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FEDERAL RESERVE BANK OF RICHMOND APRIL 1963 5 m »'0 1 i si: h- e ^ a — e. s ? 3 u & / o o o o i s & 1 0 0 / AUTOMATED CHECK COLLECTION Perhaps m ore than any other nation o f the world, Am ericans are a check-w riting people. T hey write transferring funds to the institutions m aking present ment. M oreover, the checks must be sorted for re mountains o f checks, num bered in the billions, every turn to individual check writers. year. It has been estimated that 9 0 % or m ore o f the trillions of dollars of annual payments in the U nited States is made by checks. In brief, a mountain of checks involves several mountains o f w ork. T o get this w ork done and to insure the rapid and safe collection necessary for the M OUN TAINS OF W ORK Checks are, of course, claims on com m ercial banks and as such must be presented for collection at the banks on which they are drawn. O rdinarily, presentment is made through another bank. Individuals or firms receiving checks usually deposit them at their banks and leave the problem of collection to those institutions. O n a given business day, checks received for collection at a m edium -sized bank might number in the tens of thousands while for larger banks the number might range up to several hundred thousand. A t receiving banks the checks must be elaborately processed. Since each check involves a transaction between the receiving bank and the depositor, it requires indi vidual attention on the bank’ s books. In addition, the bank must sort the checks according to their destination, package them, send them to the drawee bank, and arrange to receive payment from the drawee. N or does the processing end at the receiving bank. Other institutions get in on the act. Checks drawn on local banks will be presented to drawees through local clearing houses, institutions established pri m arily for that purpose. Checks drawn on ou t-oftow n banks are sent either to city correspondent banks or to a Federal R eserve Bank, where they go through processing similar to that described in the preceding paragraph. City correspondents, in their turn, channel a large fraction of the checks they receive through Banks. symbols, their respective Federal Reserve A system o f transit numbers and routing with each comm ercial bank assigned a specific symbol and number which are printed on its check form s, has been worked out to facilitate the transfer of checks to drawee banks. W hether through a local clearing house, a city correspondent, or a Federal Reserve Bank, checks ultimately arrive at the drawee bank. smooth w orking of a payments system based on checks, com m ercial banks and Federal R eserve Banks maintain large transit departments which account for a substantial fraction o f total banking costs in this country. Check-handling costs at com m ercial banks, incurred mainly for paper w ork and transportation, underlie much o f the service charge levied by these institutions. G RO W IN G M OUN TAINS In recent years the num ber of checks written has grow n at a phenomenal pace. T he number handled at the Federal Reserve Bank of R ichm ond alone rose from just under 150 m illion in 1950 to more than 300 million in 1962. Figures shown in the chart on the opposite page indicate that this number grew over this period at an annual rate of approxim ately 6 % . A t such a rate the num ber would double itself again in about 12 years. M ICR—A REVOLUTION W ith the great upsurge o f checking-account activity follow ing W o rld W a r II, the banking com m unity was forced to look fo r im proved means o f check processing in order to avoid long delays in collection and to hold dow n costs. T he developing revolution in electronic data processing machines appeared to offer the best opportunity to do this. In 1955 the Bank M anagement Com m ission o f the Am erican B ankers’ A ssociation, w orking with equip ment manufacturers, check printers, and represent atives o f com m ercial banks and the Federal R eserve System, appointed a comm ittee to develop an auto matic processing system for checks. T hree years later the committee unanimously approved a special type font for use on check form s as a com m on m a chine language. T he special type, technically styled E -13 B, wras to be printed in a band on the bottom o f each check in a newly developed ink bearing magnetized iron oxide particles. H ere they are T he development o f a com m on language wdiich can processed still further, each check again receiving in be read by both the human eye and electronic ma dividual attention. chinery was a necessary first step in the mechaniza T he accounts o f individual check writers must be debited and arrangements made for 2 tion of check processing. T his development has com e to he known as M agnetic Ink Character R ecognition, com m only abbreviated