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A N N U A L R E P O R T 1957 V *W FEDERAL RESERVE ' , v BANK OF RICHMOND In c o m e P ro d u c e rs in the 5 th D istrict A Message to Our Member Banks It is o u r p l e a s u r e to s e n d y o u this Forty-Third A n n u a l the Federal R ese rve B a n k o f R ich m o nd. Report o f In this report w e attem pt to po in t u p fo r y o u r i n f o r m a t i o n so m e o f the b a n k 's c a r d i n a l services a n d activities f o r the y e a r just ended. Many o f the Fifth F ederal Reserve District's im p o r t a n t ec o no m ic activities a re p o r t r a y e d here in w o r d a n d picture. N e e d le s s to say, the indu strial a n d a g r i c u l t u r a l b u sin esses describ ed h a v e contributed s ig n i f i c a n t ly to the e c o n o m ic progress of the a r e a s e rv e d by ou r m e m b e r b a n k s a n d this institution. Y o u m a y be interested in the sta tem ents of co nditio n a s w ell a s the e a r n i n g s c o m p a r i s o n s fo r 1956 a n d 1957, both o f w h ic h a re in clu d e d here. A l s o pre sen te d is a s u m m a r y of c h a n g e s w hic h h a v e ta k en pla ce in the b a n k 's directorates, a d v i s o r y g r o u p s , a n d official sta ff d u r i n g the year. O n b e h a lf of the directors a n d staff, w e extend our sincere a p p r e c i a tion for y o u r c o n t in u in g f r ie n d ly c o o p e ra t io n t h r o u g h o u t 1957. V e r y truly yours, President C h a i r m a n o f the B o a r d 1957 contents . . . M a j o r Incom e Producers in the Fifth D i s t r i c t ...................................p A Y e ar's A c t i v i t y ........................................p 1 16 C o m p a r a t i v e Statem ent of C o n d i t i o n .............................................p 19 C o m p a r a t i v e Sta tem ent of Earnings and E x p e n s e s ....................p 20 Directors a n d Officers, Federal Reserve B a n k of R ic h m o nd . . . p 21 . . . p 23 Directors a n d Officers, Baltim ore a n d Charlotte Branches MAJOR INCOME PRODUCERS IN THE FIFTH DISTRICT “ W e located here because you’ve got a state full o f intelligent, ca p able, and hard w orking people— the kind o f em ployees we want in our plant.” This statement was made to the governor o f one o f the five states com prising the Fifth Federal Reserve D istrict; it could have, in fact, been made about any one o f the other four. Each o f them has the kind o f labor force that attracts new industry— an adequate supply o f high quality workers. The advantage o f excellent human resources enjoyed by the Fifth District does not serve solely to attract new industry. It is one o f the basic reasons fo r the better-than-average gains in per capita income recorded by most o f the District states in the period since the beginning o f W orld W a r II. Even during the period o f expansion since 1950 most o f the District states equalled or exceeded the nation’s grow th in per capita incom e. This was a significant developm ent since it m ight not be expected that areas in which agriculture, nondurable goods m anufacturing, and service industries predominate would even hold their own in a period m arked by expansion o f heavy industry. It was a highly significant developm ent also because it indicated that the low -incom e states o f the District were continuing the rise, set in motion during the Great Depression, tow ard incom e equality with the rest o f the nation. Unfortunately, equality is not imminent, but the fa ct that the gap is narrowing is highly encouraging. A fter all, basic structures o f em ploym ent are not the sort o f thing that can be changed overnight, or over a decade. M a n y b u sin e sse s a re f in d in g , as h a s the ch em ical firm represented in this picture, a path to profits t h ro u g h research. "THE BOUNTY OF EARTH" A griculture has always had a dominant part in the Fifth District w ay o f life. The area is not half agriculture, as it has been carelessly described at times, but the relative im portance o f the farm is greater here than it is on the national scene. In North Carolina farm ing is two to three times more important as a source o f personal incom e than in the nation. In South Carolina the relative importance o f agriculture is about tw ice as great as it is nationally. W hile the difference is not nearly so pronounced as the foregoin g, farm ing is also relatively more important in Virginia. In M aryland and W est Virginia its contribution to personal income is considerably less than in the nation. Note also the relative im portance o f agriculture as a source ploym ent. Persons engaged in farm ing constitute about 11% total civilian labor force in the United States and over 15% Fifth District. The range is from about 6% in Maryland to 2 5% in North Carolina and South Carolina. o f em o f the in the around W hile farm ing may be “ a life fed by the bounty o f earth and sweetened by the airs o f heaven,” it is not one o f our most remunerative occupations. Hence, the depressive influence o f agriculture upon over-all levels o f personal income is particularly noticeable in the Fifth District. This is not a difficulty that is readily corrected. The scales are tipping tow ard a better balance, however, and the changes marking agricultural progress in the District in recent years have contributed to the im provem ent in the com parative income position o f the District. The pell-mell grow th o f m etropolitan areas and o f suburban rings around cities tends to make us forg et occasionally, how ever, that the Fifth District still has a large rural population. A ccord in g to the last Census o f Population (1 9 5 0 ), slightly more than half the District’s people lived in rural places— but fa r from all as farm ers. It is likely that since then the District has m oved away from its historical position as a rural region. H ow ever, the aggregate picture o f population distribution is heavily weighted by the District o f Colum bia and