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FEDERAL

RESERVE




BANK

OF

RICHMOND

APRIL

1963

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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

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