to M IC R . The M IC R principle has been accepted not only in this country but also in Canada, the United K ingdom , Australia, and Japan. Systems based on the E -13 B magnetic type are now operational in all these countries. M oreover, it appears to be only a mat ter of time before Continental European countries adopt either the same system or a comparable one based on a machine language called C M C 7. T he A m erican Bankers’ Association and the F ed eral Reserve System have encouraged banks to print their check form s with magnetic ink characters to indicate in a single field the routing symbol-transit number of the bank. A fter three years o f such en couragement, banks in the Fifth District are so print ing approxim ately 6 8 % o f their checks. ELECTRONIC "BRAINS" Pursuing the mechaniza tion plans further, the Federal Reserve System con tracted with the Stanford Research Institute o f M enlo Park, California, for the development o f equipment specifications to be presented to business machine manufacturers. A bout tw o years ago, five Federal Reserve Banks obtained equipment produced to these specifications by a num ber o f manufacturers and launched extensive pilot tests o f what amounted to new, electronic systems o f check processing. The tests demonstrated that the M I C R principle worked well and that the new system offered a good potential for both saving time and reducing costs if adopted by INPUT UNITS T he input units are the check sorterreacler and the card reader. T he card reader trans fers data from punched cards to the m em ory o f the central processor at the rate of 200 cards per minute. T his device is prim arily used for reading into the mem ory unit instructions from punched cards, but is also used at other times for reading into the unit various control and balancing totals used fo r settle ment purposes. T he check sorter-reader accepts the vast bulk of the raw data in the form of “ qualified” checks, or checks that meet all the technical requirements for machine processing. T hese documents are read and sorted in 12 pockets at speeds up to 1,560 items per minute, the exact rate depending on the dim en sions o f the check. OUTPUT UNITS T he output units consist o f the multiple tape lister and the card punch. N orm ally, the data from a given check are printed on any tw o o f six available tapes. In this operation, the amount, the pocket to which sorted, and the transit number o f the checks are printed at speeds up to 1,600 lines per minute. T he card punch is used to punch cards containing totals o f pockets, totals o f drawee banks, and other control figures which can be fed back into the machine for subsequent balancing or which can be used for final balancing operations at the end o f the day. Since many o f the accounting operations o f the H ead O ffice are processed on another type o f com puter, the transit system also prepares punched a large number of banks. FIFTH DISTRICT EQUIPM ENT F ollow in g the Federal Annual check volum e at the Richmond Fed doubled in 12 years. Reserve pilot tests, the Federal Reserve Bank of R ichm ond ordered a high-speed electronic checkprocessing system. T his system, delivered at the R ichm ond H ead Office in O ctober 1962, consists of five separate com ponents which w ork together under the control of one central processor. T he processor is the “ brain” o f the system, enabling it to sort, list, and accumulate totals as necessary in the handling of checks. It works under the control of a stored p ro gram of instructions which are read into its 4,800position core m em ory by use of punched cards. It contains the circuitry and internal logic necessary to enable the five units to w ork in unison. V arious registers and indicators are available to inform the com puter operator of the status of each of the units. T he other four units are divided into tw o classes, input and output. These are the data processing terms which indicate whether the data are being read into the system or are the delivered results of the equipment’ s work. 3 COMPUTER PROVES, US AND SORTS CHECKS ADDRESSEE BANKS. cards which are used as input data for this other computer. PERSONNEL REQUIREMENTS T he transit system can be operated by a tw o-m an team which normally handles all operations affecting the machinery. H o w ever, it is necessary that cash letters accom panying incom ing checks be inspected and grouped, or “ batched,” and this operation requires another tw o to four people. T he balancing operation, perform ed after the checks have been listed, normally requires the services o f four additional clerks. T he operation o f preparing the com pleted checks for mailing to drawee banks is usually perform ed by various com binations o f these same individuals. M ECH AN IZED PROCEDURE T o qualify fully for p ro cessing on automatic equipment at Federal