Full text of Economic Quarterly (Federal Reserve Bank of Richmond) : April 1964

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FE DE RAL R E S E R VE B A N K O F R I C H M O N D



APRI L 1964

THE U N I T E D S T A T E S M I N T
A N D T HE

S U P P L Y OF C O I N
A New England bank recently made national news
by sponsoring a “green sale.” The public wras in­
vited to buy new $1 Federal Reserve Notes for 98
cents in coin. T his not only enabled the bank to
acquire badly needed coin, but in a unique and ef­
fective w ay focused public attention on a serious
problem—the coin shortage.
In recent years the demand for coin has risen
rapidly, and existing mint facilities are being strained
to keep pace with the grow ing need. A number of
recent studies have delved into the demand side of
the equation and have explained the grow ing demand
for coin in terms of a grow ing population, rising
economic activity, increased use of vending machines,
and so forth. T his article shifts emphasis to the
supply side of the problem for a somewhat detailed
look at the U nited States M int, the institution which
produces our coin.
H istory M in t fa c ilitie s in th is co u n try are a l­
most as old as the Constitution, which vests Congress
with the authority “ . . . To coin money, regulate the
value thereof, and of foreign coin, and fix the
standard of w eights and m easures.” In the early
history of this country money consisted of precious
m etals, numerous other commodities, different foreign
coins, and a few land bank notes secured by real
estate mortgages. Jefferson, Hamilton, and others
hoped to correct this disorderly state of affairs by
specifying the m etallic content of the m onetary unit
and providing a facility which would strike precious
metals into standard coin. Under the Coinage Act
of 1792, the dollar, defined in terms of both gold and
silver, was adopted as the standard m onetary unit.
The U . S. M int was established in Philadelphia, then
the C apital, and w as the first public building au­
thorized under the Constitution.
D uring the 172 years since the M int was founded,
the monetary system of the United States has under­
gone extensive change. The country operated first
on a bim etallic coin standard, then the gold coin
standard, and since 1934 on a lim ited gold bullion
standard. The composition of the money supply
shifted from one consisting prim arily of currency
and coin to one made up prim arily of demand de­
posits. Through all of these changes the M int has
performed the vital service of supplying the coin
which is so necessary to commerce and trade.



Changing Outputs W ith c h an g in g co in age law s,
the composition of the M int’s output has, of course,
changed too. Gold coins, wrhich were minted in six
different denominations ($50, $20, $10, $5, $3, $2.50,
and $ 1 ) accounted for most of the value of the M int’s
production before 1934. T his w-as especially the
case in periods of unusually large domestic gold pro­
duction. For exam ple, in the ten years following the
California gold rush, gold coins made up over 90%
of the dollar value of the M int’s total output. The
M int has produced no gold coins since M ay 1933,
and the Gold Reserve A ct of Ja n u ary 1934 prohibits
both the production and m onetary use of such coins.
The composition of the silver and minor coinage
has been affected by numerous coinage laws, especially
those m aking additions to and deletions from the
coinage list. A t one time or another the authorized
silver coinage has included a 20-cent piece, a half­
dime, and a 3-cent piece. Among early minor coins
were a 3-cent piece made of nickel and copper, a
2-cent bronze piece, and a copper half-cent.
The metallic content of the various coins has been
subject to numerous legislative adjustm ents, but the
definition of most of today’s silver and minor coins
has been fixed for m any years. The silver dollar, for
exam ple, has not been changed since 1837, and the
half dollar, quarter, and dime have not been altered
since 1873. Except for a brief time during W orld
W a r II, wThen some metals were in short supply, the
composition of the nickel has not been changed since
1866 nor that of the bronze penny since 1864.
G rowth in Production Facilities U ntil the 1830’s
the Philadelphia M int had ample productive capacity.
Most of its output in terms of numbers of pieces con­
sisted of minor coin, and other coinage w as lim ited
in part by the scarcity of precious m etals. Domestic
production of gold and silver was quite sm all, and
raw m aterials for larger-denom ination coinage con­
sisted chiefly of foreign coin and bullion earned in
foreign trade. Production was also lim ited by Je f­
ferson’s decision in 1806 to stop m inting silver dol­
lars. These shiny new coins disappeared from
circulation almost im m ediately as they were shipped
to the W est Indies where they could be traded for
heavier, more valuable Spanish coin. Foreign coin,
therefore, continued to constitute the bulk of the do­
mestic coin supply for several years. As a result, a

