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FEDERAL RESERVE BANK OF PHILADELPHIA Mistress Mary vs. The Millstone Inn Higher Goals for Capital Spending B U S I N E S S R E V I E W is produced in th e D epartm ent of Research. Lawrence C. M urdoch, Jr. was p rim a rily respon sible for the article “ M istress Mary vs. The M illsto n e In n ,” and Evelyn E. M ajor and Bertram W. Zum eta for "H ig h e r Goals for Capital S pending.” The authors w ill be glad to receive com m ents on th e ir articles. Requests fo r a d d itio n a l copies should be addressed to Bank and Public Relations, Federal Reserve Bank of Philadelphia, Philadelphia, Pennsylvania 19101. Fighting to serve an expanding market restaurants seek to answer a fundamental question. Can small business survive in an age when big business has many apparent advantages? , Mistress Mary is only 12 years old yet her in only three people at work, yet they seem to be come runs close to $100 million a year. Like serving the 150 customers out front with no many youngsters, she has a special yen for strain at all. An order blares from an intercom system and fried chicken— but she buys it by the ton. Mistress Mary, you see, is a restaurant chain. one of the three “ cooks” withdraws a plastic Except for the name, which we invented, Mis parcel from a large freezer. The bag may con tress Mary could be one of a number of organi tain anything on the menu from Newburg to zations which are winning an increasing share of the nation’s eating-out budget. hamburg. It was prepared, preseasoned, pre cooked and frozen in Mistress Mary’s central No doubt you have enjoyed a meal in a commissary, located near a large eastern city. restaurant that closely resembles one of the Then it was stored at zero degrees Fahrenheit Mistress Mary units that stand in purple-roofed in a vast Antarctica of a warehouse. majesty along major highways from Maine to When Mistress Mary’s main-office computer Virginia. You remember the modern decor, the sensed that inventory was low in this partic substantial, if somewhat unimaginative, menu ular and the pleasant, efficient waitresses in crisp of uniforms. truck. unit, the bag, along others, was shipped with out by thousands refrigerated But most people never see what really dis Now all the cook has to do is pop the bag tinguishes the Mistress Mary chain— its kitchens. into an infrared oven and in a few minutes the All 70 of them are walled with the same glisten contents will be warm and appetizing. When the ing white tile. Look around and you will see bag has been emptied on an imitation Wedg 3 business review wood plate and garnished with reconstituted parsley, it is sent via conveyor belt to a hovering waitress, and the hungry customer is pitching in, five minutes after he made his D IN IN G NEAR TH E DELAWARE The restaurant industry in the Philadelphia Metro politan area shares the general problems and pros pects mentioned in this article with the nation. Details of operations in this area may differ, however. PHILA. METRO. AREA U.S. selection. Down the highway and to your right is an other restaurant, the Millstone Inn. It has those wide, creaky floorboards one expects to find in old Pennsylvania farmhouses; it has candles on checked tablecloths, Currier and Ives prints on rough-plaster walls and a terrace where ta bles are set in summer. Eating at the Millstone Inn costs twice as much and takes twice as long Number of eating p la c e s *.......... 5,381 229,815 Restaurant sales (m illions)* . . . $298 $11,037 Average sales per establishment* $55,000 $48,000 Number of persons per restaurant 787 754 Sales per c a p ita * ............................ $70 $64 Average number of employees* . 8 7 Average sales per employee* . . . $7,231 $7,030 Employees' hourly earnings . . . . $1.12 $1.14 (1963, not including tips) * Figures are for 1958, the latest census that provides separate information for Philadelphia. National figures for later dates often are used in the body of the article. as at Mistress Mary’s. Again the kitchen reveals the character of the operation. seems to be turning more and more toward au Step through the swinging door marked “ IN” tomated efficiency. Small business already has and you will see a bustle of activity. Vegetables lost out in automobile production, steel, appli are being sliced and diced, a rib roast is re ances and so ceiving a pre-oven trimming, and all shapes of doomed to extinction everywhere or can it sur steaming aromatic pots are being stirred. A vive and even grow? If so, how? Perhaps part many other industries. Is it man in his fifties, taller than the rest, stands of the answer lies in what is happening to by a large black-hooded stove, adding pinches Mistress Mary and the Millstone Inn. of herbs to a saucepan on the front burner. From time to time he dips in a wooden spoon Eating out is in and tastes the