Reserve Banks, checks must bear, in magnetic ink print, the routing symbol-transit num ber of the drawee bank and the amount of the check. A pproxim ately 25,000 fully qualified checks are received at the Richm ond H ead O ffice daily, m ost com ing from other Federal R eserve Banks and from large member banks. F or a com puter this is an extrem ely small number, and it is necessary that it be increased greatly if a reason able degree of efficiency is to be achieved. A pproxim ately 6 8 % o f the checks received at the R ichm ond H ead O ffice have the routing sym boltransit num ber preprinted in magnetic ink, and thus require only the encoding o f their amounts in m ag netic ink in order to be fully qualified for machine processing. Such encoding is provided through an operation called “ am ount-encoding,” after which a much larger number o f checks can be fed through the com puter. A m ount-encoding, along with an ap processed directly on the com puter since no am ountencoding is required. Other checks that require am ount-encoding are com bined with the fully quali fied items and fed into the com puter, where the totals necessary to balance the incom ing cash letters are derived. Items not having the preprinted routing symbol-transit number or which the machine cannot read because of faulty encoding are rejected by the com puter and returned to the regular p roof machine units where they are handled manually. This Bank must send checks to approxim ately 700 recipients every day. T o achieve this breakdown it is necessary that the checks be passed through the sorter-reader m ore than once. O n the average, each check handled in the H ead O ffice is passed through the sorter-reader 2.5 times before it is finally sorted to the proper end point. T he average daily volum e of w ork now handled on the com puter is 150,000 items per day. A ccordin gly, the machine m ust list and total approxim ately 375,000 items before the checks are com pletely processed and ready to be mailed to the banks on which they are drawn or to other Federal R eserve Banks. BRANCH O FFICE EQUIPMENT M e c h a n iz a tio n o f check handling has proceeded considerably further at the R ichm ond O ffice than at the B altim ore and Charlotte Branches. Both branches will soon be equipped with another type o f high-speed transit system. T his system, which perform s essentially the same operation as the system at the H ead O ffice, has already been installed at the Baltim ore Branch and is now in use. D elivery and installation at the C har lotte Branch is expected in A pril. ADA PTIN G TO THE NEW SYSTEM T h en ew M IC R propriate p roof operation, is done prim arily on two transit separate machines known as unit inscribers. methods o f operation and personnel tasks at the F ed Cash letters containing fully qualified checks are 4 system has had a large eral Reserve Bank of Richm ond. impact on both In the beginning, CHECKS ARE PREPARED FOR SHIPMENT TO ADDRESSEE BANKS. FINAL TOTALS OF ALL CHECKS ARE CONSOLIDATED AND BALANCED. IN OUT-PROOF, CHECKS ARE LISTED AND SORTED BY ADDRESSEE BANKS. OUTGOING CHECKS OUTGOING CHECKS CHECKS ARE PREPARED FOR SHIPMENT TO ADDRESSEE BANKS. FINAL TOTALS OF ALL CHECKS ARE CONSOLIDATED AND BALANCED. since so few checks received were ready for com puter processing, additional w ork was required to am ount-encode enough checks to keep the com puter of increase in the num ber o f checks written all over reasonably busy. T his has meant the addition of more equipment and m ore people without a corres ponding decrease in the old-style operation to offset efficiency and cut operating costs through adopting these additions. T his appears, however, to be a purely tem porary situation of the type com m only as sociated with a new operation. A s the num ber of qualified checks is multiplied and as the procedure becomes increasingly familiar, it will be possible to achieve far greater efficiency in the use o f the new equipment and to handle the grow in g num ber of checks without delays occasioned by overloaded per sonnel staffs. Further progress along these lines depends not only upon the Federal Reserve Banks but also on com mercial banks as wrell. T he efficiency o f the new system is linked closely to the number o f institutions that participate in it. F or comm ercial banks c o n verting to com puter processing, it is o f prime im portance that the checks they receive be fully quali fied for automated handling. T h e m ore checks so qualified, the greater the cost reduction resulting from eliminating costly manual procedures. M o re over, larger numbers o f qualified checks mean more efficient use of high-priced com puter time, faster check handling at city correspondents and at Federal Reserve Banks and Branches and, consequently, more prom pt collections. T he success o f the program ob v i ously depends