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Headquarters: Centers of Corporate Control Home Is Where the Money Is Headquarters: Centers of Corporate Control . . . A revealing look at Philadelphia’s position as a corporate headquarters center. Home Is Where the Money Is . . . It takes more than LSD— loan supply, demand— to turn a home builder on. BUSINESS REVIEW is produced in the Department of Research. Evan B. Alderfer is Editorial Consultant. Donald R. Hulmes prepared the layout and artwork. The authors will be glad to receive comments on their articles. Requests for additional copies should be addressed to Bank and Public Relations, Federal Reserve Bank of Philadelphia, Philadelphia, Pennsylvania 19101. Community leaders across the country strongly believe corporate headquarters are an important asset to their local economies. The Philadelphia Metropolitan Area is no exception. Therefore, it is understandable that the community is concerned because it feels headquarters are declining in the region. Since this current concern has been based on fragmentary evidence, we were challenged to find out whether a problem really exists. H E ADQU ARTERS: CENTERS OF CORPORATE CONTROL by Elizabeth P. Deutermann Headquarters of business corporations histori that home offices house the companies’ key de cally have concentrated in the nation’s major pop cision-makers. They make the major choices with respect to production, sales, purchases, research, ulation centers. Philadelphia is one of them. Among the ten largest metropolitan areas in the and other operations. And it is strongly felt that country, Philadelphia ranks third as a location for headquarters of giant corporations.1 Unfor many company decisions are substantially influ enced by where the decision-makers live and tunately, this observation is but a snapshot of the top of an iceberg. Beneath the surface are num work. By virtue of residence of these executives, the home town of the headquarters is blessed with erous signs that the region has lost much of its special economic benefits. strength as a center for headquarters. Under water photography reveals a decline in the num ber of major corporations headquartered here, relatively slow asset growth of those remaining, and a greater-than-expected tendency of smaller firms to be controlled by headquarters outside of the region. For example, top corporate executives in Philadelphia will most likely give the lion’s share of their company business to local banks, adver tising agencies, law firms, auditors, other service industries and producers. When considering a site for a new production facility, the decision makers will definitely include Philadelphia in the choice— if not give the area top priority. Further WHY HEADQUARTERS ARE IMPORTANT more, a large number of headquarters executives Business leaders consider headquarters a vital make an invaluable contribution to community economic asset to their community. The reason is well-being in a broader sense. They take the time, 1 References to Philadelphia throughout the article are to the Standard Metropolitan Statistical Area. This is also the case for other cities named. For Philadelphia, the area includes the counties of Bucks, Chester, Dela ware, Montgomery, and Philadelphia in Pennsylvania and Burlington, Camden, and Gloucester counties in New Jersey. and have the energy and desire, to make their region a better one in which to live and do business. These views are widespread. They have prompt ed a plethora of promotional activity across the 3 bu siness r e v ie w nation to attract headquarters to one’s home town. They have prompted us to raise some ques tions concerning corporate headquarters in Phila delphia. As a starting point, how does the region rank as a headquarters center? Where is it going? TABLE 1 HOW HEADQUARTERS CONCENTRATE IN THE LARGEST CITIES S ta n d a rd HOW PHILADELPHIA COMPARES The opening reference to Philadelphia’s leader ship as a headquarters center includes corporate “ giants” only— a subject to which we shall re turn.2 But Philadelphia’s economy is not domi nated by a few giants. It is characterized by a high proportion of intermediate-sized firms. So, to gauge the region’s strength as a headquarters center calls for a broader view of the economy. Therefore, let’s take a look at all firms with a N um ber of H e a d q u a rte rs ’ R a n k in g M e t r o p o lit a n A re a P o p u la t io n R a n k in g N e w Y o rk 1 1 C h ic a g o 2 3 L o s A