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FED tjR A y RESERV E B A N K /6 f ) r ICHM0ND

/onfflfo naAcav

J

APRIL 19S0
DEPOSITS BY COUNTIES
FIFTH FEDERAL RESERVE DISTRICT
ALL BANKS AS OF JUNE 30, 1949

DEPOSITS IN MILLIONS OF DOLLARS
LESS THAN 2
2 TO 5
5 TO 10
10 TO 50
50 AND OVER
SOURCE: DISTRIBUTION OF BANK DEPOSITS BY COUNTIES, JUNE 30, 1949
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, O.C.




FEDERAL RESERVE BANK OF RICHMOND

Business Conditions and Outlook
Business in the Fifth District in February and early
March maintained a relatively high level despite the
adverse consequences of the bituminous coal strike. As
in the past several months, construction and trade par­
ticularly in durables have been the backbone of current
relatively high level activity. Total construction con­
tract awards were 83% above February 1949, with
residential up 139% . Passenger automobile sales in
January were 35 % ahead of a year ago and four Dis­
trict states in February show a gain of 57 % over a year
earlier.
Production in the important cotton textile as in most
manufacturing industries has been maintained at Janu­
ary levels after allowance for seasonal variation, but
bituminous coal output declined to insignificant levels.
Strength in demand and output continued in the furni­
ture industry but the iron and steel and metal products
industries receded somewhat for want of coal or other
supplies.
A considerable number of lay-offs have taken place in
industries where wages averaged at or below the 75-cent

THE COVER
The map on the cover of this issue shows the total
deposits o f all banks by counties, as of June 30, 1949.
Deposits o f branches are included in totals for the
counties in which the branches are located. Cities not
part of any county have been treated as part of the
surrounding or adjacent county.

|

A LSO IN THIS ISSU E:
State and Municipal Bond O f f e r i n g s P a g e
3
Savings Rise in F ifth D istrict___________ Page 5
Statistical Trends and D ata_____________ Page 9
National Sum m ary o f Business Conditions Page 12

minimum; and production standards for other workers
have been geared somewhat higher. The paper industry
is running at peak levels and the trade apparently feels
that nothing short of a general business recession would
affect output adversely. Full fashion hosiery mills apContinued on page 7

BUSINESS INDEXES—FIFTH FEDERAL RESERVE DISTRICT
AVERAGE D AILY 1935-39=100— SEASO N ALLY ADJUSTED
% Change Latest Month
Prev. Mo.
Year Ago

Feb.
1950
New Passenger Car Registration*........................
New Commercial Car Registration*...................._________
Bank Debits .............................................................. .
Bituminous Coal Production...................................
Building Contracts Awarded, Total......................
Commercial Construction Contracts...............
Manufacturing Construction Contracts.........
Public Works and Utilities.................................
Residential Construction Contracts.................
Apartments and Hotels......................................
One and Two Family Houses............................
Building Permits Issued...........................................
Business Failures— No...............................................
Cigarette Production! .............................................
Cotton Consumption ..................................................
Cotton Spindle Hours...............................................
Department Store Salesf ...................................... .
Department Store Stocksf .....................................
Electric Power Production.......................................
Employment— M fg. Industries* ......................... .
Furniture— Retail :f ±
Net Sales ..................................................................
Cash .................................................................
_________ _
Credit ............................................................... .
___ ..
Receivables .............................................................
Collections ............................................................... .
Inventories .............................................................
Gasoline Consumption .............................................
Household Appliance Store Sales........................
Life Insurance Sales....................................................
Wholesale Trade:
Automotive Supplies** .......................................
Drugs ........................................................................
Dry Goods ...............................................................
Electrical Goods** ................................................
Groceries .................................................................
Hardware ...............................................................
Industrial Supplies** ...........................................
Paper and Its Products**...................................
Tobacco and Its Products**..............................

Jan.
1950

Dec.
1949

Feb.
1949

337
27
477
540
199
240
661
652
636
349
63
204p
149
148
301
306

181
147
346
97
432
451
329
626
465r
354
527
753
76
229r
149r
150r
300
291
289
123

185
202
324
114
474
288
336
400
591r
530
669
373
78
219
155
145
311
295
283
124

117
147
329
149
260
348
188
259
277
308
248
237
45
213
128
130
308
295
270
129

—
—
—
—
+
+
—
—
+
+
+
—
—
—

2
27
3
72
10
20
40
62
42
84
21
54
17
11
0
—
1
0
+
5
+
2
—
1

+
—
+
—
+
+
+
—
+
+
+
+
+
—
+
+
—
+
+
—

35
7
2
82
83
55
6
7
139
112
156
47
40
4
16
14
2
4
8
5

206p
263p
182p
136p
184p
158p

191p
208p
184p
137p
181p
144p

194p
222p
181p
130p
166p
152p

181
251
159
108
178
150

+
8
+ 26
—
1
—
1
+
2
+ 10

+
+
+
+
+
+

14
5
14
26
3
5

91p
258

89r
238

157p
249

76
243

+
4-

2
8

+
+

20
6

474

511
248
118
51
226
129
279
167
66

448
234
181
59
227
122
259
166
68

265
259
157
84
236
127
394
132
96

—

7

+

79

+
3
+ 33
+
8
+
1
— 5
— 25
+
9
— 3

—

1
0
35
3
3
47
38
33

256
157
55
229
123
210
182
64

♦Not seasonally adjusted
**1938-41=100
fRevised Series— Back figures available on request
$1941=100




[2]

—
—
—
—
+
—

APRIL 1950

MONTHLY REVIEW

State and Municipal Bond Offerings in the Fifth District
the difficulties not only in providing municipal services
sufficient to meet growing needs, but of financing such
outlays without burdening taxpayers to the breaking
point.
This Maryland suburban district surrounds the Dis­
trict of Columbia on three sides, is an area of approxi­
mately 180 square miles, and has a population estimated
at 180,000. In 1930 there were 65,000 people in this
area, a growth of 44% since 1910; by 1940 the count
was up to 100,000, a rise of 54% ;an influx of 40,000
more persons by 1944 raised the census 40% above
1940; and the present estimate represents a mushroom­
ing growth of 23% in the six years since 1944 and 177%
within two decades.

