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.>■ < k THE BUSINESS REVIEW L;'£Emj FEDERAL RESERVE BANK OF PHILADELPHIA 1^*1^ MARCH 1, 1945 The unprecedented production effort to which the nation now stands committed is having wide again in short supply as a result of the greatly increased munitions requirements, small pro spread repercussions in both war and essential ducers at present can do little more than plan industry. In virtually all heavy goods lines, where the bulk of munitions is produced, and in their output of peacetime goods. Under present the case of many nondurables, particularly tex conditions unrated orders for new tools or ma tiles, the volume of new orders has risen steeply chinery for postwar delivery cannot be accepted to new high levels and backlogs again are in by manufacturers; previously this had been per creasing very sharply. Shortages of many raw mitted as a preparatory step to reconversion. materials, including steel and most nonferrous Productive activity in the country has risen metals, have grown more pronounced, necessi slightly above the level prevailing in the final tating the reinstatement of directives previously three months of last year. The increase in Janu employed to regulate their end uses. ary, while small, was achieved in spite of un usually severe weather which delayed the move These developments, reminiscent of the situa tion prevailing early in the war, stem in large ment of fuels and other raw materials to con of part from new procurement policies which an suming establishments. Output millcrude steel, however, decreased sharply, as operations ticipate the direct and indirect requirements of were reduced to the lowest rate reported in two our armed forces many months in advance of actual combat needs. Manpower stringency per and one-half years. The tonnage of steel lost in sisting in a few key industries and in some cen January was reflected only in small part in the ters of war production, including several in the activity of the munitions industries, where over Philadelphia Federal Reserve District, has been all production fell a little short of the rising schedule set for that month. Deliveries of fin aggravated to some extent, but only temporarily. ished munitions in February and even in subse The longer range procurement of supplies and equipment affords greater opportunity for im quent months may be affected to a greater ex tent by the tight supply situation which has provements in labor utilization through detailed arisen in this all-important war metal. production planning; subsequently, this proce dure may result in a much less pressing man Industry. Industrial production in the Phila power supply situation. delphia Federal Reserve District on an adjusted Although reconversion to civilian output under basis declined 2 per cent in January to a level the Spot Authorization Plan still is permitted 8 per cent below a year earlier. Decreases in the when local conditions justify the step as a means over-all output of factory products reflected a of absorbing small pools of excess manpower, somewhat lower rate of activity in the month at the means of accomplishing it are far less avail plants producing nondurable goods; operations able than in the fall of last year. With many in heavy industry lines were maintained at the December level. The production of anthracite raw materials and virtually all components (Continued on Page 9) Page One Post-War Construction and Equipment Requirements Philadelphia Manufacturing Industry Expenditures Planned and Sources of Financing The most important problem of our economy following the war will be the reconversion of our manufacturing industries to efficient peace time production. Effective reconversion involves more than mere return to the manufacturing of some type of peacetime product. For Philadel phia industry, this latter cost should not be great, since most of our factories are at present producing war goods substantially similar to their pre-war prototypes. In instances such as textiles, many products now being turned out for the Government could, if available, be used by civilians. The difficult reconversion problem is not just to produce civilian goods, but to adapt our productive facilities to turning out the types and quantities of products desired by the post-war world, and to utilize effectively the cumulative improvement in technology and in materials which has been one of the useful by products of an otherwise destructive war. The C. E. D. Survey of New Construction and Renovation Plans in Philadelphia Manufacturing The importance of capital expenditures to suc cessful reconversion focuses attention on post war plans of American industry, and the war time trend toward liquidity among manufactur ing enterprises has led to much discussion of the potential needs for outside financing in implementing these plans. With this in mind, the Philadelphia Committee for Economic Develop ment recently circulated a “Confidential Memo randum on Construction and Renovation Pros pects” among 450 manufacturing concerns in the city of Philadelphia. According to the 283 replies received by the Federal Reserve Bank of Philadelphia, prior to the end of January 1945, Philadelphia manufacturers plan to spend an amount representing In modernizing our peacetime industry, man less than 7 per cent of the value of their 1939 agement must cope with problems of obsoles production on new construction and equipment cence and accumulated wear and tear on plant, in the post-war period. The same survey indi and in many cases must correct a lack of balance cates that approximately 70 per cent of such in equipment which has been the outgrowth of expenditures will be financed from the available specialized war production. This balance is funds of business itself. essential to the most effective use of existing equipment. To illustrate, one concern might Table I indicates relative coverage, based on possess twelve lathes and two drill presses, value of output in 1939, for each of twelve whereas effective civilian production might re groups into which Philadelphia manufacturing quire a ratio of 12 to 3. Without one new drill has been classified. It also shows percentages of reporting firms which anticipate expenditures press, four lathes would stand idle. for new construction or equipment as soon as the A return to pre-war volume of production will war situation permits. The firms replying rep be insufficient to support the level of national resented, in 1939, 36.8 per cent of the total income necessary for approximately full em manufacturing output in Philadelphia. Except ployment. Reconversion will entail new con for the transportation equipment group, cover struction and purchases of equipment if indus age ranges from a little less than one-fourth to try is to find adequate solutions for its post-war over one-half of the output in each classification. problems. Expansion and modernization will be Of the 283 firms replying, 159, or 56 per cent, necessary if our economy is to maintain high indicate that they are already planning either levels of productivity beyond that interim pe new construction or equipment purchases or riod when accumulated consumers’ demand for both. All but nine of the concerns replying have goods, unavailable during the war, will provide indicated sources from which they expect to finance such expenditures. Among the 159 a temporary stimulus to employment. Page Two * f * , * , TABLE I: Sample Coverage and Percentage of Reporting Firms Which Plan Expenditures for New Construction and Equipment 1939 value of output (Thous. $) Industry Philadelphia Reporting total firms Total manufacturing.. $1,421,577 Food and tobacco. . . . Textiles........................... Apparel.......................... Lumber and furniture. Paper and printing. . . Chemicals and petroleum products.......... Leather........................... Iron and steel............... Nonferrous metals... . Machinery (inch elec.). Transportation equip.. Miscellaneous mfg....... $522,762 TABLE II: Estimates of Post-War Construction and Renovation Prospects in Philadelphia, Expenditures Planned, and Probable Sources of Funds (In thousands of dollars) Coverage as %. of report % of 1939 ing firms which plan output expenditures 36.8% 56% 297,240 188,609 149,570 23,745 163,427 85,152 53,532 35,003 7,217 76,510 28.7 28.4 23.4 30.4 46.8 67 69 41 44 66 184,947 38,107 64,621 24,095 144,923 80,485 61,808 106,375 19,949 17,795 8,961 79,581 10,018 22,669 57.5 52.4 27.5 37.2 54.9 12.5 36.7 86 47 39 67 46 60 56 Type of expenditure Industry New const. Total Ma quirechinery ments Source of funds Own funds Banks Food and tobacco.............. $ 9,932 $ 5,894 $15,826 $15,314 $ 512 $ 0 Textiles................................. 