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FEDERAL RESERVE BANK OF RICHMOND MONTHLY REVIEW 1968 Balance Of Payments In Perspective Residential Mortgage Market Research In A Triangle: Part I The Fifth D istrict 1968 Balance Of Payments In Perspective T he United States recorded a small surplus in its balance of payments in 1968, the first surplus on a liquidity basis since 1957 and only the second since 1949. But perhaps m ore important than the ov er all surplus was the dramatic shift in the payments pattern of recent years. T he traditionally strong trade surplus virtually disappeared while private capital flows, usually a large debit item, turned sharply inward. This article attempts to put these over, a series of currency devaluations in September 1949, touched off by the British devaluation o f the pound, cut further into the U . S. com petitive ad vantage. T he surplus on g ood s and services fell from an average $8.2 billion in the 1946-49 period to $4.7 billion in the period 1950-56. But in co n trast to the earlier period, the private and G overn ment outflow of capital and gifts exceeded the export surplus, leaving a small deficit in the balance of recent developments into historical perspective. payments. The Postwar Pattern T he United States emerged fro m W o r ld W a r II in a s tr o n g co m p e titiv e 1950 through 1956, but rather than being considered position in w orld markets. Its productive capacity had expanded greatly during the war while much o f that of the other industrial nations had been de stroyed. T he demand of foreign countries for im ports, both for reconstruction purposes and for cu r rent consum ption, greatly exceeded their ability to pay with exports. Consequently, the U nited States ran huge surpluses in its international trade in the T he deficit averaged $1.5 billion from a problem , it was welcom ed on the grounds that the w orld was suffering from a chronic dollar shortage that could only be met through U . S. deficits. From Dollar Shortage to Dollar Glut recorded a small overall surplus in T h e U . S. 1957, largely due to the disruption of w orld trade patterns as sociated with the Suez crisis. But in 1958 the deficit reappeared, and the dollar shortage turned into a dollar glut. F rom the narrow standpoint of < early postwar years. In the 1946-49 period U . S. exports of good s and services exceeded im ports by $8 billion per year, about $7 billion of which rep of the w o rld ’s trading nations had w orked only too resented the trade surplus. O nly about a sixth of the surplus on goods and the early 1950’s, the deficits since 1958 (chart 1) our balance o f payments, the rebuilding o f econom ies well. In contrast to the small “ planned” deficits o f services was financed by private U . S. capital out flow s and gifts. M ost of the remainder was made possible by U . S. Governm ent loans and grants, in cluding Marshall Plan aid. R oughly half of the surplus was financed by Government grants and private gifts and thus did not increase U . S. claims on future foreign output or saddle other nations with the burden of foreign debt repayment. T he export surplus was, in the main, the real counterpart of U. S. BALANCE OF PAYMENTS LIQUIDITY BASIS $ Billions 2 0 massive U . S. assistance with postwar reconstruction, prim arily in W estern Europe. Despite the vast capital outflow s associated with -2 U . S. aid, the total U . S. payments position remained in surplus over this period, and the U . S. Treasury -4 acquired substantial amounts of gold from abroad. B y the end of 1949 official U . S. gold holdings stood at $24.56 billion, approxim ately 7 0 % o f the gold re -6 serves o f the non-Com m unist w orld. O u r huge export surplus was reduced after 1949. E uropean recovery was well on its way by then, and U . S. econom ic aid was cut back sharply. 2 M o re -8 1958 Note: 1960 1962 1964 1966 1968 1st quarter 1969 data are a preliminary, seasonally adjusted annual rate. Source: U. S. Department of Commerce.