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NOVEMBER 1950
T H E
BUSINESS
REVIEW
FEDERAL
RESERVE
BANK
OF
PHILADELPHIA
V-IOANS —1950 MODEL
Industrial mobilization creates many
financial problems for business.
An important one is obtaining
sufficient working capital
to handle Government contracts.
During World War II this problem
was met by guaranteed loans
administered under Regulation V.
Business is in a stronger financial position
than it was in 1940, but many
of the old problems still exist.
V-loans have been recalled to service
to provide adequate financing
and to facilitate the flow
of defense supplies and materials.
CURRENT TRENDS
All phases of business activity
continued at a high pitch during
September as industry made
vigorous efforts to meet demand.
Business loans at banks rose
rapidly during the month
but more slowly in October.
Investments declined.
THE BUSINESS REVIEW
V-LOANS —1950 MODEL
The outbreak of hostilities in June of this year has made
painfully clear the fact that we have not attained either
the “One World” envisioned by Wendell Willkie, or even
two worlds living together at peace as hoped for by less
optimistic observers. Developments since June indicate
that at least partial mobilization will be necessary to main
tain our military establishment at a level which, in the
light of present conditions, appears adequate. It is, of
course, impossible to predict how long these conditions
will prevail.
Certainly, however, mobilization of manpower alone is
not enough. It has already been necessary to institute reg
ulations in the fields of consumer and real-estate credit,
and preparations have been made for industrial mobiliza
tion to meet the needs of the armed services. This will
involve both expansion of plant and equipment and financ
ing of production itself.
One of the chief tools in the latter field is Government
guarantee of loans to facilitate the production of war ma
terials. This procedure, familiar to businessmen and
bankers during World War II as the V-loan program, re
ceived prominent mention by the President in his message
to Congress on July 19, 1950 and was incorporated in the
Defense Production Act of 1950. Pursuant to this Act and
Executive Order 10161, the Board of Governors of the
Federal Reserve System reissued Regulation V in a revised
form, effective September 27, 1950. It seems timely, there
fore, to review our experience with V-loans and to consider
their application to present conditions.
Background of Regulation V
Industrial mobilization of the type we experienced from
1940 to 1945 raises acute financing problems not only for
the Government but also for the recipients of the war con
tracts. Plant and equipment must be expanded quickly,
and re-tooling to meet war contracts must be accomplished
in the shortest possible time. A corollary problem is that
of financing inventory and payrolls until payments on the
Government contracts become due. The difficulties are
intensified by the production demands made of small pro
ducers, often amounting to several times the peacetime
capacity of their plants. Governmental attempts to assist
small business in obtaining working capital go back to
the early 1930’s—the RFC, the addition of Section 13b to
the Federal Reserve Act, etc. But by the end of 1939,
corporation cash balances and liquid assets, although
of substantial size and growing, were still not sufficient to
enable businesses to finance, by themselves, expansion of
the magnitude required.
Large and financially strong concerns were able to resort
to their banks or to security markets for assistance but, in
many cases, these avenues were not open to the small
manufacturer who frequently was a sub-contractor.
Bankers were reluctant to make loans of the size required
to financially weak businesses for use in production which
was often completely foreign to the borrower’s past ex
perience. In other cases, bankers were prevented from
making loans of the amount requested, by the legal limita
tion which restricts loans to a single borrower to 10 per
cent of the bank’s capital and surplus. The RFC and the
Federal Reserve Banks were not satisfactory alternatives
for some of the same reasons, with the added drawback
that these agencies had limited staffs which might have
slowed down the machinery had they been called upon to
carry the brunt of the burden.
“Defense Era” Financing
Congress and the procurement agencies themselves took
steps in 1940 to make funds available to war producers.
Fixed capital needs were provided for through Emergency
Plant Facilities Contracts and the Defense Plant Corpora
tion, while the various armed forces procuring agencies
utilized advance and progress payments to supply working
capital. Progress payments, which were used extensively
by the Navy in shipbuilding contracts, entailed periodic
payment in full for the work accomplished to date, and
while effective for financing large items such as ships and
aircraft, involved a considerable amount of “red tape”.
Where advance payments were used, the procurement
agency—Army, Navy, or Maritime Commission—ad
Page 1
THE BUSINESS REVIEW
vanced up to 100 per cent of the amount of the contract
to the producer on the security of controlled bank accounts
at the time work was started. In addition to the fact that
substantial amounts of money were tied up under this
system, advances were permitted only to prime contractors,
thus leaving unchanged the plight of the various tiers of
subcontractors whose need was usually greatest. They
were forced to rely, in turn, on advances from the prime
contractors that, in many cases, were not forthcoming.
