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O C T O B E R 1960

The Public’s Portfolio
Down on the Farm

FEDERAL

RESERVE

BANK

PHILADELPHIA

Additional copies of this issue are available
upon request to the Bank and Public Relations Department,
Federal Reserve Bank of Philadelphia,
Philadelphia 1, Pa.

Consumers and business have stored vast amounts of
wealth in financial claims — wealth which promises security
and material well-being. But over the last decade and a
half, substantial risk has been added to promise in . . .

THE
PUBLIC’S
PORTFOLIO

The American public is a good deal wealthier

Not only has the level of financial claims

today than it used to be— some have even said

changed

affluent. Incomes have moved up rapidly in the

composition of financial claims as well. At the

the

postwar

period

but

the

postwar period as economic activity has ex

end of World War II consumers held relatively

panded. Along with rising incomes have come

large amounts of bank deposits, savings shares,

rising savings in the form of deposits, stocks,

and Government bonds; they now hold rela

bonds,

tively large amounts of stock. In 1946, businesses

and other

financial assets.

Financial

claims of consumers and business amount to

held relatively large amounts of currency, de

almost two and one-half times as much now as

mand

deposits,

they did back in 1946. They have been growing

they now hold

at an average rate of over 7 per cent a year—

and

Government

securities;

“ receivables.”

in fact, faster in recent years than national
income.

relatively

large amounts

The kind of assets the public holds is one of
the important factors determining the degree of

business review

economic prosperity. For example, if consumers

perhaps continue to fall. In addition, the I.O.U.’s

are drenched in liquidity— if they hold large

these businesses have given to obtain credit

amounts of assets that can be quickly converted

might also be put in danger. Capital spending

into cash without loss, while their needs for

would suffer and this would reduce consumer

liquid assets are moderate— they have the ability

incomes, and perhaps spending, even further. We

to raise their spending to very high levels.

know too well how cause and effect cumulate and

Illiquidity works in reverse and tends to dis

reverberate in a free enterprise system.
The stimulating impact of high liquidity and

courage high levels of spending.
The composition of the public’s portfolio

the critical effects of interdependence in finan

holds still another meaning. It tells on whom

cial markets are not mere fanciful theories. The

the public is depending. To the extent the public

effects have been demonstrated in the past— and

holds bank deposits and Government securities,

particularly in two years that will long be re

it has placed its faith in the integrity of the

membered: 1929 and 1946.

financial system and the Federal Government.
To the extent the public holds corporate stock,

“ Only y e ste rd a y ”

trade and consumer receivables, it has put its

The years have something in common. In both,

trust in no one but itself— that is, in the con

the experts were wrong.

tinued prosperity of consumers and business;

Prior to the crash in 1929 most observers felt

for the savings of any one member of the

that the business cycle had been smoothed out;

public, then, depends on the prosperity of other
members of the public.

prosperity. But the analysts hadn’t counted on

This kind of interdependence is found through
out the free enterprise system. It is, perhaps,
the key feature. The quality consumers look for
in the products they buy depends on businessmen
who are striving for a profit. The profits busi
nessmen look for depend, in large measure, on

that the country could look forward to long-term

FINANCIAL CLAIMS RISE W ITH INCOME
A s the income of consumers and business rose in
the postwar period, so did their holdings of financial
claims. In recent years, financial assets have in
creased even faster than income.
RATIO SCALE
BILLIONS OF DOLLARS

RATIO SCALE
BILLIONS OF DOLLARS

consumers striving to raise their standards of
living. The strivings of consumers and business
men are the motive power and interdependence
is the connecting rod. Together they drive the
free enterprise system.
But interdependence also tends to make the
economy vulnerable to economic storms. If, for
example, a severe stock market decline dis
couraged consumers from spending on automo
biles, refrigerators, television sets, and other
goods, the earnings of businesses that sell these
products would fall and the values of the stock
they’ve issued would be placed in jeopardy—

Note: Trade credit held by noncorporate nonfinancial businesses is
not included in total business assets.
Source: Federal Reserve Board Flow of Funds. Department of Com
merce

business review

the delicate balance involved in the shaky pyra

and services they couldn’t get during the war. In

mid of wealth and optimism that made the

1929 the economy was vulnerable.

American

In 1946

liquidity and an intense desire for goods and

economic decline— and then a change of senti

services provided the thrust that propelled the

ment broke like a hurricane on the sensitive

economy upward.

economy

buoyant.

First

interdependent mechanism. Too late it became

Today, consumers and businesses possess a

apparent that markets could fall as well as rise

far different kind of portfolio than they had at

and that risk assets entail risk. A decline was

the end of World War II. On the basis of past

turned into a crisis— and a crisis into a “ great

experience, we can expect their new portfolio
to play an important role in determining the

depression.”
In 1946, on the other hand, pessimism was

kind of economy we have in the ’sixties.

the overriding economic emotion. Government
expenditures

were

falling

and

millions

The postwar setting

soldiers were returning to the labor force. We

Consumers and businesses came out of World

were just a few short years from the depressed

War II with a new-found wealth. At the end of

1930’s; and many firmly believed another de

1946 their financial assets were valued at more

pression was inevitable.

than $460 billion. Consumers owned most of

The United States Office of War Mobilization

these assets— about $370 billion. Business held

and Reconversion had officially confirmed the

over $90 billion.

sentiment. In its “ less favorable”

Almost half the claims held by consumers
were currency, bank deposits, savings shares,

projection,

it had forecast over 6 million people unemployed
by the end of 1945, over 8 million in 1946 and

and Federal obligations, all highly liquid assets.

