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THE BUSINESS REVIEW
’'■Vf

RESERVE DISTRICT^

THIRD FEDERAL
PHILADELPHIA

MARCH i, 1938

FEDERAL RESERVE BANK OF PHILADELPHIA

%
'■W

Business and Banking Conditions in the United States
The decline in business activity,
which had been rapid during the last
quarter of 1937, continued in January
but at a slower rate.
Production. Volume of industrial pro­
duction, as measured by the Board’s
seasonally adjusted index, was at 81
per cent of the 1923-1925 average in
January as compared with 84 per
cent in December. Output of durable
goods continued to decline, reflecting
chiefly considerable decreases in pro­
duction of atuomobiles and plate glass
and a further decline in output of
lumber. Steel ingot production in­
creased somewhat, the output for Jan­
uary averaging 30 per cent of capac­
ity. In the first three weeks of Feb­
ruary, activity at steel mills showed
little change at about 31 per cent of
capacity, while production of automo­
biles was at a lower rate than in Jan­
uary.
In the textile industries, activity at
silk and rayon mills in January showed
a sharp rise from the low levels
reached in December. At cotton mills,
however, there was less than the usual
seasonal increase and output of woolen
products continued in small volume.

Shoe production, which also had been
at a low rate in December, increased
considerably in January,'and activity
at meat packing establishments rose
somewhat further. Output of tobacco
products remained at a high level,
while sugar meltings declined. At
mines, bituminous coal production was
considerably smaller than in Decem­
ber, and there was also a reduction
in output of nonferrous metals. Pe­
troleum production continued at the
high level of other recent months.
Value of construction contracts
awarded in January was smaller than
in December and somewhat below the
level maintained during the last four
months of 1937, according to figures
of the I1 W. Dodge Corporation. Con­
'.
tracts awarded for public projects in­
creased somewhat further, while
awards for private work continued
to decline, reflecting a further de­
crease in residential building and a
sharp reduction in awards for factory
construction. In the first half of Feb­
ruary awards for private projects were
at about the same rate as in January,
while those for public work showed
a sharp decline.

INDUSTRIAL PRODUCTION

Factory employment
and payrolls declined substantially
further between the middle of Decem­
ber and the middle of January. In
the durable goods industries, decreases
in employment were general and were
particularly large at factories produc­
ing automobiles, steel, and machinery.
Employment in non-durable goods in­
dustries showed a somewhat smaller
decline than in previous months. There
was some increase in the number em­
ployed at shoe factories and little
change in the food industries as a
Employment.

MEMBER BANKS IN 101 LEADING CITIES

MLUOKS Of DOLLARS

WLUOW OfDOLLARS
s GOVT OBLIGATIONS

COMMERCIAL LOA

OTHER SECURITIES
LOANS TO BROKERS
AND DEALERS

’34

1935

1936

1937

1938

Wednesday figures for reporting member banks
in 101 leading cities, September 5, 1934 to Feb­
ruary JL6, 1938. Commercial loans, which in­
clude industrial and agricultural loans, repre­
sent prior to May 19, 1937 so-called “Other
loans” as then reported.

FACTORY EMPLOYMENT AND PAYROLLS
WHOLESALE PRICES

Aal
EM RIOYMENT/-'*'

r\

LA “V
f

PAYROLL

Ay/

1 'd

i

1934

Index of physical volume of production, ad­
justed for seasonal variation. By months,
January 1934 to January 1938.




1935

1936

1937

Indexes of number employed and payrolls,
without adjustment for seasonal variation.
By months, January 1934 to January 1938.
Indexes compiled by the United States Bureau
of Labor Statistics.

Index compiled by the United States Bureau
of Labor Statistics. By weeks, 1934 to week
ending February 12, 1938.

Page One

group. But in other non-durable goods
industries employment continued to
decrease. Employment on the rail­
roads, in mining, and in the construc­
tion industry also declined.
Distribution. Department store sales
showed a seasonal decrease from De­
cember to January, while sales at va­
riety stores and mail order sales de­
clined by more than the usual seasonal
amount.
Freight-car loadings continued to
decline in January, reflecting princi­
pally a reduction in shipments of coal.
Commodity prices.
Prices of steel
scrap and non-ferrous metals declined

from the middle of January to the
third week of February, following
some advance in December and the
early part of January. There were
further decreases in some other basic
commodities, while prices of cotton
and silk advanced. Livestock prod­
ucts continued downward and a num­
ber of finished industrial products de­
clined further. Prices of pig iron and
most finished steel products have been
reaffirmed for second quarter delivery.
Bank credit. During the first three
weeks of February excess reserves of
member banks were little changed from
the level of $1,400,000,000 reached at

the end of January following the post­
holiday return of currency from circu­
lation.
During January there were substan­
tial reductions in commercial loans
and brokers’ loans and moderate in­
creases in investments at reporting
member banks in 101 leading cities.
In the first three weeks of February
loans and investments of these banks
showed little change.
Money rates. Rates on Treasury bills

and yields on Treasury notes and bonds
continued in February at the low levels
reached in the latter part of January.