creamy contents. He frowns The chains and the small independents are con slightly and then pinches some more. Every testing for a mighty market. Surveys show that thing must be just right for he has recently almost 50 per cent of our adult population bought the Inn with his life’s savings and he visits a restaurant at least once a week. All to desperately desires it to be a gastronomic as well gether, public eating places total up checks as a financial success. worth about $14 billion a year and many bil Mistress Mary’s and the Millstone Inn occupy lions more are spent for food eaten in bars, opposite corners in the current struggle within company cafeterias, hospitals, church meetings, the restaurant industry. One represents big busi private clubs and the like. Estimates of the ness, the other small; one represents mass pro total food-aw ay-from -hom e market run to duction, the other oldtime craftsmanship; one $20 billion. emphasizes price and speed, and the other serv Restaurant spending has more than doubled ice and selection. Indeed, the restaurant indus during the postwar period. This growth rate is try has become something of a testing ground about the same as, or faster than, that of all which could shed considerable light on the over retail sales, total consumer spending and per all prospects for small business in a world that sonal income. On a per capita basis, restaurant 4 business review outlays rose from $44 in 1948 to $72 in 1962. households. Also important is the rapid and Some of these favorable comparisons are due pervasive growth in consumer income during to inflation. The cost of restaurant meals is up the postwar period. 25 per cent over the last decade, while the over But all is not full tables and fat checks for all consumer price increased only 14 per cent. the restaurant industry. It faces an imposing The price index masks an important qualitative array of problems. change' in the typical restaurant check, how ever. Patrons are buying a third more meat A tureen of troubles than they did in the early 1950s, and, as any Too few cooks can spoil the broth just as surely body who has ever scanned a menu knows, it as too many. That’s why the industry is con costs more to eat high on the hog than high cerned about a serious shortage of qualified on the stalk. chefs. Lack of job prestige, long hours, inade Industry publications cite many factors to quate training facilities, attractive opportuni explain the growth of restaurant sales: increased ties elsewhere and rising wages in Europe, a travel, the growth of expense accounts, a larger traditional source of culinary talent, are among percentage of working wives, more white-collar the factors responsible. workers, the trend toward urbanization, expand Many other food preparation jobs can be ing leisure and the increase in single-person filled with relatively unskilled labor and a large number of such work ers is readily avail able. But numbers alone are not enough. A successful restau rant requires a high degree of care and attention from its un skilled poorly workers. A washed fork or a speck of foreign 1948 '54 '58 '62 Eating place sales as a percentage of total retail sales 1948 54 58 '62 Eating place sales as a percentage of total consumer spending matter in the best rarebit is enough to drive away a steady customer. Many res taurants find it diffi cult to attract nonsupervisory employees with the proper per sonal habits and atti tudes. A high turn over rate— common 5 business review with most unskilled labor — compounds the tained a sizeable margin over 1962— there is no doubt that certain eating places were hurt. problem. As is the case in most service industries, com Restaurants also are pinched by the increased pensation of restaurant employees is not high— popularity of entertaining at home. Couples who at least for those who do not receive tips. But once would go out for a meal and maybe some wages have been rising rapidly due to spreading professional entertainment now meet in each unionization, the shortage of suitable workers other’s living rooms for home-poured refresh and the passage of many state minimum wage ment, gracious buffets and conversation. laws. One authority estimates restaurants’ labor But perhaps the greatest problem of the res taurant industry in recent years has been adapt costs have risen 25 per cent in the past decade— 5 per cent in the last year alone. Increasing ing to major changes in consumer demand. In labor costs have hit the restaurant industry the following paragraphs, we shall look a little particularly hard because, unlike the burgeoning more closely at the motives of the man or woman chains, the industry as a whole has not been able behind the menu. to increase productivity significantly through mechanization. While the level of food prices has been rel The who, when, where/ and why of eating out have