n g e le s 3 2 B o sto n 4 6 4 P h ila d e lp h ia 5 D e t r o it 6 5 S t. L o u is 7 10 S a n F r a n c is c o 8 7 P it t s b u r g h 9 9 10 8 W a s h in g t o n Source: Dun and Bradstreet, Inc., 1965, and U.S. Bureau of the Census, 1965. million dollars net worth or more.3 This then covers the small wholesaler in Montgomery County, Pennsylvania, with two employees as region. The more firms, the more headquarters. However, Philadelphia is in a somewhat unique well as a manufacturer in Camden with 27,000 position. It is the only metropolitan area rank employees. ing higher in firms than in headquarters. (See On this basis, where does Philadelphia stand Table 2.) In addition, the region ranks higher in as a corporate headquarters center? Among the subsidiaries than headquarters. Relative to other ten largest metropolitan areas, Philadelphia ranks large regions, fifth in the number of firms headquartered here. slightly more prone to corporate control outside of the area than within it. This fact alone is not too surprising. To a con firms in Philadelphia appear siderable extent, the largest population centers have the most headquarters. For example, the three top headquarters centers— New York, Chi cago and Los Angeles— also are the nation’s top three population centers. People alone, however, do not explain a region’s attraction for head quarters. If they did, Philadelphia would be in fourth place, instead of fifth as seen in Table 1. Compared to population, there is a stronger TABLE 2 THE MORE FIRMS IN A REGION, THE MORE HEADQUARTERS— USUALLY M o s t A re a s R ank t h e S a m e in N u m b e r s o f H e a d q u a rte rs a n d F ir m s : Som e Rank H ig h e r in H e a d q u a rte rs T h a n F ir m s : N ew Y o rk B o sto n C h ic a g o One R anks H ig h e r in F ir m s T h a n H e a d q u a rte rs: S t. L o u is relationship between the concentration of cor L o s A n g e le s porate control and the number of firms in a P h ila d e lp h ia D e t r o it S a n F r a n c is c o 2 These are the nation s 750 largest industrial and non industrial corporations enumerated by Fortune magazine. 3 Comparisons of metropolitan areas throughout this section are based on data obtained from Dun and Bradstreet, Inc. The data cover the year 1965. 4 P it t s b u r g h W a s h in g t o n Source: Dun and Bradstreet, Inc., 1965. bu siness re v ie w Locational advantage to the total for all ten metropolitan areas. The At this point we begin to see a tendency for some measure of regional concentration, or speciali regions to be more home-office-oriented than zation, used here works like this: others. as head quarters are the same proportion of employment quarters centers is not in direct proportion to in one region as all headquarters are to total their size or number of firms. A further indica employment of the ten metropolitan areas, that tion of this tendency is seen in the relationship between headquarters and employment in an one region would have an index of l .4 This is frequently cited as having a “ fair share.” In area. Although New York and Chicago still hold the top spots as headquarters centers relative to these terms, Philadelphia stands short of its Their comparative position if head fair share. employment, the relationship begins to fall apart for the eight other regions. For example, Boston Manufacturing’s role and St. Louis rank third and fourth, respectively, Philadelphia’s rather undistinguished position as in the number of headquarters as a percentage a headquarters dynamo is strongly weighted by CHART 1 would appear that the manufacturing sector of SOME REGIONS HOLD A LOCATIONAL ADVANTAGE FOR HEADQUARTERS* the economy might enhance the region’s head manufacturing corporations. At first glance it quarters leadership. Further probing suggests Location Quotient* this is not the case. As we take that first glance, we see that Phila delphia ranks fourth in the number of head quarters of manufacturing firms compared to other metropolitan areas. This standing is right in line with the region’s population rank, one step above its “ all headquarters” position. One would expect the region to rank high as home base for manufacturing corporations because Philadelphia is a manufacturing town. And, as previously noted, the more firms in an area, the of each region’s employment. Philadelphia again more headquarters. is in fifth place. These four regions— New York, Chicago, Bos ton and St. Louis— appear to have a locational advantage for corporate