Business and Banking Conditions in the
Philadelphia Federal Reserve District
Business conditions in the Philadel­
phia Federal Reserve District failed
to show improvement in the first month
of the year but lately they have re­
flected some upturn in the market for
consumer’s goods. The rate of indus­
trial recession in durable goods also
has been less rapid than in the closing
months of last year. The adjusted in­
dex of industrial production in Jan­
uary declined to 69 from 76 in the
previous month and was the lowest
since 1934.
The value of building contracts
awarded in December declined further
by a larger amount than usual and
was the lowest in the past two years.
Income of farmers from dairy prod­
ucts continues fairly steady but that
from the sale of farm products has
been affected adversely by the con­
tinued decline in prices.
Retail trade sales in January de­
clined more than seasonally and were
noticeably smaller than a year ago.
In February a further decline is indi­

cated by preliminary figures. Inven­
tories of merchandise have shown a
substantial reduction since last fall,
so that at the end of January they
were close to the volume held at the
same time last year. Business at
wholesale also has continued smaller
than last year. Sales of new passenger
automobiles declined sharply in the
month and as compared with a year
ago. Life insurance sales, on the other
hand, decreased much less than usual
from December to January but were
smaller in the year. Freight car load­
ings generally declined.
Industrial employment and payrolls
showed additional decreases from De­
cember to January and were substan­
tially smaller than a year ago. Pre­
liminary returns from manufacturing
industries indicate that in February
there were further decreases in cer­
tain durable goods industries but no­
ticeable increases in factories produc­
ing non-durable goods.

INDUSTRIAL AND TRADE ACTIVITY

Manufacturing. Manufacturing activ­

ity in this district has slackened fur­
ther since the turn of the year,
although lately the recession has mod­
erated considerably and become less
widespread than in the closing months
of 1937. This has been especially true
in the case of industries making con­
sumers’ goods, including textiles,
leather goods and shoes.
Current reports indicate that the
market for factory products on the
whole continues quiet and in a number
of durable goods lines sales have de­
clined further and are much smaller
than they were a year ago. The de­
mand for non-durable goods, on the
other hand, shows signs of improve­
ment. As in several past months the
greatest decreases have occurred at
plants turning out iron and steel prod­
ucts, such as machinery and tools,
castings, and virtually all building ma­
terials. The volume of unfilled orders
about the middle of February was
smaller than a month earlier and less

WORKING HOURS AND HOURLY EARNINGS

PHILADELPHIA FEDERAL RESERVE DISTRICT

PENNSYLVANIA FACTORIES

PERCENT

CENTS

HOURS
PRODUCTION
EARNINGS PER HOUR (avc.)
RETAIL TRADE SALES

VALUE OF
BUILDING CONTRACTS
HOURS WORKED

ADJUSTED TOR StASONAL VARIATION

1932


http://fraser.stlouisfed.org/
Page Two
Federal Reserve Bank of St. Louis

1934

1935

1936

1937

1938

1933

1934

1935

1936

1937

1938

than a year ago. Inventories of fin­
ished goods, especially at textile plants,
have declined in recent weeks and
supplies of raw materials at plants
quite generally show marked reduc­
tions this year and as compared with
a year ago.
Prices quoted by local manufacturers
for their products have decreased fur­
ther and in many instances are below
the level of a year earlier. In the
country, the price index of the Bureau
of Labor Statistics for commodities
other than farm products and foods
showed a pronounced downward trend
in the fourth quarter of last year but
subsequently fluctuated rather nar­
rowly. On February 19 this index
was 83.0 per cent of the 1926 average
as compared with 83.7 four weeks
earlier, 83.6 on January 1 and 84.2 a
year ago.
The number of workers employed in
manufacturing industries in this dis­
trict decreased 6 per cent and their
compensation declined 11 per cent from
the middle of December to the middle
of January. Preliminary data cover­
ing the payroll period nearest the mid­
dle of February show a small decline
in employment and little change in
wage payments. The decline was due
to sluggish activity in durable goods
industries. Factories producing non­
durable goods, including textiles and
shoes, show marked increases in em­
ployment, payrolls and working time.
In all industries of this district, nearly
14 per cent fewer workers were em­
ployed in January this year than last
and wage disbursements were about 25
per cent less.
In Pennsylvania factories the pre­
liminary index of employment for Jan­
uary was about 76, relative to the
1923-25 average, and that of payrolls
was 65. In both instances these in­
dexes were the lowest in any month
since 1935. Working time, as meas­
ured by total employee-hours, has de­
creased continuously since August and
in January was 36 per cent less than
in the same month last year.
Factory employment and wage pay­
ments in Delaware declined 5 and 9
per cent respectively from December
to January. Compared with a year
earlier, 14 per cent fewer workers were
employed and an equally large decrease
occurred in wage disbursements. Man­
ufacturing plants in southern New Jer­
sey likewise reported marked reces­
sions in employment and payrolls
during January.
Output of manufactures decreased
sharply in January, continuing a



Business Indicators
Philadelphia Federal Reserve District
Index numbers: percentages of the 1923-1925 average as 100
Adjusted for seasonal variation

Adjusted indexes allow for the usual
seasonal change in activity.

Unadjusted indexes reflect merely the
actual change which may or may not Jan.
be typical.
1937

Not adjusted

Per cent
change
Nov. Dec. Jan.
1937 1937 1938

Jan.1938
from

Jan.
1937

Nov.
1937

Dec.
1937

Jan.
1938

93
92

81
78 r

74
70

69p
64p

Month Year
ago
ago

Industrial production....

Manufacturing—total...............
Durable goods.......................
Consumers’ goods..................

Metal products......................
Textile products....................
Transportation equipment.
Food products........................
Tobacco and products.........
Building materials.................
Chemicals and products....
Leather and products...........
Paper and printing...............
Coal mining.................................
Anthracite...............................
Bituminous.............................
Crude oil......................................
Electric power
Output.....................................
Sales, total!............................
Sales to industries!...............

