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Police and Productivity: Can the Invisible
Hand of Competition Extend the Long
Arm of the Law?
The Boom in Business Loans: Bargain Loan
Rates and an Expanding Economy
Changing Times on
Pennsylvania Farms

business rerieu*

FEDERAL RESERVE BANK of PHILADELPHIA

1973

IN THIS ISSUE . . .

Police and Productivity: Can the
Invisible Hand of Competition
Extend the Long Arm of the Law?
. . . Applying some lessons from the mar
ketplace may help squeeze more and better
police services from the local tax dollar.
The Boom in Business Loans:
Bargain Loan Rates and an
Expanding Economy
. . . Bargain rates on bank loans are largely
responsible for the continuing boom in
business.
Changing Times on
Pennsylvania Farms
. . . Technology has touched every nook
and cranny of farming in the Keystone State,
and Pennsylvania farmers have prospered
by combining it with their shrewd business
sense and agricultural skills.

On our cover: This handsome farm is typical of the many which dot historic Lancaster County,
the leading agricultural area in Pennsylvania. (Photo courtesy of the Pennsylvania Dutch Tourist
Bureau, Lancaster, Pa.)
BUSINESS REVI

js produced in the Department of Research. Ronald B. Williams is Art Director and Manager,
Graphic Services. The authors will be glad to receive comments on their articles.
Requests for additional copies should be addressed to Public Information, Federal Reserve Bank of Philadelphia,
Philadelphia, Pennsylvania 19101.

Police and Productivity:
Can the Invisible Hand
Of Competition Extend
The Long Arm of
The Law?
By Stephen L Mehay

Police protection, like almost everything
else, costs more nowadays. Most municipal
police departments have beefed up their
forces and their budgets.1 As a result, bigger
police budgets are causing many citizens to
wonder how well their tax money for crime
prevention is being spent. Now, more than
ever, big city mayors and councilmen are ex
ploring ways of getting more and better
police services per tax dollar.
A major roadblock to improving police
services is the fact that most of these services
are not priced and sold to consumers. This
nonmarket environment increases the dif
ficulty of efficiently distributing tax dollars

among numerous uses. For example, de
ciding whether to add more manpower or
more communications equipment to radio
patrol, or whether to strengthen the robbery
detail rather than the vice squad, will always
be difficult. But the marketplace provides
valuable guidelines to help police adminis
trators make such tough decisions. When po
lice services can be provided either through
the market or through a simulated market
situation, greater efficiency can be expected.
POLICE AND EFFICIENCY

1 This is true even of cities with declining popula
tions. In Philadelphia, for example, major crimes in
the past decade rose nearly 60 percent and expendi
tures for police protection rose by 177 percent, while
the Quaker City's population declined.

Concern over police efficiency is probably
as great at City Hall as it is with the man in
the street. Local tax bases have shrunk in
recent years at the same time that population
shifts in our urban centers have caused de
mands for municipal services to skyrocket.
To make matters worse, urban residents have
been increasingly reluctant to support pro

MAY 1973

BUSINESS REVIEW

vices demand signals will be strong and a
direct market solution to the allocation prob
lem is appropriate.
But other police services, especially pa
trol, investigation, and apprehension (that is,
crime prevention services), yield further
benefits to the community as a whole in
addition to those received by individuals.
These services deter crime but we can't pre
dict who will be saved from becoming vic
tims. Thus, the market cannot be depended
upon to reveal consumer demands for these
services. In these cases, an internal, admin
istrative technique can be used to simulate
the market.

posed tax rate boosts. Although Federal rev
enue sharing has recently begun to brighten
the urban financial picture somewhat,
money pressures persist. Local government
officials have been forced to reexamine the
way resources are allocated in the hope of
finding ways to use those already at hand
more effectively.
A common misconception is that greater
efficiency in government means lower op
erating costs. But economic efficiency is
much more than that. It involves supplying
those services which consumers desire the
most, and in the quantities they want, with
the minimum use of society's scarce re
sources. This concept is served fairly well
when goods and services are produced and
sold in the marketplace. Consumers' spend
ing patterns reveal which goods they want
and in what quantities, and competition
among firms insures that only efficient pro
ducers survive to supply the market.
When government provides services, profit
incentives and external pressure from com
petitors are absent. The real preferences of
the consumers of those services— taxpayers
—will only be evident at the ballot box
during elections. The fact that elections are
infrequent and many issues may have to be
decided with a single vote makes these pref
erences hard to see clearly. As a result,
police departments, unlike private firms, are
not governed by explicit supply-and-demand
forces, and the incentives to be efficient are
either weak or absent altogether.
Two complementary strategies for helping
those entrusted with the public purse to
make economically sound choices are the
administrative approach and the market ap
proach. Which of the two strategies should
be used depends on the strength of demand
signals for particular services.
Almost all police services yield benefits to
particular individuals or firms and could
potentially be sold on the market. And for
some services benefits can be traced directly
to the individual recipients. For these ser

THE ADMINISTRATIVE APPROACH:
CHOICE WITHOUT MARKETS
The administrative approach tries to iden
tify those police services which yield bene
fits to the entire community and to measure
the size of those benefits (that is, demand).
When dollar values are attached to the bene
fits they can be weighed against the cost of
providing the services to find where the
greatest public good can be purchased with
each dollar of expenditure. In this way the
police can accomplish society's objectives
without wasting scarce resources.
Why Police? Although not all police pro
grams are designed to fight crime, most ob
servers agree that the major function of the
police is to protect citizens from criminal
activity. And most citizens would further
agree that the lower the crime rate the
greater protection afforded the community.'
Thus, the benefits of crime-deterring services
are reflected in part by lower crime rates.
But police must always grapple with the
problem of choosing which types of crime
to attack on pinchpenny budgets. Because
police officers can't be everywhere, they
must assign priorities to the various classes
of crime— crimes against property, crimes
against persons, vice, juvenile violations,
riots, and organized crime— and decide
which to enforce most vigorously. For ex
4

FEDERAL RESERVE BANK OF PHILADELPHIA

ample, if they crackdown on car theft, then
they must pull men from other crime details
such as burglary and robbery. The com
munity may pay for decreased car thefts
with increased robberies and burglaries.
Would such shifts in police activity benefit
the community? The answer depends on
how people evaluate the seriousness of dif
ferent crimes. One way to determine the
seriousness of certain crimes is to measure
the harm and loss associated with each—
that is, the cost society bears.
Suppose the average robbery involves
$600 in money stolen,2 medical expenses,
and wages lost because of injuries. Suppose
that the average auto theft involves only $300
in damages to the automobile plus the value
of the lost vehicle's services. Then, each
robbery could be weighted twice as heavily
as each auto theft. In trying to reduce the
cost of crime (crime rates weighted by aver
age losses per crime) instead of the crime
rate, the police will be motivated to con
centrate on reducing robberies rather than
auto thefts. In this way, the community
comes out ahead because for every crime
prevented, more harm will be forstalled.
Of course, crime imposes costs far beyond
those felt just by victims. The rest of society
bears costs in the form of supporting a crim
inal justice system, making expenditures on
insurance or protective devices, and altering
behavior to avoid high crime areas—to name
just a few. Many of these "social costs" are
difficult to quantify with any precision but
they are nevertheless real (see Box).

