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THE BUSINESS REVIEW FEDERAL RESERVE BANK OF PHILADELPHIA '33E3SI2 "nil?El mm MARCH, 1948 SHOULD OUR STEEL CAPACITY BE EXPANDED? STEEL PRODUCTION AND CAPACITY MILLION SHORT TONS MILLION SHORT TONS CAPACITY JAN. I yyyy i DLE / CAPACITY PRODUCTION DURING YEAR 1938 1940 1942 1944 1946 (948 The Angeles. That is an example of the “black market” at its blackest—in steel. most useful and the most inexpensive of indus trial metals, steel is in great demand at home and A leading trade magazine of the steel industry abroad—it is desperately scarce. estimated, last July, that the average premium for steel was in the neighborhood of $200 a Headlines tell about rising prices of steel, price ton. The volume of “black” tons was estimated “gray” and “black” markets, the shortage of at 2 million, which would give a conservative scrap, special “deals,” rising exports, “expedi estimate that buyers in desperation, approx tors,” “daisy chains,” and even gunmen. The imately a quarter ofpaid, a billion extra for reader has been deluged with statistics on produc their steel. As a matter of fact, dollars demand for steel tion, capacity, costs, labor productivity, wage was so intense last year that at least one buyer payments, and profits. re-enforced his demand by sending armed gun along with his buyer bearing an order for The United States Senate and various branches men 50,000 tons of steel—as reported in the Senate of the Executive Office of the Federal Government Hearings the Problems of American Small have made extensive investigations to determine Business. on Apparently there was no shooting, but whether steel producing capacity is adequate. it might be presumed that the buyer got his steel. Charges and countercharges have been made freely. This brief analysis of the major issues in Considerable steel is also traded in what is the debate concludes that capacity for producing ingot steel could not be expanded much faster, if called the “gray market,” otherwise known as the “daisy chain.” “Gray market” operators are a any, than the current rate without causing severe species of middlemen or “expeditors” who know strains throughout the entire economy. where steel is to be had and who also know who is in most desperate need of the metal—and they Evidences of Steel Scarcity obtain steel for a price. For the service of supply ing “gray” steel they, of course, charge “gray” When something is scarce its price, customar prices. Obviously, there are no official figures of ily, goes up. Last month the price of semi-finished “gray market” prices nor official statistics of the steel went up $5 a ton. To state the price increase volume of “gray” tonnage. We have not seen any more accurately, the old price of $55 a gross ton estimates. was changed to $54 a net ton. We are reminded Another evidence of the steel scarcity is the of the days when manufacturers of nickel candy bars raised their prices by reducing the size of the variety of “deals” that are made to get steel. Some buyers of steel mill products try to re bar; they retained the five-cent selling price. enforce their demand by offering the steel manu The February $5-a-ton mark-up is not the only facturer steel scrap in exchange for finished steel. price increase that occurred since the end of the Just where they get the scrap is sometimes a war. In mid-1947, steel prices were raised $5 mystery and it is not polite to inquire. Some to $10 a ton on all major products. Nor is that buyers of steel mill products have tried to get a the whole story. Since mid-1946, when the OPA higher priority with the steel manufacturer by began to crumble, steel manufacturers have buying securities of the steel companies on the added to their base prices various charges in the presumption that being a “member of the family,” nature of “extras” for such things as boxing, so to speak, will improve their chances of getting crating, “pickling,” and cutting to customers’ steel. specifications for size, etc. Price increases of this sort have been rather modest—5 to 10 per cent Some fabricators of steel products have gone since mid-1946, as reported by Philadelphia a step further. Instead of merely buying up a buyers. block of stock, they have bought out entire steel companies in order to assure a more reliable flow Thus far we have been speaking only of what of the much-needed raw material. For example, might be called the “white market.” There are General Electric bought the Mahoning Valley also “black markets” and “gray markets.” By Steel Company; Studebaker bought the Empire this time, almost every American knows what the Steel Corporation; Kaiser-Frazer bought the term “black market” means. Not so long ago, Chapman-Price Division of the Continental Steel one steel fabricator paid $240 a ton for steel Corporation; Hudson leased steel-making