headquarters. They have something going for them that the other six regions don’t. However, Philadelphia does lead the rest of the underachievers, as shown in Chart 1. The chart graphically depicts the locational advantage or disadvantage for corporate head quarters in each region. It shows the concentra tion of home offices in any one region relative 1 This is a descriptive measure of concentration, usual ly called a location quotient. It is a device for comparing a region’s percentage share of a particular activity (in this case, headquarters) with its percentage share of some basic aggregate (em ploym ent). As used here, the location quotient for the concentration of headquarters in a region is stated by the formula H r/E r H r/H n hFT F0 Fe T e Hr = the number of headquarters in the region; Er — employment of the region; Hn — the sum total of head quarters in the ten regions; and En = the sum total of employment in the ten regions. 5 bu siness re v ie w But relative to its size as a manufacturing TABLE 3 town, it falls short in local corporate control over operations. For example, compared to the other major metropolitan areas, Philadelphia places low in the proportion of its manufacturing HOW THE LARGEST REGIONS RANK AS HOME BASE FOR CORPORATE GIANTS* S ta n d a rd M e t r o p o lit a n phia holds the top spot for manufacturing sub sidiaries as a percentage of all firms. What this R anked 1965 place. In other words, six of the nine other regions have more home-town control over their manufacturing enterprise. In addition, Philadel N u m b er o f H e a d q u a rte rs A re a firms headquartered in the region. It’s in seventh 1956 N ew Y o rk 1 1 C h ic a g o 2 2 P h ila d e lp h ia 3 3 P it t s b u r g h 4 4 San 4 6 8 F r a n c is c o L o s A n g e le s 6 D e t r o it 7 5 the region make many key management decisions S t . L o u is 8 6 about Philadelphia’s industrial activity, and to a greater degree than in most other major metro W a s h in g t o n suggests, therefore, is that executives outside of politan areas. The region’s comparative position as a center of corporate control is less influenced by non manufacturing activities. But then Philadelphia B o sto n 9 9 1 0 1 0 * Corporate giants refer to the 7SO largest manufac turing and nonmanufacturing corporations in the nation. Source: Fortune magazine. is less of a nonmanufacturing region. In terms When a major headquarters moves into a region, of total nonmanufacturing firms headquartered in the area, it places fifth. The same rank holds or becomes a giant through acquiring firms out for the percentage of nonmanufacturing firms loss of one such home office results in much whose home offices are in Philadelphia. Non wringing of hands throughout the business com manufacturing appears neither to add to nor subtract from the region’s strength as a cor munity. porate headquarters center. side the region, rejoicing follows. Conversely, the Philadelphia’s present stand as a mecca for this cream of the crop is excellent. As men tioned at the outset of this article, the region is THE CREAM OF THE CROP in third place in the number of major corpora To this point we have taken a very broad look tions headquartered in Philadelphia. And it has at Philadelphia as a headquarters complex. In held on to this position for almost a decade cluded in this total picture are the corporate (1956 to 1965). Only New York and Chicago continue to surpass it. But how much longer giants to which we referred earlier.5 Neverthe less, they warrant some special attention. Since business leaders feel headquarters generally are Philadelphia can retain its rank is questionable. Some ominous signs are evidenced. an important asset to the local economy, the largest home offices are of particular interest. Down the down staircase Together, the ten largest metropolitan areas in 1 Comparisons oj metropolitan areas throughout this 5 section are based on Fortune magazine’s data on the nation’s 7SO largest industrial and nonindustrial corpo rations. 