79
76
94
69p
94 r i 76
72
65p
88
76 r 68
58p
98r 75
73
67p
104
72
81
62
99 r 59
57
47p
82
93
85
76
78
77
79
75p
101
95
86
90
42
38
34 r 25
130r 125
120
116p
135
96 r 96
103p
92
90
91
86
68
58
65
65p
56
67p
65
69
76
61
56
49
496 520 531
522

-14
- 8
-15
-17
-11
- 5
+ 5
-28
- 3
+ 8
- 5
- 4
- 3
-14
- 2

-27
-31
-34
-31
-41
-53
- 8
- 5
-11
-42
-11
-23
- 6
+ 12
+20
-35
+ 5

101
102r
82
76
84
37
127
140
92
64
61
86
476

81
62
90
77
113
38
126
92 r
90
67
67
68
505

69
56
87
76
63
31r
119
91
92
67
68
59
499

59
48p
76
74p
75
21
113p
107p
86
70p
72p
56
502

236
234
185

- 3
- 1
- 2

- 6
- 5
-18

250
241
180

242
238
168

244
232
148

235
229
148

- 7*
-11*
-13*

-14*
-27*
-36*

88
89
91

86
83
75

81
74
66

76
65
58

-10*
-17*

— 11* 119
— 23* 167

121
165r

118
155

106
129

+ 3
-16
-12
+25
+27
4- 3
-26

- 3
-51
+56
-18
-38
-10
-41

59
38
80
73
22
61
367

61
28
92
85
8
57
409

53
20
82
87
9
51
343

- 2
+1
+1
_ 4
+10
— 48*
+ 13*
— 1*
- 2
+ 0
— 5

- 9
- 0
-17
- 6
-16

92
91
101
80
101
101
125
146
61
61
68

129
74
97
69
85
102
108
136
52
49
64

58p
70p
77
69
79
54
121p
134p
50
49
61
118
39

233
231
164

228
225
155

222
222
153

- 9
-10

Employment and wages— Pa.
Factory—Wage earners.........
Payrolls.................................
Man-hours (1927-28= 100)
General (1932=100)
Employment........................
Payrolls.................................

Building and real estate

Contracts awardedf—total...........
Residential!..................................
Non-reside ntialj..........................
Public works and utilities!....
Permits for building—17 cities. . .
Real estate deeds—Philadelphia!.
Writs for Sheriff sales—Phila. . . .

66

71
51
57
112
24
53
504

59
37
75
65
23
62
328

30
102
73
12
47
401

84
79
104
76
106

79
80
88
77
96

78
78
86
74
81

76p
79p
87
71
89

84
82
75

60
61
62

58
56
61

57
56
57

69
25
90
91
15
48
298

55
40
52
106
14
57
580

Distribution

Retail trade
—sales...................
stocks................
Wholesale trade—sales...................
stocks................
Life insurance sales..........................
New passenger auto, registrations
Hotels—Occupancy.. . (1934= 100)
Income, total (1934= 100)
Freight car loadings—total...........
Merchandise and miscellaneous
Coal.................................................

64 r
70 r
89
74
94
98
— 0* 121
+ 3* 130
-33
72
-31
71
-24
81

Business liquidations

Number.............................
Amount of liabilities....

+62*
+ 3*

+ 11*

62
35

39
16

73
38

Payment of accounts

Check payments....................
Rate of collections (actual)
Retail trade........................

95

80

85

81

- 4

-14

97

86

92

83

28

33

28

29

+ 2

+ 3

33

34

28

34

*

86

+ 0*
5*

91
87
83
85
88
82

83
76
83
84
84
83
77

82
73
80
84
83
84
77

81
72
76
83
80
82
75

Prices—United States
Wholesale (1926 = 100).

Farm products...............
Foods......... ....'.............
Other commodities. ...

—
_
—
-

Retail Food.......................

Philadelphia.....................
Scranton............................

(In millions of dollars)

Jan.
1937

Oct.
1937

1*
2*
4*
0*
3*
3*
2*

6

- 8*

% change from

Nov.
1937

Dec.
1937

Jan.
1938

Month
ago

Year
ago

Banking and credit

Federal Reserve Bank
Bills discounted............................ $ 0.5
Other bills and securities...........
200
Member bank reserves...............
387
Reserve ratio (per cent).............
75.0
Reporting member banks
Loans................................................ S 451
Investments...................................
741
Deposits (a)...................................
1,483
Bankers’ acceptances outstanding
13.8

$

2.1
217
365
72.5

*

2.6
219
361
72.3

$

2.9
221
355
71.7

$

2.4
216
380
72.7

-17
- 2
+ 7
+1

+380
+ 8
- 2
- 3

S

469
681
1,374
15.8

$

464
677
1,353
16.1

$

460
662
1,336
15.4

$

456
656
1,362
12.9

- 1
- 1
+ 2
-16

+ i
- 11
- 8
- 7

* Computed from data unadjusted for seasonal variation,
t Not included in production index.
J 3-month moving daily average centered at 3rd month.

p—Preliminary.
r—Revised,
(a) Less cash items in process of collection.

Page Three

TEXTILE FIBERS

METAL PRICES
Mil LIONS
or LBS

PERCENT

UNITED STATES

450
COTTON

400

A
\ T

250

=

40
COPPER

V

67
5
4

A

1937

Px\

r \

SILK

H

Ap

v\
ZJ r

1935

.075
—

ssJ

VI.WAv

19 3 8

.100
f

050

3
1936

.125

WOOL

WOOL

Sr

20

1935

A
A

V

/A

30

FINISHED STEEL

j

a

300

STEEL SCRAP

COTTON

■

K

J

350

0 OLLARS
PER LB.
.150

PRIC ES

MILL TAKINGS

1936

1937

1938

.00
.