the preponderant urban count in M aryland. W est Virginia, North Carolina and South Carolina still have predom inately rural populations, and Virginia’s urbanites are just a little more numerous than her rural dwellers. Aside from Baltimore, which accounts fo r around tw o-fifths o f M aryland’s population, the m ajority o f Old Liners reside in rural areas. TOO M ANY AND TOO SMALL Thus, even though much o f the rural population is rural nonfarm, it is obvious that a large percentage o f the people in the Fifth District live on farms. As stated earlier, about one-seventh o f the persons engaged in all occupations in the District are in agriculture. The com parable figure fo r the nation is around one-ninth. Here again the aggregate conceals wide diversities. In North and South Carolina the people making a living in agriculture account fo r between one-fifth and one-fourth of the total civilian labor force in each state. One reflection o f this heavier-than-average concentration o f em ploym ent in agriculture is that North Carolina has, next to Texas, the largest num ber o f farms in the nation. However, the average acreage per North Carolina farm is the smallest in the nation. This combination is one o f the m ajor reasons fo r the relatively low level o f per capita income in North Carolina. Relatively small size o f farm s is a characteristic feature o f Fifth District agriculture, and current trends do not indicate much o f a change in this respect. The latest Census o f Agriculture, taken in 1955, shows only a negligible increase after 1950 in average size of District farms, a grow th that lagged behind the national increase. This Census disclosed also 67,000 few er farm s in our five-state area than there were at the beginning o f this decade and nearly four million acres less land in farms. This is the smallest num ber o f farm s in the District since 1890 and the few est acres o f farm land in almost a century. These changes are part o f agriculture’s contribution to a more efficient utilization o f the District’ s resources. KING TOBACCO The inimitable chant of the tobacco auctioneer, which radio has made fam iliar to the w hole nation, is sounded mainly over tobacco grow n in the Fifth District. This chant has almost becom e an oral hall mark o f District agriculture, so dominant is the District’s position in the production o f this crop. A bout nine-tenths o f the nation’s output o f flue- 3 O n e of these w o r k e r s is e n jo y in g the e n d -p ro d u c t of a lo n g p r o d u c tive process that he is b e g i n n i n g b y setting out to b acco plants. Fifth District f a r m s p ro du c e a b o u t tw othirds of the n atio n's to b ac c o crop. S o ld to the highest bidder! Down the ro w s o f ba skets of to b ac c o m o v e the c h a n t in g au ction eer a n d p a r a d e of b u ye rs at a Fifth District to b a c c o auction. These e m p lo y e e s of a Fifth District cigarette produ cer are m a k i n g tests that disclose a n y lack of u niform ity or d ep a rtu re from p e a k - h ig h s t a n d a r d s required for each of the bil lions of cigarettes s h ip p e d a n n u a lly fr o m District factories. R e a d y for harvest, this cotton w a s g r o w n on a Fifth District fa r m a n d will likely be g in n e d , spun, w o v e n , a n d fin ish ed into fa b ric in District mills. Cotton h a s a l w a y s been one of the l e a d i n g a g r ic u ltu r a l products of the District. T w is tin g sliver into r o v i n g — a n in terest-catching p h r a s e w hic h in nontechnical lan gu age m e a n s m aking a continuous, twisted s tra n d of fiber, in this case cotton fiber, to be used in the produ ction of yarn . This is a n in te gra l part of the District's la rg e st source of m a n u f a c t u r i n g w a g e s a n d salarie s. A Fifth District cotton mill runs tw o w id t h s o f cloth th r o u g h a fin is h in g process. This is o n e of the m a n y mills that m a k e this District the textile center o f the nation. cured tobacco and about two-thirds o f the total tobacco crop is raised on Fifth District farms. From the days o f our founders tobacco has been a leading crop in this area, and it still is, accounting fo r almost one-third o f the cash receipts from all farm products sold by District farm ers. In fact, the relative importance o f the “ tawney w eed ” to District farm ers has increased substantially over the past quarter-century, rising to the one-third figure just mentioned from less than onefourth on the average from 1930 to 1934. The other leading comm odities in the agricultural structure o f the District and their approxim ate shares of total cash receipts from farm marketings (1956 data) are: poultry and eggs 1 5 % , dairy products 1 1 % , cotton 7 % , cattle and calves 6 % , and forest products 5 % . Together with tobacco, these comm odities represent around threefourths o f the District’ s total farm cash receipts. Although cotton is still among the District’s leading agricultural products, its relative importance has declined steadily and considerably over the years. As just indicated, cotton provides Mr. District Farm er with about seven cents out o f every dollar he receives from the sale o f his total product. From 1945 to 1949 it was almost tw elve cents on the average, in the period 1935 to 1939 it averaged fifteen cents, and back in the last half o f the decade of the Twenties cotton really was the king o f the crops in accounting fo r over one-fourth o f the District’s agricultural cash receipts. VARIATIONS IN THE STATE MIX The pattern in each state contains important variations from the over-all list just given fo r the District. In M aryland dairy products and poultry and eggs account fo r about one-half o f total cash receipts from all farm marketings. Truck crops are a specialty o f M aryland’s Eastern Shore and have a relative im portance there unmatched in any other area o f similar size in the District. T obacco and cattle com plete M aryland’s list o f leading sources o