Bond issues floated by state and local governments in
the United States in 1949 were 8% greater than in the
preceding year and reached a record volume of almost
$3 billion. In the Fifth District, an all-time record was
also set— nearly a quarter-billion dollars of long-term
bonds was issued, an increase of 18% over the revised
total for 1948. A significant feature o f the District o f­
ferings was the tremendous increase in state issues.
While local governments were borrowing 19% less than
they did in 1948, the five states were increasing their
bond issues 94%, thus accounting for over one-half the
total state and municipal flotations compared to approxi­
mately one-fourth in 1948.
Contributing to the large increase in state offerings
was the initial issue of $22.5 million of highway con­
struction bonds by the State of Maryland. Governor
Lane’s program contemplates total highway expendi­
ture of $200 million within a five-year period— suggest­
ed as the first phase of a decade-long $600-800 million
plan of Maryland road improvement.
The Commonwealth of Virginia has not marketed
general obligation bonds for over a decade, but its
Highway Commission issued $19 million o f revenue
bonds in 1949 for the projected toll bridge across the
lower reaches of the York River and to acquire existing
privately-owned bridges and ferries in the Hampton
Roads area.
West Virginia tapped the market twice in 1949 for a
total of $6.5 million for road building funds— $4.5 mil­
lion of which was the first instalment of the $50 million
authorized in November 1948 for construction and im­
provement of secondary roads.
North Carolina voters approved two bond issues dur­
ing the year : One of $25 million for school buildings and
one for $200 million to be used for farm-to-market
roads. The latter will be the largest investment made
by North Carolina in roads since before the Great De­
pression. The first instalment, amounting to $50 mil­
lion, of the road bonds was sold last fall. Earlier in the
year $7.5 million of port development bonds were issued.
South Carolina also sold bonds in order to finance
road construction, floating three issues of $5 million
each during the year. Thus the initial outlays in the im­
pressive highway programs throughout the District con­
stituted the most important purpose, dollarwise, for
which bonds were issued. These accounted for 53% of
total borrowings by Fifth District states and munici­
palities.

Revenue Issues
Finance officers the country over are faced with simi­
lar difficulties arising from expanded populations and
pressing backlogs o f public works and with the problem
of matching debt increases with proportionate gains in
taxable valuation and other sources of revenue. One of
the answers to their problems appears to be in the greater
use of revenue bonds. States as well as local govern­
ments are turning more and more to methods of finan­
cing by which funds for debt service on specific projects
are furnished by the beneficiaries of the facilities and
services. In the Fifth District revenue bonds accounted
for 15% of total borrowings during the past year and
provided for such projects as bridges in Maryland and
Virginia, parking and market facilities in Baltimore, and
water works and sewerage systems in a number of South
Carolina municipalities.
An interesting variation of this type of financing has
just appeared in an agreement between the New Jersey
Turnpike Authority and a large number of insurance
companies, savings banks, and New Jersey public trust
funds for the financing* of a 115-mile toll highway which,
in extending from New York Metropolitan area to south
Jersey, will be the backbone road of the state. Under the
terms of this unprecedented plan of public financing,
the group of investors mentioned has agreed to lend the
Turnpike Authority, as construction needs require, up
to $220 million. As the proceeds are drawn, the Author­
ity will issue 35 year, 3j4 % bonds for the amount bor­
rowed. These obligations will be payable solely from
tolls and other related revenues and will not involve any
tax-payer money.
This method of financing an unproved public project
on a borrow-as-built basis is a novelty in public finan­
cing. The participation of insurance funds in financing
an untried venture whose self-liquidating capabilities
have not been established, is an unprecedented step in
fiduciary investment, the extension of which is bound to
be explored.

Pressure of Rapidly Growing Population
The Washington Suburban Sanitary District provides
an interesting case of the financial problems confronting
municipalities and counties that have experienced a
faster-than-average population growth. It highlights




[3]

FEDERAL RESERVE BANK OF RICHMOND
STATE AND MUNICIPAL BOND OFFERINGS
January 1-December 31, 1949
FIFTH DISTRICT
M ARYLAND
VIRGINIA
WEST VIRGINIA
N. CAROLINA
S. CAROLINA
No. of Amt.
Per- No. of Amt.
Per­
Per- No. of Amt.
Per- No. of Amt.
Per- No. of Amt.
Per- No. of Amt.
cent
Issues $000
cent Issues $000
cent Issues $000
cent Issues $000
cent Issues $000
cent Issues $000
School Building and
Improvements -----Water Drainage and
Sewer Systems ........
Street, Road and
(
Bridge Building
<
and Improvement (
Public ImprovementPublic Utility
Systems ....................
Hospitals ......................
General Refunding......
Miscellaneous ..............

10,640
8,110

7,810

654

7.4

29

11,981

13.7

31

.3

200

2.3

17

2,216

11.8

525
19,000

47.4

6,480

15.7

9
1

6,080
350

14.8

13.9

5

840

100.0

39

41,214

3*

1,650
31,425

48.3

1

450

.7

5,900
800

8.6
1.2

9,510f
68,485

Total

19.0

129

15.5

2

1
*

7,500

85.2

12
1*
1

150

1.7

2.0

300

3.4

100.0

8,804

22
8
7
18
1*

100.0 116

2.5

2

1,048
50,000

58.3

7
3*

69

.1
10.5
1.6
.2

9,175
1,445
204
3,990
7,5001:
87,628

6,074

16.7

81

37,159

15.3

200

.6

30

10,855

4.5

1,780
15,000

46.3

35

127,928

52.8

2

75

.2

11

7,074

2.9

12
2
1
13

8,274
280
150
4,443

22.8
.8
.4
12.2

47
13
8
42

29,429
3,025
354
26,583

12.1
1.2
.2
11.0

73

36,276

13.1
100.0

100.0 267

242,407

100.0

* State Issues.
flncludes such projects as the Lexington Municipal Market in Baltimore, “ general construction,” “ public facilities,” and “ capital improvement.”
tState Ports Development bonds.
Source: Weekly listings in “ The Commercial and Financial Chronicle.”

authority bonds will, therefore, be as close to a Govern­
ment obligation as possible without being a direct or
guaranteed obligation. Thus, the bonds will be of prime
quality and will probably sell at yields commensurate
with those on top-grade state and municipal bonds of
similar maturity. Their importance is also indicated by
the potential rate at which they will reach the market.
An $800 million annual volume of these offerings would
represent an increase of about 27% in the current an­
nual volume of tax-exempt flotations. Since they are
expected to be of prime quality, their effects on the sup­
ply of top-grade state and municipal bonds will be even
more pronounced.
Summary
Present indications point to another record level of
state and municipal bond offerings during 1950. There
is, still a tremendous backlog of projects for public plant
improvements and additions as a consequence of the
war-time curtailments and the population growth of the
'forties. Borrowing for such purposes during the last
three years has already wiped out the debt reductions
effected by state and local governments during the war,
and it is a certainty that their outstanding debt at the
close of this year will be at an all-time high.
On the demand side, it is expected that life insurance
companies will continue to add fairly substantially to
their holdings of state and municipal bonds which had
been reduced steadily during the war period. In 1940,
when their holdings of these bonds were at a record
high of over $2.2 billion, they constituted about 7.7% of
total life insurance assets. By 1946 this proportion had
dropped to 1.9%, but with the renewed buying of the
past two years it has risen to around 2.2%. If the pro­
posed revision of the tax formula for life insurance
companies is adopted, the demand from this group will
probably increase.
Further growth in commercial bank holdings of state
and municipal bonds is also likely. Current holdings are

Costs of Borrowing
Relative ease with which the municipal market ab­
sorbed the record floatations of 1949 is shown by the
narrow range within which municipal bond yields moved
during the year. Using the quotations of the first Thurs­
day of each month, the Bond Buyer s Index of munici­
pal yields showed a range of only .14 of a point over the
course of the year. Reflecting this stability and a higher
bond price level than in the preceding year, many repeat
municipal borrowers were able to issue bonds in 1949
at lower net interest costs than in 1948. The following
are illustrative:
1949

Amount
1948

Net Interest Cost
1949
1948

Issu e r-p u r!p o s& -m atu rity

Washington Suburban Sanitary
District, Maryland— water drain­
age, sewer and sanitary
systems— 40-year bonds ................$7,000,000 $ 1,000,000

2.72%

2.852 %

State of South Carolina—
street, road and bridge building
and improvements— 9 and 9 % year bonds ...................................