6 the nation actually lost major corporate head quarters between 1956 and 1965. The total de cline was 6 per cent. A probable reason for this bu siness re v ie w loss is stepped-up mergers and acquisitions over the period. Another is the movement from the This area’s total decline has been slow but steady. And both manufacturing and nonmanu top metropolitan areas to some of the smaller facturing headquarters have participated in the regions of the country where population and drop. Of the ten regions, only San Francisco in employment growth have been booming. One creased its number of giant manufacturing home further possible explanation is that corporations offices. The other areas either experienced no in some areas outside the big ten have grown to change or declined. Philadelphia is in the loss join the ranks of the largest 750 corporations, group. In fact, its rate of loss was surpassed only therefore displacing headquarters formerly in the by Detroit’s. Nevertheless, Philadelphia’s manu top ten.6 facturing headquarters base is strong. It was Of the ten largest regions, three actually in sufficiently strong in 1956 to keep the area in creased their number of corporate headquarters: Washington, which started from a very low base fourth place over the nine-year period, in spite of the downtrend. in 1956; San Francisco and Los Angeles— re The experience of Philadelphia’s nonmanu flecting rapid population and economic growth facturing headquarters was similar to manufac in general. The other seven metropolitan areas turing. In half of the metropolitan areas examined, registered losses. Some areas were more ad home offices of nonmanufacturers increased or versely affected than others. The greatest re remained unchanged. However, Philadelphia is gional loss in the number of major corporate in the losing half. Of the losers, only three fared worse than Philadelphia. headquarters was 20 per cent. The region is Philadelphia. Control of corporate wealth 0 Covered by Fortune. CHART 2 MOST OF THE TOP TEN ARE LOSING HEADQUARTERS The chart shows the rate of increase or decrease in the number of headquarters in each area, 1956-1965 * Per Cent Change If declining numbers of corporate headquarters are a drag on the local economy, what is the economic importance of the drag? Numbers alone don’t determine the ability of headquarters to stimulate business in other sectors of the regional economy. Among other things, strength of the stimulus depends on the economic wealth and health of corporations headquartered in the area. Take banking as an example. Declining head quarters in a region may mean fewer accounts with local banks. However, if headquarters of the wealthiest corporations are not part of the decline, those fewer bank accounts may be fatter. Then let’s look at what is happening to cor porate wealth of Philadelphia-based companies. Although assets of corporations headquartered in *Data refer to the 750 largest manufacturing and nonmanufacturing corporations in the nation. Source; Fortune Magazine. each of the ten metropolitan areas are growing, they are growing at the slowest rate in Phila delphia. Between 1956 and 1965, the total growth 7 bu siness re v ie w rate for all ten regions was 72 per cent. In Philadelphia, it was 39 per cent. As a result, the area slipped from fifth to seventh place in the value of corporate assets locally controlled. was comparatively low or moderate at best. CHALLENGE IN CONTEXT In determining where Philadelphia stands as a Assets of manufacturers headquartered here headquarters center, and particularly where it rose similarly to the total picture presented above. is heading, a rather discouraging tale emerges. They increased in all of the major metropolitan But the story should be kept in perspective. areas— except Washington, where no giant head Some recapitulation may help. Among the quarters exist in manufacturing. But once again Philadelphia’s growth rate was the slowest. Con ten largest metropolitan areas, Philadelphia is the third largest center of major corporate head sequently, the region dipped comparatively from sixth to seventh place in value of assets over the nine-year span. In addition, manufacturing sales quarters. It is surpassed only by New York and of these locally headquartered companies in Philadelphia also continues to have the fourth largest concentration of giant manufacturing creased at a slower rate than in any of the other regions. Chicago. Philadelphia can still be considered the leader of secondary centers of corporate control. Nonmanufacturing assets, as a group, also headquarters. With firms of all sizes included, this region has only a small locational disad turned in a consistent performance. Increased vantage for headquarters. And the fifth place assets characterized all ten regions. Philadelphia — growing at next to the slowest rate— dropped standing for all headquarters is only one step from fourth to fifth place between 1956 and 