______________________ __ have been much larger and quickly became a m ajor concern o f econom ic policy. The deficit since 1958 has changed in com position as well as magnitude. T he deficit on the liquidity basis is measured by the decline in gold and other reserve assets and the increase in liquid liabilities to foreigners. Before 1958 foreign countries added most of the excess dollars supplied by our deficits to their official reserves and purchased only small amounts of gold. But as the deficits grew larger and the foreign demand for dollar balances was satisfied, foreign monetary authorities increasingly exercised their right to convert dollars into gold. Official gold sales reduced the gold stock from $22.86 billion at the end of 1957 to $10.89 billion by the assets ($1 billion) and increases in liquid liabilities to foreigners ($1.7 b illion ). Policies and Programs T h e tra d ition a l p r e scription for a deficit under fixed exchange rates is the a p p lica tio n o f d e fla tio n a ry m o n e ta ry -fis ca l policies. But until m id -1965 such policies were in conflict with efforts to achieve full employm ent of domestic resources. “ Operation tw ist” in the early 1960’s represented a limited attempt to reconcile these conflicting objectives by supporting short-term interest rates for balance of payments purposes while depressing long-term rates to prom ote domestic in vestment. W ith conflicting objectives precluding a broad m onetary-fiscal attack on the deficit, m ost o f the end of 1968. Net gold sales in 1968, how ever, were concentrated in the first quarter and ended with the establishment o f the tw o-tier gold market in M arch. effort has been aimed at particular segments o f the balance o f payments. F or example, in the early W h ile the overall deficit has been large since 1958, our trade accounts, until recently, remained in sub to reduce the net impact of its transactions on the stantial surplus. averaged $4.2 T he billion trade surplus during the (chart 1958-67 2) decade while the surplus on good s and services com bined 1960’s the Governm ent attempted in several ways deficit. It tried to persuade countries in which U . S. troops are stationed to offset part of the foreign e x change costs through purchases o f U . S. military But the export equipment and long-term securities. It also sought to tie foreign econom ic aid to the purchase o f U . S. surplus was m ore than offset by deficits in private good s to neutralize its impact on the deficit, while and unilateral at the same time the Department o f Defense under transfers, leaving an average liquidity deficit of $2.7 took a sharp curtailment o f its offshore procu re ment program. (chart 3 ) averaged $6.3 billion. Governm ent capital accounts and billion that was financed through sales of reserve Since 1961, however, most of the program s to deal with the deficit have aimed at restricting the outflow o f private capital. T he first such measure was the U. S. MERCHANDISE TRADE SEA SO N A LLY AD JUSTED ANNUAL $ Billions RATES interest equalization tax (IE T ) on foreign issued securities which became effective July 19, 1963. T he tax amounted to 15% of the purchase price of stocks and up to 15 % o f the price of debt instruments with maturities over three years. It raised the effective interest rate to foreigners borrow in g in the U . S. capital market by about 1% per annum. Securities o f underdeveloped countries and new issues of Canadian securities were exempted. T he I E T sharply reduced the sale of securities to which it applied, but heavy outflow s capital for direct investment continued. of private M oreover, a rapid rise in bank loans to foreigners suggested that bank credit was being substituted for securities covered by the IE T . A ccordin gly, in February 1965, the President extended the tax to term bank loans and broadened its coverage on securities to include those with maturities over one year. H e also in stituted a program of voluntary restraint on credit to foreigners by U . S. banks and nonbank financial Source: U. S. Departm ent of Com merce. institutions, to be administered by the Federal R e serve System, and a program o f voluntary limitation 3 o f foreign direct investment by U . S. businesses, administered by the Department o f Commerce. W hereas the I E T was essentially a tariff on im ported securities, and thus operated as a market device, the credit restraint program placed direct quotas on private capital outflows. T he Federal Reserve requested banks to limit their foreign credits in 1965 to 105% of the amount outstanding at the goods. In addition to the incom e effect on im ports, there is a related substitution effect as high and rising dom estic prices lead to a substitution o f foreign for dom estic goods. A t the same time, exp ort products becom e less competitive. Im provem ent in other accounts m ore than offset the reduction in the export surplus in 1968, yielding a slight surplus of $0.2 billion in the balance o f pay end of 1964. T he guidelines for nonbank financial institutions were com parable to those for banks. Priority was given to export loans and credits to less ments. M ost o f the im provem ent was in the private capital account, which swung from a net outflow of developed countries. T he com panion C om m erce p ro gram aimed at reducing the net capital outflow in 1968. This im provem ent resulted prim arily