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Federal Reserve Bank of Philadelphia
IS S N 0007-7011

JANUARY* FEBRUARY 1979

I n t e r n a t io n a l
B a n k in g
In
P h il a d e l

VOLUNTARY
INFLATION
RESTRAINT 1
A COMMENTARY

A New Job Map
for the P h ila d e lp h ia R e g io n

&
The Fed in Print
LIBRARY

JANUARY/FEBRUARY 1979

VOLUNTARY INFLATION RESTRAINT AND
CORPORATE SOCIAL RESPONSIBILITY
C om m entary by David P. Eastburn

INTERNATIONAL BANKING
IN PHILADELPHIA
Jan ice M. W esterfield
. . . International operations are growing at
Philadelphia banks.

REVIEW
Federal Reserve Bank of Philadelphia

A NEW JOB MAP
FOR THE PHILADELPHIA REGION
John Gruenstein
. . . The shift of employment outward from
Center City may call for new initiatives in
transit, tax, and urban policy.

100 North Sixth Street
(on Independence Mall)
Philadelphia, Pennsylvania

THE FED IN PRINT

19106

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part of the Federal Reserve System— System
-a

which includes twelve regional banks located
around the nation as well as the Board of Gover
nors in Washington. The Federal Reserve System
was established by Congress in 1913 primarily to
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and currency to the banking system, acting as
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Reserve Act, the System is an agency of the
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supporting and regularly makes payments to the
United States Treasury from its operating sur
pluses.

VOLUNTARY INFLATION RESTRAINT
AND CORPORATE SOCIAL RESPONSIBILITY*
By David P. Eastburn, President
Federal Reserve Bank of Philadelphia
What responsibility does a corporation
have voluntarily to fight inflation? I suppose
there is not a corporate official in the country
who is not asking this question today. The
answer will largely determine the success of
President Carter’s anti-inflation program.
The arguments pro and con have been
made for years. Pro: corporations stand to
gain along with the rest of us if inflation can
be brought under control. Con: a corporation’s
main job is to make profits for its stock
holders, and competition prevents it from
waging the inflation fight on its own (Presi
dent Carter’s analogy of one person’s sitting
down in the stadium while everyone else is
standing).
I have nothing to add to these arguments,
but I believe there is an important aspect of

the question which has been overlooked.
This is the impact of inflation on activities of
corporations to improve social conditions.
High inflation rates threaten to reduce these
activities severely.
To explain why this is so, let me paint with
a rather broad brush a contrast between two
eras. A decade or so ago, perhaps a little less,
a debate was raging about corporate social
responsibility. Business journals were full of
articles about whether corporations should
help solve such problems as hard-core un
employment, slum housing, and lack of
minority participation in business, or whether,
simply, the “business of business is business.”
The N ew York Tim es Magazine published an
article by the Nobel prize winning economist,
Milton Friedman, which argued that corpo
rate officials who use their corporate power
to try to solve social problems are playing
fast and loose with stockholders’ money and
hastening the day of socialism. The Com

‘ Adapted from remarks delivered before the Business
Honor Society Colloquium, La Salle College, Philadel
phia, Pennsylvania, November 14, 1978.

BUSINESS REVIEW

JANUARY/FEBRUARY 1 9 7 9

lusion, and inflation uncertainties make them
more cautious. Furthermore, if the President’s
program fails, a likely course would be to
fight inflation by overall monetary and fiscal
action alone. And success in bringing infla
tion under control along that course would
require a recession or at least very slow
growth for a long period. What all this adds
up to is an unpromising outlook on the
w herew ithal for corporate social action.
The other development is the impact of
inflation on corporate willing ness to engage
in these activities. Inflation spawns an atti
tude of inward-looking and selfishness.
Businessmen accuse labor of pushing up
wages; labor accuses business of raising
prices to make bigger profits; all accuse
government. There is nothing new here, but
inflation aggravates it. What is new, and
even more symptomatic of the mood of the
country, I believe, is the emergence of a
variety of proposals to slash taxes. I am
convinced that many sincere advocates of
these proposals are motivated by a concern
to limit the growth of government or a desire
to stimulate economic growth. But I am also
convinced that at least as many are concerned
only about how inflation is picking their
pockets.
Corporations cannot help but be touched by
all this. Inflation forces them to look to their
immediate self-interest rather than their longrun welfare. It could force them to take the
position that their business is only business.
It could win the ideological war for Professor
Friedman after all.
So, for those who would like to see society
continue to move ahead in solving its many
social problems and who are eager to continue
harnessing the power of corporations to that
end, there is real reason for fighting inflation. I
would hope that corporate executives will
find this rationale further justification for
entering the lists.

mittee for Economic Development cast its
enlightened eye on the question and con
cluded that corporations should actively try
to improve social conditions because it is in
their long-run self-interest to do so.
The debate was interesting, especially be
cause of the environment in which it took
place. The nation had just gone through an
exciting, if stormy, period. Civil rights had
taken a tremendous forward stride, a war on
poverty had been declared, and the Vietnam
war had raised sensitivity about moral issues
to new heights. The economy was growing
so rapidly that the material well-being of
those in lower income groups was measurably
improved; official definitions of poverty were
successively revised upward.
In short, the debate about corporate social
responsibility took place in an era of great
social concern and considerable social im
provement. It was a time when people were
looking outward to other people’s problems.
At the risk of overdrawing the point, one
might say it was an era of growth and
generosity.
Since then, corporate social responsibility
has become an accepted fact. It is seldom
debated. It has become institutionalized.
Corporations are engaging in a myriad of
activities to improve their communities and
to help the disadvantaged.
But now we have serious inflation and the
threat of serious inflation into the indefinite
future. In contrast to the expansionary,
outward-looking environment of the earlier
period, we face the prospect of two develop
ments, both of which would be inimical to the
exercise of corporate social action.
One is the pressure of inflation on real
corporate profits. Although it might appear
that profits are rising, this appearance is
illusory, because profits are overstated as a
result of current accounting practices. Cor
porate officials see through this money il

FEDERAL RESERVE BANK OF PHILADELPHIA

International Banking
in Philadelphia
By Janice M. Westerfield*
Over the last few years, Philadelphia
bankers have made substantial strides in
international banking. The volume and
breadth of international services have grown,
and foreign earnings have grown, too, until
now they make up an appreciable part of
total earnings for some Philadelphia banks.
What caused this advance? Primarily, the
expansion of world trade, which brought
with it a new demand for financial services.
Philadelphia is a major port city with a
natural entree to international commercial
circles. And Philadelphia bankers provide a
large share of the financial services used in
foreign trade locally. But there are other
sources of growth as well—sources that can’t
be measured in tonnage passing through the

port or in pallets lifted over local piers. As
American manufacturing and service firms
have gone abroad, they have continued to
rely on American banks for financing. And
where those bankers have followed, they
have found new opportunities for profit.
Philadelphia bankers have been in the fore
front of this movement.
What does the future hold? That depends
not only on commercial conditions but also
on the legal environment in which financial
services are provided. Trade may get a boost
from Philadelphia’s International City project,
which already is bearing fruit. And foreign
bankers are moving into the Delaware Valley.
Developments like these, however, pose new
issues for the regulatory and supervisory
authorities here and abroad, who are work
ing to preserve both the soundness and the
competitiveness of the international banking
community. As the trading world becomes
more tightly knit, their cooperative efforts in

*Janice M. Westerfield, who received her Ph.D. from
the University of Pennsylvania in 1974, writes fre
quently on international finance and trade.

BUSINESS REVIEW

JANUARY/FEBRUARY 1 9 7 9

this area will help to shape the course of
international banking in Philadelphia.

FIGURE 1
PHILADELPHIA BANKS
SEE THEIR FOREIGN ASSETS RISE

PHILADELPHIA BANKS ON THE MOVE
New opportunities for international fi
nance during the 1960s spurred many Phila
delphia bankers to initiate foreign operations.
Once the benefits from exploring new mar
kets became apparent, they moved rapidly to
expand.1

Millions of Dollars

Expansion . . . At first it seemed that
foreign operations could be handled ade
quately by setting up correspondent banking
relationships—arrangements to provide ser
vices through banks in other localities. But
by 1972, Philadelphia banks had decided to
establish their own branches in London, the
Virgin Islands, and the Bahamas, and foreign
assets had reached $2.2 billion.2
During the following five years, Philadel
phia banks broadened and deepened their
commitment to international banking. Foreign
assets increased substantially, to $4.2 billion,
and the banks cultivated customers in a
variety of markets (Figure 1). Loans were up
from slightly less than $1 billion in 1972 to
$2.7 billion in 1977—a compound growth
rate of 22.8 percent per year. And even
though bankers have proceeded more cautious
ly since 1975, growth rates have held up at
just under 20 percent annually. Further, the
ratio of average foreign loans to average total
loans increased steadily from 14 percent in
1972 to 24 percent in 1977 for Philadelphia
banks as a group.

SOURCE: Delaware River Port Authority.

Also, Philadelphia banks have set up cor
porations, expressly for conducting interna
tional banking operations, under the Edge
A ct.3 Some of these corporations have re
mained in the Third District, while others
have opened offices in New York—the tradi
tional home of international finance in the
United States.
Thus additional foreign branches and sub
sidiaries, as well as representative offices,
have expanded the network of Philadelphia
banks. And foreign earnings, which now
account for over 40 percent of total earnings
at the banks most heavily involved, have
kept pace with this expansion.

^Fidelity, First Pennsylvania, Girard, Philadelphia
National, and, to a lesser extent, Provident National are
the Third District banks that have substantial foreign
operations. Several other area banks have branches in
the Cayman Islands.

. . . With a Pattern. Philadelphia bankers
as a group prefer relatively short maturities
for their foreign loans, placements with banks,
and other claims. Nearly 70 percent of these

2 A correspondent banking relationship with a foreign
bank provides a U .S. bank with services in return for
fees and compensating balances. These services enable
banks that don’t have their own international depart
ments to transact foreign business for their customers.
Where foreign volume is low, using a correspondent
bank may be less costly than establishing a foreign
branch or an international department in house.

2Edge Act Corporations are U .S. corporations that
banks may establish, under Section 25(A) of the Federal
Reserve Act, to engage in foreign banking and finance.
They accept deposits, make loans and investments, and
offer other services, but only in international trans
actions.