The problem was sufficiently acute by late 1941 to re
quire more effective measures. Several bills were presented
to Congress designed to give additional lending authority
to the Federal Reserve Banks under Section 13b but none
of these bills was enacted. Finally, under the authority of
F.xecutive Order 9112, Regulation V was issued by the
Board of Governors of the Federal Reserve System, effec
tive April 6, 1942, to provide adequate financing and to
speed up the flow of war equipment, materials, and supplies.
and varied from 10 to 50 per cent of the interest payments,
depending on the percentage of guarantee. Although per
mitted by the Regulation, very few 100 per cent guarantees
were approved by the services. The majority were for 90
per cent, with lower figures being used occasionally. The
usual term was about one year.
Among the chief beneficiaries of the program were the
commercial banks which made the loans, since they could
extend credit under a guarantee to the most marginal con
cerns provided only that the loan was “necessary or con
venient” to the prosecution of the war. It was apparently
intended that V-loans should be made available only to
those firms which otherwise were unable to secure credit,
but this condition was not rigidly enforced. The major
function of the V-loan, namely to get working capital to
war contractors, remained practically unchanged through
the various modifications of the program to be described.
Termination Provisions
The V-Loan Program
As first stated, the Regulation V program provided for the
guarantee of war production loans by the War Department,
Navy Department, and the Maritime Commission through
the Federal Reserve Banks as their agents. The mechanism
itself was comparatively simple. A prospective borrower,
either prime or subcontractor, made application to his
bank or other lending agency for a loan. The lender then
applied to the Federal Reserve Bank of its district for a
guarantee of the credit. From this point, procedure varied
depending upon whether the borrower had Army or Navy
contracts. Approval for all Navy guarantees was given in
Washington; the Army authorized the Federal Reserve
Banks to give approval on most commitments up to
$100,000, later increased to $250,000. If the application
was approved, the Federal Reserve Bank executed a guar
antee agreement with the bank or other financial institu
tion making the loan.
The guarantee agreement was in essence a commitment
by the guarantor to purchase on ten days’ notice the guar
anteed portion of the particular loan concerned. This
document, together with the directives of the Board of
Governors concerning interest rates and guarantee fees,
formed the framework within which the program operated.
The interest rate for V-loans was determined by the lend
ing bank and the borrower, the only restriction being that
it should not exceed 5 per cent, which was the limit fixed
by the Board. Guarantee fees were also set by the Board
Page 2
The original V-loan guarantee agreement included two
provisions called “stepladder” clauses, designed to take
effect in case the contract was canceled for the convenience
of the Government. The first of these was designed to
protect the lending bank by decreasing the dollar amount
of the unguaranteed portion of the loan in direct propor
tion to the amount of the borrower’s contracts canceled, if
such cancelations exceeded 25 per cent of all the borrower’s
contracts. The second clause, which was to take effect under
the same conditions, protected the borrower by suspending
the maturity of V-loans in proportion to the percentage of
his war contracts canceled until his claim was settled by
the Government. He was also relieved of any obligation
for interest payments on the part of the loan so suspended.
During this period, interest was paid to the banks by the
guarantors themselves.
As mentioned previously, V-loans were intended to ac
commodate only those borrowers who could not obtain
credit elsewhere. The War Department interpreted the
regulation leniently, as indicated by their approval of a
large guaranteed loan to General Motors in October 1942.
The Navy Department, however, was stricter and as a result
many strong firms holding Navy contracts could not avail
themselves of the “stepladder” clauses when cancelations
began to roll in during mid-1943. In order to bring the
termination provisions within the reach of all contractors,
VT-loans were inaugurated in August 1943. They were to
be available to producers regardless of financial condition
THE BUSINESS REVIEW
and, in addition to the provisions of straight V-loans, per
mitted use of the funds to free working capital when con
tracts were terminated.
In order for a business to get termination benefits under
a V- or VT-loan, the loan must have been negotiated
prior to cancelation of its contracts. Many firms, there
fore, which had not utilized these devices were at a com
petitive disadvantage in returning to peacetime produc
tion. To assist these concerns, the Contract Settlement
Act of 1944 provided for a T-loan, which could be nego
tiated after termination and was designed to free working
capital. It was not intended to supply funds for production.
T-loans utilized machinery existing under Regulation
V and ran until the claim was finally settled by the
Government.
The last refinement of the program occurred in Septem
ber 1944 with the institution of 1944 V-loans, which super
seded the V and VT types. Since T-loans were then avail
able, the “stepladder” clauses were no longer necessary and
the 1944 V-loan, although similar in intent and operation
to its predecessors, eliminated these provisions.
The actual loan agreements for the various types of
guarantees were left to the individual bank’s discretion,
except in the case of T-loans for which a standard twopage form was authorized. For the other types, the banks
often drew on their term lending experience, and docu
ments up to 129 pages in length resulted—a needless addi
tion to the complexity of the arrangements.
Appraisal of Accomplishments
It may well be asked whether Regulation V was successful
in solving the problem it was created to meet, namely, that
of getting working capital to small prime contractors and
subcontractors. A later and incidental purpose was that
of easing reconversion to peacetime production. The ques
tion can best be answered by an appraisal of the regula
tion’s effect on those involved.