upon general cooperation in the bank ing system in providing uniform ly qualified checks. F or individual banks, m oving over to the new system will inevitably involve an initial increase in costs. T his will be especially true o f banks which the country, the point will soon be reached at which a great many banks will be able to add to operating the com m on machine checks automatically. language and BROADER M A CH IN E A PPLICATIO N S processing T he im proved methods of handling checks at various points in the banking system, as described above, represent but one phase of a more general revolution in data p ro cessing currently under w ay throughout the business world. Because com m ercial banking involves vast amounts o f paper w ork, new data processing equip ment has proved especially adaptable to the every day w ork problem s of these institutions. Equipment acquired prim arily for check handling is readily adaptable to the automatic processing o f num erous other internal operations. F o r example, com m ercial bank trust operations, instalment loan accounting, loan and collateral records, savings accounts, Christ mas and vacation club accounts, and general portfolio records are but a few of the areas in which significant cost reduction may be achieved through com puter application. In brief, automated data processing equipment not only offers a solution to banking problem s occasioned by a grow in g deluge o f checks in all parts o f the country. It holds out, in addition, the prom ise of im proved and perhaps low er cost bank services to the public in num erous other areas. A s technological im provem ent in electronic data processing equipment o f all types is still, relatively speaking, in its infant stages, perhaps only a small part of the potential for im proved efficiency has been realized. W ith further without technological advancement limited only by human putting the M IC R principle to internal use in their imagination and ingenuity, the future o f efficiency ow n processing of checks. in this area is indeed prom ising. cooperate in furnishing qualified items But given the rapid rate 5 D a ft. . . gladioli cyid irises . . . chrysanthem um s an d geran ium s . . begonias an d h yd ran g eas . . . . coniferous and broad-lec»vergreens . . . deciduous sh ade an d flow ering trees . . . greenhouse tom atoes an d mushroom s . . . narcissus bulbs a n d gla< ,drms. These are but a fe w of the m any kinds of flow ers an d flow ering plants, nursery vegetables g row n uiflass, and bulbs produced by the District's 3,0 0 0 farm ers w ho earn income from horticultural 'if’ * r1 . W hen a ll a t once I s a w a cro w d — A host of golden d affo d ils . . . . —william t*orasworTn Proci of these specialty products is concentrated not only on a relatively few farm s but also in a relative num ber nnties, located m ainly n ear the District's large urban centers. The farm s are sm all in size w hen compa other fo rm the o v erag e v alu e of sales per farm is co nsiderably higher than that for a ll farm s. G ro w ers in this five-sti a re a p ro more than $31 million worth of these products in 1959. bedding ; com prised slightly more than h alf of this total. y 45 cents to each do llar of sales. Soles of cut flo w ers, potted plants, florist greens, a Nursery products w ere the second largest m oney-m akers, con The sm allest of the horticultural specialty income producers—greenhouse an d vegetable seeds an d plants, bulbs, and m ushroom s-accounted for the rem aining four cents. with other sources of District farm income, the relative income position of horticultural specialties is fa r onotem pole. Sales o f these products in 1959 m ade up only 2% of the valu e of all farm products sold in the Dis- trees the valu e of all crops sold. such a s h § 1 But this picture is quite different by states and in the a re a s of intensive produc e r cr° P s in M arylan d and W est V irg in ia, for exam p le, produce slightly more than ten cents of II crop income, w h ile V irg in ia's sales account for five cents of each crop d o llar. A nd in m ajor producing a re a s, tk. and Baltimore Counties, sales of these commodities yield more than half of the valu e of all crop sales. In the Carolinas'ever, w here tobacco an d cotton are the big farm income earn ers, the relative income position of these specialty crops is sm paratively insignificant. PBB Chan's fam ous gardens, the form al gardens at W illiam sburg's G overnor's Palace, an d those at N ew Bern's Tryon ■■ 81,*: pi the visitor w ith am ple evidence that our fo reb ears enjoyed the beauty of Spring's flow ering bulbsTsym m etric a lly groB o w e r borders, and o rn am e n tal trees an d shrubs. This sam e interest in an attractive grouping of shrubs an d ers o w e rin g plants by today's home gardeners, b ack yard farm ers, an d just plain "green thum bs" is providing nurs erym en o w e r an d bulb gro w ers w ith a grow ing m arket •a .