9 million in the first half of 1947. The “ more

Life insurance and pension fund claims accounted

favorable” projection foresaw about 7Y2 million

for

another

16 per cent of the consumers’

unemployed in 1946 with some improvement

holdings. While not necessarily liquid, these

in 1947.

claims

Of course things didn’t turn out that way.
There was a short period of readjustment to be

typically do not involve much risk. In

cluding the liquid assets, consumers held about
$237 billion of highly safe financial claims.

sure, but no depression. The economy rocked

The chief risk asset in the consumer’s port

on its launching pad for a few brief moments

folio in 1946 was corporate stock. It accounted

and then roared off into outer space. Expansion,

for about 28 per cent of their total holdings and

prosperity, and boom became the descriptive

was valued at a little over $100 billion. Small

words of the day— and inflation became the
problem.

consumer’s portfolio.

amounts of bonds and mortgages filled out the

In 1929 the risk, and the interdependence

In the business sector, high liquidity and low

involved in risk assets, had been overlooked.

risk were also the rules. Currency, bank de

In 1946, the safety and liquidity of the public’s

posits,

portfolio were overlooked, as was another im

accounted for almost 60 per cent of the business

portant fact— the American people were starved

portfolio. Trade credit represented about 30

for automobiles, radios, and all the other goods

per cent, with small amounts of consumer credit

and

Federal

Government

obligations

business review

THE CONSUMERS’ CHANGING PO RTFO LIO CORPORATE STOCK GROWS IN IMPORTANCE
Between 1 9 4 6 and 1 9 5 9 the financial assets held by consumers* * more than doubled. A ll
classes of assets increased in dollar amount, but corporate stock at market value increased
the greatest amount in dollar and percentage terms as well. As a result, corporate stock
became increasingly important in the consumers’ portfolio, and by the end of 1 95 9 it
represented about 4 5 per cent of total claims. Time deposits, savings shares, and bonds
also increased by a very large dollar amount, but in 1 9 5 9 they represented a somewhat
smaller proportion of the consumers’ portfolio than they did in 1946.
BILLIONS OF DOLLARS
ALL OTHER ASSETS*

CORPORATE STOCK

■ SAVINGS
^ " | N LIFE INSURANCE
AND PENSION FUNDS
□

FEDERAL OBLIGATIONS
OTHER THAN
SAVINGS BONDS

□

t im e

d e p o s it s ,
SAVINGS SHARES,
AND U.S. SAVINGS BONDS

CURRENCY
AND DEMAND DEPOSITS

'53

i; '55

'57

'59

* Includes nonprofit organizations
** Includes state and local government o bligations, corporate and foreign bonds, mortgages, and security credit
Source: Federal Reserve Board Flow of Funds

and foreign investments making up the rest.

felt free to spend, borrow, and build at such un

The increased financial wealth of the public

precedented rates. The postwar period started

in 1946 was confirmed by its relatively low

with a whimper, but the whimper soon turned

debts. At the end of the year, consumer debt

into a bang. Before long most of the experts

was only a little over $30 billion; and business

were agreed that it would be necessary to do

debt was actually smaller in amount than the

something about the excess liquidity created by

financial assets owned by business.

the war in order to control inflation.

Short-term debt of consumers and business—
frequently used as a measure of the need to hold

The march from money

liquid assets— was correspondingly low. In 1946

Over the postwar period something was done to

the liquid assets held by consumers were 12

liquidity— it was substantially reduced. The war

times greater than their short-term liabilities;

had created an abnormal situation. Shortages of

and the liquid assets held by business more

goods and services and rising incomes had given

than matched its short-term debt.

the American people the opportunity to build up

It is no wonder that consumers and business

their liquid balances. Once the war was over,

business review

reductions were desirable and to be expected.

In addition, growing numbers of individuals

They were part and parcel of going back to free

seem to have taken part in boom. The New

enterprise.

York Stock Exchange tells us that in 1959 about

Federal Reserve policy played a role in the
return

more normal conditions.

The re

establishment of flexible interest rates after 1951
removed an entire array
Government

marketable

assets— Federal

securities— from

1 2 ^ million people owned stock— about double
the number owning stock 7 years before.
With stock assuming a dominant position in
the consumer’s portfolio, other assets became

the

relatively less important. Consumer holdings of

perfectly liquid category. Periodic restrictions

cash accounted for about 15 per cent of the

on the growth of the money supply during

consumer’s total assets in 1946; they accounted

periods of rapid expansion also served to re

for only 7 per cent in 1959. Holdings of market

strain, when necessary, increases in liquidity.
But, over the postwar period, liquidity was
not simply “ squeezed out”

able Governments fell in relative importance
from 5 to 3 per cent. Holdings of savings bonds

of the economy.

fell in relative importance from 12 to 5 per cent.

Illiquidity was also “ pumped in.” Relatively non

In dollar terms the total of these assets increased.

liquid assets increased more rapidly than liquid
assets, and so did short-term debts. The private
economy was growing again, and the claims
issued by the private economy were becoming
more important in the public’s portfolio.
Since 1946, the expanding value of corporate
stock has represented the most important in
crease in the financial wealth of consumers.

A SMALL AMOUNT PURCHASED
BUT THE STOCK MARKET BOOMED
Between 1946 and 1959 the net purchases of stock
by consumers totaled only about $18 billion. But
the stock market boom of the 1950’s increased the
value of the stock held by consumers by more than
$300 billion.
BILLIONS OF DOLLARS

Consumer ownership of stock has just about
quadrupled in value. Moreover, at the end of
1959, corporate stock at market value accounted
for almost 45 per cent of all consumer financial
assets.
Interestingly enough consumers did not pro
gressively increase their net purchases of stock
over the period. They typically spent between
$1 billion and $2 billion

a year;

and the

proportion of their incomes they devoted to
stock purchases also fluctuated within a very
narrow range. Their total net purchases from
1946 to 1959 amounted to about $18 billion.
But the stock market boomed; and the value of
stock consumers held skyrocketed. The increase
in the market value of consumer holdings of stock
over the period was in excess of $300 billion.

business review

THE CHANGING PORTFOLIO OF BUSINESS—
ACCOUNTS RECEIVABLE GROW IN IMPORTANCE
Between 1 9 4 6 and 1 9 5 9 the financial claims held by businesses* rose more than $11 3
billion. A ll classes of assets increased in dollar value, but trade and consumer credit
by the greatest amount. B y the end of 1959, these receivables accounted for approximately
4 7 per cent of the business portfolio.

