View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDERAL

RESERVE




BANK

OF

RICHMOND

AUGUST

1965

SALES TAXES IN THE FIFTH DISTRICT
State retail sales taxes, virtually unknown in the
U nited

States 35 years ago, have becom e m ajor

sources of revenue in 37 of the 50 states.

In 1964,

this article, depends on a number o f assumptions.
It seems reasonable, though, that som e shifting back
should take place.

T he tax norm ally raises the re­

the yield from sales taxes amounted to slightly over
$6 billion, roughly one third of total state tax
revenues in states em ploying this type of tax.

tail prices of the good s and services to which it ap­
plies and might be expected to restrict consumption
of some o f them. Insofar as consum ption is reduced,

T he m ajority of A m erican sales taxes were in­
troduced during the early and middle 1930's, as
states sought new sources o f revenue to compensate

few er w orkers will be needed and dow nw ard wage

for sharp drops in the yields of older taxes.
litical pressure for property tax reduction

P o­
also

spurred adoption. In many instances, levies on sales
came into being as tem porary measures but soon
became permanent.
T he Fifth District states o f W est V irgin ia and
N orth Carolina were am ong the first in the nation
to adopt the sales tax, each levying the tax in 1933.
M aryland instituted a retail sales tax in 1935, but
repealed it the

next year.

The

retail

levy cu r­

rently in effect in M aryland was passed in 1947.
T he District of C olum bia’s sales tax dates from 1949;
South Carolina’ s, from 1951.

V irginia has no state

sales tax at this time, although a few localities have
im posed sales levies in recent years, and pressure
for a state-wide tax appears to be grow ing.

pressures could develop in som e lines o f activity.
Sales Taxation vs. Income Taxation

P ro p o n e n ts

of the sales tax claim that it has a number o f ad­
vantages

over

a

direct

levy

on

income.

Their

principal arguments may be summarized as fo llo w s :
( 1 ) Since a sales tax falls only on that portion
of incom e spent for consum ption, individuals are en­
couraged to save m ore than they w ould if an income
tax designed to raise the same amount of revenue
were im posed.

Thus, additional funds are made

available for grow th-produ cing private investment.
( 2 ) T he taxing o f consum ption expenditures
avoids the negative effect on w ork incentives which
may be present in a personal incom e tax. A n in­
dividual cannot reduce his tax liability by earning
less and, therefore, will not be m otivated to w ork
less.
( 3 ) T he sales tax is a feasible method o f col­

General Characteristics A retail sales ta x m ay
be defined generally as a levy on consum ption e x ­
penditures, applying at a uniform rate to all or a
wide range of consum er purchases. In its usual
form , the general sales tax provides an alternative
to direct levies on current incom e and to the im ­
position of a system of specific excise taxes falling
on particular com m odities. State sales tax rates in

lecting som e revenue from the low er incom e brackets.
Individuals in these brackets norm ally pay relatively
little in the form of direct incom e taxes, yet often
benefit from num erous governm ent services.

the United States range from 2 % to 4 % .

N one of

to ascertain and are subject to few er questions of

the states single out any particular group of com ­

interpretation than are earnings or incom e figures.

modities or

services for

taxing.

M ost,

( 4 ) T he tax is relatively easy to administer. It
is collected from a small number of businesses rather
than a large number of individuals, and it is collected
on the basis of sales figures, which are much easier

however,

A ll things considered, the m ost telling argument

exem pt certain com m odities and services, although

in favor of sales taxation at the state level is simply

the pattern o f exem ptions is by no means consistent.

that it is a practical and acceptable source of addi­

It is frequently argued that the burden of a retail

tional tax revenues.

The

Federal governm ent is

sales tax is borne by the consumer, and most state

dominant in the incom e tax field, and many states

legislatures have enacted their taxes on this assump­

are reluctant to rely m ore heavily on direct income

tion.

Since, in the typical instance, the consum er

sees the tax added to the bill for his purchase, wide
acceptance of this idea is understandable.

A number

of well-know n tax theorists argue, however, that at

taxation.

T h e matter is reduced to the old adage of

tax policy which charges the taxing authority to
“ pluck

the chicken

where

the feathers

com e

off

most easily.”

least part of the burden of the tax is shifted back to

Sales Taxation vs. Excise Taxation A s co m p a red

the producer and, ultimately, to his employees.