The magnitude of the V-loan program is indicated by
the $10.5 billion of credit advanced to the 4,900 borrowing
businesses during the life of the program. The peak was
reached in the first half of 1944 when the dollar amount
of guaranteed loans outstanding under Regulation V was
nearly twice as great as the amount of all non-guaranteed
loans by commercial banks for war purposes. Figures on
the characteristics of the borrowers are also indicative of
the service performed by the program. Although small
firms—that is, firms with assets of less than $500,000—
REGULATION V-LOANS OUTSTANDING
AND ADDITIONAL CREDIT AVAILABLE
BILLIONS
BILLIONS
>
5
ADDITIONAL AUTHORIZED
CREDIT AVAILABLE
4
3
2
LOANS
OUTSTANDING
I
1942
1943
1944
1945
1946
0
received less than 10 per cent of the amount of loans
guaranteed, they received almost two-thirds of the number
of such loans, the average size of authorization being about
$170,000. There are no figures available to show how
many of these small firms were subcontractors, but it seems
reasonable to believe that the number was substantial.
RELATIVE IMPORTANCE, BY SIZE, OF V-LOAN*
BORROWERS
Size of borrower
(Assets in thousands
of dollars)
Percentage
of all
borrowers
Percentage
of amount
authorized
Percentage
of number of
authorizations
Under 50 ....................
50-500 ........................
500 - 5,000 ...................
5,000 and over.............
17.7
45.1
29.8
7.4
.9
8.0
24.3
66.8
16.8
46.3
30.7
6.2
Total ...................
100.0
100.0
100.0
* Includes V, VT, T and 1944 V-loans.
Although the provision of working capital to small busi
ness was the primary aim of the regulation, the value of the
termination provisions should not be minimized. Again,
dollar figures would not be impressive but the services,
from the standpoint of the individual businessman, were
great. Businesses, both large and small, were enabled to
return to peacetime production with a minimum of finan
cial strain and without waiting for payment of claims on
canceled Government contracts. V-loans were of almost
equal importance to larger firms, although in many cases
it appears that they were enabled to retain their own funds
for civilian production while utilizing V-loans to provide
themselves with the working capital needed for war work.
Page 3
THE BUSINESS REVIEW
BANKS MAKING V-LOANS*—BY SIZE GROUPS
Total deposits
(Millions of dollars)
Percentage making
V-loans
Under 1
1- 2
2- 5
5-10
10-50
50 and over
i
6
17
41
78
98
* Includes V, VT, T and 1944 V-lnans.
V-loans constituted an important source of income to
lending banks during the life of the regulation. V-loans
(including VT, T, and 1944 V types) and participations
were made by 1,422 commercial banks. Practically all
banks with deposits exceeding $50 million and 78 per cent
of those in the $10 million to $50 million class participated
in the program. This predominance of large banks can be
attributed to their location in metropolitan centers where
much of the war work was done. During the period June
1942 to June 1944, outstanding non-guaranteed war loans
by commercial banks fell from $2.2 billion to $1.1 billion,
and during the same period V-loans rose from almost zero
to over $2 billion, indicating the relative importance of
this type of credit. Of the $10.5 billion of Regulation V
credit extended during the life of the program, over onethird was loaned at rates exceeding 3 per cent.
There were non-financial benefits to the lending banks
which are difficult to measure in concrete terms. Proce
dures under Regulation V kept this type of war production
financing in the commercial banking system rather than
centralizing it in a Government agency, as might have
been done. The way in which the banks handled the pro
gram was a credit to our banking system and in keeping
with our free enterprise economy. Of equal importance to
bankers was the opportunity to meet the credit needs of
their old customers and to make lasting contacts with many
small firms which before the war had been “unbankable”
in their eyes. Many such concerns have grown in size and
financial strength because of their wartime contracts and
have become valued customers of the banks with which
they dealt under Regulation V.
From the standpoint of the armed services, the pro
gram was undoubtedly effective. Officials of the various
procuring agencies in letters to the Board of Gov
ernors in 1946 stated that Regulation V had made an im
portant contribution to the achievement of maximum pro
duction by American industry, and thus to the successful
prosecution of the war. This is true even though at the
peak of the V-loan program, loans outstanding were only
Page 4
half the amount of the advances made by the procuring
agencies—a fact which can be attributed to the special
problems of shipbuilding, where advance payments gave
greater control over individual contracts than V-loans.
The financial results of the program are surprising con
sidering the volume of loans handled and the financial
condition of many of the borrowers. Income to the Treasury
from guarantee fees, which varied from 10 to 50 per cent
of interest payments depending on the percentage of guar
antee, exceeded losses and all expenses of the program by
about $24 million by June 1950. Without the program
the production of war materials would have required more
Government financing through direct lending and other
means at a greater expense, and trained personnel in num
bers difficult to find under the existing conditions.
The V-loan program was not without its faults and short
comings, although for the most part they resulted from
the urgency of the conditions under which the regulation
was instituted. Speed was essential at the outset and as a
result the kinks had to be ironed out gradually as they
became evident. As already shown, under the original
V-loan guarantees, the “stepladder” clauses deferred ma
turity of the customers’ loans in the event of contract ter
mination. They did not, however, free the working capital
tied up in such contracts. Revised termination provisions
were not added until borrowers demanded them as a pre
requisite to accepting further contracts.