FEDERAL RESERVE BANK OF PHILADELPHIA

movement in the volume of trade. Exports
and imports of goods both have risen, and so
has the volume of financial transactions
such as movements of bonds and currencies.
Domestic banks finance the foreign opera
tions of many U .S. corporations. In the
course of providing financial services to these
multinational clients, U .S. bankers have
learned that they can make profits in foreign
countries and that sometimes they can acquire
funds there at a lower cost than at home.
Philadelphia banks, because of their nearness
to a riverfront port, have been especially
well situated to benefit from trade growth.

claims have a year or less remaining to
maturity. But the distribution among indi
vidual banks is uneven, with some banks
having as much as 85 percent in short-term
claims while others have as little as 50
percent.
Different kinds of borrowers tend to be
associated with claims of different maturities.
U.S. bank claims on foreign banks typically
are short-term placements or loans; and these
account for over 60 percent of total foreign
claims. Claims on nonbank public borrowers—
foreign governments and their agencies—are
mostly medium to long term and make up
about 20 percent of the total. The final 20
percent have various maturities and are dis
tributed mainly among private, nonbank
borrowers.
Philadelphia bankers are active in devel
oped and developing countries in many parts
of the world. In the late 1960s, the largest
portion of credits went to Latin America, and
that area still accounts for nearly one-third of
total claims. Growth in claims over the last
ten years has been strongest in Europe,
which now accounts for 42 percent. Asian
claims, once strong, have been reduced from
over a third to about 18 percent. And Africa
accounts for about 4 percent.4
In short, foreign banking is big business in
Philadelphia. Recent years have seen dollar
involvement rise dramatically, with area
bankers seeking out profit opportunities
around the world.

Financing Trade and Capital Flows. There
are obvious opportunities for bankers to ser
vice merchandise flows through nearby U.S.
ports of entry. But besides financing stateside
trade, U.S. banks service financial and com
mercial activity in many distant markets (see
M EASURES OF RISK AND RETURN over
leaf]. U .S. private investment abroad, for
example, grew at a compound annual rate of
34.2 percent from 1972 to 1977. And it’s no
longer just the big corporations that invest
abroad. Smaller businesses also are finding
attractive investment opportunities on
foreign shores.
Many American businesses have established
close client relationships with U.S. banks on
domestic matters. These firms often find it
convenient to continue this relationship when
expanding abroad. Foreign operations may
involve less familiar currencies, with differ
ent economic and political institutions and
modes of conduct. Further, tax laws or
currency controls multiply the complexity of
financial decisions in foreign countries.
Familiar banking contacts may be helpful in
providing information or overcoming obsta
cles in foreign markets. So American busi
ness in foreign countries continues to depend
on American banks, boosting the volume of
their international transactions.

SOURCE OF GROWTH: WORLD TRADE
The main contributor to the growth of
international banking has been the upward
^This geographical distribution is changed only slightly
when external guarantees are taken into account. An
external guarantee is a commitment by an entity located
in a third country, such as a government or international
institution, to protect the lender against default; although
the borrower may be physically located in Country A,
someone in Country B has agreed to repay should the
borrower default. So it can be argued that the risk of a
loan should be treated as if the characteristics of
Country B are important to assess also.

Finding Funds. U.S. bank foreign involve
ment has been encouraged also by require7

BUSINESS REVIEW

JANUARY/FEBRUARY 1 9 7 9

ments for new sources of funds. These re
quirements are influenced not only by the
volume of trade but also by changes in the
regulatory environment.
In the mid-1960s, the Federal government
introduced policies designed to curtail out
flows of U.S. capital and reduce the balance
of payments deficit. The capital controls
established at that time included guidelines
for bank lending to foreigners, ceilings on
foreign direct investment, and taxes on foreign
securities. In response to those restrictions
on capital flows, U.S. multinational corpora
tions began to seek external sources of funds
to finance their foreign operations. And U.S.
banks set up networks to tap foreign sources
of funds and to place loans.

Later, during the 1969-70 credit crunch,
banks were unable to compete effectively for
domestic funds because of interest-rate ceil
ings, and so many turned to their foreign
branches to supplement their traditional
sources of funds. Although later regulatory
changes diminished the incentives for mem
ber banks to borrow from their overseas
branches, their initial move abroad opened
up new horizons.
Activity at the Port. While the growth of
trade financing has affected most U.S. inter
national banking centers in roughly similar
ways, Philadelphia has felt the impact more
strongly than others because its customs
region accounts for an increasing share of U.S.

MEASURES OF RISK AND RETURN
One useful way to try to get a grip on the foreign operations of Philadelphia banks is to focus on
foreign exposure and financial return. Foreign exposure usually is viewed as the volume of claims
subject to a foreign risk, and it can be measured by calculating these claims or assets as a percent of
consolidated capital. This measure may indicate potential trouble if the ratio is so high as to suggest
that capital would be endangered if defaults were to rise significantly. But it is difficult to establish a
critical level that says “any ratio above this percentage is too high.”
Another approach along this line is for the bank to measure a group of its most risky claims against
total capital. The assumption underlying the use of a subset of claims is that some borrowers are more
likely to default than others and the bank certainly does not expect to cover more than a negligible
portion of defaults with its capital.
A more direct way of assessing the performance of foreign lending operations is to look at net
chargeoffs—loan losses minus recoveries. Whereas exposure ratios attempt to measure the
likelihood of default, chargeoffs record loan losses that already have occurred. Foreign net
chargeoffs for the representative Philadelphia bank are slightly below the national average of 0.176
percent and compare favorably to their domestic net chargeoffs.*
Foreign-income-to-asset ratios provide another view of the financial side of foreign operations.
Essentially, these ratios give a picture of the rate of return on foreign assets—a return which surpasses
that on total assets for Philadelphia banks. This result may be caused partly by sluggish domestic
loans and unusual domestic loan losses. But the foreign asset picture generally is a bright one.
Although foreign income and revenue figures for Philadelphia banks actually peaked around 1974,
yearly income figures are on the rise again and soon will reach their former high level.
The importance of foreign earnings to Philadelphia banks probably is captured most accurately by
the ratio of foreign income to total income—currently 40 percent. Judged by this or the other ratios,
international financial services clearly provide substantial returns to Philadelphia bankers.
’ The 0.176 percent comes from a survey of 127 banks by Robert Morris Associates, a Philadelphia-based
organization. Their domestic loan loss figure of 0.51 percent measures chargeoffs as a percentage of the average
loan portfolio for 751 banks surveyed.

LIBRARY

FEDERAL RESERVE BANK OF PHILADELPHIA

merchandise trade.5 The nine ports of the
Philadelphia area—ranging from Trenton to
Wilmington—more than tripled the dollar
value of their exports and imports from the
1972 figure of $2.9 billion to over $10
billion in 1977. And they moved into first
place nationally in terms of dollar value of
general cargo and bulk (Figure 2).
Exports from the area in dollar terms are
dominated by machinery, especially trans
portation equipment. But when both exports
and imports are counted, petroleum clearly
is the big ticket commodity. In 1977, petroleum
products, at $5.2 billion, accounted for twothirds of the value of imports and were
greater in value than all exported cargo.
Since the Philadelphia-Delaware River area
is known as a major refinery and petro
chemical center, this figure is not surprising.
And as might be expected from the strength
of oil products, several oil exporting nations—
Saudi Arabia, Nigeria, and Venezuela—are
among the major exporters to this area. But
millions of dollars of cargo also go to and
from many other countries in the world,
especially Japan. As international business
of area companies has expanded, it has
produced a new wave of demand for financial
services.
Thus it appears that the demand for inter
national financial services has come from a
broad spectrum of both commercial and non
commercial activity in the region. And new
initiatives on both fronts can be expected to
expand the role of international banking in
Philadelphia. But it has become clear in the

FIGURE 2
WATERBORNE TRADE
R ISES STEEPLY
IN THE EARLY 1970s
Imports and Exports
for Philadelphia Area Ports*
Millions of Dollars

SOURCE: Delaware River Port Authority.
‘ The excess of the dollar value of imports over
that of exports in the mid-1970s can be accounted
for largely by the quadrupling of oil prices in
October 1973. Petroleum products currently make
up two-thirds of the total value of imports.

course of this present growth phase that
certain adjustments of a legislative and regu
latory kind may be required to preserve the
efficiency and competitiveness of the inter
national banking environment.
receives payment. The U .S. bank forwards the draft to
the German bank which accepts the obligation to pay
the draft, hence the name ‘banker’s acceptance.’
Thus the accepting bank transfers funds to the ex
porter and is reimbursed subsequently by the importer.
The exporter shifts the burden of assessing the creditworthiness of the importer, and thus the default risk, to
the bank that accepts the draft; and the exporter can get
his money at a discount without waiting for the importer
to pay for the goods. The importer is enabled to defer
payment; in effect, he gets a loan, for which he pays a
fee. And the U .S. bank gets possession of a marketable,
interest-earning asset which provides liquidity, and also
receives a fee for guaranteeing the transaction.

Philadelphia banks finance a substantial portion of
trade through the Delaware River ports. Much of the
financing is handled by banker’s acceptances and letters
of credit, both short-term claims. For example, take the
case of a local exporter who is selling some machinery
to a company located in Germany. The German importer
arranges for his banker in Germany to issue a letter of
credit in favor of the exporter. This letter gives the terms
of the merchandise transaction and states that the U .S.
exporter may draw a time draft on the German bank.
The exporter then draws the draft on the German bank,
negotiates it at his U .S. bank (at a discount], and

JANUARY/FEBRUARY 1 9 7 9

BUSINESS REVIEW

vices might include loans to foreign compa
nies or precommitments for financing that
recognize the special borrowing requirements
of firms that are unfamiliar to lenders in this
area. Or they might include the development
of innovative banking services to identify
leads and attract foreign investment, provid
ing information to reduce the uncertainties
of locating in Philadelphia or the nearby
area.
Other major elements in the project are
geared to demonstrate that Philadelphia is
equipped to service foreign firms as well as a
thriving international business community.
One proposal is to centralize business and
communications for many international firms
in a world trade center at the port. Another
proposal that’s actually made it off the draw
ing board is the establishment of a free trade
zone for goods on the waterfront. Approved
by the Department of Commerce in March
1978, the new zone permits firms to avoid
duties on their products until processing or
manufacturing is completed. The reduction
of tariffs and customs regulations in this
zone is expected to create incentives for new
firms to locate here, creating jobs and increas
ing cargo flows. 7