significant part of the M in t’s work load consisted of
assaying a variety of foreign coins in order to furnish
current estim ates of their respective values.
In the late 1820’s and early 1830’s the volume of
coinage expanded appreciably as new supplies of
metal became available. Several of Spain’s colonies
in L atin A m erica became independent during these
years, and large quantities of silver from these new
nations began to come into the United States, princi­
pally through New Orleans. Gold, also, became
available in larger quantities as new strikes were
made in the lower Appalachians.
Congress decided to establish branch mints close
to the sources of the new supplies of raw m aterials
in order to minimize the problem of transportation.
In 1835 the Philadelphia M int opened branches in
Charlotte, North Carolina, Dahlonega, Georgia, and
New Orleans. These continued in operation until
the outbreak of the Civil W ar. After the w ar the one
in Charlotte was reopened as an assay office, and the
one in New Orleans first as an assay office and then
as a mint, which remained in operation until 1909.
Even after the A ppalachian gold discoveries,
foreign coins continued to be the chief raw m aterial

for mint operations. Robert J. W alker, who was
Secretary of the T reasu ry under President Polk, was
impressed with the wastefulness involved in melting
foreign coin and striking it into U . S. coin, while
foreigners did the reverse. To avoid this waste, he
conceived a plan to standardize coin internationally.
Nothing came of this venture, however, and foreign
coin continued to be the principal raw' m aterial for
our coinage until the great California gold strikes.
In the second half of the 19th century, three
branches of the Philadelphia M int were opened in the
W est to handle that region’s expanded output of gold
and silver. Close on the heels of the tremendous
gold discoveries in California, a branch was opened
in San Francisco. T his facility continued in opera­
tion until 1955 at which time it was closed because
of its high-cost operation. Coins could be minted in
Denver and shipped to the W est Coast cheaper than
they could be produced in San Francisco. For this
reason the coinage facilities in San Francisco were
dismantled and usable items were shipped to Denver
and Philadelphia. The Denver branch was legally
established in 1862 but w as operated only as an assay
office until 1906, when it began to produce coin. In

MINTING OPERATIONS

999
F I WE

+ Q
N il

90%
10%
SILVER
COPPER
RAW MATERIALS MIXED

CASTING CLEANED

ROLLED AGAIN (18 -2 2 TIMES)

PIECE OF A FIN AL STRIP

< 2 -0

^^JO O D

BLANKS SORTED
TUMBLED (POLISHED)

WASHED

FINAL COINS COUNTED
AND BAGGED

RAISED EDGE FORMED

INDIVIDUAL COINS
AUTOMATICALLY WEIGHED. OVERWEIGHT
AND UNDERWEIGHT COINS REMELTED




CENTRIFUGALLY DRIED

FINALLY W0GHED SHIPPED

REEDED (MILLED) AND STAMPED

3

1870, a branch was established in Carson City,
Nevada, but this plant handled so sm all a volume of
business that it was perm anently closed in 1893.
For m any years, the Director of the Philadelphia
M int was responsible not only for the work in P h ila­
delphia but also for the operations of the branch mints
and assay offices. To achieve better coordination and
more effective control, Congress in 1873 created the
Bureau of the M int within the T reasury Department.
A t the present time, only two mints are in operation
— one in Philadelphia and one in Denver. In addi­
tion, the Bureau of the M int consists of the Office of
the Director in W ashington, assay offices in New
Y ork and San Francisco, the W est Point Depository,
and the Fort Knox Depository.
Supply and Demand T h at the dem and for coin
has increased very dram atically in recent years is
evident from the black line on the accompanying
chart, which shows the net shipment of coin by Fed­
eral Reserve Banks to member banks. Although net
shipments probably provide the best indicator of de­
mand that is available, they probably understate
actual demand because of Federal Reserve rationing.
The purple lines show that coinage production has
not quite kept pace with net shipments, much less
with demand. T his deficiency has occurred despite
the fact that existing facilities have been utilized more
in ten siv ely; that is, more shifts have been added and



