Regional President Speech

K.R. BOPP NOTES FOR MEETING WITH EXECUTIVE COMMITTEE, FRB OF PHILA. ON THURSDAY, JUNE 28, 1956 RE MEETING WITH LARGE PHILADELPHIA BANKS ON MONDAY. JUNE 25. 1956 All sorts of qualifications that I shall omit - unless there are questions - of which there were, of course, plenty In the meeting. At the end, I shall mention a few of the more im­ portant. A note about the data. My directions: Give me data that reveal most accurately certain basic developments. I. The Relative Importance of the Third District or Metropolitan Philadelphia in the nation (Some data for one, some for the other) II. Recent Developments indicating changes in relative importance III. Recent Banking Developments A. Relative importance 5.3% All banks for recent date B. Recent Developments 3.8% Reporting banks (80% of - all or Philadelphia only? report) - Philadelphia only would be more unfavorable position because of mergers with non-reporters IV. The General Story is accurate - give or take a few % Some Questions Is the Third District "living beyond its means"? Buying more outside than selling to outside - and making up the difference by borrowing? Are the loans to national concerns who spend elsewhere - 111 they finance companies? Or to consumers, who buy cars with funds going |e loyal? to Detroit? Or to finance construction elsewhere? Is it seasonal? If so, improvement should become apparent soon. 3.8% Demand ) . 0 4.2* Total ) D9poslts Digitized for FRASER http://fraser.stlouisfed.org/ 8-9 of total borrowing Federal Reserve Bank of St. Louis M tOM • ■■ FEDERAL RESERVE BANK OF PHILADELPHIA DATE ro (All_who attended meeting on 6/25/56) f (See other side) FROM ..K,R„Bop*>................... I an attaching a chart on float» in answer to a question that waa raised in the meeting held on Monday* Float9 although fluctuating widely from month to month* has bean somewhat more important during the past year than earlier. On the other hand, it seems clearly not to be a problem that is peculiar to banka in the Third Federal Reserre District* * Attached at end Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Fed.Res. Bank of P’:ila. A. H.Willi tins, j V. J. Davis, K.R.Bopp, G.J.Levin | V J Central-Penn National Bank (j. A. ^ienkievi President Fidelity-Phila. Trust Co. H. u. Petersf"» President Girard Trust Corn Geoffrey Sii Exchange Bank President Vincent E. pur, The Penna. Co. for William L. Day, Banking & Trusts President William F. Kell Exec. V. P. The Phila. National Bank Frederic Pot President Provident Trust Co .of Phila. Wm. R. K. Mite Chairman Tradesmens Bank & Trust Co. James M. Large, President Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis K. Bopp pr^pcircd for meeting vith Presidents of large Phila. Banks FRB of Phila. - June 25, 1956 (Charts prepared by Research Dept.) ECONOMIC DEVELOPMENTS IN PHILADELPHIA FEDERAL RESERVE DISTRICT AND IN THE NATION 1. Overall measures of the general importance of the Philadelphia Federal Reserve District indicate that it is a 5 percent to 7 per cent District. In sharp contrast is the volume of borrowing from the Federal Re­ serve Bank of Philadelphia, which has risen rapidly, especially since March, and now equals l8 per cent of the national total. (The borrow­ ing is concentrated in Philadelphia<) 2. Economic growth in the rest of the country recently has been at least as great - and probably greater - than that in the Philadelphia Federal Reserve District or the Philadelphia Metropolitan Area. 3. Reporting member banks in the Philadelphia District have had an almost uninterrupted growth in loans for several years, including 195^* The rate of growth has exceeded that of reporting banks in the rest of the country; as a result, the proportion of loans in the Philadel­ phia District has risen significantly. Unlike loans, deposits at reporting banks in the Philadelphia Dis­ trict have not kept pace with those in the rest of the country; indeed, for many months they have been declining in absolute amounts (even allowing for the year-end seasonal increase). 5. Since reporting banks in the Philadelphia District hold an expand­ ing share of loans and a declining share of deposits, their loan to de­ posit ratio has risen until it is now the highest for any District. Early in 1952 their loan to deposit ratio equalled that of the country; today it exceeds the national average by 11 points or 20 per cent. 6. Banks have met part of the loan demand by liquidating investments (except in the recession of 195*0* Reporting banks in the Philadelphia District have sold relatively more of their investments. Early in 1952 their investment to deposit ratio equalled the national average; today it falls short of the national average by 8 points or 20 per cent. 7. Banks have met part of their need for funds by borrowing from the Federal Reserve Banks. Member banks in the Philadelphia District are now borrowing 18 per cent of the national total. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis RELATIVE IMPORTANCE OF THIRD DISTRICT IN THE NATIONAL ECONOMY Per cent [Lrulavt 10 15 20 * ly/l Discounts 5.3* ' Population 5.6* Value Added by 7.2* Manufacturing Manufacturing 7-2* Employment Durable Ooods ] 5.9* • I Nondurable Ooods ] 9.1* if. Sales of Retail Stores r (Group I) I -10 Apparel | ] 5.7* Furniture tc Furnishings j 5.5* Oeneral Merchandise ] 5.*** Automotive ] 5.1* Eating & Drinking ] 5.0* Food ] *.6* Drugs J 4.3* Miscellaneous Retail ZD 4.0* 1) Service Stations □ 3.5* Building Materials ] 3.3* Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis MEMBER BANK BORROWINGS FROM RESERVE BANKS (Weekly Averages of Daily Figures) U. S. 3rd Dlst. Third District as Proportion of the United States Per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ECONOMIC ACTIVITY Planned Capital Expenditures by Manufacturers in 1956 Per cent increase over 1955 _____________ Phila. Metro. Area U. S. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ¿ i f LOANS (Reporting Member Banks) & ,V'< V Loan to Deposit Ratio - June 13» 1956 Boston ¡60.3* „ Chicago 47.1# New York ■59.3 St. Louis 52.4 Philadelphia \&x Minneapolis 55.2 Cleveland •*9.2 Kansas City 1*5.1 Richmond >*5.5 Dallas 55.0 Atlanta l>5.2 San Francisco 55.6 United States 54.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis DEPOSITS (Reporting Member Banks) Dollar Amount - Third District Billions $ Third District as Proportion of the United Statea Per cent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis INVESTMENTS (Reporting Member Banks) Billl ons $ 2.0 1.5 1.0 Per 4.0 3.5 3.0 Per ££&L Investments-to-deposlt ratio 55 United States 35 Third District L 1952 1953 1954 1955 1956 Investments to Deposit Ratio - June lj, 195& Boston 33.9* Chicago hk.Q io New York 32.8 St. Louis 36.2 Philadelphia 29^. Minneapolis 38.3 Cleveland £371 Kansas City UO.O Richmond U.8 Dallas 30.2 Atlanta lf0.6 () San Francisco 39.1 United States 37*3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis IS BORROWING SEASONAL? (Borrowing from Philadelphia Reserve Bank as proportion of total U. S. borrowing) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis IMPORTANCE OF FLOAT Weekly Reporting Banks Proportion of cash items in process of collection to demand deposits (excl. interbank and U.S. Gov't deposits) Per oent Per cent 15 14 13 12 11 10 Mote: Data as of last Wednesday of each month except June 1956 (13th of month) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1956, June 24). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19560625_karl_r_bopp

@misc{wtfs_regional_speeche_19560625_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1956},
  month = {Jun},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19560625_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}