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THE BUSINESS
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FEDERAL RESERVE BANK
OF PHILADELPHIA
MARCH 1, 1944
road revisions by the War Production Board
in the outlook for supplies of some 450 basic
materials used in war and essential civilian in
dustry reflect changes in military requirements
for equipment and supplies, characterized by
continuing reductions in some categories partly
offset by substantial increases in others; sharp
expansion in productive facilities for many
crude and some semiprocessed materials; and
maintenance of a high level of raw material
imports over the greater part of last year. On
the basis of the Board’s revised Material Substi
tutions and Supply List, an easier situation pre
vails, or is in early prospect, with respect to
most metals, while supplies of a large number
of chemicals and plastics are becoming increas
ingly tight.
Improvement in the outlook for supplies of
iron, steel and most of the nonferrous metals
except tin, suggests the possibility of resuming
or increasing the production of civilian goods by
metal consuming industries later this year. Such
a development is definitely in prospect, but to a
very limited extent, particularly in the case of
larger plants whose entire productive facilities
may continue in munitions production until hos
tilities end on one of the two major fronts. In
reappraising the raw material situation, the
War Production Board emphasized that the
improved outlook for metals referred primarily
to ores and other crude forms; that supplies of
partly processed metals continued largely insuf
ficient for both military and essential civilian
needs; and that manufacturing facilities and
manpower remained generally tight.
A more immediate implication of the changed
raw material picture is the probability that the
domestic output of some metals will be substan
tially curtailed, pending an increase in the de
mand from munitions industries, or until such
time as additional processing facilities are re
leased from war work and more labor can be
spared to meet the growing needs of the civilian
economy. A move in this direction is now under
way, as evidenced by the cancellation of several
contracts for incompleted steel-making projects
and recent curtailment in the production of
aluminum. Such reductions, while helping to
prevent the accumulation of surpluses to further
unbalance a difficult demand-supply situation,
would be directly in line with a continuing need
to conserve fuel, machinery, and manpower for
urgent war requirements.
Imports of ores already have started to de
cline to the extent that a number of small con
tracts with foreign producers have been per
mitted to lapse. Another “straw in the wind”
is the unannounced but officially confirmed re
port that the War Production Board has tenta
tively established a broad policy regulating the
size of stockpiles of critical materials. Curtailed
imports are indicated under present circum
stances for the additional reason that a substan
tial tonnage of ocean shipping could thus be di
verted to meet the expanding requirements of
our armed forces overseas.
The remaining aspect of the current raw ma
terial situation concerns the apparent need to
Continued on page 7
Page One
The Economy of The Third Federal Reserve District
The Mineral Industries
The Third Federal Reserve District is one of
the richest storehouses of mineral wealth of the
United States. After more than a century of
mineral extraction this district still produces a
greater dollar value of mineral output than
almost any other area of comparable size. This
is especially significant since the district pro
duces practically none of the rare minerals
that have a high scarcity value.
Compared with manufacturing and agricul
ture, the mineral industries occupy an interme
diate position. In 1939 the district produced
more than 300 million dollars worth of mineral
products. This was about one-sixth of the value
added by manufacturing in the district but a
third greater than the value of its agricultural
products. Its mineral industries employ about
134,000 workers, or 12 per cent of all workers
in agriculture, manufacturing, and mining.
Mineral Wealth of the Third District
The energy-producing minerals are over
whelmingly predominant in the mineral prod
ucts of the district. Eighty-five per cent of its
mineral output in 1939 consisted of coal, petro
leum, and natural gas. The relative importance
of the leading mineral products is shown in
Table 1.
TABLE 1
(ESTIMATED MINERAL PRODUCTION OF THE
THIRD DISTRICT-1939
Product
Total ....................................................
Value
(Millions)
Per cent
of total
$187
42
30
6
5
3
2
36
60%
13
10
2
2
1
1
11
$311
100%
This district is the only major producer of
anthracite in the United States. The deposits
are confined to a small area of less than 500
square miles in eastern Pennsylvania. This
coal, a hard and smokeless fuel used chiefly for
domestic heating, accounts for 60 per cent of
the mineral output of the district.
Page Two
In contrast to its virtual monopoly of anthra
cite deposits, the district includes only a small
part of the vast bituminous or soft coal deposits
of western Pennsylvania. Nevertheless, the
eleven bituminous coal-producing counties of
the district contributed 13 per cent of the dis
trict’s mineral output in 1939.
Petroleum ranks third in value of mineral
products. Although the oil fields of Pennsyl
vania are for the most part in the western end
of the state, some of the most productive pools
are found within the Third District. Natural
gas, so frequently found with petroleum, is of
only minor importance in the mineral output of
the district.
The other mineral products which make up
15 per cent of the district’s mineral output are
chiefly iron ore and a variety of common rock
products. The common rock industries include
cement rock, slate, sand and gravel, clay, sand
stone, ganister, trap rock, and granite.
Early Development of the Mineral Industries
The iron deposits of this district played a con
spicuous part in its industrial development. Iron
ore has been mined almost continuously for over
two centuries. Iron manufacturing began in
colonial times, and eastern Pennsylvania be
came an important center of production by rea
son of its extensive deposits of the ore and a
plentiful supply of wood for charcoal used as
fuel in the smelting process. In that early period
iron smelting had to be carried on near the
source of raw materials owing to the lack of
transportation facilities.
The real development of the mineral indus
tries occurred after transportation facilities
opened up larger markets. This took place
about 1840, which marks the culmination of the
canal-building era. From 1840 to 1870 the iron
ore mines of the district made their great con
tribution to the iron and steel industry of the
United States. An important factor in the devel
opment of iron and steel manufacture was the
presence of anthracite used as a fuel in the
smelting process.
For the two decades from 1850 to 1870 this
district produced about 50 per cent of the iron
ores of the United States. However, the grow
ing volume of Lake Superior ore and the grad
ual change to beehive coke gave rise to Pitts
burgh as the iron and steel center. Thereupon
iron mining in the district declined both rela
tively and in actual tonnage. In 1899 the dis
trict produced only 10 per cent of the country’s
output.