more days a week have been worked. This mode of
operation is expensive because of shift prem iums and
paym ent of overtime for weekends.
The disparity between net shipments and produc­
tion has been met by reducing inventories, but ob­
viously this cannot continue indefinitely. The Federal
Reserve Banks, which serve as an interm ediary be­
tween the M ints and the public, must have on hand an
adequate inventory of the various denominations of
coin to meet seasonal or random shifts in demand.
At times in the recent past, some of the Federal
Reserve Banks have had to ration certain denomina­
tions of coin. T his aggravates shortages because it
discourages some banks from returning their own
excess coin to the System for recirculation.
No one can read the future, but it is fairly safe
to assume that the demand for coin w ill continue to
increase. The A rthur D. Little Company, which
recently conducted a study for the Bureau of the
M int, predicted that new demand plus necessary in­
ventory maintenance w ill amount to 4.1 billion coins
in fiscal 1964, 4.3 billion coins in 1967, and 4.9 billion
in 1969. W hen this demand is m easured against
m anufacturing capability, it becomes obvious that
existing facilities are inadequate. A ccording to the
L ittle estim ates, if existing facilities w^ere operated
norm ally (tw o shifts, five days per w^eek), total out­
put would amount to only 3.1 billion coins or sub­
stantially less than current needs. If three shifts
were used and both mints were operated seven days
a week, m axim um output would still amount to
slightly less than 5 billion pieces.
U ntil new capacity becomes available, the existing
facilities w ill have to be operated at greater-thanoptimum rates. As an em ergency m easure, coinage
for foreign governments, which in recent years has
amounted to approxim ately 6% of the total, may
have to be curtailed.
Existing Facilities T he m in t b u ild in g at P h ila ­
delphia was constructed in 1900, and the space it af­
fords cannot house a modern m anufacturing process.
Of the 3.6 billion coins produced in fiscal 1962, only
1.1 billion were produced in Philadelphia.
The Denver M int was also erected at the turn of
the century, but twyo m ajor additions have made
possible the use of more efficient equipment. As a
result, production is significantly cheaper in Denver,
where the m inting cost per thousand coins is only
$.72 compared with $1.02 in Philadelphia. Because
of its greater capacity and lower cost, the Denver
M int has carried the bulk of the coinage load in recent
years. In fiscal 1962, for exam ple, it was operated
using three shifts, six days a w e e k ; with the blank

NET SHIPMENTS AND PRODUCTION OF COIN
(1 9 5 6 - 1 9 6 3 )

M in o r C o in




annealing process on a seven day basis. The re­
sulting output w as 2.5 billion coins.
Although most of the coin has recently been pro­
duced in Denver, the greatest demand for coin is
concentrated along the Eastern Seaboard. In fiscal
1962 approxim ately 70% of coin production was
delivered to banks nearer Philadelphia than Denver.
It follows, therefore, that transportation costs are a
significant consideration in developing plans for
plant expansion.
Proposed Expansion To m eet the dem and for
coin in the next few years, the M ints will have to
operate three shifts, six or seven days a week. The
projected demand for coin can be met in this fashion,
but this solution is only tem porary and also expensive.
Unfortunately, existing facilities do not perm it the
use of larger, more efficient equipment. The A rthur
D. L ittle study recommended the use of a semicontinuous casting process rather than the book-mold
process currently in use, and the use of larger,
heavier rolling m ills to handle the larger ingots which
the semi-continuous casting process w ill produce.
Due to space requirem ents, this improved equipment
cannot be installed in the existing buildings. In its
report, the Little Company proposed three possible
alternatives : 1) construct a new mint at Philadelphia
and install in the Denver M int a blank annealing
furnace, a new rolling m ill, and ten stam ping presses
by rearrangin g equipment and utilizing space which
is no longer used for refin ing; 2) expand the existing
Philadelphia M int and make the above changes in
the Denver M in t; 3 ) abandon both m ints and build
a single new mint in some central location. The
study recommended that, regardless of the alternative
chosen, the facilities be operated on a two shift basis,
the least-cost method of operation.
In response to the need for new facilities, Congress
last fall authorized the Secretary of the T reasury to
acquire suitable building sites, and to construct and
equip the buildings needed for the operations of the
Bureau of the M int. No money has yet been ap­
propriated, however.
A ccording to testimony of the Director of the M int
before the Senate B anking and Currency Committee,
the T reasury plans to abandon the inadequate P h ila­
delphia M int and construct a new facility on land in
an urban redevelopment area which the Secretary of
the T reasury has form ally requested the M ayor of
Philadelphia to set aside for that purpose. In Den­
ver, the T reasury plans a new addition behind the
existing mint on land the Government already owns.
U ntil new capacity is available, the M int w ill con­
tinue round-the-clock operation of existing facilities.
5

II. Measurements of .

Farm Income
Farm income statistics showing the "personal income of the farm population from all
sources," published at regular intervals by the U. S. Departm ent of Agriculture, cover the
second of two m ajor concepts of farm income.
Unlike the statistical series comprising the
concept of "farm operators' income from farm in g ," discussed in a previous article, these data
m easure the total income of all people w ho live on farm s.
Persons in this group include
not only resident farm operators and their fam ilies but also farm laborers and their fam ilies,
retired persons, and people living on farm s but w orking at nonfarm jobs. This series shows
the combined net income of the farm population from both farm ing and nonfarm sources.
PERSONAL INCOM E FROM FARM SOURCES
Personal income of the farm population from
farm sources is the sum of resident farm operators' total net income from farm ing and the
farm w a g es of laborers living on farm s, minus the contributions of farm resident operators
and w orkers to social insurance.
Resident farm operators’ total net income from farm ing is total net income from farm ing
operations, as defined in the first article of this series, minus the net income of nonresident
operators.
These data m easure the returns from farm production to resident farm operators
for their capital, labor, and m anagem ent after farm production expenses have been deducted.
There is no charge in production expenses for a return on farm operators' equity in land
and other farm capital.
Farm wages o f laborers living on farm s include the w a g e s, sa larie s, and other labor
income received for farm w ork by resident farm w orkers. These w a g e s, both in cash and in