Despite measurement problems, society is
better off if police are guided by a goal of
reducing the cost of crime, rather than cut
ting crime rates. This is true because weight
ing crimes according to a measure of
seriousness helps to approximate the collec
tive value that taxpayers place on prevented
crimes. The social cost of a crime indicates
the harmful impact of that crime on the com
munity. Consequently, it also indicates the
maximum amount the community would pay
to avoid that crime.
Balancing Act Among Programs. Armed
with the objective of reducing the social
cost of crime, the administrative approach
can measure the probable benefits of crimerelated programs such as patrol and detec
tives. These community-wide benefits can
then be balanced against the costs of each
program. Normally, what is most important
is comparing the benefits and costs of in
creasing or decreasing the size of various
programs rather than the benefits and costs
of the whole program. Most resource-al
location decisions boil down to "marginal
choices"— between "a little bit more of this"
and "a little bit less of that." An evaluation
of the benefits of increasing (or decreasing)
a program determines whether the change
justifies the cost of implementing it.
For example, a police department may
want to evaluate the benefits of an additional
officer on a certain beat. First, enough time
would be allotted to pass so that both the
residents and the criminals could become
aware of the added police protection. Then,
the area's crime rate would be compared
with a "base" crime rate.3 Differences be
tween the actual and base crime rate are the

2
Technically, pure monetary transfers from one
person to another don't cost society because there is
no reduction in wealth or income. However, the thief
who performs the transfer invests his capital and labor
in crime rather than in legitimate activities and this
investment is wasted from society's point of view. If
it is assumed that the amount transferred merely
compensates him for his investment, then that full
amount can be chalked up as a social cost.

3 Either the predicted crime rate based on the
historical trend of crime for the experimental area
or the rate experienced in a different section of the
city (with a similar physical and demographic make
up) could be used to establish the "base" crime rate.

MAY 1973

BUSINESS REVIEW

SO CIAL C O ST OF CRIME
Crime imposes costs far beyond just those felt by victims. In principle, crime
wastes scarce resources which have productive uses elsewhere. As a result, real out
put of goods and services is lower than it could be. The total "social cost"
per crime includes the use of resources by criminals to carry out crime and by
society to prevent it, or to deal with crimes once they have been committed. From
society's viewpoint, criminals could be employed in productive legal jobs, and re
sources used by the police and the rest of the criminal justice system (prosecutors,
courts, jails, rehabilitation agencies) could be funneled into other private or public
endeavors. In addition, expenditures by private individuals and firms on protection
services and devices have other desirable uses.
The President's Crime Commission estimated that in 1965 crimes against persons re
sulted in economic losses of $815 million in the form of lost earnings and medical
expenses; crimes against property involved transfers and losses of nearly $4
billion; other crimes (tax fraud, driving under the influence of alcohol) slightly over
$2 billion; and illegal goods and services (drugs, gambling, prostitution) a little
over $8 billion. Public expenditures by law enforcement agencies totaled over $4
billion, and private protection expenditures were estimated to be over $1 billion.
The total of these admittedly rough, but very conservative, estimates of the cost
of crime in the U. S. in 1965 neared $21 billion, about 3 percent of Gross
National Product in 1965.* Recent, but rougher, estimates place the direct and
indirect cost of crime at $45 billion in 1968-69, nearly 5 percent of the average
GNP for those years.**
In practice, measuring the real costs above and beyond the monetary value of
damages or losses is no easy task. It is as hard to attach money values to the
physical pain and mental suffering of violent crime victims as it has been for traffic
accident victims. And even when a price tag is affixed to lost productive services
of individuals killed or injured, the real losses of family and friends are hard to esti
mate. It is also difficult to measure the altered behavior of individuals who, for
example, avoid living, shopping, and traveling in certain areas of the city for fear of
such attacks. Thus, measurement of social costs frequently omits some of the
more important aspects of the costs of crime.
* President's Commission on Law Enforcement and Administration of Justice, Task Force Report:
Crime and Its Impact—An Assessment (Washington: Government Printing Office, 1967).
** Irving Slott and William Sprecher, "Cost Effectiveness and Criminal Justice." Paper presented to ASME
Winter Annual Meetings, Washington, D. C., 1971.

FEDERAL RESERVE BANK OF PHILADELPHIA

Second is the equally thorny trade-off
between capital and labor. In place of
profits which serve as guidelines to private
firms in choosing the "correct" combination
of capital and labor, the police can use social
benefits. Hence, decisions to add more pa
trolmen versus more communications equip
ment in patrol activities, or to add more
detectives versus more laboratory equipment
in the detective bureau will be facilitated
and, hopefully, improved.
The third important trade-off is between
crime-related and noncrime-related pro
grams. The police perform many functions
such as traffic regulation and community
relations which do not contribute directly to
crime deterrence. Nevertheless, these pro
grams compete for funds with crime preven
tion efforts. By computing the social
benefits of the noncrime programs and com
paring them with crime prevention pro
grams, the decision to expand one at the
expense of the other can be made, even
though they serve different objectives.

number of crime preventions which can
reasonably be attributed to an additional
officer.
Suppose that the extra officer prevents 10
robberies and 10 burglaries a year. If the
average loss (with all social costs included)
from robbery is $600 and from burglary is
$500, then the annual measurable benefit
of the officer is $11,000. This figure can be
compared with the annual dollar cost of the
additional officer, say $10,000. Using these
figures, the net benefit of that officer would
be $1,000 and the police administrator with
a fixed budget should add officers to that
particular beat provided that (1) the net
benefit is greater than zero and (2) it exceeds
the net benefit of the officer in another area
of the city or in a competing program, such
as detectives. If, however, the net benefits
from deploying another officer in the de
tective bureau outweigh those from deploy
ing him in the patrol bureau, then it would
pay to add a new officer there or shift an
existing officer from patrol to detectives. In
general, an additional dollar should be
added to each police program until the
extra benefits in all programs are nearly
equal.
Devoting more money to one program in
evitably leaves less for the others. The maxi
mum social benefit rule would help police
resolve this problem when they must choose
which programs will receive funds. There are
three major trade-offs which must be made.4
First is the decision about which of the
various categories of crime to attack. Fol
lowing the rule, police will give priority
to those types of crime that are most costly
to society.