f agricultural income. T obacco, poultry and eggs, and dairy products provide Virginia farm ers with around one-half o f their total receipts. Cattle are rela tively more important in Virginia than in most other District states, ranking fourth as a source o f agricultural income. Peanuts are also an im portant agricultural product in the Old Dominion. The “ big three” of W est Virginia’s agricultural output consist of poultry and eggs, dairy products, and cattle and calves. Fruit has a particular importance in this state that puts it much higher in the Mountain State’s agricultural hierarchy than is the case in any o f the other fou r states. T obacco dominates the agricultural scene in North Carolina, provid ing as much as one-half o f total cash receipts from all farm products. Other important sources of agricultural income there are poultry and eggs, cotton, dairy products, and forest products. In South Carolina the agricultural spotlight shines with approxim ately equal intensity on tobacco and cotton, the two together producing G around one-half o f the state’s cash sales o f farm comm odities. Even this predom inance, however, is a fa r cry from the situation thirty years ago when cotton alone provided South Carolina farm ers with almost two-thirds o f their cash receipts. THE LEADER A s an offset to the agricultural situation o f too little fo r too many, District states have looked more and more in the direction o f manu facturing. As in the nation, m anufacturing is the largest em ployer in the District and the leading source o f personal income. A ccordin g to the latest Population Census, m anufacturing as a per cent o f total civilian labor force ranges from about 19% in W est Virginia to 28% in each o f the Carolinas. W hereas m anufacturing provided almost one-third o f total personal civilian income from current production in 1956 in the nation, it accounted fo r the follow in g shares in the District: Virginia 2 1 % , W est Virginia 2 7 % , M aryland 2 8 % , North Carolina 3 2 % , and South Carolina 3 6 % . The grow th of total manufacturing em ployment has, naturally enough, been distributed very unevenly among individual industries in both the nation and in the District. One o f the results o f the skewed distribution has been the postw ar em ergence o f durable goods indus tries as the dominant mem ber o f the durable— nondurable dichotom y. This has been due in part to the slack growth in textiles, apparel, and food . Just before W orld W a r II these three industries provided em ploym ent fo r one out o f every three factory workers in the United States. A t last count this had declined to around one out o f every four. These are leading em ployers in the Fifth District, and their failure to exhibit the dynamic grow th characteristics o f most o f the m ajor categories o f manufacturing activity has hit District states right where it hurts most. THE NATION'S TEXTILE CENTER The textile industry is the kingpin o f m anufacturing industries in this District. It is the largest em ployer and has, by far, the largest payroll. It, largely the cotton textile industry, dominates the industrial structures o f the Carolinas to the point o f accounting fo r around one out o f every tw o m anufacturing job s in North Carolina and almost six out o f every ten in South Carolina. Its predominance as a payer o f wages and salaries is o f a similar magnitude in the tw o states. The textile industry is the number one em ployer also in Virginia, but there it accounts fo r only about one-seventh o f total m anufacturing em ployees as com pared to one-half in North Carolina and six-tenths in South Carolina. As a source o f m anufacturing wages and salaries, how ever, textile operations rank second in Virginia, accounting fo r a little less than one-eighth o f the state’s total. Prop s h o p v i e w of so m e o f the products of the Fifth District's a irc raft industry. 7 s ig n ific a n c e to the n ation is indicated in this im p re s s iv e a e rial photo. F ollow ing hard on the heels o f an unsatisfactory year fo r the textile people, it m ight not seem to be the most opportune time to refer to the bright future fo r this industry. Nevertheless, the basket that holds so many eggs in the economies o f North and South Carolina and of Virginia is a very sturdy one with firm prospects o f substantial growth. No one can review the Bureau o f Census estimates o f future population grow th without being impressed by the m arket potentials it spells out fo r the textile industry. The leading manufacturing source o f income in the Fifth District is certain to grow with the nation. IT ALL STARTED AT JAMESTOWN History holds that the nation’s chem ical industry had its birth at Jamestown in 1608. It is appropriate, then, that it has becom e V ir ginia’s largest m anufacturing industry so fa r as its wages and salaries bill is concerned and that some o f the country’s largest chem ical plants are located in Virginia and in its neighboring District states. Despite its many years o f age, the chem ical industry is grow ing like a youngster. Increasing in size at an annual rate o f around 7 % , as against an over-all industrial grow th o f 3 % , it has becom e the nation’ s third largest indus try, with over 11,000 plants turning out some 9,000 different products. 