A more basic problem and one for which no ready solu
tion appears is the position of trade creditors. In the event
that a war contractor is forced into receivership, the par
ticular Government agency which guaranteed the loans
becomes a preferred creditor. The trade creditor is frozen
out until and unless the guarantor has received one hundred
cents on the dollar. Fortunately, this situation did not arise
frequently, and in any event the trade creditor is little worse
off than the creditor of a firm which has pledged inventory
or accounts receivable for a non-guaranteed bank loan.
The charge that the program was unnecessarily com
plicated in operation appears open to question. The guaran
tee agreement was simple and although the loan agreements
were often lengthy, the lending bank could make these as
short and concise as it wished.
If it can be said that there were relatively few imperfec
tions in the regulation itself, several arose in its admin
istration :
1. Most important of these was the difference between
the policy of the Army and that of the Navy which
THE BUSINESS REVIEW
has been mentioned. The Navy consistently required
statements from both the borrower and the procur
ing bureau, certifying that each individual loan
was necessary in the amount requested to supplement
(but not to replace) the borrower’s working capital,
and also a certification that such funds were not
available elsewhere. The Army, on the other hand,
was more lenient and permitted loans to free the
borrower’s own funds. This situation caused con
fusion in cases where a producer holding Navy con
tracts was refused a V-loan while his competitor
making similar parts for the Army, and in similar
financial condition, had no trouble obtaining credit.
This was indeed a mystifying situation and the effect
was, at first, to deprive the Navy contractor of ter
mination benefits.
2. There was an apparent disinclination on the part of
the guarantors to make 100 per cent guarantees or to
approve V-loans to weak firms. In these cases, they
preferred to make direct advances and obtain the
added security of a controlled bank account. It ap
pears also that 90 per cent came to be looked upon
as a “standard” percentage of guarantee, rather
than attempting to fit this factor to the credit stand
ing of the borrower.
3. A ruling of the Comptroller of the Currency in 1943
made it necessary for each bank participating in a
V-loan to be named separately on guarantee agree
ments in order to be released from the 10 per cent
of capital and surplus limitation on unsecured loans.
This added measurably to the paper work of the
Federal Reserve Banks.
4. Although about two-thirds of the dollar amount of
all war loans made by commercial banks were guar
anteed, figures are cited showing that a minor pro
portion of the number of such loans was guaranteed
at the peak of the V-loan program. Some have in
terpreted this low percentage as indicating that
lending banks avoided the program due to ignorance
or fear of “red tape.” Another and probably more
accurate interpretation, however, is that banks were
willing to make the majority of war loans without
resorting to guarantees.
Why Is Regulation V Needed in 1950?
Title III of the Defense Production Act authorized the
President to reinstitute defense production loan guarantees
if the need should arise. The need did, in fact, arise as soon
as small businessmen received defense orders too big for
them to finance with their own funds, and big enough so
that their banks did not wish to assume the risk. However,
in addition to supplying working capital, which is again
the primary purpose of the program, Regulation V per
forms another valuable service. In the absence of some
provision for avoiding financial strain when contracts are
terminated, many businessmen might well be hesitant about
accepting Government orders in view of the uncertain
duration of the mobilization. Termination provisions are
important in assuring prompt placement of defense orders
under these conditions.
As a whole, American business is in a much stronger
financial position today than it was in 1940. Working
capital figures for all United States corporations show
cash balances in June 1950 of $26 billion—up 98 per cent
from 1940; total current assets of $134 billion—up 123
per cent; and a new record level for net working capital
of $74 billion—up 168 per cent. In addition, cash and
Government securities now amount to about 73 per cent
of current liabilities of these corporations, compared to
46 per cent before the war. These figures are impressive
and result, in large part, from earnings retained during the
profitable war and postwar years.
Total figures, however, do not necessarily indicate that
individual concerns have fared as well as the group; nor
do they indicate that a small producer who needs working
capital, perhaps in excess of his total assets, for war pro
duction will be able to obtain it without a guarantee. The
financing problems of contractors engaged in war work are
unique and although today they may be smaller in their
magnitude than they were in 1941, they are similar in
nature.
Operation of the Program
As might be expected, the provisions of the V-loan program
as revised in September of this year closely approximate
those in effect at the close of World War II. There are,
however, changes in both the regulation and in announced
administrative policy which are worthy of mention.
Executive Order 10161 lists seven agencies authorized
to guarantee defense production loans: the departments of
the Army, Navy, Air Force, Interior, Agriculture, and
Commerce, and the General Services Administration. It is
significant, therefore, that in the Board of Governors’
Page 5
THE BUSINESS REVIEW
statement issued with the revised regulation there appears
the following: “In the formulation of policies and pro
cedures there will be frequent consultations between the
guaranteeing agencies and the Board of Governors for
the purpose of achieving uniformity and coordination to
the greatest extent practicable.” This seems to indicate
that an effort will be made to insure uniform interpretation
of the regulation although this document contains no
specific statement concerning the eligibility of a borrower
other than requiring that his contract be “necessary to
expedite production. . . .”