1965. Local banks, life insurance firms, and Apparently, Philadelphia has had sufficient strength in the past to hold its relative position transportation companies all retained their rela as a major headquarters complex— in spite of behind the area’s population rank. tive position with other regions over the years. all of the signs of decline. Nevertheless, these Merchandising corporations and utilities in creased their standing in asset value. Nevertheless, signs are warnings to a concerned business com asset growth for all nonmanufacturing groups arrest the downtrend. The second is to reverse it. 8 munity. The first challenge to the region is to HOME IS WHERE THE MONEY IS by D. Russell Connor Sharply and as suddenly as anyone can remem ber, a dramatic change in the availability and cost of mortgage money is happening now in the eight-county Metropolitan Philadelphia Area.* Since January— in marked contrast to the tight money environment of 1966— local mort gage lenders have been amassing loanable funds “ points,” miscellaneous fees— have largely dis appeared on prime single-family residences. Equities are less and terms longer. Money at six per cent simple interest is now generally available for conventional mortgages on desirable home properties in the Greater Philadelphia area. In special circumstances, a few in increasing quantities. Pressures to get these mortgages are being financed at 5% per cent, funds invested are mounting. But the demand fewer still at 5 % per cent. If the relationship of for them to date, although improving, is short of earlier anticipation. supply and demand continues as it has been through the first third of the year— admittedly, Responding to supply-demand factors, mort a low period of new construction— the near- gage rates are coming down; many say more quickly than in their experience. Add-ons to term prospect is that rates below six per cent will become more common. which mortgage loans were subject last year— Bankers and builders have problems. Bankers look for a two-way stretch from government: * Bucks, Chester, Delaware, Montgomery and Philadel phia counties in Pennsylvania; Burlington, Camden and Gloucester counties in New Jersey. action in one direction, non-action in another. Builders are conducting a two-pronged search: 9 b usiness re v ie w for work crews disbanded last year, and for mutuals, after a time lag, began in January to worthwhile developmental sites from a dwindling gain a net inflow of funds. inventory in the eight-county area. The prospective home buyer has problems, liquidity and to retire indebtedness to the Federal too. The price of money— the mortgage interest Home Loan Bank, incurred during their deposit rate— is hut one of the prices he must pay to drought. The inflow continues, however, and now Federal S&L’s used the new funds to rebuild move. Others are the price of the property, prices thrift institutions must put their money to work of services, fees, and incidentals inherent in relo cation, and the price of dis-saving. But he has an in traditional ways. Principally, that means into drawn from conversations with lenders, builders, new mortgage loans. This brings about a dilemma. So long as the demand for mortgage loans fails to keep pace with the swelling supply of savings in S&L’s and out: apartments. Those are the eclectic facts and inferences and realtors over the past several weeks. A more mutuals, competitive pressure impinges on the universal theme is that the hoped-for homebuilding boom in the Greater Philadelphia area may be delayed until 1968. mortgage rate. Thus success in attracting de posits cuts into potential profit per deposit. The bankers— different dilemmas mortgages nationwide. However, what is hapen- Savings and loan associations and mutual savings banks together grant more residential ing here is happening elsewhere, and profits on out-of-state mortgages are narrowing also. mortgage loans than all other financial institu Another complication intrudes. Mutuals and tions. Their main source of funds is discretionary S&L’s are paying relatively high rates for new income in the hands of the public, for which they must compete. In 1966 a process termed dis against a 6 per cent mortgage rate, there’s little intermediation took place. High yields in the spread to cover operating expenses, let alone Thrift institutions are not wholly dependent on the local market; they can and do invest in funds— up to 514 per cent on certificates. Posited market