risen The demand for restaurant service resembles a sharply. Silverware is said to cost 12 per cent bouillabaisse stew; it’s hard to separate, iden atively stable, most other costs more than it did two years ago, for example. tify and understand the ingredients. For our The pressure of rising costs shows in higher purposes, it might be best to divide restaurant menu prices, already mentioned, and in disap patrons into two very broad, rather indefinite pointing profit margins. As a percentage of categories. The first includes those who eat sales, pre-tax profits of restaurant corporations out as a semi-necessity, the second those who have fluctuated within a narrow, no-trend range do it as a luxury. The semi-necessity category since 1948. The average profit margin is 1.4 embraces white-collar workers who buy their per cent, which might be all right for a super lunches in a nearby cafeteria, early risers who market but the typical restaurant corporation breakfast in a diner because their wives won’t does only $160,000 worth of business a year. get up and college students who eat in the cam The profits of individually owned restaurants pus “ beanery.” average 8.4 per cent of sales, but this includes travelers and this is where one big demand whatever recompense the owner takes for his change comes in. Motorists and truckers want It also includes all sorts of considerable labors, as well as return on his their eating facilities right along the highway investment. As with corporations, there is no and they want quick service. In many cases particular trend in the profits of proprietor they prefer to put gas in their cars as well as ships and partnerships. their stomachs and often they want a room in In 1963 the Federal Government tightened which to sleep— all at the same stopping place. expense account regulations. While the new This demand requires many new restaurants, rules had no noticeable effect on total restau since most of the older rant business— monthly sales in 1963 main around population centers. It also requires new 6 ones are clustered business review THE RIGHT HAND PART OF THE MENU who eat out primarily as a matter of choice. C o n s u m e r p r ic e in d e x , s e l e c t e d item s The clerk-typist who treats herself to a good lunch on payday fits in here, as does the mil lionaire who regularly goes to some posh place while maintaining a full kitchen staff at home. The largest and most important group that doesn’t have to eat out, but does is the middleincome family. Maybe 25 to 30 million Ameri can spending units would fall into this cate gory. Sometimes husband and wife eat Friday or Saturday night dinners in a chosen restau rant and sometimes the entire family goes along — maybe on Sunday afternoon. Either way it’s something of an occasion, something worth necktie and jacket, heels and a skirt. The tablecloth jungle These customers have undergone a vital change in the last decade or two. In a word, they are more aware— aware of menu selection, food concepts in restaurant design and operation. Traveling business executives and salesmen preparation, service and atmosphere. They are not “ pinch-pennies” but they are aware of on the road once were almost captive Mon- prices in similar establishments and will balk day-to-Friday restaurant customers. They still if the cost of a particular meal seems out of are a vital source of patronage but the jet line. Experience with pre-cooked and gourmet plane is cutting their travel time sharply. Hotel foods at home has given them more discrim restaurants, in particular, are feeling the ab inating palates. Such customers are not in a sence of the man who went home for dinner. Teenagers are voracious as barracudas and usually visit restaurants for an afternoon hurry but they want good service and attention. These new middle-class sophisticates know their restaurants and they seek adventures in eating. hoagie to tide them over until dinner, or a It doesn’t take much to induce them to try a brace of hamburgers after the movie. Both different place— but, when they do, it doesn’t visits should be considered semi-necessities, as take much to convince them not to come back. much for social as nutritional reasons. Young Like as not, they might decide to stay home people demand cheap but filling food and pre next week and invite friends for dinner. With fer it served in an informal atmosphere. They several hundred thousand restaurants scram aren’t much interested in variety, and fast serv bling for a share of this knowledgeable, increas ice ingly fickle demand, it’s not surprising that the isn’t important, but parking space and music are. The second broad category covers people restaurant industry ranks as one of the most competitive there is. 7 business review The modern way use major capital markets. At least 15 are listed How are restaurants coping with the troubles on