This

with excise or special sales taxes, the retail sales

argument, which cannot be examined in detail in

tax has several advantages, all o f which stem from


2


the general nature of the retail levy. These ad­
vantages may be summarized as fo llo w s :
( 1 ) Because the retail sales tax applies to a wider
range of com m odities and services, the rate required
to raise a given amount of revenue is lower.
( 2 ) T h e more general tax will be less likely to
force changes in consumption patterns. This avoids

It is contended by some students of tax policy that
individuals simply are not conscious o f the amount
of tax that they are paying when the indirect method
is used. Presumably, the citizen in a free society
should be aware of his tax burden and, at least in a
general fashion, weigh the burden of the tax against
the benefits of governm ent services, making the result

penalizing sellers of the particular com m odities and

of his assessment know n on election day.

services selected for specific taxation. A lso, if in the
absence of any type of consum ption tax, individuals
have allocated their spending in a way that gives
them maxim um satisfaction, undesirable distortion
o f their chosen consum ption patterns is avoided.
( 3 ) Further, the m ore general tax avoids the
discrim inatory effects of specific excise taxation.
U nder a system of excises, individuals w ho desire to
consum e a larger volum e o f taxed items rather than
nontaxed items bear a more than proportionate share
o f the tax load.

W ith the m ore general tax, this

does not happen.
Objections to the T ax T he most often encountered

District Experience W h a te v e r the m erits or
disadvantages o f sales taxation, it has proved an
effective method o f revenue collection in this District.
Last year, the District o f Columbia and the four
Fifth District states that em ploy sales taxes collected
a total of $428 million through retail merchants.
This sum was approxim ately one fifth o f their co m ­
bined total tax revenues.

A s shown in the table

on this page, yields ranged from $37.5 million in the
District of Columbia to $157 million in N orth C aro­
lina. T he tax was relatively most important in South
Carolina where it provided m ore than 3 0 % of total
state tax revenue.

objection to the general sales tax is that it tends to

Between 1952 and 1964, revenues trebled in M ary­

income

land and N orth Carolina and m ore than doubled in

brackets w ho spend a larger fraction of their income

the District o f Columbia, South Carolina and W est

for consum ption and accordingly devote a larger part

Virginia.

o f their incom e to payment of the tax.

V irginia the tax became a relatively m ore important

discriminate

against

those

in

the

low er

T he weight

attached to this argument depends basically upon the
value judgm ents of the individual observer.
A second anti-sales tax argument is that it places
an inordinate and unfair burden on the retailer who
must act as tax collector for the government.

The

actual burden of this administrative requirement is,
o f course, extremely difficult to measure in any
meaningful way.

Som e merchants operating in states

which have adopted sales taxes claim, however, that
they have been forced to hire extra personnel just to
d o the record-keeping associated with the tax.
A third argument against the use of sales taxation
is less often voiced, but perhaps m ore significant.

RETAIL SALES TAX YIELDS
Fifth District States, Fiscal 1963-1964
Retail Sales
Tax Yields
($1,000)
District of Columbia

37,539

Retail Sales Tax
Yields As % Of
State Tax Collections
17.3

M oreover, in every

state except W est

source of funds, as sales tax revenues increased more
rapidly than revenues from other taxes. T he grow th
of retail sales tax revenues is shown in the charts at
the top of page 4.
In each of the Fifth District states em ploying the
tax, the rate structures applying on small sales, gen ­
erally those o f less than $1, allow the merchant to
collect slightly m ore than the 3 % which he must
remit to the state. This partially compensates him
for the administrative burden of collecting the tax
and also provides some allowance for “ breakage.”
A s may be seen in the table at the end o f this
article, there is considerable interstate variation
in these rate structures. In W est V irginia, fo r e x ­
ample, the consum er must pay 1^ in tax on any
purchase of taxable items am ounting to 6^ or more,
while in M aryland no tax is due unless the purchase
is at least 25^.

O n larger sales, generally those of

$1 or m ore, the rate is uniform ly 3 % in the District
of Columbia and each of the four states, except that
in

N orth

Carolina

a ceiling

of

$120

applies

to

purchases o f automobiles and airplanes, and an $80
ceiling applies to machinery purchases.

Maryland

104,496

22.0

North Carolina

156,731

25.1

South Carolina

85,481

30.6

District states.

West Virginia

45,863

19.8

gasoline, newspapers, and governm ent purchases are

Source:

U. S. Department of Commerce, Bureau of the Census.




E xem ptions vary greatly am ong the several Fifth
T he only consistent policy is that

not taxed in any state.

Other com m odities may

3

RETAIL SA LES T A X R E V E N U E S
(M ILLIONS OF DOLLARS)

Source:

U. S. Department of Commerce, Bureau of the Census and West V irgin ia Blue Book.

or may not be taxed, depending upon the provisions

N ew s, Petersburg, Portsm outh, V irgin ia Beach and

of the particular state law. Cigarettes, for example,
are free of sales tax in the District o f Columbia, but
are subject to tax in the four states. Sales of both

W illiam sburg have introduced identical taxes in the

prescription and nonprescription medicines are tax
free in the District of Columbia and M aryland, while
only prescription sales are exempt in N orth C aro­
lina, and all sales of medicine are taxable in South
Carolina and W est V irginia. A ll sales to churches
are tax free in the District of Columbia, Maryland,
and W est V irginia, but are subject to tax in the other

past several months. Charlottesville will im pose the
same tax beginning in September.
W est

Virginia’s

Turnover

T ax

The

ta x in g

policy of the W est V irginia State Governm ent is
unique am ong the states in this District in that the
retail sales tax is only one stage in a com prehensive
system of taxes covering all transfers of goods and
services within the state.