The regulation itself differs little from the version in
effect at the close of World War II. While specific men
tion is not made in the regulation of termination loans, the
Defense Production Act and the Executive Order do pro
vide for the guaranteeing of such loans. A loan agreement
between the financing institution and the borrower which
provides for the financing of defense production contracts
and contracts canceled or terminated not by reason of fault
of the borrower would come within the scope of the
regulation.
The form of the guarantee agreement which has been
prescribed is identical, with a few minor exceptions, with
that of the 1944 V-loan guarantee agreement which
was in use at the end of World War II. The Board has
fixed a maximum interest rate of 5 per cent and guarantee
fees differing only slightly from those formerly in effect.
As was the case previously, the Board of Governors and
the individual Federal Reserve Banks will funnel all busi
ness between the lending banks and the guaranteeing
agencies and will have general responsibility for admin
istering the program.
TIOGA
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THE THIRD FEDERAL
RESERVE DISTRICT
Page 6
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PONTOON ufc
THE BUSINESS REVIEW
CURRENT TRENDS
The rise of most business indicators during September in the Philadelphia Federal Reserve District evidenced a continua
tion of the upward trend in general business activity which characterized the preceding five months. Factory employment,
payrolls and production increased over August and so did bank loans and deposits in the financial field. Construction rose
slightly, but the boom showed signs of easing off. Consumer prices in Philadelphia resumed their climb, and department
store sales, although large, declined from the unusually high level of the preceding month, after adjustment for seasonal
change.
There were no signs in September that manufacturers were glutting their markets. Strong demand gave firms the confi
dence to increase production. Producers of durables made especially vigorous efforts to relieve the pressure of growing
backlogs of orders. To increase output, concerns enlarged their labor forces and extended working hours. The number of
manufacturing workers employed in Pennsylvania rose 3 per cent and reached a level 9 per cent above that of a year ago.
Most industries shared in the employment advance with the major gains being registered by the electrical machinery and
food groups. The combination of active hiring and longer hours was a prime factor in raising total payrolls. Wage pay
ments to workers in Pennsylvania factories in September were the largest on record and 22 per cent above those of 1949.
Consumers continued to spend at a rapid pace. Although department store sales dipped slightly below those of August,
they remained well above those of last year. The upsurge in sales in July and August encouraged stores to step up orders
for merchandise. By September, accumulated stocks were 19 per cent above a year ago.
During the period from June 30 to October 4 the loans of all member banks in the district increased by $172 million to
$2,138 million. Nearly half of the increase was accounted for by credit advances to business concerns, but there were also
substantial gains in real estate and consumer loans. Reports of banks in leading cities indicate that the sharp upward trend
in business loans slowed materially in October. Investments declined for the fourth successive month.
The Nation s privately-owned money supply increased further in September to nearly $172 billion and toward the close
of the month was approximately $5 billion larger than a year earlier. Expansion over the twelve months, based chiefly
on the substantial growth in bank loans, has been accompanied by more active use of the funds, as indicated by a higher
rate of turnover of demand deposits in large cities of the country.
Third Federal
Reserve District
SUMMARY
United States
Per cent change
Per cent change
Sept. 1950
from
Sept. 1950
from
mo.
ago
year
ago
+ 3* + 15* + 1*
+1
+ 30 + 40
-4 + 96 + 8
+1
-4
0
4-3* + 9* - 1*
45* + 22* + 4*
+i
TRADE**
Department store sales..........
Department store stocks.. . .
-3
4-6
-4
+9
^
F 1 CT
—
V j
<
+ 7
+ 21
- 1
- 4
+ 13
+++++
42
+4
-1
-1
0
4 6
+it + 2t
ot
+i
+ 22
+ 14
+ 17
+ 7
*Pennsylvania
** Adjusted for seasonal variation, fPhiladelphia.
Stocks
Per cent
change
Sept. 1950
from
Per cent
change
Sept. 1950
from
Per cent
change
Sept. 1950
from
Per cent
change
Sept. 1950
from
year
ago
mo.
ago
year
ago
mo.
ago
mo.
ago
mo.
ago
44
+ 15
+9
+ 29
+ 58
+1
+ 56
+ 8
+7
+26
+9
+ 31
year
ago
year
ago
year
ago
5
+ 11 + 6
+ 17
+i
+4
-2
-:s
+3
+ 5 + 4
+ 18 + 8
- 3 + 6
- 6 + 4
+ 22 + 20
+2
0
+ 10 4 1
+ 2
0
-4
0
+ 12
Lancaster.............................
+2
+ 4
+i
+ 18
+ 19
+ 10
+n
+ 12
+ i
+ 12
Philadelphia.......................