5,095 13,269 18,364 11,147 4,315 2,902 Apparel................................. 0 590 560 590 30 0 Lumber and furniture.... 227 610 383 398 212 0 Paper and printing............. 7,841 22,934 30,775 21,388 9,239 148 Chemicals and petroleum products........................... 10,054 1,346 11,400 2,234 9,166 0 Leather................................. 401 501 902 770 132 0 Iron and steel...................... 163 1,765 1,928 1,498 430 0 Nonferrous metals............. 102 479 581 581 0 0 Machinery (inch elec.)... . 270 2,405 2,675 2,246 399 30 Transportation equip........ 1,205 9,320 10,525 8,515 2,010 0 Miscellaneous...................... 1,426 2,397 3,823 3,320 2 501 Total manufacturing... $36,716 $61,283 $97,999 $67,971 $26,447 ■ enterprises planning expenditures, 3 per cent plan new construction alone, 72 per cent indicate they will acquire new equipment without new construction, and the remaining 25 per cent expect to make expenditures for both purposes. Other sources $3,581 Summary of Estimates for All Philadelphia Manufacturing ^ * Although only 28 per cent of those firms con templating expenditures indicate that they are planning new construction, 37.5 per cent of total dollar estimates are for this purpose. Greater costs usually are involved when a con struction program is planned. With 97 per cent of the firms expecting to purchase additional equipment, on the other hand, only 62.5 per cent of total estimated expenditures are involved. Reflecting the extremely liquid condition of business generally, the survey indicates that out of $98 million in construction and equipment expenditures planned, $68 million, or 69 per cent, can be financed by businesses out of their own resources; only $26.4 million, or 27 per cent, will be raised by bank credit; and the re maining 4 per cent will come from other sources. * Per cent $36,716,000 61,283,000 A sample covering approximately 37 per cent of the total value of manufactured products provides a reasonably satisfactory basis for estimating the over-all picture, and sample fig ures were expanded to provide dollar estimates of the expenditures now planned by Philadel phia manufacturing concerns, both by industry groups and in total. By a similar process, esti mates were made as to sources from which these expenditures will be financed. The results are shown in Table II for the twelve manufacturing groups, indicating both expenditures planned and sources of financing. Amount 37.5 62.5 $97,999,000 100.0 $67,971,000 26,447,000 3,581,000 69.4 27.0 3.6 $97,999,000 100.0 Expenditures Total........................................................................... Source of Funds In evaluating the relative importance of these estimated expenditures on new construction and equipment, it is interesting to compare them with pre-war output. Table III shows planned expenditures (by industrial classifications) ex pressed as percentages of dollar volume of out put in 1939. Certain of the classifications of manufacturing are more fully engaged in war production than are others. These would include chemicals and petroleum products, iron and steel, nonferrous metals, machinery, and transportation equip ment. As a group these war industries plan to spend less on new construction and equipment than do the other industries—$27,109 thousand as against $70,890 thousand. More significant is TABLE III: Percentages of Planned Expenditures to 1939 Volume of Output Food andtobacco......................5.3% Leather......................................... 2.4% Textiles........................................ 9.7 Iron and steel............................. 3.0 Apparel........................................ 0.4 Nonferrous metals..................... 2.4 Lumber andfurniture.............. 2.6 Machinery (incl.elec.).............. 1.8 Paper and printing.................. 18.8 Transportation equipment. ..13.1 Chemicals & petroleum prod.. 6.2 Miscellaneous..............................6.2 Total Philadelphia manufacturing....................6.9% Page Three the fact that these expenditures represent only 5.4 per cent of the 1939 output of the war indus try group as against 7.7 per cent for all others. Two generalizations seem to be evident in the results of this survey. First, it indicates that a rather small total expenditure on construction and equipment is planned by Philadelphia manu facturing industry in the immediate post-war period; and, second, it would seem that a rela tively small proportion of bank credit will be re quired to finance such expenditures as are to be made. It is important, however, to keep in mind cer tain limiting factors inherent in the nature of this survey. To begin with, the survey includes only manufacturing concerns within the limits of Philadelphia, excluding all trade and service enterprises as well as manufacturing industry in the important metropolitan areas surrounding the city. Furthermore, estimates refer to only two specific types of expenditure; namely, new construction and purchases of equipment. Many other costs, such as re-arrangement of plant lay out, inventory, and other working capital needs, may swell total reconversion expenditures and the need for bank credit. Finally, amounts are based on present plans of reporting firms. It is probable that only those firms with more or less definite plans in mind have been willing to estimate dollar expenditures, while others either have not thought out their post-war needs or feel that any policy must depend on conditions which develop following the war. Liquid Assets Held by Philadelphia Manufacturing Industry American business, generally, will face recon version in a condition of greater liquidity than at any previous time in its history. Much stress has been placed upon huge business holdings of Government securities and demand deposits accumulated during the war, and the tendency has been strong in some quarters to arrive at the conclusion that, since such liquid resources in the aggregate exceed probable reconversion costs, there will be little need by business enter prise for credit from outside sources. The post war reconversion problem of Philadelphia manu facturing industries will undoubtedly be influ enced by the extent of their holdings of such liquid assets. The deposit ownership study made by the Philadelphia Federal Reserve Bank for the Third Page Four District indicated that, as of July 31, 1944, commercial banks in the city of Philadelphia held demand deposits of $547 million credited to manufacturing and mining businesses. Judging by the trend in deposits of all individuals, part nerships, and corporations this figure will have increased since July and will increase more be fore the end of the war. This classification of deposits in the owner ship survey, however, does not give us the proper deposit figure for Philadelphia manufacturers without some adjustment because: (1) it in cludes deposits of mining concerns whose opera tions are not part of Philadelphia manufactur ing; (2) outside manufacturing concerns located in the important industrial