4 A program budget classifies programs according
to major objectives and illuminates the many choices
confronting police administrators. The City of Phila
delphia Mayor's Operating Budget and Programs,
Fiscal 1973 is a good example of one possible classifi
cation of police programs.

Measurement Problems. If it could be
fully
implemented, the administrative
approach would help improve overall effi
ciency in the police department. Unfor
tunately, measurement difficulties may
complicate attempts to evaluate the true
social benefits of police actions and may
block full implementation.
For one thing, if a patrolman is added in
beat A, crime may drop there but soar in
neighboring beat B. If this happens, the
extra man will not have reduced crime but
merely "chased" it to a different location.
Furthermore, another patrolman might ac
tually increase reported crime. This could
happen if that officer discovers more crimes
or if citizens report crimes that otherwise
would have gone unreported. The fact that
most types of crimes are underreported (see
Box) makes it difficult to determine the true
crime rate and to measure changes in it
because of police actions.' Finally, measuring

MAY 1973

BUSINESS REVIEW

CRIME AND ARREST STATISTICS
If police effectiveness in maintaining safe streets is to be accurately assessed,
reliable data on the safeness of the streets is essential. Unfortunately, data on
many aspects of crime are either unavailable or inaccurate.
Crime Rate. The primary indicator of the extent of crime in the U. S. is the
FBI's Crime Index published in the annual Uniform Crime Reports. The index
includes seven major offenses— criminal homicide, forcible rape, robbery, aggravated
assault, burglary, larceny (over $50), and auto theft. Since the data are collected
from local police departments only offenses reported to the police are included.
The seven crimes were chosen because of their seriousness and because they are the
offenses most likely to be reported to the police. The crime rate is the number
of reported offenses per 100,000 population, and thus standardizes the Crime Index
by population size. The crime rate is a rough measure of an individual's chances of
becoming a victim of crime and is often called the victimization rate.
Widespread use of the index testifies to the need for indicators of the extent of
crime. However, the serious weaknesses of the FBI's reported crime statistics are often
overlooked. For one thing, it is hazardous to use the data to compare crime ex
periences across states or cities. Definitions of each crime vary among states, and
the classification of crimes by local police within each state is not as uniform
as it might appear. Except for California, no states have crime statistics agencies
which collect data on a uniform basis. Also, the crime reporting policies and pro
cedures vary among local police departments, again affecting the collection of
crime data. It has been observed that those cities with better organized and more
efficient departments report more crime; and when several cities instituted central
reporting systems, their crime rates rose.
There is the further problem that even major felonies are not fully reported by vic
tims and witnesses. The President's Crime Commission found that nationwide the
actual crime rate was nearly twice the FBI reported rate for index crimes. It is
fairly certain that almost all crimes, except perhaps auto theft, are underreported.
Because of underreporting the reported crime rate does not mirror the actual crime
rate, and the differences vary between geographical area and over time.
Another frequent objection to the index is that it excludes serious crimes such as
embezzlement, narcotics violations and kidnapping and includes "not-so-serious"
crimes such as auto theft and larceny. Critics argue that auto theft and larceny (over
$50) impart an upward bias to the Crime Index since these crimes automatically
rise with income growth and inflation even though the propensity to commit these
crimes may remain unchanged. They feel that the index creates misleading impres
sions of the rise in crime over time. To correct this they suggest that perhaps
auto theft should be dropped from the index and the value of larcenies included
should be increased over time with increases in the general price level.
Arrest (Clearance) Rate. The arrest rates defined as the ratio of arrests for
each type of crime to the number of those offenses, roughly approximates the

FEDERAL RESERVE BANK OF PHILADELPHIA

probability of arrest for each type of offense. From the viewpoint of the police, a
crime is "cleared" (or solved) when an arrest is made, thus the arrest rate is often
called the clearance rate.
Arrest rates rather than crime rates are often suggested as alternative indicators of
the effects of crime prevention programs. While arrest rates may adequately mea
sure the effectiveness of police officers on any assigned task, they are unreliable
guides to the social worth of that task. Arrest rates reveal little about the
safeness of the city's streets, and taxpayers are more concerned with personal
safety than with the ability of the police to increase arrest rates. Furthermore,
crimes are not always fully "cleared" when an arrest is made. Usually less than
half of all persons arrested are prosecuted and an even smaller percentage are con
victed.
Thus, the effects of police crime-prevention programs are currently measured by
inadequate yardsticks. These problems with the basic data further frustrate attempts to
evaluate systematically outcomes and social benefits of police programs.

A MARKET FOR POLICE SERVICES?

the full social cost of crime is difficult. Many
real costs associated with crime cannot be
measured and many cities don't even keep
accurate data on those costs which are the
easiest to measure.
Recap. Measurement problems and the
often high cost of developing needed infor
mation are major stumbling blocks in the
way of adopting administrative techniques
to improve police efficiency.5 But even if no
*
serious obstacles blocked the path of the
administrative approach, it is unlikely that
current police decision-making techniques
would be completely replaced. The purpose
of the administrative approach is more
modest: to sharpen the judgment of policy
makers by supplying information about the
economic effects of the many choices they
face. Thus, other methods are needed to
supplement the administrative approach.

Instead of trying to use imperfect tech
niques which at best only simulate the forces
of supply and demand, it might be better to
let the market decide what and how much
to produce.
The market-oriented approach works in
one of two ways. Some protection services
can be provided by the police and sold
directly to the recipients. Other services
might be produced by private firms, thereby
removing production decisions from the
political arena altogether. For either ap
proach to work, the beneficiaries of the
services must be identified and those not
wanting to pay must be excluded.
Private Police Firms. Private firms cannot
always produce services cheaper than the
government. Some private firms are just as
inefficient as government is often alleged
to be. However, if such firms are not pro
tected monopolies, they will tend to lose
profits and, eventually, go out of business.
When services are produced in a reasonably
competitive atmosphere the incentives for
efficient operation are in the right direction.

5 Also, considerations other than efficiency are often
important to the final decision. For example, some
police programs probably help the poor more than
the rich. Thus, on equity grounds, it may be desirable
to continue these programs, regardless of efficiency
considerations.