facil selling at the mill at a price of $90. That is ities; Borg-Wamer acquired the Superior Sheet an example of a “black market” price. Numerous Steel Company. These are examples of what other examples could be cited. “Black market” might be called “vertical integration.” Incident prices reached a high of $500 to $600 a ton in Los ally, not so long ago the same kind of thing was StEEL is the all-American “bottleneck.” Page 28 going on in the cotton textile industry when cot manufacturers, container makers, and others. A substantial part of this huge demand is in the ton was extremely scarce. nature of a backlog which had accumulated dur ing the war, when steel for civilian purposes was Causes of the Scarcity severely rationed. Of course, the huge demand is due also in part to the large amount of buying The steel scarcity is largely a heritage of the power represented by ready cash and credit. great world war and partly the result of the post The supply situation in steel is portrayed in the war boom in capital expansion, which of course accompanying chart. Please note here that we is also related to the war. Perhaps we were all too naive in jumping to the conclusion that we are shifting to crude steel produced, in contrast had already emerged from the post-war recon with finished steel discussed above. The differ struction. An evaluation of the current scarcity ence may be explained with reference to last in steel requires an examination of both the year’s output. In 1947, the industry turned out about 85 million tons of crude or ingot steel at the demand and the supply situation. mills. But by the time that unfinished steel was into various types of end-products it Current consumption of steel is as high as and converted was only about million tons of finished plates, perhaps greater than it was during the peak of sheets, pipes, etc.63 The difference is accounted for World War II. In 1947 the steel-consuming indus by such things as trimmings, rejects, and other tries utilized almost 63 million net tons, as shown unavoidable losses. The tonnage finished steel in the accompanying table. That was almost pre products usually amounts to aboutofthree-quarters cisely the tonnage used in 1944, the year of the the tonnage of raw or crude steel produced. peak war effort. It is about 30 per cent more of Last steel production was substantially steel than was consumed in 1940, as shown in above year, that of 1946, when steel-making operations the table. The table also shows that each of the were obstructed by internal labor-management major steel-consuming industries utilized sub- difficulties. statnially greater tonnages in 1947 than in 1940. Incidentally, there is no particular virtue in using long-time trend of production, as shown on 1940 as a basis of comparison, other than the fact theThe chart, is upward, but it is periodically subject that it is a recent pre-war year. to severe cyclical disturbances, as indicated by the shaded area labeled “idle capacity.” It is apparent STEEL CONSUMPTION that the industry operated close to capacity in 1947, but in 1946 it operated at only about three(Thousands of net tons) quarters of the capacity, and in 1938 at only about Markets 40 per cent of its capacity. The worst year on 1940 1947 record was 1932, when the industry operated at Tons Per cent Tons Per cent only 20 per cent of capacity. The record shows Automotive ............................. 7,965 16.4 10,234 16.3 that the industry seldom approaches 100 per cent Construction and maintenance ............ ........... 6,936 14.3 10,069 16.0 capacity operations except during periods of war Railroads ................................. 4,019 8.3 6,029 9.6 and its aftermath. “Idle capacity” almost dis Machinery and tools............. 2,330 4.8 5,787 9.2 Containers ....................... ... 3,068 6.3 5,589 8.9 appeared in 1916 during World War I and in the All other including exports 24,342 49.9 25,107 40.0 years 1941 to 1944 during World War II. Total ........................ ...... 48,660 100.0 62,815 100.0 Source: Adapted from Iron Age, January 6, 1948. Despite the high level of consumption last year, practically all of the steel consumers were clamoring for more, more. The 10 million tons of steel consumed by the automobile manufac turers produced only about 5 million vehicles, compared with that industry’s 1929 peak of about 5y2 million. That peak would doubtless have been surpassed last year had sufficient steel and other raw materials been available. The 10 mil lion tons of steel used last year for construction and maintenance are also an impressive amount as contrasted with 1940, but again a great deal more would have been used had it been available. The same is true of the railroads, machinery The term “capacity,” like so many words, is frequently misunderstood and therefore misused. For some months, the