AN INTERNATIONAL FUTURE
FOR PHILADELPHIA BANKS
Just as the growth of commerce in Phila
delphia has spurred the demand for bank
services, the banks themselves now are active
ly involved in attempts to develop induce
ments for trade, including a major new trade
effort—the International City project. Bank
ers, civic leaders, private organizations, and
others are working on a design to make
Philadelphia a recognized international city
by 1982—the city’s Tricentennial year.
International City. Philadelphia needs a
strong investment plan and an overall eco
nomic strategy to revitalize the city’s economy
and especially to create jobs. And any city
that wants to remain economically viable
will find that it must develop sound inter
national business institutions. It’s not that
Philadelphia is isolated now; this city is far
more cosmopolitan than many people realize.
The port and its shipping lines, the large
pharmaceutical companies, banks, insurance
companies, and others all have offices or
other connections in other countries. More
over, the population of the city and sur
rounding suburbs is highly diverse in ethnic
and racial background. These things are a
good start, and the International City project
emphasizes building upon them to develop
the two-way nature of international trade.
The game-plan is to seek foreign investment
while at the same time strengthening the
capability of Philadelphia-based business to
compete in foreign markets.6
There are several segments to the program,
most of which still are in the planning stage.
One of these is the Philadelphia Financial
Network—a commitment to make Philadel
phia a leading regional financial center by
offering financial services that might induce
foreign companies to locate here. Such ser

7S.I. Le Saffre, a French yeast firm which plans to
occupy a large portion of the free trade zone on the
Philadelphia waterfront, provides an example. The firm
benefits because the materials it imports won’t be taxed
in the zone. Nor will the yeast that it exports to other
countries. Only yeast that enters the U .S. will be taxed.
The local area benefits from the employment and
income that the firm generates as it builds its plant and
produces its product.
Bankers in Pennsylvania and other states also are
watching to see what happens in New York, where a
state law allowing a free trade zone for banking was
signed in June 1978. This law permits banks to establish
international banking facilities to transact foreign busi
ness free of state and New York City taxes. Currently,
these taxes on loan activities add an appreciable burden
over and above the Federal tax of 48 percent. The new
facilities are intended to attract loans which now are
booked in the Caribbean and elsewhere. Supporters of
the free banking zone are hoping to persuade the Federal
Reserve to exempt such facilities from Regulation Q
ceilings on interest rates and Regulation D reserve
requirements.

6For further information on the International City
project see News You Should Use, a newsletter issued
periodically by the Greater Philadelphia Partnership.

FEDERAL RESERVE BANK OF PHILADELPHIA

country are complex issues. Two basic prin
ciples—reciprocity and nondiscrim inationcome into play. Reciprocity requires that
U.S. banks in foreign countries be afforded
regulatory treatment similar to that given
foreign banks operating in the U.S. Non
discrimination ensures that foreign banks
are treated like U .S. domestic banks, regard
less of how the foreign country treats U.S.
banking operations. These principles aren’t
easy to accommodate, since each country
accepts responsibility for home office banks
and subsidiaries worldwide and therefore
expects some degree of control via adherence
to its own laws and regulations. 9 Thus super
vision of subsidiaries in foreign countries
must be shared with the country in which the
subsidiary is located.
Cooperation among central bankers is criti
cal to the resolution of supervisory issues as
well as to the overall safety and soundness of
the banking institutions. This cooperation
can take the form of informational exchange
on supervisory responsibilities and analyses
of the commercial banks that operate in more
than one country. Banking regulations in
each country can be reviewed and dissemi
nated, and standards of conduct for foreign
banking units can be coordinated. Much of
this can be accomplished via informal consul
tation. 10
At the state level, banking legislation (Act
No. 1977-37) which permits foreign banks to

Thus the international banking community
in Philadelphia could have a central role in
the movement to make Philadelphia more of
an international city. But the future role of
Philadelphia’s banks in this and other inter
national trade efforts will depend in part
upon banking legislation and regulation that
even now is under study.
The Banking Outlook. Area banks have a
solid foothold in international operations
upon which to develop their expertise. But
international banking is growing and inno
vating rapidly, and many changes lie ahead.
At the Federal level, changes are occurring
both formally, on the legislative front, and
informally, through increased cooperation
among the central banks. In September 1978,
Congress passed the International Banking
Act regulating the activities of foreign banks
in the U .S. This act is based on the principle
of national treatment. In the past, foreign
banks operated under the regulations of the
home office, giving them what many con
sidered an unfair competitive advantage over
U.S. domestic banking institutions in being
able to cross state lines. But under the new
law, U .S. regulatory controls are broadened
to treat foreign banks more like their domestic
counterparts. Foreign banks now, for ex
ample, must designate a home state and limit
deposits at branches outside the home state
to those permissible for an Edge Act Cor
poration. 8 Thus outside branches are limited
to less than full-service banking. Further, the
law authorizes the Federal Reserve Board to
impose mandatory reserve requirements on
foreign banks in consultation with state bank
ing authorities.
As the International Banking Act demon
strates, the extent and means of supervision
of bank subsidiaries located outside the home

^See Philip E. Coldwell, Member, Board of Governors
of the Federal Reserve System, “International Coopera
tion for Improved Banking,” an address delivered before
the Caribbean Basin Conference, Atlanta, August 3,
1978.
!9Already, new and more comprehensive methods of
data collection are being developed to provide regulatory
authorities with more information. These authorities—
the Federal Reserve, the Comptroller of the Currency,
and the Federal Deposit Insurance Corporation—are
coordinating a joint approach to the evaluation, measure
ment, and analysis of foreign operations. Part of this
approach is to evaluate the internal procedures or
guidelines of the banks to help ensure a sound U. S.
banking system.

^Foreign banks having operations in more than one
state when the bill was passed have a grandfather clause
enabling them to continue those branch operations.

JANUARY/FEBRUARY 19 7 9

BUSINESS REVIEW

establish offices in Pennsylvania was signed
in July 1977. Since then, several foreign
banks have applied to open offices and five
applications have been approved by the state
banking authority. These banks plan to locate
offices in Pittsburgh and Philadelphia. The
Pittsburgh offices will offer wholesale bank
ing services to corporate customers; those in
Philadelphia plan to offer retail services.
Thus U.S. bankers face growing competition
from foreign bankers right here on U .S. turf.
The law states that treatment of U.S.
banks in the foreign bank’s home country
shall be considered in reviewing foreign bank
applications. Other provisions require that
foreign banks maintain large enough deposits
of assets in U .S. banks to protect customer
deposits, that they be examined by and
report to the state Department of Banking,
and that they maintain a level of approved
assets equal to 108 percent of liabilities.
Thus both Federal and state actions are sure

to affect the way Philadelphia banks and
their foreign counterparts respond to future
demand for international financial services.
IN PROSPECT
International banking can be expected to
keep pace with the development of world
trade. This outlook signals further commer
cial and financial growth for Philadelphia,
which already is on a sound footing in
foreign markets.
For more than a decade, U.S. bankers
have viewed international banking as a mat
ter of seeking profits in foreign countries.
Now it looks as if foreign banks are ready to
reciprocate, entering local markets to com
pete for the opportunity to provide financial
services. While some of the ground rules
remain to be worked out, Philadelphia bank
ers are almost sure to find that, in this new
phase, international operations will be bid
ding for even more of their attention.

FEDERAL RESERVE BANK OF PHILADELPHIA

A New Job Map

for the Philadelphia Region
By John Gruenstein*
The term ‘suburb’ used to be synonymous
with ‘bedroom community’ for many people.
Suburbanites were pictured as members of a
breed who hopped onto trains or into cars in
the morning and traveled together to the
central city where they worked, returning
home at night for board and bed.
Although this simplified picture of the
metropolis may have been fairly accurate at
one time, it has been made obsolete by the
growth of employment in the outlying com
munities that surround America’s largest
cities. And the city-suburb stereotype that
has replaced it in many people’s minds—one
of suburban employment spread through
rings of diminishing density around the highdensity city—also fails to convey a full picture

of the current employment landscape. In
stead, a job map marked by suburban clusters
of activity has emerged, shaped by the inter
action of public and private initiatives. Some
suburban residents have begun to ask what the
future may hold. Will the outward sprawl
continue? Will it level off? Or, perhaps, will
the central city begin to recover its lost busi
nesses and residents?
JOBS IN THE REGION:
DECENTRALIZED BUT CONCENTRATED
If the proverbial crow flew straight out in
almost any direction from Philadelphia’s city
hall, it initially would find heavy concentra
tions of jobs and then fewer and fewer jobs
per acre of land the further it went. As a first
approximation, our aerial observer might
think it saw concentric circles of declining
employment density. But here and there
along the route the astute bird would notice

*John Gruenstein joined the Philadelphia Fed’s Depart
ment of Research in 1977. He specializes in urban and
regional economics.

BUSINESS REVIEW

JANUARY/FEBRUARY 1 9 7 9

1970, half of all suburban jobs were found in
about 30 communities—that is, in fewer than
10 percent of all the 337 MCDs in the Phila
delphia region. And since these MCDs com
prised less than 10 percent of the suburban
land area, most places with a lot of jobs also
had a higher density of employment—more
jobs per acre—than other areas (Figure 2).
Some of these clusters are in places that
grew more or less independently of Philadel
phia at first but since have been swept up by
metropolitan expansion. Even within the
present city limits examples of this process
stand out: the once independent towns of
Manayunk, Frankford, and Germantown be
came city neighborhoods when Philadelphia
expanded to its current boundaries in 1854.
Not far across the city border, Norristown,
Chester, and Camden started off somewhat
on their own but have been drawn within the
orbit of their large neighbor. And some
newly developed centers, like King of Prussia
and Cherry Hill, have grown up in recent
years within Philadelphia’s sphere of influ
ence.
Thus jobs have spread out from the central
city to the rest of the region and have clustered
into semiurban groupings. The result has
been a relative loss of jobs and tax base in the
central city and corresponding gains in the
suburbs. These gains, however, have come
at the price of increased congestion, crime,
and demand for services in some areas that
mimic conditions in the central city itself.

some fairly sizable employment concentra
tions standing out amidst the greenery, some
of them a goodly distance from William
Penn’s hat.
The ringlike effect has resulted from a long
historical spread of jobs outward through the
region,1 and this trend toward decentrali
zation has continued over the past few de
cades. The suburban share of the region’s
jobs rose from about 30 percent in 1948 to
around 57 percent by 1975 (Figure 1).
FIGURE 1
SUBURBAN EMPLOYMENT SHARE
HAS RISEN APPRECIABLY
OVER THE PAST THREE DECADES
Share of Regional Employment
in Suburbs
(Percent)

SOURCE: U. S. Department of Commerce, Bureau
of the Census, C ounty Business Patterns, 1948,
1956, 1959, 1965, 1970, 1975.