In addition to the retail

states.
These are only a few o f the interstate dif­
ferences in the laws and regulations governing sales

levy, the state taxes sales of raw industrial materials

taxation. A s is indicated by the list o f exem ptions
in the table at the end of this article, numerous others

timber, etc.— sales of semifinished products within

could be noted.

saler, and sales from wholesaler to retailer.

Local Sales Taxes

In 13 states in v a rio u s parts

— coal,

oil,

natural

gas,

limestone,

sand,

gravel,

the industrial sector, sales from producer to w hole­
C ol­

lectively, these taxes are know n as the Business and

of the nation, certain local governments have enacted

Occupation T a x .

sales taxes.

system o f taxation, the state imposes a privilege tax

In 10 of the 13, these local taxes are

im posed in addition to state levies.

T o com plete the comprehensive

N one of the

on certain carrier corporations engaged in interstate

Fifth District states with sales taxes have any local

and intrastate com m erce. T he Business and O ccupa­

levies, how ever.

tion T a x was enacted in 1921.

O nly in Virginia, where there is

T he Transportation

no state tax, are there local taxes on expenditures.

Privilege T a x came into being along with the retail

A t present, nine V irginia comm unities have such

tax in 1933.

taxes.

T he V irginia half o f the city o f Bristol has

This unusually com prehensive system of taxation

a 3%

sales tax which was instituted in 1950 to

has proved a very effective revenue producer for the

balance the Tennessee state sales tax applying in the

state.

other half of the city.

Since m id -1964, N orfolk has

yielded almost $150 million last year. Thus, whereas

im posed a 2 % tax, with a $4 m axim um on any one

collections from the retail levy were slightly less than

sale.

2 0 % of total state tax revenue in 1964, the entire

T he cities of Chesapeake, Ham pton, N ew port


4


Together, all o f these taxes on transactions

system

of

transactions

taxes

produced

45%

of

taxation. W hatever the balance o f these arguments,
however, it is evident that the states have few al­
ternatives.
T o many of them, the sales tax is the
m ost feasible source of additional tax revenues. T he

the total.
Summary

S ales taxes are clea rly

g r o w in g

in

importance, both in the nation and the Fifth District.
the direct taxation o f individual and corporate in­

fact that 10 states have adopted retail levies during
the past 15 years, and adoption is currently being
debated in a number of other states indicates in­

com es, states have been under pressure to adopt taxes

creasing recognition of the usefulness o f the tax.

A s the Federal governm ent has assumed prim acy in

on sales.

T here are, as outlined above, numerous

arguments for and against this indirect method of

In short, the retail sales tax appears to have becom e
a permanent element in the nation’s tax structure.

SALES TAX RATES A N D M A JO R EXEMPTIONS
Fifth District States, 1964
State
D. C.

General
Rate to
Retailer
3% *

General Rate to Consumer
Amount of Sale
$ .01
.15
.45
.75
1.15

Tax

to .14 ....... ........... ......... None
to .44
$ .01
to .74 ................................... 02
to 1.14 ....... ........................... 03
.04
to 1.44 .............................

Above $1.44, same progression continues.

Md.

3% *

$ .01
.25
.34
.67

to .24 ............................. None
to .33
....................... $ .01
to .66 ................................... 02
to 1.00 ................................... 03

Add ^ t for each 33<? or fraction thereof
<
in excess of $ 1 .00.
N. C.

3%*

$ .01
.11
.36
.71

to .09 ............................. None
to .35 .................. ......... $ .01
..................02
to .70 ......
to 1.16
...........................
.03

Add 1$ for each 33^ or fraction thereof
in excess of $1.16.

S. C.

3%

$ .01
.11
.36
.66

to .10
to .35
to .65
to 1.00

............................. None
...
$ .01
................................... 02
................................... 03

Add 1$ for each 33^ or fraction thereof
in excess of $ 1 .00.

W. Va.

3%*

$ .01
.06
.36
.71

to
.05 ....................
None
to
.35 .............................. $ .01
to
.70 .................................... 02
to1.00
..................... 03

Same progression continues up to $5.00.
Above $5.00, add 1$ for each 35^ or
fraction thereof.

Major Exemptions
(1) Sales to U. S. or the District or any instrumentality thereof except national banks and Federal savings and loan associations, (2) Sales to semipublic institutions, (3) Sales of motor vehicle fuels, (4) Sales of medicines,
pharmaceuticals, and drugs, (5) Sales of cigarettes, (6) Casual and isolated sales by vendor not regularly engaged in retail trade, (7) Sales of
newspapers and publications of semipublic institutions.