adequacy of steel-making capacity has been widely debated, not only in the boardrooms of steel manufacturers but also in Congress, in Pullman cars, and in barbershops. “Capacity” may be defined as “the physical out put of given specifications that an industry opera ting on its customary schedule with its existing men, machines, and methods can manufacture.” This definition conforms fairly well with the way in which the steel industry actually calculates its capacity. For each furnace, the steel industry calculates capacity by taking as a base the largest monthly output of that furnace multiplied by twelve to get a yearly capacity rate, and deducts 12i/2 per cent as an allowance for maintenance Page 29 and repair, based upon experience. The result is war or whether we would have business prosper ity and high employment. If our memory serves practical rated capacity. us right, the majority took the former view, and It is therefore apparent how the industry can perhaps some steel manufacturers were likewise occasionally operate at more than 100 per cent in that class. It is of course quite easy, though capacity for short periods of time, as it did during not quite charitable, to take advantage of hind the last war. It is perhaps also apparent why sight and say that the steel manufacturers should operations quickly fall below capacity when inter have expanded capacity more than they did. ruptions occur such as strikes or shortages of This same group of critics also cites the fact raw materials or a breakdown in equipment. Steel making is a complex process requiring a that the Federal Government had to spend a little great variety of equipment, a tremendous capital over $900 million to build additional steel-making investment, and a variety of raw materials—chief facilities during the war. (The industry spent of which are iron ore, scrap steel and iron, coal $1,100 million to build additional facilities during the war.) and coke, and limestone. It may seem peculiar that capacity was reduced basically, scrap is very scarce because during between January 1945 and January 1947, as the war the United States shipped 125 million tons shown the chart. The explanation is that the of steel and steel products out of the country, and industryin dismantled old run-down equip much of this will never come back. It can be ment that barely heldsome together during the war— retrieved only at great cost. It is equivalent to equipment which was costly to continue in opera nearly eight years’ supply of “purchased scrap” tion. During 1947, the industry increased its with mills operating at nearly peak rates. capacity by about 3 million tons as reported by Pig iron, the alternate steel-making raw mate the American Iron and Steel Institute so that rial, manufactured in blast furnaces, is also capacity presumably stood at about 95 million scarce. The “bottlenecks” here are inadequate short tons on January 1, 1948. furnace capacity, limited raw material—that is, Some steel manufacturers allege that present iron ore—and inadequate facilities for shipping capacity is adequate. They point out that present the iron ore and the shortage of good quality demand is unusual accumulation of unfilled coke, the principal fuel used in smelting iron from needs but asansoon these unusual demands will the ore. Last year, the industry consumed all the have been satisfied,ascapacity will be adequate and ore that the shippers could carry from the Upper idle capacity will be on our hands again as it has Great Lakes region down to the smelters in the been so often in the past. This argument seems Lower Great Lakes region. Incidentally, the plausible when one surveys the past record of the situation is complicated by foundries which also industry. However, it may be a grievous mistake utilize pig iron as a raw material and by the short to set our sights for the future on the basis of age of coke ovens that supply fuel for both blast past performance. furnaces and foundries. Some economists who are prone to rely on sta Enough has been said to make clear that the tistical projections say that the steel capacity question of steel-making capacity has many ram ought to be expanded to 100 million tons by 1950; ifications, both technical and economic. And we others advocate 110 million; and still others, 120 have said nothing about such things as types of million tons in order to insure a full-employment steel or kinds of steel-making facilities required economy. One fascinating study concluded that for their production. These and other factors steel capacity by 1950 ought to be either a min complicate the questions as to what present and imum of 98 million tons or a maximum of 120 future capacity should be. million tons, depending upon whether 1950 will be a year in which output of producers’ goods will Should Steel-Making Capacity Be Increased Now? be