TRANSPORTATION AND TAXES
HELP SHAPE THE MAP
Many influences contribute to shifts in
employment location. Some are basic forces
about which policymakers can do very little.
But in other areas government policies have
combined with changes in technology, taste,
and social behavior to shape the present job
map. The prime such area of public-private
interaction is transportation, which clearly
dominated the region’s early development.

Overlaid on the rings is an uneven scatter
ing of employment in suburban townships,
boroughs, and cities—Minor Civil Divisions
or MCDs, as the statisticians call them. In
•^The region is the standard metropolitan statistical
area (SMSA) comprising Philadelphia, Bucks, Chester,
Delaware, and Montgomery counties in Pennsylvania
and Burlington, Camden, and Gloucester counties in
New Jersey.

FEDERAL RESERVE BANK OF PHILADELPHIA

FIGURE 2
SUBURBAN EMPLOYMENT AROUND PHILADELPHIA IS CONCENTRATED
IN A FEW RELATIVELY LARGE, DENSE CLUSTERS

Number of
Employees

Number of
Percent of
Suburban MCDs Suburban MCDs

Percent of
Suburban Jobs

Percent of
Suburban
Land Area

Average
Employment
Density
(Employees
per Acre]

20,000 or More

2.1

21.2

2.8

4.6

10,000 - 19,999

4.7

22.9

4.8

3.3

5,000 - 9,999

7.4

17.8

6.8

2.6

2,500 - 4,999

14.8

18.2

10.2

2.5

1,000 - 2,499

24.6

13.5

24.5

1.4

500 - 999

16.6

4.2

17.0

1.1

Fewer than 500

100

29.7

2.3

34.0

0.3

All Suburbs

337

100.0

0.5

Philadelphia

—

10.9

All SM SA

—

0.9

For each employment range group, density is the average for all MCDs in that group. For All
Suburbs, Philadelphia, and All SMSA, density is the total employment divided by the total land
area.
The City of Philadelphia had a much higher density than any MCD, with just about twice as many
employees per acre as the MCDs in the group with 20,000 or more employees. But the differences
among MCDs themselves were just as great. The largest averaged close to twice the economic
density of the communities in the middle groups—2,500 to 9,999 jobs—and more than fifteen times
the density of the towns with the least employment—those with fewer than 500 jobs.
SOURCE: 1979 Employment Location File and 1970 Land Use File, Delaware Valley Regional
Planning Commission.

Employers Are Attracted by Transporta
tion. . . The convergence of rivers and rail
lines in Philadelphia strongly stimulated the
concentration of employment in the city.
Prior to the twentieth century, water routes
and railroads were the cheapest means of
moving both freight and passengers. Thus
firms which relied on deliveries of heavy
materials tended to concentrate in areas near
ports and railroad terminals like downtown
Philadelphia. Downtown was the ideal spot

for retail stores, too, because more people
could get to them there, and also for banks,
insurance companies, law firms, and other
businesses which relied heavily on face-toface contact and quick access to current
information.
When everyone wants to be in the same
place, however, competition dictates that
some will be crowded out. So outlying loca
tions along rivers and railroads also were
favored by businesses, and even current
15

JANUARY/FEBRUARY 1 9 7 9

BUSINESS REVIEW

have a direct effect on business location
decisions and the topography of the job
market.2

maps of the area show fingers of high employ
ment density reaching out along the Schuylkill
and Delaware Rivers and along railroad lines
to the North and West, reflecting the persis
tence of much older patterns (Figure 3).
Transportation to outlying areas became
cheaper and faster with the advent of electri
fied street cars in the late 1800s, trucks and
cars in the first half of the twentieth century,
and the Federally subsidized Interstate High
way Program after World War II. As a result,
areas that once were too far out to have
strong ties to the city or hadn’t the good
fortune to be located on a river became more
easily accessible. Heavy trucks rumbling
along tax-supported highways began to offer
firms the option to develop away from rail
lines and waterways. Movement to locations
where land cost less, because there was more
of it and competition for it wasn’t as heated,
now became possible. Firms were trading
cheaper land for a greater separation from
the center; transportation costs were higher,
but not so much higher as they would have
been without highway subsidies. And im
provements in communications technology
made it possible to transmit most kinds of
information without physical movement,
thereby further freeing many types of busi
nesses—nonmanufacturing as well as indus
trial—from having to remain downtown.

And So Are Employees. Many of the con
siderations that draw employers into the
suburbs bring their workforces out, too. By
the end of World War II, more and more
people already were living in the suburbs,
partly because of easier and cheaper trans
portation over subsidized roads and partly
because of rising incomes which increased
the demand for spacious yards and newer
houses. Government tax and housing poli
cies encouraged this trend. The new subur
banites represented both a market for prod
ucts and a labor force of skilled workers,
providing another reason for the decentrali
zation of firms of all sorts. 3 Thus the condi
tions that influenced residential patterns had
an indirect effect on employment location as
well.
Although the movement of population out
of the central city started earlier and pro
ceeded at a faster pace than the movement of
jobs, both trends have been operating since
2This shopping behavior probably works among in
dividual suburban communities as well as between city
and suburb. Just how large this effect is compared to
other factors is a matter of debate. Some observers view
the effect as marginal when compared to more basic
forces. Others disagree. In addition, as the suburbs
become more urbanized they need to deliver more city
like services and consequently taxes may tend to rise.
Finally, other local government policies, like zoning
and other land-use restrictions and incentives such as
tax abatements and land acquisition programs, can
affect location decisions.

. . . And Tax Advantages. In more recent
years, tax and service packages seem to have
become more important influences on indus
try location choices, as the constraints im
posed by transportation routes have weakened.
Many suburban centers offer relatively high
levels of services such as police and fire
protection at relatively low cost. And they
may spend less on such services as welfare
and health care, which probably carry little
direct benefit to business. New firms coming
into the area or old firms seeking a new
location probably shop around to some extent
for the combination of taxes and services
that will suit their requirements most closely.
So a favorable tax and service package can

^Just as the overall movement of the population to the
suburbs seems to have drawn jobs along with it, so, too,
the pattern of employment location among different
suburban towns appears to be sensitive to residential
patterns. This effect works both ways, of course; jobs
draw people as well as the other way around. For an
example of a location model which demonstrates the
simultaneous interaction of jobs and people, see Walter
D. Fisher and Marjorie C. L. Fisher, "The Spatial
Allocation of Employment and Residence within a
Metropolitan Area,” Journal of Regional Science, De
cember 1975, pp. 261-276.

FEDERAL RESERVE BANK OF PHILADELPHIA

FIGURE 3
EMPLOYMENT REACHES OUT ALONG RIVERS AND RAIL LINES
Philadelphia and Surrounding Counties
(Standard Metropolitan Statistical Area]

Quakertown

..’Doylestown
ii i l l S j Souderton

."ilUii,.•
Pottstown " !!i’

l i l l l l i i l i f f l l l i l
Royersford '!•
..1'.!:::::::::::::::::::::::::::::::::::::::::
Phoenixville ..

i
Norristown ,

::
-■ *..................... .
•

:;^
‘
Ftioll.

Coatesville

11
•

.
■ t l in i i 'i i l i h i ii i •
1 i........ •
1
. IT-.
..

Conshohocken “•
::::::::
Downingtawn

1 1 1 1 b ,.
....•II.

. ..

':|| |
|J
|
i i i

. Levittown
’* •

" IP L iL -. • i § !

mim

•]! Philadelphia
j ...Camden
iiii"
’“
Cherry Hill

West Chester

:l!!!!i

••Eddystone
.^•Chester
‘Marcus Hook

Approximate Number
of Jobs per Acre

.1. . . .
0 - 50

SOURCE:

50 - 200 200 - 800

Over 800

Data compiled and plotted by Federal Reserve Bank of Philadelphia

BUSINESS REVIEW

JANUARY/FEBRUARY 1 9 7 9

at least as far back as the middle of the nine
teenth century and probably even earlier for most
cities, including Philadelphia. The trend toward
employment decentralization has been the re
sult of a long process of change in transporta
tion and government tax policy as well as in
production technology and other areas (see
NATURE AND TECHNOLOGY . . .). The role
of transportation has been that of a constraint:
firms need to be in accessible locations. As
the accessibility of many noncentral areas
has increased, partly as a result of highway
subsidies, the grip of the central city has been
loosened and other factors have come to play
a greater role in setting employment patterns
in the region. 4 How will these factors affect
the future of employment location patterns?
And how will changes in these patterns
affect the framework for policy decisions?

growth will continue to outpace the city’s.
Still, urbanologists find plenty of room to
disagree about the shape of cities to come. At
least three scenarios seem possible—suburban
sprawl, downtown redevelopment, and the
many-centered metropolis.
Sprawl. Some observers favor the big
bang theory of urban growth, which says
that factories, offices, shops, and houses
will spread explosively over a larger and
larger area. They stress that continuing im
provements in transportation and communi
cation will reduce the importance of physi
cal proximity as a factor influencing location
decisions. Thus, they argue, further subur
ban sprawl—low-density, patchwork develop
ment—is the likeliest end result, at least in the
absence of strong government intervention
to change it. In this scenario, jobs and people
eventually wind up spread thinly and evenly
throughout a greatly expanded metropolitan
area.

THE FUTURE PATTERN
It seems most likely that suburban job4

Recentralization. Other watchers of the
urban scene sense the winds of change start
ing to blow in a different direction—inward
and back to the city. One source of this
implosive movement is the rise in the cost of
fuel, which encourages businesses and resi
dents to cut transportation costs. Another
source is changing demographics. The shift

4 An excellent discussion of the long-term nature of
the trends toward employment and population subur
banization can be found in Edwin S. Mills, Studies in the
Structure o f the Urban EconomyJBaltimore: Johns Hop
kins Press, 1972), chapters 2 and 3. For the impact of
Federal policies on the process see Roger J. Vaughan,
The Urban Impacts of F ederal P olicies: V olum e 2,
E con om ic D evelopm ent [Santa Monica: RAND Corpor
ation, 1977).