from a $3.7 billion increase in the inflow of foreign capital, mainly in the form of foreign purchases o f U . S. arising from direct foreign investment activities o f U . S. firms. Due largely to a sharp reduction in foreign claims reported by U . S. banks, the net ou t flow of private capital declined substantially in 1965 and 1966 as did the overall deficit in the balance of payments. T he sharp deterioration in the payments position in 1967 led the President on January 1, $2.8 billion in 1967 to a net inflow o f $1.6 billion securities. Som e of the im provem ent in the capital accounts can probably be attributed to the various capital co n trol program s described earlier. Banks, for example, reduced their foreign claims substantially in 1968. T he D irect investment abroad declined only moderately, but a much larger portion was financed abroad and C om m erce program was tightened and made manda thus did not add to the net outflow of U . S. funds. 1968 to propose m ore restrictive measures. tory, while guideline ceilings under the Federal R e T he unexpected overall surplus w ould not have o c serve program were low ered. curred without a huge year-end repatriation of c o r Both program s, h ow ever, have been liberalized somewhat this year. Recent Changes in the Postwar Pattern porate funds from foreign affiliates to meet the in- The sharp drop in the export surplus and the reversal of U. S. TRADE IN G O O D S AND SERVICES private capital flow s last year represented an a c celeration of a trend that began in 1965. T he trade surplus fell from $6.6 billion in 1964 to $3.5 billion in 1967 to only $0.1 billion in 1968. 12 T he surplus on goods and services dropped from $9.7 billion in 1964 to $2.8 billion last year. $ Billions 10 Preliminary estimates show 8- a further decline so far in 1969, although a m ajor dock strike early in the year may be largely re sponsible for this decline. T he deterioration in the U . S. export surplus coincides with the current inflation that began with the V ietnam buildup in 1965. F rom 1960 to 1964, a period of exceptional price stability and less than full employm ent, merchandise exports grew 9 .2 % at a com pounded annual rate while im ports e x panded at a 4 .0 % rate. E xports continued to grow at a substantial 7.2 % rate in the 1965-68 period, but imports, under the influence o f dom estic inflation, increased twice as fast, at 15.7% . T he large export -2 grow th of 9 .5 % in 1968 was overwhelmed by a fan tastic 2 3 .3 % rise in imports. A n inflationary boom reduces the trade balance in tw o ways. A s incomes rise people spend m ore, and part of the additional spending is for foreign 4 -4 1958 1960 1962 1964 1966 1968 | Net M ilitary Sales Q Net Investm ent Income B Net M dse. Exports [U Net O ther G oods and Services ™ Balance of G oods and Services Source: U. S. Departm ent of Com m erce. vestment quotas set by the C om m erce program . Special program s, how ever, have a way of w orking better if they are reinforced by underlying market forces. M ost of the credit for the im proved capital account probably should g o to rising interest rates relative to foreign interest rates. Relatively high U . S. interest rates tend to attract foreign capital and keep U . S. capital at home. T hey encourage U . S. corporations to finance their foreign operations abroad. T ight domestic credit conditions help U . S. banks and other financial institutions to reconcile the foreign credit restraint program with their profit objectives. Certainly the fact that banks consistently have maintained their foreign credits well below the guideline ceilings suggests that the program is not their only constraint, nor even the main constraint, on foreign lending. It is ironic that the high interest rates which helped the capital account in 1968 were partly the result of domestic inflation which contributed to the w orsening of the trade balance. In other words, inflation had an offsetting influence on the trade and capital accounts. Unfortunately, its harmful effect on the trade balance is likely to be more permanent and m ore difficult to reverse than its beneficial ef fect on the capital account. T he ability of high in terest rates to attract capital during a period of in flation is found to be transitory, as the higher money return is offset by a low er value of the monetary unit. Fundamental im provem ent in our balance o f payments must await the elimination o f inflation. But if the end of inflation brings low er interest rates, a capital outflow could precede any substantial im provement in the balance of good s and services, worsening the overall balance in the meantime. A nother deficit in factor that will affect