PERSONAL IN COM E O F THE FARM POPULATION FROM FARM AND N ONFARM SOURCES
United States, 1949-1962

Less:
Net Income
of
Nonresident
O perato rs

Plus:
W ages, Sa la rie s
and
O ther Labor
Income of
Farm
Resident
W orkers

Less:
Contributions
of
Farm Resident
O perato rs
and W orkers
to Social
Insurance

Equals:
Personal
Income of
Farm
Population
from
Farm
Sources

Personal
Incom e of
Farm
Population
from
Nonfarm
Sources

$ Mil.

$ Mil.

$ Mil.

$ Mil.

$ Mil.

$ Mil.

$ Mil.

1949

12,926

1,254

1,792

---

13,464

5,580

19,044

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

14,000
16,334
15,337
13,278
12,691
11,767
11,617
11,780
13,548
11,371

1,372
1,617
1,534
1,328
1,269
1,177
1,162
1,178
1,355
1,137

1,703
1,805
1,922
1,828
1,746
1,717
1,719
1,749
1,784
1,792

11
11
13
17
133
157
171
182
193

14,331
16,511
15,714
13,765
13,151
12,174
12,017
12,180
13,795
11,833

6,045
6,329
6,553
6,271
5,850
6,140
6,565
6,649
6,712
7,143

20,376
22,840
22,267
20,036
19,001
18,314
18,582
18,829
20,507
18,976

1960
1961
1962

12,021
12,800
13,284

1,202
1,280
1,328

1,746
1,756
1,719

229
232
240

12,336
13,044
13,435

7,242
7,040
7,100

19,578
20,084
20,535

Year

Total Net
Income of
Farm
O perato rs,
Including
Governm ent
Paym ents

Source: U. S. Departm ent of Agriculture.




---

Total
Personal
Income of
Farm
Population
from
All Sources

kind, represent a production cost to farm operators, but they are income to the hired farm
w orkers who live on farm s.
W ages paid by farm operators to m igrant and other nonresi­
dent farm laborers are not included.
Contributions o f farm resident operators and irorkers to social insurance are the taxes
paid in accordance with the old-age and survivors' insurance provisions of the Social
Security Act.
Personal income of the farm population from farm production is, then, derived from a
series of component parts as can be seen in the accom panying table.
It is farm operators'
total net income from farm ing, including Governm ent paym ents, less the net income of non­
resident operators, plus the w ag es, sala rie s, and other labor income of farm resident w orkers,
less farm resident operators' and w orkers' contributions to social insurance.
PERSONAL INCOM E FROM NONFARM SOURCES Personal income of the farm population from
nonfarm sources has m ade up slightly more than one-third of the total personal income re­
ceived by farm residents in recent years.
This statistical series provides a m easure of all the
income farm residents receive from nonfarm sources.
Included in this yardstick are w a g es
and salarie s from nonfarm employment, income from nonfarm business and professions, and
rental income from nonfarm real estate.
Income obtained from dividends, interest, royal­
ties, and transfer paym ents, such as unem ploym ent com pensation, social security, and vet­
erans' benefits, is also included.
FARM POPULATION'S PERSONAL INCOM E FROM ALL SOURCES
Total personal income a v a il­
able to all persons living on farm s thus consists of two m ajor components: (1) personal income
from farm sources, and (2) personal income from nonfarm sources. The three principal
series—income from all sources, from farm sources, and from nonfarm sources—comprising the
"personal income of the farm population" concept are published on both a total and a per
capita basis.
H istorically, these statistics, issued an n u a lly and a v a ila b le only for the nation
as a w hole, cover the years since 1934.
Figures showing the personal income of the farm population from all sources represent
the total income a v a ila b le to all people w ho live on farm s for purchasing goods and services
and paying income taxes. These d ata , w hich can be com pared with the personal income
statistics of the U. S. Department of Com m erce, are the statistics to use w hen m aking com­
parative studies of income figures of farm people and the personal income of nonfarm people
or of the total population.

PERSONAL IN CO M E O F THE FARM POPULATION
United States, 1949-1962
____________

$ B illio n.

Million Persons

Dollars

PER CAPITA

TOTAL
32

1,600

40

Income from All Sources

1,200

- 30

Income from All Sources

800
Farm Sources
Farm Sources
400

10

N onfarm Sour

1950

1955

Source: U. S. Departm ent of Agriculture.




