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RESERVE BANK/)F]RICHMOND AUGUST 1950 FIFTH DISTRICT MEMBER BANK LOANS 2000 Millions of Dollars 2000 1500 1500 1000 1000 500 500 F ifth District member bank loans continued upward in the first half o f 1950, with further expansion in consumer, real estate, and business loans. The above chart traces loan trends since 194,5, and the article beginning on page 5 discusses monetary and banking developments and the outlook in view o f the Korean crisis. Also In This Issue: ..Page Fifth District Trends.. ..Page 3 Business Conditions and Prospects.. Retail Trade in the W ar Decade, 1939-48—Page 8 Statistical Data___________________________Page 10 National Business Conditions_____________ Page 12 FEDERAL RESERVE BANK OF RICHMOND F ift h d is t r ic t Tr en d s BANK DEBITS DEPARTMENT STORE SA LES The District’s index of bank debits declined 3% from May to June. Appreciable declines were witnessed in Virginia and North Carolina which together more than offset moderate rises in West Virginia and South Carolina. With the exception of the month of May the District’s bank debits index is the highest for all time. Seasonally adjusted daily average department store sales in June were 4 % higher than in May. June came within 2 % of the all-time peak of October 1948. Department store inventories gained 2% from May to June but were 8% above a year ago compared with a gain of 6% in sales. + + + LIFE ♦ + ♦ MANUFACTURING INSURANCE SALES EMPLOYMENT Life insurance sales, which had been in a strong upward trend since the middle of 1949, experienced a moderate setback from May to June on an adjusted basis. Sales in the District of Columbia and West Virgnia went contrary to the District trend. Employment in manufacturing industries of the Fifth District, which had remained steady in the first five months of the year, showed a moderate pickup in June. Up trends since March have been in evidence in Maryland, the District of Columbia, and West Virginia with the other states slightly down or steady. •+ + + ' ■+ + +CONSTRUCTION COTTON CONSUMPTION AWARDED Some of the edge was taken off of the building boom in June when total contract awards in the Fifth District dropped 15% on a seasonal basis from May. Total awards, however, were still 23% ahead of a year ago, and indications are that the first half of July will likewise show a substantial increase. Average daily cotton consumption, corrected for seasonal vari ation, declined 9% from May to June in the Fifth District with North Carolina and South Carolina showing somewhat larger drops than Virginia. Much the same pattern was also shown in spindle hours run in each of the states. CONTRACTS r 2i MONTHLY REVIEW AUGUST 1950 Business Conditions and Prospects P aramount in the minds of the American people at this time are the consequences of the reentry into a par tial war economy. The basic issues involved in the Korean conflict are certainly bigger, broader, and deep er than the mere upsetting of domestic demand and sup ply. But the American people also learned the hard way — in World War II— that a period of armed conflict could be severely upsetting to the economy and that national success in such a conflict was heavily predi cated both on rapid adjustment of the economic base and on keeping it at maximum strength. Business men are therefore asking at this time what are the expectable consequences of national reentry into even a small-scale or partial war environment. Obvious ly, no well-rounded answer can now be presented since the Korean situation, now a limited operation, is an ex tremely fluid one and could be expanded or duplicated elsewhere. The following economic changes, however, seem probable in the immediate future: (1) Expanded Federal Government outlays— super imposed upon a deficit-financing program which had already gone on for two years— set the stage for re newed price inflation; (2 ) Relatively rapid upward adjustment of prices will surely meet renewed efforts to stem these changes through either voluntary action or Governmental fiat against the sources and use of credit; (3 ) Durable goods production for civilian use will be reduced by the demands made on steel, aluminum, copper, and zinc for military purposes. (4 ) In non-durables considerable slack has existed and it may well be that purchasing power will be divert ed to some extent to these industries and products. (5 ) We are again entering a period when income received by people will exceed, at present prices, the volume of goods available for purchase; (6 ) Employment and wages— both at record high levels as the Korean conflict began— will continue to rise, the latter particularly unless restricted by agree ment or by the twin freeze of wages and prices; (7 ) Costs of the conflict— to individuals and busi ness— will be heavy, and definite decisions should be made as to how to meet the costs— by increased taxation now, or later, by increased public debt and payments thereon, or both as in the period 1941-1945. The progress of the Korean conflict, the speed with which the new $10.5 billion military budget is used, and the stability and temper of the American public will determine how rapidly important economic readjust ments take place— and what shortages develop, particu larly in the durable goods industries. For some months, it may be that no important effects will be witnessed in this sector, but it is almost certain that, since materials [3] were proving inadequate to cover peace-time demand for durable goods, cutbacks will appear shortly. Significantly, new demands for war and defense pur poses are to be essentially a diversion from civilian supplies; thus, current high incomes will put pressure on the price level and exert more pressure if additional wage demands become general and are met by industrial and other employers. Fortunately, aid in holding down price rises can be forthcoming when people realize that it is unnecessary to hoard food products (because of their relative abundance) and inimical to the national interest to hoard other commodities. The wholesale price level has risen quite sharply since the end of June. Price rises have taken place chiefly in farm and food products, building materials, and the basic raw materials. Some prices may already have overshot the level which could be expected to hold under current demand conditions, if “ scare” buying is eliminated. Though prices of commodities other than farm and food products have risen sharply, the rise thus far has not been spectacular, and it is probable that under voluntary controls and allocations every attempt will be made by producers of many of these commodities to hold the price line. Farm and food products, which have shown the great est rises, are in no way threatened with shortages, and these prices may be expected to tone down considerably when this situation is generally realized. It is highly improbable that we shall see the restrictions on food supply which World War II required. The building boom, which at mid-year was still boom ing in this District, may continue