the published 1969 will be the use made o f “ special transactions” by the Government. Special financial transactions reduce the published liquidity deficit by shifting foreign dollar claims into nonliquid or near liquid form s, e.g., time deposits with 366 days or more maturity and certain nonmarketable, medium term U . S. Government securities. Such transac tions, which involve little fundamental im provem ent, reduced the published deficit by $2.3 billion last year, as com pared to $1 billion in 1967. If less reliance is placed on such transactions in the future, an in creased liquidity deficit could mask a m ore funda mental improvem ent in the balance o f payments. R ob ert D . M cT e e r, Jr. 5 FIRST QUARTER NET CH A N G E IN M O R TG A G E HOLDINGS OF M A JO R LENDERS RESIDENTIAL * $ Billions 2.4 2.1 W hile a degree of tightening has occurred 1.8 'O N CO Os > 0 -O "O 'O O s Os O s Os in the residential m ortgage m arket in recent months, funds have not become as scarce as 1.5 - during the 1966 period of credit stringency. 1.2 V irtu ally .9 - .6 - all principal m ortgage lenders m ade sizable first quarter additions to their m ortgage holdings. .3 0 Com m ercial Banks Mutual Savin gs Banks Savings and Loans Life Ins. Com panies NET FLOW OF FUNDS INTO SA V IN G S INSTITUTIONS (Season ally Adjusted A n nual Rates) Com pared with the sam e period in other recent ye ars, net inflow s of funds at saving s institutions, the dom inant suppliers of home mortgage funds, have held up fa irly w ell so fa r this ye ar. flow s, Some w eakening in these in how ever, is suggested in the latest data. Feb. Jan . M ar. April M ay M O R TG A G E COMMITMENTS O UTSTANDING (Season ally Adjusted A n n ual Rates) $ Billions S A V IN G S AND LO A N S M ortgage commitments at saving s institu tions have rem ained at relatively high levels, reflecting the industry's cautiously optimistic view ability. concerning near-term capital a v a il l TGAGE m a r k e t INTEREST RATES ON HOME M O R TG A G ES Per Cent W hile mortgage funds for single fam ily homes have been a v a ila b le , their cost has been rising steadily, Note: Broken line indicates a change in the legal ceiling rate. NONRATE M O R TG A G E TERMS ON NEW HOMES . . . and several nonrate terms have become more restrictive. A ve ra g e down paym ents have risen sh a rp ly and loanprice ratios have been declining, on balance. On the brighter side, a v era g e terms to m aturity have been relatively stable. A V ER A G E PRICE OF NEW AND EXISTING HOMES $ Thousands Home buyers have been contending with soaring housing prices, reflecting in part the trend tow ard construction of larger and more luxurious homes. Jane F. Nelson Sources: Board of Governors of the Federal Reserve System and the Federal Home Loan Bank Board. RESEARCH IN A TRIANGLE: PART I N estled in the flat land of the P ied m on t section of N orth Carolina is one of the m ost successful research centers in the country today. T he R esearch Triangle, bounded by R aleigh, Durham , and Chapel H ill — once only a dream — is now a thriving research conglom erate. E ighteen re search organisations, w hose research activities are as diverse as textile chem istry, environm ental health problem s, and com puter com ponents, form the hub of the R esearch Triangle com plex. T he specific activities of these organisations will be discussed in P a rt I I of this series. H o w the Research Triangle began, what it has becom e, and w h y it has succeeded w hen many similar attem pts have failed provide the su bject of this article. 8 This portion of the story begins in the m id-1950’s. 1 History A research cen ter fo r N orth C arolin a was envisioned as early as 1955. T he original stimulus for the idea was an econom ic one. Realizing the need to diversify an econom y which for decades had been dependent on tobacco, textiles, and furni ture, leaders of both governm ent and industry were willing to consider and experim ent with any idea that might lure industry to their state. A center devoted to scientific, technological, and industrial research, they concluded, would not only be a big business in its ow n right, but w ould also attract m ajor industries which thus far had bypassed the T ar Heel State. T he original planners were extrem ely fortunate in having a nearly perfect site for their proposed re search center. T hree universities, located in the north-central portion o f the state within close proxim ity to one another, conveniently provided the academic resources vital to the research-development objective. T he U niversity of N orth Carolina at Chapel Hill, Duke U niversity in Durham, and North Carolina State U niversity in Raleigh form ed a scalene