve System

UNITED STATES C H THIRD DISTRICT

Percentage Change

♦Loans include both loans and discounts

points. Investments by member banks also
turned down in '70, as shown in Chart 9. In
recent months, however, bankers, faced with
deteriorating corporate demand for credit
as would-be borrowers shifted from bank
loans to long-term borrowings in the bond
market, have made extensive efforts to ex
pand their securities holdings. Member insti
tutions also have lowered the prime interest
rate in successive attempts to attract bor
rowers and increase loans.

fMember banks only— data for last Wednes
day of each month

PROSPECTS FOR THE FUTURE?

1966

1967

1968

1969

1970*

♦Based on first 11 months

In short, 1970 moved sluggishly into '71.
High unemployment rates and increases in
consumer prices persisted, while production

Source: U.S. Data, Board of Governors of the
Federal Reserve System

FEDERAL RESERVE BANK OF PHILADELPHIA

sistent with expectations of area executives,
who foresee a modest upturn in business
activity in the coming months as well as
some improvement in labor market condi
tions. (See below.) The path of inflation,
however, remains a major uncertainty in the
outlook fo r '71.
■

remained weak. But, with economic policy
on a course of moderate ease for almost a
year now, at least a mild recovery appears to
be shaping up for the District and the nation.
Although consumers remain cautious, retail
spending is likely to accelerate somewhat
this year. This pickup in the economy is con

WHAT THIRD DISTRICT BUSINESSMEN SEE FOR 1971
The Federal Reserve Bank of Philadelphia conducts a monthly Business Outlook Survey.
The purpose of the survey is to obtain a reading of business conditions within the Third
Federal Reserve District— an area comprising the eastern two-thirds of Pennsylvania, the
southern half of New Jersey, and Delaware. The survey sample polls manufacturing firms with
500 or more employees.
Since its inception at the request of the regional business community nearly three years
ago, the Business Outlook Survey has become a useful source of economic intelligence both
for business and public policymakers. You may request that names be placed on the mailing
list for the Business Outlook Survey by writing to Public Services, Federal Reserve Bank of
Philadelphia, Philadelphia, Pennsylvania 19101.
OUTLOOK FOR 1971
Area executives expect the general level of business activity to pick up steam in 1971 after
a weak performance last year. Most manufacturers in the Third District anticipate rising sales
and new orders in the coming months. In part, this newly emerging optimism reflects
stepped-up production at General Motors in the aftermath of its strike, as well as some steel
stockpiling in anticipation of a possible strike by the United Steel Workers this summer. But
this budding optimism also reflects some feeling in the business community that the basic
trend of the economy will be upward— if only modestly so— in '71.
Caution rather than optimism, however, still dominates the thinking of area businessmen.
Because of excess capacity, area management plans to hold the line on capital spending—at
least through the first half of the year. Also, regional manufacturers appear reluctant to add
new employees to their work forces until the firmness of the recovery is more apparent.
Although this "no hire" policy will keep layoffs to a minimum, it does not preclude some
further increases in unemployment. The reason is that with an expanding pool of manpower
because of increasing population, new jobs need to be created— not just old ones maintained
— if unemployment is to be checked or reduced.
The outlook for prices remains inflationary. Although the rate of inflation may slow, the
majority of respondents to the Business Outlook Survey still expects to be paying higher
prices during 1971.