at high level for a few months— strongly aided by the favorable seasonal factor and the heavy momentum which it had acquired. Ris ing building material prices may be stabilized by the recent restrictions inaugurated in Federal housing credit. If these restrictions do not restrain building sufficiently, it is clear that further controls will be effected to free materials for war and defense purposes. Although the trend of Fifth District business in the first half of 1950 has been mainly upward, June was a month of irregularities. On a seasonally adjusted basis, building continued to rise, department store sales rose to within 5 percentage points of the all-time high in October 1948, and sales in the wholesale trades were mostly up. Cotton consumption rose in every State in the District, due to more working days— actually, daily average use declined slightly. Bank debits were also down and cigarette production, household appliance sales and life insurance sales fell, while bituminous coal output held at May levels. Output of the cotton mills for the third quarter had been sold prior to the outbreak of the Korean war, and since that time inquiries have been extremely heavy FEDERAL RESERVE BANK OF RICHMOND with prices all along the line rising substantially. These price increases, however, are mainly nominal quotations as mills have largely withdrawn from the market. They have not over-extended their bookings, and have hesi tated to fill completely their fourth quarter bookings. This has been due mainly to the low cotton acreage report and the uncertainties regarding raw cotton prices with a forecasted crop of 10 million bales. Until such time as the price of cotton and military requirements for cotton goods are determined, mill sales will prob ably not be materially further extended. The hosiery industry, which had been moving at fair production levels with an easing price structure, was confronted by an avalanche of inquiries following the outbreak of the Korean war. These inquiries arose chiefly from “ scare” buying on the part of the con sumers. Some diversion of nylon to military uses will occur ( 1 0 % reduction already announced) but it is probable that voluntary allocation will be used, essen tial hosiery requirements will be met, and diversion will come mainly from the broad woven trade. Bituminous coal weekly output has been expanding even though the monthly figures in June were the same as in May. Further expansion of the coal output should be seen in the last half of the current year. Prices are holding, and it is probable that a greater amount of consumption as well as stockpiling, both at the resi dential and industrial level, will be seen. Rayon industries, operating at peak levels, will prob ably be called on for still greater production. It may be that greater effort will have to be exerted and capaci ty expanded in the high tenacity yarns. A few compa nies have increased prices selectively within the past month. The shipbuilding industries laid off fewer workers in June than they had anticipated would be necessary. Some business may be forthcoming in reconditioning part of the mothball fleet. Food products industries in the overall have improved operations. Livestock slaughter in most States was running ahead of a year ago, and ice cream production was about the same as a year ago. BUSINESS IN D E X E S— FIFTH FED ER AL RESERVE DISTRICT A V E R A G E D A IL Y 1935-39 = 100— S E A S O N A L L Y A D JU STE D June 1950 Automobile Registrations1 ____________________ New Commercial Car Registrations___________ Bank Debits ___________________________________ _____________ Bituminous Coal Production______________ _____ ____________ Building Contracts Awarded, Total____________ _____________ Commercial Construction Contracts_____________________ Manufacturing Construction Contracts_____ Public Works and Utilities__________________ ____________ Residential Construction Contracts_______________________ Apartments and Hotels_____________________ _____________ One and Two Family Houses______________ ____________ Building Permits Issued ______________________ ____________ Business Failures— No. _____________________________________ Cigarette Production __________________________ ____________ Cotton Consumption _______________________ __ ____________ Cotton Spindle Hours _________________________ _____________ Department Store Sales3 ______________________ ............ ........... Department Store Stocks3 ____________________ ____________ Electric Power Production ___________________ Employment— M fg. Industries1 ____________ ___ _____________ Furniture M frs.: Orders3 _____________________ _ Furniture M frs.: Shipments3 _________________ Furniture M frs.: Unfilled Orders3 ----------------Furniture— Retail: 3 / 4 Net Sales ___________________________________....... ................ Cash ______________ ______________________ ______ ______ Credit ___________________________________ ................... Receivables ---------------------------------------------------- _____________ Collections _____________________ _____________ _....................... Inventories ----------------------------------------------------- - ....................... Gasoline Consumption _________________________ Household Appliance Store Sales -------------------_____________ ____ Life Insurance Sales __________________________ ___ Wholesale Trade: Automotive Supplies2 _______________________ ____________ _______ Drugs ____ _______ _______ ____— .......... ...... Dry Goods ----------------------------------- -----------------Electrical Goods2 ______________ _____________ _____________ Groceries ____________________________________ Hardware ------------------- --------- -------------------------_______ _____ Industrial Supplies2 --------------------------------- ---- _____________ Paper and Its Products2 ____________________ _____________ Tobacco and Its Products2 _________________ _____________ May 1950 June 1949 225 216 366 152 485 414 742r 384 603 398 675 407 102 244r 151 148 320 331r 299 138 364 324 752 214 205 356 143 517r 456 493 323 697 1131 630 379 76 197 145 141 ,323 329 296 138 271 301 764 180 168 320 120 334r 266 138 303 440 1145 285 479 69 249 115 119 313 311 255 134 129 158 199 199 258 174 140 182 153 199 252 172 139 176 164r 125 290 133r 299 188 202 167 138 178 162 221 98 257 671 280 175 63 270 161 278 159 68 609 254 202 75 253 153 229 150 65 515 257 184 63 244 134 271 158 63 355 152 410 285 369 311 517p 500 586 430 86 237 137 138 332 337 139 1 Not Seasonally adjusted 2 1938-41=100 3 Revised Series— back figures available on request 4 1941=100 Apr. 1950 [ 4] % Change--Latest Month Prev. Mo. Year Ago + + — — — — — — + — + — — — — + + + + + + — 5 5 3 0 15 31 50 19 14 26 13 6 16 3 9 7 4 2 1 1 34 8 2 189 260 163 111 166 134 209 112 239 + + + + — + — — 0 2 1 1 3 7 1 6 3 + b - 5 1 7 26 10 14 9 12 21 380 270 128 73 259 122 296 135 82 + + — — + + + + + io io 13 16 7 5 21 6 5 + + + + + + - 77 4 37 14 4 32 6 18 17 + 14 + 17 + 11 + 27 + 23 + 7 + 167 + 3 + 18 - 56 + 106 - 10 + 25 - 5 + 19 + 16 + 6 + 8 + 16 + 4 + 