1960

1950

1955

I9 6 0

Foreign Trade Tonnage at Fifth District Ports
Sustained expansion in this country’s foreign trade
is exerting a notable, though little publicized, impact
on activity at Fifth D istrict seaports. E xtensive
program s for renovation and expansion of cargohandling facilities are currently in process in each
of the four D istrict states fronting on the Atlantic.
These program s, which have already involved m il­
lions of dollars of new investment and have created
thousands of new jobs, are designed to m aintain or
improve the relative position of District ports in the
nation’s foreign waterborne commerce.
The D istrict’s Ports T he D istric t’s co astal con­
tours form some of the best natural harbors on the
A tlantic Seaboard. The well-sheltered ports of
Baltim ore, Hampton Roads, and Charleston have
played a leading role in the nation’s foreign trade
since early colonial times. The excellent transporta­
tion networks converging at these three port areas
enable them to service the seaport needs of a vast
hinterland extending far beyond the boundaries of
the Fifth D istrict. Favorable transportation con­
nections and rates allow them to compete effectively
with Gulf and other A tlantic ports for the foreign
traffic of areas as far removed as the Upper M issis­
sippi V alley. T oday the Hampton Roads ports
(N orfolk, Newport News, and Portsm outh) rank
second among A tlantic Coast seaports in foreign
trade tonnage, while Baltim ore ranks fourth and
Charleston ninth.
Recent improvements in the D istrict’s port fa­
cilities have centered heavily in Baltim ore, C harles­
ton, and the Hampton Roads complex. Lesser
ports, however, are also receiving attention and some
Digitized for
8 FRASER


have experienced rem arkable expansion in recent
years. For exam ple, W ilm ington and Morehead
City, in North Carolina, are currently among the
fastest grow ing ports on the A tlantic. In South
Carolina, improved facilities at Georgetown and Port
Royal (B eaufo rt) have led to a significant traffic
acceleration at these ports. New deepwater term inal
facilities at Cambridge, on M arylan d’s eastern shore,
were opened early this year and are scheduled for
prompt expansion.
The bulk of the D istrict’s foreign trade traffic
flows through the seaports mentioned here. A minor
part, however, proceeds through river ports, the most
important of which are Richmond and A lexandria, in
V irgin ia. W hile term inal facilities at both these
ports have been improved in recent years, they still
account for only a negligible fraction of the D istrict’s
foreign trade tonnage.
U. S. W aterborne Foreign Trade T he c o u n try ’s
waterborne foreign trade has grown dram atically in
recent years. Figures for 1962, the latest year for
which complete data are available, show that com­
bined export and import tonnage at all United States
ports amounted in that year to 359 million short tons.
This represents an increase of nearly 9% over 1961
and a cum ulative gain of just under 65% since 1953.
The 1962 figure was also a shade higher than the
record level reached in 1957, when the totals were
artificially swollen due to trade disruptions oc­
casioned by the Suez C risis.
For the country as a whole, increases in import
tonnage in recent years have outpaced gains in export
tonnage. Import tonnage in 1962 came to 223 mil-

lion short tons as compared to export tonnage of 136
million. The gain over the preceding year amounted
to over 11% for imports against slightly more than
5 °/o for exports. E xport tonnage was still well below
the 1957 peak while import tonnage was at an alltime high, 74% above the 1953 level.
The relatively larger figures for imports do not
im ply a deterioration of the nation’s trade balance
with the rest of the world, as they say nothing of
the value of the shipments. Rather they reflect the
nature of the commodities brought in from abroad.
U nited States imports are made up, in large measure,
of bulky m aterials destined for further p ro cessin g:
ores, petroleum, sugar, coffee, and other prim ary
products. W hile sim ilar commodities are important
in the country’s exports, manufactured goods are,
in value terms, of far greater significance. In terms
of the value of shipments, export volume rose 69%
between 1953 and 1962 while import volume in ­
creased only 40% .
D istrict Tonnage T h e com bined exp ort and
import tonnage at Fifth D istrict ports in 1962
amounted to 61 million short tons. T his represents
an increase of 11% over 1961. The cum ulative gain
between 1953 and 1962 was ju st over 50% , as com­
pared w ith 65% for all U nited States ports and 61%
for all A tlantic ports. In recent years, D istrict ports
have accounted for approxim ately 17% of total
foreign trade tonnage at all U nited States ports and
a third of that at all A tlantic ports.
At D istrict ports, export tonnage is relatively more
important and has increased more rapidly in recent
years than import tonnage. District ports handled
34 million export tons in 1962, nearly 10% more
than in 1961. Import tonnage in 1962 was 27 million,
11% greater than a year earlier. But between 1953
and 1962 export tonnage grew 83% wrhile import
tonnage expanded only 23% . Over the same period,
export tonnage at all United States ports gained
59% ; and at all A tlantic ports it rose 74% . D istrict
ports in 1962 handled 25% of all United States
waterborne export tonnage and 72% of all such
tonnage at A tlantic ports.
The greater relative importance of export tonnage
in the D istrict is accounted for entirely by V irgin ia
ports. A t M aryland ports and at those of each of
the Carolinas, import tonnage makes up the bulk of
the total. In 1962, V irgin ia ports handled more
than 28 million short tons of exports and just under
6 million tons of imports. On the other hand, 5
million tons of exports left the ports of M aryland,
w hile almost 19 million tons of imports were re­
ceived. Tonnage figures for the ports of North