areas around Phila delphia carry deposits with Philadelphia banks; and (3) some Philadelphia industries, partic ularly those with home offices in other cities, carry substantial deposits elsewhere. Although no data exist for measuring the net effect of these factors, it is quite probable that the actual demand deposit holdings of Philadelphia manu facturers are lower than the total deposits of manufacturing industry held by Philadelphia banks. Making adjustments for these discrepancies, and allowing for the continued growth in deposits until the end of the war, it may be con servatively estimated that demand deposits of Philadelphia manufacturers will be not less than $500 million when the war ends, and may be as high as $550 million. At the end of 1944 they were probably between $450 million and $500 million. Holdings of Government securities by Philadelphia manufacturers cannot be ascertained directly, but their general magnitude can be estimated roughly. The Federal Reserve Board has estimated holdings of American business, excluding banks and insurance companies, at about $32 billion, as of December 31, 1944. Purchases by similar business corporations credited to Philadelphia in the Third, Fourth, Fifth, and Sixth War Loan Drives averaged 2 per cent of similar allotments in the country as a whole. If we assume that unincorporated business received a similar proportion, and that this percentage is also representative of accumu lated holdings of Government securities, Phila delphia business would own about $640 million of Government securities. If we further assume that Government security holdings of Philadel 4 * * ♦ , * phia manufacturers are in the same ratio to the total for all Philadelphia business as are their demand deposits, such holdings would probably amount to something over $300 million. It would seem reasonable to assume, there fore, that Philadelphia manufacturing indus tries at the end of 1944 held about three-quar ters of a billion dollars worth of liquid assets in the form of bank deposits and Government se curities, and that the amount will increase sub stantially before the end of the war. Another factor in post-war liquidity of business enter prise generally, is the probability of tax refunds on a substantial scale. Such refunds would include the 10 per cent return of excess profits taxes after the war, the possibility of refunds granted on appeals for adjustment in the tax base used to determine excess profits, and the indirect effect of “carry-over” and “carry-back” features in the tax laws. No data exist for esti mating the magnitude of these refunds for Philadelphia manufacturing enterprises. 1943, with end-of-the-year tax accruals on their books, Government security holdings of these corporations exceeded income tax liabilities by only $.1 billion, or 6/10 of one per cent. In a re cent study of over 1,600 small and medium-sized businesses with assets under $10 million, the Federal Reserve System, in collaboration with the Robert Morris Associates, found that hold ings of securities (mostly government) on De cember 31,1943, were $444 million and Federal income tax liabilities were $509 million. If tax accruals were to remain permanently at their present levels, there would be no necessity for offsetting them entirely with equivalent holding of liquid assets. Although charges against current earnings, they might, like other accruals, be paid out of earnings of a subsequent period and in the interim the funds represented might be used for other purposes. After the war, however, if corporate earnings decrease, tax accruals will decline also and at least part of businesses’ Government securities will be ab sorbed in liquidating taxes accrued in an earlier It should not be concluded that this figure for period. Furthermore, most businesses would liquid assets of Philadelphia manufacturers, hesitate to use tax reserves as a source of funds even though it may be greater than reconversion for new construction, equipment purchases, or costs of all types, indicates that no credit will be other reconversion costs, and for that reason needed from banks or other sources. The most will probably continue to offset a large propor obvious weakness of such reasoning is that it tion of such accruals with Government securities attempts to apply aggregate figures, derived at least as long as tax obligations are looked from thousands of balance sheets, to the prob upon as unusually or temporarily high. lems of the individual enterprise. Neither hold ings of liquid assets nor costs of reconversion The error in comparing gross liquid assets will be proportionately distributed among indi with reconversion costs is further illustrated in vidual concerns. The fact that one concern may the case of demand deposits. Deposits are neces have liquid assets five times greater than its sary for carrying on day-to-day business opera costs of reconversion will not obviate the need tions. Just how much of the deposit total is in for borrowing on the part of another concern excess of such needs would be difficult to say, which must spend an amount larger than its although the amount is undoubtedly large. At available cash and Government security the outbreak of war, demand deposits of indi holdings. viduals, partnerships, and corporations in Phila delphia member banks were 72 per cent of the Another fallacy is a tendency to assume that amount held December 30, 1944. Allowing for all of the Government securities held by busi the increased price level and for an anticipated ness enterprise represent funds freely available level of national income above that of 1941, it is for general expenditure. Actually these secu quite possible that $350 million of the esti rities are largely offset by accrued tax liabilities; mated post-war deposits of Philadelphia manu and, indeed, a sizable proportion of them is in facturers will be required as normal operating the form of tax savings notes. For example, the balances. Securities and Exchange Commission estimates A final point that is sometimes overlooked in that all corporations, exclusive of banks and in surance companies held $18.9 billion of Gov evaluating post-war credit needs of business, is ernment securities on September 30, 1944, but the fact that with termination of war contracts had $16.1 billion in accrued Federal income tax some concerns will find large amounts of their liabilities on the same date. On December 31, working capital tied up in inventories which are Page Five not well adapted to their peacetime needs, or in receivables due from the United States Govern ment, the final liquidation of which will be de layed until termination settlements are reached. It is true that T-loans are designed to meet this situation, but T-loans, although guaranteed, are financed by bank credit. Also, concerns at pres ent engaged in war production are not the only ones whose inventories may be affected by the ending of war. Large amounts of substitute products and items of inferior grade may prove unsalable when the war is over, and will either have to be written off or sold at less than cost. In either case working capital will shrink and stocking of new inventory may require bank credit. In summary, certain aspects of reconversion by Philadelphia manufacturing industries may be stressed: 1. Effective reconversion and relatively full employment will require large expenditures for new construction and equipment—a mere return to pre-war civilian production will not be suffi cient. The necessary volume of such expendi tures may well be greater than envisioned in present plans of individual enterprises. 2. Business at present holds an enormous volume of liquid assets, but there is danger of over-stressing the adequacy of such resources for financing complete reconversion needs. The Philadelphia survey indicates at least twentyseven per cent of construction and equipment needs will require bank credit; and, as full reali zation of the magnitude of the industrial reno vation problem develops, not only gross expendi tures but the proportion to be financed by bank credit may increase. 