BUSINESS REVIEW

MAY 1973

But if City Hall wishes to retain some control
over the production decision, the service
could be contracted out to private suppliers
through open, competitive bidding. In this
way, government decides how much to pro
duce, but competitive producers supply it
(see Box).
Fortunately, private suppliers already
exist for many police services.6 Services of
expensive chemical laboratories maintained
by most large cities might be obtainable
from existing private research facilities or
nearby colleges. The training of police of
ficers could be undertaken by private schools
with tuition paid by the trainees or sub
sidized by the city. Most research and
planning, maintenance services, and follow
up investigation of property losses could
also be farmed out to private suppliers.

Most patrol, detection, and apprehension
services don't have readily identifiable bene
ficiaries who can be charged. But other
routine police services can be priced. In
fact, some cities already charge for copies
of crime and traffic accident reports and of
fingerprints, for extra police services at
sporting and entertainment events, and for
towing automobiles. Police services which
are not currently priced but which could
be offered at fees to cover operating costs
are accident investigation services, special
parking and crowd control, extra patrols for
businesses and residences, police escorts,
and searches for lost property, especially
stolen automobiles.8
A COMBINED APPROACH

Pricing Police Services. Some services
which cannot be provided feasibly by private
firms can still be sold to consumers— for
example, many special protection services
and various police reports. User charges for
a service improve efficiency by yielding in
formation on the demand for it.7 If buyers
are unwilling to pay enough to cover the
extra cost of the service, then the police are
overproducing and should cut back. User
charges not only provide useful demand
information, they also ration output and
force those who benefit most from the
services to pay for them. Last, but not least,
user charges provide much-needed revenue
for strained municipal coffers.
User charges pan out only when police
services have easily identifiable recipients.

If police service delivery can be made
more efficient, the increasingly scarce re
sources available to city governments can
be stretched to provide more and better
public services. Because police services are
provided by government, useful signals
about consumer demand are often not re
ceived. Consequently, the incentives to
channel police programs into efficient uses
are weak or entirely absent or, worse yet,
often misdirected.9 The administrative and
market approaches try, in different ways, to
provide the missing incentives. If police
services can be sold in the market or, better
yet, produced by private suppliers, the in
centive structure will resemble that faced
by profit-seeking firms. At the very least,
demand signals will be stronger and will
provide police officials with better informa-

6 The number of private guards and police in the
United States has grown rapidly in the last two dec
ades and now roughly equals the number of sworn
policemen (about 300,000).
7 A discussion of the benefits of employing user
charges for a variety of other public services can be
found in S. J. Mushkin, ed., Public Prices for Public
Products (Washington: The Urban Institute, 1972).

8 Forcing the owner to bear the cost of recovering
his stolen automobile (either directly or through his
insurance company) may "teach" him not to leave
his car door unlocked and the keys in the ignition.
9 For example, if traffic officers are guided by a
quota system for traffic tickets, they may patrol in
locations and employ methods which produce the
most citations, not the fewest accidents.

FEDERAL RESERVE BANK OF PHILADELPHIA

MARKET ARRANGEMENTS FOR POLICE SERVICES
Although most cities have had limited experiences with market arrangements for
law enforcement services, there's scattered evidence of the workability of this
approach. Residents of neighborhoods within some big cities and of some suburbs
have collectively hired private firms to provide basic patrol services to supplement
those received from the city. This approach works in the case of patrolling a small
geographical area because the patrol car provides protection to residents of that
area rather than of the entire city. Thus, although it might be difficult to identify
the individuals who benefit from a prevented crime, it's possible to identify sub
groups of beneficiaries who would be willing to pay for such basic services as patrol.
This notion forms the basis for another successful experiment in marketing police
services— the Lakewood Plan in California. This is a plan, named after a city,
whereby the Los Angeles County Sheriff's Department provides law enforcement
services on a fee basis to 30 of the county's 77 cities. (The plan is also in effect
in several other populous California counties.) Services sold to the contract cities
include basic preventive patrol, traffic patrol, accident investigation, and safety offi
cers. The contract city can purchase whatever amount of service it desires, above a
certain minimum, and it pays accordingly. For example, the basic unit of patrol
service is a patrol car on 24-hour duty seven days a week, divided into two eighthour shifts with two men per car and one eight-hour shift with one man per car.
The contract city can purchase any multiple or fraction of this basic unit. The city
is charged on a per car basis which is intended to cover the marginal cost of pro
viding patrol service to the contract cities (the sheriff also provides patrol to the
unincorporated areas of the county).
Although the Lakewood Plan involves a higher level of government providing
police services to a lower level of government, the plan has important lessons
for advocates of the market approach. First of all, it shows that it's not particularly
difficult (that is, costly) to establish and administer a market-type arrangement in
police services. Second, it demonstrates once again that even crime prevention ser
vices such as patrol can be sold on a fee basis. Finally, although the sheriff's de
partment neither seeks nor earns profits from the sale of services, presumably the
charges levied cover the cost of providing the service. And, since the sheriff faces
some competition, he has some incentive to keep costs as low as possible. Where
does the competition come from? From the contract city itself which, if dis
satisfied with the services received from the the sheriff, has the option of providing
its own police services.
At the very least the Lakewood Plan demonstrates that competition between two
police forces in one area is workable. Buying services from private firms is not very
different from buying from a higher level of government.

MAY 1973

BUSINESS REVIEW

tion regarding what services taxpayers most
desire and in what quantities.
If, however, services cannot be sold in
the private market, the administrative ap
proach must be relied on to provide infor
mation on the value consumers place on
various police services. This approach imi

tates the market and spurs internal incentives
to police administrators to be efficient. A
rational combination of the two approaches
may squeeze more crime prevention from
strained police budgets and help stem the
serious and growing problem of urban
crime.

SELECTED BIBLIOGRAPHY
Fisk, Donald M. The Indianapolis Police Fleet Plan. Washington: The Urban Insti
tute, 1970.
Hirsch, Werner Z. Urban Economic Analysis. New York: McGraw-Hill Book Com
pany, 1972.
Kakalik, James S. and Wildhorn, Sorrel. Aids to Decision Making in Police Patrol.
Santa Monica, Calif.: Rand Corporation, 1971.
Katzman, Martin T. “ The Economics of Defense Against Crime in the Streets." Land
Economics 44 (1968): 431-40.
President's Commission on Law Enforcement and Administration of Justice. Task
Force Report: Crime and Its Impact—An Assessment. Washington: Government
Printing Office, 1967.
Shoup, Donald and Mehay, Stephen L. Program Budgeting for Urban Police Services.
New York: Praeger Press, 1972.