□

INVESTMENTS ABROAD

I TRADE CREDIT,
1
— ' c o n s u m e r CREDIT,
AND OTHER LOANS
I FEDERAL OBLIGATIONS
---- AND TIME DEPOSITS

CURRENCY
AND DEMAND DEPOSITS

1947

"51

'53

* Includes a ll nonfinancial business enterprises
Note: Trade cre dit held by noncorporate nonfinancial businesses is not included in total business assets.
Source: Federal Reserve Board Flow of Funds

Nevertheless they represented a shrinking part
of the consumer’s portfolio.

could it keep pace with the rising volume of
short-term debt incurred by consumers— debts

Over the period, consumers did increase their

which increase the need for liquid assets. Pushed

large

upward by the rapid expansion of consumer

amounts. Between 1946 and 1959 they added

credit, short-term debt rose rapidly. The ratio

time deposits

and

savings, shares

about $94 billion to their holdings. But in

of liquid assets to short-term debt fell from the

percentage terms even this huge dollar increase

fantastic high of over 13 to 1 to about 4 to 1.

by the rise in the stock

The business sector of the economy experi

market. Time deposits and savings shares just

was overwhelmed

enced similar developments, with receivables—

about held their same relative importance in

trade and consumer credit— assuming the role

the consumer’s portfolio.

played by

corporate

stock in the consumer

The dollar increase in consumer holdings of

sector. Receivables more than tripled over the

currency, bank deposits, savings shares, and

postwar period and became the most important

Government bonds— assets that are relatively

single financial claim held by business. At the

safe and liquid— could not keep pace with the

end of 1959 receivables represented almost one-

rising value of stock— an asset that can be easily

half of the business portfolio. Currency, bank

marketed, but sometimes only at a loss. Nor

deposits, and Federal- obligations became rela-

business review

entire deterioration that took place. The millions

LIQUIDITY OUT— ILLIQUIDITY IN
Since 1946, the liquidity of consumers and busi
nesses, as measured by the ratio of liquid assets* to
short-term debts, has been falling. Liquidity was
“ squeezed out” of the economy in the sense that
some assets— marketable Governments— were elim
inated from the perfectly liquid category after the
Treasury-Federal Reserve Accord in 1951. The
economy became less liquid, as the ratio shows, in
the sense that short-term debts rose faster than
liquid assets.
RATIO

RATIO

of people making up the public could have
chosen to hold larger amounts of liquid assets,
though it must be admitted that the investment
consumers made in time deposits and savings
shares was considerable. At least, the public
could have incurred debt at a somewhat slower
pace than it actually did. Individuals by them
selves have very little influence on the stock
market; however, here, the collective attitude of
the public played a major role.
The assets which represent such a large part
of .the public’s financial savings today, it should
be remembered, entail substantial risk. These
claims are not I.O.U.’s issued by the Federal
Government, the Federal Reserve, or federally
supported financial

institutions;

there is no

F.D.I.C. to insure the stock market or accounts
receivable.

A new economy
We are frequently told that we live in a new
economy where the consumer is more powerful,
* Includes currency, bank deposits, savings shares, and Federal
government obligations
Note: Fo r the business sector, the ratio is slig h tly overestimated
because trade credit, an asset, of noncorporate nonfinancial businesses is deducted from trade debt, a lia b ility .
Source: Federal Reserve Board Flow of Funds

corporations more responsible, labor disputes
more intractable, and foreign competition more
demanding— and where, perhaps, we need not
worry about major depressions. This newness

tively less important even though total liquid

certainly carries through to the public’s port

assets increased in dollar terms.

folio. Dominated by highly liquid, safe assets in

Here, too, short-term debt rose more rapidly

1946, it is now heavy with assets that involve

than liquid assets. The ratio of liquid assets to

greater risks— whose liquidity depends on stable

this debt also fell rapidly, as it did in the con

or rising markets. Partially as a result of this

sumer sector.

and partially as a result of rising debt, the

So the liquidity position of the public de

liquidity position of the public has deteriorated.

Relatively

Excess liquidity, of itself, does not appear to

liquid assets increased slowly while relatively

constitute an inflationary threat today as it did

teriorated
illiquid
rapidly.*

the postwar period.

assets and short-term debt increased
No

central

authority

dictated

the

after World War II. Our economy has been
heading in the other

direction— toward less

liquidity and more interdependence.
* O ver the postwar period, the ratio of liq u id assets to national
income, another measure of liq u id ity , also fe ll.

The consumers’ savings now rest to a con

business review

siderable degree on the stock market— on the

yet it is still important to judiciously consider

continued profitability of corporate business and

the growing risks in our economy.

on that very fickle, psychological catchall called

While the public is not completely alone in its

market sentiment. Businesses depend, to an in

financial struggles, these struggles have increas

creasing degree, on receivables— in other words,

ingly become personal affairs. The policies of the

on the ability of other businesses and consumers

central authorities— the Federal Reserve and the

to meet their debt obligations. More so now than

Federal Government— help maintain the finan

at any time since the end of World War II,

cial soundness of the economy and have an

consumers and business have a real stake in

important influence on the liquidity of assets.

American free enterprise— a real financial stake.
While

the public’s portfolio

has

changed

Powerful weapons, operated with intelligence,
would without doubt be brought to bear in any

greatly since 1946, we don’t really know how

emergency. But these policies, and even the

far we’ve gone in the direction of the prewar

emergency equipment, are not directly aimed at

period.

maintaining the value of the financial assets that

know,

fortunately, that our

economy today is vastly different from what it

have become so important to the public in the

was in the past. We have built into our economy

postwar period— corporate stock and accounts

automatic adjustments to stabilize income; and

receivable. With stock now so widely distributed

we have developed discretionary policies to re

and representing such a large proportion of the

inforce these built-in stabilizers. Our commercial

consumer’s portfolio, a sharp decline in the stock

banking system, and our entire financial system,

market could possibly have a very depressing

is far more secure today because of the reforms

influence on spending, and thereby endanger

of the I930’s. Of great importance is the fact

the large volume of “ accounts receivable” out

that the stock market boom of the 1950’s was not

standing. The interdependence of the free enter

built on a torturously strained credit expansion

prise system makes the economy only as strong

such as characterized the “ big bull” market of

as its weakest link.

the late 1920’s.
All these differences are important; they go

We have returned to free enterprise and
financial interdependence in the postwar period;

a long way toward preventing first-magnitude

both the individual and the central authorities

financial crises such as occurred in the past. And

must be concerned with minimizing the danger.

A Report On Conditions This Year

...

DOWN ON THE FARM
Farmers in Pennsylvania, New Jersey, and Dela

in mind, the size of our farms is increasing and

ware are experiencing another year of excellent

the number of farms is declining as more and

crop yields, say county farm agents in leading

more small units are being absorbed.

agricultural areas of these states. Comments on
local farm markets are somewhat less reassuring.

A good growing season

Prices of most products are described as slightly

To say that farmers in the Third Federal Reserve

firmer than a year ago, although some still are

District

subject to rather wide fluctuations. Farm pro

season does not rule out all weather problems,

duction costs are mentioned as another area of

particularly the passage of Hurricane Donna in

some concern. They have not increased signifi

early September. Damage from this storm was

cantly, neither

severe in some eastern counties, where apple

has there

been

any decline,

except possibly in the case of feed.
A continuing spread between prices received

had

better-than-average

growing

and peach trees were blown over and corn crops
flattened. Over most of the season, however,

and prices paid puts a heavy premium on operat

ample supplies of moisture and relatively few

ing efficiency— a fact of life that county agents

weather extremes provided nearly ideal condi

say is making a deeper impression on farmers in

tions for maturing crops.

this area with each passing year. With this goal

damage was reported in the spring.

