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F e d e ra l R eserve Bank of Rrcnmond

MANUFACTURING EMPLOYMENT

ACTIVE COTTON SPINDLE HOURS

(SEASONALLY ADJUSTED)
(1935-1939 ■ 100)

( Not Adjusted For Seasonal Variations)
(1935-'39* 100)

A further drop in cotton mill operations occurred during October
when spindle hours operated declined 3% from September on an ad­
justed basis to a level 11% under October 1950. Cotton consumption
did not follow this pattern, but rose 2% on an adjusted basis to a
level 12% under a year ago.

Employment levels in the District during September remained at
the high levels established in August. Part of this gain, of course,
has been seasonal, but the September figure is within 4% of the alltime peak established during the war. Durable goods industries ac­
count for the major part of the rise in employment this year.

DEPARTMENT

RETAIL FURNITURE STORE INVENTORIES

STORE

SALES

(Seasonally Adjusted)
(1941 = 100)

WOMEN'S

AND CHILDREN'S SHOES

(Seasonally Adjusted)
(1942=100)

1943

A rising level of furniture sales between spring and summer and a
well sustained level this fall, have served to bring furniture store in­
ventories down to tenable levels. These inventories which reached a
peak in February of this year, declined 24% between that month and
September. October shows the first rise thus far this year, gaining
1% over September after seasonal correction, and standing 3% under
last year.

1944

1945

1946

1947

1948

1949

1950

1951

Sales of women’s and children’s shoes in department stores of this
district have been doing remarkably well although the September fig­
ure is at the same level of a year ago. There has been a persistent
upward trend in sales with the first nine months’ figures showing a
gain of 8% above the same period a year ago. Store inventories,
however, in September were near the peak established in April and
14% over a year ago.

DEPARTMENT

WHOLESALE

DRUG SALES

(Seasonally Adjusted)
(1942=100)

TELEVISION, RADIO, RECORDS, E(

(Seasonally Adjusted)
(1935-1939 » 100)

1943

1944

1945

1946

1947

1948

1949

1950




1943

1951

In September, sales of radios, television, etc. were 24% under a
year ago. In the nine months, figures were down 18%, but this hard­
ly describes the situation in these commodities. The general trend of
these sales is fairly sharply upward, and the adverse comparisons are
due to the scare buying in the July-October period of last year. In­
ventories are probably low for the current volume of sales.

1944

1945

1946

1947

1948

1949

1950

15
91

Drug wholesalers in this District have continued their sales at high
levels, with October gaining 1% over September on an adjusted basis
to a level 3% ahead of a year ago. Drug wholesalers’ sales rose sharp­
ly from June 1950 to September in that year and have maintained a
slow upward trend since that time. October sales this year on an ad­
justed basis are 20% higher than in June 1950.

* 2 }
1 -

D ecem ber 1951

Europe's Coal Needs Stimulate Fifth District Ports
On the cover, the picture shows the vessel
“ Frederick W . Galbraith” being loaded with
coal at the N. & W . pier 5 at Norfolk. Photo­
graph through the courtesy of the Norfolk &
Western Railway.