MAY 1973

BUSINESS REVIEW

111
110

“

May

June

July

August

Sept

Oct

1972

Dec

Jan

Feb

1973

Source: Business Conditions Digest

Nov

Mar

FEDERAL RESERVE BANK OF PHILADELPHIA

CHART 2
COMBINED WITH BARGAIN RATES ON BANK LOANS COMPARED TO OTHER BORROWING
COSTS . . .
Percent Per Annum

May

June

July

August

Sept

Oct

1972

Dec

Jan

Feb

1973

Source: Federal Reserve Bulletin

Nov

■

Mar

MAY 1973

BUSINESS REVIEW

FEDERAL RESERVE BANK OF PHILADELPHIA

Changing Times on
Pennsylvania Farms
By Evan B. Alderfer*

Gone are the days of the self-sufficient
farmer. Today Pennsylvania has 70 percent
fewer farms, 40 percent fewer farm workers,
and only about half as many acres under
cultivation as at the peak around the turn
of the century. However, total farm output
is greater than ever. So is productivity per
worker and productivity per acre. Higher
production and higher productivity have
been achieved through advances in biology,
chemistry, mechanization, and management.
Whether it's milking cows, fattening cattle,
growing mushrooms or curing tobacco,
technology has touched every nook and
cranny of farming.
Farms in the Keystone State continue to
dwindle in number, partly because of in

creasing mechanization and specialization,
partly because of the insatiable nonagricultural (commercial, industrial, residential)
demands for land. But the size of the farms
and their capital investment are on the in
crease. Pennsylvania's farmers are more
sophisticated, more efficient, and more
eager than ever to turn new techniques and
developments to their advantage.
OVERVIEW: SPECIALIZATION SPELLS
SUCCESS
Pennsylvania agriculture is a billion dol
lar industry as measured by gross sales (see
Table). Unlike several generations ago when
every farm produced a little of almost every
thing (see Box) we now have regional
specialization. Each farming area in the
state specializes in what is best suited to
the land conformation, soil, climate, and the
market (see Map).

* Dr. Alderfer, now retired, is a former Economic
Adviser of the Federal Reserve Bank of Philadelphia.

FEDERAL RESERVE BANK OF PHILADELPHIA

PENNSYLVANIA CASH RECEIPTS FROM SALES OF
AGRICULTURAL PRODUCTS
1970
Crops:
Field crops
Vegetables and potatoes
Horticultural specialties
Fruits
Other

(millions of dollars)
85
44
87
40
7
263

Livestock Products:
Dairy products
Meat animals and products
Poultry products

448
169
160

Total
Source:

777
1,040

1971 Crop and Livestock, Annual Summary. Pennsylvania Crop Reporting Service, Harrisburg,
Pa.

Lancaster County, blessed with just about
the best of everything— landscape, soil, cli
mate and nearness to market— is a veritable
Eden. Lancaster ranks first among the Com
monwealth's 67 counties in the production
of wheat, corn, barley, hay, tobacco, dairy
products, beef cattle, hogs, broilers, and
eggs. Cash farm income in the county ac
counts for almost a sixth of the state's total.
Within the county, however, there is con
siderable product specialization— each farm
concentrates on one or two lines.
Livestock and livestock products in 1970
accounted for 75 percent of cash receipts
from the sale of Pennsylvania farm products,
and crops 25 percent. Since 1920, crops as
a percentage of total farm production have
been on the decline and livestock products
have been on the increase. These changes
were caused in part by the shift from horses
and mules to tractors. This shift released

several million acres of crop land which
formerly had to be devoted to the raising
of feed for the draft animals. Moreover,
raising livestock assumed greater importance
as farmers turned more of their slopey and
hilly acres into land for pasture in order to
prevent good soil from being gullied and
washed away by heavy storms.
DAIRY FARMING THE MOST
REPRESENTATIVE
The dairy farm is the most representative
farm in Pennsylvania. It contributes 42 per
cent of all cash farm income— more than any
other type of farming, and for good reasons.
Out-of-state competition can be met better
with dairy products than with field crops.
Milk, butter, and cheese find ready markets
in the populous cities and suburbs nearby,
and serving these markets has been facili19

BUSINESS REVIEW

MAY 1973

BACK IN THE 'G O O D OLD DAYS''
Uncle John's farm bordered the upper reaches of a small tributary of the Perkiomen
Creek which flows into the Schuylkill River. The farm embraced about 50 rolling
acres, including a few acres of streamside woodland. The big red barn had stalls for
five horses and about 16 cows. Loose hay and loose straw were stored in the capacious
loft.
A lean-to on one side of the barn sheltered a single-cylinder gasoline engine with
two huge flywheels. Flopping belts, wobbly pulleys, and a long shaft carried noisy
mechanical horsepower from the engine to the threshing machine— the major piece
of equipment on the threshing floor. A lean-to on the other side of the barn shel
tered a binder, a grass-cutting machine, a utility wagon, a harrow, a manure spreader,
and a Sunday-go-to-meeting carriage.
Just beyond the manure pile in the barnyard was the pigsty with a half dozen everready disposers of buttermilk and garbage. Nearby was a chicken house with nests
for the brooders and layers and perches for uncounted others. There were also ac
commodations of sorts for ducks, guinea hens, and a few turkeys. And, of course,
there were the inevitable corncrib, springhouse, icehouse, and outhouse.
There was no running water but water was plentiful and was obtained with handoperated pumps— one in the barn, one in the kitchen, and one on the porch outside
the dining room. Cold drinking water was lifted with bucket and windlass from a deep
well at the far end of the long stone house. The horses were served drinking water
carried to them in a bucket; the cows drank their fill in the nearby stream.
On the tillable acres were grown corn, wheat, rye, oats, and potatoes, in some
rotation. Grass for hay making was cropped from the meadow. Then there was a
good-sized family garden with its variety of vegetables, an apple orchard, a mulberry
tree, and a few cherry trees— sour cherries for pies.
Cream was separated from the milk by a Delaval separator and butter was made in
a barrel-type churn— both machines hand-operated. Horses did the heavy field work
but there was an endless amount of work requiring manpower. In those days a farmer
was seldom seen without a pitchfork in his hands. All the manual labor on the farm
was done by Uncle John, his muscular wife, their not-so-muscular daughter, and a
hired man as elusive as a Pullman porter.
The farm was neither one of the best nor one of the worst. John and his wife worked
hard, and she even assisted in the fields during harvest time. There must have been
some cash farm income but cash was seldom seen except when city boarders paid for
their summer vacations on the farm. Uncle John's only visible luxuries were chewing
Red Man tobacco at work, and falling asleep in Sunday morning church. His wife had
no luxuries at all unless you consider a hand-operated coffee grinder and a foot-op
erated sewing machine as luxuries. Farms of this type belong to auld lang syne.