9 G o n d o l a s — W e st V i r g i n i a style. Freight cars lo a d e d w ith b itu m in o u s coal a b o u t to b e g in their trip to distribution points for dom estic a n d o v e r s e a s m arkets. In order to meet a burgeoning demand, this industry has had to invest about a billion dollars a year since W orld W ar II in new plant and equipment. In the Fifth District investment outlays o f chem ical com panies have generally exceeded those of any other manufacturing group. A large share o f these expenditures has been made in Virginia and the Carolinas fo r plant and equipment used to produce synthetic fibers. Much o f the intense competition faced by the District’s cotton textile industry has developed right here in the District with the growth o f the synthetic fibers industry. Indicative o f this grow th is the rise in the share o f total fiber consumption in the United States accounted fo r by man-made fibers from 10% in 1937 to 17% in 1947 to around 2 5% today. Synthetic fiber plants make up much o f the chemical industry in Virginia and the Carolinas. THE VALLEY OF THE GIANTS The chem ical industry, sans the synthetic fiber sector, is the leading m anufacturing group in W est Virginia (excluding from the latter the six panhandle counties not in the Fifth D istrict). Alm ost one-third of this state’s total m anufacturing wages and salaries and over one-fourth o f all m anufacturing employm ent originate in its chemical plants. The bulk o f this industry consists o f a relatively small number o f huge plants located along the banks o f the Kanawha River fo r a total stretch o f about 55 miles above and below Charleston. These vast plants of modern technological m agic stand like giant Sequoias in the Kanawha V alley and constitute such a unique concentration o f chem ical facilities that the valley is frequently described as the “ chemical Ruhr o f the United States.” Drawing on the valley’s generous supply o f vital 10 The Fifth District is f a m o u s for its q u a lit y furniture. skilled c r a ft s m a n tive m e m b e r that is one This is a of a h i g h l y re p re s e n t a l a b o r i n g force of the District's m ost v a l u a b l e resources. raw materials such as coal, oil, natural gas, and brine these plants make W est Virginia one o f the nation’s leaders in the production of producers’ chemicals. Incidentally, chemical production is not so dominant in the Kanawha V alley that it excludes other industries. Kanawha County is, for example, included among the leading counties o f the nation in the pro duction o f stone, clay, and glass products. In fact, this industry group is W est V irginia’s (excluding the six counties referred to earlier) second largest source o f manufacturing wages and salaries. In none o f the other District states does this industry group have a relatively important ranking. But even as this is written an announcement is re ceived that one o f the w orld ’s largest continuous fibrous glass yarn plants will be built in North Carolina. KNOWN THE WORLD OVER The fo o d industry is the third largest source o f m anufacturing wages and salaries in the District, follow ed by the transportation equipment industry (ships and airplanes) and the apparel industry. Together with textiles and chemicals, they account fo r over one-half o f total m anufacturing wages and salaries. Such general statements suffer from the omission o f m anufacturing groups that are o f vital im portance in specific states or areas. For example, primary metals and fabricated metal products are important m anufacturing income producers in M ary land. In Virginia and North Carolina tobacco, furniture, and lumber and other w ood products are m ajor components o f the econom ies of 11 those states. In fact, there are no products o f the Fifth District that are better known throughout the w orld than the tobacco products and furniture made in North Carolina and Virginia factories. BLACK DIAMONDS W est V irginia’s, and perhaps the nation’s, greatest natural resource is its vast deposits o f bituminous coal. These are so widespread in the Mountain State that a construction crew struck a bituminous seam while building a sector o f the W est Virginia Turnpike. It has been claimed that if all the other coal mines in the nation were shut down, W est Virginia would have no trouble in supplying the country with bituminous coal fo r the next two centuries. In recent years, however, this abundance has been a serious problem, fo r W est Virginia has more mines and miners than its coal markets require. A t the end o f W orld W ar II it was obvious that two o f the coal industry’s largest markets— railroads and residential— would be steadily and severely reduced. W hile this took place, the utility in dustry becam e coa l’s principal and fastest-growing customer. Its in creased consumption has not been large enough, however, to offset This h e a v y e q u i p m e n t is indic ative of the m en t m u ltim illio n th at has p ap erm akin g d o lla r built the facilities to in ve st District's im pres s iv e p r o p o r tio n s since W o r l d W a r II. declines in other markets, and so coal has bucked the trend o f an expanding econom y over the postw ar period. This has been, o f course, a very serious problem in W est Virginia where coal mining, when at high levels o f operations, is a potent leaven in its econom ic loaf. Around one-fifth each o f total civilian income and total wages and salaries from all sources in W est Virginia is derived from bituminous coal mining. Thus, coal mining is second only to manufacturing as a source o f income to W est Virginians. Despite its disappointing perform ance and frequently depressed state during the postwar period, bituminous coal mining is classed as a grow th industry by many authorities. A 50% increase in demand for this product, fo r example, has been estimated fo r the decade follow in g 1955. Indeed, a rather sharp check has to be kept on one’s tendencies to avoid forecasting a truly fabulous future fo r this industry. Presently, fo r example, the United States leans heavily on imports o f liquid fuels, and the prospects are that the amount needed to be im ported will increase. H owever, if costs and military considerations intervene, coal will be converted into liquid fuels and a really tremendous new market will be created fo r W est Virginia coal. Again, considerable research is being conducted on the basis o f the theory that coal will becom e the basic source o f chemicals. This conversion would provide a sizable increase in the demand fo r coal. Another coal market with a strong grow th potential is the aluminum industry. This is not only a fast-grow ing industry