1.38%

1.7408%

1.3

1.659

$5,000,000 $10,000,000

State of West Virginia— street,
road and bridge building and
improvement— 15-year bonds ..... $4,500,000 $ 2,000,000

Public Housing Bonds
One of the most potent forces in the future supply of
tax-exempts is likely to be the Housing Act of 1949.
Under the terms of this provision for low-rent housing
and slum clearance, a tremendous volume— perhaps as
much as $7 billion spread over a 6 to 8 year period— of
a new type of tax-exempt bond will likely begin to flow
into the market this year. These new bonds, obligations
of the respective local housing authorities, will mature
serially up to a 40-year maximum. They will be exempt,
by Congressional Act, from Federal income taxes, and
will probably be secured solely by pledge of the annual
contributions from the PH A which will be drawn from
appropriated funds in the Treasury.
The faith of the United States is pledged to the pay­
ment of these contributions and the new local housing




Continued on page 8

[4]

APRIL 1950

MONTHLY REVIEW

Savings Rise in the Fifth District
Fifth District accounted for 8.4% of the national
growth, growth in time deposits accounted for 3.3%
of the national growth, while in Series F and G savings
bonds the District’s proportion of the national increase
amounted to 4.3%.
Fifth District redemptions of Series A through E
savings bonds in the same period exceeded sales of Se­
ries E bonds by $221 million. This amounted to 12.1%
of national divestment of these bonds which totaled
$1,830 million. Thus, the proportion of savings in the
above-mentioned forms in the Fifth District has not
been commensurate with the District’s share of income
payments with the exception of share capital in savings
and loan associations.
During the year 1949 the increase in savings in the
aforementioned forms amounted to $117 million— the
gain was $121 million in share capital in savings and
loan associations, $40 million in time deposits, $36 mil­
lion in Series F and G savings bonds, and a net reduc­
tion of $80 million in Series A through E savings bonds
holdings. The last named reduction was $2 million more
than the decline nationally, which indicates that the re­
mainder of the United States outside the Fifth District
increased $2 million. During 1949 the Fifth District’s
$40 million increase in time deposits accounted for 2.9%
of the national increase of $1,402 million, a proportion
slightly under that in 1946-49. The $36 million gain in
holdings of Series F and G bonds was approximately the
same proportion of the national total as was shown in
the period from December 31, 1945 to December 31,
1949. The District’s 1949 total of $117 million account­
ed for 3.3% of the national total. In the 4-year period,
1946 through 1949, these District savings accounted for
4.1% of the national total.

Over-all savings appear to be rising in the Fifth Dis­
trict, but the amount of savings has not constituted as
large a proportion of the nation's total as the District’s
percentage of national income. This is related to the
fact that per-capita income in the District runs some­
what below the national level and, as a consequence, a
greater proportion of the income of the District must
be used for consumption purposes.
In view of the basic importance of savings in a freeenterprise economy, it is proposed to trace as much of
Fifth District savings as it is possible for the post-war
years 1946-1949. It should be noted that savings are
extremely difficult to measure; undoubtedly, large
amounts are held in the form of demand deposits but
what proportion of these deposits may be considered as
savings is unknown. Shifts in the rate of turnover of
demand deposits could be considered as saving or dis­
saving. There is also an indeterminate amount of cur­
rency in circulation which is part of people’s savings
but difficult to separate from transactions money or to
measure at the regional level. And there are myriads
of direct and indirect investments in securities, in busi­
nesses, and in various forms of property for which no
currently adequate measures are available. The im­
portant savings held by life insurance companies can
not be statistically measured at the present time at the
regional level and complete data are not available on
regional ownership of U. S. savings bonds.
Measurement of savings is, therefore, limited to a
few of the outstanding liquid forms— such as time de­
posits in banks, share capital in savings and loan asso­
ciations, and net purchases of Series E, F, and G sav­
ings bonds.

The changes in savings from the end of 1945 through
the end of 1949 and for the year 1949 are shown in
Table 1.

Changes in Fifth District Savings Since 1945
Subject to the above listed difficulties and with a few
estimates or deductions, the aggregate growth of sav­
ings in the Fifth District and in the fields abovementioned amounted to approximately $830 million
from the end of 1945 to the end of 1949. In the same
period, comparable national savings increased $20.4
billion.
Break-down of the $830 million growth in savings
shows savings and loan associations gained $410 mil­
lion, time deposits in banks gained $329 million, and
net ownership of Series F and G bonds increased $312
million. This total of $1,051 million was in part offset
by a decline of $221 million in the holdings of Series E
savings bonds.
Income payments in the Fifth Federal Reserve Dis­
trict accounted for between 7^2% and 8% of national
income payments, 1946-49.
Meanwhile, growth in
share capital of savings and loan associations in the




Table 1
GROWTH IN SELECTED TYPES OF SAVINGS
IN THE FIFTH DISTRICT
(million dollars)
1946-49
Share capital in savings and loan associations. 4410
Time deposits of all banks.................... ................... +
329
Net redemptions of Series A -E savings bonds
221
Net purchases of Series F and G savings bonds. +
312
Total

............................................................................ .+

830

United States ........................................................... + 20,390

1949
121
+
40
+
80
36
+
+

117

+ 3,580

Savings Increases by States
As previously shown, savings (in the forms under
discussion) for all Fifth District states, 1946 through
1949, were $830 million. O f this, North Carolina ac­
counted for $214 million or 26% of the total; Maryland,
the District of Columbia, and Virginia showed approxi­

f 51

FEDERAL RESERVE BANK OF RICHMOND
mately the same dollar gains, each state accounting for
slightly under 19% of the total; West Virginia account­
ed for just under 9% of the total and South Carolina
just under 8% .
Breakdown of the 1949 total of $117 million shows
North Carolina accounting for nearly half, Virginia and
the District of Columbia for 17% and 18%, respec­
tively, and Maryland (which had accounted for 19%
of the growth during 1946-49) for only 5% in 1949,
and South Carolina and West Virginia each around 5%.
Largest decrease in holdings of Series A through E
savings bonds in the 1946-49 period and in the year 1949
occurred in Virginia with Maryland a close second. In
both periods purchases of Series E bonds exceeded re­
demptions of A through E bonds in West Virginia.
Changes in savings by states for the 1946-49 period
and for the year 1949 are shown in Table 2.