.60

SILK

2.00

r V 4 fV
v7

V

1935

1936

1.00

\

1.75
1.50

.

125
1937

1938

Source: Iron <ge

marked downward trend since August,
and was the smallest for the month
since 1934. This bank’s seasonally ad­
justed index of productive activity re­
ceded to 65 per cent of the 1923-25
average as compared with 72 in De­
cember, 76 in November and nearly
94 in January, 1937.
As in months immediately preced­
ing, the decline during January in the
output of consumers’ goods, though
sharp, was neither so widespread nor
so drastic as that at plants making
durable goods. Production of non­
durable goods such as leather, shoes,
cigars and petroleum products was
larger than in December. Activity at
meat packing establishments also was
at a higher rate in January than in
the previous month. In the case of
durable goods, an outstanding excep­
tion to the general recession was the
increase in the output of pig iron.
Production of motor vehicles also ex­
panded substantially.
Electric power output by eight cen­
tral stations showed a decline from
December to January that was larger
than seasonal, continuing a downward
trend for about six months. Total
sales for all purposes fell off slightly.
The rate of consumption of electrical
energy by industries was virtually un­
changed, although a small increase is
usual; compared with a year ago, in­
dustrial consumption was 18 per cent
smaller.
Coal and other fuels.
Reflecting the
prevalence of relatively mild weather,
demand for anthracite declined. ' There
was an increase in output from Decem­
ber to January, but this fell somewhat
short of the volume usually to be ex­
pected. Compared with a year ago,
however, production increased 20 per
cent. Shipments also increased con­

Page Four


siderably in January and were 18 per
cent greater than a year ago.
Producers report little activity in
the market for bituminous coal, with
further decreases in sales to industries,
railroads and utilities. Continuing the
decline which occurred in the last
quarter of 1937, colliery output de­
creased 6 per cent from December to
January, although an increase is usual
in that month. Production was the
smallest since the autumn of 1935 and
was 35 per cent less than a year earlier.
Shipments also declined, reflecting re­
duced industrial consumption and ade­
quate supplies of coal for current
needs.
Per cent
change from
January
(Output and shipment
figures are daily averages)
1938 Month Year
ago
ago
Anthracite
Production............... tons
Shipments.................tons
Stocks.............. 1000 tons
Prices.......... (1926 = 100)
Employment............. No.
Bituminous
Production............... tons
Shipments.........No. cars
Prices.......... (1926= 100)
Employment............. No.
Coke
Prod. ...(1923-25=100)
Prices.......... (1926=100)
Gas and fuel oil
Prod.. . .(1923-25=100)
Prices.......... (1926=100)

191,600
192,240
2,154t
80.1
94,926

+ 6
+13
-10
+ 0
- 3

+20
+18
- 5
- 2
- 9

265,200
22,092
103.2
122,355

- 6
-13
+ 2
- 1

-35
-27
+ 7
-10

82.3
105.5

- 2
0

155.8*
76.1

+1
0

Building. The value of building con­

tracts awarded in January amounted
to approximately $10,000,000, a decline
of 26 per cent from December as
against the estimated seasonal decrease
of 15 per cent. This change was due
principally to a sharp drop in awards
for public works and utilities, family
houses and miscellaneous construction;
substantial increases were reported in
the case of educational and commer­
cial buildings.
The January total was the smallest
for the month since 1935; it showed a
decline of 18 per cent from a year
ago, despite a much larger volume of
contracts let for educational buildings
and unclassified structures. The de­
crease in awards for family dwellings
contributed largely to the falling off
in the total.
Building contracts
Philadelphia
Federal Reserve
District

Per cent
January change from
1938
(000’s
Jan.
omitted) Dec.
1937 1937

-37
+ 8

$ 1,748
238
1,510
5,648
1,130
Commercial.....................
82
2,544
1,892

-16
+ 1
-19
-21
+23
-29
+86
-60

- 64
+ 60
- 65
+ 26
- 36
- 92
+184
+131

+ 3
+10

Total buildings...... $ 7,396
Public works and utilities.
2,675

-20
-38

- 21
- 9

$10,071

-26

- 18

Sources: Bureau of Mines and Bureau of Labor
Statistics.
* Estimated.
f 1st of month.

There was a small decline in the out­
put of by-product coke in eastern Penn­
sylvania from December to January
instead of the usual seasonal increase.
Production was the smallest in two
and one half years and 37 per cent be­
low that in January 1937. Production
of gas and fuel oils increased slightly
in January, according to preliminary
figures.

Apts, and hotels.............
Family houses.................

Source: F. W. Dodge Corporation.