attracted potential savings shares and provide a profit. Again, competition helps deter savings deposits directly, and away from the mine a rate, this time the dividend rate paid by financial intermediaries, the thrift institutions the thrift institutions. Unilateral reduction of its and commercial banks. Dis-intermediation thus dividend rate, each thrift institution seems to reduced the amount of mortgage money available fear, would merely drive its clientele to a com from S&L’s and savings banks. petitor. And it cannot join with its sister institu Financial intermediaries also compete with each other for savings. From January 1, 1962, tions in a cabal to curtail the prevalent rate; that’s against the law. through December 5, 1965, interest rates per So the savings banks and savings and loan mitted to be paid by commercial banks for sav associations look to government for relief. They would welcome rulings by regulatory agencies lowering the permissible maximum rates for ings and time deposits were raised in fractional steps. Commercial banks became stiffer com The signals were changed last year. A rate savings in all institutions. They view this man dated reduction as an escape route from their permitted commercial banks on a certain class of time deposits was lowered, and local S&L’s and the short run, unless and until the saver gets petitors for savings, and captured a bigger share. 10 present dilemma— perhaps the only way out, in bu siness re v ie w off his fireside and starts to spend for new hous ing. Mortgage bankers per se are a different breed of catalyst in the mortgage/construction scheme Commercial banks are in a somewhat different of things. They are essentially traders, buying situation. They have a broader lending universe, and selling mortgages for clients— insurance companies, welfare and pension funds, and other are not so dependent on mortgage loans. Local banks have cut back deposit costs by individually non-bank investors, as well as for banking in reducing their CD rates. Although some commer cial banks are permanent lenders for single stitutions. They may hold mortgages for their own accounts, or they may “ warehouse” them family residences, others specialize in construc with commercial banks (use them as collateral tion loans, mortgage loans for apartment com for loans), reinvesting the proceeds in still more plexes, or in nonresidential, commercial mort mortgages for resale. They may service mort gage loans. Proximate commercial banks, there gages for clients, for which they charge a fee; and fore, are not as intra-competitive for mortgages for bringing mortgagor and mortgagee together, as are thrift institutions. they occasionally earn a “ finder’s fee.” In common with thrift institutions, commercial To be successful, mortgage bankers need ac banks have more money to lend this year than last. New reserves supplied by the Federal Re tivity. They trade on fractions of one per cent; it takes a lot of fractions to add up to a profit. serve in the past six months have done much to ease the posture of tight money characteristic of Last year when residential construction was in the doldrums, little building and little money 1966. Overall loan demand by business and con put a double squeeze on mortgage bankers. sumers is not matching the rates of growth ex perienced last year. As a consequence, interest charges on commercial bank loans are under There’s more activity now but it’s unbalanced. Insurance companies, more liquid this year as policy loans slough off, are back in the mortgage going some compression, as witness the recent reduction in the prime rate, locally and na market, predominantly for apartments and com mercial construction. Non-bank investors, find tionally. Philadelphia-area commercial banks that are ing opportunities in other fields shrinking, are adding to the mortgage money supply. As in dicated, so are banking institutions. It all adds residential mortgagees did not actively seek new mortgage loans last year, because of their limited up to supply picking up faster than demand. funds and intensive loan demand from other There is another condition mortgage bankers sectors. Now they are seeking them, and to that would superimpose on balanced activity: stability extent are contributing to the downward tilt of the rate structure. They, along with other of the mortgage rate. A resurgence in business mortgage lenders, see the current six per cent and consumer borrowing— more profitable than