purchases of $160 million. Net redemption of $25 bonds
amounted to $220 million, an amount nearly equal to the
total for all series. The largest net purchases came in
the $1,000 series and these aggregated $142 million. It
is thus evident that the rank and file of the people have
utilized their savings bonds in preference to other forms
of savings for consumption purposes or have placed
these funds in other forms of savings or investment.
Net redemptions or purchases of Series A through E
bonds from 1946 to 1949 inclusive are shown in Table 3.
Table 3
NET SALES OR REDEMPTIONS* OF
SERIES A-E SAVINGS BONDS IN THE FIFTH DISTRICT
1946-1949 inclusive
Million
Denomination
dollars
10’s
............................................................................
—
5
25’s ............................................................................... — 220
50’s ............................................................................... — 88
100 s
— 92
200’s ..............................................................................■ + 11
500’s .............................................................................. . +
7
+ 142
1,000’s ..............................................................................

...............................................

Table 2
GROWTH IN SELECTED TYPES OF SAVINGS
IN FIFTH DISTRICT STATES
(million dollars)
Maryland ........................................................................
District of Columbia ......................................... .......
Virginia ..........................................................................
West Virginia ................................................................
North Carolina .............................................................
South Carolina .............................................................

1946-49
156
160
156
80
214
64

Total ..........................................................................
830
United States ......................................................... 20,390

Total

1949
6
20
. 21
6
58
6

— 245

Since 1947 the $1,000 series has tended to constitute
an increasingly smaller proportion of total sales, and re­
demptions of the $1,000 series to constitute an increas­
ingly larger proportion of total redemptions. Sales of
the $50 and $100 denominations have both shown in­
creasing proportions of total sales in the period under
review, while redemptions of these series have been
almost a constant proportion. Sales of the $25 denomi­
nation decreased in importance from 1946 to 1947, held
steady in 1948,, and increased slightly in 1949. Redemp­
tions of this denomination have shown a decreasing pro­
portion of total redemptions. Thus there is some evi­
dence o f tendencies toward stabilized investment in the
lower denominations and of divestment in the higher
denominations, but these tendencies may not show up in
net sales or redemption figures for some time.

117
3,580

In view of the fact that the only apparent decrease in
savings has come in the A to E savings bonds series, it
should be interesting to look further into these bonds,
asking, for example, where sales and purchases have
been by size of bonds. This should answer the question
of divestment— is it by large investors or the rank and
file of the people? Here it would seem reasonable to
consider the $200, $500, and $1,000 bonds as investment
funds, whereas the $10, $25, $50’s and $100’s would
constitute the small man's temporary or permanent sav­
ings. Figures available by denominations for the Fifth
District unfortunately do not include post office sales.
In the period under review the difference in sales of the
total by denominations and the total sales including post
office sales amount to just over $100 million. Assuming
post office sales to be made largely in $25 and $50 de­
nominations, the figure of net redemptions (to be shown
later) will make the net redemptions in these series
larger than is probably the case, since all redemptions of
A through E series are included in our figures.

Table 4
PERCENTAGE OF SALES V A L U E OF
SERIES E SAVINGS BONDS
Fifth District
10’s

25’s

100’s

200’s

500’s

1946
.. 1.1
1947
.
.2
1948
..
.1
1949...... ........ 1

27.3
19.3
19.3
21.8

9.5
8.5
9.3
11.0

11.8
12.7
13.6
14.6

2.4
2.1
2.3
2.6

12.8
14.7
14.0
12.8

35.1
42.5
41.4
37.1

100
100
100
100

1946-49

Sales in the Fifth District of Series E savings bonds
by denominations from 1946 through 1949 totaled $950
million. Redemptions of Series A through E bonds in
the same period totaled $1,195 million. Net redemption,
calculated at issue price, was therefore $245 million.
O f this $245 million of net redemptions, denominations
of $100 and under showed a net redemption of $405
million, while denominations of $200 and up showed net



.........................................................................

♦Redemptions calculated at issue price.

22.2

9.6

13.1

2.3

13.6

38.8

100

.4

50’s

1,000*8 Total

PERCENTAGE OF TOTAL V A L U E OF REDEMPTIONS*
OF SERIES A -E SAVINGS BONDS
Fifth District
1946
1.2
1947
.7
1948
.4
1949...... ........ 3

42.7
35.5
31.4
32.1

15.6
14.9
14.4
14.8

17.4
18.5
18.9
17.9

.5
.8
1.1
1.6

8.4
10.5
11.5
11.2

14.2
19.1
22.3
22.1

100
100
100
100

1946-49...........7

36.1

15.0

18.1

.9

10.2

19.0

100

♦Redemptions calculated at issue price.

J61

APRIL 1950

MONTHLY REVIEW

Business Conditions and Outlook
Continued from page 2

parently produced in February at a somewhat better
rate than in January and the seamless mills are experi­
encing a rather heavy demand. Sawmills increased their
production levels somewhat in February but have been
adversely affected by weather conditions in March.

Construction

market, it appears that passenger car sales will be either
at or near record levels in the season ahead— unless
strikes curtail output severely. When compared on the
basis of current and past relative levels, automobile sales
in Virginia and the Carolinas have been better than in
other states in the District. There are several reasons for
the large volume being shown in automobile sales among
which are: (1 ) cars are relatively cheaper in terms of
wages and salaries today than they were in prewar years;
(2) a large proportion of cars on the road are overage ;
(3) financing is plentiful and cheap; (4 ) GI insurance
dividends provide down-payments and support to the
used car market.
Commercial car registrations declined 27% from
December to January after showing a sustained rise
during most of 1949. Part of this decline was of sea­
sonal proportions but possibly more important was the
general uncertainty creat­
ed by the coal stoppage.
CAR REGISTRATIONS