103 + 62 + 195 MONTHLY REVIEW AUGUST 1950 Monetary and Banking Developments F uture effects of military expenditures and domestic of 1950— more than 7 % as compared with a 14% contraction during the same period last year. The in mobilization are admittedly not clear and are diffi cult to assess, but they may well alter considerably the crease came principally in business, real estate, and consumer loans, while the seasonal increase of farm monetary and banking trends operating prior to midyear. production loans added to the total. Increased Federal deficits, a revised tax structure for both corporations and individuals, renewed price infla Fifth District banks liquidated Governments by $111 tion, a slowing-down of deposit turnover, introduction of million, or 4.3 % , in order to supply the expanded de credit controls of one type or another, a stiffening of mand for loans and to meet a loss of reserves. The credit terms— all of these are significant elements and money supply increased slightly, and businessmen and potentials and could check the loan expansion and re consumers used funds at an increasing rate of turnover verse the declining holdings of Governments which have — velocity of demand deposits in June stood at a new been important aspects of high since the outbreak the banking picture up to of W orld War II. In CHART I Korean developments of terest rates on bank loans CHANGES IN THE MONEY S U P P L Y * late June. to business firmed some FIFTH FEDERAL RESERVE DISTRICT Had the d o m e s t i c what during t h e s i x M IL L IO N S OF D O L L A R S economy continued its ex m o n t h s , as yields on pansion unhampered by Treasury bills rose from their lows of 1949 to international d e v e l o p ments, it seems a certain 1.175 in June 1950. ty that the upward trend Bank Loan Expansion of bank loans would have Paced by b u s i n e s s, paralleled an expansion of real estate, and consum business activity through er loans, total loans of out 1950. Current devel Fifth District member opments arising out of the banks continued to paral Korean crisis will, how lel the rising trend of ever, modify the direction business, construction, of extension of b a n k and trade during the credit. The President has first half of 1950. This expansion began in the last already directed Federal mortgage agencies to restrict half of 1949 and gathered such momentum that, by credit in the housing field; real estate financing will thus midyear 1950, total loans of the 478 member banks in be less liberal and construction will decline, cutting back the District stood at 107.2 per cent of their December the supply of new mortgages available to banks. 1949 level— while deposits were relatively constant. At the same time, the Defense Production Act of The growth of business loans reflects the generally 1950 proposes controls over real estate credit, consumer prosperous condition of the District’s economy during credit, and credit used for commodity speculation, as the period. Basic industries had shown increased ac well as provision for a system of priorities and allocat tivity in the later part of 1949, and this subsequently ion over essential materials. Establishment of these spread into other lines this year. Higher levels of ac controls would presumably check the expansion of loans tivity increased working capital requirements for financ in these fields. ing inventories and receivables, and led to increased The method of financing the outlay occasioned by the demands for bank credit. Interestingly Fifth District crisis will certainly influence the composition of bank member banks outstripped those of the nation as a whole assets in the future. Already $10.5 billion of additional in extensions of business credit up to July— reports funds have been requested, and the President has asked from the larger banks of the country indicate an actual for immediate tax increases to provide a part of these decline in commercial loans during the period. funds. To the extent that new outlays are not met by taxes, the Treasury deficit will increase, and the new Viewed against previous years the increase is even securities will go into bank portfolios or those of other more significant. In the first half of 1948, Fifth Dis investors. trict member bank loans to business showed virtually no net change, while in the first six months of 1949 there The Korean crisis will leave its mark on a Fifth was a decline of nearly 14%. This year’s 2.4% gain District banking system already in the process of ex brought the total near the all time peak of December pansion. Rising levels of business activity in the District brought a substantial loan increase during the first half 1948. [ 5J FEDERAL RESERVE BANK OF RICHMOND The current very high level of construction resulted in increases in total real estate loans in the Fifth District. Residential construction remained high throughout the winter and spring, and additional new mortgages re sulted in a 10% gain in loans against residential real estate. Loans against farm lands and “ other” -— com mercial and industrial— properties also increased, rais ing total real estate loans to a new peak for the member banks of the District. The greatest increase in member bank outstandings during the first half of 1950 was made in the young giant of postwar banking, consumer credit. Renew ed vigor in the sales of automobiles and other durable consumer goods was reflected in the 26 % increase in retail auto in stalment paper held and the 38 % increase in simi lar paper covering other types of goods. Single payment loans to indi viduals showed a sub stantial gain— 9 % since December. These three broad cate gories of loans— business, real estate, and consumer — accounted for virtually the entire increase of out standings taking place in the six-month period. Pro duction loans to farmers showed their usual spring in crease, 40% over the year-end figure, and accounted for $15 million of the $117 million increase in total loans. Contrary to the national trend, loans to brokers and dealers contracted, although the bullish securities mar ket was reflected to some extent in a $3 million increase in loans to others than brokers for the purpose of pur chasing or carrying charges. Figures from the weekly reporting member banks of the Fifth District indicate that the loan expansion has carried over into July. Business, real estate, and con sumer loans have all shown continued growth in the chasing or carrying securities. Fifth District member banks increased t h e i r h o l d i n g s of securities other than U. S. Govern ments during the first half of 1950 by $5 mil lion. The increase, which amounted to less than 2 % of portfolios at the beginning of the year, actually occurred during May and June, a small decline having b e e n shown during the four preceding months. Indi cations are that much of the gain came in state and municipal securities issued to obtain funds for expansion of physical plant by state and local governments Continuing Decline in Bank Reserves During the first half of 1950, there was a continuing decline in Fifth District member bank reserves, reflect ing both the mildly restrictive Federal Reserve credit policy and the District’s relatively unfavorable position on commercial and financial account with other districts. However, an increasing excess of Treasury expenditures over Treasury receipts in the Fifth District during the same period served to cushion the net loss of reserves. L O A N S A N D D IS C O U N T S F IF T H D IS T R IC T M E M B E R B A N K S (Dollar Amounts in Thousands) June 30, 1950p Commercial and industrial loans in cluding open-market paper______________ 580,930 Loans to farmers directly guaranteed by the Commodity Credit Corporation_____ 2,556 Other loans to farmers (not secured by 52,382 real estate)___________________ _________ .... Loans to brokers and dealers in securities.. 