^ ' Vj S’ *?- : ,• . ^ A growing source of farm income . . . HORTICULTURAL SPECIALTIES Easter has long been known as one o f the busiest seasons o f the year for nurserymen, flower farmers, and florists. A cross the nation, nurseries and florists are veritable beehives of activity during the days immediately preceding the Easter observance. Street corner vendors and supermarket salesmen also have potted plants and cut flowers fo r sale to the many w ould-be purchasers. T he fast pace o f the Easter business is an excel lent exam ple of the seasonal nature o f the demand for horticultural specialties, particularly florist crops and nursery crops grow n in greenhouses. T his socalled “ special event” trade-— business resulting from holiday celebrations, gala civic events, births, m ar riages, and deaths— is probably one o f the chief reasons w hy production o f these specialty crops is centered prim arily around large metropolitan centers. EXPA N D IN G SALES T he growth in the value o f horticultural specialties sold by Fifth District farmers is but one indication of their increasing importance in D istrict agriculture. T he sales value of these specialty crops from 1954 to 1959, for example, jum ped nearly 5 0 % , reaching $31.3 million in the latter year. T h e value o f all farm products sold in creased about 13% during this same period, while the value o f total crop sales actually declined 2 % . F o r the decade 1949-1959, horticultural specialty sales climbed 6 5 % , w'hile the value o f all farm com modities sold rose about 4 0 % and total crop sales increased 2 5 % . E xam ination of the changes in all m ajor sources o f farm product sales during this same Carolina, where sales o f these specialty crops in 1959 were nearly tw o and one-half times greater than ten years earlier, en joyed the most spectacular grow th. Sales in V irgin ia and South Carolina were half again as large as in 1949, while M aryland’s sales grew m ore than two-fifths and W e st V irg in ia ’ s gained around one-fourth. V irgin ia was still the largest contributor to the D istrict’s total value of sales from these crops in 1959 despite significant gains in all other D istrict states. V irgin ia’s $9.2 million in horticultural specialty sales was follow ed closely, however, by N orth Carolina’ s $9.1 million and M aryland’ s $8.0 million. W e st V ir ginia contributed roughly $2.5 million and South Carolina about $2.4 m illion to this total. Relative to the total value o f all agricultural marketings in the F ifth District, the value o f horti cultural specialties, while grow in g rapidly, is still small. Sales of these specialty crops represent an important source of incom e in certain states, h ow ever, and especially in particular localities. N orfolk and Baltim ore Counties, both m ajor areas o f p ro duction, rank am ong the nation’s 100 leading counties in the total value o f horticultural specialties sold. INDUSTRY CHARACTERISTICS AND SIZE F arm cen sus takers counted some 3,000 District farm ers w ho produced horticultural specialty crops in 1959. Som e 2,900 earned as much as $250 or m ore from the sale of these specialties. O f this number, 1,016 producers had sales am ounting to $2,000 and over, leaving a ten years reveals that the grow th in the value of total o f 1,887 grow ers— 6 5 % o f the num ber reporting sales by volum e— with earnings ranging from $250 to specialty crop marketings was exceeded only by in $1,999. creases in the sales value o f fruits and nuts and may well have been part-time farmers, produced only poultry and poultry products. 4 % o f the value o f all horticultural specialties sold. T he sales value of tw o o f the three classes o f horti cultural specialties showed especially rapid growth during these Farm s producing flowers and flow ering plants, bulbs, shrubs, ornamentals, and the like are com para flowers, potted plants, florist greens, and bedding tively small in size, but the average value o f their 45 % . products accounted for 9 6 % o f all sales. than doubled as income producers, while sales o f cut increased N ursery B y contrast, producers with sales o f $2,000 or m ore more plants ten years. T h e latter group, a good many o f whom Greenhouse vegetables, sales is considerably higher than the average fo r all flower and vegetable seeds and plants, bulbs, and farms. mushroom s recorded only a very slight gain in sales 1959, for example, averaged around $10,375— nearly value, however. tw o and one-half times the $4,260 sales average o f FTorticultural specialties have provided a grow in g source o f farm incom e in all District states. Digitized for 8 FRASER N orth Sales o f all horticultural specialty farms in all District farms. Specialty farms producing nurs ery products averaged