FIGURE I
MILLIONS
ANTHRACITE PRODUCTION
Anthracite, which became the leading min
eral of the district, is alleged to have been dis
covered in 1762. For many years an article of
curiosity, it was of no commercial importance
until 1830 when approximately 200 thousand
tons were produced.
The period from 1830 to 1870 was character
ized by a slow but steadily rising production of heating, particularly in the markets remote
anthracite. Markets had to be cultivated and from the anthracite region. Another factor was
adequate means for transporting the coal to the the extension of gas for cooking and hot water
markets had to be provided. Consumer preju heating. Since the anthracite industry was
dice was overcome by developing household earning substantial profits, little effort was made
furnaces specially adapted for hard coal and by to meet the new competition or to seek new
improved colliery equipment to clean and size markets for anthracite.
the coal properly. At the same time the trans
The rise of substitute fuels, which arrested
portation difficulties were solved by the con
expansion
in the period prior to 1917, caused an
struction of railroads and canals into the an
actual decline of serious proportions in the
thracite region.
period from 1917 to 1939. Though production
The greatest development in anthracite min increased during the First World War, the war
ing occurred during the period from 1870 to had an adverse effect upon the industry. Con
1900; production increased from 16 to 60 mil fronted by greatly increased demand for the
lion tons. Its suitability for household heating product and a seriously curtailed supply of
and cooking gained wider appreciation because labor, anthracite had to be rationed. In areas
of its dustless and smokeless qualities. Indus where bituminous coal was available consumers
trial markets were likewise developed; the turned to soft coal, and after the war many of
smaller sizes were used by the railroads, public them continued to use bituminous coal espe
cially since anthracite prices had gone up quite
utilities, and manufacturing industries.
sharply.
Recent Trends in Anthracite Production
The shift to alternate fuels was further accel
Production of anthracite during the forty erated by the anthracite strikes in 1922 and
years ending with 1939 is characterized by two 1925-26. The shortage of anthracite as a result
well-defined trends. Production rose, as Fig. I of these interruptions in production was met by
shows, from an annual output of 60 million substitute fuels. The anthracite industry never
tons in 1899 to a peak of 100 million tons in fully recovered the markets lost to competitive
1917. From that year to 1939 production re fuels after the 1925-26 strike. The strikes were
ceded to a level of 50 million tons—a decline of not the sole cause but they hastened the shift to
50 per cent.
other fuels already in progress for some time.
The expansion of the industry from the turn
of the century to 1917 was a natural continua
tion of its earlier growth. The rate of growth
was considerably diminished, however, because
of the growing use of soft coal for domestic
As a low-priced, all-purpose fuel bituminous
coal is anthracite’s largest competitor. How
ever, the traditional market which anthracite
alone supplied for many years was invaded by
fuel oil, coke, natural gas, manufactured gas,
Page Three
fuel briquets, hydro-electric power, and anthra
cite imported from Russia. Of these, fuel oil
made the greatest inroads on the normal an
thracite market.
As a result of the tremendous growth in the
use of gasoline, fuel oil, a by-product of petro
leum refining, became so plentiful that refiners
naturally sought other than their customary
channels for the disposal of this product. The
domestic heating market proved especially re
sponsive because fuel oil offered automatic
heating. Sale of heating and range oil in 1939
in the New England and Middle Atlantic mar
kets was the equivalent of 27 million tons of
anthracite.
Employment in the Anthracite Industry
Since anthracite is the principal mineral in
dustry of the Third District, it is the largest em
ployer of mine labor. In 1899 the industry em
ployed 140,000 workers in the mining and prep
aration of coal for the market. Throughout the
40-year period from 1899 to 1939 employment
in general followed the trend in production.
The industry absorbed a steadily increasing
number of workers until 1914, but as Fig. II
shows, employment declined rather consistently
from 1914 to 1939.
Throughout most of the period before the
First World War while the industry was expand
ing it provided steadily growing opportunity for
employment. However, the peak in employ
ment occurred in 1914 when the industry em
ployed 180,000 workers, whereas production
continued to rise until 1917-18. During the war
FIGURE II
THOUSANDS
ANTHRACITE
1909
Page Four
EMPLOYMENT
1919
years the industry was confronted by an increas
ing demand for coal and a diminishing supply
of labor. Despite the falling employment, out
put was expanded by increasing the number of
days of operation, which rose from 245 days in
1914 to 293 days in 1918.
The contraction of the anthracite industry
in the latter part of this period had a serious
effect upon employment. From a peak of 180,
000 on the payrolls in 1914 employment de
clined to 93,000 in 1939—a decrease of almost
50 per cent. Unfortunately, the adverse effects
upon labor are not fully revealed by the declin
ing trend in employment because it was accom
panied by a shrinkage in working time. There
was a decrease in the average number of days
worked from almost full-time employment in
1918 to 183 days in 1939. A factor contributing
to the diminishing labor requirements, espe
cially during the thirties, was the growing mech
anization of the industry. The throwing out of
work of thousands of workers and the partial
employment incident to reduced working time
caused very great hardship. Since they lived in
an essentially one-industry area the idle miners
had almost no opportunity for alternative em
ployment.
The Anthracite Problem
The welfare of 1,000,000 people in the five
hard coal counties—Lackawanna, Luzerne, Car
bon, Schuylkill, and Northumberland—is de
pendent primarily upon the anthracite industry.
Railroad, trade and related service occupations
are also heavily dependent on coal mining.
Manufacturing in these counties employed only
about two-thirds as many workers as mining in
1940; many of the industries are silk and other
textiles, employing women. Employment in
these industries has declined considerably since
1939.
The 50 per cent contraction in production and
employment in the anthracite industry has been
accompanied by an almost equal reduction in
wages. During the last decade, 1929 to 1939,
over $300 million was spent by the WPA and
other types of public assistance for the relief of
the unemployed in these counties. Population
declined about 23,000. Under pressure of wide
spread unemployment many workers migrated
to industrial centers in southeastern Pennsyl
vania, New York, and New Jersey.
During the thirties, “bootleg” mining ex
panded because of the continued decline of col
liery operations and the lack of alternative em
ployment opportunities. A recent survey re
vealed that in March 1941 over 12,000 miners
were engaged in this activity, producing about
5,000,000 tons annually.