Construction activity has continued at an amazingly
high level— total contract awards in February were
83% above a year ago, sparked mainly by residential
contracts which gained 139% in this period. One and
two family houses were up 156% and apartments and
hotels rose 112% . The current trend continued to move
upward through the month of February with the sea­
sonally adjusted figures of total contracts rising 10% ,
residential 42 % , and commercial 20 % . Factory build­
ings as well as public works and utilities decreased from
January to F e b r u a r y ,
after seasonal correction,
NEW PASSENGER
40% and 62% respec­
FIFTH FEDERAL RESERVE' DISTRICT
Department Stores
( 1935-1939 = 100 )
tively.
Continued
P E R C EN T
P E R CEN T
Aggregate department
strength in the construct­
store sales in the Fifth
ion situation has been
District were substantial­
maintained through the
ly at the same level in
first fifteen days of
February as in January
March.
A substantial
and 2 % under a year
part of the contract vol­
ago, on a seasonally ad­
ume in apartments and
justed basis. Important
hotels was no doubt oc­
shifts in consumer buy­
casioned b y t h e ap­
ing habits have been ap­
proaching expiration of
parent for several months
,FHA Title 6 on March 1.
and were still in evidence in February. The important
It has been announced that the Federal National
soft goods lines showed greater losses from a year ago
Mortgage Association has purchased all the mortgages
than in January, but these were offset by rises in ap­
possible under presently available funds. If the lack
pliances, floor coverings, furniture, radio and television.
of funds by FN M A continues for a considerable period
Inventory policy is still on the conversative side; even
of time it will have a noticeable adverse effect on mort­
so, sales apparently failed to meet expectations and the
gage financing via GI loans. The New York Life In­
result was an inventory rise of 5% after seasonal
surance Company, however, has offered to purchase
correctoion.
from F N M A mortgages of suitable quality for its in­
Furniture Stores
vestment portfolio, and this may again activate that
Marked improvement occurred in February retail
agency’s mortgage purchases. Indications in legislative
sales of furniture stores and the seasonally adjusted
circles are that future lending capacity will be granted
figures rose 8 % over January to a level 14% above a
to F N M A as well as FH A so that from the financial
year ago. Here GI insurance refunds appear to be hav­
standpoint it is probable that no impediment to con­
ing an effect, for cash sales in February rose 26% from
tinued construction activity will be witnessed.
January on a seasonally adjusted basis, whereas credit
Automotive Registrations
sales declined 1 % in this period. Actually, cash sales
Sales of new passenger automobiles still constitute
in February were 5% higher than a year ago, while
one of the prime factors of strength in the trade level.
credit sales were up 14% . The up trend in receivables
In January, for example, Fifth District sales were 2 %
over the past year was temporarily halted in February
smaller than in December and a soaring 35% higher
when a drop of 1 % occurred.
than a year ago. Four states of the District show even
Strength in furniture sales at retail are undoubtedly
better in February with a gain year to year of 57%.
the motivating factor behind the rising level of pro­
Despite some apprehension regarding the automotive
duction at the furniture factories. This trend has not




t7]

FEDERAL RESERVE BANK Oh RICHMOND

been confined to the Fifth District but has been nation­
wide and so long as the boom in residential housing con­
tinues, there will be a strong demand for furniture.
Household appliance stores, which in many cases
duplicate the commodities sold in furniture stores, con­
tinued to show sales strength in February with a rise of
2 % over January and 20% over a year ago. This was
a better showing than has been evident in the prelimi­
nary figures of major household appliances in depart­
ment stores.

Cotton Textiles
Cotton consumption in the mills of the Fifth District
held at the same level after January after seasonal cor­
rection but 16% higher than in February 1949. The
number of spindle hours run, however, showed a 1 %
loss from January to February but remained 14%
higher than a year ago. The industrial decline in the
nation in February, resulting from the coal strike, had
some adverse effect on the industry as industrial goods
and yarns shipments were held back pending clarifica­
tion o f the outlook in consuming industries. Some im­
provement in the industrial goods lines has taken place,
but purchases have usually been held to a 60-day basis.
In the apparel end of the business retail orders have
been held to a minimum, and so this has proved to be
in line with retail sales. A better Easter season than
retailers had anticipated would reduce inventories and
probably inject the force needed for the resumption of
forward purchases at the mill level. Basically, the in­
dustry appears in sound position despite some easiness
in gray goods prices. Mills have their production well
booked into June and there is still adequate time for a
reversal of purchasing policies to take place before a
production cutback is required. Rayon weavers are
meeting a slow demand at the retail level by cutting
back their operation from a six to a five-day week.

total employment picture, but it has hurt some com­
munities noticeably, particularly in those areas where
seamless hosiery mills, lumber mills, work clothing es­
tablishments, and furniture plants are located.
Insured unemployment held fairly constant through
the third week in February, with a rising level in Dis­
trict of Columbia and North Carolina and falling levels
in Maryland and West Virginia. Virginia and South
Carolina have shown little change since the first of the
year. Initial unemployment claims have been falling in
most states, though a slight increase was shown in the
four weeks to March 4 in Maryland.

Conclusion
The business situation in the Fifth District still ap­
pears to be relatively strong though the rising momen­
tum has subsided. No serious weakness is evident in
the important industries and none should probably de­
velop for at least several months. Retail trade in soft
goods will, however, have to show improvement by mid­
year if later weakness in District production is to be
avoided. Some slackening in activity could occur, but
would hardly be of much consequence. Bituminous coal
production is back on a five-day week and while it is
probable that consuming sources will build a substantial
inventory of coal it is likewise probable that full produc­
tion of all mines now operating will not continue for
many months. Coal prices have risen less than the cost
increases inherent in the new contract and this may
cause shutdowns among marginal producers later on.
Trade in the durable goods lines is still strong and so
long as credit terms remain easy and the price structure
relatively stable this trend will probably continue.

State and Municipal Bond Offerings
Continued from page 4

at their highest dollar volume in 15 years and, for all
United States member banks, amounted to 8.1% of their
total investments at the close of 1949. Fifth District
member banks have always held a smaller percentage of
their investments in tax-exempts, and at the date men­
tioned their average ratio was 5.3%, as compared with
a low of 2.2% in 1945.

Employment
Employment in the District has held rather stable for
the last three months, seasonal industries excepted, with
durable goods industries rising and nondurable goods
industries easing. The shipbuilding industry has con­
tinued to lay off workers and the prospects for that in­
dustry continue to be unfavorable. Bethlehem Ship­
yards in Baltimore has announced that without new
business forthcoming soon they will be forced to close
down completely. Some improvement, however, has
occurred at the aircraft factories and this improvement
is likely to hold for some time.
The new minimum wage was certainly not expected
to create unemployment but this seems to be what has
happened in a fairly substanial number of firms in this
District. Workers who were unable to carry a heavier
work load to offset the rise in minimum wages have
been laid off. This has hardly affected importantly the




It remains to be seen what effect issues of new housing
bonds will have on the demand for state and municipal
bonds by commercial banks. It is reported that the
Comptroller of the Currency stated that so long as the
new housing authority bonds conformed with the re­
vision of Section 5136 of the National Bank Statutes,
they would be regarded as on a par with government
obligations. Thus, unlike state and municipal bonds, the
new housing issues will not be subject to a limitation on
che amount that might be invested in them by national
banks or, so long as there is no conflict with state laws
by state member banks.
r8 1