JANUARY 1971

BUSINESS REVIEW

ANNUAL OPERATIONS
AND
EXECUTIVE CHANGES

FEDERAL RESERVE BANK OF PHILADELPHIA

DIRECTORS AND OFFICERS
At the election held in the fall of 1970, Richard A. Herbster, President, Lewistown Trust
Company, Lewistown, Pennsylvania, was elected by member banks in Electoral Group 3 as a
Class A Director for a three-year term beginning January 1, 1971. He succeeded H. Lyle
Duffey. Philip H. Glatfelter, III, Chairman and President, P. H. Glatfelter Co., Spring Grove,
Pennsylvania, was reelected by member banks in Electoral Group 1 as a Class B Director for
a like term.
The Board of Governors designated Bayard L. England, Chairman of the Board, Atlantic
City Electric Company, Atlantic City, New Jersey, as Chairman of the Board of Directors and
Federal Reserve Agent at the Federal Reserve Bank of Philadelphia for 1971. Mr. England suc
ceeded Willis J. Winn, Dean of the Wharton School of Finance and Commerce, University of
Pennsylvania. Dr. Winn served as Chairman since 1966. To serve as Deputy Chairman of the
Board of Directors for 1971, the Board of Governors named D. Robert Yarnall, Jr., President of
Yarway Corporation, Blue Bell, Pennsylvania, who has been a director of the Reserve Bank
since 1965. To fill the vacancy created by Willis J. Winn, whose term expired December 31,
1970, the Board of Governors appointed John R. Coleman, President of Haverford College,
Haverford, Pennsylvania, to a three-year term as a Class C Director, commencing January
1, 1971.
The Board of Directors selected G. Morris Dorrance, Jr., President and Chief Executive
Officer, The Philadelphia National Bank, Philadelphia, Pennsylvania, to serve during 1971 as
the member of the Federal Advisory Council from the Third Federal Reserve District.
The Directors of this Bank elected David P. Eastburn as President and David C. Melnicoff
as First Vice President effective March 1, 1970, to complete the unexpired portion of the
present term of these offices ending February 28, 1971.
Also effective March 1, 1970, a number of changes and additions occurred in the official
staff. Joseph M. Case was promoted to Vice President from Assistant Vice President in the
Department of Supervision and Regulation. Max Klass was designated Regulations Officer to
assist Mr. Case. In the same department, James P. Giacobello was advanced from Chief

JANUARY 1971

BUSINESS REVIEW

Examining Officer to Assistant Vice President. Thomas K. Desch was made Chief Examining
Officer and Stephen M. Ondeck became an Examining Officer. In the Personnel Department,
Joseph R. Joyce, formerly Department Head, was appointed Assistant Vice President. William
F. Staats, Secretary, assumed expanded responsibilities in the newly created Executive Office.
Lawrence C. Murdoch, Jr., returned to the Bank as Vice President-Staff within the Executive
Office. George C. Haag, formerly Public Information Officer, became Public Services Officer
in the Department of Bank and Public Services. In the Department of Research and Statistics,
Mark H. Willes was promoted from Senior Economist to Director of Research. Edward G.
Boehne, Richard W. Epps, and Hugh Chairnoff were appointed Research Officers and Econo
mists. Warren J. Gustus became Economic Adviser to the President.
Effective September 1, 1970, Hugh Chairnoff was appointed Assistant Vice President in the
Credit-Discount Department, and Donald J. McAnemy was named Examining Officer in the
Department of Supervision and Regulation.
Effective January 1, 1971, William A. James was promoted from Vice President to Senior
Vice President, assuming responsibility for internal services as well as personnel. Alexander
A. Kudelich, formerly Assistant Vice President, became Vice President with responsibility for
the entire collection and check processing function. Continuing in their present areas of
responsibility, Mark H. Willes was promoted to Vice President and Director of Research,
William F. Staats to Vice President and Secretary, and Eugene W. Lowe to Assistant Vice Presi
dent. In an important shift of duties, James A. Agnew, Assistant Vice President, moved to the
Cash Department and Warren R. Moll, Assistant Vice President, moved to the Department of
Collections and Check Processing.
During the year 1970, the Bank lost four members of its official staff. On February 27,
William L. Ensor, Examining Officer, died as a result of a heart attack. Karl R. Bopp, President,
and Robert N. Hilkert, First Vice President, retired on February 28 under provisions of the
Retirement System of the Federal Reserve Banks. Albert Spencer, Jr., Assistant Vice President
in the Credit-Discount Department, retired on August 31.

FEDERAL RESERVE BANK OF PHILADELPHIA

DIRECTORS AS OF JANUARY 1, 1971

Term expires
December 31,

GROUP

CLASS A
HAROLD F. STILL, JR.
President, Central Penn National Bank
Bala-Cynwyd, Pennsylvania

1971

WILLIAM R. COSBY
Chairman of the Board, Princeton Bank & Trust Company
Princeton, New Jersey

1972

RICHARD A. HERBSTER
President, Lewistown Trust Company
Lewistown, Pennsylvania

1973

CLASS B
PHILIP H. GLATFELTER, III
Chairman and President, P. H. Glatfelter Co.
Spring Grove, Pennsylvania

1973

HENRY A. THOURON
Chairman of the Board, Hercules Incorporated
Wilmington, Delaware

1971

EDWARD J. DWYER
President, ESB Incorporated
Philadelphia, Pennsylvania

1972

CLASS C
BAYARD L. ENGLAND, Chairman and Federal Reserve Agent
Chairman of the Board
Atlantic City Electric Company
Atlantic City, New Jersey