mortgage rate as an equitable one for seller and mortgage lending— could alter the slope. But buyer alike. They do not view six per cent as a until these borrowers increase their demands, deterrent to the prospective home buyer. In fact, renewed emphasis is on mortgage lending. Banks they consider six per cent as clothed with legal are not asking aid from government, but are sanction: it’s the usury rate limitation set by the states in the Third Federal Reserve District, demanding better results from advertising and new business staffs. They’d rather do it them selves. Pennsylvania, New Jersey, and Delaware. A stable rate permits mortgage bankers to I T bu siness re v ie w plan for the future with some assurance. Six quo, apprehensive of the party affiliations of per cent allows them to trade with a margin for potential newcomers. miscalculation, and make a profit. That’s why Home building, too, is not without its prob mortgage bankers, unlike their cousins the sav lems. Costs are going up as local zoning boards ings banks and savings and loans, seek non set higher minimum acreage requirements, insist on basic improvements such as in-place sewers. action from government. They do not want FHA to lower its present six per cent rate on Along with land, labor and materials are more Government-insured mortgages. expensive, boosting the price of a 1967 house 10 The builders’ rock and roll per cent higher than in 1965, and making it somewhat more difficult to sell. It takes more than LSD— loan supply, demand— From the builders’ viewpoint, these considera to turn a builder on. It takes time. Time to lure workmen back from the industrial jobs they tions add up to selective residential construction took last year when residential construction was homes than apartments in the three New Jersey slack. Time to renegotiate land leases lapsed counties, where land and labor seem relatively more abundant and less expensive. (Including an innovation in suburban “ town houses,” which Philadelphians will term row houses, by one na last year when money was scarce. Time to get samples built. And time to reestablish the mo mentum of building and selling homes. this year. Emphasis will probably be on more There was, it is true, quite a bit of residential tionally known builder.) In the five Pennsylvania building locally in 1966, but of a special kind: counties, probably emphasis on apartments. In apart all eight counties, a lag. Builders were rocked by ments. Smart ones can get in and out of apart the events of last year, and it takes time to get rolling again. garden-type apartments. Builders like ment construction with very little of their own capital. Apartment building has some elements of mass production, sadly lacking in the con The buyer— in the driver’s seat, with safety belt struction business generally. A maximum num ber of living units can be crammed onto a On the other side of the savings window is the potential home buyer/mortgagor. He is em minimum amount of land, land that is becoming ployed in record numbers in the metropolitan precious in suburban Philadelphia. And many investors like apartments; the six per cent limita Philadelphia area today, and is saving more than ever. He likes the high return his savings and tion on mortgage loans doesn’t apply. other investments are earning. It affords him the Builders claim apartments have a salutary luxury of choice. effect on local tax structures. That they’ve been He makes subjective comparisons. Five per persuasive is evidenced by the mushroom growth cent from the bank is no more than right; six of apartments in the boroughs and townships per cent for the bank, and for the real estate ringing Philadelphia. Not all local officials are agent, is too much. Friends from other states tell believers, however. They cite narrow country him housing here offers as much or more value roads overcrowded with the cars of apartment residents. They point to instances of shoddy materials and workmanship, visualize slum prob parison is strictly local and several years ago, lems ahead. They may prefer the political status 12 than in any other metropolitan area. His com when last he and the missus looked at new houses. In terms of personal economics, houses bu siness re v ie w cost too much, banks and realtors charge too home is where the money is. much, and if he spends his savings he loses too At press time much. He may elect, as dictated by his economics, to A recheck with interviewees indicates that in the