and South C arolina showed sim ilar relationships.
In both cases the tonnage of imports wras about three
times greater than that of exports.
V irgin ia ports thus accounted for more than fourfifths of all export tonnage of Fifth D istrict states
in 1962. In fact, nearly three-fifths of total export
tonnage leaving all U nited States A tlantic ports were
handled through V irgin ia facilities. T his is explain­
able in large m easure by the kinds of commodities
shipped through the ports of that state.
Kinds of Commodities F o reign trad e to n n age
through Fifth D istrict ports is dominated by bulk
shipments of such commodities as coal, petroleum
products, wheat, corn, grain sorghums, and soybeans.
General cargo items such as tobacco, steel mill prod­
ucts, wood pulp, and cotton swell the total.
The largest single item of export tonnage leaving
Baltim ore in 1962 was bituminous coal. T his product
accounted for almost one-half of total export tonnage
shipped through the Baltim ore harbor in that year.
Grains, mostly wheat and corn, and soybeans pro­
vided more than a fifth of the total, and iron and
steel mill products accounted for another one-eighth.
Import tonnage through Baltim ore consists chiefly
of bulk cargo of raw and semi-finished m aterials.
Imports of iron ore and concentrates amounted
to over 10 million short tons in 1962-— more
than half the total. Chrome and manganese also
FIFTH DISTRICT PORTS
M ajor Exports and Im ports, 1962
C oal
W heat
Soybeans

Iron Ore
Petroleum Products
M anganese
Chrom e
G ypsum Rock
Sugars
Bananas

Petroleum Products
G ypsum Rock
Iron Ore
M anganese

W heat
Soybeans

Tobacco
Iron and Steel Scrap
W ood Pulp

Petroleum Products
Fe rtilize r and M aterials

W ood Pulp
Cotton and M anufacture
P aperbo ard

Petroleum Products
Fe rtilize r and M aterials
Chrome
W ool

Exports

Imports

accounted for a sizable proportion of import ton­
nage. In 1962 Baltim ore accounted for almost
half of total U nited States chrome and manganese
imports and more than one-fourth of the country’s
imports of iron ore and concentrates. L ike all m ajor
ports in the Fifth District, Baltim ore also received
large quantities of petroleum and petroleum products.
Receipts of these items amounted to about 19% of
the port’s import tonnage. Other important imports
include bananas, sugar, and gypsum rock.
Coal dominates export tonnage through the H am p­
ton Roads ports. In 1962 two-thirds of total exports
of bituminous coal from the United States passed
through V irgin ia ports, and this product accounted
for almost 90% of foreign trade tonnage leaving V ir­
gin ia ports. Grains, mostly corn and wheat, soy­
beans, and unmanufactured tobacco provided most
of the rem aining exports.
Petroleum and petroleum products accounted for
a large fraction of import tonnage arrivin g at V ir­
gin ia ports in 1962. Imports of crude petroleum,
gas oil, distillate fuel oil, and residual fuel oil in
that year amounted to 3.7 million short tons,
more than three-fifths of total import tonnage.
Gypsum or plaster rock, iron ore, manganese, chrome,
fertilizers, and tobacco provided most of the rem ain­
ing import tonnage.
Unm anufactured tobacco was the most important
commodity exported through North C arolina ports in
1962. S ix ty thousand tons, representing more than
one-fifth of total U nited States exports of this prod­
uct, left W ilm ington and Morehead City in that year.
Shipm ents of iron and steel scrap and wood pulp
accounted for a large part of the rem aining export
tonnage.
Almost one-half of import tonnage received at
North Carolina ports in 1962 was petroleum products.
A large part of the rem aining import tonnage was
made up of fertilizer and fertilizer m aterials and iron