relatively high (a high-investment economy) or low (a high-consumption economy). The One group of critics contend that the steel author very wisely refrained from making a spe shortage is due primarily to inadequate capacity, cific forecast. This, of course, is not very helpful and has charged the steel industry with gross lack to the steel industry for the purpose of determin of vision. Perhaps steel manufacturers did lack ing whether steel capacity should be expanded vision in recent years by failing to expand capac now. ity sufficiently, but if so they had a lot of com pany. For some months before the war ended, Before attempting to answer the question as there was a great uncertainty in the minds of to whether we should expand steel capacity now, most people as to whether we would have a severe another aspect of the steel industry should be depression and unemployment at the end of the considered—that is, exports. Page 30 The United States Steel Industry in a If we attempt to ascertain what our steel capac ity should be by confining our analysis to the United States, the chances are that we shall arrive at only a partial answer and therefore an incorrect answer. It would be unwise to consider merely our own estimated steel requirements for the next five or ten years and disregard the needs and the productive capacity of the rest of the world. During 1947, the largest block of our steel ex ports, about 40 per cent, went to Latin-American countries. Almost a third of our exports went to Europe and Canada took 5 per cent. Last year, Canada took about the same percentage of our exports as she did in pre-war 1938, but the percentage of our exports going to other Western Hemisphere countries, chiefly LatinAmerica, increased quite substantially over pre war, and the percentage going to Western Euro pean countries increased from 16 per cent of our exports in 1938 to 30 per cent. We have emerged from the world’s most destructive war with our own economy substan tially intact, but the economies of some of the other nations are tottering on the brink of col lapse. We have already assumed some obliga tions to help our neighbors in greatest distress, and in all probability we shall have to assume still more obligations. For purposes of convenience, these matters are usually discussed under such titles as “foreign aid” or the Marshall Plan, and usually a price tag is attached to the package, which of course runs up into billions of dollars. Actually, we are not giving them dollars—we are giving them so many dollars worth of concrete assistance in the form of steel, copper, wheat, cotton, and other things which they need desperately. The steel industries of some of the Western European countries are in very bad shape. In 1947, the production of finished steel in Belgium, Luxemburg, Sweden, and the United Kingdom was greater than pre-war 1938. But production fell somewhat below pre-war levels in France, considerably below in Italy, and pitifully below in Western Germany, which produced about half of the pre-war output of steel of the Western European countries. Last year, Western Ger many produced only about 2yz million metric tons of finished steel, in contrast with almost 16 mil lion tons in 1938. Another way of summarizing the steel situation in Western Europe is this: “In 1947, net imports of crude and semi-finished steel into Western Europe were more than three times as large as in 1938, while its net exports of fin ished steel had fallen by almost 80 per cent.” If we think we have a steel scarcity in this country, we should familiarize ourselves with the steel scarcity in some of our neighboring coun tries—England, Germany, France, India, as well as some of our American neighbors. Foreign needs for steel are revealed, to some extent, by noting the destination of our steel exports; but that tells only half the story because obviously the nations that are in the best position to buy are the biggest buyers, and increased exports aggravate the scarcity at home. What is the story on exports? The Committee of European Economic Cooper ation has estimated that the sixteen participating countries and Western Germany, which together produced 24 million tons of finished steel in 1947, ought to be able to produce 34 million tons in 1948. However, it should be noted that the esti mate is based upon the assumption of favorable circumstances in all respects, including imports of substantial quantities of pig iron, scrap, and crude and semi-finished steel from the United States, which can scarcely be expected to in crease. Post-War World During pre-war 1937-1939, when we were pro ducing 32 million tons of finished steel products a Concluding Observations year at home, we exported 2 million tons. Last year, when we produced 63 million tons of fin This does not seem to be the proper time to ished steel, we exported