12,479 Other loans for purchasing or carrying 44,843 securities ________________________________ Real estate loans: On farm land_________ __ _____________ 43,409 On residential property________________ 375,973 129,192 On other properties____________________ Other loans to individuals: Retail automobile instalment paper___ 106,019 Other retail instalment paper__________ 36,276 Repair and modernization instalment 22,597 loans ______________ ___ ___ ___ ________ 69,973 Instalment cash loans__________________ 219,250 Single-payment loans___________________ Loans to banks___________________________ 3,373 50,604 All other loans (including overdrafts)____ 1,749,856 Loans— gross ____ ______________________ Reserves ____ ___ ________________________ 18,762 Loans— net _______ ______________________ 1,731,094 Dec. 31, 1949 567,328 The sharp upturn in business activity, paralleled by an upsurge in bank credit, brought about the modifi cation of Federal Reserve credit policy from the 1949 policy of monetary ease to one of mild restraint, marked chiefly by sales of long-term Government bonds from the System’s portfolio. In the first half of 1950, Federal Reserve Bank holdings of restricted Treasury bonds declined by $1.4 billion, affecting bank reserves both in the District and in the United States. During this period, Fifth District member bank reserve balances were reduced $55.4 million, or 10.2%. This compares with a decline of only 3.5% in the reserve balances of all member banks in the United States during the same period. Thus, Fifth District member banks have been losing reserves both relatively and absolutely. 5,094 37,434 14,634 41,563 42,771 341,516 125,327 84,077 26,372 22,013 65,154 200,718 2,052 56,801 1,632,809 17,311 1,615,498 p— Preliminary. r61 AUGUST 1950 MONTHLY REVIEW F IF T H D IS T R IC T M E M B E R B A N K R E SE R V E S As a Per Cent of United States Reserve Balances, 1939 and 1945-50 Per cent End of year, 19391945.. 1946.. 1947.. 1948 .. 1949June 28, 1950- ____________ ____________ ___________ ____________ ____________ ____________ ____________ 2.43 4.57 4.54 4.38 4.15 4.12 3.98 Brief analysis of the losses in member bank reserve balances indicates that they are attributable primarily to the flow of funds to other districts as a result of commer cial and financial transactions with those districts. Up to midyear 1950, there was an accelerated outflow of re serve funds on commercial and financial account with other districts; and Fifth District member banks lost in these transactions $310.2 million in reserve funds. This was more than 50% greater than the loss in the corre sponding period last year and in sharp contrast to a gain in the first half of 1948 of approximately $320 million. Offsetting, in large part, this outflow of reserve funds on interdistrict commercial and financial transactions, there was an excess of Treasury expenditures over re ceipts in the Fifth District, which added $250 million to bank reserves in the first half of 1950. Liquidation of Holdings of U. S. Government Securities To secure funds for the sharp expansion in bank loans, the increase in other securities held, and to meet the outflow of reserve funds, Fifth District member banks sold $111 million, or 4 .3% , of their holdings of U. S. Government securities during the first half of 1950. This liquidation of U. S. securities in the first half of 1950 approximately equaled the $115 million increase in bank loans in the period. Most sales of Governments by District member banks occurred in the four-month period beginning March 1950. In contrast, the liquidation in holdings of Gov ernment securities by all member banks in the U. S. was reversed in May and June 1950. Liquidation of holdings by Fifth District member banks presumably represents sales of bonds acquired last year following the reductions in reserve requirements. Strength in institutional and individual demand made possible the shift in Government securities to non-bank investors in early 1950. Money Supply— Velocity and Cost During the first half of 1950, the money supply in creased slightly in the Fifth District, reflecting higher adjusted demand deposits and time deposits and, since February, an expanding volume of currency in circu lation. Adjusted demand deposits increased slightly in the Fifth District from year-end 1949. At the end of June 1950 they totaled $3.4 billion— $113 million (or 3.4% ) above the June 1949 level. Time deposits were up by 1.7% to $1.3 billion. This increase in time deposits was, however, much smaller than the 3.6% increase for the same period in 1949. Currency in circulation in the District declined sea sonally in January, registered increases in four of the five following months and thus reduced the net inflow of currency from circulation to $18.7 million during the period. This contrasts with a shrinkage in the corresponding periods in 1948 and 1949. Chart I shows the changes in the District’s money supply in the post war period through midyear 1950. Although adjusted demand deposits of Fifth District member banks increased slightly during the first half of 1950, the rate at which they were employed increased much more sharply. In June checks were drawn on demand deposits (other than interbank and U. S. Gov ernment) at a rate of turnover (debits divided by de posits) of 18.8 times a year. This compares with a rate of 17.2 times in June 1949 and an average for 1949 of 16.9 times. This increased velocity is an indication of the current high level of Fifth District business. (See Chart II.) Interest rates on short-term bank loans to business weakened in the two Fifth District cities reporting such rates during the second half of 1949, then turned upward during the first six months of this year. This paral leled the trend in 11 southern and western reporting centers, but ran counter to a first quarter 1950 decline in northern and eastern cities. These increased rates on business loans paralleled increased rates on Treasury bills and certificates. By June 1950 yields on these obligations and the rates charged on business loans by member banks in the 11 southern and western cities exceeded the corresponding yields and rates of a year ago. S E L E C T E D IN T E R E S T R ATES (Per cent per annum) Month Average int. rates on U. S. Government short-term bank loans to Security yields business 2 3-month 9-12-month U. S. 11 South.