3. The relative magnitude of the demand for credit will depend very largely upon business conditions and prospects at the time, including such imponderables as the national employment level, price trends, consumers’ demand, Treas ury and banking policy, and international polit ical and economic developments. If, however, we are to preserve a level of national income sufficient to provide substantially full employ ment, business prosperity, and a rising standard of living, commercial banks must stand ready to finance sound productive enterprise as the needs appear, even though this may involve risks somewhat higher than the Government direct or guaranteed credit to which they have become accustomed during the war. The Baking Industry The baking industry occupies a strategic posi tion in our economy. In general terms, baking has occupied a significant place in human activ ity since antiquity; bread, the “staff of life,” is still the staple of our diet. In quantitative terms it is important because it has more establish ments and employs more people than any other major food industry. Value of output in baking is surpassed only by that in meat packing. In 1939, bakeries provided employment for 230, 000 wage earners in the United States and turned out products worth $1,412 million. Growth of the Industry Commercial baking has grown rapidly in the present century despite declining trends in the consumption of grain products. Per capita con sumption of flour decreased from 230 pounds in 1900 to 154 pounds in 1939. This is reflected in the milling industry (see Chart I) but not in baking. Until 1919, the growth of the two were somewhat parallel but since that time milling Page Six has declined and baking has continued to expand. The continued growth of baking reflects a shift from home to commercial baking. Both economic and social reasons account for this transition. The growing urbanization of the population afforded an expanding market for bakery products as well as other processed foods. Together with the shift in population came smaller-sized family units, apartment liv ing, and greater participation of women in in dustrial, civic, and social activities. Characteristics of the Industry There are two divisions of the baking indus try : the producers of soft dough products, prin cipally bread; and the producers of the harder, less perishable goods such as biscuits and crackers. The former is overwhelmingly the more important of the two branches, although biscuit bakeries were the first to develop. CHART I CHART 11 COMMERCIAL BAKING AND FLOUR MILLING BREAD AND FLOUR PRICES UNITED STATES MILLIONS (value or (t PER LOAF products) 2000 BREAD MILLING BAKING jiii i 1899 1904 1909 1914 i i i i i i i i i 1919*21 *23 ’25 ’27 ’29 '31 ’33 *35 *37 *39 Bread baking is predominantly small scale. It has been estimated that there were some 30,000 baking establishments in the United States in 1939. The Census of Manufactures re ported 18,000 establishments producing at least $5,000 of products. Over one-half of these establishments produced between $5,000 and $20,000 of products, and more than one-fourth of the bakeries produced between $20,000 and $50,000 worth of products. Only 11 per cent of the bakeries had a sales volume of $100,000 or more. The extreme perishability of the product necessitates rapid delivery and limits the area which a bakery can serve. Technological lim itations, such as size of ovens and fermentation units, also restrict large-scale operations. Be yond a certain point, larger size of plant offers little or no saving in production costs. Growth in size brings increased costs of distribution as the marketing area is enlarged. By consolida tion, many bakeries have been united into large companies but they have not eliminated the small shops. Many neighborhood bakeries owe their existence to a specialized line of products that appeal to the local trade. The biscuit and cracker branch of the indus try produces less perishable products and there fore finds it profitable to operate on a largerscale basis. Almost 50 per cent of the estab lishments produce in excess of $100,000 of products and 25 per cent of them have annual sales running over a half million dollars. There are also multi-plant concerns in this division of the baking industry—three companies account for 80 per cent of the total output. 1925 '26 27 28 29 '30 '31 '32 33 34 35 36 37 38 39 '40 '41 '42 43 There is very little competition between the two divisions, but competition is keen within each branch. This applies particularly to bread bakeries, which require very little capital to set up in business, and working capital requirements are small also because there is a daily cash turn over. Moreover, bakeries must compete with housewives who still do considerable cake and pie baking at home. Problems of Operation Raw materials are the major cost of produc tion, and flour is the largest single item. The baking industry is greatly affected by the yearto-year changes in the volume of wheat produc tion and the resulting fluctuations in the price of flour. Flour prices vary considerably from one crop year to another and they also rise and fall within short periods of time, while retail prices of bakery products are sluggish. This is especially true of bread prices, dictated largely by custom. Thus, periodically, profit margins in baking expand or contract as raw material prices fall or rise faster than retail bread prices. (See Chart II.) Rising raw material prices jeopardized earn ings at the outset of the war. Government pol icies were established to check rising retail prices to consumers, but prices of raw materials continued to advance, with the result that bakers found themselves in a price squeeze. The flour miller, caught in a similar price squeeze, got relief in the form of a Government subsidy, but the bakers had to find other solutions. The difficulty which confronted the bakers was solved by a number of wartime developments. Gasoline and rubber rationing forced bakeries to reduce Page Seven the size of the areas they had been serving and, naturally, they cut out their most unprofitable delivery routes. At the same time, many women took wartime jobs in industry with the result that bakeries found a rising demand for their products in their immediate neighborhoods. Another factor which reduced their costs of operations was Government prohibition of con signment selling. Formerly, bakeries shipped bread to distributors, allowing them the priv ilege of returning unsold merchandise, and the volume of stale goods returned was a consid erable cost item. Hence, the elimination of this practice as a war economy measure reduced materially the over-all cost of bakery opera tions. Moreover, economies in operation were secured by baking larger sized loaves—by in creasing the size of the loaf from 16 to 20 ounces —and securing Government approval to raise prices correspondingly. Since the turn of the century the baking pro cess has become increasingly mechanized and standardized. Improvements, such as mechan ical mixers, traveling ovens, automatic tempera ture and humidity control assure greater uni formity of quality. Naturally, the larger bakeries have made more extensive installations of these devices; in the smaller bakeries, the process re mains more of an art than a science. Problems in Marketing One of the problems which has confronted the industry for many years is the decline of cereals in the American diet. There has been a tendency during the past half century toward an increasing consumption of the so-called pro tective foods—those high in mineral salts, vita mins, and proteins—and a declining consumption of the energy foods, such as