but by reason o f its electrolytic methods o f production it is a very large consum er o f power. A dramatic step in the direction o f realizing the potential of this market fo r bituminous coal was the recent beginning of operations at a $200 million aluminum processing plant at Ravenswood, W est Vir ginia. This may well be the forerunner o f other plants that will be located near bituminous fields rather than near water power. One spokesman for the coal industry has expressed the opinion that “ the growth in demand can becom e great enough (from now on) to strain the abilities o f the coal industry and of transportation facilities to meet it.” Should this occur, W est Virginia and Virginia would be prime beneficiaries. UNCLE SAM, PROPRIETOR Nowhere in the nation does the fa ct that “ Government has becom e big business” have the significance that it has in the Fifth District. W hat with the District o f Columbia and the spilling over o f its Federal employment into Virginia and Maryland, government is more than half again as important in the District as it is nationally as a source of civilian income. On the basis o f civilian income derived from current production, governm ent is the third largest o f the District’s m ajor sources, outranked only by manufacturing and trade. On this same basis, government is pushing m anufacturing hard as the number one income producer in Virginia. The latest available data show manufacturing ahead only by a very slim margin. Back in the Twenties, Virginia could have been referred to as an agricultural econom y. During the depression o f the Thirties, however, income from every source except government declined, and by 1940 the latter had exceeded agriculture in relative importance. At times during the 13 present decade governm ent civilian payrolls in Virginia have exceeded m anufacturing wages and salaries. It should be noted that while the Federal governm ent accounts fo r the larger part of such government payments, the share emanating from the state and its municipalities has been grow ing at a faster rate since the end o f W orld W ar II. W orking fo r Uncle Sam or fo r the state or a local government also produces larger-than-average relative shares o f total civilian income in Maryland, South Carolina, and, o f course, in the District o f Columbia. The rise in governm ent employment in the Fifth District at a faster clip than in the rest o f the nation since 1939 has been a growth factor in the above-average rise in personal income. Paradoxically, it should be view ed also as a stability fa ctor fo r it probably heightens the ability of the states involved to avoid as wide swings in total employment as may occur in the rest o f the nation from time to time. TRIANGLE OF OPPORTUNITY Changes in the industrial structures o f individual states from year to year occur at a seemingly snail-like pace. Nevertheless, a new econo my is evolving in each Fifth District state that appears better suited fo r ■ h A s p e c ia lty u n d e rgo in g that flavo r gives fo r of the the District— h a m s s m o k in g them the w h ic h they process delecta ble a re w o r ld fam ous. 14 ,ii f The la rg est private b ra n c h te lep ho n e e x c h a n g e in the w o r ld is located in the Pe n tago n , one of the m a n y sources of g o v e r n m e n t e m p l o y m e n t in the Fifth District. the accomplishment o f such objectives as higher per capita income and reduction in the ranks o f the lowest income groups. The principal differences to date are not in the comparative dollar gains of individuals and businesses, but in the econom ic structure— the industrial arrange ment and composition. One of the most impressive examples o f this is in the District growth in research. An increasing number of companies are budgeting sizable amounts for scientific work carried on in the firms’ own laboratories or in professional and academ ic facilities. In recognition o f the facts that there is a profitable bond between industry and scientific research and that industrialization in the South now needs more and better scientific facilities, North Carolina has created a non-profit agency to develop and coordinate industrial research within the state’s “ Research Tri angle.” Comprised of three closely located educational institutions with over 850 research scientists, this unique concentration o f facilities offers special advantages to private businesses. Its contributions to industrial progress in North Carolina and in the South should be lasting and impressive. The advantages o f modern facilities and scientific know-how offered by this institutional triumvirate are also w idespread among the m ajor income producers o f this District. In a very real sense, the progressive nature of this research center is a m ajor characteristic o f the people, businesses, and governments that together are called the Fifth Federal Reserve District. 15 A Y E A R ’S A C T IV IT Y One striking aspect of econom ic grow th in a dynamic region such as described in the feature article o f this report is the constantly increas ing need fo r banking services. Our member banks saw this in more checks written by customers, in more currency needed fo r tills of Fifth District businesses, in the record demand fo r loans during most o f 1957, and in the demand fo r the many other services provided their customers. This expanding demand also shows up in the w ork o f this bank as it helps its members provide these ever-increasing services, fo r the opera tions o f the Federal Reserve Bank o f Richmond are directly related to those o f its members and to the econom ic life o f the District. An illustration o f this expansion is the rapid grow th in the volume o f checks handled by our transit department. The accom panying chart shows this increase over the past three decades. The increase in the dollar volume is equally impressive. In the past 20 years, fo r example, the dollar volume o f checks cleared has increased almost sevenfold. In 1957 the three