(1) Sales of food for human consumption by churches, religious organizations, schools, colleges, and hospitals, (2) Sales of motor vehicles or motor
vehicle fuel and liquid fuel, (3) Farm products, seeds, feeds, fertilizers,
etc., (4) Professional, insurance, or personal services, (5) Drugs, medicines,
etc., and physical aids, (6) Sales to state, local, and Federal governments,
(7) S a | of newspapers,
es

(1) Farm products, seeds, feeds, fertilizers, etc., (2) Sales of boats, fuel
and lubricating oils, machinery and equipment for use by commercial
fishermen, (3) Gasoline and other motor fuel, (4) Medicines sold on prescription and physical aids, (5) Sales of manufactured products produced
and sold by manufacturers or producers to other manufacturers or producers for resale, (6) Sales of newspapers, (7) Sales to state, local, and
Federal governments.

(1) Sales of textbooks used in elementary and high schools and institu­
tions of higher learning, (2) Farm products, feeds, seeds, fertilizers, etc.,
(3) Gross proceeds from sales of fuel, lubricants, and supplies for use
aboard ships plying the high seas, (4) Sales of railroad cars and loco­
motives and parts thereof and vessels and barges of more than 50 tons
burden, (5) Sales of all supplies and machinery used by laundries,
launderettes, cleaning, dyeing, and pressing establishments, (6) Sales of
gasoline and other motor vehicle fuels, (7) Sales of newsprint paper,
newspapers and religious publications, (8) Sales to state, local, and Fed­
eral governments.
(1) Sales of motor vehicles and gasoline, (2) Sales of gas, steam and
water delivered to consumers through mains or pipes and sales of elec­
tricity, (3) Sales of textbooks to be used in public schools of the state,
(4) Sales to churches and charitable organizations, (5) Sales of tangible
personal property for purpose of resale in form of tangible personal
property, (6) Sales of newspapers when delivered to consumers by route
carriers, (7) Sales to the state and the United States governments.

*There are several variations in the general 3% tax rate. The District of Columbia imposes a 4 % tax on transient lodging and a 1% tax
on the sale of food for off-premises consumption; M aryland levies a 2% tax on the sale of farm equipment; and North Carolina levies a
1% tax ($80 maximum) on the sale of fuel to farmers and manufacturers, machinery and equipment to farmers, dairymen, commercial
laundries and dry cleaning establishments.
Also, there are a number of exceptions as to the manner in which motor vehicles are taxed. Under North Carolina's sales and use tax
laws the amount of tax on the sale of a motor vehicle cannot exceed 1V2% of the sale price of the automobile or $120. The following states
exempt motor vehicles from general sales and use taxes but impose special sales or gross receipts taxes on them under motor vehicle tax
laws: Maryland 3% titling tax; West Virginia 3 % titling tax; District of Columbia 2% titling tax.
Sources:

Codes of the several states involved.




5

Last year a record 2.2 million United States residents traveled
abroad, 11.6% more than in 1963. United States expenditures for
foreign travel, excluding C anad a and Mexico, totaled about $3.4
billion, a 5.8% increase over 1963.
O f this amount transoceanic
fares accounted for $1.2 billion, one third of the total, with Ameri­
can carriers receiving $530 million and foreign carriers about $635
million. Expenditures in foreign countries accounted for the re­
m aining $2.2 billion.

U. S. TRAVELERS T FOREIGN COUNTRIES
Thousands of Travelers

____________

2,200p
Note:

FOREIGN VISITORS TO THE U. S
Thousands of Travelers

Excludes Canada and Mieo.

Note:

Excludes Canada and Mexico.

In contrast to total spending by Americans, which increased,
the average annual expenditure per traveler trended downward.
In the European and Mediterranean Area, for example, average
expenditures fell by 4.8% despite a 13.4% increase in the number
of travelers.
The number of foreigners visiting the United States, excluding
Canadians and Mexicans, rose a substantial 29.6% from 1963, to
1.1 million. About one half of this total came from Europe
and the Mediterranean Area, and their spending totaled almost
$160 million.

West Indies, Central ane
South America
Europe and Mediterranean

Total United States receipts from foreign visitors increased
18.6% to $1.2 billion, which included $150 million in fares paid to
U. S. carriers. Tourists from C an ad a and Mexico provided the
bulk of total receipts, with $698 million. Expenditures by visitors
from overseas reached $397 million, up 20.3% from 1963, although
average annual expenditure per traveler decreased by 7.3%.

EXPENDITURES FOR FOREIGN TRAVEL

$ Millions

1,000

L

cm Canada and Mexico
a West Indies, Central and

South America

n

Europe and Mediterranean

■1

Europe and Miterranean

West Indies, Central and South America

Dollars

U. S. Residents
in Foreign
Countries

Other

Othei

A VERA G E A N N U A L E)ENDITURE PER TRAVELER

FOREIGN TRAVEL:

"

U. S. EXPENDITURES A N D RECEIPTS

$ M illions

Total U. S. Travelers

Other

800

Expenditures for Foreign
Travel by U. S. Residents

Foreign
Residents
in U. S.