+ 12
+ 19
+5
+ 6
+7
+ 16
+39
+11 + 12
+24
- 4
+24
+ 28
+ 17
+ 12
+ 7
+ 2
+ 30
+ 22
+ 13
+ 15
+ 5
- 9
+ 13
+ 22
+ 6
+ 11
+ 15
+ 6
+ 7
+ 6
+ 25
- 3
+ 16
+ 22
Reading................................
+1
+ 7
0
+ 19
Scranton...............................
+3
+ 10
+5
+ 21
Wilkes-Barre......................
+i
+ 1
+2
+ 10
Williamsport.......................
+5
+ 18
+8
+ 33
+1
+ 13
+6
+3
+ 8
+i
Trenton................................
OTHER
Output of electricity...............
Sales
+4
+ 10 + 3
PRICES
Consumers...................................
Check
Payments
Payrolls
mo.
ago
LOCAL
CONDITIONS
Allentown............................
EMPLOYMENT AND
INCOME
Factory employment..............
Factory wage income.............
BANKING
(All member banks)
Deposits........................................
Loans.............................................
Investments................................
U. S. Govt, securities..........
Other...........................................
9
mos.
1950
from
year
ago
Employ
ment
Per cent
change
Sept. 1950
from
+ 19 +n
+ 35 + 49
4129 + 7
year
ago
Department Store
+1
9
mos.
1950
from
year
ago
mo.
ago
OUTPUT
Manufacturing production. .
Construction contracts..........
Coal mining................................
Factory*
York......................................
+23
+ 8
+ 11
+ 11
+ 15
*Not restricted to corporate limits of cities but covers areas of one or more counties.
Page 7
THE BUSINESS REVIEW
EMPLOYMENT AND INCOME
MEASURES OF OUTPUT
Per cent change
Sept. 1950
from
month
ago
year
ago
9 mos.
1950
from
year
ago
MANUFACTURING (Pa.).....................
Durable goods industries..........................
Nondurable goods industries...................
+ 3
+ 5
+ 1
+ 15
+ 24
+ 5
+ i
0
+ 2
Foods................................................................
Tobacco............................................................
Textiles............................................................
Apparel.............................................................
Lumber.............................................................
Furniture........................................................
Paper.................................................................
Printing and publishing.............................
Chemicals........................................................
Petroleum and coal products..................
Rubber.............................................................
Leather.............................................................
Stone, clay and glass..................................
Primary metal industries.........................
Fabricated metal products .....................
Machinery (except electrical)................
Electrical machinery...................................
Transportation equipment......................
Instruments and related products.........
Misc. manufacturing industries..............
+ 3
0
+ 2
- 4
- 1
+ 7
+ 5
+ 4
+ 3
- 1
+ 12
- 1
- 2
+ 4
+ 5
+ 4
+ 12
+ 2
+ 7
+ 5
+
+
+
+
+
+
+
4+
+
+
+
+
-1+
2
11
12
1
14
28
n
1
12
4
97
1
10
38
28
22
21
0
+ 18
+ 11
- 1
-10
+ ft
+ 3
+ 2
+ 31
+ 9
- 2
+ 2
- 2
+ 20
- 1
0
+ 4
+ 1
- 4
+ 2
-21
- 1
+ 9
COAL MINING (3rd F. R. Dist.)*..
Anthracite.......................................................
Bituminous.....................................................
- 4
- 5
+ 3
+ 96
+ 84
+ 164
+ 8
+ 9
- 2
CRUDE OIL (3rd F. R. Dist.)**___
- 3
+
CONSTRUCTION — CONTRACT
AWARDS (3rd F. R. Dist.) f............
Residential......................................................
Nonresidential...............................................
Public works and utilities.........................
+
+
+
-
i
2
3
4
+
+
+
-
6
30
64
57
22
0
+ 40
+ 84
+ 31
+ 5
*U.S. Bureau of Mines.
♦♦American Petroleum Inst. Bradford field.
fSource: F. W. Dodge Corporation. Changes computed from
3-month moving averages, centered on 3rd month.
Pennsylvania
Manufacturing
Industries*
(1939 avg. =100)
All manufacturing... .
Durable goods
industries...................
Nondurable goods
industries...................
Foods............................
Tobacco.......................
Textiles........................
Apparel........................
Lumber........................
Furniture.....................
Paper.............................
Printing and
publishing.................
Chemicals....................
Petroleum and coal
products.....................
Rubber.........................
Leather.........................
Stone, clay and
glass ............................
Primary metal
industries...................
Fabricated metal
products.....................
Machinery (except
electrical)...................
Electrical
machinery.................
Transportation
equipment.................
Instruments and
related products. . .
Misc. Manufacturing
Industries..................
Average
Weekly
Earnings
Payrolls
Employment
Per cent
change
Sept.
Sept.
from
1950
1950
(In mo. year (In
dex) ago
ago dex)
Per cent
change
from
mo.
ago
1950
year
ago
Average
Hourly
Earnings
%
chg.
from
year
ago
Sept.