triangle— too obvious to ignore in naming the project. T he Research Triangle offered the ideal environment for almost any type o f study. F urther more, the cultural advantages associated with uni versity life were an enticement to the necessary human elem ent; concerts, art exhibits, little theaters, and the possibility of continuing education com bined with living in a relaxed country atmosphere made a tempting combination. Preparations for the new research com plex were begun, and by m id -1958 a name and site had been chosen. T he Research T riangle Park, the land p ro vided for the prospective industrial and governmental research organizations, was located at the base o f the Triangle, within easy reach o f all three uni versities and purposely near the Raleigh-D urham A irport. Restrictions were established to insure both the purpose and appearance o f the Park. O c cupants were to be organizations devoted solely to research and research-oriented manufacturing and, in order to maintain a park-like, campus atmosphere, were allowed to cover no m ore than 15% o f their allotted acreage with buildings. W h en the location o f the Park had been selected, the problem s associated with developing a research com plex became manifest. Land had to be acquired, m oney had to be collected, prom otion w ork had to be started, and most important of all, clients had to be found. It was a slow, disorganized period for the Park— and the most com plicated part o f its history. T he com plexity was increased by the unique com bination of business, governm ent, and academic interests in the project. T he difficulties were slow ly and carefully overcom e, however, until the present organization and structure were attained. T he underlying cause for the success o f the whole research p roject seems to have been the ability of dissimilar interests to w ork for one com m on goal which w ould ultimately benefit all. T here were, of course, additional factors which contributed to the su ccess; the close alliance with the universities, care ful and detailed planning— not only of the Park itself, but of the residential areas surrounding it — the generosity of contributors, and the cooperation and enthusiasm o f then G overnor Luther H . H odges all played an invaluable role in the success story. 9 S tru ctu re T oday the “ Research T rian gle” com m only refers to the three universities and the 18 institutions in the Park. There are three distinct corporate organizations which act as the basic governing bodies of the research com plex. M em ber The Research Triangle Institute, com m only re ferred to as “ R T I ,” provides contract research services to Federal, state, and local governm ent agencies, foundations, and industrial clients ranging from local companies to national corporations. O ver ship of the Boards of Directors of the three groups reflects the influential role of the universities and the past ten years, R T I ’s cumulative contract billings to its clients have exceeded $26.5 million— another exam ple o f the success of the research endeavor. the collaboration of state, business, and academic interests. The Research Triangle Foundation, the Earnings are reinvested in program development, mother organization, the Research Triangle Park, staff grow th, and expansion of facilities. and the Research Triangle Institute com prise the tripod structure. Each has its own fu n ctio n ; each created as the focal point of the Triangle and was established as an independent corporate entity by the three universities. A s a w holly owned affiliate fulfills a vital need. T he Research Triangle Foundation’s prim ary pur pose is to prom ote the entire resources o f the T r i angle, and thereby recruit new research organiza tions to the area and the state. It is in essence a trusteeship and was originally financed through co n R T I was of the three schools, it operates under a separate Board of G overnors with its own full-time staff. Separated from this three-pronged structure is the Research Triangle Regional Planning Commission, tributions from corporations and individual citizens which has proved invaluable to the overall develop ment of the research area. Established in 1959 by in N orth Carolina. the Profits from both the Institute and the Park are turned over to the Foundation. These surpluses are used as grants to support scien tific research at N orth Carolina universities and colleges and at the Institute. The Chairman o f the Board of Directors o f the Foundation is the form er G overnor and form er U . S. Secretary o f Com m erce Luther H odges. A s a respected citizen o f N orth Carolina with great administrative ability, he seems ideally suited to the job . T