Only minor frost

business review

quality was high. Prices in the fresh vegetable

Field crops above averag e
Winter grains are said to have survived the cold

market showed considerable fluctuation this year

weather with little or no loss. Wheat, rye, and

and we heard complaints on that score. Most of

barley yields were sharply higher than a year

the weakness in local markets, however, seems to

ago. Oats was the only grain crop that was dis

have occurred early in the season. Later returns

appointing in some areas, owing to a virus that

on sweet corn and tomatoes are said to have

became especially difficult to control. Hay ran

been better than a year ago. Contract prices on

to high yields, but in the early cutting, farmers

crops grown for processing were no higher than

quality

in 1959 but volume was somewhat greater.

suffered somewhat. Production of soy beans may

Adequate moisture reduced irrigation costs and

be almost one-fourth greater than in 1959, re

most growers were reporting less difficulty in

flecting a sharp increase in Delaware, where this

controlling plant diseases and insect pests.

experienced

difficulty

curing,

crop is growing rapidly in importance.
Corn for silage and grain looks like a crop

Orchard fruits of high quality

that could almost make history this year, accord

According to crop estimates as of September 1,

ing to some of our county agents. Some corn

this season’s harvest of fall apples may be about

was planted late and will need a growing season

one-fourth smaller than in 1959 and consider

of at least normal length; a little more frost-free

ably below the ten-year average. The Delaware

time, and it will add substantially to what

and New Jersey crops were cut sharply by

already is being harvested.

Hurricane

In areas where

Donna.

Reports

from

important

hurricane and gale force winds occurred, much

growing areas in Pennsylvania indicate light

of the blown-down corn can be salvaged, al

production centered in three leading commercial

though harvesting costs will be increased. Potato

varieties. Quality of all apples, however, is said

yields and quality are expected to run fairly

to be high with respect to both size and color.

high.

Peaches were an unusually good crop this year

Tobacco prospects excellent

local markets.

and appear to have brought fair prices in all
In Pennsylvania’s Lancaster County, tobacco

Cranberries and blueberries rank high among

growers are harvesting and curing another large

the small fruits grown in this area. The cran

crop of quality leaves that should bring good

berry crop produced in New Jersey is expected

prices. Tobacco is heavy, with a high moisture

to show some reduction this year. Market pros

content that will require some breezy, dry, curing

pects at present are hard to appraise because of

weather if shed burn is to be avoided. Some of

the unfavorable publicity associated with last

this crop was planted later than usual, so frost

fall’s cancer scare. However, growers appear to

dates are critical, as in the case of corn.

feel that with the safeguards that have been
taken, the consumer has been largely reassured

Vegetable yields larger

on this score. Blueberries are said to have been

Our vegetable growers seem to have had fewer

high in both yield and quality and to have

problems than in the 1959 season. Production

brought slightly higher prices this season than

generally was heavy and in nearly all cases

in 1959.

business review

higher and have been subject to less fluctuation

Dairym en in good shape
Dairy herds are described as being in excel

than a year ago.

lent condition. Little supplementary feeding has
been necessary, so dairymen have saved on the

Production costs a stumbling block

feed bill.

Moreover, with ample supplies of

Although farm production costs have not risen

home-grown feeds in prospect they appear to be

perhaps as much as in some other years, they

in very good shape for the winter and early

still point upward. Taxes, wages, and machinery,

spring. Milk production has continued high.

in about that order, are the cost components we

County agents are reporting generally satisfac

hear the most complaints about. Tax increases

tory market conditions— but, of course, the milk

seem to be associated with rising land values

check always could be larger. Surplus milk prob

in the vicinity of our larger cities and towns.

lems have not been too serious and in some

A recent study by the United States Department

areas a slightly larger proportion of output has

of Agriculture indicates that 1959 taxes at the

been going into the fluid milk market.

national level showed their sharpest rise in a
decade. Of the three states included in the

Fewer beef cattle on feed

Philadelphia

Feeder cattle operations continue on a somewhat

Delaware experienced an increase that was less

smaller scale in many areas this year. For one

than the country’s average rise.

Federal

Reserve

District,

only

thing, price weakness in finished cattle has been

Some of our county agents speak of increasing

a problem from time to time. And this, along

difficulty in securing adequate farm labor, par
ticularly the experienced type that is almost a

with the relatively high cost of replacement stock,
has discouraged expansion in this type of farm

“ must” for the dairyman. All of them are re

enterprise. Reports from areas where this is an

porting some advance in wage rates again this

important source of farm income also indicate

year. Local farmers who have turned to labor-

that feeder cattle are being marketed at some

saving machinery are finding this only a little

what lighter weights because of the narrow price

less expensive

spread between fat animals and those less highly

machinery replacements are being deferred.

than

hiring

field

hands.

finished.

Larger farm s— few er farm ers
Poultry situation improving

Faced with prices of farm products that seem

After two very bad years in a row, poultrymen

ingly refuse to rise in line with production costs,

are said to be recouping some of their losses.

an increasing number of our smaller farmers

Broiler markets have been somewhat stronger

are said to be considering the advisability of

than in either of the past two years. Although

selling out or expanding their enterprise into a

prices

have

increased

only

moderately, this

efficient operational

unit.

Our

county

could be a good thing for an industry seemingly

agents have been talking about this for some

plagued with heavy overproduction whenever a

time. They tell us an expansion trend is espe

sharp rise occurs in any important market.

cially pronounced among dairymen, many of

Poultrymen with laying flocks also are reporting

whom have installed bulk tanks and other equip

a somewhat better situation. Egg prices are

ment intended for use with a larger number of

business review

cows. Thus, in the past few years, the size of

income from crops showed substantial increases

dairy herds has been increasing. The number of

over a year earlier in every month except

milk cows has scarcely changed but there has

January.

been a noticeable reduction in the number of

fluctuated widely,

farms having dairy herds. The poultry industry

from a substantial minus last winter to a small

in this area is another type of farm enterprise

plus around mid-year. It is too early to get a

where larger operations are handled by fewer

good notion of how total farm cash income

farmers. Expansion trends are least noticeable

for all of 1960 will compare with that of a

among fruit and vegetable growers.

year

Receipts

earlier.

from
with

Receipts

livestock

products

comparisons

ranging

from

marketings

coming months could change the picture con

Farm cash income static

siderably. Much will depend on price trends in

Cash receipts from the sale of crops and live

livestock and livestock products and on returns

stock products in Pennsylvania, New Jersey, and

from

late

vegetables,

excellent

tobacco

Delaware were only 1 per cent larger in the first

crop, and fall apples still to be harvested and

seven months of this year than last. In this period

sold.