NATURE AND TECHNOLOGY AFFECT LOCATION CHOICES
There are some location factors that governments can do little to change.
Sometimes natural advantages have been the lure. The iron and steel industry was attracted to
Pottstown and Phoenixville along the Schuylkill River, for example, by deposits of iron ore located
near forests which could be used as a source of charcoal for smelting. Fast-flowing streams, even
when not navigable, once turned mill wheels to make flour, paper, gunpowder, and other products
throughout the Delaware Valley.
Changes in production technology and the consequent obsolescence of old structures and
equipment also have had an effect. The trend toward decentralization has been reinforced by the
desire to locate in single-story plants spread out over large land areas which facilitate modern
methods of materials handling and processing. Such plants are cheaper to build in outlying areas,
where large lots can be acquired at relatively low cost. Thus, with the passage of time, many
multistory buildings which were crowded together to conserve scarce downtown land have lost out
as manufacturing sites.

FEDERAL RESERVE BANK OF PHILADELPHIA

and shoppers has reinforced previous growth.
Finally, the same higher energy prices and
changes in family structure that have stimu
lated some movement back to the city may be
even more important in promoting higher
densities and increased clustering of activities
in suburban areas.5
It isn’t easy to tell whose crystal ball is the
clearest, and all three viewpoints probably
contain a grain of truth. In some ways the
multicentered scenario seems the most likely
to succeed, since clear suburban employ
ment concentrations already are in place and
have been for some time. But these have a
long way to grow to approach Philadelphia’s
order of magnitude.
Some evidence which may shed light on
future growth patterns is available in Federal
and state census tabulations. These figures
show suburban MCDs of large and medium
employment size growing faster than the city
of Philadelphia in population and retail em
ployment and losing jobs in manufacturing
at a slower rate (Figure 4 overleaf). And
although not doing as well in manufacturing
and population as smaller suburban places
on average, the medium-sized MCDs have
had the largest percentage gains in retail
employment (except for the under-500
employment group, which started from a very
small base). Furthermore, one group of
medium-sized MCDs—the one with 5,000 to
9,999 employees—has had a very high aver
age population growth rate. This evidence
suggests that even if extremely large centers
don’t emerge, concentrations should persist
in the Philadelphia region and complete
sprawl is unlikely.
Looking behind the averages, it’s clear that

toward smaller households could result in
lower demand for single-family houses on
large lots and higher demand for more com
pact living accommodations. Further, as the
two-worker family becomes more common,
husbands and wives may place a higher
value on the time they both spend traveling
to work, shops, and entertainment. And they
may be more interested in the amenities
traditionally associated with downtown liv
ing. Changes in some Federal government
policies which reduce the incentives for lowdensity suburban development also have
been cited as helping to strengthen a back-tothe-city movement.
Some indications of such a movement
already have been seen in many cities, includ
ing Philadelphia, where recent years have
brought the development of the Gallery shop
ping mall, the revitalization of downtown
neighborhoods like Society Hill, and the first
reversal of the loss of jobs in about a decade.
But although in absolute terms Philadelphia’s
employment decline may have bottomed out,
few, if any, would argue that the relative
standings of city and suburban growth pat
terns are likelv to change.
The Many-Centered Metropolis. A third
group, including such scholars as Werner
Hirsch of UCLA and Peter Muller of Temple
University, contends that the likeliest course
of events is neither total explosion nor total
implosion but the advent of another kind of
urban form—the multicentered metropolis.
Centers in outlying areas would function as
suburban downtowns and would attain a
sufficient size, density, and variety of activi
ties to rival the central city in economic and
political clout. Such relatively high density
arrangements already have begun to coalesce.
Industrial parks, regional shopping malls,
and office parks have been drawn almost
invariably to locations adjoining highway
interchanges. As time has passed, the pres
tige of such locations has grown, and the
increased availability of business services
and conveniences for workers, executives,

5The possibilities for future multicentered metro
politan development are outlined in Werner Z. Hirsch,
“Energy and America’s Changing Urban Settlement
Pattern” (Los Angeles: RAND Corporation, 1976); Peter
O. Muller, T he Outer City: G eographical Consequences
of the Urbanization of the Suburbs (Washington: Asso
ciation of American Geographers, 1976); and “The
Suburbs are Winning, Professor Claims,” Philadelphia
Inquirer, August 17, 1978.

BUSINESS REVIEW

JANUARY/FEBRUARY 1 9 7 9

suburban development continues to be un
even. While some centers have been growing
quickly, others have been losing employ
ment and population. In recent years, many
of the older centers like Chester, Camden,
and Norristown have suffered from the same
problems as larger central cities—loss of
manufacturing and retail jobs followed by
relatively high unemployment and a shrinking
tax base, outmigration of the relatively af
fluent while the poor stayed behind, and
decay of residential, commercial, and indus
trial structures.
Thus the same social, economic, and tech
nological shifts that have led to decentraliza

tion have produced mixed results in the
suburbs. Some MCDs have prospered because
of these shifts and with the aid of governmentsponsored initiatives in transportation and
other areas. But others, especially those with
older or decaying infrastructures, have failed
to keep up. Recognizing this unevenness is a
prerequisite for promoting efficient and equi
table development in the future.6
6Four different patterns ranging from sprawl to re
centralization are discussed in A lternative Futures for
the D elaw are Valley, Year 2000 report no. 4 (Phila
delphia: Delaware Valley Regional Planning Commis
sion, September 1976).

FIGURE 4
PHILADELPHIA SUBURBAN EMPLOYMENT AND POPULATION
SHOW UNEVEN GROWTH PATTERNS
Average Annual Percent Change
Clusters by
Number of Employees
1970

Manufacturing
Employment
1970-1975*

Retail
Employment
1967-1972f

Population
1970-1975$

20,000 or More

-1.1

3.0

-0.7

10,000 - 19,999

-2.5

9.1

0.7

5,000 - 9,999

-2.9

9.5

12.4

2,500 - 4,999

-1.7

6.6

1.3

1,000 - 2,499

-0.4

6.8

1.7

500 - 999

-0.4

7.2

1.9

Fewer than 500

-0.6

2.4

2.7

All Suburbs

-2.3

2.1

0.6

Philadelphia

-6.7

-1.3

All SM SA

-4.1

4.6

0.1

‘ Includes all MCDs in the Pennsylvania portion of the SM SA as listed in Pennsylvania Department of
Commerce, C ounty Industry Reports, 1970 and 1975.
t Includes all MCDs with more than 2,500 inhabitants as listed in U .S. Census of Business, Retail Trade, 1972.
t Includes all MCDs in the SM SA , except Philadelphia, as listed in U .S. Census Bureau, Current P opulation
Reports, 1977.

FEDERAL RESERVE BANK OF PHILADELPHIA

more of the tax burden to commuters and
other travelers between suburbs by means of
a variety of taxes. In the past, the tax issue
has been looked at mainly from the city-vs.suburb point of view. It has been asked, for
example, whether the Philadelphia wage tax
should be lower for commuters than for
people who both work and live in the city.
But the growth of suburban employment
centers now poses a similar question for
groups of outlying sites.7
The question is a complicated one. Benefits
and taxes can flow back and forth among a
large number of suburban communities, as
well as between the central city and the
suburbs, and to and from places outside the
region. With more and more people living in
one suburban municipality, working in an
other, and shopping and seeking recreation
in yet others, the quantity of public services
provided to nonresidents—services such as
street maintenance and police p ro tection will increase. But although benefits spill
over to outsiders, taxes do, too. Direct taxes,
like a wage tax, are the most straightforward
examples, but taxes can be exported indi
rectly as well. Business property taxes, for
example, ultimately must be paid by con
sumers, employees, stockholders, and land
lords in the form of higher product prices and
lower wages, profits, and rents.

POLICY SHIFTS IN THE OFFING?
Whether suburban employment clusters
end up as large cities or as something more
modest, the new job map will affect the way
local suburban governments provide services,
raise revenues, and interact with higher levels
of government. As the suburbs become more
like the cities they surround, suburban offi
cials increasingly will find themselves deal
ing with questions of transportation policy,
tax policy, and Federal assistance that once
were faced mainly by their big-city counter
parts.
Mass Transit. As they become more dense,
suburban employment centers could increase
traffic congestion on some roads and high
ways. One possible policy response is to
build more highways. Another is to try to
disperse employment. But a better approach
may be to upgrade mass transit—an option
often favored by large cities. For suburban
areas, upgrading probably would mean im
proving bus service, perhaps through more
express bus lanes, and developing other
forms of highway-oriented mass transit, like
jitneys. For while the clustering of suburban
employment by itself would make the devel
opment of mass transportation more effi
cient, so too the emergence of transit systems
to link suburban employment centers would
encourage an efficient pattern of growth.
Further, such systems could produce signi
ficant social benefits such as reduced con
gestion on highways, less pollution from
automobiles, and better transportation for
those who have no access to cars—the elderly,
children, and the poor. Also, greater use of
mass transportation and shorter automobile
trips because of higher densities could pro
mote the achievement of national energy
conservation goals. Thus a policy decision to
improve suburban mass transit could enhance
the attractiveness of the multicentered metrop
olis as a format for regional growth.

n
'N ew or increased taxes which are intended to shift
resources from one municipality to another could be
justified on the basis of economic efficiency to the
extent that they would allocate costs of services to the
users of those services. Some proposals have been made
with this aim for Pennsylvania, where currently, for all
communities outside Philadelphia, an earned income tax
paid to one’s place of residence is credited against a tax
of the same kind levied by one’s place of employment.
Senate Bill 943, for exam ple, which was introduced into
the Pennsylvania Senate in 1977 and still is pending,
would allow municipalities to levy a maximum $25
municipal services tax on all employed persons. Another
proposal, advocated in 1969 by the Pennsylvania Econ
omy League, would allow a 50-50 split between place of
employment and place of residence in the earned income
tax. Both Senate Bill 943 and the Pennsylvania Economy
League envisage property tax relief as one of the goals of
the proposed changes.

Local Taxes. As suburban employment
centers grow, legislators who represent them
may come under heavier pressure to shift

BUSINESS REVIEW

JANUARY/FEBRUARY 19 7 9

possible. Action along these lines could res
cue public capital, like sewer and water
lines, and private capital, such as abandoned
factories and houses, which may have been
undervalued by the market or slighted by
past tax policies. This proposal has been
interpreted by some observers as a program
for large cities only, but it is likely to benefit
some older high-density areas outside the
central city as well.
So Federal, state, and local policy can
interact in complex ways to affect patterns
of employment growth. In turn, coordination
of these policies can best be done with a clear
understanding of how all forces acting to
gether have created the present pattern and
have set the stage for a new one.

