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SEPTEMBER 1953 b u s in e s s lie v ie w j>ANK OF PHILADELPHIA O W A TTS COOPERATE ON TH E DELAW ARE ric power is one of our fastest-growing industries, icle, about power in the Third District, tells utilities work together to produce cheaper power. BA N KIN G CHANGES: 1953 vs. 1952 ns, investments, deposits, and net current earnings. REPO RT FROM TH E FARM Diversified agriculture eases farmers' problems in this district. PO RT PROGRESS Foreign commerce at the local port lagged a bit in 1952. C URRENT TREN D S Additional copies of this issue are available upon request to the Department of Research, Federal Reserve Bank of Philadelphia, Philadelphia 1, Pa. KILOWATTS COOPERATE ON Ben Franklin should have known better than to fly a kite in a thunderstorm— he might have been killed. But he was curious about electricity. Almost on the very site where he drew elec tricity out of the clouds over Chestnut Street the bath water, cool the air in summertime, in Philadelphia is a central control board from warm our beds in wintertime,, and to perform which electric power produced by utility com scores of other personal services. panies on both sides of the Delaware River is Though not a primary source, electricity is the dispatched on the most-favored-station principle most widely used form of industrial power. This to one of the country’s most heavily industrial is because it is so cheap and so convenient. Elec ized areas. Dr. Franklin, who did a lot of experimenting tricity is easily piped to industrial plants and within each plant easily distributed to the with electricity, never knew what it really was. various machines and work places. It can be Neither did Thomas Edison, whose invention of used in small quantities to run the miniature the incandescent lamp was quickly followed by motor of a jeweler or in large quantities to the organization, in 1880, of the first electric power mammoth motors in a steel mill. It is company in the United States. Now, the country’s always available for consumption, either regu investor-owned power industry sells $5 billion larly or intermittently, at constant or irregular worth of electricity annually and has $23 bil flow, as work may require. Furthermore, for lion of capital tied up in generating and dis most industries, electric power is one of the tributing equipment. Curiously, we still do not smallest items of cost. Very few industries pro know just what electricity is. duce their own power. They can usually buy it Electricity, whatever it is, is a peculiar com cheaper because electricity can be produced most modity. It is about as commonplace and almost efficiently in large quantities by the power utili as indispensable as water. Practically every room ties that specialize in this service. in every home has one or more electric outlets. From millions of these plug-in receptacles, kilo watts are always on tap— day and night, summer Power is big business and winter— to light our homes, sweep the floors, On going through one of the financial manuals wash the clothing, preserve and cook food, heat that describes the life and times of the country’s 3 business re v ie w power companies, two things are especially out intendent tells you, is being consumed at the rate standing. First, it takes a lot of money to go of 150 tons an hour, and the two spinning gen into the business; and, second, most of the erators produce 364,000 kilowatts of electricity money is sunk good and hard in so-called fixed hour after hour. capital, which means that it can be used for Going from one department of the plant to absolutely no other purpose. In the power busi another you ness, a $25 million concern is rather small and amidst this maze of machinery. One or two men see comparatively few workers companies with assets of a half billion dollars in the boiler control center periodically look at or more are by no means unusual. In any case, regardless of size, usually three out of every the gauges, recording temperature, pressure, and other pertinent information. The electrical con four dollars of investment are tied up in fixed trol room looks just like you would expect an plant account. The technology of power makes electrical control room to look— it houses a huge it that way and there is little that can be done panel with lights flashing red or green, and about it. Anyone going into the business must scores of meters that speak only the electrical be prepared to invest a lot of money— the in vestment in most power companies is five times is always at the entrance and a maintenance the annual revenue. language of volts, watts, and amperes. A guard crew is indispensable; but for the most part the Another peculiarity about the business, some machinery seems to know what to do without what related to the observations just made, is much human direction. Things seldom go wrong that most power companies usually have ten times as many stockholders as employees. The striking disproportion between the amount of capital and labor required to make kilowatts is apparent when you see one of the big Delaware WHAT IS A KILOWATT? River plants in operation. Outside one of these A kilowatt, without getting too technical, is equal river-front temples of power you see nothing to I horsepower; or, to avoid fractions, three but coal going into the building and apparently kilowatts of electric generating capacity corre nothing ever coming out. But that is just be spond to the working power of four draft horses. cause kilowatts are invisible. All day long, crane- The 85 million kilowatts of electrical generating operated buckets scoop great gobs of coal out capacity in the United States is the equivalent of a river barge, and a conveyor belt carries the of I 13 million horses— and that's a lot of horses. coal to bunkers on the top floor of the station. Kilowatt hours measure the amount of elec Batteries of pulverizing mills grind the coal to tric ity generated, consumed, or sold. For ex talcum-powder fineness for feeding like gas into ample, a 50,000-kilowatt generator running at the fiery furnaces. Massive