FO R TH E R E C O R D . . .
MEMBER BAN KS 3RD F.R.D.

BILLIONS $

INDEX
B U S IN E S S

B A N K IN G

r * .

-CHECK PAYMENTS
/
(20 CITIES)

f t /

FACTORY PAYROLLS, DIST.
(1949 = 100)

i
<1949 ss 100)

A
A

%
%
lV

/
»

/ v V

FACTORY EMPLOYMENT, DIST.

A
M

.«

1 »
»
1
J - 1

DEPOSITS

v
LOANS

DE PARTMENT STORE SALES, DIST.

L a VAa \
v

X V

INVESTMENTS

CONSUMER PRICES, PHILA.
(194749 = 100)

^ -i

j i

________________________________ j L

2 YEARS
AGO

YEAR
AGO

AUG.
I9 6 0

Third Federal
Reserve District
Per cent change

SUM M ARY
Aug. I960
from
mo.
ago

OUTPUT

Manufacturing production.
Construction contracts . . .
Coal mining ......................

year
ago

mos.
I960
from
year
ago

Factory*

United States

Employ
ment

Per cent change

Aug. I960
from
mo.
ago

year
ago

mos.
I960
from
year
ago

LOCAL
CHANGES

+ 4 + 5 + 4
— 8 + 7 —5
+30 + 9 + 2

Factory employment
(Total) ...............................
Factory wage income.......

TRADE*

Department store sales . . .
Department store stocks ..

0 + 3 + 2
0 + 7 + 3
—4
0 + 2
0 + 1

+ 1 + 1 + 2
0 + 2

- 3

....

PR IC ES '

•Adjusted for seasonal variation.

+ 2 + 1
+ 9 + 11
— 6 — 8
- 8 — 10
— 1
+ iot

- 2
+ 6f

+ 2| + 2t
|20 Cities

0
0 + 1
0 + 6 + 10
0 — 6 — II
0 — 7 — 13
0 - 3 — 4
8 + 16 + 7
0
0

0
1

0
+ 2

JPhiladelphia

year mo.
ago ago

Per cent
change
Aug. I960
from

year mo.
ago ago

Per cent
change
Aug. I960
from

year mo.
ago ago

year
ago

0 +31

1 + 9

0 +21

+ 10 + 15

8 + 15

1 -

2 +

2 -

1 -1 5

0 +

4 + 10 +

0 +

0 -

1 +

2 +

1 -

2 -

2 — 5

0 -

6 -

1 +21

0 -

Scranton . . . .

(A ll member bonks)
0
Deposits ..............................
Loans ................................... + 1
0
Investments ........................
0
U.S. Govt, securities........
Other ................................. — 1
Check payments ............... + 5t

Reading

year mo.
ago ago

Check
Payments

Stocks

0 +

Philadelphia

B A N K IN G

Consumer ............................

Lancaster . . .

Sales

Payrolls

0 + 15

Lehigh Valley

EM PLOYM ENT A N D
IN C O M E

Department Sto re f

Per cent
Per cent
Per cent
change
change
change
Aug I960 Aug. I960 Aug. 1960
from
from
from

mo.
ago

0
+ i + 3
—21 — 19 — 8
+37 +27 — 1

r
AUC
I960 '

YE AR
A 30
C

2 YEARS
AGO

2 +

0 -

4
4

— 8 +

7 -

1
1

— 4 -

Trenton ........

1 -

+ 1 +

W ilke s-Ba rre

1 -

W ilm in g to n .

+ 1 +

7 -

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

+ 5

-1 2

2 -

6 +

+25

5 + 12

6 + 13

+ 8

0 -

8 +

5 -

2 -1 6

+ 17

2 — 1

+ 8

7 + 10

*Not restricted to corporate lim its of cities but covers areas of one
or more counties.
fAdjusted for seasonal variation.

M A N A G E R IA L G R O W T H —W ITH O U T INFLATION

S up p le m e n t to b u sin e ss review October, 1960

F E D E R A L

R E S E R V E

B A N K

L
P H A D E L P AH

An Address
by
Robert N. Hilkert
First Vice President
Federal Reserve Bank of Philadelphia
before the
Trust Division
of the
86th Annual Convention
American Bankers Association
Belmont-Plaza Hotel
New York, N. Y.
September 19, 1960

M a n a g eria l G row th—
W ith ou t In flation
In the comic section of the Philadelphia Evening

At this stage in our banking history it is

Bulletin there appears a syndicated cartoon de

unnecessary to belabor the thought that mana

picting a strange character known as Carmichael.

gerial growth is a matter of concern to all banks,

Each day he makes sage comments on various

large and small. No business of a bank is more

facets of American life. This talk today on

important than seeing to it that there are on

MANAGERIAL

hand today men prepared to carry on the busi

FLATION had its beginnings with Carmichael,

ness tomorrow. The community, stockholders,

who recently made the following observation:

and employes have the right to expect stability

GROWTH— WITHOUT

“ This probably is a good company to

and continuity. A bank’s charter is granted in

work for, if you can ever get through

perpetuity. It is supposed to keep going after

the training program.”

everybody now connected with the bank has

Obviously, this remark can be meaningful

gone. The show must go on.

only to the segment of the population that knows

Some banks don’t keep going. Not the least

something about training programs. It can be

of the reasons for some mergers is that there are

funny, in a cynical sort of way, to a still smaller

not enough competent and thoroughly experi

number who perhaps know too much about some

enced men to manage the banks as separate

training programs. At any rate, it seems that

institutions. While this point is more freely

Carmichael has some doubts and, at the risk of

discussed in convention corridors than in open

being considered reactionary, I too shall express

meetings, the problem I am sure does not come

a few doubts as we move along.

as news to anyone here.