the New York and American stock ex we have outlined above— the “ chef gap,” other changes. personnel problems, rising costs, disappointing One-stop shopping. Restaurant chains are team profits and fast-changing demand? The chains, ing up with oil and motel companies to offer for their part, are displaying great resource eating, lodging and auto service at the same fulness. They are employing many of the most highway location. modern techniques used by large organizations How good is good in other industries: Automation. All sorts of modern machinery, With such techniques working for them, you including computers, are at work in many chain might expect the restaurant chains to knock operations. the customers out of the independents. Centralization. Food preparation, menu plan hard to measure the chains’ market penetra ning, accounting, purchasing, etc. are It’s per tion with precision, but we can get a few formed for an entire chain at a single location. indications of it. Sales of eating-and-drinking- Quality control. Considerable time and effort place chains with 11 or more units have risen is devoted to scientifically maintaining stand from about 5 per cent to almost 7 per cent of ards of food and service. the industry total since 1952. The unavoidable Specialization. Highly skilled experts in cook inclusion of drinking places, or barrooms serv ing, merchandising, management, etc. are de ing occasional food, deflates the figures, how voting their skills to various problems. ever. In the early postwar period, restaurant The volume concept. Borrowing an idea from corporations accounted for 4 per cent of all discount stores and supermarkets, some chains units and 19 per cent of all sales. Now the fig offer a low price menu, with a severely limited ures are 8 per cent and 33 per cent respectively. number of items. Fast turnover is counted on As we pointed out earlier, the trend of cor to offset low profit per unit. porate restaurant profits is no better than that Diversification. Restaurant chains are branching of the proprietorships. On the other hand, sales into food-at-home, motels, catering and other of the 10 largest chains have increased 96 per businesses. cent in the past decade compared to 54 per Publicity. Large restaurants have stepped up cent for the industry as a whole. their advertising in media such as radio and Does this fragmentary evidence indicate an television. impressive performance— impressive when you Market Research. Chains often use consumer consider all the apparent advantages the chains surveys to choose new locations and determine have? Many industry spokesmen seem to be their bill of fare. New recipes may be tested awed by the chains but, in spite of their growth, on a panel of typical customers. the independent restaurant has shown surpris Personnel policies. Company-wide training pro ing durability and tenacity. grams turn out qualified workers who are re Indeed, restauranting still is an essentially tained by competitive wage and fringe policies. small-scale industry. The latest census lists 230,- Capital access. Many chains are large enough to 000 eating places and they average only 7 em- 8 business review is far lower than that of CHAIN REACTION Chains with eleven or more units as a percentage of total restaurant sales Ten largest chains as a percentage o f total restaurant sales PER CENT most retailers and many manufacturers. The old-fashioned way Small independent restau rants must have a number of particular advantages to achieve such strength and staying power. For one thing they are more likely than the chains to have access to nonunion, and, 1954Pretax profit as a percentage of sales ------ i962---- Corporate restaurant sales as a percentage of total therefore, cheaper dition, labor. the usually In ad independent owner-operator often pays 8 himself far less than a PROPRIETORSHIPS - corporation 7 would have to pay a unit manager 6 of equivalent skill and experience. 5 2 - And then there is “ at CORPORATIONS mosphere” — the essential I 0 intangible in the restau _L 1949 '51 '53 '55 '57 '59 1947-48 1960-61 rant business. The chain usually mass produces its ployees each. In fact, over 57,000 have no em atmosphere in the New York office and, although ployees at all; presumably the owner and his in good taste, it may be somewhat cold to the family do all the work. The average restaurant discerning patron. The independent, in contrast, sells only $58,000 worth of food a year and if can display a warm, one-of-a-kind personality. you include drinking places as well, almost Chains may employ specialists but independ 90,000 units have yearly sales of only $10,000 ents can specialize their entire operation. Spe or less. cialization in the food of a certain foreign Food service is an easy business to enter country is becoming increasingly popular in since space and equipment often can