& bills c. of i. 19 cities West, cities 1949— June September December 1.158 1.062 1.097 1.20 1.08 1.10 2.74 2.63 2.65 3.17 3.07 3.03 1950— March June _____ 1.140 1.175 1.16 1.23 2.60 2.68 3.12 3.22 1Monthly averages. 3Averages of rates charged during first 15 days of each month. FEDERAL RESERVE BANK OF RICHMOND Fifth District Retail Trade in the War Decade, 1939-48 lina was next, with 244% , and West Virginia was he Fifth District’s retail trade boomed in the war fourth, with 224% . The District of Columbia and decade, 1939-48, along with the rest of the country, Maryland had gains of 175% and 209% respectively. but moved up at a slightly faster rate. The District ex perienced an unparalleled growth in retail sales between Almost half of the Fifth District retail sales in 1948 1939 and 1948. Retail sales aggregated $9.7 billion and were made in the two states, Virginia and North Caro lina, each of which accounted for 22.8% of the total. provided employment for 564 thousand people. At this Figures for other states level they stood 228 % were: Maryland, 19.7 % ; higher than in the prewar South Carolina, 11.7% ; year, 1939, and the Dis R e t a i l T r e n d s In T h i s W a r West Virginia, 11.6% ; trict gain thus exceeded The outbreak o f war in Korea, with the United States and the District of Co the national gain, which once again on the way to at least a partial war footing, lumbia, 11.4 % . Some amounted to 210% . In has brought abrupt change in the day-to-day economic thinking o f the average American. It could, probably shifting took place be 1948 District retail sales will, bring about significant changes in the entire Ameri tween 1939 and 1948— were 7.5 % of the United can economy as it existed. District of Columbia and States total of $130.5 bil Since the war began, on June 25, what might be termed “ scare buying” has brought runs on standard commodities South Carolina, for ex lion, and were thus some at the retail level. Up to now this has been particularly ample, switched places, what higher than the 1939 noticeable in such goods as canned foods, coffee, sugar, and the District of Co pepper, nylon, tires, automobiles, refrigerators, television figure of 7.1 % . sets and the like— the things which W orld W ar II made lumbia dropped f r o m Food stores accounted scarce. f o u r t h to sixth place Some prices— farm products mainly— have gone up, for the largest portion of apparently because o f wholesalers’, jobbers’ and manu while South Carolina rose retail sales in the Fifth facturers’ anticipation o f higher retail price levels and the from sixth to f o u r t h possibility o f scarcities later. Actually, however, there is D i s t r i c t , followed by place. Maryland main no real shortage o f agricultural commodities. This year’s automotive and general cotton crop is off somewhat, but a surplus o f more than tained third place in the 4,000,000 bales from past years remains under government merchandise stores. Drug Fifth District in 1948, loans. and proprietary stores with a larger portion of There were strong indications that soft goods were in an upward trend prior to the outbreak in Korea, and the an accounted for the smallest the 1939 total. Virginia ticipation o f shortages may accentuate that trend. Should and North Carolina were portion. All Fifth Dis it become evident that soft goods are in adequate supply, as is true up to now, some slackening in sales trend could be also tied for the largest trict counties had gains expected. percentage of sales in in retail trade for the Durable goods industries, on the other hand, will be ad 1939. versely affected, as steel and non-ferrous metals and other period surveyed, though materials are allocated to greater war effort and to ex the percentage increases panding defense preparations. Steel, operating at capacity Retail Sales by for many weeks to meet civilian boom demands, obviously varied greatly. Kind of Business T These are but a few of the cardinal facts about a momentous decade rev e a 1e d by the 1948 Census of Business, re cently released. Since re tail stores are required by law to report total sales to the Census of Busi ness, the results provide the most accurate sta tistical measures avail able on retail trade. will feel the diversion to military use. Many items made o f steel will likely be in short supply. Since there is clear reluctance to re-introduce price con trols at this time, and since demand has been sufficient to take all o f the pre-Korean production, prices o f durable goods are likely to increase. Setting up consumer credit controls would help prevent such a rise, but would entail difficulties o f administration, and doubtless the “ gray” or even “ black” markets o f the past war. It is probable, however, that, barring an all-out war, the supply o f non-durable goods will be enough to permit a continued rise in the trade level. Up to June, total sales o f all retail stores in 1950 rose 3V2% over comparable months in 1949. Durable goods stores showed a 15% rise, and non-durable goods sales were off only one per cent. It would seem that the final 1950 trade level, even with a shortage o f durable goods, may equal or even surpass the all-time peak year o f 1948. The pattern of retail trade by kind of store making the sale was much the same in the Fifth District as in the country as a whole dur ing 1948. In both cases the largest portion of re tail sales was made in food stores, followed by automotive and general stores. Fifth District resi dents made a smaller part of their total retail pur chases in eating and drinking places, and in lumber, building, and hardware stores, than United States citi zens generally. On the other hand, the general stores accounted for a larger part of total sales in the Fifth District than in the country as a whole. Retail Sales by Fifth District States As the accompanying chart shows, greatest expan sion of retail trade in the District occurred in Virginia, with an increase of 254% . North Carolina showed the second largest percentage increase, 251% . South Caro [8] MONTHLY REVIEW AUGUST 1950 gains were 100 counties with an increase between 250299% and 41 counties with an increase between 300 and 399% . Only Baltimore County and Washington, D. C. had retail sales of more than a billion dollars in 1948 and both of these areas had gains of less than 200% . As indicated above, size of total retail sales apparently had no relation to amount of percentage increase. While the top two counties had relatively small gains during the period, the next two counties, Fairfax County, Virginia ($97.9 million of sales in 1948) and Arlington County, Virginia ($93.3 million of sales in 1948) had gains over 400% . Population figures from the 1950 Census are not yet available for all counties in the Fifth District ; however, from preliminary releases for Virginia, some relation between growth in population and growth in retail sales can be seen. Arlington County, for example, had the largest percentage increase in population in Virginia from 1940 to 1950 and also the largest increase in the state in retail sales from 1939 to 1948. The two dates available for population figures are not the same as those used for retail sales, but changes in population from 1939 to 1948 probably differ little from the changes, 1940 to 1950. T A B L E I.