600
Foreign
Residents
in U. S.

S. Travelers in European
ind Mediterranean Area

U. S. Residents
in Foreign
Countries

400
Foreign Travelers the U. S

Expenditures of Foreign
Travelers in U. S.

200

1954

1954


Source: Survey of Current Business.


1964

1964

Som e 67 years ago a small group o f bank clerks
living in M inneapolis decided they wanted to know
m ore about their field and began to meet after office
hours to study subjects related to banking.

These

inform al classes were the forerunners o f today’s in­
numerable banker education program s which range
in type from seminars o f a few hours duration to
several years of study at the graduate level.
T h e A m erican Institute o f Banking offers chapter
classes in banking and related subjects in some 345
large cities and sponsors numerous study groups in
smaller cities. T h e m ajority o f Institute subjects
are also available by correspondence.
Annual en­
rollment in A .I.B . courses totals about 100,000.
Other form al education for bankers is available at
state, regional, and national full-time banking schools
sponsored, in m ost cases, by national and state
bankers associations.

These schools are found in 28

states, principally in the south and east.

F ive are

located in the Fifth District. T he South Carolina
Bankers A ssociation operates a banking school at
the U niversity o f South Carolina and, with the N orth
Carolina Bankers A ssociation, the N orth Carolina

to develop a com prehensive view o f the role of the
com m ercial banking system in the econom y. They
are “ state.” in that they are sponsored by either one
or tw o state bankers associations.
Curricula

T h e r e is co n s id e ra b le v a ria tio n a m o n g

general state banking school program s in level and
type o f education offered. T he General Banking
D ivision of the Carolinas S chool of Banking and the
Commercial Bankers Seminar of the V irgin ia -M a ryland

Bankers

Schools,

for

example,

are

geared

principally to the educational requirements of non­
officer bank personnel. Com prised of basic subjects,
these program s are designed fo r individuals with
relatively limited experience in the banking field.
M ore experienced banking personnel w ho are unable
to com m it themselves to longer program s also find
these one-week sessions useful as refresher courses.
Other general state banking school program s are
planned for ju n ior officers and supervisory personnel
interested in management training or intermediate
banking education. Senior bank officers, also, often
find these program s consonant with their w ork and
derive benefit from participating in them as well as

State Banking Department, and the U niversity of

in the still relatively few which are adapted to their

N orth Carolina, co-sponsors the Carolinas School of

special educational needs.
Comprehensive education for management is of­
fered by both the Carolinas School o f Banking in its

Banking at Chapel Hill.

T he W est V irgin ia School

of Banking, run by the state’ s banking association
and W est V irgin ia U niversity’ s College of C om ­

M id-M anagem ent D ivision and the V irgin ia-M ary-

merce, is located at Jackson’s M ill.

land

T h e V irginia-

Bankers

Schools

in

their

School

of

Bank

M aryland Bankers Schools at Charlottesville are a

Management.

cooperative venture o f the bankers associations of

grow th, human relations, loan administration, busi­

the tw o states and the M cln tire School o f C om ­

ness finance, com m unications, and in other subjects

m erce of the U niversity of V irginia.

T he fifth, also

located at Charlottesville, is a special school on con ­

Curricula include courses in econom ic

related to management functions.

Program s offered

by the South Carolina Bankers School and the W est
V irginia School of Banking are also suitable fo r ad­

sumer credit.

vanced personnel and include management training.

GENERAL STATE SCHOOLS

Such courses, how ever, are fitted into a fram ew ork of

T he first four of these are classified in banking
circles as “ general state banking schools.”

T hey are

m ore general banking education.
program s

is

a three-year

Each of these four

course

of

study,

with

“ general” because their purpose is to expose students

students attending a 4- to 5-day session each year.

to all phases of the com m ercial banking function and

In addition, students enrolled in the School o f Bank


8


Management of the V irginia-M aryland Bankers
Schools are assigned intersession problem s which
must be completed before the follow ing resident
session.
Admissions Policies T h e fo u r F ifth D is tric t g e n ­
eral state banking schools are operated prim arily for
the benefit of com m ercial bankers. H ow ever, ad­
mission is usually open to persons connected with
bank exam ining agencies, state banking departments,
and, in some instances, other financial institutions.
Preference in admissions is given applicants from the
state whose bankers association sponsors the school,

of the instructors are com m ercial bankers.
Others
are recruited from colleges and universities and from
the professions. It is custom ary for several Federal
R eserve Bank officers and economists to instruct
in the schools.
T he lecture method o f instruction is most often
used, supplemented by such visual aids as flannel
board exhibits, charts, and “ hand-outs.” T he case
study method is not uncom m on, particularly in ad­
vanced w ork. Seminars and forum s are often used
to supplement classroom instruction, and intersession problem s may be required.