Although it has suffered a severe contraction,
the anthracite industry is by no means doomed
to extinction. Its decline is attributable primar
ily to the inroads of competitive products—not
the exhaustion of deposits. About 70 per cent
of the original deposits are still untouched de
spite more than a century of mining. The prob
lem of maintaining production at recent levels
or recovering some of the lost markets may be
approached from two different angles. One is
through economical mining and the other is
through effective marketing.
The cost of extracting and preparing coal for
the market at best offers only limited oppor
tunities for improvement. Despite technical ad
vances such as machine cutting, mechanical un
derground loading and strip mining, labor still
constitutes about 60 per cent of production costs.
Other elements in the cost structure offer
little prospect of reduction. Royalties, taxes,
and freight rates are inflexible. The cost
of pumping out mine water is increasing. In
1937 each ton of coal produced required the
pumping of 33 tons of mine water, which was
treble the 1921 rate.
Effective marketing of anthracite seems to
offer better prospects than reducing production
costs. About 80 per cent of the annual output is
used for domestic heating. This is the market
for which the fuel is best adapted. It is also the
market in which it has suffered the greatest loss.
Since it has been replaced so largely by fuel oil
on the basis of consumer convenience rather
than cost, the industry must meet this compe
tition.
The industry already has made considerable
progress in this respect. Controlled combustion
is insured by mechanical stokers, which auto
matically feed the coal and remove the ashes
from the furnace. Sales of mechanical stokers
for burning anthracite attained an annual vol
ume of 12,000 by 1940.
Greater automaticity in anthracite-burning
equipment, more effective advertising of such
devices, and improved service by anthracite
dealers are the most promising avenues to in
creased use of this fuel.
The industrial market for anthracite consists
of railroads, public utilities, and some manufac
turing industries. Formerly this market was
quite substantial but now it accounts for only 10
per cent of the output. Both bituminous coal and
fuel oil have invaded this market, which is ex
tremely sensitive to price competition. It is
doubtful whether anthracite can regain much of
this business.
There is some evidence of a revival of interest
in the use of anthracite as a foundry cupola and
blast furnace fuel and also as a substitute for
coke to manufacture carbureted water gas for
general city use. Research programs are in
progress to develop non-fuel uses for anthracite,
such as the production of synthetic textiles, plas
tics, carbon black and filtering materials. Total
demand for anthracite for all of these purposes
would not be very extensive at best.
Other Mineral Industries—
Bituminous Coal
Most of the bituminous coal of the district
comes from the Cambria and Clearfield county
deposits which are part of the vast Appalachian
coal beds cutting across western Pennsylvania.
Although nationally bituminous coal is a much
larger industry than anthracite, in the Third
District the bituminous industry is much smaller.
Compared with anthracite, the bituminous in
dustry of the district produced, in 1939, little
more than one-third as much tonnage, about
one-fifth as much value and employed about
one-third as many workers.
Bituminous coal production expanded during
the first two decades of the present century and
declined in the next two decades. Production
rose from 19 million tons in 1899 to 30 million
tons in 1919. Soft coal is essentially an indus
trial fuel, and the rising output of the district’s
bituminous coal was marketed in the growing
industrial centers of the northeastern United
States.
Between 1919 and 1939 bituminous coal pro
duction declined from 30 to 19 million tons—a
decrease of 37 per cent. Although there was a
Page Five
reduction of output by the entire soft coal indus
try of the United States during this period, ow
ing chiefly to the rapid rise of petroleum, the
rate of decrease in this district was more than
twice that of the country. The greater decline
in the district is attributable to the competition
of other coal-producing areas—notably Ken
tucky and West Virginia—whose producers
have some cost advantages over this district.
Employment in the district’s bituminous coal
industry has followed the same general trend as
production. In 1899 the industry employed ap
proximately 26,000 workers, which rose during
the period of expanding production to 42,000
workers in 1919. The subsequent contraction
of the industry caused a shrinkage of employ
ment to 29,000 workers by 1939.
trict commands premium prices because of its
high quality. The best grades of lubricating oil
are obtained from this petroleum, which has a
paraffin base.
Limestone
«
Limestone accounts for the largest proportion
in tonnage and value of the common rock prod
ucts. It is used as a raw material for cement
manufacturing, as a fluxing stone in iron and
steel manufacturing, as a road material for con
structing and resurfacing highways, and as a
raw material to make pure lime utilized in agri
culture, the building trades, and in numerous
manufacturing industries.
The cement industry is the largest consumer
of limestone. The rich limestone deposits of Le
high and Northampton counties gave rise to an
Petroleum
important cement manufacturing industry in this
Since 1899 the trends of petroleum produc
tion in the Third District have been practically region. In 1900 this area produced about 70 per
the reverse of those of its coal output. Unlike cent of the cement of the United States. The
limestone in this region was known as cement
coal, petroleum output declined steadily from
rock because it contained enough clay to make
the opening of this century until the early 1920s,
it ideal for cement manufacture by adding small
after which production increased sharply.
quantities of pure limestone.
The Bradford field in McKean County is the
Since 1900 cement mills have sprung up in
principal source of petroleum produced within
numerous
areas throughout the United States.
the Third District. This field, located in the
The
development
of a standard formula of ce
northwestern corner of the district, is a part
ment
manufacturing
ingredients permitted the
of the Appalachian oil-producing area cutting
utilization of limestone deposits inferior to
across western Pennsylvania in a northeast to
those of the Lehigh Valley. Largely as a conse
southwesterly direction.
quence of this technical development, the ce
ment
industry of the Third District lost its for
As a part of the pioneer oil-producing area of
the United States, the Bradford field had its mer supremacy.
greatest development late in the 19th century.