meat and cereals. The baking industry is aware of these trends and the reasons for it—changing habits of Amer ican life require less energy foods, and rising standards of living promote the consumption of higher-priced low-calorie foods. The industry has endeavored to impress the public with the idea that “bread is basic”. The nutritional value of bread, particularly since the Government enrichment program has been in effect, has been emphasized by advertising. Moreover, bakeries have been placing more em phasis upon variety of output, such as cakes, cookies, sweet rolls, and related products. By offering such products to consumers with higher incomes they have expanded their markets, but Page Eight at the same time the industry has become more vulnerable to fluctuations in consumer incomes. Another situation peculiar to this industry is the potential competition of baking in the family kitchen which has given way to commercial baking. This trend was the result of rapid growth in urban population and numerous changes in the pattern of family life. In 1900 about two-thirds of all bread baking was done in the home; by 1939, it is estimated, over twothirds of the bread consumed was the product of commercial bakeries. However, it is estimated that about half of the “other bakery products,” such as pies, cakes, and cookies, are still pro duced at home. No doubt the war has stimulated the commercial production of these products, owing to the employment of women in war in dustries and the desire to conserve household supplies of sugar and shortening. The industry recognizes the fact that improvement in quality and variety of these and other specialty products must take place after the war in order to retain the markets gained during the war. Wartime Developments Baking has been confronted by many of the same problems which the war has imposed on other industries. The shortage of manpower was one of its greatest difficulties. To meet this situation the industry expanded its training pro grams and employed more women than formerly. Material shortages of various kinds have also handicapped the industry. Sugar and shorten ing have been major problems, but adequate substitutes have been devised with little sacri fice of quality. Fortunately, there has been no shortage of wheat flour as there was during the First World War. Most raw material shortages are expected to end as soon as supplies flow through normal channels of distribution. The baking industry has also had its quota of equipment difficulties. Expanded production, to gether with a lack of materials and available manpower for proper maintenance, has over taxed machinery and given rise to acute needs for replacement. To prevent further impair ment of productivity, machinery allotments have recently been made to this industry. In the post war period the equipment situation will depend largely upon progress in reconversion. No ex tensive changes in type of machinery are in im mediate prospect because methods of baking have remained substantially unchanged since the outbreak of the war. The cost-price-profit structure which was in jeopardy in the early stages of the war has im proved as a result of the elimination of consign ment selling, reduction in ceiling prices of pastry flour, and enforced economies in distribution. The industry generally reacted favorably to most of the Food Distribution and ODT orders, and hopes to retain the desirable features of these regulations. It is feared, however, that if these mandatory regulations were suddenly abolished, the beneficial effects would not long remain. Consignment selling, for example, was abolished by voluntary cooperation during World War I but subsequently crept back under the stress of competition. Baking Industry of Philadelphia The baking industry of Philadelphia has not grown as rapidly as that of the United States. Both employment and value of output declined from 6 per cent of the national totals in 1899 to about 4 per cent in 1939. This is to be ex pected in view of the westward shift of the coun try’s population and the local character of baking arising from the perishability of its products. Output of the baking industry in Philadelphia rose from $52 million in 1939 to $72 million in 1943, an increase of almost 40 per cent. (See Chart 3.) Employment decreased from 8,000 workers to 7,400 during the same period. Higher dollar volume reflects, in part, greater wartime purchases of the more expensive bakery spe cialties. Nevertheless the physical output in creased despite a shrinking labor force. This was accomplished by restricted wartime deliv eries of bakery products and longer hours of work. According to estimates submitted by Phila delphia bakers, volume of output in the imme diate post-war period is expected to be about 20 %Per cent below the wartime peak but 10 per cent CHART III BAKING INDUSTRY OF PHILADELPHIA MILLIONS THOUSANDS 80 70 60 50 VALUE OF PRODUCTS ‘ (SCALE LErT) WAGE EARNERS " (scale rtchtJ ' T9 '21 '23 2 5 27 29 '31 '33 35 37 39 above the 1939 level. Employment is expected to be slightly above the 1943 peak. Conclusion The baking industry is in an enviable position so far as the immediate post-war period is con cerned. It has no problems of reconversion; it has not over-expanded; and there has been no serious wartime inflation of prices. There is less prospect of a repetition of inventory losses suf fered after the last war because the industry is required to keep inventories at moderate levels. The major problems are expected in the field of marketing. Wartime restrictions have had salutary effects but it will be difficult to retain current practices after the controls are removed. The demand for bread is relatively stable, regardless of changes in consumer purchasing power. However, should output of cakes, pas tries, and other semi-luxury items continue to increase in importance, production in the baking industry will become increasingly susceptible to fluctuations in consumer incomes. Business and Banking (Continued from Page 1) was sharply curtailed, as widespread storms and exceptionally severe winter weather prevented the prompt return of coal cars to the collieries for reloading. Output of crude petroleum de creased in January for the third successive month and was 15 per cent less than a year ago. Factory employment in Pennsylvania was vir tually unchanged from December to January, although some decline ordinarily occurs over the year-end inventory period. The number of workers, estimated at some 1,200,000, was about 6 per cent less than in January 1944. Decreases from the preceding year, which had grown proPage Nine element of uncertainty in the supply outlook stems from the fact that the current working agreements between miners and mine operators expire within the next two months. PRODUCTION AND PRICES PERCENT 1935-39AV G-slOO 200 PR DI CTI0N * 0 PHILA. FEDER AL RESERVE DIST RICT 175 150 WHOLESALE COMMODITY PRICES U S. J L«-»—i— 125 r ~t V COST OF LIVING in phii Ann PHIA IOO ZfisrT* 75 *ADJ. FOR SEASONAL V< RIATION 1939 1940 1941 1942 1943 1944 1945 gressively larger from March through last November, have tended to level off. Payrolls also reflect a somewhat greater degree of sta bility in manufacturing lines over the past sev eral months. Approximating $54 million a week in January, they were about the same as in December and only 2 per cent smaller than a year ago. Total working time decreased slightly in the month and was down 6 per cent in the year. The weekly income of wage earners at report ing plants in Pennsylvania averaged $48.58 in January, slightly more than in December, and 5 per cent above last year. The increase in both the month and year reflected advances in aver age hourly earnings. Averaging $1.09 in Jan uary, they were the highest in records covering nearly two decades. Earnings on this basis have shown an almost uninterrupted rise over the en tire period