So in response to the changing job map,
suburban policymakers may well try to charge
isers, through taxes, for the local public
services they use, regardless of where they
reside. But such a program must be carried
3ut carefully, with full regard to the way in
which costs already are being shared through
3oth direct and indirect taxes.
Federal Aid. Just as changes in local tax
policy need to be made with a clear view of
3merging employment patterns, Federal
policies also should attempt to accommodate
:hemselves to uneven suburban develop
ment. In the past, medium-sized cities in
decline have suffered from relative neglect by
:he Federal government, which has focused
mainly on the difficulties of the big cities.
But recently enacted and proposed programs
For urban areas, such as the Urban Develop
ment Action Grants program, passed in 1977,
and a number of other urban policy initiatives
currently under consideration, use guidelines
For allocating funds which are intended to
include medium-sized cities as well as large
anes, in order to assist disadvantaged people
wherever they reside. Political pressure from
increasingly powerful suburban legislators
tias helped to bring about this shift. But so
das the more widespread realization that
people, not places or jurisdictions, should be
:he beneficiaries of Federal aid.
Furthermore, the Federal government has
proposed to reevaluate programs which have
worked against older cities, such as subsi
dies for water and sewer systems in newly
developing areas. The rationale is to take
advantage of in-place facilities as much as

LOOKING FORWARD
Thus the job map isn’t what it used to be.
The sharp urban-suburban split of employ
ment from residential location is a thing of
the past, replaced by a patchwork of job
concentrations scattered unevenly across the
region. Transportation and tax policy, along
with natural conditions and technological
developments, helped shape this realign
ment, and policymakers, along with other
interested parties, will continue to watch for
their influence. For it’s fairly clear that
continued suburban employment gains are
more likely than a full-scale revitalization of
the old downtown districts. And a reinforce
ment of suburban clustering is a surer bet
than overall job sprawl. But whether subur
ban employment clusters end up as cities in
the country or as something smaller—that
remains to be seen.

FEDERAL RESERVE BANK OF PHILADELPHIA

The Fed in Print

Recent developments in U. S. international
transactions—
FR Bull April 78 p 255
The recent U. S. trade deficit—no cause
for panic—
St Louis April 78 p 2
United States international service trans
actions: their structure and growth—
NY Spr 78 p 34

Business Review Topics,
First Half 1978
Selected by Barbara Turnbull

BANK CAPITAL
External capital financing requirements
of commercial banks: 1977-81—
FR Bull Feb 78 p 82
Trends in capital at district banks: 196576—
Chic March 78 p 7

Articles appearing in the Federal Reserve
Bulletin and in the periodic reviews of the
Federal Reserve banks during the first half of
1978 are referenced in this compilation. A
cumulation of references for the period 1974
to date is available upon request from the De
partment of Public Services, Federal Reserve
Bank of Philadelphia, 100 North Sixth Street,
Philadelphia, Pennsylvania 19106.
To obtain a copy of the Federal Reserve
Bulletin, send two dollars to the Board of
Governors of the Federal Reserve System at
the Washington address on page 34. The
periodic reviews of the Federal Reserve banks
are available without charge directly from
the issuing banks, whose addresses also
appear on page 34.

BANK COMPETITION
Potential competition and the banks—
Phila Jan 78 p 7
BANK COSTS
A bank management tool: income, expen
ses, and profits analyzed—
Dallas Jan 78 p 16
Estimating the cost of your bank’s funds—
Phila May 78 p 3
BANK CRIMES
Improper payments by banks and bank
holding companies—
FR Bull Feb 78 p 146

AGRICULTURE
Agriculture: issues of the past resurface—
Chic Jan 78 p 10

BANK EARNINGS
Insured commercial bank income in 1977—
FR Bull June 78 p 441

AUTOMATED CLEARING HOUSES
Automated clearinghouses—current status
and prospects—
Kansas City May 78 p 3

BANK EXAMINATION
Uniform interagency rating system for
banks—
FR Bull May 78 p 426
Uniform rating system adopted by Federal
regulators—
Dallas June 78 p 20

BALANCE OF PAYMENTS
The challenges of international economic
policy (Volcker)—
NY Wint 77-78 p 1
What is happening to the U. S. dollar?
(Mayo)—
Chic March 78 p 10

BANK FAILURES
Bank failures—
Chic March 78 p 22
23

BUSINESS REVIEW

JANUARY/FEBRUARY 1979

BANK HOLDING COMPANIES
Have multibank holding companies affect
ed commercial bank performance?—
St Louis April 78 p 8
Convenience and needs: a post-audit
survey—
Chic May 78 p 20

Data from reports of condition and income—
FR Bull March 78 p 251
BANK SUPERVISION
Statement on improper activities—
FR Bull Jan 78 p 61
BANKING
A BANKER’S DAY av ailable—
Phila May 78 p 12
Statement to Congress, May 25, 1978
(Miller)—
FR Bull June 78 p 458

BANK LOANS
Southeastern loan demand revives—at
last! —
Atlanta March 78 p 35
Statement to Congress, March 16, 1978
(Partee)—
FR Bull April 78 p 285
Reduction of statistical reporting—
FR Bull June 78 p 518
Commercial bank loans and investments:
revisions in series—
FR Bull June 78 p 518

BANKING—FOREIGN BRANCHES
Overseas branches of member banks: as
sets and liabilities—
FR Bull June 78 p 516
BANKING—INTERNATIONAL
KEY ISSU ES IN INTERNATIONAL
BANKING available—
Bost May 78 p 62

BANK LOANS—BUSINESS
Loan commitments and facility fees—
Chic March 78 p 14
Business loan demand running at record
rate at district banks—
Dallas April 78 p 14
Business loans and banks: is this cycle
unusual?—
Dallas June 78 p 1

BANKING STRUCTURE
CHANGING COMMERCIAL BANK
STRUCTURE IN NEW ENGLAND 197576 av ailable—
Bost March 78 p 50
Statement to Congress, March 7, 1978
(Coldwell)—
FR Bull March 78 p 179
Perspectives on Fifth District banking:
1960-1976—
Rich March 78 p 2

BANK LOANS—CONSUMER
Consumer borrowing up at district banks—
Dallas March 78 p 13
BANK SALARIES
Member bank salary surveys available—
Dallas Feb 78 p 9

BONDS—MUNICIPAL
COMMERCIAL BANK DEMAND AND
MUNICIPAL BOND YIELDS a v a il a b le Bost May 78 p 61

BANK SERVICE CHARGES
The surprising variety of checking account
prices—
Dallas May 78 p 8

BUDGET
Government: a new administration takes
command—
Chic Jan 78 p 21
Statement to Congress, Feb 6, 1978
(Gardner)—
FR Bull Feb 78 p 84

BANK STATEMENTS
Revised reports of condition and income—
FR Bull Feb 78 p 147

FEDERAL RESERVE BANK OF PHILADELPHIA

CAPITAL EXPENDITURES
How accurate are capital spending sur
veys?—
NY Wint 77-78 p 10
Tax incentives: their impact on investment
decisions and their cost to the Treasury—
Bost Jan 78 p 19
Inflation and taxes: disincentives for capi
tal formation—
St Louis Jan 78 p 2

Statement to Congress, March 15, 1978
(Miller)—
FR Bull March 78 p 190
BURNS, ARTHUR F.
Resignation as a member of the Board of
Governors—
FR Bull Jan 78 p 59
Designation as acting chairman of the
Board of Governors—
FR Bull March 78 p 249

CERTIFICATES OF DEPOSIT
The market for large negotiable CDs—
NY Wint 77-78 p 22
New types of time certificates—
FR Bull May 78 p 423
Large time deposits up sharply at district
banks—
Dallas May 78 p 18

BUSINESS CYCLES
The current business cycle in historical
perspective—
Bost Jan 78 p 44
A perspective on the economy: three years
of expansion—
St Louis May 78 p 2

CHECK COLLECTIONS
Changing patterns in check collection—
Dallas April 78 p 1
Exception items processing to be
improved—
Dallas June 78 p 19

BUSINESS FORECASTS AND REVIEWS
The U. S. economy in 1977 and 1978—
Minn Wint 78 p 1
The southeastern economy moves ahead
in 1977—
Atlanta Jan 78 p 3
The economic expansion in 1977—
FR Bull Jan 78 p 1
Review and outlook: 1977-1978—
Chic Jan 78 p 3
Business forecasts 1 9 7 8 Rich Jan 78 p 2
Review of 1977—
Dallas Feb 78 p 10
Statement to Congress, April 25, 1978
(Miller)—
FR Bull May 78 p 373

COINAGE
Statement to Congress, May 17, 1978
(Coldwell)—
FR Bull June 78 p 453
COLDWELL, PHILIP E.
Statement to Congress, Feb 8, 1978 (Fed
eral Reserve Bank’s financial statements)—
FR Bull Feb 78 p 90
Statement to Congress, March 7, 1978
(banking structure)—
FR Bull March 78 p 179
Statement to Congress, May 17, 1978
(coinage)—
FR Bull June 78 p 453

BUSINESS INDICATORS
Lagging indicators: guide to the future?—
Atlanta May 78 p 55
CAPACITY
FEDERAL RESERVE M EASURES OF
CAPACITY AND CAPACITY UTILIZA
TION av ailable—
FR Bull Feb 78 p 148

COMMODITES
Public and private sector information in
agricultural commodity markets—
San Fran Spr 78 p 30
25

BUSINESS REVIEW

JANUARY/FEBRUARY 1979

COMMUNITY REINVESTMENT ACT 1977
Hearings scheduled—
FR Bull Feb 78 p 145
Community Reinvestment Act of 1977 to
be implemented—
Dallas March 78 p 12
Community Reinvestment Act hearing held
at the Fed—
Dallas May 78 p 22

FR Bull April 78 p 341
Exercise of consumer rights under the
Equal Credit Opportunity and Fair Credit
Billing Acts—
FR Bull May 78 p 363
TRUTH IN LEASING av ailable—
FR Bull May 78 p 426
Fed offers consumer advisory visits—
Dallas June 78 p 24

CONSTRUCTION INDUSTRY
A primer on nonresidential construction—
Atlanta March 78 p 40
Move toward full employment portends
cyclical decline for residential construction
in Texas—
Dallas April 78 p 17

CORPORATE FINANCE
Recent developments in corporate finance—
FR Bull June 78 p 431
CORPORATE PROFITS
The decline in corporate profitability—
Bost May 78 p 36
CREDIT
Finance: credit demands strong—
Chic Jan 78 p 24
Short-term business credit in the recovery—
Rich Jan 78 p 12

CONSUMER ADVISORY COUNCIL
New members—
FR Bull Feb 78 p 145
Meeting—
FR Bull March 78 p 250
Meeting May 31, and June 1, 1978—
FR Bull June 78 p 518