but applicants from other states may be accepted if

Fees and Expenses

space permits.
T he student body of the M idManagement D ivision of the Carolinas School of

the schools are relatively low , making it possible for

Banking, for example, is made up predominantly o f

C o sts in v o lv e d in o p e ra tin g

the schools to keep fees reasonable and still be selfsupporting. In V irginia, N orth Carolina, and South

include

Carolina, the banking schools make use of classroom

bankers from V irginia and Georgia.
A ll o f the general banking schools in the Fifth

and other types of facilities on the campuses o f state
universities. T he W est V irginia school uses accom ­
modations on the grounds o f the state’s 4 -H camp

N orth

and

South

Carolinians,

but

may

District admit both men and wom en.

W h ile the

number of wom en attending these schools is still
relatively small, it is gradually increasing as the em­

at Jackson’s M ill.

ploym ent of wom en in managerial type job s in bank­
ing becom es a m ore general practice.

schools is another factor which helps to keep costs
down. Fees covering tuition, room , board, and se­

Enrollm ent ranges from about 75 at the South

lected study aids currently run from $60 to $120,
while those which do not include the cost o f a room
amount to $55 to $60. Fees are ordinarily paid, at

Carolina Bankers School to around 250 at the V irginia-M aryland Bankers Schools.

Total enrollment

at the fou r schools runs between 650 and 700 a year.
Instructional Staffs

structors

remuneration

from

the

A D V A N C E D GENERAL SCHOOLS

E xpert knowledge and teach­
M any

T he fact that many of the in­

without

least in part, by the student’s em ploying bank.

ing ability are tw o of the main qualities sought in
selecting instructors for the banking schools.

serve

F or many bankers, state banking school program s
provide all o f the specialized education that is feasible.

FIFTH DISTRICT B A N K IN G SCHOOLS
Month
Held

Days Per
Session

Years to
Complete

Approximate
Enrollment

Number

Name and Location

Number

Number

C A R O L IN A S SCHOOL OF B A N K IN G
University of North Carolina, Chapel Hill, North Carolina
Mid-Managem ent Division ......................................................

July

115

General Banking Conference .................................................

July

75

March

75

School of Bank Management ............................................

August

165

Commercial Bankers Seminar .................................................

August

75

SOUTH C A R O L IN A BANKERS SCHOOL
University of South Carolina, Columbia, South Carolina ..............
V IR G IN IA -M A R Y L A N D BANKERS SCHOOLS
University of Virginia, Charlottesville, Virginia

WEST V IR G IN IA SCHOO L OF B A N K IN G
West Virginia State 4-H Camp, Jackson's Mill, West Virginia
SCH O O L

OF

CON SUM ER

140

B A N K IN G

University of Virginia, Charlottesville, Virginia .............................

Source:

October

August

12

300

Banking Education Committee of The American Bankers Association.




9

F or others, such program s represent an intermediate
step in their progress toward advanced study at one
of the regional or national banking schools where

to com plete a course of study may be one year, two
years, or three; and program s may be appropriate
for a special group— nonofficers, ju n ior officers,

curricula are geared to ju n ior officer level and above.
Regional schools are sponsored by three or m ore

supervisory personnel, senior executives, or any com ­
bination o f these— or fo r bank employees regardless

state bankers associations to afford opportunities for
higher education to officers and experienced bank per­

of

sonnel.

Southernm ost o f these, and the one serving

the area in which most of the Fifth District lies, is

their

position.

Specialized

national

banking

schools are usually sponsored by a national banking
association, a college or university, or by the two
jointly. O n the state level, specialized schools are

T he School of Banking of the South held at L ouisi­

sponsored

ana State U niversity, Baton R ouge, Louisiana.

singly or in cooperation with an institution of higher

Its

by

a state

banking

association

either

dents understanding of the most significant banking,

education.
T he School

monetary and econom ic problem s that affect com ­

specialized

mercial banking.”

T he program covers a three-year

Sponsored by the Consumer Bankers A ssociation in

period, with students in residence for tw o weeks

cooperation with the M cln tire School o f Commerce,
U niversity of V irginia, it is held annually at the U n i­

program of study “ is designed to broaden the stu­

each year.

A m on g the 14 state bankers associations

sponsoring T h e School of Banking o f the South are
those in N orth Carolina, South Carolina, V irginia,
and W est V irginia.

Bankers from these four states

com prised some 15 per cent of the student body
registered for the 1965 session and 16 per cent of
this year’s graduating class.
T h e oldest and perhaps best known of the advanced
schools is T he Stonier Graduate School o f Banking
at Rutgers U niversity, N ew Brunswick, N ew Jersey.
Established in 1935 by the Am erican Bankers A s ­

Stonier w h o founded, and was for many years di­

each year.