and steel mill products. Imports of T urkish and
other unmanufactured tobacco, while am ounting to
only 10,000 tons in 1962, point up the importance of
the State as a m anufacturer of cigarettes. The ports
of V irgin ia and North C arolina together accounted
for 75% of total U nited States imports of foreign
unmanufactured tobacco in 1962.
W ood pulp accounted for 27% of total export
tonnage through South Carolina ports in 1962. R e­
flecting the importance of South C arolina and con­
tiguous areas in textile m anufacturing, cotton m anu­
factures ranked next in importance in export tonnage
Paperboard, clays, and iron and steel scrap provided
a good part of rem aining exports.
As in other Fifth D istrict states, petroleum prod­
ucts provided much of the import tonnage of South
C arolina ports in 1962. These products made up
about 55% of total tonnage received. Other im ­
portant products were unmanufactured wool, bananas,
fertilizers, and chrome. W ith the growth of the textile
industry in the southeast, imports of wool have grown
spectacularly. In 1962 receipts of unmanufactured
wool at Charleston accounted for almost one-fourth
of total U nited States imports of that product.
Sum m ary S te a d y exp an sio n in w o rld trad e over
the past ten years has exerted an important impact on
port activity in the Fifth D istrict. Increasing export
and import tonnage has generated additional m an­
power needs for handling the grow ing traffic and
has thus created new jobs. Moreover, the rapid
tonnage growth has stim ulated ambitious program s to
expand existin g port facilities in District states. This
has meant millions of dollars of new investment and
corresponding increases in opportunities for con­
struction-type employment. A s the outlook for
further expansion in world trade improves, prospects
for this important facet of the D istrict’s economy will
brighten com mensurately.

W ATERBORNE FO REIGN TRADE
EXPORTS

Thous.

W eight
Short

1953

V alue
$ M illions

Tons

1962

IMPORTS

Per Cent
Change
1953-62

Thous.

1953

1962

United States

85,703

136,046

+

59

8,320

14,035

Fifth District

18,618

34,122

+

83

1,051

1,617

4,839

5,190

+

7

430

575

M arylan d

Per Cent
Chang e
1953-62

W eight
Short

1953

1962

Per Cent
C hang e
1953-62

222,522

+

74

8,715

12,210

+

+

54

26,552

+

23

717

1,179

+

65

+

34

16,893

18,619

+

10

487

659

+

35

+

+

77

28,233

+ 109

519

814

+

57

3,049

5,784

236

+ 841

15

107

+ 606

332

692

South C aro lin a

254

463

+

87

121

+

1,318

1,456

Bureau of the Census, FT-985.

1962

21,591

25

82

1953

127,915

13,500


Source:
U.S. Departm ent of Com m erce,


Per Cent
Chang e
1953-62

69

+

North C aro lina

V irg in ia

V alu e
$ M illions

Tons

38

40

90

163

288

+ 109

13

51

+ 295

+

54

181

+ 234

11

THE FIFTH DISTRICT
Business barometers in the Fifth D istrict and
across the country continue to indicate a broadly
favorable outlook. Recent reports suggest, in fact,
that activity m ay be livelier now than it wras ju st a
few weeks ago. The most significant new develop­
ment is, of course, the tax cut, which appears to have
boosted business optimism at least as much as con­
sum er buying power.
D istrict Contrasts Noted B u sin ess co nditio ns in
the D istrict resemble those in the nation, although a
few contrasting features m ark the local scene. Con­
struction has been especially strong in the District, as
heavy flows of new contract aw ards have raised the
volume of work to consecutive new records. Most
m anufacturing sectors and m any service-type enter­
prises have moved steadily into new high ground.
R etail sales have maintained record levels, w7hile the
D istrict’s general indicators, such as nonfarm em­
ployment, factory man-hours, and electric power con­
sumption, have advanced to new highs.
The less favorable side of the D istrict picture
focuses largely on agriculture where, according to
prelim inary figures, last y e a r’s realized net income
dropped 10%. T his y e a r’s prospects thus far offer
little hope of recovering the lost ground. M anu­
facturing also displays a few uncertainties, with the
tobacco business currently in the limelight.
Recent banking statistics have been inconclusive at
best. In contrast to the rather strong note on which
the year began, F ebruary and M arch data on weekly
reporting member banks displayed little more than
seasonal strength, either in loan demand or in deposit
growth. The M arch tax date was accompanied by
no more than a normal increase in loans. The
absence of distinctive features in the banking picture
m ay be a tem porary result of seasonal uncertainties
associated with the early E aster and w ith variable
weather conditions.
Automobile Trends S u stain e d dem and for au to ­
mobiles helps to set the current upswing apart from
its predecessors. A ll signs point to a third successive
year w ith sales above the 7-m illion-unit level, a
phenomenon which not too long ago would have been
considered highly unlikely. Data on newr car regis­
trations suggest that the D istrict has accounted