piping conveys the full capacity for one hour would produce 50,000 steam generated in the boilers to the turbo kilowatt hours. generators. These huge pieces of machinery are the United States was in the order of S 1/-) bil the heart of the power plant. The high-pressure lion kilowatt hours a week. steam drives the turbines which spin the gener ators that produce electricity. Coal, the super 4 In mid-1953, electric output in business re v ie w and when they do the meters tell the technicians sure (voltage) and reduce the volume of cur where to look for the trouble. rent, thus reducing the loss of current caused At a hydro-electric plant like Philadelphia by resistance. At the Conowingo transformer Electric’s Conowingo station on the Susque yard, for example, electricity is stepped-up to hanna River in northern Maryland, where the 220,000 volts for the 58-mile trip to the bulk power of falling water is used to generate elec power substation in suburban Philadelphia. The tricity, the disparity between the amount of large capital and labor employed is even greater than ported “ high above the earth on graceful steel in a plant operating on coal, oil, or gas. It takes towers which march majestically across the coun an average of only about seventy people to run tryside” also sweep majestic cost-of-construction the $50 million Conowingo project. There are no figures into the books of the power company. steel reinforced aluminum cables sup steam turbines, no fire boxes, no boilers— but Substations perform a kind of wholesaling big money was required to buy the land, build function. There, step-down transformers reduce the dam, and impound fourteen square miles the high-voltage incoming power to low-voltage of Susquehanna River water. outgoing power for distribution to customers in the area. The distribution requires, of course, How kilowatts go to market It takes big money not only to produce but a vast network of lines and transformers to re duce voltage still further to the conventional 220 or 110 for household use. also to distribute electricity. As a matter of fact, the transportation and distribution of power costs more than its production. Unlike carrots, Power in the Third District kilowatts cannot be wrapped up in cellophane Power in the Third District is supplied by no and distributed through a large chain-store or less than nineteen companies. The area served ganization. The power company must personally by each company is shown in the accompanying deliver every single kilowatt to the point of use, map. Some companies operate exclusively within to each of its thousands of customers. That takes the district; others cut across district lines into an elaborate system of transformers, trunk lines, neighboring territory and there is no necessary distributing lines, and related electrical para relation between size of company and size of phernalia. territory served. How much electric power is Outside every power house you see a fenced-in consumed in an area depends upon how many area of electrical equipment and a sign pro people live in the territory, how they make their claiming in bold and forbidding letters, “ Dan living, and how well they live. ger— High Voltage.” This is the transformer The Philadelphia Electric Company is the larg yard, or the “ shipping department,” of the station. est of the companies; it generates almost half of Power coming from the generators cannot be the power produced in the entire district. The sent over wires for long distances without con company serves Philadelphia and Delaware Coun siderable losses caused by the wire’s resistance ties, most of Chester and Montgomery Counties, — like the friction encountered by water flowing the lower half of Bucks County (which is the through a pipe. Transformers step up the pres industrialized section including the new Fairless 5 business re v ie w steel mill at Morrisville), the southeastern tip of a total capacity of more than 2 million kilo York County, and a small area in northern Mary watts. It takes more than 7,000 people and over land. This is the part of the district where in a half billion dollars of power-producing and dustrial establishments are counted by the thou distributing equipment to serve this area. The sands and people by the millions. To supply region has expanded rapidly during and since electricity for this great and growing industrial World War II and so has the company. The area beehive, Philadelphia Electric operates six great has never been retarded for want of power. steam plants (four on the Delaware and two on the Schuylkill) and the huge Conowingo hydro-electric plant— the seven stations having In terms of square miles of area covered, Pennsylvania Power & Light Company is the largest operating in the Third District. The com- THIRD DISTRICT POWER PATTERN 1 Philadelphia Electric Co. System 10 2 Pennsylvania Power & Light Co. I I Northern Pennsylvania Power Co. Harvey's Lake Light Co. 3 Metropolitan Edison Co. 12 Elkland Electric Co. 4 Atlantic C ity Electric Co. 13 W ellsboro Electric Co. 5 Public Service Electric & Gas Co. 14 W est Penn Power Co. 6 Jersey Central Power & Light 15 Pennsylvania Electric Co. 7 New Jersey Power & Light Co. 16 Home Electric Co. 8 Delaware Power & Light Co.. 17 South Penn Power Co. 9 The United Gas Improvement Co. 18 Cumberland Valley Electric Co. 19 Pike Cou 6 Light & Power Co. business re v ie w pany’s lines run from the New York State bor On call but not in stock der on the upper Delaware in the east to well One of the outstanding peculiarities of the power beyond Lock Haven and Carlisle in the west,, and business is that electricity cannot be stored. extend to the Maryland line in the south. With There is no such thing as an inventory of fin less than half the generating capacity of Phila ished kilowatts, stored on the shelf and ready delphia Electric, Pennsylvania Power & Light for delivery on call as in the case of cigars, serves a territory more than four times as large. canned corn, or most other commodities. Power The company’s far-flung lines distribute power companies must always stand ready to