be leased. this age when the well-traveled gourmet is a Naturally many of the small entrepreneurs lack major status figure. Every area long has had the necessary skill— or luck— and they quickly its French, Italian and Chinese restaurants but fail. But at 42 reported failures per 10,000 con now you find Polynesian, Spanish, Russian, cerns, the rate for eating and drinking places Greek, Indian and many others as well. Some 9 business review independents specialize in fresh-caught seafood, SUCCESS STORY charcoaled Black Angus steaks or whatever is Reported failure rate per 10,000 operating retail concerns, 1962 appropriate to their immediate locality. Others specialize by type of customer— “ tea rooms” seek to attract older ladies, for example. Cer tain eating places specialize in entertainment; a popular piano player brings patrons back, again and again, to one restaurant we know. Finally, every independent can, and many do, offer a certain dish as a specialty of the house. The Millstone Inn features cheese fondu Albert, named for the owner. Flexibility is another advantage the independ ents have. They can make up their menu from day to day and take advantage of local foods available with special quality or at bargain prices. They can draw on neighbors for parttime help in peak periods and can always rustle Infants' & Children's W e a r.................. Sporting Goods .................................... Women's Ready-to-Wear....................... Furniture and F u rn is h in g s.................. Cameias & Photographic Supplies . . . Men's W e a r ........................................... B a ke rie s.................................................. Gifts ...................................................... Books and S ta tio n e ry ........................... Appliances, Radio & T e le v is io n ......... Shoes ...................................................... ALL INDUSTRIAL AND COMMERCIAL ESTABLISHMENTS ......................... Women's A ccessories........................... Lumber and Building M a te ria ls ......... Dry Goods & General Merchandise . . . Jewelry .................................................. Automotive Parts and Accessories . . . EATING AND DRINKING PLACES . . . Hardware ................................................ A u to m o b ile s........................................... Drugs ...................................................... Groceries, Meats & P ro d u ce................ Farm Im p le m e n ts.................................. 161 145 109 105 94 93 83 74 69 69 66 61 59 54 48 47 44 42 40 35 33 26 21 up a few extra hands for a big wedding party. Lack of unionization is a key factor in this labor his eye on details than the manager of a chain unit with his business school degree and his flexibility. The small-scale operation can offer a brand manual from headquarters. of personalized service that the chains find hard to match. The independent owner and To each his own most of his employees often are long-time resi We mention such things to explain the strength dents of the local community. They get to know of the small independents in the face of strong their customers and vice versa. They can em competition ploy with telling effect, the great secret weapon chains. We don’t mean to imply that the inde of small business— calling customers by their pendents such as the Millstone Inn will increase names. from Mistress Mary and sister you their present share of the total market. Chains today? Would you like the same table you had should continue to wedge slowly into this tra last week?” It is of stuff such as this that true ditional small-business industry— by sheer ef customer loyalty is made, not necessarily of the ficiency if nothing else. “ Hello, Mr. Cooper. How are cheapest, quickest chicken a la king in town. If baseball is a “ game of inches” restaurant- Actually, there should be room for an ex pansion of chains and at least the present num ing is a business of “ details.” A thousand little ber of independents for years to come. The total things are of crucial importance to a successful eating-out market is expected to increase at the operation and they require constant personal rate of 3 or 4 per cent a year, mainly on the supervision. It may well be that the experienced, strength of the nation’s expanding population dedicated owner-operator is better able to keep and affluence. 