Consumer
located

in

Banking
the

is the one

Fifth

District.

versity in Charlottesville. T he program covers a
three-year span and students must attend a tw o-week
session each year. T hey also must com plete e x ­
tension w ork between resident sessions and submit
an acceptable thesis in order to fulfill diplom a re­
quirements. Instruction is geared to the officer
level. F or the 300-odd students w h o attend the
school each year, the program is designed to furnish
a broad general background in bank management in
addition to specialized study in consum er banking.

sociation as T he Graduate School of Banking, its
name was changed in 1959 to honor Dr. H arold
rector of, the school. Its purpose is to provide an
opportunity for advanced education to the many bank
officers w ho are qualified by experience or form al
schooling, or a combination o f the two, for graduate
study in their field of interest. Today, annual en­
rollment in its three-year program numbers from
1,100 to 1,200 bank officers. Between 300 and 400
students successfully complete diploma requirements

of

school

OTHER BANKER EDUCATION P R O G R A M S
There are other banker education program s which
may be m ore appropriately classified as conferences,
forum s, clinics, workshops, or seminars than as
“ schools.” Som e are general in scope, others are
limited to a specific area such as agricultural credit
or management operations. In general they are
brief, lasting only a day or two. O f the fou r cu r­
rently held by the V irgin ia Bankers A ssociation, for
example, the shortest lasts only one d a y ; the longest,
tw o and one-half days.

T he city in which such p ro­

grams are held may or may not be the same each

SPECIALIZED SCHOOLS
F or men and wom en interested in studying a single

year.

In M aryland, fo r instance, the Management

Operations and Consumer Credit Conferences are

phase of banking— investments or consum er lending,

always scheduled fo r

for exam ple— there are state and national specialized

Bankers Conference may meet in Baltim ore but more

schools.

often is held elsewhere.

W h ile study in one o f these schools is not

Baltim ore while the Y ou n g

necessarily limited to the core subject since many

W hatever their type, their duration, or their lo­

specialized schools also offer one or m ore courses in

cation, these brief program s are valuable adjuncts to

econom ics or other general subjects, the curriculum

form al schooling.

is much m ore circum scribed than that in a general

contacts outside their immediate sphere o f activity.

school, allowing attention to be focused sharply on

T hey stimulate interest in the topic or topics being

a single aspect o f banking.

presented.

A s in general schools, length of sessions varies
from a few days to tw o w e e k s ; the time required

10


T hey expand participant bankers’

A n d they direct attention to the value

of outside education
jo b training.

as a supplement to

on-the-

THE FIFTH DISTRICT
Business activity in the Fifth Federal Reserve
District has continued at a high level in recent weeks.

T he D istrict’s econom ic vitality is also reflected

Bank debits in June recovered from a M ay decline,
rising to a record level one-sixth higher than a year

in less com prehensive indicators. N ew car sales in
the first half of the year topped last year’s first-half
figure by one eighth. Few er businesses have failed

ago. Total debits in the first half of the year sur­
passed 1964’s first-half figure by one eighth, slightly

so far this year than at any time since 1956 and,
except for an unusually high figure in February,

m ore than the comparable rise in bank debits na­
tionally. Nonagricultural employm ent increased m ore
than seasonally in June, as it has with few exceptions

the dollar volum e o f liabilities associated with these

for many months, and closed the first half 3 % above
a year ago.

A lthough m an-hour gains were quite

failures has remained at its lowest level in nearly
a decade.
Strength

in

Construction

E a rlier

in d ica tion s

that the District construction industry’s strong three-

prevalent in June am ong the D istrict’s principal
manufacturing industries, most fell slightly short of

year uptrend might be starting to wane have largely

the usual seasonal magnitudes. Nevertheless, total
factory man-hours finished the first six months 4 %

which rose less than seasonally in M arch and A pril,

higher than in the previous year.

District insured

unem ployment has continued to decrease considerably
faster than usual and averaged more than one-fifth

disappeared.

Contract

construction

employment,

resumed greater-than-seasonal gains in M ay and June
and recently has maintained a margin of m ore than
4 % over year-earlier levels.

Contract award values

below comparable 1964 levels during June and the

rose sharply in M arch and A pril, and although they

first half of July.

declined in M ay, the total was still the second highest

SALES OF RETAIL ESTABLISHMENTS
FIFTH DISTRICT
TYPE OF TRADE

GEO GRAPH ICAL
Food Stores

M aryland

Automotive Dealers
District of
Columbia

General Merchandise
Service Stations

Virginia

Restaurants,
Cafes, etc.
Apparel and
Accessories

West Virginia

g

p

Building Materials,
Hardware, etc.
| 1963

Furniture,
Appliances, etc.

North Carolina

j

1958

J 1954
Drug and Proprietary
South Carolina

= p -3
----------J .. - ..
L




i
2

-------------Other
i
3

$ Bit.
Source:

1
4

J
5

0

1

2

3

$ Bil.
U. S. Department of Commerce, Bureau of the Census.