DEBT MANAGEMENT
Federal debt management policy: a re
examination of the issues—
Kansas City Feb 78 p 14

CONSUMER CREDIT
Household borrowing in the recovery—
FR Bull March 78 p 153
CONSUMER AFFAIRS PAMPHLETS
av ailable—
Phila March 78 p 22

DISCOUNT RATES
Change to 6 l/2%—
FR Bull Jan 78 p 59
Changes to 7%, May 11 & 12, 1978—
FR Bull May 78 p 423

CONSUMER EXPENDITURES
Household spending: how strong will it
be?—
Kansas City Jan 78 p 17

DISINTERMEDIATION
Disintermediation?—
Atlanta May 78 p 52
Disintermediation again?—
Chic May 78 p 10

CONSUMER PROTECTION
Consumer protection legislation being
studied—
Dallas Feb 78 p 18
THE EQUAL CREDIT OPPORTUNITY
ACT A N D .. . CREDIT RIGHTS IN HOUS
ING av ailable—
FR Bull March 78 p 250
Fact sheet: Fair Debt Collection Practices
Act—

ECONOMIC DEVELOPMENT
International: new strains emerge—
Chic Jan 78 p 15
ECONOMIC POLICY
Policies for better business in the U. S.
(Baughman)—
Dallas Jan 78 p 2
26

FEDERAL RESERVE BANK OF PHILADELPHIA

other borrowing by banks in immediately
available funds—
FR Bull Feb 78 p 149

EMPLOYMENT—FULL
Statement to Congress, May 9, 1978
(Partee)—
FR Bull May 78 p 377

FEDERAL RESERVE BANKS—DIRECTORS
Directors of Federal Reserve Banks and
branches—
FR Bull March 78 p 229

FARM CREDIT
Farm financial and credit conditions—
Rich March 78 p 21

FEDERAL RESERVE BANKS—EARNINGS
Reserve bank earnings, 1977—
FR Bull Jan 78 p 63
Net earnings of Reserve Banks reach $6.04
billion—
Dallas March 78 p 15

FARM EXPORTS
Farm exports conditioned by world sup
plies and U. S. government policy—
Dallas Jan 78 p 7
FARM INCOME
The farm income and debt situation in
perspective—
Rich May 78 p 9

FEDERAL RESERVE BANKS—FINANCIAL
STATEMENTS
Approval of Reserve bank budgets, 1978—
FR Bull Jan 78 p 63
Statement to Congress, Feb 8, 1978
(Coldwell)—
FR Bull Feb 78 p 90

FARM OUTLOOK
The outlook for agriculture in ’7 8 Rich Jan 78 p 7
Outlook for food and agriculture—
St Louis Jan 78 p 15
Implications of farmers’ planting intentions
in 1978—
Atlanta May 78 p 57

FEDERAL RESERVE BANKS—
OPERATIONS
Operations of the Federal Reserve Bank of
St. Louis—1977—
St Louis April 78 p 16

FARM PRICES
Parity—is it the answer?—
Kansas City June 78 p 3

FEDERAL RESERVE BOARD
Membership of the Board of Governors of
of the Federal Reserve System, 1913-78—
FR Bull March 78 p 246
Membership of the Board of Governors of
the Federal Reserve System, 1913-78—
FR Bull April 78 p 335
ANNUAL REPORT available—
FR Bull June 78 p 519

FARM PRODUCTION
Energy and American agriculture—
Kansas City April 78 p 3
FARM REAL ESTATE
Farmland price movements—
Atlanta March 78 p 44
Inflation stimulates demand for farmland—
Dallas April 78 p 11
Rising farmland prices and falling farm
earnings: is agriculture in trouble?—
St Louis May 78 p 16

FEDERAL RESERVE—MONETARY
POLICY
Weighting multiple monetary aggregate
targets—
Kansas City Feb 78 p 3
Statement to Congress, March 9, 1978
(Miller)—
FR Bull March 78 p 185

FEDERAL FUNDS MARKET
Special survey: repurchase agreements and

BUSINESS REVIEW

JANUARY/FEBRUARY 1979

The mechanics of intervention in exchange
markets—
St Louis Feb 78 p 2
The cause of the dollar depreciation—
Rich May 78 p 15

The choice of a monetary policy instru
ment—
Kansas City May 78 p 17
FEDERAL RESERVE SYSTEM
The Federal Reserve and the economy
(Baughman)—
Dallas March 78 p 1

FOREIGN TRADE—DOMESTIC EFFECTS
Imports and jobs—the observed and the
unobserved—
St Louis June 78 p 2

FEDERAL RESERVE SYSTEM—MEMBER
SHIP
An analysis of Federal Reserve System
attrition since 1960—
FR Bull Jan 78 p 12

FORESTS AND FORESTRY
An economic alternative to current public
forest policy—
San Fran Wint 78 p 20

FEDERAL RESERVE SYSTEM—PUBLI
CATIONS
OCCASIONAL PAPERS av ailable—
Atlanta Jan 78 p 2
ECONOMIC MAN VS. SOCIAL MAN
av a ila b le—
Phila Jan 78 p 14
UPDATE av a ila b le—
Atlanta March 78 p 29
RESEARCH PAPERS—TWO NEW ITEMS
av a ila b le—
Phila March 78 p 12
CONSUMER PAMPHLETS a v a ila b le Dallas May 78 p 20

GARDNER, STEPHEN S.
Statement to Congress, Feb 6, 1978
(budget)—
FR Bull Feb 78 p 84
GOVERNMENT AGENCY SECURITIES
The market for agency securities—
NY Spr 78 p 7
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION
GNMA futures: stabilizing or destabi
lizing?—
San Fran Spr 78 p 20

FOOD PRICES
Marketing costs boost food prices—
Dallas March 78 p 7

GOVERNMENT SECURITIES
The Federal Reserve and the government
securities market—
Kansas City April 78 p 15

FOREIGN CREDIT
Country exposure lending survey—
FR Bull Jan 78 p 60
A new supervisory approach to foreign
lending—
NY Spr 78 p 1
Country exposure lending survey—
FR Bull June 78 p 515

GOVERNMENT SECURITIES DEALERS
The dealer market for United States gov
ernment securities—
NY Wint 77-78 p 35
GOVERNMENT SECURITIES—REPUR
CHASE
Repurchase agreements and Federal
funds—
FR Bull May 78 p 353

FOREIGN EXCHANGE RATES
Statement to Congress, Feb 6, 1978
(Wallich)—
FR Bull Feb 78 p 86

FEDERAL RESERVE BANK OF PHILADELPHIA

GRANTS IN AID
Federal grants in aid—solvency for state
and local governments—
Chic May 78 p 17

Should we fight inflation with wage and
price controls?—
Minn Spr 78 p 1
A new investigation of the impact of wage
and price controls—
Minn Spr 78 p 2
TIP: the wrong way to fight inflation—
Minn Spr 78 p 9

GROSS NATIONAL PRODUCT
Real output growth and unemployment,
1947-1977—
Atlanta March 78 p 19

INFORMATION DISCLOSURE
Open Board meetings—
FR Bull Jan 78 p 63
Policy statement: misuse of inside invest
ment information—
FR Bull April 78 p 339

HOUSING
Housing decay: cause or symptom of urban
decline?—
Phila March 78 p 13
INCOME DISTRIBUTION
Measuring income distribution in the United
States—
Phila March 78 p 3

INSTALMENT LOANS
Instalment credit—benefits and burdens—
Chic March 78 p 3

INCOME—FAMILY
Gains in median family incomes offset
by inflation and higher taxes—
Dallas Feb 78 p 16

INSURANCE—UNEMPLOYMENT
The performance of the unemployment
insurance program in the 1970s—
Bost March 78 p 32

INCOME—PERSONAL
District enjoys strong income growth—
Rich May 78 p 2

INTEREST RATES—PRIME
Prime rate update—
Chic May 78 p 14

INCOMES POLICY
Statement to Congress, Feb 8, 1978
(Wallich)—
FR Bull Feb 78 p 94
A tax-based incomes policy (TIP): what’s
it all about?—
St Louis Feb 78 p 8
Statement to Congress, May 22, 1978
(Wallich)—
FR Bull June 78 p 454

IRON AND STEEL INDUSTRY
Southwestern steel producers
foreign competition—
Dallas Feb 78 p 1

LILLY, DAVID M.
Resignation as member of Board effective
Feb 24, 1978—
FR Bull March 78 p 249
LIVESTOCK
Fewer cattle = less beef = higher prices—
Atlanta May 78 p 62

INDEXATION
Indexation and inflation—
Chic May 78 p 3

MEASURE OF ECONOMIC WELFARE
Our vanishing golden age?
(Eastburn)—
Phila Jan 78 p 3

INFLATION
Inflation: an extreme view—
Minn Wint 78 p 7

meet

BUSINESS REVIEW

JANUARY/FEBRUARY 19 7 9

MONEY SUPPLY
The impact of large time deposits on the
growth rate of M 2—
Rich March 78 p 17
Money stock revision—
FR Bull April 78 p 338
On the significance of weekly changes in
M l—
Bost May 78 p 5
Benchmark revisions of the money stock
and ranges of money stock growth—
St Louis June 78 p 11

MILLER, G. WILLIAM
Miller to succeed Burns as chairman of the
Fed—
Dallas Feb 78 p 1
Appointment to Board of Governors, sworn
in March 8, 1978—
FR Bull March 78 p 248
Statement to Congress, March 9, 1978
(monetary policy)—
FR Bull March 78 p 185
Statement to Congress, March 15, 1978
(budget)—
FR Bull March 78 p 190
Statement to Congress, April 25, 1978
(business forecast)—
FR Bull May 78 p 373
Statement to Congress, May 25, 1978
(banking)—
FR Bull June 78 p 458

MORTGAGES
Mortgage borrowing against equity in ex
isting homes—
FR Bull June 78 p 361
MUNICIPAL FINANCE
Texas cities credited with sound financial
management—
Dallas April 78 p 3

MINNEAPOLIS FEDERAL RESERVE DIS
TRICT
The regional economy in 1977 and 1978—
Minn Wint 78 p 15

NATURAL RESOURCES
Mineral resources in the Pacific area —
9th Pacific Trade and Development Con
ference—
San Fran Fall 77 supp
Problems of resource utilization—
San Fran Wint 78 p 5