sudden and striking increase in coal ex­
ports promises to make 1951 a record year,
second only to the peak reached in 1947. Hamp­
ton Roads, the main East Coast coal shipment
port, is handling capacity traffic to meet the coal
shortage in Europe. Tw ice as many foreign
ships called at Newport News and Norfolk in
October as compared with arrivals in October
of last year, and many merchant ships from
the United States’ “ mothball fleet” have again
been put into service to take care of this exces­
sively heavy coal trade.
In October alone, 3.8 million gross tons of
coal were dumped for transshipment by the
Norfolk and Western, the Chesapeake and
Ohio, and the Virginian Railroads, which bring
bituminous coal into the port area. October’s
dumpings were the highest ever recorded for a
— Through the courtesy of the League of Virginia Counties
single month, and the coal loaded on ships at
Pier 14 at Newport News. The new low-level C. & O. pier is equipped
Hampton Roads in the first nine months of this
with multiple belt conveyors.
year amounted to more than 20 million net tons
as compared with a mere one million tons in
principally at Hampton Roads. The heavy volume of
the same period of 1950.
coal sent to Europe this fall is part of an erratic postwar
T o alleviate the tie-up of cargoes and backlog of or­
pattern. In 1947, a crisis year in Europe, 36 million
ders at Hampton Roads, the Office of International
tons of United States coal went to Europe alone, but
Trade, effective November 1, ordered all overseas ship­
by 1950, these shipments had dwindled to one million
ments under allocation and export control, with the ex­
tons. The fluctuation in coal exports to Europe accounts
ception of exports to Canada. By this method, all coal
for the extreme highs and lows in the foreign coal ex­
orders of foreign countries are being screened to give
port figures of Hampton Roads. Coal exports in the
priority to European countries, thus insuring friendly
first nine months of 1951 represent an increase of more
nations their supplies of coal, despite the shortage of ves­
than 10 times the shipment for the whole year of 1950.
sels and the cargo congestion at Hampton Roads. Under
What is behind the revived demand for coal in Eu­
the export allocation and licensing system, the bulk
rope? Actually, what has happened is not a falling-off
in European coal production, as might be assumed, since
of coal destined for Europe will go through Hampton
Roads, and the rest will be shipped via other ports. In
output of coal has in fact increased, especially in France,
the Saar, and Germany. The reason for the enlarged
the Fifth District, Baltimore is taking some of the over­
flow of orders, and Charleston, South Carolina also is
shipments is that the demand for coal has outstripped
the small increase in its production. Overall industrial
sharing in the coal export boom.
Not only in the port areas but over the Fifth District
production in Europe has increased by 11 per cent in
in general, the economy is affected by a high level in
the year since the war started in Korea, including such
coal exports. The coal fields of Virginia and W est V ir­
increases a s : steel production, 14 per cent, rayon fibers,
27 per cent, cotton yarn, 14 per cent, electricity, 11 per
ginia make up one of the largest bituminous coal pro­
ducing areas of the nation, and the Fifth District ac­
cent. These economic indicators reflect the increased
counts for one-third of the United States’ bituminous
use of coal, while European coal production over the
same period has increased by only 6 per cent.
coal output.
If defense requirements are to be met in Europe, in­
W hile the large coal exports to Canada go through
ports on the Great Lakes, coal for Europe is handled
dustrial production will have to be maintained on a high

T

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I

F e d e ra l R eserve Bank of Richmond

and increasing level. In France, for example, steel mills
are reported running at 85 per cent of capacity and are
held at this level partly owing to a shortage of coal and
partly because of the shortage of coke.
Great Britain, the traditional supplier of coal to the
European continent, has cut its coal exports in half, and
increased its own imports from 3 thousand tons in the
first nine months of 1950 to over 8 million tons in the
like period of 1951. Coal imports from America are
the largest since 1927. This cut in exports and increase
in imports of coal is the result of a rise in domestic con­
sumption. Industrial production is now 50 per cent
above the prewar level, and British demand for coal is
expected to grow as its rearmament program gets under
way. The increase in coal mined has not met this ris­
ing demand, and over and above the production prob­
lem, it is doubtful that the railway facilities can trans­
port more coal from the mines. Therefore, it has been
necessary to curb exports and restrict the home use of
coal. Rationing went into effect in the first part of
November.
In Western Germany, another source of European
coal, the prospects are no better than they are in Britain.
Coal output is still below prewar levels, and Western
Germany also has experienced a boom in industrial pro­
duction during the past year. T o permit this high level
of production, coal already has been rationed for this
winter to one ton per household. Ironically, however,
Germany is required by the international authority for
the Ruhr to meet certain coal export quotas, while at
the same time it must import higher-cost coal from the
United States.
A s a result of the increased demand in Europe and
the lack of surplus in its coal producing areas, the deficit
in European coal needs has been estimated at 17 million
tons for the last half of 1951 and 20 million tons in the
first half of 1952. The total dollar cost would be in the
nature of $600 million. If the 11 million tons now ex­
pected from Poland and Czechoslovakia for 1951 are
not forthcoming, Western Europe will be even more de­
pendent on the United States.
H ow long Europe will be importing coal from the
United States depends on economic developments with
respect to its demand for coal, the available supply, and
its ability to pay for imports.
On the demand side, the speed with which the rearma­
ment programs get under way is the important factor.
Rearmament has undoubtedly been given impetus by the
outbreak of disturbances in the Middle East and the
continued lagging of peace talks in Korea. A s to the
supply, the possibility of increasing coal mined in Eu­
rope on any large scale is remote. The Organization for
European Economic Cooperation (O E E C ) in Paris
has launched a drive to increase the coal production of
the Marshall Plan countries by 30 million tons next
year. This would fill in Western Europe’s coal deficit,
but the target may be too ambitious to attain. Other