around $9,445, while those grow in g cut flowers, potted plants, and so forth, averaged nearly $10,790. Farm s grow in g vegetables under glass, bulbs, flower and vegetable seeds and plants, and mushroom s, with average sales o f $2,135, were the only specialty farms with earnings low er than average farm product sales for all District number excludes the operators themselves as well as salaried officers o f corporations. R oughly 9 0 % of the total were paid employees, including full-time, part-time, and seasonal help. T he remainder were unpaid family workers. H alf o f the total were fu ll time employees, while about tw o-fifths were parttime or seasonal helpers. G row ers with establish farms. These com parisons suggest that the small and intensive type o f farm ing carried on by p ro ducers o f horticultural specialties still has an im ments producing products having a crop value of portant place in the D istrict’ s agricultural econom y, despite the grow in g trend tow ard larger and highly mechanized farm ing operations. num ber o f paid em ployees per farm averaged about T he 1,016 District farms that produced and sold specialty crops valued at $2,000 or m ore in 1959 were included in a special farm census tally which provides detailed inform ation concerning the horti cultural specialty industry. R oughly seven-tenths o f these 1,016 producing units were individual p ro prietorships, while the remainder were about equally divided between partnerships and corporations. Nurserymen, flower grow ers, producers o f bulbs and greenhouse vegetables, and m ushroom and flower seed grow ers were the principal kinds of businesses. F low er grow ers and nurserym en were the m ost prev alent, with bulb grow ers the next most numerous. T he value o f all land, structures, and equipment owned a n d /o r rented by horticultural specialty farmers in 1959 totaled $49.4 million— around twro and one-fifth times that in 1949. Value per farm averaged about $48,600, m ore than double the 1949 average, and ranged from a low o f around $26,800 $10,000 and over accounted for roughly 8 0 % o f both total em ploym ent and total paid employm ent. The nine, six o f whom were full-tim e workers. Between 1949 and 1959, total paid em ploym ent rose by about one-fourth, while the num ber o f unpaid family workers declined by the same amount. A t the same time, the num ber of paid full-time employees in creased 3 0 % . N early half o f all District operators use both the wholesale and retail method o f selling their products. O ne-fourth o f them sell at wholesale only, while the remaining one-fourth sell only at retail. T he dollar volum e of their wholesale sales in 1959 was tw o and one-fourth times that in 1949. D u ring this same ten years, the volum e o f their retail sales dropped by onethird. A s a proportion o f total gross receipts, w hole sale and retail methods o f selling thus changed posi tions. W holesale sales, which had accounted for slightly m ore than one-third o f the total sales volum e in 1949, represented roughly tw o-thirds of the products oc total in 1959. O U TD O O R PRODUCTION N ursery in South Carolina to a high o f $77,200 in V irginia. T otal employm ent reported by these specialty p ro ducers in 1959 was approxim ately 8,260. This cupied four-fifths of the total land area used for ou t Specialty crop sales grew in each District state 1949-1959, but only the C aro lin a s im proved in Fifth District producers w ith sales of $2,000 or more accounted for 96% of all horticultural specialty crop sales in 1959. in the decade national rank. TO TAL V ALU E O F H ORTICULTURAL SPECIALTIES SOLD AND N A TIO N A L RAN K O F FIFTH DISTRICT STATES, 1949 AND 1959 d oor production o f horticultural specialties in 1959. NUMBER O F HO RTICULTURAL SP EC IA LTY ESTABLISHM ENTS A N D TOTAL SALES, BY A M O U N T O F SA LES, 1959 M aryland m Virginia W est Virginia North C aro lin a South Caro lina 0 2 4 6 http://fraser.stlouisfed.org/ M illions of Dollars Federal Reserve Bank of St. Louis 8 Percentage Distribution U U E O F FARM PRODUCTS SOLD PER FARM, 1959 Farm s and Horticultural Specialty Farm s, By Type $ tousand 20 A b ou t one-sixth o f the acreage was usecl for the p ro duction of cut flowers, flow ering plants, and the like, while almost all o f the remainder was devoted to 15 10 g row in g bulb crops. T he land area used for p ro ducing nursery products averaged 28 acres per farm, 5 bulb farms averaged about 15 acres, and the average 0 acreage devoted to cut flowers and flow ering plants was only 9. 25 T he land area covered by lath, saran, or other shade substitute m aterial; fra m es; and cloth houses increased sharply between 1949 and 1959 and now 20 amounts to slightly less than 2 % o f the total acreage 15 used for ou tdoor production. 