over 6 million tons. embark upon a large-scale plan to expand steelPercentagewise, an increase in exports from 7.5 producing capacity. This conclusion is based on per cent of our production to 10 per cent does the following reasons: not appear frightening nor formidable. Nor can it be said to be the major cause of our steel 1. It is difficult to believe that the demand for scarcity. Nevertheless, it is a more important steel will continue to expand more or less factor than the over-all figures reveal because in indefinitely at the rate indicated by the level numerous instances our exports consist of those of demand prevailing since the end of the particular kinds of steel, such as sheet steel and war. Output last year equalled that of 1944 steel pipes and tubing, in which the scarcity at —the World War II peak. Both years were home is most acute. abnormal. Indeed, groping for the ideal ton- Page 31 nage of capacity is really chasing a will-o’the wisp. By the time it were found and built it would be out of date. The real issue is the rate of expansion—a question of how fast we want to expand our industries mak ing producers’ goods in relation to con sumers’ goods. Some of the present demand (though we do not know precisely what proportion) is in the nature of temporary post-war catching up. We already hear that some of our smaller industries are now encountering dif ficulties in selling all of their current output, and they may be forced to try the age-old expedient of reducing prices. The present unusually high foreign demand for American steel is not likely to continue indefinitely. The German steel industry, which is now operating at a very low rate of only 20 per cent capacity, should return to some semblance of normal output some time. When that occurs it will relieve the demand upon our steel industry. Furthermore, the Latin-American countries that are buying so heavily from us now are not likely to con tinue buying at present rates. In pre-war years they bought substantial quantities of their steel requirements from Europe, and in time they may return to their former suppliers. 2. Capacity is being increased about as fast as we can afford to do so now. The additional capacity built last year and now under con struction is admittedly a small amount when considered in terms of what it adds, percent agewise, to the total but it is a large amount in terms of cost. The term “cost” here is used in two different senses: the money cost to the steel manufacturers who are building additional capacity, and the “real” cost to the country at large—that is, to the direct and indirect customers of the steel industry who will have to do without, while materials and labor are going into new plant and equipment. To some steel manufacturers, the present cost of expanding capacity is apparently pro hibitive. The cost of building a ton of steel making capacity, consisting of blast fur naces, open-hearth furnaces, rolling mills, and all the auxiliary equipment needed to operate a fully-integrated plant, is said to be Page 32 somewhere in the neighborhood of $150 to $200 a ton of ingot capacity, compared to about $75 a ton before the war. To expand steel capacity at a faster rate now is going to cost everybody something in the way of delayed delivery of products made out of steel. Building additional capacity diverts steel from consumer goods to producer goods. 3. It is an eminently worthy goal to strive for perpetual full employment, which would pre sumably keep the steel industry—as well as all other industries—operating somewhere near full capacity. But as long as steel con tinues to be our basic industrial metal and as long as the industry continues to make steel by its present technology, which requires a huge capital investment per worker, and as long as the industry stands—so to speak—at the base of our industrial pyramid, it cannot avoid absorbing all the shocks of cyclical fluctuations in business. Owing to its basic nature, steel, of all industries, should guard against expanding capacity too fast. We should keep in mind the need for stability as well as growth. # # * * * In the foregoing analysis, effort has been made to cover the major considerations but, obviously, all aspects of the problem were not included. For example, the possibility of substitutes for steel— the lighter metals, such as aluminum and mag nesium. Many steel consumers are shifting to these metals rather than buying steel at “gray” or “black” market prices. Naturally, steel manu facturers are going to lose some of their cus tomers permanently. It is impossible to ascertain how serious this competition will be, but it cer tainly cannot be laughed off. If we have given the impression that the steel industry is unanimously opposed to expanding capacity, it has been inadvertent. Opinion in the industry is divided. Some companies are