Wholesale prices of building mate­
rials have shown an almost continu­
ous drop since September. The index
of the Bureau of Labor Statistics for
the week ended February 19 was 91.1
per cent of the 1926 average, about 1
per cent low'er than in the first week
of the year and 6 per cent under the
high point fo'r recent years reached
in May. A year ago the index was

FREIGHT CAR LOADINGS

SALES OF ELECTRIC POWER

ALLEGHENY

PHILADELPHIA FEDERAL RESERVE DISTRICT
PERCENT

DISTRICT

1923-25AVG s IOO

192 3-25AVG. *100

250
COAL

TOTAL

TOTAL
200

/
150

100

r:\, :*-V*
*
V*

*;

■
♦V*<

50 ADJUSTED FO SEASONAL VARIATION
1933
1934
1935

.
MERCHANDI 5E AND
MISCEL LANE0US

TO INDUSTR ES

ADJUSTED Ft R SEASONAL VARlATlON

1936

92.8. Lower quotations for brick and
tile, lumber, and paint materials were
among those which caused the de­
cline.
Distribution, trade and service. The
value of retail sales by department,
apparel, shoe and credit stores in this
district in January was 9 per cent
smaller than a year ago. Decreases
ranged from 3 per cent at men’s ap­
parel stores to 21 per cent at credit
stores which sell merchandise on the
installment plan. Department store
sales in the district as a whole were
7 per cent smaller in January this
year than last; at Philadelphia stores
the decline was 5 per cent and else­
where it amounted to 9 per cent.
Total dollar sales decreased a little
more than they usually do from De­
cember to January, so that the sea­
sonally adjusted index declined from
78 to 76 per cent of the 1923-25 aver­
age. In January, 1937, this index was
84.
Inventories of merchandise at re­
tail establishments declined a little less
than usual but at the end of the
month showed virtually no change as
compared with a year earlier. The
trend of retail inventories was defi­
nitely upward in the first three quar­
ters of 1937, as indicated by a rise in
the seasonally adjusted index from 76
in December 1936 to 85 in Septem­
ber 1937. Subsequently, stocks of
goods were reduced almost steadily
to 79 in January. The rate of stock
turnover was slightly less rapid in
January this year than last. Collec­
tions, in relation to outstanding bal­
ances, were somewhat higher than a
year ago.
Business at wholesale, as measured
by total dollar sales, was considerably
less active in January this year than



V\ /.

1937

1938

1933

1934

last. Decreases were substantial in all
lines except groceries, which showed a
small gain over a year ago. Stocks
of goods at the end of the month were
about 6 per cent smaller than a year
earlier.
Total freight car loadings in this
section decreased further in January
and were nearly one-third smaller than
in the same month last year. Ship­
ments of merchandise and miscellane­
ous commodities showed about the cus­
tomary rate of change as compared
with December but loadings of coal
declined appreciably instead of increas­
ing as they usually do in January. The
volume of rail freight consisting chiefly
of manufactures originating in the
Philadelphia industrial area decreased
somewhat less than was to be expected
from December to January, following
larger than seasonal declines in the
last two months of 1937. Compared
with a year ago, however, shipments
were almost 17 per cent smaller."
Sales of new passenger automobiles
increased somewhat for two months
following the introduction of new mod­
els last autumn but declined drasti­
cally in January and were the smallest
since February 1936. Although the
decrease in the month was sharp in
all parts of this district, it was more
pronounced in eastern Pennsylvania
than in southern New Jersey or Dela­
ware.
Room occupancy at non-resort com­
mercial hotels increased sharply in
January but total revenue declined
slightly, owing to smaller receipts from
food and miscellaneous sources. Com­
pared with a year ago, room occu­
pancy showed virtually no change but
revenue from all sources was some­
what larger.

1935

1936

1937

1938

Jan. per cent
change from

Hotel business
Philadelphia Federal
Reserve District

Month
ago

Year
ago

Capacity.........................................
Room occupancy.........................
Per cent of capacity used:
Jan. 1938...................... 53.3
Dec. 1937...................... 50.0
Jan. 1937...................... 57.9
Income from:
Guest rooms..............................
Food............................................
Other sources............................

+ 0
+13

+0
-0

+12
- 6
-12

+3
+1
+6

Total revenue.......................

- 1

+3

Banking conditions. The reserve bal­

ances of reserve city or Philadelphia
member banks have shown substan­
tial fluctuations over the past six
months. Semi-monthly averages have
varied within upper and lower limits
of $236,700,000 and $207,400,000, the
latest figure covering the first half
of February being $230,400,000. The
proportion of excess reserves to re­
quirements declined as low as 10 per
cent early in September, but subse­
quently increased and in January was
26 per cent.
Reserve balances
of member banks
(Dollar figures in
millions)

Held

Re­
Ex­
quired cess

Ratio of
excess
to re­
quired

Reserve city banks
Dec. 16-31........... 8216.2 *185.0 *31.2
Jan. 1-15........... 233.6 185.9 47.7
Jan. 16-31........... 236.7 187.4 49.3
Feb. 1-15........... 230.4 186.4 44.0

17%
26”
26”
24”

Country banks
Dec. 16-31...........
Jan. 1-15...........
Jan. 16-31...........
Feb. 1-15...........

25”
27 ”
26”
28”

