The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
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. 2 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, wT hen 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 4 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 8 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 °/ for exports. E xport tonnage was still well below o 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 http://fraser.stlouisfed.org/ ent of Com m erce, Federal Reserve Bank of St. Louis 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, w7 hile 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