1950
%
chg.
from
year
ago
138
+3
+ 9
359
+ 5 + 22 $58.52
+n
1.450
+ 5
158
+3
+ 14
393
+ 6 + 29
64.11
+ 13
1.562
+ 4
118
+2
+ 4
314
+ 2 + 11
51.19
+ 7
1.297
+ 5
137
87
87
139
171
151
142
+7
+1
+2
0
0
+ft
+3
+ 4
-10
+ 7
+ 1
+ 8
+ 29
+ 6
316
221
249
370
431
425
393
+ 5 +
+ 3
+ 2 +
4 +
0 +
+ 8 +
+ 6 +
7
4
14
6
20
38
16
51.53
33.41
51.15
37.58
43.87
52.03
59.81
+ 3
+ ft
+ 7
+ 5
+ 12
+ 7
+ 9
1.245
.882
1.266
1.062
1.040
1.202
1.360
+
+
+
+
+
+
+
121
145
+2
+3
0
+ 8
308
388
+ 5 + 4
+ 3 + 22
71.65
63.80
+ 4
+ 13
1.814
1.517
+ 4
+ 7
158
222
93
0 + 2
+ 0 + 51
4
0
395
649
236
75.28
72.53
43.54
+ 4
+ 34
+ 9
+ 13
+ 18
+ 12
1.847
1.633
1.129
133
0 + 6
+ 13 + 102
0 + 8
+ 1 + 16
+ 7 + 42
+ 6 + 34
1.496
+ 1
+m
+ 8
+ 6
+ 3
+ 4
59.60
5
8
3
6
5
7
5
-3
+
3
345
133
+2
+21
336
174
+5
217
+4
+ 20
+ 14
437
540
+ 5 + 28
62.98
+ 11
1.505
252
+8
+ 19
545
+ 15 + 22
60.66
+ 3
1.467
0
146
+4
-12
370
+ 3
1
71.97
+ 12
1.778
+ 6
167
+8
+ 13
431
+ 6 + 26
58.73
+ 11
1.456
+ 6
135
+2
+ 2
346
+ 3 + 17
52.68
+ 14
1.195
+ 5
70.53
59.77
1.744
1.452
+ 4
♦Production workers only.
TRADE
Per cent change
Third F. R. District
Indexes: 1935-39 Avg. =100
Adjusted for seasonal variation
Sept.
Sept. 1950 from
1950
(Index)
month
year
ago
ago
SALES
Department stores.......................
Women’s apparel stores..............
STOCKS
Department stores........................
Women’s apparel stores..............
310
228
275
239
-3
-5
+ 4*
+ 12
+ 2
+21*
+6
+5
+8*
+6
-7
+ 9*
+ 19
+ 14
+ 19*
Recent Changes in Department Store Sales
in Central Philadelphia
Week ended October 7..................
9 mos.
1950
from
year
ago
Per
cent
ehange
from
year
ago
+ 3
+ 17
+ 6
+ 7
Third F. R. District
% chg. % dig.
Sept.
9 mos.
1950
1950
from
from
year
year
ago
ago
Page 8
% chg.
Sept.
1950
from
year
ago
Ratio to sales
(months’
supply)
September
1950
1949
Total — All departments...............................................
+ 9
+ 3
+ 23
2.9
2.6
Main store total.................................................................
Piece goods and household textiles..........................
Small wares........................................................................
Women’s and misses’ accessories..............................
Women’s and misses’ apparel....................................
Men’s and boys’ wear...................................................
Housefurnishings............................................................
Other main store.............................................................
+ 11
+ 14
+ •6
+ 7
+ 4
+ 12
+ 21
+ 3
+ 5
+ 1
+ 2
+ 2
- 6
+ 4
+ 18
- 1
+ 24
+ 16
+ 30
+ 28
+ 13
+ 16
+ 29
+32
3.1
3.1
4.0
3.1
2.0
4.3
2.9
4.8
3.1
3.1
3.3
2.6
1.8
4.2
2.8
3.8
Basement store total........................................................
Domestics and blankets..............................................
Small wares........................................................................
Women’s and misses’ wear..........................................
Men’s and boys’ wear...................................................
Housefurnishings.............................................................
Shoes....................................................................................
+ 2
+ 18
+ 3
- 1
+ 10
- 1
+ 3
+
+
+
+
-
+ 18
+ 28
+ 6
+ 11
+ 15
+ 40
+ 13
2.2
2.2
2.1
1.7
2.6
2.8
2.5
1.9
2.0
2.1
1.5
2.5
2.0
2.3
+ 6
♦Not adjusted for seasonal variation.
Stocks (end of month)
Sales
Departmental Sales and Slocks of
Independent Department Stores
3
9
9
8
i
3
1
+ 3
THE BUSINESS REVIEW
CONSUMER CREDIT
BANKING
Sales
Sale Credit
Receiv
ables
(end of
month)
% chg. % chg. % chg.
Sept.
Sept.
9 mos.
1950
1950
1950
from
from
from
yearago yearago year ago
Third F. R. District
Department stores
Cash........................................