APRIL 1950

MONTHLY REVIEW

DEBITS TO IN DIVIDUAL ACCOUNTS
(000 omitted)
February
February
1950
1949
Dist. of Columbia
$ 676,990
Washington ............
Maryland
884,415
Baltimore ................
18,834
Cumberland ............
15,713
Frederick ..............
22,984
Hagerstown ............
North Carolina
43,092
Asheville ................
234,606
Charlotte ................
63,486
Durham ..................
70,907
Greensboro ............
12,370
Kinston ....................
Raleigh .................................
113,082
Wilmington ........................
30,009
Wilson .................................
14,292
Winston-Salem ..................
115,321
South Carolina
60,038
Charleston ..............
93,201
Columbia ................
78,263
Greenville ..............
46,050
Spartanburg ..........
Virginia
22,047
Charlottesville .......
21,899
Danville ..................
33,596
Lynchburg ..............
24,014
Newport News .....
187,956
Norfolk ....................
18,625
Portsmouth ............
424,286
Richmond ..............
80,355
Roanoke ..................
West Virginia
30,991
Bluefield ..................
104,302
Charleston ..............
23,317
Clarksburg ............
49,802
Huntington ............
21,520
Parkersburg ..........
..$3,636,363
DISTRICT TOTALS

BUILDING PERMIT FIGURES

2 Months
1950

$ 668,049

$1,482,895

$1,390,822

831,293
18,181
15,648
23,424

1,896,161
41,410
31,664
49,912

1,773,827
38,186
31,981
50,028

41,789
214,765
76,329
69,657
12.735
108,318
27,768
12,830
103,803

92,924
505,737
149,916
147,114
26,054
246,206
60,822
29,454
256,302

92,893
447,844
165,782
144,607
27,280
216,765
60,309
27,890
223,359

53,877
83,384
70,739
42,363

118,257
193,248
163,167
95,226

115,150
176,894
155,374
91,814

19,299
21,774
32,013
28,265
156,509
17.736
427,929
78,264

45,087
48,431
72,608
50,996
385,814
39,240
908,501
171,178

44,270
47,781
71,019
60,866
340,472
37,368
913,779
170,519

40,706
124,042
25,852
53,119
23,194
$3,523,654

71,848
236,219
54,679
106,689
46,178
$7,823,937

Feb. 1950
Maryland
Baltimore .............. $ 6,404,300
124,535
Cumberland ............
Frederick ................
50,725
Hagerstown ............
48,497
Salisbury ................
59,875
Virginia
Danville ..................
126,387
342,836
Lynchburg ..............
1,829,405
Norfolk ....................
Petersburg ..............
251,435
Portsmouth ............
272,855
1,716,363
Richmond ................
800,636
Roanoke ...................
West Virginia
Charleston ..............
1,156,999
Clarksburg ..............
240,800
503,136
Huntington ............
North Carolina
278,285
Asheville ................
1,220,179
Charlotte ................
Durham ..................
460,830
1,002,415
Greensboro
218,605
High Point ...........
Raleigh ....................
465,450
196,943
Rocky Mount ..........
587,250
Salisbury ................
1,190,703
Winston-Salem
South Carolina
220,094
Charleston ..............
588,042
Columbia ................
565,033
Greenville ................
97,000
Spartanburg ..........
Dist. of Columbia
Washington ............
3,248,755
DISTRICT TOTALS ....$24,268,368

2 Months
1949

87,012
271,207
58,787
121,742
50,754
$7,506,381

F e b .1949

2 Mos. ’50

2 Mos. ’ 49

$ 2,902,415
33,115
4,450
111,290
426,865

$17,007,750
156,245
84,425
199,772
150,225

$ 3,844,815
63,765
67,550
156,695
504,288

100,215
349,515
493,795
70,620
109,600
1,252,664
381,625

276,098
620,264
2,672,435
1,044,671
530,869
2,901,211
4,047,268

227,062
502,985
881,240
166,376
226,395
2,394,141
763,942

1,096,594
131,835
155,675

5,498,999
268,836
680,127

1,517,149
174,585
377,967

117,940
1,580,900
704,055
507,310
123,243
303,410
107,150
77,245
317,538

421,371
3,257,353
6,519,092
1,606,193
440,021
1,231,290
632,668
750,773
1,685,888

218,457
3,059,750
1,242,054
841,535
259,673
513,215
177,517
118,745
605,661

505,275
1,166,805
450,150
95,480

420,294
2,315,885
1,057,093
182,714

897,970
1,391,690
1,352,350
353,590

2,809,405
$16,486,179

9,037,908
$65,697,738

6,326,455
$29,227,617

Debits and Building Permit data are also shown graphically on page 10. A prime objective of the Monthly Review is to present information
on the District’s economy in the form most useful to its readers. You are invited to write and suggest your preference as between statistical
and graphic presentation.

PRINCIPAL

ASSETS

AND

L IA B IL IT IE S

UN IT ED S T A T E S AND
LA ST W EDNESDAY OF

5th. Dist.

DEMAND DEPOSITS ADJ.
BILLIONS

Data

Partly Estimated.




MEMBER

BANKS

D IS T R IC T

MONTH FIGU RES

LO A NS

LO A N S AND IN V E S T M E N T S
BILLIONS OF DO LLARS

F IF T H

OF

BILLIONS OF DO LLARS

TIM E D EP O SIT S

OF DO LLARS

BILLIONS OF DOLLARS

Latest

Figure Plotted :

Fifth 0is,ric* • Feb' 2 2 « 1950
United States, Jan. 2 5 , 1950

[9]

U.S. GO VT
u. ‘

5th. Dist.

S E C U R IT IE S

BILLIONS OF DOLLARS

TOTAL DEPOSITS
BILLIONS OF DOLLARS

FEDERAL RESERVE BANK OF RICHMOND

F ifth

D

istrict

T rends
BUILDING PERMITS

CONSTRUCTION CONTRACTS AWARDED

Construction contracts in February pointed upward by more than
seasonal proportions. February adjusted awards have been exceeded
in only five individual months as far as the record is available.
Three of these months were during the war period and two were
last October and November.

Building permits in 22 of the 29 reporting cities were larger in
February than a year ago but despite this breadth of increase the
adjusted index of permits declined sharply from the January level.
This was due primarily to extraordinarily large January permits in
Baltimore, Roanoke, and Columbia.

-----------------<> <> <>
$ $ $ -----------------

-----------------------<$><$> <S>------------------------

CIGARETTE PRODUCTION

COTTON CONSUMPTION

Adjusted cigarette output in this District in February declined
11% from January. February output was the lowest for that month
since 1944. In the first two months of the year output has been 1%
below a year ago.

Cotton consumption rose by seasonal proportions in February and
the adjusted index remained unchanged at the January level. The
recovery in consumption since the low point in July has amounted
to 46% . It would have been larger except for the substantial shift
in tire cord production which took place in this period.