produce into 29 counties, forming a jigsaw territory the number of kilowatts that customers want which includes the richest farmland of the state, when they want them. a large part of the hard-coal territory, and a Another peculiarity of the power business is variety of industrial communities. Pennsylvania that the demand for kilowatts is anything but has an unusually large number of cities of mod regular. The amount of electricity consumed erate size, and Pennsylvania Power & Light Com fluctuates from hour to hour, from day to day, pany serves a surprisingly large number of those and from one season to the next. Consumption within the Third Federal Reserve District. is naturally greater during the daytime when Public Service Electric and Gas Company, industries are operating than at night; more comparable in size with Philadelphia Electric, electricity is used on cloudy days than on clear operates in northeastern New Jersey— for the days, and usually more during winter with its most part outside of the Third District. This shorter days than during summer. Irregularity company’s lines run southwest across the state of New Jersey into this district, where its Bur lington station supplies power to Trenton and DAILY LOAD CURVE as far southwest as Camden. The company dis tributes power to the thickly populated Newark K IL O W A TTS (000) area and also to the most highly industrialized part of New Jersey within our district. These three companies— Philadelphia Electric, Penn sylvania Power & Light, and Public Service Elec tric and Gas— serve the district well through cooperative arrangements and facilities. If it seems surprising that so many companies (19 utilities) operate in the district, it should be remembered that formerly there were still more, each serving a restricted area. The present power pattern, though it still may have the appearance of a crazy quilt, is the result of a great many con solidations of small companies into larger units that produce power more economically than the component units before consolidation. 7 business re v ie w of demand is illustrated in the preceding “ shorthand” jargon for the 220,000-volt line chart showing the load curve on a certain day — is the backbone of the interconnection sys in March for a group of companies along the tem. A number of smaller adjacent companies Delaware River. The low point occurred at 4 are coordinated through the three major com a.m., and the peak at 10:30 a.m., followed by panies constituting the ring, so that actually a two secondary peaks at 2 p.m. and 7 :30 p.m. total of 13 companies makes up the Pennsyl For any one company, the peaks are likely vania-New Jersey Interconnection. Each of the to be higher and the valleys deeper, and the load curve will differ from one concern to three major companies is connected to two links another. For example, a company in the hard- caused by stormy weather in any part of the area of the ring, so the possibility of a breakdown coal region may have its peak in the morning; is remote. Over 200 separate generators in more a company supplying a seashore resort area is than 60 generating stations throughout the terri likely to have its peak in the evening. Each com tory feed power into this ring, which is always pany must have, of course, sufficient generating kept “ hot,” electrically. capacity to meet its peak demand whenever it occurs, which means that the difference between Integration of the generating facilities of these companies reduces both investment and its average load and its peak load represents operating costs and also improves reliability of costly reserve capacity frequently idle. If two service. Investment is reduced because less total or more companies in adjacent territories oper generating capacity is required to carry the com ate in unison, the combined area can be served bined interconnected load— one company’s peak more economically than if each company oper falls into another company’s valley. Further ates independently. This is precisely what is more, it is possible to increase generating ca done in the Delaware Valley. pacity in size of units and at locations on the interconnection that will result in greatest over all economy. Finally, the day-to-day and hour- Cooperating kilowatts to-hour power needs of the entire area served The Pennsylvania-New Jersey Interconnection can be supplied at any moment by that combina is a working agreement among three major tion of generating units having the lowest cost. companies— Philadelphia Electric, Pennsylvania Gas— to pool their power-producing resources The nerve center of power on the Delaware for most economical operation. The properties At 10th and Chestnut Streets, diagonally across of the three companies are linked by a high- the street from this Bank, are the Intercon Power & Light, and Public Service Electric and voltage interconnection in the form of a triangle. nection At each point of the triangle each company Company load dispatcher’s office. Here is the has a large substation— Philadelphia Electric in nerve center of the inter-company power hook suburban ups. In the Philadelphia Electric load-dispatch Philadelphia, that of Pennsylvania office and the Philadelphia Electric Power & Light near Allentown, and the Pub ing office an entire wall is covered by a huge lic Service Company’s substation near Newark, panel-board loaded with diagrams and meters. New Jersey. The so-called “ 220 k.v. ring” — the The diagrams serve as memory charts of major 8 business re v ie w switching operations, and the meters record in in the system. Like an orchestra conductor sig megawatts (thousands of kilowatts) the electric naling for changes in tonal power, so the inter power generated at various points throughout connection dispatcher calls for the various gen the entire system and the amount consumed. erators throughout the system to come in so that Facing the array of meters and instruments are kilowatts may be produced most economically. the dispatchers, constantly receiving intelligence Naturally, he would never play “ Let’s Put Out through earphones from all parts of the