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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 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 % Change Latest Month Prev. Mo. Year Ago Feb. 1950 [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 15.5 8,110 11.8 7.4 29 11,981 13.7 31 129 .3 200 2.3 17 2,216 47.4 15.7 9 1 6,080 350 14.8 13.9 5 840 100.0 39 41,214 48.3 450 .7 5,900 800 8.6 1.2 68,485 654 6,480 3* 1 Total 19.0 525 19,000 1,650 31,425 9,510f 7,810 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 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. 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 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 2 Months 1949 $ 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 87,012 271,207 58,787 121,742 50,754 $7,506,381 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 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 $29,227,617 Debits and Building Permit data are also shown graphically on page 10. A prime objective of the Monthly Review is to present information on the District’s economy in the form most useful to its readers. You are invited to write and suggest your preference as between statistical and graphic presentation. PRINCIPAL ASSETS AND L IA B IL IT IE S UN IT ED S T A T E S AND LA ST W EDNESDAY OF 5th. Dist. DEMAND DEPOSITS ADJ. BILLIONS Data Partly Estimated. MEMBER BANKS D IS T R IC T MONTH FIGU RES LO A NS LO A N S AND IN V E S T M E N T S BILLIONS OF DO LLARS F IF T H OF BILLIONS OF DO LLARS TIM E D EP O SIT S OF DO LLARS BILLIONS OF DOLLARS Latest Figure Plotted : Fifth 0is,ric* • Feb' 2 2 « 1950 United States, Jan. 2 5 , 1950 [9] U.S. GO VT u. ‘ 5th. Dist. S E C U R IT IE S BILLIONS OF DOLLARS TOTAL DEPOSITS BILLIONS OF DOLLARS FEDERAL RESERVE BANK OF RICHMOND F ifth D ist r ic t Tr e n d s BUILDING PERMITS CONSTRUCTION CONTRACTS AWARDED Construction contracts in February pointed upward by more than seasonal proportions. February adjusted awards have been exceeded in only five individual months as far as the record is available. Three of these months were during the war period and two were last October and November. Building permits in 22 of the 29 reporting cities were larger in February than a year ago but despite this breadth of increase the adjusted index of permits declined sharply from the January level. This was due primarily to extraordinarily large January permits in Baltimore, Roanoke, and Columbia. -----------------<$> <$> <$>----------------- -----------------------<$><$> <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 1 — — 11 +17 — 5 — 20 — 8 +19 — 7 — 3 0 + 3 0 ITEMS — 3 — + Source: Department of Commerce. Number of reporting firms in parentheses. RETAIL FURNITURE SALES STATES +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 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 6 9 46 17 Va. W .Va. —3 —2 —2 -— 1 7 38 21 N.C. —1 —2 1 9 41 17 S.C. 0 —3 382,293 329,325 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. 1949 — — — March 15 1950 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 ......................... ❖ -------- Feb. 1950 $1,527,881 726,649 678,022 526 43,680 4,421 228,770 600 47,129 $2,531,029 ITEMS DEPARTMENT STORE OPERATIONS (All figures show percentage change) Sales, Feb. ’ 50 vs. Feb. ’49. Sales, 2 mos. ’50 vs. 2 mos. ’49. ... Federal Reserve Notes in Cir. Deposits, Total ............................... Members’, Total ........................ U. S. Treas. Gen. Account <§> <£ ------------ ----<$><$><$•------ -----—--- 16 D.C. — 1 —2 $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 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 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 ................................. 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 Mar. 15, 1950 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]