offices o f this bank helped speed on their way 251,000,000 checks totaling $88,000,000,000. NUMBER OF CHECKS HANDLED 1927 1937 1947 1957 M illions of Checks A lso essential to the health o f the Fifth District econom y is the cur rency and coin needed to support its many business transactions. W hen people need more currency and coin they get it through m ember banks which in turn get it from the Federal Reserve Bank. W hen they would rather have a little more m oney on deposit and less in currency, the currency returns to the Federal Reserve in the same way. Last year this bank shipped to and received from District banks (and the Treas ury) 849,000,000 pieces o f currency worth $5,058,000,000 and 1,402,000,000 coins worth $116,000,000. A conscientious w orker counting one piece a second and w orking an eight-hour day could count a little more than one-third o f the currency in his working lifetime— if he didn’t take too much time out fo r coffee breaks. 16 CURRENCY RECEIVED AND PAID OUT 1927 1937 1947 1957 1 2 3 4 5 Billions of Dollars Time is valuable to a businessman, and he frequently needs to transfer money quickly over long distances. Through his member bank and this bank’s facilities for wire transfers he does it for the cost o f a com m ercial wire. In 1957 such transfers aggregated $62,000,000,000, almost twice the total purchases o f all state and local governments. TELEGRAPHIC TRANSFERS OF FUNDS 1927 1937 1947 1957 10 20 30 40 50 60 Billions of Dollars These are but a few o f the services this bank provides its member banks and their customers. Am ong the others— Government securities issued and redeem ed aggregated $6,761,000,000, an amount equal to a one-third down payment on all the new cars sold last yea r; notes dis counted fo r member banks totaled $5,794,000,000 (enough to pay for every mile of new highways built in the United States in 1957) ; $1.7 million o f non-cash items were collected every working day. All in all, 1957 was a very busy year at the Federal Reserve Bank o f Richmond. 17 CHANGES IN BOARDS OF DIRECTORS Denver L. Morgan, vice president and cashier of The Charleston National Bank, Charleston, W . Va., was elected a Class A director to succeed Daniel W . Bell, president and chairman o f the Board of the Am erican Security and Trust Company, W ashington, D. C. Robert O. Huffman, president o f Drexel Furniture Company, Drexel, N. C., was elected to a second term as Class B director. The Board o f Governors redesignated as chairman o f the Head Office Board and Federal Reserve Agent, John B. W oodw ard, Jr., chairman o f the Board, N ew port News Shipbuilding & Dry D ock Company, N ew port News, Va. A lonzo G. Decker, Jr., executive vice president o f The Black and D ecker M anufacturing Company, Towson, Md., was redesig nated as deputy chairman of the Board. D. W . Colvard, dean o f agriculture o f North Carolina State College o f Agriculture and Engineer ing, Raleigh, N. C., was appointed to a second term as Class C director. The Board o f Governors also appointed three branch directors during the year. Gordon M. Cairns, dean o f agriculture, University o f Mary land, College Park, Md., was appointed to the Baltimore Branch Board in February, succeeding Theodore E. Fletcher, agriculturist from Easton, Md. In Decem ber, Clarence R. Zarfoss, vice president of Western Mary land Railway Company, Baltimore, Md., was reappointed to the Board o f the Baltimore Branch, and George H. Aull, agricultural economist, Clemson College, Clemson, S. C., was appointed to the Charlotte Branch Board, succeeding Paul T. Taylor, president o f the Taylor W arehouse Company, Winston-Salem, N. C. The Head Office Board o f Directors appointed J. N. Shumate, presi dent o f The Farmers National Bank o f Annapolis, Md., to the Baltimore Branch Board to succeed Charles A. Piper, president of The Liberty Trust Company, Cumberland, Md. Ernest Patton, chairman of the Board, Peoples National Bank o f Greenville, S. C., was appointed to a second term on the Charlotte Branch Board. FEDERAL ADVISORY COUNCIL MEMBER The directors o f this bank appointed John S. Alfriend, chairman of the Board and president o f the National Bank o f Commerce, N orfolk, Va., to the Federal A dvisory Council to succeed Robert V. Fleming, chairman o f the Board, Riggs National Bank, W ashington, D. C. CHANGES IN OFFICIAL STAFF In February, Robert R. Fentress was elected to the position o f assist ant cashier. Robert G. H ow ard, assistant vice president, left the bank in March to accept a position with the Am erican Bankers Association. Three official prom otions and one change in official title were made at year end. H. Ernest Ford was prom oted from assistant cashier to assistant vice president, and John E. Friend and Raymond E. Sanders, Jr., were elected assistant cashiers. The title o f R. Pierce Lumpkin was changed from financial economist to senior economist. NEW MEMBER BANK On April 1 a member bank opened its doors to the public as a newly chartered national bank. The new member is the City National Bank o f Charleston, W . Va. 18 ASSETS: D ec e m b e r 3 1 ,1 9 5 7 D e c e m b e r 3 1 ,1 9 5 6 Gold certificate a c c o u n t___________________________________________________________ $1,347,886,751.27 $1,315,476,176.09 Redemption fund for Federal Reserve n o te s ____________________________________ 73,569,035.78 71,140,170.78 T otal G old C ertificate R e s e r v e s ____________________________________ 1,421,455,787.05 1,386,616,346.87 Federal Reserve notes o f other b a n k s ___________________________________________ 45,902,310.00 31,348,800.00 Other cash ___________________________________________ __ _____ ______ _______________ 25,618,053.01 18,748,368.68 Discounts and advances __________________________________________________________ 4,265,000.00 4,525,000.00 U . S. G O V E R N M E N T S E C U R IT I E S : Bills _______________________________________________________________________________ 62,844,000.00 105,978,000.00 C