expand ing, and others are not. One thing is sure: if all firms were engaged in a vigorous program of expansion, the current shortage of consumer goods would be intensified, the danger of over expansion would be intensified, and our inflation ary difficulties would be intensified. BUSINESS STATISTICS Production Philadelphia Federal Reserve District Adjusted for Seasonal Variation Not Adjusted Production Workers in Pennsylvania Factories Per cent change Indexes: 1923-25 = 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....................................... Iron castings......................... Steel castings....................... Electrical apparatus........... Motor vehicles.................... Automobile parts & bodies Locomotives and cars......... Shipbuilding......................... Silk and rayon.................... Woolens and worsteds.... Cotton products.................. Carpets and rugs................ Hosiery.................................. Underwear........................... Cement.................................. Brick....................................... Lumber and products......... Bread & bakery products. Slaughtering, meat pack.. Sugar refining...................... Canning and preserving . Cigars.................................... Paper and wood pulp......... Printing and publishing. . Shoes....................................... Leather, goat and kid......... Explosives.............................. Paints and varnishes......... Petroleum products........... Coke, by-product................ COAL MINING Anthracite............................. Bituminous........................... CRUDE OIL................................ ELECTRIC P’W’R—OUTPUT Sales, total............................. Sales, to industries............. BUILDING CONTRACTS TOTAL AWARDS+........... Residential +....................... Nonresidential+................ Public works & utilities-!- Jan. 1948 Dec. 1947 Jan. 1947 Jan. 1948 from 113p 115p 125p 104p 149 72p 124p 130p 147 63p 166p 92p 120 116 118 128 107 150r 77 148 135 146 57 165 98 120 Month ago 113r — 3 114 — 3 122 — 2 105r — 4 145 — 1 71 — 6 133 —16 130 — 4 155 0 58 +11 161 0 81 — 6 121 0 100 119 92 83 229 44 137 60 104r 122r 93 97 224 51r 143 59 99 113 101 110 225 59r 128r 69 81 _ 77p 40p 109p 78 150 114p 64 32 86r 84 38 110 86 154 100 60 29 _ 85 74 51r 84 74 144 103 63 30 104 _ 152 220p 148 102 123 91p 92p 100 116 214p 113 __ 157 225 147 99 124 110 85 104 109 217 113 78 210 157 94 126 97 66 98r 114 209r — 4 — 3 — 1 —14 + 2 —13 — 5 + 2 —28 — 6 — 8 + 5 — 1 —10 — 2 +15 + 6 + 8 — 5 — 8 —3 — 2 0 + 3 — 1 —17 + 8 — 4 + 6 — 1 180p Up 70 81p 294 475 490 348 130 146 125 185 181 73 70 93 295 469 478 354 134 112 157 183 167 77 74 97 316 440 453 328 75 100 78 64 0 — 2 0 —13 0 + 1 + 3 — 2 — 3 +31 —20 + i Jan. Dec. Jan. 1948 1947 1947 Year ago 0 +1 + 3 — 1 + 2 + 1 — 7 0 — 5 + 8 + 3 +13 — 1 + 1 + 5 — 9 —25 +1 —24 + 7 —13 —10 — 5 + 5 —21 +30 + 6 + 5 +11 + 2 + 7 — 7 — 8 +94 + 5 — 6 + 8 — 2 — 6 +41 + 2 + 2 + 3 110p 113 112p 115 110 lllr 143 73p 123p 126p 121 51p 160p 96p 119 143r 76 147 133 106 51 163 93 121 140 73 131 127 128 48 156 84 120 97 117 84 88 215 39 135 58 103r 115r 87 93 218r 40r 140 59 96 111 92 116 212 51r 126r 67 83 78p 41p 105p 81 147 80p 59 29 106 111 105 213p 121 101 123 93p 98p 100 105 210p 88r 87 78 74 52r 41 107 82r 84 77 152 141 82 72 59r 58 29 27 hi 115 120 122 102 54 227 203 106 128 100 93 126 126 94 99 93 70 103 98r 106 102 214 207r + 8 180p 175 — 7 73p 73 — 5 70 70 —16 93p 98 — 7 282 277 + 8 503 501 + 8 505 492 + 6 338 336 +74 144 149 +45 118 108 +60 135 169 + 191 237 219 Unadjusted for seasonal variation. p Preliminary + 3-month moving daily average centered at 3rd month. r Revised. ' ** Increase of 1000% or more. 167 78 74 111 304 467 467 318 83 81 85 81 Local Business Conditions* Percentage change— January1948 from month and year ago Allentown......... Altoona............. Harrisburg......... Johnstown......... Lancaster........... Philadelphia. . Reading............. Scranton........... Trenton............. Wilkes-Barre. . Williamsport . . Wilmington. . . York.................. Employment Dec. 1947 — 3 — 2 0 0 0 — 2 + 1 — 3 — Pay Rolls Jan. Dec. 1947 1947 — 3 — 2 —11 0 — 1 + 2 + 5 + 8 + 1 — 1 — 1 — 3 — 5 + 2 + 4 — 1 — 1 +1 — 8 — 1 0 — 4 — 3 —12 __2 + + — — 4 3 2 Building permits value Jan. Dec. 1947 1947 + 16 —77 + 4 —67 + 18 —87 +32 —43 + 18 —29 —31 +78 + 19 —24 + 19 +28 + 10 —75 —72 + 3 + 6 +37 + 3 —69 Jan. 1947 + 5 +774 + in — 68 — 10 + 35 + 97 — 76 + 41 — 39 + 58 +331 — 59 Retail sales Dec. 1947 —57 —61 —53 —58 —55 —53 —54 —60 —61 —57 Jan. 1947 + 3 + 3 +14 +16 +10 + 8 + 10 + 9 +16 +14 —57 —58 + 7 + 2 Debits Dec. 1947 +1 — 9 — 7 — 7 —10 — 9 — 3 — 8 —12 0 — 4 —28 —11 Jan. 1947 +32 + 3 +18 +18 0 + 1 + 9 — 7 +n +23 — 2 + 2 + 5 Summary Estimates—January 1948 Weekly Employ Weekly Man-Hours ment Pay Rolls Worked All manufacturing ......... 