system the Lights.” In the power “ orchestration,” due and doing the appropriate switching from one account is taken o f the water available at run- line to another and occasional blocking— that of-river and storage hydro-electric plants so as is, shutting down certain circuits for necessary to take full economic advantage of available repair and maintenance work. Similar operations water power. are going on constantly in the load-dispatching The interconnection office also keeps the nec offices of Pennsylvania Power & Light Company, essary records and coordinates the accounting Public Service Electric and Gas Company, and among the member companies. Savings— the dif other companies in the “ pool” with which the ference between the generating company’s cost interconnection supervisor maintains constant and the value o f the energy delivered to the The supervisor of interconnection is respon the sending and the receiving companies. Such sible for selecting the equipment to be operated savings amount to thousands of dollars each during each period of the day, and for loading year. communication. receiving company— are divided equally among this equipment so as to obtain maximum operat ing economy. Daily estimates have to be made Larger areas of cooperation of anticipated loads and capacity, and these esti The interconnection is part of a larger power mates must be revised several times each day. grid over which electricity can be interchanged. An aid in making these estimates is the daily Transmission lines to the north connect this area equipment schedule which shows precisely what with the New York and New England region, generators throughout the system are available and several transmission lines to the south link for duty. this area with the power companies in the Balti Power “ orchestration” a power failure in, let us say, Massachusetts, The job of dispatching kilowatts from where that area can draw upon power stations in Con they can be produced at least cost to where they necticut which in turn can draw upon those in are needed most urgently is somewhat similar New York, which in turn can draw upon those to the job of a train dispatcher. As the system in the Philadelphia region. The advantages of load increases, it is the responsibility of the such a power grid are obvious. more-Washington territory. Thus in the event of interconnection dispatcher to order an increase in generation at the most economical location. Electric power consumption This information is obtained from the loading The use of electricity in this district has grown chart, which shows the cost to the fraction of at a tremendous rate. Sales of the leading power- a mill of producing kilowatts by each generator (Continued on page 12) 9 business re v ie w business re v ie w COUNTY BANKING CHANGES: 1953 vs. 1952 Plus signs dominate the following table of year- was the rule, although declines were reported to-year changes in loans, investments, deposits in seven Third District counties. and earnings. In the case of loans there were no Increases in earnings before income taxes exceptions. Every county had an increase in were quite general. Comparison of first-half 1953 loans from June 1952 to June 1953. with first-half 1952 shows increases ranging But the size of the increase varied widely, ranging from from 15 to 25 per cent in more than half of a few percentage points to more than one-third the counties. and averaging 1 2 ^ per cent. With respect to The aggregates on which the figures are based investments, the picture is more diverse, but the were derived from mid-year condition statements number of counties reporting increases in securi and first-half earnings reports of member banks, ties portfolios outnumbered those reporting de with appropriate adjustments to compensate for clines by two to one. Growth in deposits also mergers and changes in membership. Percentage change from the firs t half of 1952 to the firs t half of 1953 in— Percentage change from June 30, 1952 to June 30, 1953 in— LOANS INVESTMENTS DEPOSITS NET CURRENT EARNINGS PENNSYLVANIA Adams ....................... Bedford .................... Berks ......................... Blair ........................... Bradford .................. + + + + + 15.4 15.6 15.1 12.9 8.4 + + + + + -8 6.1 .3 5.6 2.3 + + + + + 9.2 7.6 4.1 6.2 4.8 + 2 1 .8 + 2 1 .8 + 2 3 .7 + 16.4 + 31.9 Bucks ......................... Cambria .................. Carbon .................... Center ...................... Chester .................... + 15.7 + 12.9 + 5.8 + 12.2 + 8.8 + + + + 6.6 .5 3.6 -6 4.4 + 17.3 + 3.6 + 2.4 + + -2 5.5 + 2 9 .1 + 2 1 .7 + 2 1 .1 + 15.3 + 13.7 Clearfield ................ C lin to n ...................... C o lum b ia .................. Cumberland............. Dauphin .................... + 14 2 + 10.5 + 14.1 + 8.9 + 9.6 - 6.9 8.9 + -2 + 13.9 + 2.7 + — + + + 1.4 5.9 3.5 14.4 7.0 + + + + + Delaware .................. Elk ............................. Franklin .................... F u lto n ......................... Huntingdon .............. + 9.4 + 6.0 + 15.8 + 8.8 + 18.9 + — + + + + — + + + 6.5 7.6 2.7 7.6 10.2 + 7.9 + 4 4 .0 + 2 3 .0 * 8.1 6.0 4.9 6.0 1.4 16.5 19.4 19.2 18.4 13.2 + 15.8 LOANS INVESTMENTS DEPOSITS 4.3 1.8 3.1 7.0 3.2 + 17.0 + 4 1 .3 + 16.6 + 9.0 + 19.9 — 5.2 + 5.8 — 4.5 + 1.9 + .3 + 1.2 + .8 — 2.8 + 6.9 — .1 + 1 1.0 + 18.8 + 14.5 + 2 1 .6 * + 14.0 + 2 0 .1 + 9.1 + 8.2 + 15.0 + 3.0 — 14.0 + 2.9 — + 8.0 + 6.1 — .6 + 3.8 + •1 + 9.2 + 17.3 * Philadelphia ............... Pike ............................. P o t te r........................... Schuylkill .................... Snyder ......................... + + + + + 14.2 14.4 14.3 1 1.5 18.6 — 15.4 + 4.7 + l. l — 1.9 — + -9 + 10.5 + 6.8 + 1.0 + 6.8 Sullivan Susquehanna ............. Tioga ........................... Union ........................... Wayne ......................... + 6.2 + 12.9 + 10.9 + 13.9 + 4.2 — 1.0 + 2.0 + -9 — 7.5 — .4 + + + + + -4 2.5 1.4 1.5 1.9 + 19.4 W y o m in g .................... York ............................. + 9.0 + 13.0 + 2.0 — 1.3 + + 3.7 4.3 + .8 + 2 8 .3 Atlantic ...................... Burlington .................. Camden ...................... Cape M a y .................. C um berland............... + 11.0 + 10.3 + 36.7 + 12.1 + 2 3 .6 + + — + + 3.9 7.9 1 1.4 6.3 2.4 + 4.7 + 8.7 + 4.9 + 10.1 + 3.7 + 4.1 + 18.7 + 14.3 — 1 1.9 + 2 1 .2 G lo u c e ste r.................. M e rc e r........................ Ocean ......................... Salem ........................... + + + + 12.4 1 1.5 17.0 14.4 + 1.5 — 1.8 + 14.5 — 1.3 + 3.6 + l. l + 10.9 + 3.1 + 19.8 + 1 1.5 + 2 2 .7 + 2 8 .1 + 17.0 + 8.8 + 3.1 — 8.8 — 7.9 + 13.4 — .5 — 3.7 + 17.7 + 19.6 + 8.0 J u n ia ta ......................... Lackawanna ............... Lancaster .................... Lebanon ...................... Lehigh ......................... + 11.7 + 2 0 .0 + 8.4 + 12.5 + 12.3 + — + + + Luzerne ...................... Lyc o m in g .................... McKean ...................... M ifflin ......................... Monroe ...................... + 10.2 + 4.1 + 6.9 + 11.6 + 10.1 Montgomery ............. M o n to u r...................... Northampton ........... Northumberland . . . . Perry ........................... 5.0 3.2 3.7 5.3 2.0 + + + + + NET CURRENT EARNINGS + 16.7 + 9.3 + 16.7 + 2 0 .0 * + 32.0 + 15.0 + 9.6 * + 17.6 + 10.8 * NEW JERSEY DELAWARE Kent ............................. New Castle ................ S u sse x ........................... + 4.4 *Not shown because o f limited number o f member banks in county. 10 11 b usiness re v ie w producing companies that account for most of heaters, and the list is constantly growing. Out the power generated in the district rose from standing among the recent additions to house 3 billion kilowatt-hours in 1925 to 19 billion in hold appliances are TV receiving sets, dishwash 1952. As the chart shows, the use of electricity has just about doubled every decade. This is ers, food freezers, and room air conditioners. Booming sales of room air conditioners should characteristic not only of the power industry make the power people happy, but at the same of this district, but of the entire country. Indeed, time it also creates a problem for some of them. the growth in the use of power is astonishing. Traditionally, the peak in power consumption Not many industries have been growing like the occurs in December, following a mid-summer electric power industry, which has doubled and low. redoubled its output during the past two decades. for maintaining generating equipment. Because The use of electricity has been increasing in of the addition of air conditioners and other The summer period is normally utilized practically all categories. In the Third District, cooling equipment, however, it is a constantly about 37 per cent of the sales of electricity is increasing problem for many companies to find used for residential and commercial purposes the time to do their maintenance. Obviously, if and about 57 per cent is for industrial and rail the summer period fills up too much, additional road use— the remainder going to municipalities. capacity will have to be installed to permit main As a servant in the typical American home, elec tenance. This fact is most pronounced in the tricity is constantly assuming wider duties. The Baltimore-Washington area where the peak load modern home now has available about 50 differ for the month of July was greater than the peak ent electrical appliances, ranging from blankets load of December 1952. and bottle warmers to electric ranges and water The industrial demand for electricity is like wise expanding rapidly because of the fast war time POWER SALES and postwar growth of manufacturing industries and the universal applicability of electrical power in industry. Particularly heavy demands for electrical energy are made by the rapidly expanding atomic energy program and the production of aluminum. More power The fast-growing electrical power industry seems to have no bounds. On top of a huge postwar expansion program, power companies are plan ning substantial increases to existing generating capacity. The Philadelphia Electric Company, which has already spent $320 million since World War II to expand and modernize ca pacity, is planning to spend an additional $385 12 b usiness re v ie w Similarly, Penn is now a real prospect of utilizing atomic power sylvania Power & Light Company is in the mid economically at central stations with fissionable dle of a big expansion program; in fact, almost materials taking the place of conventional fuels, every power company has a section in its annual and nuclear reactors and heat transfer systems report outlining the amount of expenditures replacing conventional boilers. This does not million by the end of 1958. for additional generating capacity required for mean the future needs of the territory it serves. Power equipment is doomed to quick obsolescence; if companies across the country are expected to it did, electric utilities would not be planning spend $12 billion in the four years 1953-1956 to such huge sums for expanding capacity. Whether boost United States capacity to about 125 mil operating on nuclear fuels or conventional fuels, lion kilowatts. That would be an increase of 50 all central stations will continue to use steam per cent over present generating capacity. Power turbines, electric generators, and other present- that present electric-power generating people are no mere word-of-mouth optimists; day equipment. It has been estimated that a full- they back up their forecasts with cash and lots scale plant operating on nuclear fuel, capable of it. of generating 200,000 kilowatts, would cost about $50 million. From this it is apparent that you do not get kilowatts for nothing when pro And now— nuclear power duced in a plant operated on nuclear fuels. The electric power industry has an important Atomic energy will no doubt be used to produce interest in the atomic energy program, not only electricity at central stations when it becomes as a market for power but also as an ultimate economical to do so, and from present appear source of electrical power. Nuclear fission has ances it is more likely to be an evolutionary opened a vast new source of heat energy. There