As a result of the early exploitation of its pe The Mineral Industries in War
troleum resources, the oil production of the dis
The importance of mineral raw materials in a
trict was slowly declining during the first quar period of national emergency is not often fully
ter of the present century. Production tapered appreciated. The mechanized character of mod
off from approximately 4 million barrels in 1899 ern warfare creates unprecedented demands for
to about 214 million barrels in 1921, and even minerals of every kind. Although the United
this diminishing flow was obtained only by con States has an abundance of mineral wealth, the
tinuous pumping.
war is taking a heavy toll on reserves. Demand
became particularly acute after this country en
The Bradford oil field was revived in the early tered the war, because increased difficulties of
twenties by the application of water flooding. shipping forced ever greater reliance upon do
The flow of oil was greatly increased by inject mestic supplies.
ing water into the oil-bearing sands that had
been responding poorly to the ordinary methods
In time of war conservation must give way to
of pumping. As a result of water flooding, oil the urgency of immediate needs, with the result
production in the district steadily rose to 14 mil that mineral reserves are rapidly depleted.
lion barrels in 1939. Though a very small part Moreover, the requirements for war cause
of total American output, the oil from this dis greater drains upon some minerals than others.
Page Six
Depletion of reserves is more serious with re
spect to the fuel minerals than the metals. Un
like metals, fuels once used are irretrievablygone—there is no reclamation of scrap as in
metals.
From the beginning of this century to 1939
solid fuels have supplied a constantly diminish
ing proportion of our national energy require
ments. Anthracite and bituminous coal supplied
90 per cent of our energy needs in 1899 but only
47 per cent in 1939. Meanwhile, petroleum in
creased from 5 to 32 per cent. If these trends
continue during the war and after, the mineral
industries of the Third District will face addi
tional readjustments owing to the predominance
of solid fuels in its mineral economy. However,
if the war should bring about a drastic reduc
tion in our national reserves of petroleum, the
mineral industries of the Third District may
take on added importance.
In a subsequent release an appraisal will be
made of the effect of the war upon the mineral
industries of the Third District and the implica
tions with respect to their post-war prospects.
Business and Banking
Continued from page 1
below last fall’s peak, and showed a gain of 6
make resubstitutions for certain materials for per cent over January 1943.
merly in ample supply and only recently grown
scarce. A case in point is plastics, used in place
The influence of reductions authorized in the
of metals on an increasing scale through the output of specific types of munitions was appar
first two years of war. Resubstitutions are not ent in the lower rate of operations in heavy in
without precedent in this war, as very early in dustries during January. The decline in output
the conflict the supply of various chemicals fell at plants making lighter products, chiefly on
short of total requirements. Substitutes were civilian account, reflected the persistence of a
obtained, but later replaced by the original ma tight labor situation, and in some instances, con
terials when supplies eased sufficiently to permit tinued difficulty in obtaining supplies of certain
a resumption of their use in less essential prod crude and semi-processed materials. Productive
ucts or processes.
activity in both durable and consumers’ goods
lines in January was about 5 per cent greater
Industry and trade. Industrial production in than a year earlier.
this district on an adjusted basis decreased
The number of wage earners employed in
somewhat further from December to January,
owing principally to small declines in the out Pennsylvania factories decreased slightly in
put of durable and nondurable manufactures. January and was little larger than a year ago.
In the aggregate output was less than 3 per cent Employment continues close to the November
peak—the highest reported in two decades—
suggesting that a wartime ceiling may have
been reached in manufacturing industries.
PRODUCTION AND PRICES
The volume of wage disbursements also showed
PERCENT
a small decline in January, but was about onetenth greater than a year earlier. Payroll in
creases over 1943 occurred in all major lines
PRODUCTION *
except leather products, where productive
activity has been curtailed for many months by
the limitations imposed on the consumption of
raw materials.
PHILA.FEDERAL RESERVE
WHOLESALE
COMMODITY PRICES US
' COST OT LIVING
IN PHILADELPHIA
1939
1940
1941
1942
1943
1944
The weekly income of wage earners at report
ing plants in Pennsylvania averaged somewhat
less in January than in December, reflecting a
small decline in the average number of hours
worked per man to just under 45 a week, a level
maintained or exceeded through the last five
months of 1943. Average hourly earnings con
Page Seven
tinued at $1.03 for the third successive month,
the highest in records back through 1927.
Emergency shipments of anthracite to areas
of acute shortage, and continued substitution of
bituminous coal are easing the critical supply
problem for solid fuels used primarily for heat
ing. But recent upward revisions in estimated
requirements for the full year serve to empha
size that a relatively tight situation may per
sist for a considerable period beyond the pres
ent crisis. Anthracite needs are expected to total
66 million tons in 1944, as against 60 million
tons produced in each of the two preceding
years. Domestic and export requirements for
bituminous coal have been estimated at approx
imately 620 million tons, or 5 per cent above the
quantity mined in 1943.
ary, a reduction of over one-fourth from a year
earlier, and the smallest for that month since
1935. The sharpest declines from 1943 were
in contracts for public works and utilities.
With the volume of primary distribution by
rail and motor truck expanding from relatively
low levels reached over the year end, the na
tion’s carriers, particularly the railroads, are
facing a growing shortage of manpower. Thus,
such easement of a persistently tight transporta
tion situation as might have been expected later
this year from increases in rolling stock may be
offset by a continuing loss of railway personnel.
Total freight-car loadings in this section in Jan
uary were about one-tenth greater than a year
earlier, with an even larger increase indicated in
the volume of freight, owing to heavier loadings
per car.
The production of anthracite on a daily basis
increased somewhat further in January, and was
Activity in wholesale markets expanded con
the largest for that month since 1941. Contin siderably during January, when retailers made
ued gains through the first half of February re large commitments for spring goods and to re
flected the almost universal adoption of a seven- plenish stocks of staple merchandise reduced by
day work-week authorized by the Administrator heavy consumer purchases in the preceding two
for Solid Fuels to meet the immediate require months. Sales of dry goods were nearly double
ments of consumers and to permit rebuilding of the dollar volume reported in December, with
depleted stockpiles. Colliery operations are to much less pronounced gains occurring in the
be maintained on this basis to the end of Febru case of shoes, groceries, and paper. Increases
ary. Output of bituminous coal in Pennsylvania over January 1943 were shown in all reporting
also increased from December to January, al branches of the trade except shoes and electrical
though the tonnage produced remained below supplies. Inventories in the aggregate were
the high levels prevailing last fall. Operations in maintained in January at about the level of a
this field continued to expand in early February. year earlier, although wide fluctuations oc
curred in individual lines.