of defense and war activity, with the increase since mid-1940 amounting to almost 50 per cent. Average working time decreased slightly from December to January to just under 45 hours a week. Continued heavy consumption of coal for in dustrial and heating purposes while production failed to reach anticipated levels has created the most serious supply problem experienced in many years. In spite of the broad conservation measures taken in recent weeks, reserves of both anthracite and bituminous fuel have been re duced to unusually low levels, with the result that estimates of the deficit in the coal year ending March 81 have been revised upward substantially in the past several weeks. Another Page Ten Output of anthracite declined from an average of nearly 183,000 tons a day in December to about 163,000 tons in January. Production on this basis was down almost one-fifth from a year earlier, and the smallest of any like month since the early nineteen thirties. At bituminous mines in Pennsylvania output showed a smaller than seasonal increase from December, and was 13 per cent less than in January 1944. Although the tonnage of soft coal mined in the country as a whole has increased considerably since the turn of the year, output in January was 3 per cent, or more than 1J4 million tons below the high level reached twelve months earlier. Building activity decreased nationally and locally from December to January. Expendi tures for new construction in the country totaling $340 million showed only a small decline in the month, but were down nearly one-tenth from January 1944. The decline in the year was en tirely in the publicly financed field, where ex penditures were reduced approximately 30 per cent. Construction undertaken with private funds was 14 per cent larger in January this year than last. In this district, the value of contracts awarded decreased 8 per cent in January and was nearly one-third less than a year earlier. Sharp de clines from December were reported in awards for all types of construction except educational buildings and public works and utilities. The dollar volume of January placements was the smallest reported for that month since 1935. The acute shortage of lumber and certain other building materials and the continued manpower stringency suggest that the present low level of construction activity may persist through the spring and summer months at least. Freight-car loadings in January were main tained a little above the level of the preceding month but were somewhat smaller than a year earlier. On an adjusted basis, loadings of agri cultural commodities and ore showed increases of 10 per cent or more in the month; the move ment of merchandise and miscellaneous freight increased slightly, while declines occurred in the case of less than car-lot merchandise and solid fuels. The only increases over January 1944 were reported in shipments of live stock and miscellaneous freight. In other categories de clines ranged from about 5 per cent to more than one-third, reflecting principally traffic delays occasioned by the unusually severe winter weather prevailing throughout the entire month. Trade. Business at wholesale showed virtually no change from December to January, but was somewhat larger than a year earlier. The dollar volume of drug, dry goods, and grocery sales increased in the month, while decreases, in most cases substantial, occurred in other reporting lines. Changes over the twelve months also were mixed, with increased sales of drugs, electrical supplies, groceries, and hardware partly offset by declines in dollar volume at establishments handling dry goods, jewelry, and paper. Inven tories decreased in the month and year in a majority of wholesale lines; in the aggregate, the value of stocks was down 4 per cent in January and about one-tenth less than a year earlier. Retail dollar sales by department, apparel and shoe stores in this district were considerably larger in January this year than last. Compari sons with December, however, showed no such uniform pattern; on an adjusted basis depart ment and women’s apparel stores sales increased about one per cent, while declines of 25 and 13 per cent respectively occurred at men’s apparel and shoe stores. Sales of furniture, unadjusted for seasonal change, dropped sharply from De cember to January, but were moderately larger than a year earlier. Inventories at department stores showed a small contra-seasonal increase in the month, and they were unusually well maintained at women’s apparel stores. Stocks at shoe stores declined rather sharply from the December level, but no significant change was reported by furniture stores. Declines from January 1944 were shown in all lines. Department store sales, which last year reached a record volume estimated at some $388 million for the district as a whole, showed increases over 1943 ranging from 3 per cent in the main store home furnishings department to 25 per cent in the piece goods department. Within these extremes were gains of 11 per cent in women’s apparel, 7 per cent in men’s and boys’ wear, and 12 per cent in small wares. Gains by main store and basement departments DEPARTMENT STORE SALES AND STOCKS THIRD FEDERAL RESERVE DISTRICT SALES 1939 1940 1941 1942 1943 1944 1945 were very nearly proportionate from 1943 to 1944, while in the preceding year sales increased 9 per cent in the main store but declined 3 per cent elsewhere. Sales in the great majority of individual lines increased last year, the only declines being in furs, floor coverings, major household appli ances, and housewares. The luxury tax imposed on furs last spring doubtless restricted consumer demand in this category, while war induced shortages were chiefly responsible for smaller sales of the durable items. Over the war period to the end of 1944 these stores experienced an average annual increase in sales of approximately $30 million. The sharpest rise in any single year was $42 million, or about 16 per cent, reported in 1941. Sub sequent gains aggregating $88 million or 29 per cent were reported over the three years ended in 1944. Although further expansion in dollar volume is entirely possible during 1945, the increasing difficulty of replenishing stocks is expected to impose greater limitations on con sumer purchasing than in any of the other war years. Banking conditions. Developments at report ing banks in this district over the past month were in line with expectations between loan drives. Customers’ deposits continued to ex pand, despite currency outflow and repayments on loans, and by February 21 had recovered nearly one-half of the loss sustained during the drive and the subsequent period of heavy tax payments In part this reflected Treasury payPage Eleven DEPOSITS AT MEMBER BANKS THIRD FEDERAL RESERVE DISTRICT MILLIONS $ 3200 r 2800 PHILADELPHIA BANKS . 