144.1
145.8
143.1
143.8

115.5
114.4
113.3
112.6

28.6
31.4
29.8
31.2

The reserves of country member
banks have been relatively more sta­
ble, showing a range of only $142,300,­
000 to $148,600,000 and a proportion
of excess to requirements which has
averaged close to 26 per cent in SepPage Five

tember and over the past six months
as a whole. A recent study shows that
the great majority of member banks
in this district carry reserves substan­
tially in excess of requirements and
that they also have large balances of
available funds on deposit with their
correspondents.
Preliminary figures as of the close
of the year show that there was a
decline of $3,000,000 in the loans of
member banks in Philadelphia during
1937. A substantial increase in un­
classified loans, largely of commercial
or industrial character, was more than
offset by declines in loans on securi­
ties and other classes. Investments
decreased $87,000,000, of which $40,­
000,000 was in direct issues of the
United States Government.
The situation at the country banks
was quite different. Loans increased
$19,000,000, owing largely to expan­
sion in those made on real estate, and
the shrinkage in investments was only
$15,000,000'.
Holdings of United
States Government obligations, direct
or guaranteed, increased $18,000,000,
while those of other securities declined
$33,000,000.
Outstanding credit of the reserve
bank changed very little in the four
weeks ended February 16. A small
increase in discounts was offset by
declines in industrial advances and in
float. Holdings of United States se­
curities remain at $211,600,000, com­
paring with $194,800,000 a year ago.
The district had an unfavorable bal­
ance of payments in interdistrict com­
mercial and financial transactions of
$21,000,000, but much of this loss was
offset by funds received from other
sources, so that reserves declined only
$5,300,000. The principal factor tend­
ing to sustain reserves was the op­
erations of the Treasury. The excess
of Government disbursements over re­
ceipts amounted to $12,800,000, re­
flecting largely the redemption of
Treasury bills; apart from public debt
operations, expenditures of the Treas­
ury were about $5,000,000 larger than
receipts. To meet the drain upon its
deposits at the reserve bank, the Treas­
ury transferred funds from other dis­
tricts, and its balances at this bank in­
creased by $4,000,000,
The seasonal return of currency from
circulation was completed in the sec­
ond half of January as usual. Subse­
quently there was a small increase in
the demand for money but the net
change in the four weeks ended Feb­
ruary 16 was negligible.

Page Six


Federal Reserve
Bank of Philadelphia Feb. 16,
(Dollar figures in
1938
millions)
Bills discounted.... $ 2.5
Bills bought..............
0.1
Industrial advances.
3.4
United States securities...................... 211.6
Total bills and securities............... $217.6
Federal reserve note
circulation............. 310.7
Member bank reserve deposits.... 372.3
U. S. Treasurer—
general account. .
10.9
Foreign bank deposits......................
15.0
Other deposits..........
1.0
Total reserves........... 513.7
Reserve ratio............
72.4%

Changes in—
Four
weeks

One year

Reporting member banks
(000,000’s omitted)

Changes in—
Feb. 16,
Four One
1938
weeks year

+$0.2
0
- 0.1

+$ 2.0
- 0.2
- 1.0

0

+ 16.8

+$0.1

+$17.6

- 0.5

+

5.6

Assets
Commercial, industrial and
agricultural loans:
On securities........................ $
Otherwise secured and unsecured..............................
Open market paper................
Loans to brokers and dealers in securities...................
Other loans to purchase or

- 5.3

+

5.8

Loans on real estate..............

+ 4.1

-

1.4

Other loans:

-

+
+
-

4.2
0.7
0.9
1.2%

1.4
0.8
6.5
0.5%

The reserves of reporting banks in
leading cities declined $13,000,000 and
their balances with correspondents
$10,000,000 in the period from Jan­
uary 5 to February 16. Nearly half
of these declines occurred in the first
four weeks, although deposits were
quite stable at a level somewhat about
$1,360,000,000. The banks reported
the repayment of $5,000,000 in com­
mercial loans, but a substantial ex­
pansion in their outstanding credit
through the purchase of $6,000,000 of
open market paper, $8,000,000 of di­
rect and guaranteed obligations of the
United States Government, and $4,­
000,000 of other securities.
In the two following weeks, ended
February 16, the reporting banks re­
duced reserves and balances with
other banks by $12,000,000; in addi­
tion they decreased their holdings of
securities and purchased paper by $3,­
000,000. The principal reason for
these changes was a decrease of $17,­
000,000 in deposits, only part of which
may be accounted for by the repay­
ment of loans by customers. While
commercial loans increased $3,000,000,
other classes of loans declined $6,­
000,000.
Deposits of the reporting banks on
February 16 continued above the low

50

+$ 2

158
26

+

3
2

*
*

18

-

2

-$10

35
58
2

-

1
1

-

*

*

50

Otherwise secured and unsecured..............................

54

Total loans........................... $ 451
United States Government
307
securities...............................
Obligations fully guar, by
92
261

5

-

5

-$ 8

-$ 2

+

- 40

2

+ 7
- 37

Total loans and investments................................. $1,111
Reserve with Federal Re239
serve Bank...........................
Cash in vault..........................
15
Balances with other banks..
140
Other assets—net...................
85

-1 6

-$72

+

1

- 10
- 1
— 5
- 4

Liabilities
Demand deposits, adjusted. $
Time deposits..........................
U. S. Government deposits. .
Interbank deposits.................

766
279
23
277

—$16
+ 5
- 2
- 5

—$60
+ 19
- 12
- 36

Other liabilities.......................

18
227

+

-

6
2
5

1

3

1

* Comparable figures not yet available.

levels reached in December, but they
were $89,000,000 smaller than a year
earlier. The principal source from
which funds were obtained to meet
withdrawals was through the sale of
$70,000,000 of investments, of which
$33,000,000 represented a reduction in
obligations of the United States Gov­
ernment.
The shrinkage in deposits in the
past year has been due partly to a de­
crease in balances held for other banks.
Another factor has been the substan­
tial amount by which Government ex­
penditures within the district fell short
of its local receipts, the latter includ­
ing a very considerable volume of un­
employment trust funds which the
States turned over to the Treasury
for investment.