-----------------<> <> < >
$ $ $ -----------------

-<> <> <>
$ $ $-

BANK DEBITS

BITUMINOUS COAL PRODUCTION

February adjusted bank debits in the District dropped 25% from
January but remained higher than any month in 1949. Despite the
February drop debits are indicating a cyclical rise following a re­
cession during most of 1949.




The strike month of February saw bituminous coal production in
the District fall 64% from the January level on an adjusted basis
to a point 82% below February 1949. Production was resumed early
in March and it is believed that the contract will permit full pro­
duction at the discretion of operators.

[10]

MONTHLY REVIEW

APRIL 1950

FEDERAL RESERVE BANK OF RICHMOND
(All figures in thousands)

W HOLESALE TRADE
Stocks on
Feb. 28, 1950
compared with
Feb. 28
Jan. 31
1949
1950

Sales in
Feb. 1950
compared with
Feb.
Jan.
1949
1950

LINES
Auto supplies (8 )......................
Electrical goods (4 )..................
Hardware (10) ........................
Industrial supplies (3 )............
Drugs & sundries (8 )............
Dry goods (12)..........................
Groceries (55) ..........................
Paper & products (6 )............
Tobacco & products (9 )............
Miscellaneous (85) ..................
District Totals (200).......

—
—
+
—
+
—
—
+
—
—
—

18
22
6
39
5
16
3
7
4
2
3

—

+

RETAIL FURNITURE SALES

+14
+ 8
+ 2
+31
+ 8
+22
+10

INDIVIDUAL CITIES
Baltimore, Md. (7 )........................ .....................+ 8
Washington, D. C. (7 )...................................+ 6
Richmond, Va. (5 )........................ .....................+ 6
Charleston, W . Va. (3 )................................ — 14

<> <
§ £

+14
+ 8
+ 7
— 17

Total loans ........................................ .
Bus. & Agri...................................
Real Estate Loans.......................
All Other Loans............................
Total Security Holdings.................
U. S. Treasury Bills...................
U. S. Treasury Certificates......
U. S. Treasury Notes.................
U. S. Treasury Bonds.................
Other Bonds, Stocks & Secur,...
Cash Items in Process of Col.....
Due From Banks............................
Currency and Coin...........................
Reserve with F. R. Banks.............
Other Assets ......................................
Total Assets ..................................
Total Demand Deposits.................
Deposits of Individuals...............
Deposits of U. S. Government...
Deposits of State & Local Gov..
Deposits of Banks.......................
Certified and Officers’ Checks...
Total Time Deposits.......................
Deposits of Individuals.............
Other Time Deposits...................
Liabilities for Borrowed M oneyAll Other Liabilities.......................
Capital Accounts ............................
Total Liabilities .........................

------------ ----< < < ------ -----—--$> $> $•
DEPARTMENT STORE OPERATIONS
(All figures show percentage change)

Sales, Feb. ’ 50 vs. Feb. ’49..

Rich.
— 4

Balt.
— 8

Wash.
— 1

Other
Cities
— 1

Dist.
Total
— 3

Sales, 2 mos. ’50 vs. 2 mos. ’49

—

1

— 6

— 2

— 3

— 3

Stocks, Feb. 28, ’ 50 vs. ’ 49...
Orders outstanding,
Feb. 28, *50 vs. ’ 49..........
Receivables Feb. 28, ’ 50 vs. ’ 49
Current receivables Feb. 1
collected in Feb. ’ 50.....
Instalment receivables Feb. 1
collected in Feb. ’ 50.........

+

6

— 9

+

8

— 6

—

— 3
+ 13

— 11

— 7

— 2

— 7

+

+

+

+

30

45

Sales, Feb. ’ 50 vs. Feb. ’49.
Sales, 2 mos. ’50 vs. 2 mos. ’49. ...

16
D.C.
— 1
—2

9
46

17
Va. W .Va.
—3
—2
—2
-— 1

7
38
21
N.C.
—1
—2

1

9
41

17
S.C.
0
—3

❖ --------

Feb.
1949

382,293

329,325

2,642,967

2,468,079

Cotton Growing States:
Cotton consumed ................

668,498

574,530

4,606,332

4,324,709

—
3,395
— 38,242
6,006
+
44,692
—
580
1,024
+
+ 42,938
103
+
1,241
+
2,645
+

— 53,019
— 182,861
-^167,141
— 23,750
+
7,807
+
223
— 21,104
—
64
+
3,429
— 253,619

1,617,476
9,202,437
739,438

$ 900,487**
410,097
218,955
282,668
1,825,415
116,926
209,660
228,222
1,119,691
150,916
241,277
174,952*
61,575
452,138
51,163
3,707,007
2,835,365
2,080,099
113,720
178,455
414,478*
48,613
615,412
568,995
46,417
5,000
20,114
231,116
3,707,007

Chg. In Amt. ;from
2-15-50
3-16-49

5,079,163

16,178
7,847
1,958
6,466
14,946
23,787
38,932
80,332
33,106
547
14,650
3,281
169
3,414
10
15,908
24,340
3,886
7,209
7,752
4,603
8,662
1,447
3,080
1,633
12,050
602
1,569
15,908

+
+
+
+
—
—
—

+
+
+
+
+

—
—

+
+
+
+
+
+
+
+
—
—

+
+
+

+ 47,924
455
+
+ 22,471
28,316
+
+ 144,651
+ 13,545
+ 23,275
+ 183,496
—
96,890
+ 21,225
9,188
+
9,451
+
138
+
— 102,425
+ 1,788
+ 110,715
+ 75,450
+ 34,468
+ 21,995
12,978
+ 32,065
100
+ 27,077
+ 1,618
+ 25,459
100
+
1,356
+ 9,444
+ 110,715

—

PRICES OF UNFINISHED COTTON TEXTILES

Average, 17 constructions..
Printcloths, average (6)....
Sheetings, average (3 )........
Twill (1) .................................
Drills, average (4 )................
Sateen (1) .............................
Ducks, average (2 )................

1,401,349
7,525,093
640,179

30,947
1,694
29,253
8,832
67
230,812
188,115
67,211
32,281
77,627
239,577
26,638
16,657
253,619

----------------

eb. 1950

Cotton on hand Feb. 25 in
consuming establishments 1,825,791
Storage & compresses..... 9,228,737
Spindles active, U.S., Feb. 25 20,417,000

4,839,971

1,616,394
7,563,540
20,756,000

69.59
79.52
62.07
74.26
59.50
89.90
58.77

Jan. 1950

Feb. 1949

69.07
79.18
61.46
71.94
58.81
90.97
58.30

64.56
70.34
58.23
63.60
56.57
87.99
61.46

Note: The above figures are those for the approximate quantities of
cloth obtainable from a pound of cotton with adjustments for
salable waste.
Source: Department of Agriculture.

Source: Department of Commerce.




+
—
+
—
+
—
—
+
—
—
—
—
—
—

--------------------------------------------------------------

Aug. 1 to Feb. 25
1950
1949

Fifth District States:
Cotton consumed ................