1972

D. ROBERT YARNALL, JR., Deputy Chairman
President, Yarway Corporation
Blue Bell, Pennsylvania

1971

JOHN R. COLEMAN
President, Haverford College
Haverford, Pennsylvania

1973

JANUARY 1971

BUSINESS REVIEW

OFFICERS AS OF JANUARY 1, 1971

DAVID P. EASTBURN, President
DAVID C. MELNICOFF, First Vice President
JOSEPH R. CAMPBELL, Senior Vice President
WILLIAM A. JAMES, Senior Vice President
JAMES V. VERGARI, Senior Vice President and General Counsel
EDWARD A. AFF, Vice President
HUGH BARRIE, Vice President
JOSEPH M. CASE, Vice President
NORMAN G. DASH, Vice President
RALPH E. HAAS, Vice President
ALEXANDER A. KUDELICH, Vice President
G. WILLIAM METZ, Vice President and General Auditor
LAWRENCE C. MURDOCH, JR., Vice President-Staff
WILLIAM F. STAATS, Vice President and Secretary
MARK H. WILLES, Vice President and Director of Research
WARREN J. GUSTUS, Economic Adviser to the President
JAMES A. AGNEW, Assistant Vice President
JACK P. BESSE, Assistant Vice President
HUGH CHAIRNOFF, Assistant Vice President
D. RUSSELL CONNOR, Assistant Vice President and Assistant Secretary
JAMES P. GIACOBELLO, Assistant Vice President
JOSEPH R. JOYCE, Assistant Vice President
EUGENE W. LOWE, Assistant Vice President
WARREN R. MOLL, Assistant Vice President
HENRY J. NELSON, Assistant Vice President
KENNETH M. SNADER, Assistant Vice President
RUSSELL P. SUDDERS, Assistant Vice President
THOMAS K. DESCH, Chief Examining Officer
JACK H. JAMES, Examining Officer
LEONARD E. MARKFORD, Examining Officer
DONALD J. McANENY, Examining Officer
STEPHEN M. ONDECK, Examining Officer
HI LI ARY H. HOLLOWAY, Assistant Counsel and Assistant Secretary
A. LAMONT MAGEE, Assistant General Auditor
SAMUEL J. CULBERT, JR., Bank Services Officer
EDWARD G. BOEHNE, Research Officer and Economist
RICHARD W. EPPS, Research Officer and Economist
GEORGE C. HAAG, Public Services Officer
MAX KLASS, Regulations Officer
DAVID P. NOONAN, Personnel Officer

FEDERAL RESERVE BANK OF PHILADELPHIA

STATEMENT OF CONDITION
FEDERAL RESERVE BANK of PHILADELPHIA

End of year

(000's omitted in dollar figures)

1970

1969

ASSETS
Gold certificate a cco u n t...................................................................
Special Drawing Rights Certificate ............................................
Federal Reserve notes of other Federal Reserve Banks . . .
Other cash ..............................................................................................

$ 721,185
23,000
60,448
9,761

$ 525,671

Loans and securities:
Discounts and advances..............................................................
United States Government securities...................................
Total loans and securities......................................................

150
3,261,250
$3,261,400

650
3,071,751
$3,072,401

Uncollected cash items ...................................................................
Bank premises .......................................................................................
All other assets ....................................................................................
Total a sse ts....................................................................................

693,676
2,533
42,670
$4,814,673

729,778
2,475
125,279
$4,495,252

LIABILITIES
Federal Reserve n o te s................................................................ ..

$2,933,550

$2,756,766

Deposits:
Member bank reserve accounts ............................................
United States Governm ent.........................................................
Foreign .................................................................................................
Other deposits ...............................................................................
Total deposits .............................................................................

1,163,059
64,016
6,375
16,474
$1,249,924

986,466
70,870
6,760
17,965
$1,082,061

Deferred availability cash items .................................................
All other lia b ilitie s...............................................................................
Total lia b ilitie s.............................................................................

529,336
29,919
$4,742,729

557,760
30,631
$4,427,218

34,614
5,034

CAPITAL ACCOUNTS
Capital paid i n ..................................................................................
Surplus .................................................................................................
Total liabilities and capital accounts................................

35,972
35,972
$4,814,673

34,017
34,017
$4,495,252

Ratio of gold certificate reserve to
Federal Reserve note lia b ility ....................................................

24.6%

19.1%

BUSINESS REVIEW

JANUARY 1971

EARNINGS AND EXPENSES
FEDERAL RESERVE RAIVK of PHILADELPHIA

(000's omitted)

1970

1969

Earnings from:
United States Government securities ..........................................
Other so u rce s.......... .................................................................................
Total current earnings ......................................................................