2400 2000 1600 '■‘-COUNTRY BANKS 1939 1940 1941 1942 1943 1944 1945 ments to individuals and business concerns from accumulated funds. Withdrawals from United States Government and interbank balances were sufficiently heavy to reduce total deposits in the month by some $40 million to $2,748 million. Over the longer term, as shown in the chart cov ering all member banks in the district, the trend of deposits has been upward, with gains at country banks over the past year much greater than at city banks in this district. Investments of banks in leading cities reached a new high early in February, but by the 21st had dropped to $2,035 million, showing a net decline of $20 million over a four-week period. Steps taken to maintain reserves in the face of declining deposits were reflected in a decrease of $31 million in Treasury bills; holdings of United States bonds, which had been rising steadily, also were reduced somewhat, but there was a corresponding increase in certificates. The reporting banks have been adding slowly but steadily to their holdings of miscellaneous securities since the turn of the year. Loans have dropped further this year, declin ing from $447 million late in 1944 to $417 Page Twelve million on February 21. This reflected contrac tion in commercial loans to the lowest point in nearly five years, repayments on advances made during the loan drive to carry Governments, and smaller borrowings by other banks. Many ex pect loans to expand with the coming of peace, as banks assist financially in the reconversion and renovation of plant and equipment, in the restoration of civilian inventories, and in the extension of consumer credit. Whatever the volume of this new demand, it can hardly be expected to restore loans to their pre-war im portance. Fifteen years ago loans made up two-thirds of the earning assets of all member banks in this district; a decade later the propor tion was two-fifths; and by December 31, 1944, it was only one-sixth. Reserves of Third District banks have declined somewhat in the past four weeks, while con tinuing above a year ago. Seasonal return of currency in the weeks immediately after the holidays was followed by a substantial outflow, and a still larger volume of funds was taken from the local market by Treasury operations. These losses were largely offset by gains in commercial transactions with other districts and funds provided by the Federal Reserve Bank. Direct loans of this Bank increased more than $11 million, and its holdings of Treasury bills under repurchase option increased $56 million to $244 million. Records for the last half of January show that in this district and in the nation the bulk of the excess reserves of member banks are held by country banks. For banks in Philadel phia the proportion of excess to required re serves averaged 3}4 per cent, as against 5 per cent for all reserve city banks; at country banks the district proportion was 24 per cent, compared with 24j4 per cent for all member banks in this reserve classification. BUSINESS STATISTICS Production Employment and Income Philadelphia Federal Reserve District in Pennsylvania Industry, Trade and Service Adjusted for seasonal variation Indexes: 1923-5-100 Mo. ago 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............................... Woolen and worsteds......................... Cotton products................................... Carpets and rugs................................. Hosiery................................................... Underwear............................................. Cement................................................... Brick. .................. ................................ .. Lumber and products......................... Slaughtering, meat packing.............. Sugar refining........................................ Canning and preserving..................... Cigars. ................................................. .. Paper and wood pulp......................... Printing and Publishing Shoes....................................................... Leather, goat and kid......................... Paints and varnishes.......................... Coke, by-product................................. COAL MINING................. ................... Anthracite.............................................. Bituminous........................................ CRUDE OIL............................................ ELECTRIC POWER........................... Sales, total............................................. Sales to industries................................ BUILDING CONTRACTS TOTAL AWARDSt............................... Residential t........................................... Non residential!.................................... Public works and utilities!............... 138p 144p 219p 91 p 181 65p 525p 119p 104 38 I70p 94p 94 141 146 219 96 lB2r 70 525 124 127 36 r 175r 97 94r 151 r 15Sr 244r 93 190 68 r 637 r 119r 117 41 171 lOOr 95 Employment %C tenge Jan. 1945 fr om Jan. Dec. Jan. 1945 1944 1944 INDUSTRIAL PRODUCTION......... MANUFACTURING........................... Not adjusted Jan. Dec. Jan. 1945 1944 1944 99 95 107 + 5 137 145 r 144 - 5 86 81 83 - 6 64p 70 59 r - 8 43 42 47 + 2 62p 63 54r 0 65 71 72 - 9 139 145 150 - 4 35 32 r 40 +10 50 49 r 56 + 3 34 31r 33 + 9 — 3* 97 107 127 -10 143 160 r 141 -10 157p 155 144 r +1 103 126 117 -18 85 84 86 + 2 95 97 97 - 1 125 128 120 - 2 65p 67 80 - 3 103 97 107 + 6 169p 172 168 - 2 63 70 77 -11 61 69 75 -12 76 82 89 - 5 327 340 383 - 4 431 413 405 + 5 444 426 430 + 4 358 377 368 - 5 a* 25 33 38 -23 6 ^6 38 + 2 51 60 54 -14 26 53 26 -51 * Unadjusted for seasonal variation. 13-month moving daily average centered at 3rd month. _ __ _ + + _ _ _ + + + _ _ + _ — — _ + + 137p 139 142p 144 149r 154r 174 67p 529p 117p 86 33 167p 97p 94 96 135 83 64p 43 62p 67 137 25 47 31 129 105 99 156p 85 84 95 127 69p 93 169p 64 61 88 314 457 458 347 7 5 3 8 8 14 10 7 12 11 3 24 l 9 12 1 2 4 19 3 0 18 19 13 15 7 3 3 174 70 540 r 122 92 33 r 171 r 90 95r 94 103 136 r 141 88r 85 65 60r 45 47 63 54r 69 75 144r 147 26 r 28 47 52 30 r 30 115 104 r 157 91 85 98 108 73 94 167 71 69 86 320 442 439 358 28 _ 32 5 _ 85 55 _ 6 0 34 p—Preliminary. r—Revised. 183 70r 643 r 116r 97 35 167 103 95 139 97 139 r 96 85 97 123 85r 96 168 78 75 102 368 429 443 r 357 37 6 64 64 42 31 59 33 Lancaster............ Philadelphia.... Wilkes-Barre.... Williamsport.... Wilmington........ York..................... FaclLory emplo rment FadLory pay oils Buil ding pennits va ue Dec. 1944 Jan. 1944 Dec. 1944 Jan. 1944 Dec. 1944 Jan. 1944 Dec. 1944 Jan. 1944 — + — — - 1 1 1 1 2 1 0 +1 — 6 + 1 0 — 2 -12 -10 — 5 +10 + — + + — — 2 3 3 6 3 2 1 3 + 4 +14 + 4 + 2 -11 — 5 — 2 +29 - 52 + 22 - 82 +468 + 57 - 77 +329 - 76 +124 + 69 + 2 -10 -10 - 2 + - 2 5 5 3 +22 - 7 - 8 + 4 - 31 + 15 - 26 +179 - 60 - 80 + 18 + 5 +17 + 4 +12 + 2 + 8 +1 +1 - 2 - 1 - 42 - 17 + 17 + 19 + 12 - 53 +475 -59 -57 -57 -57 -58 —52 -59 -62 66 -57 -59 -60 +14 + 6 - 4 0 - 7 0 - 9 - 5 + 2 0 -18 - 2 - 1 - 2 - 1 - 5 - 6 -12 -10 +1 -12 - 1 - 1 + 4 - 2 0 - 2 - 2 325 487 86 343 102 232 244 150 162 149 175 172 151 Employment* - 2 0 - 8 + 4 -13 - 4 0 + 2 -16 - 2 - 2 - 2 + 2 - 2 - 2 - 6 - 9 - 4 -14 + 6 + 9 + 5 + 4 + 9 0 0 Payrolls* Per cent Per cent Jan. change from Jan. change from 1945 1945 index Dec. Jan. index Deo. Jan. 1944 1944 1944 1944 Indexes: 1923-5 -100 TOTAL...................................... Iron, steel and products___ Nouferroua 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......... 115 124 213 153 78 72 101 125 82 50 116 71 100 94 50 153 91 0 0 - 2 - 2 - 2 - 1 0 - 2 0 0 - 2 - 2 - 6 - 6 +10 -15 - 5 - 4 - 8 + 3 - 7 + 3 - 5 - 7 - 2 0 199 273 461 281 121 113 161 192 122 83 212 116 149 130 0 - 3 - 4 - 1 - 3 - 3 - 1 - 1 - 1 - 2 - 3 - 2 - 2 + 9 -10 0 0 0 + 6 - 4 + 8 + 1 - 1 + 2 + 2 - 1 + 3 - 2 -13 +1 - 6 74 336 137 - 4 +12 + 11 - 9 +12 -24 +1 - 1 0 0 - 1 * Figures from 2808 plants.. De bits Dec. 1944 + 3 +19 129 178 43 72 42 74 133 97 116 102 101 97 93 Manufacturing Factory workers Averages January 1945 and per cent change from year ago Re tail sa ea * Area not restricted to the corporate limits of cities given here. GENERAL INDEX............ Manufacturing...................... Anthracite mining................ Bituminous coal mining... Building and construction.. Quar. and nonmet. mining. Crude petroleum prod......... Public utilities....................... Retail trade........................... Wholesale trade.................... Hotels........................... .. Laundries............................... Dyeing and cleaning........... Hours and Wages Local Business Conditions * Percentage change— January 1945 from month and year ago Per cent Per cent Jan. changefrom Jan. changefrom 1945 1945 index Dec. Jan. index Dec. Jan. 1944 1944 1914 1944 Indexes: 1932 =100 Year ago - 2 _ 8 - 2 _ 8 10 0 — 5 7 - 1 5 - 7 _ 4 0 _ 18 - 4 + 1 -18 12 + 7 _ 6 - 3 0 - 3 _ 6 -1 — 2 Payrolls Jan. 1944 + 9 +15 -13 — 6 -12 -38 -34 -10 — 2 -26 -16 + 3 +12 + — + + 4 3 7 6 TOTAL............................. Iron, steel and prods... Nonfer. metal prods.. . Transportation equip.. Textiles and clothing.. lextiles........................ 