power resources, hydro-electric power and oil, could be
used to replace coal in some fields of industry. Due to
political developments in the Middle East, oil is scarce
and threatens to become more so. Any increase in hydro­
electric power, superficially the best possible solution,
would require heavy outlays of capital and would be
a long-term project. Coal, therefore, and coal above
ground, is still the key to Europe’s industrial output.
Europe’s ability to pay for heavy coal imports from
the United States is a question mark. W ill it continue
to be supplemented by dollar aid from this country? In
the early part of this year, European countries were
paying for coal imports themselves. Then the Mutual
Defense Assistance Program financed shipments of coal
to Yugoslavia and Italy, and the Economic Coopera­
tion Administration (E C A ) has issued procurement au­
thorizations to pay for coal shipments to France, Italy,
Austria, Denmark, and Norway, and it is predicted that
Great Britain, too, will soon be receiving foreign aid dol­
lars to pay for imports of coal.
Thus, the jest of “ coals to Newcastle” has become a
serious reality not only for Great Britain but also for
the rest of Europe, which before the war was selfsufficient in coal production. This is one of the many
problems arising from rearmament. Yet, it seems prob­
able that a solution to this particular problem may be
worked out with the same cooperation which has char­
acterized American-European relations since the end of
the war. The answer lies in both increased European
production and increased imports from the United
States. In this event, Fifth District coal will continue
to move eastbound via rail, and Flampton Roads will
continue to handle its currently abnormal volume of
outbound coal cargoes.

— Through the courtesy of the League of Virginia Counties

A close-up of the multiple conveyor system on the C. & O.
pier 14 at Newport News.