FEDERAL RESERVE BANK OF PHILADELPHIA

PRINCIPAL FARMING AREAS IN THE KEYSTONE STATE

□
VEGETABLE
C Z J FRUIT AND VEGETABLE
C Z 3 DAIRY AND POULTRY

C Z H DAIRY
C Z D POULTRY

Source: Pennsylvania Crops and Livestock Annual Summary, 1965.

A line from Philadelphia to Erie would cross a half dozen physiographic provinces.
Starting with the narrow, sandy coastal plain at the Delaware River, come, in succes
sion— the Piedmont, a broad bank of rolling countryside; then the Great Valley, a
beautiful and fertile lowland; the ridge and valley section with a contour that looks as
if it had been scooped with a monstrous earthscraper by Paul Bunyan in an angry
mood; then the Appalachian plateau— a wide, high, and handsome upland pockmarked
in the northern extremeties by a glacier; and finally the Lake Erie plain. On the
whole, not the best landscape for farming, but good in spots.
The topography varies from tidewater to 3,213 feet above sea level. Half of the
state is forested. The regions with poor soil or poor drainage are also unsuitable for
farming as are the areas that are too hilly or too urban. Climate varies also. Frostfree days, good for growing crops, are as few as 127 days in some areas and as many
as 211 days in other places. Average annual rainfall varies from a minimum of 34
inches to a maximum of 49 inches. All of this is good for farming.

MAY 1973

BUSINESS REVIEW

in size of herds and in acreage. A herd of
50 cows is now somewhere near the average,
but some herds are as large as 500 to 600
cows. A farm of the latter size, with perhaps
1,000 acres of land to grow corn and small
grains and some acreage in pasture, has
tractors and other machinery for tilling
the soil; silos, automatic feeders, barn
cleaners, milking and milk handling equip
ment entail a capital investment running
deep into seven figures. Such a farm is more
than a way of life; it is an agronomic
adventure.
CATTLE FEEDING A SPECIALTY
Fattening beef cattle for the sirloin-steak
market of the East Coast is another agricul
tural specialty in Pennsylvania. In 1970 this
activity was a $169 million agribusiness cater
ing to a clientele with a carnivorous appetite
and the buying power to afford it.
Here is how the business goes. White
faced beef cattle, bred and raised on farms
in Virginia, the Carolinas and other southern
states, are shipped to the Lancaster Livestock
Market where farmers buy the animals, fatten
them right well on a diet of corn and barley,
and then sell them to specialists for disas
sembly into filet mignon, rib roasts, and less
elegant cuts. During a week last February,
according to the Lancaster Livestock Re
porter, auction receipts totaled 1,010 head
of cattle compared with 848 of the previous
week and 654 a year ago. These numbers
are perhaps indicative of the healthy growth
of cattle feeding.
Farmers engage in cattle feeding because
it makes fuller use of farm buildings and
equipment, keeps farm labor busy, makes
the best use of forage produced on the farm,
and brings in more cash than the market
price for grains grown on the farm. Or is that
rationalization on the part of those who just
like to feed cattle? Running a cattle cafeteria
involves risk. The market price of fattened
cattle does not always cover the price of the
lean cattle plus the costs of feeding them up
to marketable weight and the anticipated

tated by improvements in transportation and
refrigeration.
The cow is a self-propelled, tractable, cudchewing, biochemical wonder equipped
with four stomachs, pipes and valves for
processing corn, grain, grass, and water. In
the course of a year Bossy produces tons of
milk and manure and perhaps a calf. The
milk nourishes man; the manure nourishes
the soil. The calf, if female, becomes another
cow in due time; if male, he goes to the
abattoir for conversion into veal. If the value
of all the cow's output is greater than the
value of all the input, the farmer wins; if not,
he loses.
Annual milk production per cow rose from
an average of only a little better than 5,000
pounds in 1930 to 10,000 pounds in 1971.
The doubling of productivity was achieved
through a variety of developments in bovine
breeding, feeding, and management. With
artificial insemination of sperm from proved
sires widespread enrichment of dairy herds
has been attained. Balanced rations and
greater use of grain concentrates have con
tributed much to the increased flow of milk
per cow.
Modern m anagem ent practices have
greatly increased the efficiency of dairy
farming. Milking machines, which have re
placed hand milking, afford savings in time
and labor and encourage larger herds. In
elevated stalls or "parlor milking," the cow
stands waist high with respect to the man
doing the milking so as to eliminate tiresome
stooping and reaching to attach and detach
the machines.
A pipeline setup permits a dozen or more
cows to stand next to each other in herring
bone fashion on each side of the operator
on each side of the operator's runway. The
pipeline conveys the milk to the cooling
room equipped for bulk storage from which
tank trucks transport the milk to commercial
dairies for processing. Milk pails and fortyquart milk cans are obsolete.
Dairy farms continue to grow larger, both

FEDERAL RESERVE BANK OF PHILADELPHIA

profit. Making a buck on cattle feeding re
quires shrewd business sense mixed with
equal portions of farming skill.

they are washed automatically and boxed for
shipment. A henery is really an "egg fac
tory." Everything is automatic and efficient.
It used to take about 7 pounds of feed to
produce a dozen eggs; today it takes 41
/2
pounds or less.
Raising broilers is a highly specialized,
high-speed form of agriculture. Broilers are
bred in specialized hatcheries, fed on spe
cialized farms, and bled in specialized dress
ing plants. Breeding parent stock of broilers
has, in fact, become so specialized that some
breeders have tended to concentrate on the
development of male lines, while others have
concentrated on female lines.
Broilers are given the same degree of care
and pampering showered upon layers, but
broilers are not confined in cages. Broilers
in large flocks are free to roam in their airconditioned apartments. The feed, often
supplied by special arrangement with a feed
dealer, is a computer-controlled blend or
mix, including vitamins to assure a balanced
diet and rapid growth. A broiler is a bird,
and birds are by nature ravenous eaters. The
growers assist Nature with a menu that will
produce the maximum edible meat with the
minimum expense in the shortest time.
Upon attaining marketable weight the
broilers go to the dressing plant which is
really an undressing operation, starting with
fluttering, squawking birds at the head of
the disassembly line and ending with a defeathered, eviscerated, singed, washed, and
packaged-for-market b ro ile r. Short and
happy is the life of a broiler. The turnover
is fast, profits are narrow, flocks are getting
larger, and competition is fierce.