Any bank can, in the next day or two, lose its

Young men want to grow. They want to grow

chief officer or other key figure because of un

managerially. It is hard to find an able young

expected illness or death. This is the age of

man who doesn’t hope to become a boss, or a

coronaries, and most senior bankers are of

bigger boss, or the big boss. There is nothing

coronary age, or soon will be. Banks also lose

wrong with this. It is normal ambition, candidly

key men by resignation. Piracy did not end with

expressed. The young man wants to grow at a

the seventeenth century. In fact, there are times

fairly decent rate of speed. Why not? Is there

when a bank is almost afraid to permit too much
public exposure of its ablest young men for fear

virtue in growing slowly? When we recruit

they may be lured or attracted to more fertile
fields. There seems always to be someone around

those who are intelligent, who have superior
educational records, who have demonstrated

who is eager to cash in on our investment, just

initiative, drive, and ambition. Isn’t it curious

as there are always people who seek to reap

that after we have found them we show surprise,

where they have not sown. Let me hasten to say

at times annoyance, when they attempt to dis

that I wouldn’t for anything want to give up the

play the very qualities for which they were

“ free market” idea. We have much more to gain

selected ?

young men we always say we are looking for

than to lose. I merely point out that individual

This leads us to questions. If the young man

banks can suffer talent losses in this free-market

in the bank is not growing as fast as his capacity

operation and we must manage with that risk

permits, if he is not doing all that he could be

ever in mind.

doing, given the right conditions, is the bank

To give emphasis to this point we might scan

getting its money’s worth? Obviously not, it is

the personal columns of banking trade publica

getting less than full value. I call this managerial

tions. We are forced to conclude that there is a

growth— with inflation. So it is with the young

great

“ milling around.”

man. He is not getting full value. He is paying

Again, much of this is good for banking, and for

too high a price for what he is receiving from us.

deal

of managerial

individual bankers, but it isn’t all good. For

From his point of view, it is managerial growth

some banks the heavy experience-losses are such

— with inflation. It is only when he receives full

as to place them not just on the sick list, but on

value in growth terms that the bank gets its

the critical list.

money’s worth, and vice versa. These are two

Why do we lose good men? In this talk

sides of the same coin. It is when the man grows

today I am considering principally the younger

as fast as his capacity permits, and when the

men. Some of them describe their own situation

bank makes full and productive use of his abili

this way. “ I’m just not getting anywhere.” A

ties and acquired knowledge and skills, that we

variant of this is, “ I just don’t know whether

can have managerial growth— without inflation.

I’m getting anywhere.” Then there are those who

We are familiar enough with the principle that

say, “ I may be getting somewhere, but the going

rising wage rates without commensurate increase

is just too slow for me.” Well, what do they want

in productivity is inflationary. We seem not to

to get? Where do they want to go when they say

appreciate the need to be concerned with produc

they aren’t getting anywhere? How can they come

tivity associated with managerial growth.

to know whether they are getting somewhere?

It may be that some of us have slipped in our

approaches to training because we have lost sight

“ There are enough jobs for all college graduates;

of the importance of work. We have given so

there just aren’t enough positions.”

much thought to the design of programs of study

I don’t believe it is true that young men don’t

that we have neglected to give enough thought to

want to work, that they don’t want to “ go to

programs of work. All work and no study leads

work” — on a real job. The difficulty is that many

to underdeveloped managers, but all study and

of us have given them ideas which they have

no productive work will not produce mature

taken seriously, one of which is that the sure

managers either. Of course, no one goes to either

way to success is through training programs—

of these extremes, but it is by giving thought to

“ management development” programs. The siren

extreme positions that we are more likely to

song of recruiters is, “ Come with us, we have

come up with a better “ product-mix.”

the best training program.”

Many of us have always felt that the man who

What is “ the best” program? Is it one with

worked his way through college reaped a few

the greatest number of lectures and seminars? Is

important benefits that did not come to the man

it one which boasts the most elaborate audio

who found it unnecessary to “ work his way.”

visual equipment? Is it one that sends men away

What philosophy are we following if we design

to the most meetings— usually at very nice hotels

or resorts, or to quiet but expensive spots where

management

development

program

which

productive

one can “ get away from it all” and spend the

work? Doesn’t work contribute to managerial

whole time just “ thinking management?” Is it

growth? Don’t we believe with John Dewey that

one that features job rotation, except that ours

we “ learn to do by doin g?” What did our friend

rotates faster than the others? Is it one that

Carmichael mean when he said that this is prob

offers the greatest number of observation points,

ably a good company to work for, if you can

although perhaps the fewest number of par

ever get through the training program? Don’t we

ticipation points? Is it one which provides a

gather that he thought it would be a red-letter

great variety of work experiences, but without

day when he could begin to do productive work

responsibility or accountability? Is it one that

for the company, and not just keep on “ going

requires the most study and the least work?

places

minimum

emphasis

upon

to school?” Is there doubt that there are men

Ideas that young men have about training pro

in some of our training programs who have

grams have come from employers— from us. If

similar thoughts?

this is the road to success, they want to be on it.

Bankers, including some of my own colleagues,

Should this surprise us? Certainly we should

have reminded me that able young college men

not be surprised if the young men decide that it

are attracted to those banks which have “ the

makes sense to play according to the ground

best” training programs; and'that banks, there

rules of our own making. I suggest that we take

fore, must compete for the best men on the basis

stock to determine whether we have worked out

of training programs. Not long ago one of our

a game that leans more upon off-the-job training

officers, after interviewing a series of applicants,

than on-the-job training. And if we have, have

said, “ These fellows don’t want jobs— they want

we been right?

fellowships.” This is a bit of a twist on a quip
appearing

recently

in a national

magazine:

There are real values in off-the-job training.
Like you, I have taken part in a good many

sessions held in schools, on college campuses, and

of one of the principal things we know about

in hotels— sometimes as student and sometimes

individuals, namely, that they are different?

as teacher. Again like you, I have learned a great

They come to us having different qualities and

deal that I would not have learned, certainly not

qualifications, different educational and experi

as effectively or as quickly, while on the job. It

ence records, different accomplishments, differ

would be hypocritical of me to serve on the

ent personalities, different strengths and weak

faculties of banking schools if I were not con

nesses, different interests; and, because of the

vinced that these schools fill a genuine need in

foregoing, different needs.

banking education.