11

so far this year and was surpassed in only four
months of 1964. A w ards have been particularly
strong in the residential category and in public works
and utilities.
Retail Trade D istrict d ep a rtm en t store sales rose
again in July follow ing a mild decline. Present indi­
cations are that the July figure may be the second
highest on record.

T otal retail sales in the District,

which take m ore time to com pile, have been estimated
for M ay at $2.03 billion. This was the first time that
any month other than Decem ber had passed the tw obillion-dollar mark. A lthough the increase over the
A pril figure was smaller than in either of the previous
tw o years, M ay sales exceeded their year-earlier level
by m ore than 6 % .
T he largest com ponent of the M ay figure was, of
course, automobiles, which totaled $508 million in
the District, almost exactly one fourth o f the total.
M ay automobile sales were up 9 % from the previous
year and wrere 2 3 % greater than in 1963.
Trends in Trade L o n g e r term ch a n g e s in the
volum e and com position of retail trade are revealed
in recently published results of the 1963 Census of
Business.

T he chart on page 11, based on census

data, classifies Fifth D istrict retail sales by g e o ­
graphical areas and by types of stores for the census
years 1954, 1958, and 1963.
T he grow th of retail trade in a particular geo­
graphical area prim arily reflects tw o elements, the
change in population and the rise in living standards.
A third factor may be p resen t: the extent to which
shopping centers in one geographical area draw
customers from other a re a s; as W ashington stores,
for instance, attract business from suburban M a ry­
land and V irginia. Naturally, the strongest gains
in sales have occurred where both population and per
capita consum ption have trended upwrard.
The
follow in g table summarizes these changes in the D is­
trict and com pares them with national trends.

Columbia and Wrest V irgin ia experienced significant
declines. D uring this first period, sales grew7 most
rapidly in M aryland with N orth Carolina in second
place, barely ahead of V irginia. Population was the
strong factor in each of the tw o northern states,
while increased sales per capita dominated the picture
in N orth Carolina. W est V irgin ia and the District
of Columbia, where population declined and per
capita personal incom e remained high, showed the
strongest rise in per capita sales, and N orth Caro­
lina came next.
D uring the second period
of

most

rapid

grow th

(1 9 5 8 -1 9 6 3 ), centers

shifted

southward.

South

Carolina made the strongest gain, and most of it
resulted from gains in sales per capita, in which the
Palmetto State led the rest of the D istrict by a sizable
margin. H igher per capita sales likewise accounted
for most of the increase in N orth Carolina and V ir ­
ginia. but gains in population were also strong.

As

in the first period, the grow th o f sales in Maryland
strongly reflected both increased population and
higher consum ption per capita.
Retailers Broaden Lines

T r e n d s in the c o m p o s i­

tion o f retail sales by type o f store also reflect tw o
principal influences. A s incom es rise, consumers
shift larger fractions of expenditures from “ neces­
sities” to “ extras,” and retailers tend to widen their
lines accordingly.

Thus, store classifications indicate

less and less accurately the type of merchandise sold.
A utom obile dealers are exceptions, as are gasoline
service stations to a considerable extent.
M ost of the increase since 1954 in automobile sales
and much of the rise in sales of service stations o c­
curred after 1958. F or other types of retailers,
gains were about evenly distributed over the entire
period and wrere strongest where diversification was
most apparent.

Com pared to a rise of 4 8 % in total

District sales between

1954 and

1963, drug store

sales rose m ore than tw o thirds, and the volum e of
food store and general merchandise store sales in­

%

change

1954-1958
Popula­
tion

7.6
u . s.
5th Dist.
6.1
11.1
Md.
4.3
D. C.
10.1
Va.
3.2
W . Va.
N. C.
5.9
S. c .

5.9

Sales
per
capita

creased more than one half.

1958-1963

Sales
per
capita

9.2
11.6
11.9
14.2

8.2
18.3
13.4
8.6

Total
sales

17.5

18.5
24.3
9.2
19.3
14.7
19.5
15.0

Popula­
tion

8.3
8.4
12.4
5.4
9.4
1.7
9.4
8.7

12.5
15.5
13.4
3.1
17.8
12.6
17.9
19.8

Retail sales represent a declining fraction of per­
Total
sales

21.9
25.3
27.4
8.7
28.7
10.7
29.7
30.1

Grow th rates in the District as a whole exceeded

sonal income.

T his fraction was three fifths in 1954

in both the nation and the Fifth District.

Between

1954 and 1963, however, the ratio o f sales to per­
sonal incom e declined m ore slow ly in the District
than in the nation as a w7
hole.

In 1963, the portion

of personal incom e spent for retail purchases ranged
from 4 6 %

in M aryland to 5 8 %

in the Carolinas,

with an average of a bit over 5 3 % fo r the entire

national rates, except fo r the change in population

District com pared with slightly less than 5 3 % for

between 1954 and 1958 when both the District of

the nation as a whole.


12