Cotton on hand Feb. 25 in
consuming establishments
Storage & compresses.....
United States:
Cotton consumed ...............

8,455
1,880
10,335
— 15,230
16
+
631
+
19,706
+ 43,519
25,054
1,872
+
— 14,583
+ 32,740
—
5,177
2,645
+

♦Net figures, reciprocal balances being eliminated.
**Less reserves for bad debts.

COTTON CONSUMPTION AND ON HAND— BALES
Feb.
1950

—
—
—

March 15
1950

ITEMS

6

Chg. in Amt. From
2- 15-50
3-16-49

51 REPORTING MEMBER BANKS— 5th DISTRICT
(All Figures in Thousands)

Number of reporting firms in parentheses.

14
Md.
—8
—6

$1,527,881
726,649
678,022
526
43,680
4,421
228,770
600
47,129
$2,531,029

Other Deposits ..........................
Def. Availability Items................
Other Liabilities
.....................
Capital Accounts ..........................
Total Liabilities
..................

Percentage comparison of sales in
periods named with sales in same
periods in 1949
Feb. 1950
2 Mos. 1950

Maryland (7) ......................................................+ 8
Dist. of Col. (7 )....................................................+ 6
Virginia (14) ..................................................... + 6
West Virginia (10) ...................... .....................+ 9
North Carolina (9 )........................ .....................+ 2 5
South Carolina (8) ...................... .....................+ 3 6
District (55) .............................. .....................+ 9

$1,084,843
18,479
1,103,322
4,386
112
1,149,416
427,387
89,105
383,957
248,967
1,153,914
251,544
22,249
$2,531,029

Federal Reserve Notes in Cir.
Deposits, Total ...............................
Members’, Total ........................
U. S. Treas. Gen. Account

— 3

Source: Department of Commerce.
Number of reporting firms in parentheses.

STATES

Mar. 15, 1950

Total Gold Reserves......................
Other Reserves ...............................
Total Reserves ............................
Bills Discounted .............................
Industrial Loans .............................
Gov. Securities, Total....................
Bonds .............................................
Notes .............................................
Certificates ...................................
Bills ................................................
Total Bills & Securities................
Uncollected Items ........................
Other Assets ...................................
Total Assets .................................

1

—

— 11
+17
— 5
— 20
— 8
+19
— 7
— 3
0
+ 3
0

ITEMS

H i]

FEDERAL RESERVE BANK OF RICHMOND

NATIONAL SUMMARY OF BUSINESS CONDITIONS
(Compiled by the Board of Governors of the Federal Reserve System)

Industrial production declined somewhat in Febru­
ary, owing to work stoppages, but recovered in March.
The volume of construction work done and contracts
awarded reached exceptionally high levels for this sea­
son. The number unemployed, however, was larger
than last year. Personal income was at a new high as
insurance dividend payments to veterans reached a total
of over 2 billion dollars by the end of March. Depart­
ment store sales showed only the usual seasonal rise
but demand for most consumer durable goods was
strong.
Average prices of commodities in wholesale and re­
tail markets continued to show little change; charges
for rents and other services rose further. Common
stock prices on March 27 were about 3 per cent higher
than at the beginning of February. Prices of long-term
Government bonds declined somewhat further. Bank
loans to business declined less than is usual for this
season.

Industrial Production
The Board's industrial production index declined 3
points in February to 180, owing chiefly to work stop­
pages in the coal and automobile industries which were
only partly offset by rising output of building materials
and machinery. The coal dispute was settled on March
5 with an advance of about 5 per cent in the daily basic
wage rate and larger payments for welfare purposes,
and coal production increased sharply. A s a result of
larger coal supplies and heavy steel demand, activity at
steel mills, which had been reduced to 74 per cent of
capacity in early March, has since risen to 97 per cent.
Automobile assemblies have been at a somewhat higher
rate in March than in February, although 18 per cent
lower than in mid-January before being curtailed by
labor disputes. On the basis of indicated increases in
most durable goods and in coal, the Board’s index in
March is estimated to be slightly above the January
level of 183.
In February machinery production increased 4 per
cent, to the highest level since April 1949. While much
of this rise reflected continued marked gains in refrig­
erators, television, and other consumer goods, advances
were general in producers equipment. In some lines,
however, such as agricultural machinery, increases were
largely of a seasonal nature. The exceptionally high
level of construction activity has been an important fac­
tor in stimulating output in some machinery industries
and in the furniture and building materials industries.
Lumber production this year has been about one-fourth
above the reduced level of a year ago.
In most nondurable goods industries, output in Feb­
ruary was maintained at the high levels reached last
autumn. Production of textiles, which by the begin­
ning of this year was 11 per cent above year-ago levels,
declined somewhat in February, however, and appar­




ently has been curtailed further in March, owing large­
ly to the continued lag in retail sales of apparel.

Distribution
Value of department store sales in February and
early March was maintained at last year’s level. Sales
of most durable goods, especially television and furni­
ture, continued substantially above year-ago levels. Re­
tail apparel sales in recent months have been about onetenth below the corresponding period a year ago, with
not all of the reduction accounted for by lower prices.
This reduced volume has apparently been below the ad­
vanced level of textile-mill output. In contract, the
number of automobiles sold has increased and has been
about equal to the number produced.

Commodity Prices
The general wholesale price index was at a slightly
higher level during February and March owing mainly
to seasonal increases in prices of domestic farm and
food products. Prices of imported foods declined and
in the latter part of March hog prices decreased to levels
somewhat below Federal supports.
Prices of some industrial materials, particularly cot­
ton and rayon gray goods, burlap, and lead, were re­
duced considerably in February and March. Rubber
and tin, on the other hand, advanced, industrial alcohol
was raised 17 per cent, and coal and coke increased
somewhat after the new wage contracts were signed.
Lumber prices rose further and average costs of build­
ing materials were probably about 5 per cent higher
than last summer.
Consumers’ prices for carpets and furniture ad­
vanced in February, while prices for apparel, appli­
ances, and foods were reduced.

Bank Credit
Reductions in Treasury deposits at the Reserve
Banks supplied reserves to member banks during Feb­
ruary and the first half of March. These funds were
absorbed only in part through net sales of U. S. Gov­
ernment securities by the Federal Reserve, currency
outflow, and reduction in gold stock. Member banks
reduced their borrowings at Reserve Banks and in­
creased their reserve balances. After mid-March, large
tax payments shifted funds from private deposits at
commercial banks to Treasury deposits at Reserve
Banks and member bank excess reserves declined
sharply.
Loans to business by member banks in leading cities
continued to show a less-than-seasonal reduction during
February and early March. Banks made moderate in­
creases in real estate and consumer loans and in hold­
ings of corporate and municipal securities. U. S.
Government security holdings declined substantially,
reflecting sales of bills and certificates both to the Fed­
eral Reserve and to nonbank investors.
[ 12]


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102