Manpower and, to a lesser extent, material
shortages are reflected in a continuing decline in
The continuance of an unusually strong de
building and construction activity since the turn
mand
from consumers was reflected in smaller
of the year. Scheduled cut-backs in operations
than
seasonal
decreases during January in the
during the current half-year are expected to re
lease for more essential needs another 100,000 value of retail sales in the majority of reporting
employees in building trades throughout the lines in this district. After adjustment for usual
country, reducing the total by July 1, 1944 to a seasonal changes, the index of sales by depart
new wartime low of approximately 700,000, ac ment stores rose by one-fourth. Sales also were
cording to the War Manpower Commission. somewhat above expectations at establishments
specializing in women’s apparel and shoes, but
The sharp downward trend of new contract they declined more than usual at men’s apparel
awards over a large part of 1943 and further stores. Gains over a year ago were substantial,
moderate reductions in January of this year are except at furniture stores, and at shoe stores
indicative of the extent to which emphasis has where the influence of rationing was apparent
shifted to production for direct war needs since in a sharp decline in the value of sales.
the completion of the bulk of military installa
Outstanding orders for merchandise by de
tions, industrial and other facilities some months
partment
stores increased considerably in Janu
ago. In this district, the value of contracts
awarded totaled less than $10 million in Janu ary, reversing a downward movement in the prePage Eight
ceding five months. Retail inventories showed
mixed changes in the month; on an adjusted
basis supplies at department and women’s ap
parel stores increased considerably, while some
decline was reported by shoe stores. Stocks at
the end of January were only slightly below the
dollar volume of a year earlier at department
stores, but considerably lower at shoe and furni
ture stores. A large percentage increase per
sisted in the case of women’s apparel.
Banking conditions. Sales of Treasury secu
rities to nonbank investors during the Fourth
War Loan Drive exceeded over-all quotas in the
country as a whole and in each of the three
states which lie wholly or partly in the Third
Federal Reserve District. Figures in detail, in
cluding sales of saving bonds and savings notes
through February, await release of final data by
the Treasury.
The growth in bank credit in this district was
less than that reported during the drive held last
fall. At reporting banks loans and investments
expanded $240 million in the period from Sep
tember 1 to October 6, during which the Third
Drive was conducted. The increase was only
$145 million in the corresponding weeks bridg
ing the Fourth Drive, although banks were given
an opportunity to invest limited portions of their
savings deposits in specified issues. The increase
during this last period was principally in hold
ings of Governments, but included also some $20
million of advances to purchase or carry such
securities and an additional $10 million of com
mercial and other loans.
Outstanding credit and deposits at the report
ing banks are still below the record high points
reached on October 20. Changes in deposits in
the four weeks ended February 16 were typical
of those in loan drive periods. Adjusted demand
deposits decreased $191 million, while balances
of the United States Government moved up more
than $300 million.
Combined reserves of all member banks de
clined $43 million to $609 million in the four
latest weeks. The district gained heavily in com
mercial transactions with other sections, but
this inflow of funds was more than balanced by
large cash payments to the Treasury and a mod
erate demand for currency. Reserve Bank credit
was reduced, principally by a decline of $38 mil
lion to $132 million in Treasury bills held under
the repurchase option.
LOANS AND INVESTMENTS
REPORTING MEMBER BANKS
BILLIONS $
THIRD TED. RES. DISTRICT
2.4
■TOTAL
U.S. GOVT
OBLIGATIONS
While recognizing that all efforts during the
war period must be directed to the consumma
tion of war objectives, banks and others look
forward to the time when conversion of the
economy to the ways of peace will take place.
The development of an adequate bank policy
and program must take into account such ele
ments as the financial requirements of business
in reconverting their facilities and the shifting
of deposits that may occur during the post-war
period.
Surveys of deposit ownership conducted
by the Reserve Banks contribute to the factual
basis upon which both of these problems may
be appraised and in so doing prove helpful to
individual banks in the evolution of their own
plans. The last survey, undertaken in July, was
summarized in an article on the “Growth and
Distribution of Demand Deposits”, which ap
peared in the Business Review some months ago.
Banks are now being asked to supply informa
tion as of February 29 to bring this material up
to date. Gains in deposits in the period from
June 1939 to June 1943 were relatively greater
in the South and West than in the Northeastern
section of the country, in which the Third Fed
eral Reserve District is located. During the last
half of 1943 trends by areas followed much the
same pattern. Monthly averages of total depos
its showed gains of 6, 5, and 7 per cent re
spectively at member banks in the Philadelphia,
New York, and Boston Reserve Districts be
tween June and December, as compared with
increases ranging from 8 to 18 per cent in the
other nine districts.
Page Nine
Revision in Department Store Sales Index
INDEX BEFORE REVISION
REVISED INDEX
ADJUSTED FOR SEASONAL VARIATION
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
The index of department store sales in the
Third Federal Reserve District has been revised
to include more comprehensive data that have
become available. Similar revisions are under
way at each of the other Federal Reserve Banks.
Revised district figures will be combined into a
national index to be published by the Board of
Governors of the Federal Reserve System.
For some time it was recognized that the sales
index reflected a downward bias, owing largely
to insufficient representation of chain stores and
stores in small communities. To correct this de
ficiency, additional stores were solicited and
added to the reporting sample in 1935 and later
years. As a result, reporting stores now account
for approximately 80 per cent of total depart
ment store sales in the district.
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
district. No revision was necessary in the case
of Philadelphia because so large a proportion of
the city’s total sales is included in reports from
cooperating stores. The index of sales in the dis
trict outside Philadelphia, however, was revised
and adjusted to 1929-39 census levels. Weights
used to combine the two index series were also
revised. They are now based on value of sales
during the base period, 1935-1939.