10 Greatest gains have occurred in the areas covered by cloth houses and frames, but lath, saran, or some other shade substitute is still the m ajor type o f coverin g used. 5 0 GARD EN IN G UNDER GLASS Som e 620 horticultural specialty producers— three-fifths of those with sales 25 of $2,000 or m ore in 1959— reported the production o f florist, nursery, and vegetable crops in greenhouses. Production was concentrated in some 8.6 million 20 15 square feet o f greenhouse area, an increase of 15% since 1949. 10 Space devoted to the production o f florist crops, which occupies m ore than 9 0 % o f the total green house area, rose one-eighth. T hou gh the num ber of farmers producing vegetables under glass— chiefly tomatoes and lettuce— doubled, the actual space used for this purpose declined by one-sixth. T h e green house area em ployed in the production o f nursery crops, though still fairly small, rose a w hopping 1 40% , while the num ber o f producers jum ped nearly 7 5 % . 5 0 20 15 10 5 M ost o f the D istrict’s greenhouse area was covered by glass, but about 7 % o f the area was covered by a glass substitute such as plastic or fiberglass. T he use o f glass substitutes for green house production is reported to be ushering in a new type of gardening. Plastic greenhouses, for 0 20 15 10 example, are easy to build, low in cost, and rela tively easy to heat. 5 T h e grow in g impact o f scientific research on the production of horticultural specialties has brought 0 spectacular results. 20 F low ers and ornamental trees and shrubs are prettier, longer lived, and m ore re sistant to 15 disease and insect pests. A nsw ers to questions such as how to fertilize and the proper use of chemical weed killers and mulches have been 10 found. 5 Directions for better methods o f out of- season production of both vegetables and flow er and vegetable plants have been developed. 0 Continuing research in this area emphasizes its grow in g potential i | A ll horticultural specialty farm s I ^ □ All farm s N ursery products H Cut flow ers, potted plants, florist for FRASER greens, an d bedding plants Digitized I http://fraser.stlouisfed.org/ ”1 V eg etab les Federal Reserve Bank grow n Louis . glass,I of St. under J II flow er and vegetab le L _______ as a producer o f farm income. THE FIFTH DISTRICT Em ploym ent and unem ployment are closely related business indicators that do not always convey co n sistent impressions o f business trends. first quarter of 1963, fo r instance, D uring the employm ent reached record levels after several months o f fluctua tion along a high plateau, but unemployment failed to decline. In fact, joblessness showed a trouble some tendency to rise during most o f last year while employm ent remained virtually unchanged. A p parently the num ber o f jobseekers has acquired a tendency to grow a little faster than the number rise that occurs in June when schools close and most new graduates join the labor force in search o f work. T he declines in unem ployment that occurred early last fall were somewhat less than seasonal. T he rise in joblessness that follow ed turned out to be slightly greater than would norm ally be expected. A n d this year the spring downturn got started at a later date and has since progressed at a slower pace than has usually been the case. JO BS AT RECORD LEVEL Despite the presence o f L ike other econom ic events, more unem ployment than usual, District employm ent showed some im provem ent in January and February. T he seasonally adjusted num ber o f job s in nonagri- labor market developments at various seasons must cultural enterprises reached 4,946,000 in February, be evaluated by com parison with the changes that equaling the all-time high set in September last year. of jobs. JOBLESSNESS PERSISTS usually occur. F or instance, unemployment drops to District em ploym ent ow es its recent strength to the seasonal lows each fall as job s build up to harvest nondurable goods sector o f manufacturing, to trade, and process farm output, and to prepare for the reg services, and governm ent, and to transportation, com ular year-end bulge in general business activity. munications, and public utilities. T he last-mentioned trict and most other parts o f the nation as well. February after the end of the dock strike. F rom autumn lows, as a rule, joblessness rises to seasonal category reached E m ploym ent in the pattern is typical o f the Fifth Federal R eserve D is record levels in M anu facturing industries show ing particular im provem ent T he com ing of so far this year include textile spinning and weaving spring turns the course o f unemployment downw ard operations, apparel, tobacco, chemicals, and printing. again. Prim ary metals producers were the only members of highs in January and February. A n d so it continues until fall except for the the durable goods group to raise employm ent in both January and February. Jobs increased