— R E T A IL SALES B Y K IN D OF B U S IN E S S Per Cent of State, District and National Totals 5th Md. D. C. Va. W . Y a. N.C. S. C. Dist. U. S. Food group__ 27 Eating and drink ing places_____ 9 General merchandise group __________ 15 Apparel group,— 6 Furniture-home furnishings, ap pliance group.— 5 Automotive group 14 Gasoline service stations ________ 4 Lumber-buildinghardware group 6 Drug and pro prietary stores3 All other retail stores _________ 11 20 23 24 22 24 23 24 17 10 14 7 19 7 16 7 14 7 16 7 13 8 5 13 5 16 6 6 16 18 18 6 16 5 15 10 10 11 10 100 100 100 100 100 5 15 Total100 100 100 Source: 1948 Census of Business. Distribution of retail sales in the nation’s capital showed a marked difference from that of the surround ing states. Due, no doubt, to the relatively high level of per capita income, to the urban characteristics of the area, and to the fact that a large proportion of the work ing force resides outside the district, a smaller portion of retail purchases in Washington, D. C. are made in food, lumber, buildings, and hardware stores than in any Fifth District state and a larger portion in apparel stores. Fifth District experience shows that the more rural the state, the larger the percentage of total retail sales made for the purchase, upkeep, and operation of auto mobiles and the smaller the percentage made for the consumption of food and drink “ away from home” . Car purchase and upkeep account for 16% of sales in the District of Columbia and 24% in North and South Carolina. Eating and drinking places account for only 4 % in the Carolinas and 9 % in both Maryland and the District of Columbia. RETAIL TRADE 1948 PER CENT INCREASE 200 200 100 Retail Sales in the Fifth District Counties Every county in the Fifth District had a larger dollar volume of retail sales in 1948 than in 1939. Apparently, no geographic pattern exists for this area, and the reasons for the growth could be as numerous as the number of counties, but basically the changes have been closely related to changes in income. Among the 319 counties, the increase in sales from 1939 to 1948 ranged from a low of 100% in Wirt County, West Virginia, to a high of 613% in Onslow County, North Carolina. Gains of 400% or more were made in 12 counties where retail sales ranged during 1948 from $3.5 million in Jasper County, South Caro lina to $97.9 million in Fairfax County, Virginia. In the 59 counties where the growth was less than 200% the amount of the sales during 1948 varied from $0.8 million in Highland County, Virginia to $1,169.5 mil lion in Baltimore County, Maryland. Between these counties making relatively low and high percentage 1939 - Va. N.C. While population growth seems to be a normal cause for increase in retail sales, no such relation appears to exist in many counties. King and Queen County had a decrease of 20 % in population between 1940 and 1950, the largest for any Virginia county; yet it had a 367% increase in retail sales between 1939 and 1948, the seventh largest increase in the state. Henrico ranked 17th among Virginia’s 100 counties in percentage in crease of population but 89th in percentage increase of retail sales in the above period. The fact that a county was largely urban seemed to have had little influence on the size of the increase in retail sales. As pointed out before, Baltimore, Mary- r91 FEDERAL RESERVE BANK OF RICHMOND land and Henrico, Virginia counties had gains below 200% . Other urban counties— Norfolk and Roanoke, Virginia; Kanawha and Cabell, West Virginia; Meck lenburg, Durham, Guilford, and New Hanover, North Carolina; and Charleston and Richland, South Carolina — had gains in retail sales from 1939 to 1948 greater than 200% but less than 300% . Warwick County, Virginia had a gain of 318% and Arlington. Fairfax, and Princess Anne counties in Virginia had gains of more than 400% . rayon plant during the period being discussed had much to do with the increase of 445% in the retail sales of Giles County, Virginia. The overflow of the expanded population from the Norfolk area and the growth of Virginia Beach as a resort were responsible for the increase of 428% in Princess Anne County. In two North Carolina counties the military was in a large measure responsible for the expansion of retail trade, namely a Marine base at Cherry Point in Onslow Coun ty where the increase amounted to 613% and Fort Bragg in Cumberland County where the increase amounted to 416% . While no specific reason for the varied increases in most of the counties is at hand, causes can be pointed out for several of the counties having exceptional gains. As the activities of the government expanded, many of the workers coming to the District of Columbia set up residence in nearby areas, causing the increases noted in Fairfax and Arlington counties. The opening of a Undoubtedly a detailed study of this changeful de cade would include such factors as wages and their distribution, new capital emplacement, and other new income sources as causes for the heavily expanding retail trade of this area. D E B IT S TO I N D IV ID U A L AC C O U N T S B U IL D IN G P E R M IT F IG U R E S (000 omitted) 6 Months 1950 6 Months 1949 788,243 $ 4,942,236 $ 4,454,436 1,113,489 25,555 19,604 29,934 1,011,967 23,115 17,151 26,385 6,023,316 130,512 104,538 161,056 5,651,845 125,114 102,533 155,901 52,576 280,467 90,110 86,612 12,171 142,067 35,670 13,035 143,425 46,153 220,188 80,251 69,208 12,968 114,571 30,162 12,068 128,550 292,325 1,584,199 481,661 480,865 74,438 814,064 195,175 82,514 803,863 272,417 1,342,173 495,756 426,984 77,228 729,391 184,039 83,545 716,599 64,751 109,124 92,918 49,119 60,555 104,105 76,423 41,843 365,859 614,299 515,367 288,688 351,588 580,488 461,744 263,007 24,290 24,528 41,420 31,191 190,299 22,570 495,588 108,502 21,335 21,846 34,009 31,890 179,024 19,993 492,118 95,379 138,973 141,395 229,252 171,349 1,236,767 124,422 2,836,848 569,155 129,720 133,039 210,568 190,211 1,037,612 114,922 2,842,936 535,166 46,169 131,978 31,381 59,852 28,353 47,988 136,417 29,971 52,713 25,221 238,241 738,924 171,767 336,641 151,123 274,110 809,022 173,872 337,946 151,164 $ 4,522,053 $ 4,051,810 $25,039,832 $23,415,076 June 1950 Dist. of Columbia Washington Maryland Baltimore ____ Cumberland .... Frederick _____ Hagerstown North Carolina Asheville Charlotte _____ Durham ______ Greensboro Kinston ______ Raleigh ________ Wilmington ___ Wilson ________ W inston- Salem South Carolina Charleston Columbia _____ Greenville Spartanburg — Virginia Charlottesville Danville ______ Lynchburg ___ Newport News Norfolk ______ Portsmouth Richmond _ Roanoke ______ W est Virginia Bluefield .......... Charleston Clarksburg ----Huntington — Parkersburg — District Totals----- $ 925,305 June 1949 $ June 1950 June 1949 6 Months 1950 6 Months 1949 Baltimore ___ Cumberland Frederick Hagerstown Salisbury ___ $ 6,212,440 49,950 107,205 173,505 178,060 $ 6,147,350 19,225 70,475 96,385 156,980 $ 45,851,580 641,740 1,337,155 948,085 811,977 $ 25,480,625 2 34,225 537,422 736,380 931,761 Virginia Danville ____ Lynchburg .. Norfolk ____ Petersburg .. Portsmouth .. Richmond __ Roanoke 305,351 684,935 1,167,045 326,288 209,510 3,126,918 1,670,467 65,156 206,224 1,034,005 208,505 176,705 1,565,911 1,495,280 1,781,703 2,296,530 7,764,250 2,064,983 1,672,419 12,755,489 10,517,974 1,492,287 2,175,442 5,827,151 816,283 843,352 9,004,764 5,821,072 West Virginia Charleston __ Clarksburg __ Huntington ... 