POULTRY AND NEW TECHNIQUES
In 1971, sales of Pennsylvania poultry
products totaled a tidy $170 million— no
"chicken feed." About $100 million came
from the marketing of eggs, $40 million from
broilers, and the remainder from other fowl.
Pennsylvania ranks about fifth among the
states in egg production.
The hen's egg is one of Nature's largest
single cells— a neat container of 55 different
chemicals, a storehouse of nutrition, an
architectural masterpiece said to be the
most perfect single creation, and the hen's
hope of posterity.
Years ago, almost every farm had chickens
scratching for food in the barnyard. The
housewife tossed to them a daily ration of
shelled corn, collected the eggs, and sold
them for pin money. When hens outlived
their laying life they were slaughtered for the
meat— an alleged piece de resistance for the
visiting minister.
After World War I the economic stature
of the hen began to rise. First, dual-purpose
flocks were rep laced by single-purpose
strains. Techniques for "sexing" chicks im
proved, and only female chicks were sold by
hatcheries. Egg productivity per hen was
greatly increased through improvements in
breeding, feeding, disease control, and over
all poultry management.
The modern hen house is air-conditioned
and electrically lighted. The hens work in
long rows of metal cages, sometimes three
hens to a cage, giving each bird only about
three-quarters of a square foot of space.
Down the length of each row and accessible
to each hen is a trough never out of fresh
water; immediately below is another trough
supplying chicken feed. Slightly tilted floors
cause freshly laid eggs to roll gently onto a
moving belt that delivers the eggs to the
receiving station adjacent to the office where

CROWN-HOLDER IN MUSHROOM
PRODUCTION
Pennsylvania holds undisputed first place
in the growing of mushrooms. To the coun
try's 1971-72 crop, worth $107 million, Penn
sylvania contributed $64 million, or 61
percent. As a money crop, mushrooms out
ranked fruits, and even outranked vegetables.
23

BUSINESS REVIEW

MAY 1973

vania's 67 counties. Six geographically scat
tered counties, however, produce half the
total tonnage. They are Lehigh, Erie, Cam
bria, York, Lancaster, and Potter— in that
order as the cash register rings.
The current practice is to grow potatoes
in areas specially favored by soil and climate,
on big farms, with specialized machinery.
A farm with 100 acres in potatoes very likely
has 400 acres for purposes of crop rota
tion. Certified seed potatoes are machinecut, m a ch in e -p la n te d , machine-sprayed,
machine-harvested, and m ach in e -g rad ed .
The harvesting machine is a thing to behold
— it unearths two rows sim ultaneously,
shakes out the soil, removes the rocks from
the potatoes which are then delivered by
moving belt to the accompanying truck that
hauls the harvest to the air-conditioned stor
age barn where the unloading is done by
elevators. The gunny sack is obsolete. Stoop
ing labor is obsolete. The term “ small po
tatoes" is obsolete. Potato growing has
become big business.

Mushrooms were enjoyed by the Pharaohs
of Egypt who considered them too good for
the common people. They are still regarded
as delicacies, but they cost much less than
the steaks they so frequently garnish. About
1885, two florists ventured into a new side
line of raising mushrooms in the unused
space under the benches in their hothouse.
From that inauspicious beginning, Chester
County's Kennett Square ultimately became
the country's mushroom capital.
A mushroom is a fungus— a thallophytic
plant, destitute of chlorophyll, without true
roots, stems, or leaves, and deriving nour
ishment almost wholly from organic com
pounds. No wonder mushrooms are hard
to grow!
Production of mushrooms requires a deli
cate touch. The process begins with the
preparation of compost, which takes about
four weeks; then the transfer of the compost
into trays or beds in the windowless, dark
mushroom house; next the pasteurization of
the compost to kill all harmful bacteria,
which takes three to ten days; then the plant
ing of the spawn, or mushroom “ seed" (best
bought from a specialized producer); then
casing, that is, topping the beds with a thin
covering of soil and keeping the beds prop
erly watered for three to four weeks; after
which comes cropping, or harvesting; and
finally, cleaning out and starting the next
crop.
Mushroom growers have been facing
steadily sharper competition from imports of
canned mushrooms. In calendar 1972, im
ports were 50 million pounds, over 20 per
cent of the domestic production. Almost
three-fourths of the imports came from Tai
wan, most of the rest came from Japan,
France, and Korea, in that order.

TOBACCO AND TLC (TENDER LEAF
CURING)
Tobacco is Lancaster County's leading cash
crop. The tobacco grown there is cigar
tobacco, officially designated Pennsylvania
Seedleaf, Type 41. The 1971 harvest brought
the Lancaster growers of the weed $10 mil
lion, but it took about $10 million worth of
stooping labor to grow the crop.
There is scarcely a month in the year that
tobacco farming doesn't call for some atten
tion. In late March or early April, sometimes
before last year's crop is sold, soil beds for
seeding must be prepared. When the tender
seedlings are about six inches tall they are
transplanted into straight rows in the fields.
All summer long the plants require suckering,
and endless warfare against weeds, bugs,
and diseases. Toward the end of August
comes harvesting when the farmer and his
family cut the stalks and slip them on spearpointed laths which are loaded on wagons

SPUDS PRODUCTION “ NO SMALL
POTATOES"
In some form or other the potato appears
on almost every dinner menu and appears
on the list of crops in every one of Pennsyl

FEDERAL RESERVE BANK OF PHILADELPHIA

elevations, seldom over 1,000 feet, are the
apple orchards.
Fruit trees on the slopes and hillsides get
the benefit of good air and water drainage.
Cold air currents settle in the lowlands and
thereby the apple blossoms escape the dam
aging effects of late spring frosts. Also, the
maturing apples have a better chance of
escaping the hazards of early fall frosts.
There are at least 338 different varieties of
apples ranging, alphabetically, from Akin to
York Imperial. About 70 percent of Adams
County apples are York Imperial—a type
used mostly for making pies.
Since 1952, the apple industry of Adams
County has undergone quite a change. Ac
cording to one authority, "Land values have
escalated, taxes have gone up, labor costs
have risen, and competent labor has grown
scarce at any price." Inevitable consequences
of these developments were mechanization
and consolidation of orchard ownership.
Rising costs and labor shortages have in
duced the planting of trees on dwarfing
rootstocks to produce smaller trees. Use of
machin.es for topping and hedging has cut
down labor costs of pruning. It is also easier
to mechanize the harvesting of dwarf trees.
Smaller trees can be harvested without climb
ing ladders which permits the employment of
older workers and women. Dwarf trees-also
simplify the work of spraying— spray ma
terials can be applied more efficiently. Labor
costs of spraying have been reduced by
applying more highly concentrated sprays
to larger areas. A recent development is an
integrated chemical-biological spray sched
ule. By using low-level sprays of not-so-toxic
materials, predator insects are preserved to
help rid the trees of destructive insects.
The York Imperial harvest goes directly to
the processing plants for conversion into
canned apple slices, applesauce, apple juice,
cider, vinegar, apple butter, and apple pie
mix. Golden Delicious and other fresh mar
ket apples, which account for 30 percent of
the harvest, go into controlled atmosphere