he “ G overn or" receives one dollar a year for his services— 50 cents at each semi-annual Board meeting. T he Research Triangle Park is a w holly owned subsidiary of the Foundation and has its ow n Board of Directors. Its original purpose was to secure land for the research center. T od ay its prim ary function is the sale o f that land. T he Research Triangle Park refers not only to the corporation, but also to the land itself. The Park, which is the geographical hub o f re search activity within the Triangle, is a huge 5,000 acre tract of land six miles long and tw o miles wide. It is the Park which offers the physical evidence of a “ dream com e true.” The total value o f the investment today is about $50 million. A n addi tional $105 million for buildings which will be com pleted in the next few years will raise the total to approxim ately $155 million. V isitors to the Park are initially impressed with its sprawling size, and secondly with its m odernity. It is rather paradoxical to find m illion-dollar buildings which manage to N orth Carolina General Assem bly, its chief responsibility is to provide long-range, area-wide planning fo r the development of the Park and the surrounding counties o f W ake, Durham, and Orange. The Measure of Success In little o v e r a d eca d e the Research Triangle has becom e one of the most successful research com plexes in the nation, and thereby one of N orth Carolina’s most valuable assets. T h e very size and operation o f the Park — 18 “ tenants” on 5,000 acres doing research in numerous disciplines— are indicators o f the success of the research center. A wide variety o f research services are made available through the T riangle to the state’s educational, governm ental, agricultural, and business communities. Perhaps the success of the Research Triangle is best measured by h ow well it has fulfilled the purpose for which it was originally intended: the econom ic im provem ent o f N orth Carolina. T he amount of revenue the state gains from the Park is one very evident example. Last year the annual payroll for the approxim ately 5,000 Park employees totaled $50 million. A lso of great econom ic value are the human resources brought to N orth Carolina by the Triangle facilities: not only professional scientists and engineers, but also sup porting personnel such as highly skilled technicians. T he Triangle also allows the state to retain its ow n talent and brainpower by supplying positions for graduates of the three universities and the 57 other N orth Carolina colleges. B y pouring both capital capture all the strength and simplicity of modern and m anpower into the econom ic stream, the R e design in the middle o f a forest of scrub pine. search Triangle has taken a giant step tow ard ac A m azing also is the mere ten years required for the com plishing its prim ary purpose. Park to reach its present state o f development. Digitized for 10 FRASER Carla R . G regory The Fifth Jistrict CROP PROSPECTS FOR 1969 Fifth District crop prospects on July 1 were gen Soybean, Cotton, and Peanut Acreages F irst e sti erally good to excellent, according to estimates of mates o f this year’s production o f soybeans, cotton, the U . and peanuts will not be made until A ugust 1. S. Department of Agriculture. T he only T he exceptions were in W est V irgin ia’ s Eastern Pan planted acreages o f these crops provide g ood clues handle and the adjoining portions of V irginia and M aryland and in South Carolina’s central Coastal Plain. Final crop outturn will, o f course, be de termined in large measure by weather conditions to 1969 prospects, however. T he acreage o f soy beans planted alone fo r all purposes is 6 % below a year ago. P roducers, however, expect to harvest only 2 % fewer acres for beans than in 1968. Stands during the remainder of the grow in g and harvesting are said to be generally g ood . seasons. Total acreage of the principal crops fo r harvest, including planted acreages of cotton and peanuts, is are reported to be reasonably g ood , although they vary widely. Should yields per acre average more Supplies of moisture T he only nearly normal than last year’s drought-reduced yields, production could be up considerably. significant shifts in acreage from last year are in dicated for tobacco, sweet potatoes, and wheat. Gains over last year in yields per acre are anticipated for all crops for which data are available except hay, changed to encourage an increase in 1969 production, it appears that many Fifth D istrict farmers did not take advantage of these changes. A s a result, planted expected to be 2 % smaller than in 1968. Irish potatoes, and M aryland tobacco. More Tobacco C om b in ed o u tp u t o