ertificates_______________________________________________________________________ 1,273,618,000.00 673,115,000.00 N o t e s ______________________________________________________________________________ Bonds _______ 563,597,000.00 179,012,000.00 172,501,000.00 s e c u r it ie s __________________________________ 1,515,474,000.00 1,515,191,000.00 1,519,716,000.00 _____________________________________________________________________________ T otal U . S. G o v er n m en t l o a n s a n d s e c u r it ie s ___________________________________________ 1,519,739,000.00 Due from foreign banks __________________________________________________________ T otal 740.28 1,135.39 Uncollected cash items ___________________________________________________________ 421,537,623.58 417,564,495.66 Bank p rem ises______________________________________________________________________ 6,996,259.30 7,219,617.41 14,057,742.09 Other a s s e t s ________________________________________________________________________ 15,336,514.24 T O T A L A S S E T S _____ __ _____________________________________ $3,455,307,515.31 $3,396,551,278.25 Federal Reserve notes _____________________________________________________________ $2,188,220,565.00 $2,181,224,185.00 Member bank— reserve a cco u n ts______________________________________________ 801,083,446.15 814,960,898.02 LIABILITIES: D E P O S IT S : U . S. Treasurer— general account ____________________________________________ 47,160,559.22 28,484,110.63 Foreign ___________________________________________________________________________ 17,391,000.00 15,096,000.00 O t h e r ______________________________________________________________________________ 5,155,946.47 8,820,000.76 _________________________________________________________ 870,790,951.84 867,361,009.41 Deferred availability cash items _________________________________________________ 327,773,004.22 283,633,909.54 Other lia b ilitie s_____________________________________________________________________ 587,044.96 969,841.45 T O T A L L I A B I L I T I E S _______________________________________ 3,387,371,566.02 3,333,188,945.40 T o t a l D e p o s it s CAPITAL ACCOUNTS: Capital paid in ____________________________________________________________________ 15,695,050.00 14,817,100.00 Surplus (Section 7) _______________________________________________________________ 41,236,411.12 37,593,783.07 Surplus (Section 13b) _____________________________________________________________ 3,349,144.81 3,349,144.81 Other capital a cco u n ts_____________________________________________________________ 7,655,343.36 7,602,304.97 T O T A L L IA B I L IT IE S A N D C A P IT A L A C C O U N T S _____________ $3,455,307,515.31 $3,396,551,278.25 Contingent liability on acceptances purchased for foreign correspondents _ _ $ 3,881,100.00 $ 2,539,800.00 E a r n in g s : 1957 Discounts and advances _______________________________________________________ Fees received on commitments to make industrial lo a n s ___________________ Interest on U . S. Government secu rities_____________________________________ Other earnings __________________________________________________________________ Total Current Earnings ________________....___________________________ 1956 $ 1,180,778.42 _______ 46,405,110.59 14,483.20 $ 8 9 3 ,2 2 7 .4 6 2 5 .8 9 3 4 ,7 5 1 ,7 6 8 .7 7 1 5 ,5 7 8 .5 6 47,600,372.21 3 5 ,6 6 0 ,6 0 0 .6 8 Operating expenses (including depreciation on bank premises) after deducting reimbursements received for certain Fiscal Agency and other expenses _________________________________________________ Assessments for expenses of Board of G overn ors___________________________ Cost of Federal Reserve cu rren cy _____________________________________________ 8,718,644.60 380,800.00 660,458.96 8 ,0 7 2 ,0 0 7 .0 4 N et Expenses _________________________________________________________ 9,759,903.56 8 ,9 4 3 ,6 2 6 .7 6 Current N et E a r n in g s __________________________________________________________ 37,840,468.65 2 6 ,7 1 6 ,9 7 3 .9 2 Profit on sales of U . S. Government securities (net) _______________________ Reimbursement for Fiscal Agency expenses incurred in prior y e a r s _____ A ll o th e r __________________________________________________________________________ 10,405.94 116,135.27 1,886.26 1 6 ,9 6 0 .1 0 Total A d d itio n s________________________________________________________ 128,427.47 2 0 ,9 9 9 .1 9 Reserves for contingencies _____________________________________________________ Retirement system (adjustm ent for revised benefits) ______________________ A ll o th e r __________________________________________________________________________ 53,038.39 571,926.00 533.02 5 2 ,9 2 7 .7 5 Total Deductions _____________________________________________________ 625,497.41 5 4 ,3 5 4 .0 7 N et Additions ( + ) or Deductions ( — ) _____________________________________ — 497,069.94 - 3 3 ,3 5 4 .8 8 U . S. T r e a s u r y ____________ $37,343,398.71 $ 2 6 ,6 8 3 ,6 1 9 .0 4 Paid U . S. Treasury (interest on Federal Reserve notes) _________________ Dividends paid __________________________________________________________________ Transferred to surplus (Section 7) ___________________________________________ $32,783,688.22 917,082.44 3,642,628.05 $ 2 3 ,2 3 7 ,5 3 4 .7 5 8 6 4 ,1 5 3 .9 0 2 ,5 8 1 ,9 3 0 .3 9 Total ___________________________________________________________________ $37,343,398.71 $ 2 6 ,6 8 3 ,6 1 9 .0 4 Balance at close o f previous y e a r ________________________________________________ Addition account o f profits for y e a r _____________________________________________ $37,593,783.07 3,642,628.05 $ 3 5 ,0 1 1 ,8 5 2 .6 8 B a l a n c e a t C l o s e o f C u r r e n t Y e a r _______________________________ $41,236,411.12 $ 3 7 ,5 9 3 ,7 8 3 .0 7 $14,817,100.00 930,450.00 $ 1 3 ,7 7 1 ,5 0 0 .0 0 15,747,550.00 1 4 ,8 2 3 ,2 0 0 .0 0 E xpenses : A d d it io n s to D e d u c t io n s Current N from et 2 7 2 ,1 0 0 .0 0 5 9 9 ,5 1 9 .7 2 E a r n in g s : Current N et 4 ,0 3 9 .0 9 E