Effect of the Revision
Comparisons of sales over short intervals of
time were not changed materially by this revi
sion ; the correction did not exceed one per cent
in any single year. The effect of the revision,
however, was more apparent over long periods
of time. For example, the revised index shows
that sales in both 1942 and 1943 were greater
than in any other year on record, whereas the
Although these additions to the reporting former index indicated that sales in 1943 were
sample added considerably to the accuracy of smaller than in 1926 and that sales in 1942 were
current information, it was only recently that smaller than in any year from 1923 through
adequate data became available for use in ad 1927.
justing indexes for earlier years. At the request
Over the entire life of the series (1923-1943)
of the Board of Governors of the Federal Re
serve System, the Bureau of the Census of the the revised district index shows an increase of
U. S. Department of Commerce recently pre 12 per cent, whereas the old index indicated an
pared some special tabulations of department increase of only 2 per cent. The greater part of
store sales in 1929 and 1939 for each of the the adjustment was made between 1929 and
Federal Reserve Districts. This information 1939, when both adjustment to Census levels
and revision of weights were involved. Adjust
was the basis for the index revision.
ments prior to 1929 and subsequent to 1939 in
The index of total sales in this district is a volved revision of weights only.
weighted combination of the index for Phila
Note: Revised district indexes are included in the table.on page
delphia and an index for the remainder of the 12. Revised figures for past years may be secured upon request.
Page Ten
BUSINESS STATISTICS
Production
Employment and Income
Philadelphia Federal Reserve District
in Pennsylvania
Adjusted for seasonal
variation
Jan. Dec. Jan.
1944 1943 1943
Pe cent
ch angc
Jap . 1944
f rom
Mo. Year
ago
ago
154p
160p
256p
93p
187
67p
698
120p
117
41p
169
105p
95
- 2 + 6
- 2 + 6
- 2 + 5
- 2 4- 5
- 1 + 5
- 6
0
- 3 + 12
- 2 + 18
- 5 - 15
+1 - 25
+ 2 + 14
- 2
0
0 + 5
153p 155
158p 161
144
148
179
69p
705
119p
97
35p
165
109p
95
170r
69r
633 r
lOOr
114
45
145
108r
91
88 103r 104r
142 148r 137 r
83
87
77
57p 60
58
45r 59
47
51p 50
50
77
72
77
150 152 158
80
41p 41
56
56
71
32
33
30
-15
- 4
- 4
- 5
+ 3
+ 2
- 7
- 1
0
0
+ 3
+
+
+
+
16
4
8
2
20
2
7
5
49
20
10
85 I02r 101r
139 I39r 134r
85
88r 79
58
57p 57
47
49 r 60
51p 50
50
75
80
75
147 150 155
56
29p 33
52
66
55
27
30
31
141
151p
117
86
97
120
90p
107
164p
75
73
90
383
405
430
368
119
174
150
122
85
97
133
82
100r
171
75
72
95
394
403
443
379
91
112
118r
138
84
92
125
84 r
101
161
66r
64 r
83
450
374
391
326
+ 7
-19
+1
- 4
+1
0
-10
+10
+ 7
- 4
0
+1
- 6
- 3
0
- 3
- 3
+
+
+
+
+
+
+
+
+
+
+
+
+
+
40
26
27
15
2
5
4
7
6
2
13
14
9
15
8
10
13
139
97
149p
96
85
97
123
95p
96
164p
76
73
102
368
429
442
357
129
113
151
88
86
98
113
89
97 r
175
75
72
100
371
431
456
360
38
38
54
26
44
37
57
43
165
64
190
398
-14
+ 4
- 5
-40
-
77
40
71
93
42
31
59
33
48
36
62
52
Indexes: 1923-5 =100
INDUSTRIAL PRODUCTION.
MANUFACTURING..................
Durable goods.............................
Consumers' goods.....................
Metal products............................
Textile products.........................
Transportation equipment.. . .
Food products.............................
Tobacco and products...............
Building materials......................
Chemicals and products...........
Leather and products................
Paper and printing....................
Individual lines
Pig iron..........................................
Steel................................................
Silk manufactures......................
Woolens and worsteds...............
Cotton products..........................
Carpets and rugs........................
Hosiery..........................................
Underwear....................................
Cement..........................................
Brick..............................................
Lumber and products...............
Bread and bakery products...
Slaughtering, meat packing...
Sugar relining..............................
Cunning and preserving...........
Cigars.......................1............ ..
Paper and wood pulp................
PrinLing and publishing...........
Shoes..............................................
Leather, goat and kid...............
Paints and varui^hep.................
Coke, by-product........................
COAL MINING..........................
Anthracite..
Bituminous.
CRUDE OIL........ ,.............................
ELECTRIC POWER-OUTPUT.
Sales, total. . . .................................
Sales to industries.............................
BUILDING CONTRACTS
TOTAL A WARDSt............................
Residential t........................................
Nonresidentialt.................................
Public works and utilities'}*............ .
Not adjusted
157
163
260
95
189
71
717
122
123
41
166r
107
95
146r
150
243
89 r
177 r
67
625r
102 r
138
54
148
104 r
91
* Unadjusted for seasonal variation,
t 3-month moving daily average centered at 3rd month.
Employment
Jan. Dec. Jan.
1944 1943 1943
181
70
740
120
89
38
164r
101
96
100
77
114r
113
83
92
128
89 r
91
161
67r
64r
94
432
397
403
317
183
52
205
510
Factory
Employment
Building
permits
value
Factory
Payrolls
Dec.
1943
Jan.
1943
Dec.
1943
Jan.
1943
Allentown...........
Altoona...............
Harrisburg..........
Johnstown..........
Lancaster............
Philadelphia....
Reading...............
Scranton..............
0
0
0
0
0
0
0
0
- 2
+ 8
- 3
- 5
+12
+ 3
- 3
+21
0
-10
+1
0
+ 3
0
+1
- 4
+13
+ 9
+ 7
+11
+25
+13
+ 7
+33
+
+
+
-
Wilkes-Barre....
Williamsport....
Wilmington........
Y ork.....................
0
- 1
- 2
- 1
+
+
—
- 6
+ 1
- 3
+1
+ 2
+ 9
+20
+ 3
1
2
7
6
Dec.
1943
330 — 2
491 - 1
91 - 6
375 - 2
106 - 6
263 -10
232 + 3
139
0
174 - 5
144 - 1
161 - 2
171 + 8
146 - 4
+ 2
+1
- 2
-13
-23
- 2
- 2
+22
- 6
+ 5
— 9
+ 2
+12
+11
+46
+20
- 2
— 17
+16
+ 7
+22
+ 2
+14
+ 4
+ 6
Manufacturing
Employment*
Payrolls*
Per cen t
Per cent
Jan. change from Jan. change from
1944
1944
index Dec. Jan. index Dec. Jan.