rather than a revolutionary change. REPORT FROM THE FARM County agricultural agents are the specialists found this to be the case when we tried to reach farmers consult about their problems. They are them for a run-down of local conditions in some asked questions every day about cropping prac of the more important agricultural counties of tices, marketing this district. You must get up early in the morn methods. These on-the-spot representatives of ing to catch these farm advisers before they take each state’s agricultural extension service, there off for the field on their daily rounds. production techniques, and fore, are well-versed in the day-to-day situation as it unfolds in their respective counties. They Price-wise, our farmers are not too bad off are busy men at almost any season but particu In talking with county agents in various parts larly so when crops are being harvested. We of the Philadelphia Federal Reserve District we 13 b usiness re v ie w learn that price-wise the over-all situation here has deteriorated less than in some parts of the country where agriculture is not so diversified. The extent of this diversification was pointed up in the August 1953 issue of the Business Review. We do have our specialists — farm ers who grow nothing but fruit, raise only poultry, or produce little else beside tobacco. But they are in the minority. The very nature of the district’s agricultural Livestock feeders face uncertainty Our farmers in Lancaster County and other nearby areas are reluctant to commit themselves heavily to the business of fattening and finish ing grass-fed steers shipped in from the westernrange states. Their hesitancy is understandable in view of the near-chaotic conditions which prevailed in cattle markets a while back. But local cattle prices have steadied or even firmed a little recently; moreover, near-failure of pas economy, however, is such that few farmers have turage in some range areas is contributing to all their eggs in one basket. Consequently, as offerings of steers suitable for fattening at quite price declines in one market often have been reasonable prices. accompanied by stability or even increases in another, farm purchasing power here does not business are in somewhat of a dilemma. These new offerings look tempting, but the losses in So, farmers in the feeder appear to have been affected so severely as in curred in marketing well-fattened animals last areas wholly dependent on one crop like live spring and in the early summer are still fresh stock, wheat, or cotton. in mind. Weather-wise, it’s been good until Poultrymen are encouraged recently From the standpoint of growing conditions, too, crop diversification has proved fortunate over a good part of the current season, because what one crop could do without another needed. An unusually wet spring was hard on early pota toes, but most grains yielded well. Although hot weather in July caused premature ripening and undersizing in early fruits, it gave a late-planted Down in Sussex County, Delaware, where broil ers are the crop, deflationary tendencies are perhaps less noticeable than elsewhere in this Federal Reserve District. Baby chicks are in heavy demand. Broiler production, already above its year-ago level, is still rising. The mar ket has strengthened beyond early expectations and prices, too, are stronger. At current levels, it appears that growers are likely to make some corn crop a much-needed boost. But all is not money this year. In Ocean County, New Jersey, a prime area rosy, weather-wise. Insufficient rainfall and ex for both poultry and eggs, this year’s outlook cessively high temperatures since mid-August also is promising. Markets have held up well have caused much concern for both vegetable and in point of volume and only a little less so as to field crops. Pastures have deteriorated rapidly, price. Egg prices have shown the least fluctua forcing dairy and livestock farmers to make tion. Another note of optimism in this area of our heavy inroads on their winter feed supplies. On agricultural economy is a decline in feed costs. a crop-by-crop basis, the situation in this district And to poultrymen and dairymen alike, that’s a shapes up about as follows. big item. 14 b usiness re v ie w Fruit growers are in a strong position mand high wages and, even so, many are lost Franklin and Adams County orchards are yield to higher-paying jobs in industry. ing good crops of apples, peaches, and cherries this season. Volume is up from a year ago and quality is high. Processing demand for apples In vegetables and field crops, it’s a mixed situation is particularly strong, and prices are higher than Vegetable growers in Philadelphia,, Bucks, and a year ago. Much the same situation prevails some of the nearby counties in New Jersey were in the fruit-growing areas of southern New doing right well until the drought intensified, Jersey. In Gloucester and Burlington counties, and the heat made things worse. Sweet corn and this has been an extremely good year for peaches. tomatoes, in particular, looked like excellent Prices in all principal markets held up well, crops. But too many days of hot, dry weather averaging somewhat higher than in 1952. Late have forced harvesting of these and other truck apples are not sizing properly, however, be crops now in season. Peak volume reaching the cause of the hot, dry weather. fresh market and the canneries in too short a time for ready absorption has depressed prices and caused heavy losses through spoilage. Some Dairy farmers are hopeful . . . but they have their problems canneries have set a daily limit on tomato re Bradford County dairymen producing for the der contract for whatever was delivered and New York milk market have been receiving a have processed as much as they could— working little more for their fluid milk than a year ago, and prices recently advanced slightly. In Chester seven days a week under terrific pressure. Up in Lehigh County, early potatoes were of ceipts; others have simply paid the farmers un County, too, the price is up— principally on the rather poor quality. The crop moved