a r n in g s : N et E a r n in g s B efore P a y m e n t s to 1 ,4 2 6 .3 2 S U R P L U S A C C O U N T (Section 7) 2 ,5 8 1 ,9 3 0 .3 9 C A P IT A L STO CK A C C O U N T (Representing amount paid in, which is 5 0 % of amount subscribed) Balance at close o f previous y e a r ________________________________________________ Issued during the year ___________________________________________________________ Cancelled during the year _______________________________________________________ B a l a n c e a t C l o s e o f C u r r e n t Y e a r _______________________________ 52,500.00 $15,695,050.00 1 ,0 5 1 ,7 0 0 .0 0 6, 100.00 $ 1 4 ,8 1 7 ,1 0 0 .0 0 20 Directors and Officers D ire c to rs John B. W o o d w a r d , jr. C h airm a n of the Board and Federal Reserve A ge n t A lo n z o G. Decker, Jr. Deputy Ch airm an of the Board CLASS A Robert G a g e President, The Com m ercial Bank Chester, South Carolin a Jo se ph E. H e a ly President, The Citizens N a tio n a l Bank of Ham pton D e n v e r L. M o r g a n Vice President and Cashier, The Charleston N a tio n a l Bank Ham pton, V irgin ia Charleston, W est V irgin ia CLASS B L. V in to n Hershey President, H agerstow n Shoe C o m p a n y H age rsto w n, M a ryla n d Robert O. H u f f m a n President, Drexel Furniture C o m p a n y Drexel, N orth C aro lin a W m . A. L. Sib le y Vice President and Treasurer, M o n a rch M ills Union, South C a ro lin a CLASS C D. W . C o lv a r d Dean of Agriculture, North C a ro lin a State C o lle ge of Agriculture and Engineering Raleigh, North Carolin a A l o n z o G. Decker, Jr. Executive Vice President, The Black and Decker M a n u fa c tu rin g C o m p a n y Tow son, M a ry la n d J ohn B. W o o d w a r d , Jr. Ch airm a n of the Board, N e w p ort N e w s Sh ip b u ild in g and Dry Dock C o m p a n y N e w p o rt N e w s, V irgin ia Mem ber F ederal A d v is o r y C o u n c il 1 John S. A lfrie n d C h airm an of the Board and President, N a tio n a l Bank of Commerce N o rfolk, V irgin ia O ffic e rs H u g h Leach President E d w a r d A. W a y n e First Vice President N. L. A r m i s t e a d Vice President E d m u n d F. M a c D o n a l d Assistan t Vice President Robert L. C h e rry Vice President G e o r g e W . M c K i n n e y , Jr. A ssistan t Vice President J. D e w e y D a a n e Vice President John L. N o s k e r A ssistan t Vice President D o n a l d F. H a g n e r Vice President Victor E. P re g e a n t, III A ssistan t G e n e ral Counsel A u b r e y N. Heflin Vice President and Counsel G. H a r o ld S n e a d Chief Exam iner U pton S. M a r t i n Vice President C liffo rd B. B e a v e r s A ssistan t Cashie r J oseph M . N o w l a n Vice President and Cashier E. B. C o l e m a n A ssistan t Cashie r J a m e s M . S la y Vice President John G. Deitrick A ssistan t C ash ie r T h o m a s 1 Storrs . Vice President J. G o r d o n Dickerson, Jr. A ssistan t C ash ie r C. B. S trathy Vice President and Secretary Robert R. Fentress A ssistant Cashie r C h a r le s W . W il li a m s Economic Adviser John E. Friend A ssistan t C ashie r H. Ernest Ford A ssistan t Vice President R a y m o n d E. S a n d e r s, Jr. A ssistan t Cashie r R. Pierce Lu m p kin Senior Economist W y t h e B. W a k e h a m A ssistan t Cashier General R. S. Brock, Jr. In d u s tria l A d v is o ry C o m m itte e General Auditor O v e r to n D. D e nn is E d w in H yde W a l k e r D. Stuart Dom inion Oil C o m p an y President, Miller & Rhoads, Inc. President, Richmond Richmond, V irgin ia Richmond, V irgin ia Richmond, V irgin ia H a rd w a re Com pany 22 D ire c to rs Dean of Agriculture, University of M a ry la n d College Park, M a ry la n d W m . Purnell Hall President, M a ry la n d Sh ip b u ild in g & Drydock C o m p a n y Baltimore, M a ry la n d J a m e s W. M c E lro y President, First N a tio n a l Bank of Baltimore Baltimore, M a ry la n d J. N. S h u m a t e President, The Farmers N a tio n a l Bank of A n n a p olis Annapolis, M a ry la n d J o h n W. Stout President, The Parkersburg N a tio n a l Bank Parkersburg, W est V irgin ia S t a n le y B. Trott President, M a ry la n d Trust C o m p a n y Baltimore, M a ry la n d C la re n c e R. Z a rfo s s Vice President, W estern M a r y la n d R a ilw a y C o m p a n y Baltimore, M a ry la n d D o n a l d F. H a g n e r Vice President A. A. Stew art, Jr. Cashier B. F. A r m s t r o n g Assistant C ashier E. R i g g s Jones, Jr. Assistant Cashie r A. C. W ie nert O ffic e rs G o r d o n M . C a ir n s Assistant C ashier D irecto rs President, First N a tio n a l Bank and Trust C o m p a n y Asheville, North C a ro lin a Ernest Patton Ch airm an of the Board, Peoples N a tio n a l Bank of Greenville Greenville, South C a ro lin a Ivey W. S te w a rt Ch airm an of the Board. A m erican Com m ercial Bank Charlotte, N orth C a ro lin a G. G. W a t ts President, Merchants and Planters N a tio n a l Bank G affn e y, South C aro lin a T, H enry W ils o n President and Treasurer, Henredon Furniture Industries, Inc. M o rgan to n , North C a ro lin a Robert L. C h erry Vice President S. A. Ligon Cashier R. L. Honeycutt A ssistant C ashier E. C. M o n d y 23 Executive Vice President, Rock Hill Printing and Finishing C o m p a n y Rock Hill, South C aro lin a C h a r le s D. Parker Agricultural Economist, Clem son College Clemson, South C a ro lin a W il li a m H. G rier O ffic e rs G e o r g e H. Au ll A ssistan t Cashier PHOTO CREDITS Page 2 — V -C Chem ical C o rp oratio n 4 — V irgin ia C h am be r of Com m erce The A m erican Tobacco C o m p a n y V irgin ia C h am be r o f Com m erce 5 — N a tio n a l Cotton Council of A m erica 8 — Fairchild A ircraft Division, H a ge rsto w n 9 — N e w p o rt N e w s S h ip b u ild in g 10 — 11 — and Dry Dock C o m p a n y N a tio n a l C o a l A sso ciatio n Furniture by B ig g s 12 — Continental C a n C o m p a n y 14 — V irg in ia C h am b e r of Com m erce 15 — O fficia l Departm ent o f Defense Photo 16 — Co lo n ia l Studios, Richmond 17 — C o lo n ia l Studios, Richmond