1943 1943
1943 1943
Indexes; 1923-5=100
TOTAL.....................................
Iron,steel and products.. .
Nonferrous metal products.
Transportation equipment.
Textiles and clothing..........
Textiles.................................
Clothing................................
Food products.......................
Stone, clay and glass..........
Lumber products.................
Chemicals and products...
Leather and products.........
Paper and printing..............
Printing.................................
Others:.....................................
Cigars and tobacco...........
Rubber tires, goods...........
__Musical instruments.........
122
131
193
179
82
75
123
88
49
122
77
103
94
- 1
- 1
+1
+1
- i
- 1
- 1
- 1
- 3
- 3
- 1
- 1
- 1
- 2
+1
+1
0
+13
- 6
- 6
- 6
+ 7
- 5
- 5
+1
-16
+ 2
+ 2
200
275
423
301
121
112
162
182
127
77
210
117
147
128
57
153
96
- 2
0
- 3
-12
+28
+29
80
317
180
no
-1
-+ 21
- 3
1
1
2
1
5
4
0
-
+
+11
+10
+13
+17
+ 5
+ 5
+20
+
+116
+14
- 7
04
0
+n
+12
0
+ 4
- 3
-+461
+52
* Figures from 2889 plants.
Hours and Wages
Debits
Jan.
1943
Dec.
1943
Jan.
1943
Dec.
1943
Jan.
1943
93
89
25
ii
40
43
91
97
+ 91
- 92
- 45
- 47
+ 82
+ 33
+240
+992
-53
-56
-46
-54
-53
-49
-54
-56
+ 6
+13
+22
+20
+ 10
+ 6
+ 7
+25
+24
+35
+38
+18
+35
+22
+19
+23
- 68
+ 14
- 11
+628
- 9
+236
+304
- 63
-54
+19
-59
-55
- 4
+n
0
+ 1
+ 6
- 8
- 3
- 5
- 3
-12
—~6
— 4
-24
-10
* Area not restricted to the corporate limits of cities given here.
GENERAL INDEX............ 138 - 2
Manufacturing...................... 189 - 1
Anthracite mining................
49 - 1
Bituminous coal mining.. .
80 - 1
Building and construction.
41 -10
Quar. and nonmet. mining.
83 - 9
Crude petroleum prod........ 135
0
Public utilities......................
98
0
Retail trade........................... 133 - 8
Wholesale trade.................... 103 - 2
Hotels...................................... 100 - 1
Laundries................................ 100
0
Dyeing and cleaning...........
93 - 3
Factory workers
Averages
January 1944
and per cent change
from year ago
Retail
Sales
Payrolls
Per cent
Per cent
Jan. change from Jan. change from
1944
index Dec. Jan. index Dec. Jan.
1943 1943
1943 1943
Indexes: 1932 =100
p—Preliminary,
r—Revised.
Local Business Conditions*
Percentage
change—
January
1941 from
month and
year ago
Industry, Trade and Service
+29
+18
+24
TOTAL.............................
Iron.stcci and prods..
Nonfer. metal prods.. .
Transportation equip..
Textiles and clothing..
Textiles.........................
Clothing.......................
Food products..............
Stone,clay and glass..
Lumber products.........
Chemicals and prods..
Leather and prods.. . .
Paper and printing. . .
Printing........................
Others:
Cigars and tobacco. .
Rubber tires, goods..
Musical instruments.
Weekly
working
time*
Hourly
earnings*
Weekly
eajmingsf
Aver
age Gh’ge Aver Ch’gc Aver Ch’ge
hours
age
age
3 $1,031 + 6 $46.00
3 1.093 + 4 50.49
3 1.002 + 9 46.34
1 1.181 + 7 55.49
.745 + 9 29.38
2
.768 + 8 31.17
2
.688 +11
1
25.67
.805 +10 34.67
3
4
.915 + 7 35.80
2
.742 +12 32.62
8 1.032 + 4 46.47
.735 + 7 30.46
2
4
.886 + 6 38.43
4 1.034 + 7 41.65
44.8
46.2
46.3
47.0
39.6
40.7
37.0
42.8
39.3
44.2
45.1
41.3
43.1
40.2
+
+
+
+
+
+
+
+
+
+
+
+
+
42.3
45.2
51.5
+ 3
+ 4
+14
* Figures from 2740 plants.
.603 + 9
1.016 +11
.946 + 4
25.49
45.89
48.70
+ 9
+ 8
+12
+ 5
+12
+11
+13
+13
+10
+15
+11
+10
+ 9
+10
+12
+15
+18
t Figures Irom 2889 plants.
Page Eleven
Distribution and Prices
Adjusted for seasonal
variation
Per cent
change
Jan. 1944
from
Wholesale trade
Unadjusted for seasonal
variation
Indexes: 1935-1939=100
Month Year
ago
ago
Sales
Inventories
Paper..................................................
+17
+ 4
- 3
+94
-22
+12
-20
-10
+18
+19
-14
+ 2
+32
- 3
+25
+14
+15
+44
- 1
- 5
- 9
+ 1
+ 2
+13
- 7
0
- 6
-30
+22
- 4
-11
- 4
Source: U. S. Department of Commerce.
Per cent change from
Prices
Basic commodities
(Aug. 1939=100)....
Wholesale
(1926=100)................
Farm.............................
Food..............................
Other............................
Living costs
(1935-1939=100)....
United Spates.............
Philadelphia...............
Food............................
Clothing....................
Rent............................
Fuels...........................
Housefurnishings.. .
Other..........................
1944 Month Yeajr
ago
ago
Aug.
1939
179
0
+ 3
+ 79
103
122
105
98
0
0
- 1
0
+ 1
+ 4
0
+ 2
+ 38
+100
+ 56
+ 22
124
123
135
132
107
109
125
117
0
0
- 1
0
0
0
0
+ 1
+
+
+
+
+
+
+
+
+
+
+
+
3
3
4
5
0
+ 3
+ 2
+ 2
Not adjusted
Per cent
change
26
26
45
34
4
13
25
16
Jan. 1944
U >m
Month Year
ago
ago
Jan. Dec. Jan.