in January in nearly all durable good s categories, but February declines disappointed hopes for steady advances. Contract construction employm ent in recent weeks but for m ore than tw o-thirds o f insured unem ploy ment. B y contrast, trade and services, which p r o vide nearly another third o f all nonagricultural jobs, generated only one-sixth o f joblessness qualifying for unemployment compensation. has been conspicuously lacking in vigor. T he number of construction w orkers reached a high for recent Differences in econom ic structure am ong D istrict states result in some sharply divergent patterns o f years last O ctober but has declined ever since. insured unemployment. T he M aryland rate has re mained quite stable at or near 6 % since the first of the year. Seasonal declines in the num ber o f jobs Due in large measure to unusually adverse weather con d i tions, jobs dropped 3 % in February alone. Indi cations are that the return o f good weather has en abled many to return to work. In February, as a result of the cyclical upswing of provided by construction and trade, and additional idleness induced by the dock strike, maintained this rate in January despite increased em ploym ent in g o v the past tw o years, all categories of employm ent except m ining were well above their levels o f one and tw o years ago. Total employment was 2 % higher than a year ago and 7 % higher than tw o years ago. F actory jobs were 1% more num erous than ernment and stability elsewhere. in 1962 and 6 % m ore plentiful than in 1961. start of the year was about 3 % . The largest gain in the one-year period was 4 % , recorded in trade, in services, and in the finance, insurance, and real estate group. T he biggest gain registered since February 1960 was 15% in contract construction. V irtually all this increase occurred in 1961. Em ploym ent gains stemming 300,00 0 NEW JO BS from im proved business conditions in the Fifth D is trict generated about 125,000 new jobs in the past year com pared to 175,000 during the year before. A s already suggested, m ost o f the 1962 increases o c curred prior to midyear. In contrast to 1961 e x perience, however, jobs in 1962 did not rise enough to reduce unemployment significantly. A s shown by the chart on page 11, last fall’s rates of insured jo b lessness were the lowest since 1957. Thus, District rates of insured unem ployment are high com pared to pre-1958 experience, but not unusually high in re lation to typical rates since that year. D uring the period depicted on the chart District rates have matched national rates rather closely with respect to seasonal variations and business cycle fluctuations. P rior to 1957 the tw o series were also o f similar average magnitude. Since that time, however, rates in the District have been consistently below the n a tional figures. by and trade, these were partly offset by small declines in m anufacturing employment. V irg in ia ’s rate o f insured unem ployment at the particular industries Insured unem ploy differs am ong the Construction and manufacturing were the principal industries involved, but some unemployment was also linked to trade. Insured unem ployment in manufacturing was fairly wrell distributed across the board, but writh the smaller concentrations in food industries, textiles, and lumber. A s the year began the rate o f insured unem ploy ment in W est V irginia stood at 10 % . It has since shown a tendency to decline, prim arily because o f employm ent gains in manufacturing, governm ent, and transportation, com m unications, and public utilities. T he rate o f insured unem ployment am ong miners, however, reached 4 7 % o f covered em ploym ent in February. 'l'he rate of insured unem ployment was 6 % early in January in N orth Carolina, and the trend since then has been slightly downw ard. N early tw o-thirds of the insured unem ployed were linked with manu facturing, principally tobacco factories and textile mills. M ost o f the remainder were in construction and trade. South Carolina’s rate o f insured unem ployment has been declining this year from a starting level o f about 5% . As in N orth Carolina, manufacturing, con struction, and trade headed the list o f industries in volved. UNEM PLOYM ENT BY INDUSTRY ment W h en jo b o p p o r tunities later increased in transportation, services, W ithin the group linked to manufacturing, about tw o-thirds o f the insured unem ployed had been attached to textile mills and apparel plants. various District states pretty much as industry pat terns themselves differ. In the early months of the year much of the D istrict’s unemployment is sea sonal, and is linked to manufacturing and contract construction. These activities accounted for about one-third of total nonfarm employm ent in February, Digitized for12 FRASER PHOTO CREDITS C over—Federal Reserve Bank of Richmond