MINORITIES
The economic experience of blacks: 19641974—
Bost Jan 78 p 5
MOBILE HOMES
Mobile homes—declining share of single
family homes—
Dallas June 78 p 21

NEGOTIABLE ORDER OF WITHDRAWAL
Checking vs. savings: the lines blur—
Atlanta May 78 p 51

MODELS—STATISTICS
Does the St. Louis equation now believe
in fiscal policy?—
St Louis Feb 78 p 13
Forecasting with statistical models and a
case study of retail sales—
Kansas City March 78 p 3

OCEANOGRAPHY
Dividing up the minerals of the deep sea
bed—
San Fran Wint 78 p 7

MONEY CIRCULATION
How the Federal Reserve creates and de
stroys currency—
Dallas Feb 78 p 12

OPEN MARKET OPERATIONS
Monetary policy and open market opera
tions in 1977—
NY Spr 78 p 41
The Federal Open Market Committee in
1977—
St Louis March 78 p 2

MONEY MARKET
Information and market efficiency—
San Fran Spr 78 p 5

FEDERAL RESERVE BANK OF PHILADELPHIA

Monetary policy and open market opera
tions in 1977—
FR Bull April 78 p 265

REGULATION B
Problems in applying discriminant analy
sis in credit scoring models—
FR Bull Jan 78 p 13
Amendment and interpretation—
FR Bull April 78 p 337

OVER-THE-COUNTER MARKET
Revised list—
FR Bull April 78 p 342

REGULATION C
Exemption—
FR Bull March 78 p 251

PARTEE, J. CHARLES
Statement to Congress, March 16, 1978
(bank loans)—
FR Bull April 78 p 285
Statement to Congress, May 9, 1978
(employment, full)—
FR Bull May 78 p 377
Some economic policy issues—
Dallas May 78 p 1

REGULATION D
Amendment Dec 23, 1977—
FR Bull Jan 78 p 27
Amendments July 6, 1978—
FR Bull May 78 p 427
Interpretation—
FR Bull May 78 p 427

PENSION PLANS
Are private pensions doomed?—
Bost March 78 p 5

REGULATION G
Amendment—
FR Bull May 78 p 427
Margin regulations amendment June 15,
1978—
FR Bull June 78 p 480

PHILLIPS CURVE
Some recent developments in Phillips curve
analysis—
Rich Jan 78 p 15

REGULATION M
Amendment to Regulation M —
Dallas Feb 78 p 15

POLLUTION
Pollution control legislation and the capital
appropriations-expenditure lag—
San Fran Wint 78 p 40

REGULATION O
Amendment March 24, 1978—
FR Bull March 78 p 251

PRODUCTIVITY
Comparing per capita output internation
ally: has the United States been over
taken?—
St Louis May 78 p 8

REGULATION Q
Amendment to Regulation Q—
Dallas Feb 78 p 14
Automatic transfers from savings to check
ing accounts proposed—
Dallas March 78 p 5
Amendment Nov. 1, 1978—
FR Bull May 78 p 424
Interpretation—
FR Bull May 78 p 427
Amendments July 6, 1978—
FR Bull May 78 p 427
Fed approves automatic transfer proposal—
Dallas May 78 p 21

PROPERTY TAX
Uniformity in assessment: high on the list
of property tax reforms—
Phila May 78 p 13
REGULATION A
Interpretation—
FR Bull June 78 p 486

BUSINESS REVIEW

JANUARY/FEBRUARY 1979

effect on the employment of older
workers—
Bost May 78 p 23

Amendment November 1, 1978—
FR Bull June 78 p 479
Ruling—
FR Bull June 78 p 519

SEASONAL VARIATION
Review of seasonal adjustment tech
niques—
FR Bull April 78 p 341

REGULATION T
Amendment—
FR Bull May 78 p 427
Margin regulations amendment June 15,
1978—
FR Bull June 78 p 480

SECURITIES—TAX EXEMPT
The effect of a taxable bond option on
borrowing costs of state and local govern
ments in the northeast—
Bost March 78 p 21

REGULATION U
Amendment—
FR Bull May 78 p 427
Margin regulations amendment June 15,
1978—
FR Bull June 78 p 480

SERVICE INDUSTRIES
BUSINESS SERVICES AND NEW
ENGLAND’S EXPORT BASE available—
Bost May 78 p 61

REGULATION Y
Interpretation and permissible activity—
FR Bull Feb 78 p 148
Interpretation—
FR Bull March 78 p 211
Amendment April 5, 1978—
FR Bull April 78 p 306

SPECIAL DRAWING RIGHTS
International reserves and the role of spe
cial drawing rights—
St Louis Jan 78 p 9
STOCK MARKET
Practical monetarism and the stock mar
ket—
San Fran Spr 78 p 39

REGULATION Z
Amendment March 28, 1978—
FR Bull Feb 78 p 147
Exemption of consumer leasing laws—
FR Bull May 78 p 428
Truth in Lending, new supplement—
FR Bull June 78 p 481
Amendment May 30, 1978—
FR Bull June 78 p 486
Amendment May 22, 1978—
FR Bull June 78 p 517

SWAP ARRANGEMENTS
Monetary effects of Federal Reserve
swaps—
NY Wint 77-78 p 19
Treasury-Federal Reserve joint interven
tion—
FR Bull Jan 78 p 60
Change—
FR Bull March 78 p 250

RESERVE REQUIREMENTS
Bank reserve requirements and their en
forcement: a comparison across states—
St Louis March 78 p 22

TAX AND LOAN ACCOUNTS
Changes in the Treasury’s cash manage
ment procedures—
Atlanta Jan 78 p 14
Interest authorized on U. S. Treasury de
mand deposits at commercial banks—
Dallas Jan 78 p 5

RETIREMENT
Mandatory retirement: issues and impacts—
NY Spr 78 p 25
Raising the mandatory retirement age: its

FEDERAL RESERVE BANK OF PHILADELPHIA

UNEMPLOYMENT
The problem of rising teenage unemploy
ment: a reappraisal—
Kansas City March 78 p 12

TAX COLLECTIONS
State and local tax collections rise sharply
in Eleventh District—
Dallas Jan 78 p 14

VELOCITY
Velocity: money’s second dimension—
Kansas City June 78 p 15

TRANSFER OF FUNDS
Improved transfers of funds proposed—
Dallas Feb 78 p 19
EFT and privacy—
FR Bull April 78 p 279
Improved funds transfers and clearing ser
vices—
FR Bull May 78 p 425
Fed takes steps to improve EFT—
Dallas May 78 p 6

WAGE RATES
How different are regional wages?—
Bost Jan 78 p 33
WAGES—MINIMUM
The minimum wage and youth unemploy
ment—
Kansas City Jan 78 p 3
The new minimum wage: a threat to south
eastern jobs?—
Atlanta March 78 p 30

TREASURY BILLS
Using T-bill futures to gauge interest rate
expectations—
San Fran Spr 78 p 7

WALLICH, HENRY C.
Statement to Congress, Feb 6,1978 (foreign
exchange ratesj—
FR Bull Feb 78 p 86
Statement to Congress, Feb 8, 1978
(incomes policy]—
FR Bull Feb 78 p 94
Statement to Congress May 22, 1978
(incomes policy]—
FR Bull June 78 p 454

TREASURY CHECKS
Treasury checks to be “truncated”—
Dallas Jan 78 p 13
TRUST DEPARTMENT—BANK
Securities trading data to be required of
bank trust departments—
Dallas March 78 p 6

JANUARY/FEBRUARY 1979

BUSINESS REVIEW

llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll
FEDERAL RESERVE BANKS AND BOARD OF GOVERNORS
Publications Services
Division of Administrative Services
Board of Governors of the
Federal Reserve System
Washington, D.C. 20551

Federal Reserve Bank of Kansas City
Federal Reserve Station
Kansas City, Missouri 64198
Federal Reserve Bank of Minneapolis
Minneapolis, Minnesota 55480

Federal Reserve Bank of Atlanta
Federal Reserve Station
Atlanta, Georgia 30303

Federal Reserve Bank of New York
Federal Reserve P.O. Station
New York, New York 10045

Federal Reserve Bank of Boston
600 Atlantic Avenue
Boston, Massachusetts 02106

Federal Reserve Bank of Philadelphia
100 North Sixth Street
Philadelphia, Pennsylvania 19106

Federal Reserve Bank of Chicago
Box 834
Chicago, Illinois 60690

Federal Reserve Bank of Richmond
P.O. Box 27622
Richmond, Virginia 23261

Federal Reserve Bank of Cleveland
P.O. Box 6387
Cleveland, Ohio 44101

Federal Reserve Bank of St. Louis
P.O. Box 442
St. Louis, Missouri 63166

Federal Reserve Bank of Dallas
Station K
Dallas, Texas 75222

Federal Reserve Bank of San Francisco
San Francisco, California 94120

llllll lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

FEDERAL RESERVE BANK OF PHILADELPHIA

FEDERAL RESERVE BANK OF PHILADELPHIA
BUSINESS REVIEW CONTENTS 1978
JANUARY/FEBRUARY

JULY/AUGUST

David P. Eastburn, “Our Vanishing Golden Age?”
Timothy Hannan, “Potential Competition and the
Banks”
The Fed in Print

David P. Eastburn and W. Lee Hoskins, “The
Influence of Monetary Policy on Commercial
Banking”
Janice M. Westerfield, “A Primer on the Risks of
International Lending and HowTo Evaluate Them”
The Fed in Print

MARCH/APRIL

SEPTEMBER/OCTOBER

Timothy Hannan, “Measuring Income Distribu
tion in the United States”
Anthony M. Rufolo, “Housing Decay: Cause or
Symptom of Urban Decline?”

Donald J. Mullineaux, “Regulation: Whence It
Came and Whether It’s Here To Stay”
Anthony M. Rufolo, “Philadelphia’s Economy in
the National Setting”
NOVEMBER/DECEMBER

MAY/JUNE

Edward G. Boehne, “Commentary”
Howard Keen, Jr., “Bank Dividend Cuts: Recent
Experience and the Traditional View”
Anthony M. Rufolo, "Upward Biases in Govern
ment Spending?”

Ronald D. Watson, “Estimating the Cost of Your
Bank’s Funds”
Nonna A. Noto, “Uniformity in Assessment: High
on the List of Property Tax Reforms”

Federal Reserve Bank of Philadelphia

on Independence Mall
100 North Sixth Street
Philadelnhia. Pa. 19106

Address Correction Requested

Full text of Business Review (Federal Reserve Bank of Philadelphia) : January/February 1979

FRASER