Charge account............................
Instalment account...........
+ 7
+ 15
+ 22
- 2
+ 6
+23
Furniture stores
Cash......................................
Charge account.....................................
Instalment account.............
+ 3
+ 32
+25
- 2
+ 16
+ 14
+ 15
+ 38
MONEY SUPPLY AND BELATED ITEMS
United States (Billions $)
Money supply, privately owned......................................
Demand deposits, adjusted......................
Time deposits...................................
Currency outside banks................................
Turnover of demand deposits.............................
Commercial bank earning assets..............
+ 25
Loans..........................................
U.S. Government securities............................
Other securities..............................
Member bank reserves held...................
Loans made
Loan Credit
Third F. R. District
Loan
bal
ances
out
standing
(end of
month)
% chg. % chg. % chg.
Sept.
Sept.
9 mos.
1950
1950
1950
from
from
from
year ago year ago year ago
Consumer instalment loans
Commercial banks............
Industrial banks and loan companies
Small loan companies....................
Credit unions.............
+ 56
+ 2
-35
+ 13
+61
+ 7
-36
+ 29
+11
+12
+ 13
+37
Required reserves (estimated)............................................
Excess reserves (estimated)....................... ..
Changes in—
Sept. 27
1950
four
weeks
year
171.7
+ .7
+ 5.3
88.1
59.1
24.5
+ .7
0
0
+ 5.0
21.9*
-
0*
.4
+ 15.3*
123.7
+ .4
+ 5.1
49.0
62.6
12.1
— 1.7
+ .3
-4.2
+ 1.9
16.7
+ .4
+
.7
15.8
.9
+ .1
+ .3
+
.7
0
Changes in reserves during 4 weeks ended September 27
reflected the following:
Increase in Reserve Bank holdings of Governments.
Other Federal Reserve Bank credit................................
Net payments to the Treasury.........................................
Gold and foreign transactions...........................................
Effect on
reserves
+.8
-{-.3
— ’5
— .2
Change in reserves........................................................
.4
♦Annual rate for the month and per cent changes from month and year ago
at leading cities outside N. Y. City.
PRICES
OTHER BANKING DATA
Sept.
1950
(Index)
Index: 1935-39 average =100
Per cent change
from
month
ago
year
ago
Wholesale prices—United States ... .
Farm products................................
Foods...............................................
Other............................................
210
237
224
196
+2
+2
+1
+2
+10
+n
+ 9
+10
Consumer prices
United States.............................
Philadelphia.....................................
Food........................................
Clothing..............................
Fuel.......................................
Housefurnishings......................
Other.....................................
174
174
207
187
146
204
154
0
+1
0
+3
+1
+4
0
+
+
+
+
+
+
+
2
2
3
1
2
6
1
Weekly reporting banks—leading cities
United States (billions %):
Loans—
Commercial, industrial and agricultural....................
Security..........................................................
Beal estate.......................................................
To banks......................................................
All other.......................................................
Total loans—gross..................................
Investments....................................
Deposits................................................
Third Federal Reserve District (millions $):
Loans—
Commercial, industrial and agricultural....................
Security.............................................
Beal estate................................................
To banks...............................................
All other......................................
Total loans—gross..............................
Investments.............................
Deposits..........................................................
Weekly Wholesale Prices—U.S.
(Index: 1935-39 average =100)
Week
Week
Week
Week
Week
ended
ended
ended
ended
ended
October
October
October
October
October
3...................
10.....................
17.........
24................
31..............
Changes in—
Oct. 25
1950
Allcom
modi
ties
Farm
prod
ucts
Foods
Other
209
209
209
210
210
236
234
234
235
236
222
218
220
220
220
197
198
198
198
199
Member bank reserves and related items
United States (billions $):
Member bank reserves held...................
Reserve Bank holdings of Governments. . . .
Gold stock..............................................
Money in circulation.......................
Treasury deposits at Reserve Banks...........
Federal Reserve Bank of Phila. (millions t)
Loans and securities..................................
I'ederal Reserve notes.........................
Member bank reserve deposits........................
Gold certificate reserves.................................
Reserve ratio (%)............................... .
four
weeks
year
16.3
2.1
5.1
.3
5.7
+
+
+
.6
.1
.1
.1
.1
+ 2.6
+ .2
+ .9
+ .1
+1.5
29.5
40.1
77.9
+ .6
— .2
+ .7
+ 2.3
595
43
135
+ 112
+ 10
+ 35
376
+ 5
- 7
+ 3
- 12
+ 4
1,149
1,707
3,172
— 7
- 15
+ 9
+ 230
-164
+ 107
+ 6
+ 1.8
— 1 3
- .2
0
16.6
19.2
23.3
27.1
.4
+
-
0
.1
.2
.1
.7
1,283
1,614
791
1,256
49.6%
+
+
+
+
7
8
18
21
.5%
+ 79
+ 22
+ 49
+ 27
-1.4%
Source: U.S. Bureau of Labor Statistics.
Page 9
@FedFRASER