MEMBER BANK RESERVES AND RELATED FACTORS
Changes in weeks ending—

Philadelphia Federal Reserve District
(Millions of dollars)

Jan. 26

Feb. 2

Feb. 9p

Feb. 16p

Changes
in four
weeks

Sources of funds:
Reserve bank credit extended in district...............
Commercial transfers (chiefly interdistrict)..........
Treasury operations.....................................................

-0.8
-8.3
+6.0

- 2.4
- 9.6
+10.6

+2.0
-3.6
+0.8

+1.2
+0.4
-4.6

- 0.0
-21.1
+12.8

Total............................................................................

-3.1

- 1.4

-0.8

-3.0

- 8.3

Uses of funds:
Currency demand.........................................................
Member bank reserve deposits.................................
“Other deposits” at reserve bank...........................
Unexpended capital funds..........................................

-2.3
+2.3
-0.6
-2.5

+1.9
- 3.1
- 0.1
- 0.1

-0.2
-0.4
-0.1
-0.1

+1.1
-4.1
+0.0
+0.0

+
-

Total............................................................................

-3.1

- 1.4

-0.8

-3.0

- 8.3

p—Prelimi nary.

0.5
5.3
0.8
2.7

Employment and Payrolls
in Pennsylvania

SECURITY HOLDINGS
MILLIONS
$

(All figures are rounded from original data)

400
US.GOVERNMEN T
DIRECT OBLIGAT ONS

300

r y~'
ER^ —.
OTH
S ICURITIES

200
US.GOV’T FULL
OBLIGATIONS

r GUARANTEED

-

100
^J...I...L..i..,J..,l....l...l...l... I...I..

1935

Manufacturing Indexes

-

r

1936

1937

1938

DEPOSITS
REPORTING MEMBER BANKS

PHILA. FED. RES. DISTRICT

MILLIONS

Employment*
Payrolls*
(Indexes are percentages
of the 1923-25 average
Per cent
Per cent
taken as 100. Total and
group indexes are weight­ Jan. change from Jan. change from
1938
1938
ed proportionately.)
index Jan. Dec. index Jan. Dec.
1937 1937
1937 1937
All manufacturing ..
76 -14 - 7
Iron, steel and products .
72 -13 - 8
Non-ferrous metal prods. 112 - 6 - 4
Transportation equip. . .
57 -19 - 6
Textiles and clothing....
84 -23 - 5
Textiles...........................
81 -22 - 4
Clothing..........................
95 -24 - 5
Food products................... 102 - 1 - 2
Stone, clay and glass....
67 - 8 -15
Lumber products..............
47 -25 -13
Chemicals and products .
89 - 4 - 1
Leather and products___
81 -16 + i
Paper and printing...........
96 - 1 - 2
Printing...........................
92 - 1 - 2
Others:
Cigars and tobacco...........
56 - 4 -18
Rubber tires, goods. . .
76 -15 - 3
Musical instruments ..
54 + 0 - 2
* Figures from 2327 plants.

Employehoursf
Jan. 1938—
per cent
change from
Jan. Dec.
1937 1937

65
65
118
45
64
62
77
102
51
35
89
74
92
91

-27
-34
-10
-32
-34
-35
-27
+ 3
-20
-31
- 7
-22
- 5
- 2

-11
-14
-13
-15
- 6
- 8
+ 3
- 4
-21
-22
- 4
+12
- 8
- 7

-36 -13
-42 -14
-24
-34 -13
-40 - 7
-42 - 9
-31 + 6
- 8 - 7
-36 -23
-39 -22
-23 - 2
-25 -14
-11 - 8
- 4 - 6

43
71
50

- 5
-25
+ 7

-34
- 7
-14

- 9
-32
- 2

-35
- 6
-14

t Figures from 2078 plants.

DEMAND (adjusted)

General Index Numbers
Covering twelve branches of trade and industry

(Indexes are percentages of the
1932 average taken as 100. In­
dividual indexes are combined
proportionately into general in­
dex number.)

INTERBANK

General index (weighted)...
US GOVERNMENT

1936

1937

1938

Percentage change—January 1938 from January 1937
City areas*

Manufacturing
Employ­
ment

Wage
payments

Allentown.............
Altoona..................
Harrisburg............
Johnstown............
Lancaster..............
Philadelphia.........
Reading.................
Scranton................
Trenton.................
Wilkes-Barre. . . .
Williamsport........
Wilmington..........

-11
-19
-10
-23
-11
-13
-15
-18
-13
-12
- 7
-14
-28

-20
-48
-25
-45
-21
-16
-30
-19
-24
-23
-14
-14
-37

Allentown.............
Altoona..................
Harrisburg............
Johnstown............
Lancaster..............
Philadelphia.........
Reading.................
Scranton................
Trenton..................
Wilkes-Barre. . . .
Williamsport........
Wilmington..........
York.......................

- 8
- 5
- 8
- 9
- 5
- 5
- 6
- 8
- 9
- 7
- 4
- 5
-19

Building
permits
(value)
-f
-

41
46
89
85
77
37
29
59
85
69
9
57
80

Debits
- 6
-12
- 8
- 8
- 9
-13
-13
-15
+ 3
-17
-18
- 5

Manufacturing.............................
Anthracite mining.......................
Bituminous coal mining.............
Building and construction.........
Quarrying and non-met. mining
Crude petroleum producing .. .
Public utilities.............................
Retail trade...................................
Wholesale trade...........................
Hotels.............................................
Laundries.......................................
Dyeing and cleaning...................