1944 1943 1943
RETAIL TRADE
Sales
Department stores—District.....................................
—Philadelphia............................
Women’s apparel...........................................................
Men’s apparel.................................................................
Shoe...................................................................................
174p
164
153
119p
141
139
127
140
134r
133
158
156
135
115
169
+25
+29
+ 9
-11
+ 6
-45*
+ 10
+ 6
+13
+ 4
-17
o*
Inventories
Department storey—District.....................................
—Philadelphia............................
Women’s apparel..........................................................
Shoe...................................................................................
149p
147
195
98
139
137
177
100
150
151
165
113
+ 7
+ 7
+10
- 2
— 1*
- 1 131p 128
- 2 131 129
+18 170 174
85
-13
90
-12*
132
134
144
99
FREIGHT-CAR LOADINGS
Total...................................................................................
Merchandise and miscellaneous................................
Merchandise—l.c.l.........................................................
Coal...................................................................................
Ore.....................................................................................
Coke..................................................................................
Forest products.............................................................
Grain and products,......................................................
Livestock.........................................................................
140
136
89
136
200
189
129
139
153
140
137
88
136
149
208
128
134
138
127
126
79
115
190
174
119
129
115
0
- 1
0
0
+34
- 9
+1
+ 4
+n
+10
+ 7
+13
+18
+ 5
+ 9
+ 9
+ a
+33
133
126
83
152
76
218
105
135
154
134
130
87
146
74
225
109
139
149
121
118
74
129
72
200
96
125
116
113
92
94
+23
+20
107
99
89
154
0*
+10*
+17
-73* 10
-69*
8
+22 186
10
7
193
39
26
153
MISCELLANEOUS
Life insurance sales........................................................
Business liquidations
Cheqk payments..............................................................
'Computed from unadjusted data.
Source: U. S. Bureau of Labor Statistics.
Jan. Dec. Jan.
1944 1943 1943
188
161
p-Preliminary.
123p
120
132
123p
110
256
242
231
246 r
160
112
114
116
115
132
r-Revised.
BANKING STATISTICS
Total loans.......................... $ 476
One
yeaj
+$
+* 17
+ 20
+
9
9
+
4
- 15
6
+
+
9
10
1
+
4
4
+$ 32
+
+
26
Government securities........ $1610
Obligations fully guar’teed.
69
175
+*121
2
+*542
Total investments............. $1854
+*119
+*486
Total loans & investments $2330
Reserve with F.R. Bank'..
362
Cash in vault........................
28
Balances with other banks.
84
Other assets—net................
62
+*151
- 35
1
+
2
+
3
+$512
- 71
+
- 20
2
Liabilities
Demand deposits, adjusted. $1488 -*191
Time deposits........................
169 2
U.S. Government deposits.
619 + 316
Interbank deposits...............
348 5
Borrowings.............................
1
13
Capital account....................
228
+
+
Page Twelve
—
56
i
Feb. 9
Feb.16
Changes
in four
weeks
Sources of funds:
Reserve Bank credit extended in district...........................
Commercial transfers (chiefly interdistrict).......................
Treasury operations..................................................................
-29.8
+44.2
-16.6
-35.2
+51.5
-14.0
- 8.2
- 1.9
-6.8
+37.0
+28.7
-76.6
- 36.2
+122.5
-114.0
- 2.2
+ 2.3
-16.9
-10.9
- 27.7
+
+
+
+
+
+
2.6
5.4
5.1
0.0
+ 6.4
-19.6
- 3.7
+ 0.0
+ 2.3
-16.9
-10.9
Uses of funds:
Member bank reserve deposits..............................................
“Other deposits” at Reserve Bank........................................
Other Federal Reserve accounts............................................
Total............................................................................................
Member bank
reserves
(Daily averages;
dollar figures in
million^)
Re
Ex
Held quired cess
Phila. batiks
1943: Feb. 1-15...
1944:Jan. 1-15...
Jan. 16-31...
Feb. 1-15...
$410
370
384
354
*362
357
367
336
*48
13
17
18
Country banks
1943: Feb. 1-15...
1944:Jan. 1-15...
Jan. 16-31.. .
Feb- 1-15...
252
272
274
271
185
215
214
208
67
57
60
63
Ratio
of
excess
t,o re
quired
13%
4
4
6
-$ 57
+ 2
+
- 494
30
i + 1
+ 2
i +
8
37
26
28
30
0.6
6.8
3.9
0.0
- 2.2
Federal Reserve
H w y io
Assets
Commercial loans................ $ 261
46
Loans to brokers, etc..........
20
Other loans to carry secur..
Loans on real estate............
38
Loans to banks.....................
4
107
Other loans............................
Four
weeks
Feb. 2
Changes in weeks ended—■
i
Feb.
16,
1944
Jan.26
m
Reporting member
hanks
(000,000’s omitted)
Philadelphia Federal Reserve District
(Millions of dollars)
OHHM
Changes in—
+
MEMBER BANK RESERVES AND RELATED FACTORS
+ 11.6
- 43.3
+ 4.0
+ 0.0
- 27.7
Changes in
Feb.
16,
1944
Four
weeks
Discounts and ad
vances .................... * 1.0
Industrial loans. . . .
4.4
U. S. securities........ 810.3
-$ 0.2
+ 0.0
+ 25.2
+* 0.6
+
0.2
+ 409.1
Total........................
Fed. Reserve notes..
Member bk. deposi ts
U. S. general account
Foreign deposits... .
Other deposits.........
Total reserves..........
Reserve ra tio...........
+$25.0
+ 12.5
- 43.3
- 5.2
+ 3.0
+ 4.0
- 55.6
- 1.9%
+$409.9
+ 287.4
- 61.2
+ 11.4
+ 67.8
+
4.5
+ 104.7
- 17.5%
(Dollar figures in
millions)
$815.7
il63.3
609.3
21.8
134.1
9.9
1127.7
58.2%
One
year
@FedFRASER