do nothing; many of his fellows are watching first week of May there is continued imbalance and waiting. If he is induced to improve his between mortgage money supply and demand. housing standards, he has several choices. He Despite this, the six per cent rate on convention- can use the rationale that housing values and als is holding firm, as investors are reluctant to costs will continue to rise, and decide he’d better commit themselves to a lesser return. Some move now. He can add rooms and conveniences builders are resisting service charge and con to his present dwelling. Or he can opt for an struction loan rates, but construction is improv apartment, the safety belt of the buyer-saver in ing. However, the bulk of new starts will not be the driver’s seat. salable until later in the year. Apartments enjoy an “ in” status in the “ City Hard hit by tight money last year, some lend of Homes” and its environs. Once the recourse ers are apprehensive that a rising Federal deficit of “ empty nesters” and moneyless newlyweds, could cause a turnabout in monetary ease in the they now appeal to affluent families who like second half of the year. Their advice to the mobility and dislike the confinement of home prospective home buyer is to take advantage of ownership. Apartment developments in the Great the current situation, and arrange his point-free er Philadelphia area offer a wide range of rentals and locations, plus the pleasurable amen ities of golf courses, tennis and swimming facil six per cent financing now. But others look to a reduction in the FHA rate, and see conventional rates coming down shortly thereafter. ities, and even marinas. And they seem economi In sum, the situation is fluid, and no one is cally advantageous to many, requiring minimum confident of its resolution. But it is better for all investment and permitting retention of savings concerned than 1966, and may improve still more income. in 1968. This years seems an interim period. Perhaps now more than heretofore, 13 FOR THE RECORD... Third Federal Reserve District Per cent change SUM M ARY United States Per cent change March 1967 from mo. ago year ago 3 mos. 1967 from year ago March 1967 from mo. ago year ago M a n u f a c t u r in g E m p lo y m ent 3 mos. 1967 from year ago + 1 + 2 - 2 + 1 + 2 - 1 — 17 > + — + + - 4 2 2 3 0 8 + 2 P a y r o lls Check P a y m e n ts * * T o ta l D e p o s its * * * Per cen t ch an ge M a r c h 1967 fr o m Per cent ch an ge M a r c h 1967 fro m Per cent change M a r c h 1967 fro m Per cen t ch an ge M a r c h 1967 fro m m o. ag o m o. ago year ago m o. ag o year ag o m o. ag o + + -1 8 + LO C A L C H A N G E S S ta n d a rd M e t r o p o lit a n S ta tis tic a l A re a s * MANUFACTURING Production ................... Electric power consumed + 7 Man-hours, total* ....... + 4 0 Employment, total ........ Wage income* ........... + 4 CONSTRUCTION** .......... +36 COAL PRODUCTION ........ -1 3 ..... W ilm in g t o n — 1 +34 - 1 - 7 - 3 -1 1 + 2 T re n to n + 8f + + + + + 1 1 3 3 3 0 + + + + + + 6 6 9 6 13 9 + + + + + 6 7 4 1 11 12 ‘ Production workers only “ Value of contracts ‘ “ Adjusted for seasonal variation + 2f + 3* 0 0 0 + 3 year ag o A lto o n a 8 + 19 1 1 + — ............. 1 + 3 + 2 0 + 4 + 6 + 13 + 12 0 ....... La n ca ste r ......... L e h ig h V a lle y 2 + 2 + 11 + 2 + - 1 + 5 + 0 - + + fl5 SMSA’s ^Philadelphia 1 3 + 1 2 + 1 2 - 1 .................. + 3 2 1 + 3 + 10 2 4 + 1 + 10 + 3 + 10 + 4 - 4 + 2 + + 7 + 4 + 2 + 7 0 - 4 + 2 + 5 2 7 5 + 4 + 2 + 4 0 + 10 — 6 + 4 - 2 0 -3 9 + 2 + 9 - 8 + 1 0 + 7 0 - 0 + + - + 12 0 3 - Y o rk - 2 — ... 3 0 . ........... + 0 + P h i l a d e l p h i a ..... R e a d in g 6 - 1 0 + 31 - 2 - ....... — 0 4 0 - S c r a n t o n ........... ot 2 + 13 W ilk e s - B a r r e PRICES Wholesale..................... Consumer ..................... 6 ........... H a r r is b u r g + 7 + 10 + 1 - 7 + 10 0 A t l a n t i c C it y ... J o h n s to w n + 7 + 9 + 4 - 3 + 12 + 5t year ag o + 3 BANKING (All member banks) Deposits ...................... + 1 Loans ......................... + 1 Investments.................. + 2 U.S. Govt, securities .... + 1 Other ......................... + 4 Check payments***....... - It B a n k in g + 4 - 1 + 9 + 1 + 7 1 + 9 - 1 + 16 + 1 + 5 ‘ Not restricted to corporate limits of cities but covers areas of one or more counties. “ All commercial banks. Adjusted for seasonal variation. “ ‘ Member banks only. Last Wednesday of the month. SEE BACK OF VOLUME FOR MAY 1967 SUPPLEMENT