f all ty p es o f District tobaccos will be 14% larger than in 1968 if July 1 indications materialize. E xcept for a 3 % decrease in Southern M aryland leaf, production of all types will be up. T he smaller M aryland crop will result entirely from a cut in acreage. T he D istrict’ s flue-cured crop, its chief money crop and largest farm incom e producer, is expected to total 990 million pounds. If realized, 1969 out put will be 16% above that a year ago. T he increase is expected because of an anticipated gain in yield per acre as well as a 9 % larger acreage. A g ood portion of the increase in this year’s acreage reflects adjustments resulting from net undermarketings of 1968 poundage quotas under the acreage-poundage program. (U n d er this program , if a grow er markets T hough provisions o f the cotton program were acreage is 3 % smaller than in 1968. Stands are reported to be better in N orth Carolina than in South Carolina, and soil moisture is said to be adequate in most areas. a m ajor problem as yet. Insects have not becom e Peanut acreage allotments are unchanged from last year, and District farm ers planted roughly the same acreage as they did in 1968. R eports indicate that stands are excellent and that the crop is making g ood progress. Fruit Crops W in te r and sp rin g w ea th er g e n erally favored the D istrict’s apple and peach crops, and trees in most areas set g ood crops of fruit. The com m ercial apple crop is expected to be 13% larger than last year’s excellent production. E xpectations vary considerably by states, however, with antici less than his poundage quota in any year, the under pated changes from a year ago ranging from a sharp marketings are added to the farm ’s quota the follow 4 7 % increase in N orth Carolina to a decline of 14% ing year. Similarly, if a grow er markets m ore than his poundage quota in any year, the overmarketings are deducted from the farm ’s quota the follow ing year.) H arvest of this year’s bright leaf crop was in WTest V irginia, where dry weather has slowed development o f the crop. The prospective peach harvest in the District as a whole is 4 % smaller than last year’s large crop. well under way by m id-July and marketing began A ll o f the anticipated decline is in the Carolinas and on the South Carolina markets July 23— eight days is due largely to a reduction in bearing trees. ahead of last year. though larger peach crops are expected in V irginia, It is reportedly the kind of crop which should be in good demand. A l W est V irginia, and M aryland, moisture shortages 11 were developing in their important producing areas than last year and the largest barley crop on record, by July 1 at a time when moisture is critically needed 4 % above 1968’s output. for proper sizing o f the fruit. T he grape crop, produced only in the Carolinas. is expected to be about 2 % larger than in 1968. A ll of the prospective increase is in N orth Carolina. H ay and Feed Grains H a y p ro d u ctio n p rosp e cts Food Grains and Potatoes W h e a t a llo tm e n ts fo r 1969 were cut 13% below a year ago, and District fa rm ers re d u ced a crea g es a c co r d in g ly . S h a rp ly higher yields per acre are in prospect, however, and crop estimates indicate an output 3 % above a year are 8 % below a year ago, with declines anticipated earlier. in all District states except South Carolina. increased yields per acre, is also anticipated. The reduction is expected because of a 2 % cut in acreage and an anticipated 6 % decline in yield per acre. T otal feed grain production now shaping up gives prom ise of being around one-tenth larger than last year, despite farm ers’ heavier participation in the feed grain program and the resulting reductions in acreage from year-ago levels. T he indicated in crease is due to expected large gains in yields per acre. Should anticipated output materialize, the A 6% larger crop of rye, due entirely to Farmers are expected to harvest a 12% sweet potato crop than last year. larger A creage fo r har vest is up in all states and for the District as a whole averages 8 % above the 1968 acreage. Prospective per-acre yields are also larger in the Carolinas. By com parison, indications point to a 4 % re duction from last year in the D istrict’s Irish p o tato crop. Smaller production is indicated fo r all three seasonal groups— the late spring potatoes and both the early summer and late summer crops. corn crop, estimated at 183 million bushels, will be L ow er average yields per acre account for most 12% above 1968 and second only to the record 1967 of the decline. crop. 12 Prospects also call for an oat crop 5 % larger Sada L . Clarke
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