1,113,600 $55,422,000 44,566,000 Durable goods industries 631,100 34,693,000 25,582,000 Nondurable goods industries ....................... 482,600 20,729,000 18,984,000 Changes in Major Industry Groups Employment Per cent Ian. change 1948 from In Jan. dex Dec.i 19471 1947 0 All manufacturing........... 130 —1 Durable goods industries. 156 —1 — 1 Nondurable goods 0 industries........................... 106 —1 0 Food......................................... 127 —3 Tobacco.................................. 105 0 + 3 0 Textiles.................................. 86 —1 Apparel.................................. 95 —1 + 3 Lumber.................................. 92 +1 +1 Furniture and lumber products.............................. 102 —2 — 2 0 Paper....................................... 121 —1 Printing and publishing. . . 138 —i + 3 Chemicals.............................. 122 —1 — 2 Petroleum and coal products.............................. 149 +i + 6 Rubber.................................... 162 0 —13 Leather.................................. 98 +1 + 2 Stone, clay and glass......... 134 —1 — 4 0 Iron and steel....................... 139 0 Nonferrous metals.............. 147 —3 —13 Machinery (excl. elect.). + 7 —1 210 Electrical machinery......... 234 0 — 1 Transportation equip. (excl. auto)....................... 215 —3 —14 Automobiles and 182 —3 — 2 equipment......................... Other manufacturing......... 135 -i — 6 Indexes (1939 average = 100) Pay Rolls Per cent Jan. change 1948 from In Jan. dex Dec. 1947 1947 288 —1 + 13 330 —1 +15 237 229 231 213 243 198 —2 —8 —3 —1 0 +2 +11 + 5 + 5 + 15 + 14 + 17 244 261 271 247 +2 —2 +2 —1 + 10 + 15 + 11 + 9 276 326 208 281 292 295 442 503 —1 —2 +3 —1 +1 —4 0 0 +15 —11 + 12 + 10 + 19 — 6 +22 + 18 397 379 —8 —4 — 7 + 9 262 —3 + 1 Average Earnings and Working Time January 1948 Per cent change from year ago Weekly Earnings Hourly Earnings Aver- Ch’ge Aver- Ch’ge age age All manufacturing... $49.77 + 14 1.244 +13 Durable goods indus.. 54.98 +16 1.356 +13 Nondurable goods industries.................... 42.95 +10 1.092 + 12 Food.................................. 40.34 + 5 1.012 +10 Tobacco........................... 29.09 + 2 .748 + 1 Textiles........................... 44.47 + 16 1.118 + 19 Apparel........................... 36.17 + 11 .945 + 9 Lumber........................... 40.05 +16 .973 + 9 Furniture and lumber products....................... 43.90 + 13 1.000 + 11 Paper................................ 46.61 +14 1.052 + 12 Printing and pub........... 55.54 + 7 1.451 + 13 Chemicals....................... 48.31 +11 1.190 +12 Petroleum and coal products....................... 56.40 + 9 1.455 +10 Rubber........................... 49.98 + 2 1.328 + 8 .975 + 11 Leather........................... 36.46 + 10 48.04 +14 1.184 + 12 Stone, clay and glass. Iron and steel................ 56.65 + 19 1.413 + 14 Nonferrous metals. . . . 52.26 + 8 1.304 + 10 Machinery (excl. electrical) .................. 53.28 + 15 1.299 + 10 Electrical machinery 60.10 + 19 1.481 + 16 Transportation equip. (excl. auto)................ 56.42 | + 8 1.425 + 7 Automobiles and equip 57.19 | +11 1.346 +11 Other manufacturing. 40.63 | + 8 1.072 + 10 Weekly Hours Aver-ChVe age | 40.0 40.5 +3 39.3 39.9 38.9 39.8 38.3 41.2 —2 —4 +i —2 +2 43.9 44.3 38.3 40.6 +2 +2 —5 —1 38.8 37.6 37.4 40.6 40.1 40.1 —1 —5 —i +2 +4 -1 41.0 40.6 +4 +3 39.6 42.5 37.9 +2 0 —2 +6 * Area not restricted to the corporate limits of cities given here. Page 33 Distribution and Prices Per cent change Jan. 1948 from Month Year ago ago Wholesale trade Unadjusted for seasonal variation Sales Total of all lines .................. Drugs .................................... Dry goods ........................... Electrical supplies ........... Groceries .............................. Hardware .............................. Jewelry ................................ Paper .................................... Inventories Total of all lines ................ Dry goods.............................. Electrical supplies ........... Groceries .............................. Hardware ........................... Paper .................................... —ii — 5 — 4 —44 + 13 —41 —62 —28 Dec. 1947 Jan. 1947 +12 + 3 + 5 — 6 +41 +56 + 4 + 9 — 2 268p 240 249 183 217p 284 260 270r 246 247r 248r — 221 — 235 168r — 0 + 18 + 5 350 — 1 +15 +250 166 199 180 148 + + + + 2 1 1 2 +17 +21 + 15 +16 +121 +227 +168 + 85 169 168 206 189 135 191 142 + + + + + — + 1 1 2 1 4 1 1 +10 + 11 +14 + 7 +10 + 6 + 7 + 71 + 72 + 121 + 90 + 40 + 90 + 41 RETAIL TRADE Sales Department stores—District........... Philadelphia Women’s apparel ............................. Men's apparel.................................... Shoe .................................................... Furniture ........................................... Inventories Department stores—District ......... Philadelphia . Women’s apparel .............................. Shoe ...................................................... Furniture ........................................... FREIGHT-CAR LOADINGS Total .................................................... Merchandise and miscellaneous. Merchandise—lc.l.............................. Coal .................................................... Ore .................................................... Coke .................................................. Forest products ............................. Grain and products ....................... Livestock........................................... MISCELLANEOUS Life insurance sales . . Business liquidations Number ....................... Amount of liabilities Check payments ......... 243p 214 248 140p 245 230 228r 142 217r 196 256 116 132 129 77 132 153 173 87 129 85 138 133 81 143 165 191 90 142 138 95 144 168 163 107 157 221 201 243 * Computed from unadjusted data. 211 122 86 122 223 Not adjusted Per cent change Jan. 1948 from Jan. 1948 — 7 —11 +15 + 2 — 9 —12 Per cent chan ge from Jan. Year Aug. 1948 Month) ago 1 ago 1939 Basic commodities (Aug. 1939 = 100) Wholesale (1926 = 100) ......................... Farm .................... Food ....................... Other .................. Living costs (1935 1939 = 100) United States . . . Philadelphia ......... Food .................. Clothing ............. Fuels .................. Housefumishings Other .................. Indexes: 1935-1939 = 100 + 3 + 1 Source: U. S. Department of Commerce. Prices Adjusted for seasonal variation Month ago 6 8 8 Year ago 44- 8 8 6 —25 + —49* + 2* 44— 44- 12 9 3 20 12* —12 0 — 7 4- 9 — 2 + 4* — 4 — 3 — 5 — — 8 8 —10 — 3 4- 6 — 2 9 3 — 7 — 6 — 19 — 8 — 4— — — 9 6 19 18 30 8 203 4-10 4- 236 4- 8* —45* 4- 9 4-146* + 60* 4- 3 p Preliminary. Jan. 1948 Dec. 1947 Jan. 1947 204p 192 204 191 169p 460 421 387 450 293r 188 177 193 174 165 212p 190 208 121p 208 196 201r 128 189r 174 215 125 73 148 58 199 70 125 135 128 89 161 64 188 86 133 127 80 154 83 207 76 127 93 152 123 210 217 193 40 64 241 37 117 268 16 40 233 120 101 86 r Revised. Source: U. S. Bureau of Labor Statistics. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Changes in weeks ended Four wks. One year Third Federal Reserve District (Millions of dollars) — 14 +126 —133 ............................................................................. — 2 — 5 — 7 — 7 — 21 — "2 + 14 — 20 + 1 — 6 + 1 — 2 + 3 — 10 + 11 — 31 — 1 — 2 — 5 — 7 — 7 — 21 Uses of funds: 873 +11 +129 Total ............................................................................. Total investments . . . 1,652 —29 —125 Total loans & invest.. Reserve with F. R. Bank Cash in vault ................ Balances with other bks. Other assets—net........... 2,525 —18 + 4 495 —13 + 29 + 2 43 105 + 7 56 + 2 + 3 2,111 399 42 337 9 26 300 —35 + 16 + 8 — 9 — 9 — i +1 +133 — 24 — 66 + 9 — 5 — 2 l Total 1,391 —23 —127 261 — 6 + 2 + 14 + 22 — 43 l 87 4 7 3 4 46 ............................... Page 34 + 5 + 58 — 68 1 + 4 + — 5 — — — 2 + + 6 + + 8 + Government securities . Other securities ................ Liabilities Demand dep. adjusted. . Time deposits.................. U.S. Gov. Deposits .... Interbank deposits .... Borrowings .................... Other liabilities .............. Capital account ............... Feb. 25 05 518 18 13 73 7 244 “Other deposits" at Reserve Bank......................... Total Feb. 18 1 Sources of funds: Reserve Bank credit extended in district........... Commercial transfers (chiefly interdistrict).... Ch’ges in four weeks Feb. 11 Feb. 4 + Assets Commercial loans ......... Loans to brokers, etc. . Other loans to carry secur. Loans on real estate......... Loans to banks .............. Other loans ....................... Feb. 25 1948 3S3 + Reporting member banks (Millions $) Changes in — Member bank reserves (Daily averages; dollar figures in millions) Held Phila. banks 1947 Feb. 1-15___ 1948 Jan. 1-15___ Jan.16-31. .. Feb. 1-15___ $412 451 443 429 $407 436 434 426 $ 5 15 9 3 i% 3 2 1 Country banks 1947 Feb. 1-15 1948 Jan. 1-15 . Jan. 16-31 Feb. 1-15 $375 402 392 387 $330 351 346 344 $ 45 51 46 43 14% 15 13 13 Re Ex quir’d cess Ratio of Excess to Re quired Changes in— Federal Reserve Feb. Bank of Phila. Four 25, One (Dollar figures in weeks 1948 year millions) Discounts & advances $ 18.2 $+ 4.0 $— 1.3 Industrial loans . . . . 0.9 — 0.4 — 0.1 U.S. securities......... 1,502.5 — 68.1 —229.4 Total ..................... $1,521.6 $— 64.5 $—230.8 Fed. Res. notes . . . . $1,645.8 $+ 2.6 $— 16.7 Member bank dep.. 811.0 — 31.7 + 26.5 U. S. general acct.. 147.7 + 72.5 — 34.0 Foreign deposits . . 30.4 + 2.5 — 8.0 Other deposits .... 1.4 — 0.8 — 0.9 Gold cert, reserves. 1,119.6 +126.0 + 197.3 Reserve ratio ........... 42.5% +4.2% +7.9%
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