slowly prospect of some reduction in output. Dairy products have been in good demand in Salem and prices were low. The late crop looked fairly promising but the drought and heat changed County, New Jersey, but output also has been that. Lancaster County’s early plantings of to declining because of poor pastures. From all bacco have done rather well but later-planted corners of the district there are reports of heavy supplementary feeding by dairymen. In some fields have been hard hit. It looks like a smaller crop this year, so the market should be strong counties a winter shortage of hay threatens; in at higher prices than were received last season. others the whole winter feed picture is indicative Grain and hay crops harvested in early summer of a tight situation. This sort of feeding so early yielded well and quality was high. Corn for in the season is not the kind of farm economics silage looked like a fine crop until recently. our dairymen relish. They have another prob But here, as in the case of other late crops, the lem too— labor. There are not too many satis final outturn will depend on the vagaries of the factory year-round workers available. They com weather from now until harvest time. 15 business re v ie w PORT PROGRESS The considerable attention given industry United States declined by about 3.3 per cent in the Delaware Valley should not obscure in 1952. Locally, imports were up fractionally, the fact that this region is also an enor whereas exports declined from 5.6 million tons mous center of commerce. At the heart of in 1951 to 3.6 million tons in 1952. Nationally, this commercial center is the Philadelphia port area— a bulk-breaking station from ports showed the same general trend— a slight rise in imports and a fall in export tonnage. which ocean, railway, and highway lines of transportation radiate in all directions. Exports Port activity serves as one important meas The lag in foreign commerce tonnage in 1952, ure of commerce in the area. For this rea locally and nationally, was due to a decrease son a recent release of the Delaware River in exports. It did not come about, however, as Port Authority attracts the attention of a result of a general decline in world demand those concerned with business conditions for American goods; rather, the contraction was in the Third Federal Reserve District. In caused by significant drops in foreign demand December 1951, the Business Review gave for a few products. Coal and wheat were among a more complete appraisal of the Phila the three or four commodities most adversely delphia port area. affected by this selective contraction in foreign demand. Since about 95 per cent of anthracite Foreign commerce shipped through the Phila coal exports of the United States and a larger- delphia port area declined in 1952. The decrease than-average amount of wheat were exported was in line with the trend of total United States through the Philadelphia port area in 1951, total tonnage which also was down; but, percentage commerce at this port was more than propor wise, the drop here was sharper. The somewhat tionally affected by the slow-down in the export faster rate of decline came about primarily of these products in 1952. because a decrease in foreign demand for a few responsible for the sharper decline at the port American products had a more-than-proportion- than for the country as a whole. This was largely ate impact on the Philadelphia port area. Over Export reductions in coal and wheat together the longer run, however, commerce at the port has accounted for better than 91 per cent of the total been on the upswing. With the tremendous ex net loss in tonnage through the Philadelphia pansion in industry in the Delaware Valley more port area in 1952. The drop in coal shipments of the same is anticipated. amounted to about l 1/^ million tons, and in A total of 25.9 million tons of foreign com wheat exports the loss was 526,000 tons. Lesser merce was shipped through the Philadelphia export declines were recorded for automobiles, port area in 1952, as compared with 27.9 mil chemicals, and petroleum products. These more lion tons in 1951. This represented a decrease than offset export gains of steel products and of about 7.2 per cent. Total tonnage for the animal products. 16 business re v ie w Imports reflects a nation-wide trend but the increase Imports in the Philadelphia port area— at 22.3 million tons in 1952— were about six times as large as exports and somewhat higher than in the previous year. The all-time high for imports was 23.6 million tons set in 1950. As is practically always the case, crude petro leum was easily the leading commodity im ported through the Philadelphia port area. The port received 17.8 million tons of crude petroleum in 1952— about 670,000 tons more than in 1951. This represented 51 per cent of the nation’s crude petroleum imports. Other imports at the Philadelphia port area showing significant in creases in 1952 included molasses, residual fuel oil, other petroleum products, fertilizer, lead ores, here has run ahead of the trend. A characteristic peculiar to the pre-war Phila delphia port area has survived that period of enormous growth. Ships still enter the port loaded with raw materials but leave without cargo. In the five years immediately preceding World War II imports accounted for around 80 per cent of total foreign tonnage here. Since 1947, imports more than matched this, account ing for 85 per cent. This heavy import balance survives largely because industry in this region, although import ing raw materials through the Philadelphia port area, sends much of its manufactured products overseas by way of the port in New York. The New York Port, the largest port in the country, and burlap and jute bagging. has long attracted goods of this class. This habit still outweighs the many The longer-run outlook advantages offered by the Philadelphia port. Although foreign trade figures for 1952 as com pared with 1951 seem to indicate that commer Perhaps in the future the Philadelphia port area will be able to induce local manufacturers cial activity is lagging