640,761 68,575 610,647 451,084 142,865 441,509 8,257,074 846,848 3,176,943 3,386,829 614,570 2,215,752 358,373 3,550,364 683,981 1,646,828 329,280 596,144 265,732 256,228 1,620,778 118,276 4,867,602 868,688 1,842,429 256,026 319,265 215,430 166,700 767,156 2,298,669 15,238,424 9,689,268 6,641,114 2,057,852 8,641,785 2,515,618 1,896,574 6,563,349 1,519,978 12,322,013 3,387,150 6,091,573 1,477,512 4,271,280 802,383 616,612 5,000,701 238,544 524,481 609,020 213,099 122,135 437,773 1,043,591 104,770 1,717,727 5,898,277 3,740,949 1,916,046 1,437,465 3,602,665 4,128,381 756,452 Washington .. 8,770,481 15,799,114 37,811,664 35,544,556 District Totals.. $35,194,990 $39,206,614 $207,352,066 $141,076,636 Maryland North Carolina Asheville Charlotte Durham ____ Greensboro .. High Point__ Raleigh _____ Rocky Mount Salisbury Winston-Salem South Carolina Charleston __ Columbia Greenville __ Spartanburg Dist. of Columbia [ 10] AUGUST 1950 MONTHLY REVIEW F E D E R A L R E S E R V E B A N K O F R IC H M O N D W H O L E SA L E TRADE (All Figures in Thousands) Stocks on Sales in June 1950 June 30, 1950 compared with compared with May June 30, May 31, June 1950 1949 1950 1949 LINES Auto supplies ( 7 ) ___ Electrical goods (5).. Hardware (9) .. Industrial supplies (3 )... Drugs & Sundries (11).. Dry goods (1 2 )_________ Groceries (5 3 ). Paper & Products ( 6 ) ____ Tobacco & Products (8).. Miscellaneous (8 4 )_______ District Totals (198) — — 3 + 2 +23 — 8 + 17 + 5 6 — 8 — + 10 + 11 + 6 + 3 — 1 — + 11 — 6 +~2 + 15 + 9 + 4 — 14 + 5 + 5 + 7 + 1 0 +15 —1 —1 + 5 + 8 11 + 10 + 2 +~3 + 2 0 +~5 — 3 + 1 Number of reporting firms in parentheses. Source: Department of Commerce. ------------------------- + + + ~ R E T A IL F U R N IT U R E SALES Percentage comparison of sales in periods named with sales in same periods in 1949 June 1950 6 Mos. 1950 STATES Maryland ( 7 ) ___________________ ___ District of Columbia ( 7 ) ----------------Virginia (1 9 )_______________________ West Virginia (1 0 )_________________ North Carolina (1 2 )________________ South Carolina ( 9 ) _________________ District (6 4 )____________________ + 2 — 5 --1 3 — 5 — 9 — 3 + IN D IV ID U AL CITIES Baltimore, Md. ( 7 ) _________ Washington, D. C. ( 7 ) ____ Richmond, Va. ( 6 ) ________ Lynchburg, Va. ( 3 ) _______ Charleston, W . Va. ( 3 ) ____ Charlotte, N . C. ( 3 ) _______ Columbia, S. C. ( 3 ) ________ + 5 + 7 —1 + V + 1 ITEMS +10 + 3 + 7 Number of reporting stores in parentheses. + - D E P A R T M E N T ST O R E O P E R A T IO N S (Figures show percentage change) Sales, June ’50 vs. June ’49____ Sales, 6 mos. ’50 vs. 6 mos. ’49Stocks, June 30, ’50 vs. ’49_____ Orders outstanding, June 30, ’50 vs. ’49___________ Current rceivables June 1 collected in June ’50_________ Instalment receivables June 1 collected in June ’50_________ Balt. Wash. + + + + 3 — 4 — 5 + 2 — 1 + 8 + + + + + +29 29 13 -----------------+ Other Cities Rich. 3 1 9 + + 7 4 3 Dist. Total + + 4 0 3 7 +20 + 12 48 48 42 43 16 18 16 17 8 ------------------ C O T T O N C O N S U M P T IO N A N D ON H A N D — B A L E S June 1950 Fifth District States: Cotton consumed_________ Cotton Growing States: Cotton consumed___________ Cotton on hand June 30 in consuming establish ments ___________ _________ storage & compresses___ United States: Cotton consumed___________ Cotton on hand June 30 in consuming establish ments ____________________ storage & compresses____ June 1949 Aug. 1 to June 30 1950 1949 428,527 311,982 4,272,869 3,752,871 764,347 538,109 7,485,953 6,570,959 1,228,663 5,247,422 896,342 4,386,553 _ 11,965 — 22 — 11,987 2,365 + — 8 + 38,821 17,334 — 130,059 +203,606 — 17,392 + 41,178 — 50,305 — 2,514 — 23,628 + 13,877 — 2,453 — 8,464 8,244 + 5,365 + 7,598 — 35,862 — 319 1,129 + — 23,628 841,227 600,651 1,429,178 5,268,258 1,052,134 4,409,962 1950 Total Loans_____________________ Business & Agricultural______ Real Estate Loans____________ All Other Loans______________ Total Security Holdings___ __ __ U. S. Treasury Bills___________ U. S. Treasury Certificates U. S. Treasury Notes__________ U. S. Treasury Bonds_________ Other Bonds, Stocks & Secur. Cash Items in Process of Col__ Due from Banks_______________ Currency & Coin_______________ Reserve with F. R. Bank______ Other Assets____________________ Total Assets__________________ Total Demand Deposits__________ Deposits of Individuals_______ Deposits of U. S. Gov’t_______ Deposits of State & Local Gov’t. Deposits of Banks_____________ Certified & Officers’ Checks Total Time Deposits_____________ Deposits of Individuals______ Other Time Deposits__________ Liabilities for Borrowed MoneyAll Other Liabilities_____________ Capital Accounts______________ Total Liabilities______________ $ 959,690** 424,565 232,257 314,930 1,757,281 97,113 83,084 313,989 1,105,888 157,207 241,493 185,537* 72,078 447,017 51,898 3,714,994 2,836,428 2,165,428 86,090 148,848 395,101* 40,961 616,225 569,799 46,426 4,200 21,896 236,245 3,714,994 3,257 4,848 1,591 — 4,210 95 + _ 27,723 — 5,080 —251,626 + 378,840 — 149,857 — 31,838 — 2,791 3,470 — 39,690 — 28,958 _ 9,270 — 58,228 13,428 + + 34,166 1,364 + — 4,141 — 25 2,704 + — 39,690 + — 6-■14-50 7-■13-49 13,993 2,825 2,459 9,507 6,086 15,534 43,613 + 39,499 6,266 932 + — 9,851 + 14,460 4,208 + — 15,645 — 3,210 + 10,041 5,815 + 9,928 + 9,938 + 14,297 4,565 + 4,319 __ 2,146 — 1,924 — 222 3,225 + 1,275 + 1,872 + + 10,041 + 166,683 + 75,607 + 36,821 + 57,508 + 40,555 + 11,519 —127,883 +273,490 — 130,658 + 14,087 + 21,688 6,293 + 3,008 + _ 28,911 3,141 + +212,457 + 198,451 + 116,293 + 57,507 + 15,217 9,937 + 503 323 1,698 + 2,021 800 + 1,638 + + 11,891 +212,457 + + + + + + -+ + + C O T T O N T E X T IL E S June 1950May 1950 8,258,956 7,340,978 _ *Net figures, reciprocal balances being eliminated. **Less reserves for losses on bad loans. PR ICES OF U N F IN IS H E D Average, 17 constructions____ Printcloths, average ( 6 ) _____ Sheetings, average ( 3 ) _______ Twill ( 1 ) ______________________ Drills, average ( 4 ) _____________ Sateen ( 1 ) _____________________ Ducks, average ( 2 ) ___________ 65.45 71.69 57.54 74.79 58.46 83.17 59.05 64.65 69.24 57.72 73.49 58.59 84.16 59.21 June 1949 60.22 63.12 54.83 62.44 55.29 80.34 58.30 Note: The above figures are those for the approximate quantities of cloth obtainable from a pound of cotton with adjustment for salable waste. Source: Department of Agriculture. Spindles