Another thing we know about individuals is

Off-the-job training, however, is not a sub

that they grow at different rates. A program

stitute for on-the-job training. We should note

which puts everybody through the same ropes,

also that the term is on-the-job, and that this is

and at the same pace, is inefficient and wasteful.

not synonymous with “ on-the-premises.” Many

Full value is not received for the time, effort,

of us have had the experience of realizing that

and money expended. Managerial growth— with

a problem presented for discussion in the re

inflation.

laxed, academic atmosphere of a training room

Companies

are increasingly gathering evi

is actually quite different from that supposedly

dence that training must be geared to the specific

“ same” problem encountered on the operating

needs of individuals. No one questions that there

floor in the course of duty. We know that one

are aspects of training which can be handled

of the greatest difficulties in supervisory training

effectively, and most economically, on a group

courses is to obtain carry-over from the lecture

basis. (I am tempted to say that this would be

or seminar to the field of operation. Most ball

killing many birds with one stone, but that might

players look pretty good in batting practice. No

be misinterpreted.) It appears increasingly clear,

one would suggest the elimination of batting

however, that more of the developmental program

practice, but we would all agree that there is no

needs to be tailor-made than was formerly sup

substitute for the contribution made to growth

posed. Our task is to determine what forms of

by the playing of the game in competition.

training are best suited to group undertaking,

In this business of training it may be that we
have become overly

enamored of the word

“ program,” or the idea of program. To some, a

and what parts must be tailored to the person.
Honest appraisal will, I feel sure, lead to the use
of more rifles and fewer shotguns.

program is a kind of outline of events, with

A basic issue, of course, is whether it is bet

names and numbers of all the players, a sort of

ter training for one to be exposed to a great

table d’hote syllabus (printed or Xeroxed and

variety of subjects and experiences, or to be

placed in a fancy binder) which is to be fol

given the opportunity to learn a few things really

lowed by every individual who is to “ go through”

well. Someone will ask, “ Are we trying to train

the program. This may perhaps be justified if

men to be specialists or generalists?” We need

it can be demonstrated that every individual

not get bogged down on that one. It is a bit too

needs to undergo the same course of treatment

ambitious for the program to attempt to train

as part of his managerial growth and develop

the young man to command the whole army

ment. Haven’t we, however, tended to lose sight

before he has learned how to be a patrol leader.

There is wisdom in handing over the big prob
lems to a man who has demonstrated his ability

can be upset merely by pushing a wrong key.
The kind of job that contributes to managerial

smaller problems

growth is one which entails, among other things,

I am trying to set forth the point of my belief

planning, coordination and control; and, most

that managerial growth must stem principally

important, responsibility for results. It calls for

from job performance. I am endeavoring also not

the making of decisions, which means the exer

to under-value off-the-job training. It does seem

cise of personal judgment. This is high sounding,

appropriate, however, to raise the kind of doubts

and I don’t mean it to be because I envisage

handle successfully

the

encountered on live jobs.

responsibility. By this I mean responsibility for

that may lead each of us to evaluate the results,

planning, coordination, and control applying in

even to forecast them wherever possible, of the

the earlier stages of training to fairly light

particular forms of off-the-job training in which

responsibilities. We can and should increase the

we may be engaged. Are they in fact contribut

demands as the man’s knowledge, skills, and

ing to the managerial growth we seek? Are we

abilities expand and deepen through experience.

getting our money’s worth? I have also stated a

The trick is to see that we do not allow him to

belief that the most effective training is that

keep on performing the simple tasks only, cer

which is keyed to the specific needs of individ

tainly not after he has mastered them. We don’t

uals. This, of course, means that we must,

want growth to stop.

through our own continuous observation and

On the other hand, and strangely enough I

study, know the individuals and their needs. This
opens a whole field of exploration which un

haven’t found this point mentioned in manage
ment literature, it is completely unrealistic for

fortunately we cannot pursue today.
It should be immediately apparent that the

new, interesting, and unique experience every

managerial growth we seek will not come from

hour on the hour. It is a sign that one is growing

the performance of just any job. While the job

up managerially when he learns not to be bored

ought not be beyond the man’s current capabili

with old and familiar problems. We shall have,

one to think that on every job a man can have a

ties, assuming opportunity for a certain amount

and we need, new problems, and we must learn

of mind-stretching, a job will contribute little if

how to meet them; but who among us does not

it consists exclusively of simple routines. In pass

have much to learn in trying to find better solu

ing, however, let me say that it is good for every

tions to old problems?

potential manager to understand a few basic

My guess is that there is general agreement

facts about routines: (1) that each of us has to

on this. It has a kind of safe, traditional ring.

do some work which we look upon as routine,

But does it when we reflect upon the implica

and that we might just as well get used to it;

tions? The man in training who devotes his

(2)

thought processes and his enthusiasms to finding

that one man’s routine is another man’s

challenge, and sometimes even his Waterloo;

new,

and (3) that a mistake in simple routine at one

problems will in all likelihood depart from

point of a bank’s operation can create havoc

patterns of behavior and action which we our

at some other point. Because a task or operation

selves have established. Are we receptive to such

is simple doesn’t mean it is unimportant. A bank

nonconformity?

and hopefully

better,

solutions to old

Elsewhere I have asked the

question, “ Why do junior officers not put into

company time and at company expense? I think

practice some of the fine management ideas they

we should do everything we can to resist the

have learned in training programs?” I have

spread of this idea. Why shouldn’t a man devote
some of his own time to self-improvement, to

supplied one answer— that it is because their
vice presidents won’t give them the green light.

his own managerial development? There was a

What is the sense of teaching juniors a lot of

time when it was said that a man earned his

theory which their superiors refuse to let them

salary while working on the job, and that he

put into practice?
To be sure, there are right ways and wrong

earned his promotions off the job. I am not

ways to handle some problems, but with others

Standards Act, and I am sure that the Wage

advocating any violation of the Fair Labor

there are different right ways. Difficult though it

and Hour Division of the Department of Labor

may be, we not only must permit, but we must

doesn’t consider it unlawful for a man to engage

encourage new approaches to old problems. Our

in many valuable forms of self-improvement on
his own time.

personal reward lies in the satisfaction which
comes from providing the climate, the freedom,

The volume of published material on every

and the inspiration which enable our juniors

phase of banking and of bank management is

to grow not just up to us, but way beyond us.

enormous. Just as reading is not a substitute for

Among the self-evident truths about mana

practical experience, so is job experience no

gerial growth, or any kind of personal develop

substitute for a carefully chosen reading pro

ment, is that all of it is self-development. Some

gram. Men in training should do a lot of reading

one has said that the teacher can teach, but it is

for themselves. We hear it said that book learn

the learner who must learn. Some of us never

ing isn’t everything, and of course it isn’t. But it

did agree with the slogan used during World

is something— and it can be a mighty important

War II by the Training Within Industry Pro

contributor to managerial growth. Banks can

grams that “ If the student hasn’t learned the

save a lot of money spent on training if we can

teacher hasn’t taught.” This is no more true than

effectively inspire men to do what used to be

the one about the customer always being right.

called in school “ outside reading.” Note that the

We can create, foster, and sustain an environ

word used is inspire, not require. We don’t want

ment conducive to managerial growth, and it is

to be legally trapped into having to pay for this

of crucial importance that we do s o ; but we must

at time and a half. I don’t know a better way of

live with the truth that every man has to do his

inspiring a man in training to read widely and

own growing. A little later I shall comment on

deeply than to set the example by doing it

our responsibilities for the environment, but at

ourselves.

this point I wish to place some responsibility for

Over a period of years I have made it a point

growth where most of it belongs, on the man

to ask a good many successful men the ques

who is doing the growing. This is one of his

tions, “ What in your background do you believe

responsibilities while on the job, and even more

contributed most to your managerial growth?

so in his off-the-job training.