10 business review It could be that the chains will concentrate ness system as a whole. As with restaurants, on the market for which they are particularly large firms are likely to continue to expand well fitted— the semi-necessity section. If you their market penetration in many industries. have to eat your lunch out 250 working days They have the advantages of highly efficient man a year you probably will prize quick service agement, production and marketing techniques. and low price above all else. If you take a super Nevertheless, the small firm is far from ob highway to save time you won’t want to squan solete in the American economy. As large firms der a half hour while your meal is cooked to grow more impersonal and products and serv order. Probably you would prefer the speed ices become more standardized, as we become of the infrared oven and an impersonal, cat- a number to the utility company, the mailman, quick waitress. If you are a teenager pulling up the insurance company, the tax collector and in your 1952 convertible you want 15^ ham the banker, we could learn to covet some old- burgers and 20^ malts, not an impeccably served fashioned, luxurious “ inefficiency.” Small firms selection of unusual entrees. But when you eat should be able to capitalize on a growing de out instead of at home or in the office, simply mand for personal attention, unique surround because you want to, you tend to seek the many ings, individualized and hand-made products, pleasant extras that independents are in a good warmth of personality, flexible service, special position to offer. ization, selection, attention to detail and face-tosmiling-face relationships. Conclusion Possibly these observations about the restaurant industry apply in some measure to our busi “ Goodbye, Mr. Cooper. Thank you for your patronage and I hope you will be back again soon.” 11 HIGHER GOALS FOR CAPITAL SPENDING Manufacturers in the Philadelphia Metropolitan ing steadily, though not spectacularly, since the Area plan to spend $378 million on plant and leveling-off which occurred late in 1962. In equipment in 1964. This is an increase of 18 per cent over last September’s projections for good measure, the current projections of in 1964 and a rise of 10 per cent from last year. from this experience. creased plant and equipment spending result The estimate represents a sharp reversal from Another reason for a brighter outlook is the predictions last fall that capital spending would recent corporate and individual income tax cut. be 6 per cent less this year than in 1963. A substantial part of the corporate tax reduc tion will be temporarily offset by accelerated The projected increases are even larger in Metropolitan tax payments, but the individual tax cut also Areas. Trenton manufacturers now expect cap has repercussions on investment spending. Al ital expenditures to be 75 per cent higher than though the magnitude of effects from the tax the Trenton and Wilmington in 1963, while last fall they expected a decrease cut of 14 per cent. Wilmington industries raised an change will be toward increased spending on is now unpredictable, the direction of optimistic fall prediction of a 20 per cent in final goods by consumers. Some increases in crease in 1964 to 38 per cent. The Lehigh Val capital spending now planned may anticipate ley Area still does not predict an increase, this increased demand for final products, which although manufacturers in this area are still is expected to add to total demand and help more optimistic now than in the fall. They have stretch out the business expansion. One bit of shaved their projected 34 per cent decrease to supporting evidence is the distribution of spend 20 per cent. ing increases by industry. In part, these reversals reflect the traditional estimates, which are made before final plans Increases higher in industries making durable goods are firm. However, the magnitude of these Both this Federal Reserve Bank’s survey and changes seems indicative of a rise in business current national surveys show that, as manu optimism this year, and a feeling on the part facturers increase their capital spending plans, conservatism of businessmen in their fall survey of businessmen that the investment climate looks durable goods industries are increasing their good. National surveys of capital expenditure investment predictions at a faster rate than plans show similar or even higher increases. nondurable goods industries. In the Philadel It would be surprising if the estimates were phia Area, current 1964 projections for dura not behaving in this manner. For one thing, ble goods industries are 16 per cent higher capital spending plans tend to follow changes than 1963 figures; for nondurables, the increase in business activity. Business has been improv is 6 per cent. Findings are similar in Trenton, 12 business review where expected 1964 spending figures for du rables are 92 per cent ESTIMATED CAPITAL EXPENDITURES OF M ANUFACTURERS IN TH E DELAWARE AND LEHIGH VALLEYS 1 9 6 3 AND 1 9 6 4 1964 Estimate As of higher than last year, while estimates for non durables are up 43 per cent. In Wilmington, the increases are 81 per cent for durables and 24 per cent for Only in nondurables. the Lehigh Valley, where the other wise universal increases are reversed, is the dura bles estimate less opti mistic than that for