J£P

for its share of the m arket. The year 1955 set
D istrict and national sales records that w ere un­
approached until 1960 and unexcelled until 1962. In
that year, the previous District high for new car
registrations wras passed by a 6% m argin, and a
further gain of 13% w as recorded in 1963. D istrict
registrations in Ja n u ary 1964 were down from the
previous month, perhaps more than seasonally, but
still exceeded the year-ago figure by a wide m argin.
A comparison of automobile registrations to per­
sonal income figures suggests that, despite the
strength of current demand, D istrict residents may
be devoting progressively sm aller fractions of in­
come to new car purchases. In 1950, the record
year prior to 1955, District residents registered 27
new cars per million dollars of personal income. The
figure in 1955, when total car sales were 11% higher,
was only 23 cars per million of income. Although
registrations in 1962 and 1963 averaged 13% above
the 1955 level, cars per million dollars of personal
income dropped to 17. The figures were lower during
the recessions of 1958 and 1961, but this is not sur­
prising in view of the fact that automobile sales are
much more sensitive to business cycles than are per­
sonal income data.
For the nation as a whole, new car registrations
per million dollars of personal income dropped 31%
between 1955 and 1963, compared w ith 28% in the
Fifth District. New car prices during this period
rose 14% , and the proportion of national personal
income spent on new cars dropped about 22% .
Builders Seek Labor T h e volum e of co n stru c­
tion work accum ulating in the District is also wrorthy
of note. Its most recent manifestation appears to be
an incipient shortage of labor. Skilled construction
w orkers have occasionally been in tight supply, but
now some areas are reported to be short of unskilled
labor as well. L ast w inter produced fewer seasonal
layoffs than usual, and normal strength in the spring
upsw ing promptly took the seasonal slack out of the
labor m arket. Demand has apparently continued to
grow, but the supply has been slow to respond.
Recent statistics tend to bear out this picture.
Seasonally adjusted construction employment in­
creased quite rapidly last year, declined sligh tly in
11

CIGARETTE TAXES
S Mil.

2000

Per Cent

•

.

PER CEN T O F RETAIL PRICE
N ovem ber 1, 1963

C O LLEC T IO N S , UNITED STATES
Y e ers ended June 30

1500

1000

-

rv*
19 5 0
Source: T o ba c c o

1955
Tax

1960

N.C.

D.C.

V a.

Md.

S.C.

W .V a.

C oun cil.

Jan u ary, then rose sharply again in F ebruary. Febru­
ary gains were unusually large, averaging 5% and
ranging as high as 10% in W est V irgin ia and 11%
in the District of Columbia. The volume of new
business has also been extraordinary. Contract
aw ards set records by sizable m argins for each month
from A ugust through February. Sim ilarly, building
perm its were high all last year and hit all-tim e
Ja n u ary and F ebruary highs this year. Regional
w age data are not available, but national figures show
hourly earnings of construction workers risin g along
with the volume of work, although less rapidly.
D uring the twelve months ending in Jan u ary, hourly
earnings increased 5% in construction compared to
3% in manufacturing.
Tobacco Dilemma W h ile the tobacco in d u stry
steps up research to reduce the questionable effects of
its products on health, other observers are giving
some serious thought to the industry’s economic sig­
nificance. Among these, Federal and, state fiscal au ­
thorities appear to have about as much at stake as
any group outside the industry itself.
Federal and state taxes on tobacco products ex ­
ceeded $3.2 billion in fiscal 1963. W ith roughly onethird going to the states, tobacco taxes represented
5y 2 cents of every state tax dollar. In 1963, Federal
tobacco taxes amounted to $2.1 billion, nearly 2% of
all Federal taxes.
In fiscal 1963, cigarettes accounted for 97% of
Digitized for 12
FRASER


U.S.
Average

Federal tobacco tax receipts and 98% of state to­
bacco revenues. The accom panying charts show the
growth of these taxes since 1950 and their effects
on retail prices as of November 1, 1963. Only three
states— North Carolina, Colorado, and Oregon—
levied no cigarette tax. In North Carolina, as the
chart shows, the 8-cent-per-pack Federal tax was
close to 37% of the average retail price, 21.6 cents
per pack. Since shipping costs and other price com­
ponents v ary among the states, a higher bar on the
chart does not necessarily mean higher taxes. M a ry­
land and W est V irginia, for instance, each added a
6-cent state tax to the 8-cent Federal, but this raised
the total tax to 50% of a 28-cent average retail price
in W est V irgin ia compared to 49% of a 28.6-cent
average price in M aryland. In South Carolina, the
average price was only 25.5 cents per pack, so that
a total tax of 13 cents also represented 49% of the
price. In 24 states, taxes accounted for more than
half of average retail price during 1963. Thus it
seems reasonably clear that, however the tobacco in­
dustry m ay figure in the national health picture, it
is at present significantly involved in the fiscal health
of numerous governmental units.

PHOTO
C o ver—United
12.

States

Mint,

CREDITS
P hiladelph ia,

Federal Reserve Bank of Richmond.

P ennsylvania