What aspects of your training were most effec

Isn’t it true that there is spreading in America
a belief that all off-the-job training must be on

tive?” Let me summarize what they have told
me. Contributing most were:

1. Experience obtained in the performance of
productive work on live jobs.
2. Being given responsibility for results, and
for the solution of problems encountered
in the course of daily work.

by indicating what it is that is to be done. Each
individual

learns

the

“ fundamentals”

before

becoming very deeply involved in complex plays.
The coach knows that his job is to develop a
team, not just an aggregate of individuals; and,

3. Working in an environment in which one

just in passing, this means not only a first team,

had freedom to express his thoughts, to

but a good bench. He teaches individuals how to

ask questions, and to try out ideas— some

work together, how and when to rely upon one

of which were not very good.

another, and when and how to act on one’s own.

4. Working under a first-class man who sup

If there is one thing that a coach knows be

plied just the right amount and kind of

yond all shadow of doubt it is that the game is

guidance which led tangibly to improve

not won solely by virtue of the technical com

ment and advancement.

petence of the players. One of the winning in

I have already touched on each of these, with

gredients is that of spirit, or morale. The coach

the exception of the last which, upon reflection,

knows that it is an indispensable part of his job

they typically placed first: “ Experience gained in

to foster and sustain the esprit de corps. He does

working under a first-class man.” It is on this

this through his own enthusiasm, his personal

“ theme and variations” that I wish to conclude.

interest in every player, his obvious desire to

My plea is for a greater and wiser use of the

help each player to grow. He gives recognition to

understudy method of training and development.

superior performance. He shares the individual

In referring to the man being understudied we

and team sorrows as well as the joys.

have no comparable term of designation, so I

I am not trying to suggest that banking is just

supply the best one I can think of— the coach.

a football game. If this sounds superficial then

What are his characteristics and what must

I am failing to convey my very strong and

he do?

serious belief that those of us who have a

It goes without saying that he is a technically
competent operator. Like all seasoned coaches,

responsibility

for

promoting

the managerial

growth of our young men should study how a

he knows the game down to its finest points. He

first-class coach operates. If we will spend more

is aware of, and receptive to, new ideas con

time studying how to be a good coach, spend

tributing to the improvement of the game. He is

more time being a good coach, and less time

an active seeker of refinements of old ideas.

devising fancy and frilly “ programs” of off-the-

The coach is a teacher, one of the very best

job training, we shall, I believe, do a better job

kinds of teacher. He spends little time lecturing

of management development. The bank will get

to groups, although there are occasions when

more for its money. The understudy will have

he does. He devotes time to individuals. He

the feel that he is getting somewhere, and if the

studies them in action. He ferrets out their

coaching is implemented as it should be, the

strengths and weaknesses. He shows them how

young man will advance in position, prestige,

to capitalize on their strengths, and how to work

and compensation as fast as his increasing capa

on correcting their faults. The players learn to

bilities will take him, making due allowance for

do by doing, but the coach supplies the guidance

one of the hard and sometimes disappointing

facts of life that one cannot be promoted to spots

be unappreciative of the contributions being

which are not yet vacant. We, too, must face a

made by the personnel staff organizations in our

fact of life. No one will wait too long for a

banks, especially in the field of off-the-job, but

higher post for which he is fully qualified, cer

on-the-premises, training.

tainly not if there is a more attractive alternative.

What I am asking is, “ Have we tended to rely

The beauty of the understudy method of

too heavily upon off-the-job training with the

training is that it is applicable to banks of every

result that, by slow and easy steps, we have

size. Bankers in small banks have often told me

begun to lose sight of our own personal responsi

that they are unable to have a training program

bility for the managerial growth of our succes

because they are too small. I try to remind them

sors? Have the bright lights which have been

that no one, in my judgment, has yet improved

shining upon the glamor programs had the effect

on the training program exemplified by Mark

of causing us to hide our own lights under a

Hopkins on one end of a log and a student on

bushel?

the other.

others, however unwittingly, have we even with

transferring

our

obligations

In conclusion, banking education to foster

drawn too much of the responsibility from the

managerial growth consists of both on-the-job

shoulders of the man who must do his own grow
ing? Are we bearing in mind that growth must

and off-the-job training. Neither is a substitute
for the other. I have raised some doubts about

be continuous, till death or resignation do us

our use of, or perhaps our over-reliance upon,

part?”

off-the-job methods, devices, and programs. This

This is a plea for a re-evaluation of ourselves,

must not lead any of you to believe we should

of our responsibilities, and of our policies and

refrain from using them judiciously. Let no one

methods of promoting and fostering continuous

conclude that, conservative though I may seem

managerial growth. It is a reminder of our

to be, this talk advocates tossing out the baby

obligation as managers to assess the values of

with the bathwater. We must recognize the great

all forms of training and education, especially

strides being made in training ideas and devices.

education on the job, and related to the observed

We can think offhand of the recent developments

needs of specific individuals. We must look to

in bank management problem-simulations which

cost and to full value for money spent if we are

make use of the modern computer. We must take

to have managerial growth— without inflation.

note of the vast improvements continuously

We all know of many instances in which far

being made in the educational programs of our

too little is being spent on training and develop

banking schools— the programs of the ABA, the

ment. On the other hand, it may well be that

AIB, and schools sponsored by our regional

some of us are spending too much for what we

and state associations. And, as one who has been

are getting. The suggestion is that we look be

trained in the field of personnel administration, I

neath the glitter to ascertain whether it is in fact

would be a traitor to the profession were I to

being produced by gold.

Full text of Business Review (Federal Reserve Bank of Philadelphia) : October 1960

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