non durables. Investment spending important in sustaining nation’s total product While capital spending figures for encouraging, 1964 are they fall short of the boom pro portions reached Fall 1963 Expenditures 1963 Spring 1964 Change in 1964 Change Estimate 1963-1964 Fall-Spring (Dollar Amounts in Millions) Philadelphia Metropolitan Area All Manufacturing Durables Lumber and furniture Stone, clay, glass Primary metals Fabricated metals Machinery (excl. elec.) Electrical machinery Transportation equipment Instruments and misc. Nondurables Food and tobacco Textiles Apparel Paper Printing and publishing Chemicals Petroleum and coal Rubber and leather Lehigh Valley All Manufacturing Trenton All Manufacturing $343.6 137.4 1.5 22.0 15.5 20.9 29.2 28.6 11.9 7.8 206.2 45.8 6.7 3.0 23.4 18.7 68.9 39.2 0.5 $321.1 130.9 1.6 17.3 21.9 17.5 28.3 29.4 6.6 8.3 190.2 28.3 9.4 1.9 33.1 7.8 69.0 40.2 0.5 $377.9 159.2 1.9 21.2 28.9 19.3 29.3 31.5 7.3 22.8 218.7 39.9 13.1 1.9 34.4 11.4 78.5 40.5 0.6 68.6 45.9 22.3 55.2 — 20 + 20 19.1 39.0 + 75 + 104 53.4 62.0 + 38 + 135.7 118.4 152.7 + 13 + 29 479.3 in + 4 + 7 + 11 + 175 + 15 + 41 + 39 1 + 4 + 46 + 14 + 1 + 17 44.8 Wilmington All Manufacturing 3 Area Total All Manufacturing 4 Area Total All Manufacturing 10% 16 27 4 + 86 8 0 + 10 39 + 192 6 + 13 + 96 37 + 47 39 + 14 + 3 + 20 439.5 534.0 + 11 + 22 + + + + 18% + 22 + 17 + 22 + 32 + io 16 1955— 57, even though the size of the economy provide a very strong stimulus. But now the has grown since then. Industry still is not push new increases planned in plant and equipment ing against capacity limits as it was in the spending are enough, perhaps, to offset some mid-fifties. Nevertheless, the projected increases projected leveling-off of increases in Govern in plant and equipment expenditures should ment expenditures. Private investment spending make an important contribution to growth this thus may pick up a greater share of the burden year in the gross national product. of augmenting the gross national product. From late in 1961 until well into 1963, in Heightened activity in the capital-goods indus creases in the national product were sustained tries also stimulates, consumer spending, the by sectors of spending other than private in sector which must make the major contribution vestment. Even thereafter, investment did not if economic growth is to continue through 1964. 13 FOR THE R E C O R D • • • BILLIONS $_________________ MEMBER BANKS 3RD F.R.D._____________f t INDEX BANKING / >1, / 1 1% / | f CHECK . PAYM ENTS* (20 CITIES) A rH i i / V \ # v \ jr V 1 1/ ’ i/ if w M ! y V 1 i \ A i' l 1 n , V DEPOSITS — ■ ” INVESTMENTS /' i* 2 YEARS AGO YEAR AGO MAR. 1964 2 YEARS AGO Third Federal Reserve District United States Per cent change Per cent change YEAR AGO M AR. 1964 Department Store** Factory* Employ ment Payrolls Sales** Check Payments Per cent change March 1964 from Per cent change March 1964 from Per cent change March 1964 from Per cent change March 1964 from SUMM ARY Mar. 1964 from Mar. 1964 from mo. ago year ago + mo. ago year ago 3 mos. 1964 from year ago i 1 + 2 + 18 LO CA L CH AN GES + 6 + 3 mos. 1964 from year ago mo. ago MANUFACTURING Electric power consumed........... Man-hours, to ta l* ........................ Employment, to ta l.......................... W age income*.............................. + + + + 6 3 2 3 + 8 0 + 1 + 4 + + 7 3 1 1 CONSTRUCTION**........................ + 3 2 - 3 + 11 +32 COAL PRODUCTION..................... - 1 2 - 3 + - DEPARTMENT STORE SALES***. . . - + 2 BANKING (All member banksl Deposits.......................................... Loans............................................... Investments..................................... U.S. Govt, securities................... O ther............................................ Check payments............................. 1 6 0 5 + 2 0 + i + 16 Harrisburg......... 0 +3 + + Lancaster............ 0 -1 4 Philadelphia. . . . Reading.............. + 6 + 5 + 9 + 8 + 3 + 2 - 5 - 6 +20 +20 + 12t + 4 | + 5 t + + + 1 2 1 0 + 2 +16 + + + + + 7 12 1 7 17 12 + 7 + 12 0 - 8 + 18 + 10 •Production workers only. ••Value of contracts. •••Adjusted for seasonal variation. 0 year ago mo. ago year ago 1 + 12 + 3 + 6 -1 5 - 6 + 9 + 12 + 7 year ago +n 0 mo. ago +11 + +20 8 -1 + 1 + 1 + 2 + 2 + 13 + 4 -2 + 1 - 2 + 7 - 2 + 4 + 7 + 9 - Scranton............. -1 + 1 Trenton............... + 1 +3 W ilkes-Barre. . . 3 + 7 - 3 - 1 + 5 + 6 0 + 9 + 2 + 5 + 1 - 7 o t + 2 t + 2* 0 0 + + 1 1 + t20 Cities JPhiladelphia 0 1 + 1 +2 + 3 + 10 - 4 0 + 17 + 14 W ilmington........ PRICES Consumer....................................... mo. ago Lehigh Valley. . . + 10 + 1 + 2 0 — 1 year ago 0 +2 + 1 + 11 - 8 + 3 + 15 - Y ork.................... 0 +3 0 + - 5 -1 0 + + 15 8 9 5 *N o t restricted to corporate limits of cities but covers areas of one or more counties. ••Adjusted for seasonal variation.