active, June 30, U.S. 20,221,000 19,464,000 Source: Department of Commerce. $1,080,570 12,377 1,092,947 6,455 121 1,181,884 247,607 182,903 401,765 349,609 1,188,460 236,678 20,322 $2,538,407 $1,514,977 761,115 668,334 28,380 58,740 5,661 213,360 521 48,434 $2,538,407 51 R E P O R T IN G M E M B E R B A N K S —-5th D IS T R IC T (All Figures in Thousands) 6 + 15 + 17 +23 +11 + Total Gold ReservesOther Reserves______ Total Reserves____ Bills Discounted_____ Industrial Loans_____ Gov. Securities, TotalBills ________________ Certificates ________ Notes .......................... Bonds _____________ Total Loans & Securities.. Uncollected Items_________ Other Assets______________ Total Assets.. Federal Reserve Notes in Cir._ Deposits, TotalMembers’ Reserves_________ U. S. Treas. Gen. Account . Foreign Other Deposits.. Def. Availability Items.. Other Liabilities_______ Capital Accounts______ Total Liabilities______ Chg. in Amt. From 6--14-50 7-■13-49 -+ + + - + 2 + 5 -+ July 12, 1950 ITEMS r ii i FEDERAL RESERVE BANK OF RICHMOND NATIONAL SUMMARY OF BUSINESS CONDITIONS (Compiled by the Board of Governors of the Federal Reserve System) feed crops may approach last year’s large harvest. Market ings of meat animals recently have been in about the same seasonally low volume as a year ago, while production of milk and eggs has been larger. Industrial production and construction activity increased further in June to new peacetime peaks. Following the out break of hostilities in Korea near the end of the month, buy ing showed a marked upsurge and commodity prices gener ally rose considerably in both wholesale and retail markets. Common stock prices declined sharply for a time. Prices of U. S. Government securities generally showed little change. Bank credit continued to expand. On July 19 a large-scale Federal program was proposed for expanding defense pro duction and curbing inflationary developments. Distribution Consumer buying increased considerably beginning in the latter part of June, influenced largely by international de velopments. Sales at department stores in mid-July were 24 per cent larger than in the corresponding period a year ago; sales in the preceding 2 weeks were 9 per cent larger. New automobile sales increasd further and the volume was lim ited only by the supply available. Anticipatory buying was also evident for various other durable and semidurable goods and such foodstuffs as coffee and sugar. Distributors’ stocks of most consumer goods, except passenger cars, had pre viously been rising following the recovery in production last summer. Industrial Production The Board’s production index rose another 4 points in June to 199. Although output of steel and some other basic materials had been at or close to capacity levels in May, continued strong demands resulted in further increases in production of most major groups of manufactures and min erals in June. In early July output declined temporarily owing to holiday and vacation influences. Production of durable goods increased substantially fur ther in June, mainly because of gains in the automobile and machinery industries. Automobile assembly, which had been at a new record rate in May, increased 23 per cent further in June, and activity in machinery industries continued the marked rise which began in early spring. Steel production was maintained in June at the capacity level reached in April. Refinery output of nonferrous metals expanded considerably further, but supplies available, after increased takings for Government stockpiles, continued substantially below indus try demands. Mine production of copper and iron ore also expanded. Output of nondurable goods increased somewhat further in June, reflecting mainly continued gains in rayon and woolen textiles, paper, petroleum, rubber and chemical pro ducts. Tire production was at a new record, and a substan tial expansion in output of synthetic rubber was initiated. Activity at cotton mills declined somewhat. Commodity Prices Wholesale prices have generally risen considerably dur ing the past 4 weeks, following earlier marked advances in April and May. The sharpest increases have been in prices of farm and food products, particularly livestock, meats, im ported foodstuffs, and cotton. Cotton prices on July 21 were about one-fourth above the Federal loan level. Prices of most industrial materials have advanced further in recent weeks, with especially marked increases in build ing materials, textiles, rubber, and tin. Prices of most metals have been maintained at earlier advanced levels. Prices of some additional finishjed industrial products have been advanced during this period and with retail food prices increasing sharply, a substantial further rise is indicated in the level of ocnsumers’ prices. Bank Credit Loans to real estate owners and consumers and holdings of corporate and municipal securities showed further sub stantial increases at banks in leading cities during June and the first half of July. Loans to businesses also expanded. Holdings of U. S. Government securities fluctuated consid erably but declined somewhat over the period. Treasury deposits at the Reserve Banks which had been built up through tax payments in the latter part of June were drawn down during the first three reporting weeks of July, supplying reserve funds to members banks. These funds were absorbed by reduction in Federal Reserve hold ings of U. S. Government securities. The System continued to sell Treasury bonds and also sold bills and certificates, and these sales were offset in part by purchases of notes. Construction Value of construction contracts awarded in June was maintained at the spring peak level reflecting continued ex pansion in awards for public work which offset further small declines in private awards. The number of housing units started in June was maintained at the record May level and for the first half of the year totaled 687,000 units, as com pared with 449,000 units started during the first half of 1949. Employment Employment in nonagricultural establishments rose by about 300 thousand persons in June, after allowance for sea sonal changes. About one-half of this increase occurred in industries producing durable manufactures; there were also gains in employment in construction and transportation activities. Security Markets Common stock prices fell 13 per cent from the latter part of June to the middle of July, reflecting developments in Korea, but recovered part of the decline during the third week. Demand for U. S. Government securities broadened throughout this period. With virtually no change in prices of long-term Treasury bonds, a moderate decline in the prices of high-grade corporate obligations resulted in some widening of the narrow spread between yields of these se curities. Agriculture Total crop production this year, according to July 1 esti mates, is expected to be 6 per cent less than last year when stocks increased and exports were somewhat larger. Con siderably small cotton and wheat crops are in prospect, but ri2i
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