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* Wee klU earnixigaf Aver age Ch’ge Aver Ch'ge Aver hours age age 44.8 46.1 45 9 46.9 39 7 40.8 36.8 43.4 40.1 42.7 45.6 41.8 43 5 39.9 Ch’ga 0 $1,089 + 5 $48.58 + 5 - 1 1.149 + 5 53 01 + 4 0 1.022 + 2 46.96 + 2 0 1.294 + 9 60 69 + 9 0 .798 + 7 31.58 + 1 0 .809 + 5 33 02 + 6 0 .768 +12 28.48 + 11 +1 .812 + 1 35.57 + 3 + 2 .927 + 2 36.95 + 3 - 3 .794 + 7 33.77 + 3 +1 1.087 + 5 49 49 + 6 +1 .774 + 6 32.46 + 7 +1 .924 + 4 40.48 + 5 - 1 1.078 + 4 43.11 + 3 42.1 - 2 .644 + 7 27.10 + 5 44.8 0 1.088 + 8 48.68 + 8 42.8 -13 .922 - 7 39.46 -19 * Figures from_2664 plants. t Figures from 2808 plants. Page Thirteen Distribution and Prices , a V\ \ Adjusted for seasonal variation Per cent change Percen change Jan. 1945 fit>m Wholesale trade Unadjusted for seasonal variation ^ Indexes: 1935-1939 =100 Month ago 0 +16 +62 -28 + 4 -11 -40 - 6 + 3 + 2 -10 + 6 + 9 +14 -24 - 5 Inventories Total of all lines....................... Dry goods................................. Electrical supplies.................. Groceries................................... Hardware.................................. Jewelry...................................... Paper......................................... - 4 -15 - 5 - 7 + 2 + 7 - 5 -10 -34 +17 -16 - 6 -27 + 5 Basic commodities (Aug. 1939=100).... Wholesale (1926=100)................ Farm............................. Food.............................. Other............................ Living costs (1935-1939=100)___ United States............. Philadelphia............... Food........................... Clothing..................... Fuels........................... Housefurnishings... Other.......................... Source: U. S. Bureau RETAIL TRADE Sales Department stores—District..................................... Philadelphia............................ Women’s apparel........................................................... Men’s apparel................................................................. Shoe................................................................................... 183 0 + 2 + 83 105 126 105 99 0 +1 - 1 0 + 2 + 4 0 + 1 + 40 +107 + 56 + 24 0 + 2 0 + 2 0 0 0 + s 0 + 1 0 +13 0 + 3 Statistics. + + + + + + + 29 28 45 45 13 41 20 174p 170 174p 130 153p Inventories Department stores—District..................................... Philadelphia............................ Women’s apparel........................................................... Shoe................................................................................... Per cent change from Jan. 1945 Month Year Aug. 1939 ago ago 127 126 135 144 109 141 121 of Labor Jan. Dec. Jan. 1945 1944 1944 Month Year ago ago Source: U. S. Department of Commerce. Prices Jan. 1945 fre>m Jan. Dec. Jan. 1945 1944 1944 Sales Total of all lines....................... Drugs......................................... Dry goods................................. Electrical supplies.................. Groceries................................... Hardware.................................. Jewelry...................................... Paper.......................................... Not adjusted FREIGHT-CAR LOADINGS Total................................................................................... Merchandise and miscellaneous................................ Merchandise—l.c.l......................................................... Coal................................................................................... Ore..................................................................................... Coke.................................................................................. Forest products............................................................. Grain and products....................................................... Livestock......................................................................... MISCELLANEOUS Life insurance sales....................................................... Business liquidations Check payments............................................................ * Computed from unadjusted data. 159r 152 154r 111 141 +1 + 9 134p 305 122 134 287r 120 + 7 +11 151p 285 133r +13 + 1 -25 133 317 112 +17 120p 211 110 -13 + 9 —53* + 6* 141p 132 125 133 I83p 168 72p 80 149 147 195 98 + 7 + 6 + 9 -10 0* - 5 - 9 - 6 -27 - 8* 124p 120 119 118 159 164 62p 72 131 131 170 85 132 136 85 116 130 164 118 121 164 131 134 86 119 113 173 106 111 128 140 136 89 136 200 189 129 139 153 + 1 + 2 - 2 - 2 +15 - 5 +n + 10 +28 - 5 +1 - 5 -15 -35 -13 - 9 -13 + 7 126 127 80 130 50 188 95 118 166 125 127 85 128 57 187 91 115 139 133 126 83 152 76 218 105 135 154 118 106 113 +n + 5 112 114 107 188 -71* -45* + 5 -71* -41* + 5 3 10 5 9 196. 226 10 81 186 171 158 173 174 177 198 189 p—Preliminary. r—Revised* BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changes in— Reporting member banks (Millions $) Assets Commercial loans.................. Loans to brokers, etc....... Other loans to carry Becur... Loans on real estate.............. Feb. 21, 1945 223 34 15 34 Changes in weeks ended— Jan. 31 Feb. 7 Feb. 14 Feb. 21 Third Federal Reserve District (Millions of dollars) Four weeks One year Sources of funds: Reserve Bank credit extended in district.................. .. Commercial transfers (chiefly interdistrict)....................... Treasury operations................................................................... 6 2 1 3 5 + 4 7 - 52 Member bank reserve deposits.............................................. “Other deposits” at Reserve Bank....................................... Other Federal Reserve accounts............................................ Total............................................................................................ 39 14 i 4 Other loans............................... iii — + Total loans............................. 417 - Government securities.......... Obligations fully guar’teed. . Other securities...................... 1810 54 171 - 30 - 2 + 12 + 212 - 15 6 Total investments................ 2035 - 20 + 191 Total loans & investments.. Reserve with F. R. Bank.. . Cash in vault.......................... Balances wi th other banks... Other assets—net................... 2452 406 28 76 51 - 27 + 2 - 2 - 4 + i + 139 + 50 2 1 - 11 Liabilities Demand deposits, adjusted.. Time deposits.......................... U. S. Government deposits.. Interbank deposits................. Borrowings............................... Other liabilities....................... Capital account...................... Page Fourteen 1748 194 473 333 8 17 240 + + + + 38 3 63 19 8 1 4 + 222 + 24 - Ill - 18 7 4 h 11 +37.5 + 3.8 -37.8 -31.7 +23.8 +12.3 +31.8 +14.8 -35.6 +31.9 + 3.6 -25.4 +69.5 +46.0 -86.5 + 3.5 - + - Changes in four weeks + 4.4 +11.0 +10.1 +29.0 + + - 4.0 1.1 1.5 0.1 +10.2 - 6.0 + 0.1 + 0.1 +11.5 - 1.2 + 0.6 + 0.1 +12.9 - 2.8 + 0.0 - 0.0 +38.6 - 8.9 - 0.8 + 0.1 + 3.5 + 4.4 +11.0 +10.1 +29.0 Uses of funds: Member bank reserves (Daily averages; dollar figures in millions) Held Re quired Ex cess Ratio of excess to re quired Federal Reserve Bank of Phila. (Dollar figures in millions) $ *354 388 389 392 *336 373 376 380 18 15 13 12 Country banks 1944: Feb. 1-15.. 1945: Jan. 1-15.. Jan. 16-31.. Feb. 1-15.. 271 316 308 301 208 247 249 251 63 69 59 50 6% 4 3 3 30 28 24 20 Four weeks 11.8 2.8 1260.2 +*11.3 + .1 + 22.7 +$ 8.4 1.3 + 437.0 +$34.1 + 31.6 - 8.9 + 29.1 + 13.1 .8 + 29.1 +$444.1 + 289.2 + 84.8 6.7 - 32.4 2.7 - 120.3 - 13.7% One year Discounts and Industrial loans........ Phila. banks 1944: Feb. 1-15.. 1945: Jan. 1-15.. Jan. 16-31. . Feb. 1-15.. Changes in Feb. 21, 1945 $1274.8 Note circulation.... 1459.1 Member bk. deposits 684.0 U. S. general account 42.1 Foreign deposits.... 109.6 4.8 1032.1 44.9%
@FedFRASER