at the Philadelphia port to ship more from here; perhaps not. In any area, this is not the case from the longer-run event, the port should continue to grow. Industry view. Since 1939 this port— second in total in the Delaware Valley has undergone enormous waterborne commerce tonnage— has been on the expansion. Even now this industry is bringing upswing. Over that period, foreign commerce raw material imports in tremendous quantities handled here has quadrupled. In part, this gain to the Philadelphia port. CURRENT TRENDS More and more observers seem to feel that busi odd-page study of “ Measuring Business Cycles,” ness may now be at or near the turning point. by Burns and Mitchell, has an idea of the Whether the long-postponed downturn has ar difficulty of timing and measuring fluctuations rived or is in the immediate offing no one, of after they have happened. But it is still easier course, can say for sure. Even looking back it to analyze the past than the future. We are liv is hard to determine exactly when turns take ing through an interesting but confusing period place. Anyone who has leafed through the 500- in which signs point in all directions. 17 business re v ie w Businessmen, Government officials, and others Government spending during fiscal year 1954 have been looking for signs of a downturn for will be $2 billion a long time. They now seem to be having more last May. The bulk of the cut is to come out of success in finding them. The rate of steel out military spending. This leaves a budget deficit put for some time has been below the level of of $3.8 billion as against the May estimate of last spring. Automobile production seems too high $5.8 billion. On a cash basis, the picture looks less than was estimated to be sustained. Businessmen have given indica even better. Instead of a cash deficit of $3 bil tions that they are carefully watching inven lion, it is now estimated that Government cash tories, which recently have been accumulating at a rapid rate. The machinery industry is ex receipts will fall short of cash outlays by only $500 million. pecting to cut output, and production of farm The budget review stressed that even more im machinery already has declined, suggesting that businessmen and farmers will spend less for portant for the future, and “ the essential turn ing point toward a balanced budget,” is the capital equipment. Housing starts have been whittling down of commitments for future out dropping. lays. In the past few years, the pace at which What makes the picture confusing, however, appropriations and authorizations were made is that these signs appear in the midst of un far exceeded the pace at which goods were precedented prosperity. Personal and business delivered and expenditures actually made. The incomes are at all-time highs. Prices have been result was that during much of the time unex fairly steady (even farm prices have shown pended funds amounted to more than $100 bil indications of stabilizing). Although production lion. For the first time in several years new ob- was down in July this seemed to be largely ligational authority is substantially less than esti because of plant-wide vacations; output is be mated annual budget expenditures, and this lower lieved to have risen again in August. Unem level of new obligational authority promises lower ployment currently is as low as at any time since expenditures not only in 1954 but also in future World War II. years. The effect of lower Government spending on A new budget a situation in which other forces may be tend A turning point of another kind has been re ing to produce less vigorous business remains, vealed by the mid-year review of the budget. of course, to be seen. 18 FOR THE R E C O R D ... Fa ctory* T h ird Fe d e ra l Reserve D istric t U n ite d States Pe r cent change P e r cent change Department S to re Check Payments Em p loy ment P a y ro lls Stocks S a le s LO C A L mo. ago O u tp u t M anu fa ctu ring p ro d u c tio n . . C o nstruction c o n tra c tst.......... C o a l m in in g ................................. EM PLO YM EN T A N D IN C O M E Factory em ploym ent.................. - + B A N K IN G ( A ll member banks) D e p o sits......................................... L o a n s............................................... Investm ents................................... U .S . G o vt, s e c u ritie s ............. O t h e r ........................................... Check paym ents......................... yea r ago mos. 1953 from year ago 2* + 2 5 * + 9* + 2 + 20 + 8 -1 6 9 -1 4 - TR A D E** Department sto re s a le s ........... Department sto re sto c ks......... 7 J u ly 1953 from SUM M A RY + mo. ago year ago - 3 - 2 + 22 1 + 29 -1 1 1* + 25* + 9* 1* + 42* + 19* 6 0 + + 9 9 + 4 0 + 3 2 + 12 + + C H A N G ES 7 J u ly 1953 from 5 9 mos. 1953 from year ago +13 + 4 - 6 + + yea r ago mo. ago yea r mo. ago ago 0 + 26 -1 + 46 + 35 + + + + - 2 1 3 4 0 3§ + 6 +16 4 5 0 + 19§ Of ot + 3 + 14 2 3 + 1 + 12§ + 2 0 + + + - 7 + 1t yea r mo. ago ago year mo. ago ago year ago 0+ +1 + 19 -1 La nc a ste r. . . +1 + 9 + 3 +17 P h ila d e lp h ia . -1 + 8 -1 + 16 - 2 5 + 4 R e a d in g . . . . -1 + 3 -1 +14 + + 3 o + 9 1 4 + 3 + 10 0 1 + 1 + 8 + 3 + 11 1 3 + 4 + 8 1 0 — 1 + 1 + 2 1 ♦Pennsylvania fP h ila d e lp h ia § 2 0 C itie s ♦ ♦A d ju ste d fo r seasonal va ria tio n . TBased on 3-month moving averages. mo. ago - 2 + 14 10 + 4 + 8 + 1 + 11 + 6 - 6 + 17 + 8 + 5 + 32 - 8 + 2 -4 + 1 1 9 -8 8 -7 8 P R IC ES C o n su m e r...................................... P e r cent P e r cent P e r cent Pe r cent Pe r cent change change change change change J u ly J u ly J u ly J u ly J u ly 1 9 5 3 from 1 9 5 3 from 1 9 5 3 from 1 9 5 3 from 1 9 5 3 from T re n t o n .......... + 7 + 21 -1 +44 W ilk e s - B a rre 0 + 4 -1 + W ilm in g to n . . 0 + 9 + 1 -3 Y o r k ................ -2 0 + 1 +10 -2 0 -2 8 + 3 +4 + 7 -2 0 + 5 -4 +11 + 28 - 1 0 + 12 -8 + + 23 - 1 0 +12 0 6 + 7 8 +104 2 + 17 5 -2 0 + 6 3 + 23 +14 + - ♦ N o t restricted to corporate lim its o f c itie s but covers area s o f one o r more counties. THIRD FEDERAL RESERVE DISTRICT
@FedFRASER