Employment
Jan.
1938
index
106
119
80
115
63
83
165
98
105
115
111
100
94

Per cent
change from
Jan.
1937

Dec.
1937

-11
-14
- 9
-10
-12
-23
+ 5
+ 6
- 6
+ 0
+ 3
- 2
- 2

-10
- 7
- 3
- 1
-20
-21
+ 2
- 1
-26
- 2
- 4
- 2
- 6

Payrolls
Jan.
1938
index
129
159
80
147
83
103
178
104
121
115
127
117
99

Per cent
change from
Jan.
1937

Dec.
1937

-23
-27
- 0
-35
- 1
-44
+14
+ 6
+ 1
+ 2
+ 9
+ 7
+ 2

-17
-11
- 9
-31
-21
-30
+ 1
- 5
-20
- 3
— 2
- 9

Retail
trade
•sales
- 9
-26
— 4
-14
- 2
- 6
-14
- 6
-11
- 3

INDUSTRIAL EMPLOYMENT AND PAYROLLS
PENNSYLVANIA
PERCENT

PAYROLLS

+ 4

January 1938 from December 1937
- 9
-13
-11
- 4
- 9
- 9
-14
-10
- 9
-18
- 7
- 9
-25

+ 49
- 40
+ 144
- 93
- 60
+ 4
- 63
- 73
+ 82
+119
- 46
+ 31

-10
-13
-20
-20
-20
-12
-15
-10
-18
-20
-16
-42
-23

-58
-58
-58
-59
-58
-58
-62
-61
-66
-59

EMPLOYMENT

-59
1933

1934

1935

1936

1937

1938

* Area not restricted to the corporate limits of cities given here.




Page Seven

RETAIL TRADE

Index numbers of individual lines of trade and
manufacture

PHILADELPHIA FEDERAL RESERVE DISTRICT

PERCENT

Philadelphia Federal Reserve District
Index numbers: percentages of the 1923- 1925 average as 100
Adjusted indexes allow for the usual
seasonal change in activity.
Unadjusted indexes reflect merely the
actual change which may or may not
be typical.

Not adjusted

Adjusted for seasonal variation
Per cent
change
Jan.
1937

Nov. Dec.
1937 1937

Jan.
1938

Jan. 1938
from

Jan.
1937

Nov.
1937

Dec.
1937

Jan.
1938

Month Year
ago
ago

Retail trade
Sales

Stocks of goods

84
76 r
79
104
82
99

79
78
67
94
75
80

78
72
71
108
72
81

79

80
59
105
71
104

78
55
109
71
103

118
100

2
2
9
9
i
4

- 9
- 7
- 3
- 6
-10
-21

64 r
55 r
74
93
64
65

92
89
77
113
73
103

129
130
120
162
93
125

58p
51p
72p
88
58p
51p

79p + i
55p + i
- 2
107
68
- 4
lOOp - 2

- 0
- 6
-10
+ 5
+ 0

70 r
52 r
101
59
95

91
69
129
75
117

74
52
102
66
95

70p
49p
91
62
95p

76p
71 p
77p
98
73p
78p

+
+
-

Rate of stock turnover

0.28

- 3* 0.29

Wholesale trade
Sales

-21*
-12*
- 9*
-49*
- 3*
-24*
-77*
_ 2*

Output of manufactures

75
100
79
119
120
21
78
40
231
101
86
64
171
111
148
40
61
34

88

119
61
100
75
95
165
107
86
95
167
130

40
35
50
58
49
54
74
89
89
108
19
22 64 r 22
51
79
27
39
32
286 r 279 r 252
57
78
71
31
33
36
31
38
33
40
52
44
63
79
86
100 92 93
20
48
44
37
34 r 29
25
32
28
50
69
59
110
111

83
87
81
79
81
136
56
55p
54
93
84
89
63
64 r 60
97
92
95
127
106
120
81p
87 r 73
73
86
90
71
82
81
168p
170
165
103
87
82

* Computed from data unadjusted for seasonal variation.

Page Eight



101

97

77

+ t*
+19*
+ 12*
+ 6*
- 1*
+ 3*
-39*
+ 1*

Stocks of goods

— 17* 89
-55*
-30*
-37*
+ 2*
-25*
-25*
-25*
- 6* 74
-13*
+ 5*
-18*
0*
+ 4*
-25*
-ii*

80

69

69

+ 13
-14
- 8
-17
-18
+ 15
-19
-14
-10
-20
-15
- 6

-47
—50
-38
-38
-26
+ 3
-34
-31
+ 9
-44
-64
-52
-76
-43
-37
-49
-53
-27

73
98
72
126
113
19
77
39
235
103
87
65
160
116
146
28
56
31

+ 0*
- 5
-32
-11
-11
-19
- 4
-23
-24
-16
-25
+ i
-37

88
96

-22

-20
+ 1
-54
-16
— 12
- 2*
+ 3
-40
- 1
+ 5
- 6
— 5
+n
-16
-13

+ 2
- 5

82
60
82
74
95
168
113
86
86
165
130

p—Preliminary.

51
66
61
103
117
19
72
36
286 r
79
35
40
48
98
101
48
37
32
91
96
51
59
111
63
96
100
84 r
90
85
171
99

39
35
49
54
45
50
78
86
83
105
19
15
51
62
27
32
293 r 257
58
73
31
34
31
35
39
50
66
77
91
91
14
36
33 r 27
23
28
91
88
92
87
56
88 54 p
56
73
61
65r 60
92
98
102 129
86p
80
73
86
79
64
165 167p
82
84

r—Revised.

WOMENAPPAREL STORES


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102