fitted with racks to haul the crop to the
tobacco barn. Then comes the curing, a
delicate operation requiring ventilation un
der careful supervision and skilled handling.
By Thanksgiving time, when other field work
is completed, the farmer works on his to
bacco in the stripping cellar— removing the
stalks, grading for length, inspecting for im
perfections, and, finally packing for sale to
the cigar manufacturer.
Growing tobacco is a labor-intensive type
of farming which appeals to the Amish
farmer who believes in keeping all young
hands in his family busy in productive work.
The Amish raise most of the Lancaster to
bacco.
Once a local banker made a business call
upon an Amish farmer who was at work in
his tobacco shed. During the conversation
the banker said "Do you mind if I smoke?"
"No," replied the farmer, whereupon the
visitor lit a cigarette. "Jake," said the farmer,
"I'm ashamed of you smoking them things."
"W ell, it's tobacco," said the banker, sum
moning his best defense. "Yes," replied the
farmer, "but it's not Pennsylvania tobacco!"
APPLE GROWING:
PICTURESQUE

PROFITABLE AND

Pennsylvania is usually among the nation's
half-dozen leading apple-producing states.
Although apples are grown in all but one
of the Commonwealth's counties, Adams
County produces almost a third of the total.
Nature favors Adams County and man helps.
Apple blossom time in Adams County
affords one of the most picturesque sights
in Pennsylvania. The scene is South Moun
tain which is not really a mountain, except
by poetic license, but is a section of the Blue
Ridge Mountains that pushes up through
Maryland into Pennsylvania. Seldom does
the Pennsylvania part of the upheaval rise
above 2,000 feet. The peaks and crests are
forested, the lowlands in summer are green
with grass and corn. On the intermediate

BUSINESS REVIEW

MAY 1973

storage where they stay fresh until demanded
by the market.

sure to increase, as they have in the past,
thanks to technology and specialization.
Pennsylvania farmers may be conservative in
many respects, but they have always been
quick to accept new developments in farm
ing, new kinds of agricultural machinery, new
ways of fertilizing land, new breeds of stock,
new grasses, fruits, and horticultural spe
cialties.
The small family farm is giving way to the
large commercial operation. Farmers are
steadily becoming more sophisticated. They
keep better records, are more knowledge
able in Animal Science, Plant Pathology,
Entomology, and Agronomy. They consult
their county agricultural agents, have their
soil tested, and read reports they get from
the Agricultural Experiment Station at Penn
State University. No need to argue whether
farming is an art or a science. In Pennsylvania
it is both.

TOMORROW'S TECHNOLOGY AND
TRENDS
Technological innovations in agriculture—
biological, chemical, and mechanical— have
been more rewarding than is generally re
alized. Since the end of World War II,
productivity, as measured by output per
man-hour, has increased twice as fast in agri
culture as in manufacturing. Pennsylvania
farmers have obtained better yields for their
efforts, but how about technology and
trends for tomorrow?
The probabilities are that the total amount
of land in Pennsylvania farms and the num
ber of farms will continue to decline because
of the growing commercial, industrial, and
residential demands for land. Farms, both in
acreage and in capital investment, are almost

FOR THE R E C O R D ...

2 YEARS AGO

YEAR AGO

APRIL 1973

't ■

WmmmamMmmimmi * '

■

Third Federal
Reserve District

United States

Percent change

March 1973

SUM M ARY

from

3
mos.
1973
from

March 1973
from

3
mos.
1973
from

year
ago

+ 1 +10

year
ago

mo.
ago

+ 11

+ 7
+ 5
+14
+19
+ 2

N/A
N/A
N/A
+18
- 2

mo.
ago

MANUFACTURING
Electric power consumed . . .
Man-hours, total*.....................
Employment, total........................
Wage income*................................
CONSTRUCTION**..........................
COAL PRODUCTION.......................

Manufacturing

LO C A L
CH AN GES
Standard
Metropolitan
Statistical Areas*

5
0
0

+ 1
+106
- 2

+
+
+
+
+
-

7
2
1
9
1
1

+ 8
+ 4
+ 2
+ 11
+ 6
-3

+ 1
0
+ 1
+26
+ 2

•

Banking

Employment

Check
Total
Payments** Deposits***

Percent
change
March 1973
from

month year month year month year month year
ago ago ago ago ago ago ago ago

Wilmington...................... +

S B H H II

Atlantic City....................

+11

+23

3 -1 54 -

1 -8 9

2 + 16

24 -

2 +13

0
+

N/A

Bridgeton......................... -

N/A

+13

Trenton.............................

7 +41

77 -

Altoona.............................

2 +14

1 +14

N/A

BANKING
(All member banks)
1
Deposits............................................ 0
Loans.................................................
0
Investments....................................
0
U.S. Govt, securities...............
Other.............................................
0
Check payments***..................... + lo t

+ 9
+17
+ 2
- 3
+ 4
+ 3 1f

- 1 +12
+ 2 +21
0 + 2
- 1 - 5
0 + 6
N/A N/A

+12
+21
+ 4
- 1
+ 7
N/A

3 + 16

24 -

3 +17

1 +18

Lancaster.........................
+ 9
+15
0
- 2
+ 1
+ 41f

Harrisburg.......................
Johnstown.......................

+14

9 +146 -

Lehigh Valley.................

2 +14

1 +13
2 +19

Philadelphia....................

Reading............................

Scranton...........................

Wilkes-Barre................
PRICES
Consumer......................................... +
♦Production workers only
♦♦Value of contracts
♦♦♦Adjusted for seasonal variation

Williamsport...................
U + 5J

+ 4|

+ 2 + 10 + 9
+ 1 + 5 + 4

fl5 SMSAs
^Philadelphia

York.................................

1 +16
+

1 +11

9 +19

2 +31

+ 16 +14

35 -

1 +72

+ 13

1 +14

12 +17
+

♦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.

F D R L R B R K B MK
E E A
E I V
A

FEDERAL RESERV E RAINK of PHILADELPHIA
PHILADELPHIA, PEINIVSYLV AIVIA 19101

b u sin e ss review
FEDERAL RESERVE BANK
OF PHILADELPHIA
PHILADELPHIA, PA. 19101

Full text of Business Review (Federal Reserve Bank of Philadelphia) : May 1973

FRASER