$194,106
4,064
$198,170

$164,711
8,371
$173,082

Net expenses:
Operating expenses* .............................................................................
Cost of Federal Reserve cu rren cy....................................................
Assessment for expenses of Board of Governors....................
Total net expenses.............................................................................

12,631
1,196
1,078
$ 14,905

10,701
1,262
779
$ 12,742

Current net earnings ..................................................................................

$183,265

$160,340

Additions to current net earnings:
Profit on sales of U.S. Government securities (n e t)...............
All other ......................................................................................................
Total additions ....................................................................................

424
189
613

_
319
319

14
14

317
25
342

Deductions from current net earnings:
Loss on sales of U.S. Government securities (n e t).................
Miscellaneous nonoperating expenses .......................................
Total deductions ...............................................................................
Net additions .................................................................................................

599

(22)

Net earnings before payments to U.S. Treasury...........................
Dividends paid ..............................................................................................
Paid to U.S. Treasury (interest on Federal Reserve notes)
Transferred to or deducted from ( —) Surp lus................................

$183,864

$160,317

$ 2,082
179,827
1,955

$ 2,000
157,082
1,235

* After deducting reimbursable or recoverable expenses

FEDERAL RESERVE BANK OF PHILADELPHIA

VOLUM E OF OPERATIONS
FEDERAL RESERVE BANK o f PHILADELPHIA
Number of pieces (000's omitted)
Collections:
Ordinary checks* .............................................................................................................................
Government checks (paper and c a r d )...................................................................................
Postal money orders (c a rd )..........................................................................................................
Non-cash items .................................................................................................................................
Food stamps redeemed ................................................................................................................
Clearing operations in connection with direct sendings & wire & group clearing plans** .............................................................................................................................................
Transfers of f u n d s ..................................................................................................................................
Currency c o u n te d ...................................................................................................................................
Coins c o u n te d ...........................................................................................................................................
Discounts and advances to member banks ........................................................................
Depositary receipts for withheld ta x e s .....................................................................................
Postal receipts (remittances) ...........................................................................................................
Fiscal agency activities:
Marketable securities delivered or red ee m ed ................................................................
Computerized marketable securities (Book entry transactio ns)...........................
Savings bonds and notes (F.R. Bank and agents)
Issues (including reissues) .....................................................................................................
Redemptions ...................................................................................................................................
Coupons redeemed (Government and a g en cies)...........................................................

1970

1969

1968

386,878
38,050
13,022
876
51,492

363,658
33,933
13,708
899
29,581

324,466
32,821
14,649
832
22,633

606
325
349,173
752,489
1
1,296
276

607
308
334,891
803,868
1
1,293
281

655
271
319,723
492,377
(a)
1,056
272

557
7

569
18

482
13

10,932
9,098
867

10,187
9,229
996

10,506
7,941
959

$116,717
9,421
241
1,464
42

$100,774
8,952
253
1,258
31

66,946
351,524
2,494
103
6,289
7,012
1,031

61,742
250,695
2,351
58
1,193
5,695
1,008

11,603
5,966

14,091
7,877

428
530
380

468
403
394

Dollar amounts (000,000's omitted)
Collections:
Ordinary checks ................................................... ............................................................................. $120,156
Government checks (paper and c a r d )...................................................................................
9,553
Postal money orders (c a rd )...........................................................................................................
240
Non-cash items ...................................................................................................................................
1,775
Food stamps redeemed ................................................................................................................
76
Clearing operations in connection with direct sendings & w ire & group clear
ing p la n s * * ..............................................................................................................................................
69,340
Transfers of fu n d s ...................................................................................................................................
404,927
Currency c o u n te d ...................................................................................................................................
2,650
Coins counted..............................................................................................................
102
Discounts and advances to member b a n k s ...........................................................................
4,607
Depositary receipts for withheld ta x e s .....................................................................................
6,344
Postal receipts (remittances) ...................’ .....................................................................................
1,051
Fiscal agency activities:
Marketable securities delivered or re d e e m e d ................................................................
11,155
Computerized marketable securities (Book entry tran sactio ns)...........................
7,286
Savings bonds and notes (F.R. Bank and agents)
Issues (including reissues) .....................................................................................................
491
Redemptions ...................................................................................................................................
497
Coupons redeemed (Government and ag en cies)...........................................................
146
* Checks handled in sealed packages counted as units
** Debit and credit items
(a) Less than 1,000 rounded

Full text of Business Review (Federal Reserve Bank of Philadelphia) : January 1971

FRASER