i 4 K

D ecem ber 1951

Fifth District Banking Developments
In the Second Half of 1951 Lending Has Slowed Down, but Deposits Are
at New Peak Levels
Despite the near cessation of loan expansion, Fifth
and banking developments in the second
District member bank deposits have risen sharply since
half of 1951 have taken some unexpected and even
paradoxical turns. In the Fifth District, member bank midyear, and at $6.3 billion are substantially above the
record peak of year end 1950. Many factors contributed
loans leveled off, and holdings of Governments increased
to the slowdown in lending— reduced liquidity of banks,
sharply, in contrast to national trends. The National
Voluntary Credit Restrain, uncertainty as to future
Production Authority announced that use of critical
economic trends, and the more attractive yields on Gov­
materials will have to be substantially curtailed in the
ernment securities.
near future, while consumer and real estate credit con­
Control of consumer credit seemed to contribute to a
trols were eased by Congress. The Treasury effected
great extent to the slow-down in this type of lending
refinancing and new borrowing requirements through
through the first quarter, 1951. Regulation W , even
th issue of bills and certificates of indebtedness; its new
with the easier terms now prevailing, undoubtedly serves
tax anticipation bills produced a novel “ kink” in the
as a restraining factor in some degree. Another im­
pattern of short-term notes. Taxes were increased again
portant factor in the consumer loan field is the more
to bring anticipated yields to the highest figures in his­
cautious approach of individuals in their purchases.
tory. Mutual savings banks and savings and loan asso­
In the real estate field, even under the earlier more
ciations have, for the first time, been subjected to Fed­
stringent controls, conventional loans of banks on low
eral incom e taxation.
and medium-priced housing were not affected by selec­
Loans Show Little Change
tive controls, as state and Federal banking regulations
Perhaps the most interesting development in Fifth
are in general more stringent than the terms permitted
District banking since June 30 has been the virtual ces­
under Regulation X . The tightening of terms required
sation of loan expansion at a time when member bank
on F H A and V A loans may have in some cases con­
loans usually show a considerable seasonal growth.
tributed toward the slow-down of mortgage lending by
The change in net loans of Fifth District member banks
banks in this area. Another factor was the increase in
from mid-year to October 10 was less than $1 million.
yields on Government securities, which made these types
The smallest autumn increase previously recorded in the
of loans relatively less attractive. In addition, many
post-war period was in 1948, when loans rose an esti­
banks seem reluctant to increase their mortgage hold­
mated $63 million. By contrast, loans of member banks
ings relative to other types of assets.
in the United States are estimated to have risen by al­
Near cessation of net new business lending in the
most 2% in the third quarter of this year.
District has been the most important factor contributing
Particularly worthy of note has been the behavior of
toward the standstill in total lending. Coincident with
specific categories of loans. Real estate loans in this
the decline in the price of Government securities, the
District slowed their rapid increase more than a year
cessation of consumer scare-buying and business inven­
ago, largely because individual banks had in many cases
tory accumulation and the establishment of the V C R
built up their mortgage portfolios to desired levels. Con­
program last spring, inflationary pressures dropped off
sumer loans, after the imposition of Regulation W late
sharply, and price levels have remained remarkably
in 1950, leveled off, and have shown little change since
stable since that time. Inventory levels were felt to be
that time. It is interesting to note that no type of in­
high and buying to increase inventories decreased sharp­
stallment loan to individuals has shown a net change of
ly. Consequently, the demand for funds to carry larger
more than $1 million from the level of ^ear end 1950.
inventories also fell off substantially.
Increases in loans to individuals since then have been
Holdings of Governments Are Up Substantially
in single payment loans to individuals, largely loans of
W ith bank loans at a standstill, creation of credit by
$3,000 and over, and these, in many cases, have been for
Fifth District member banks has been channeled into
business purposes.
the purchase of Government securities. From mid-year
Commercial and industrial loans, prime faptor in the
through October 10, Fifth District member bank hold­
unparalleled expansion of loans from m id-1950- through
ings of Governments showed their most substantial in­
April 1951, showed more than a seasonal decline from
crease since the early 40’s. Holdings of Governments
April to June, and only a negligible increase (less than
had dropped by more than a third from year end 1945
1 % ) through October 10. The normal seasonal increase
through April of this year. Since then, more attractive
in business loans in this District is close to 10% for this
rates on Government securities have led to an increase
p eriod ; this therefore represents a considerable slow­
of almost 10% in holdings, which now top $2.5 billion
down in business lending activity.
onetary

M




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F e d e ra l Reserve Bank o f Richmond

WITHIN

FIFTH DISTRICT MEMBER BANKS:
...then consumer lending

First, mortgage lending.

600
400

200

0

... but deposits have reached
a new peak.

. . . and recently business
lending have fallen o f f , ...

800

8000

600

6000

400

4000
DEPOSITS

200

2000

J ________ !________ I________ I

0

1946
AMOUNTS

1948

1950

1946

1948

I9S0

IN MILLIONS OF DOLLARS

for the first time since the spring of 1950. Holdings of
Governments by all member banks in the United States
show a much smaller increase, and are estimated to have
grown by less than 2% in the third quarter.
All of the Treasury’s refinancing and new borrowing
thus far in the second half has been done on a short­
term basis. By increasing the weekly offerings of threemonth bills, total 90-day Treasury bills outstanding were
increased from $13.6 billion to $15.6 billion.
Tw o new tax anticipation bills were found so attrac­
tive that they created the novelty of a “ kink” in the
pattern of short-term interest rates. The first issue of
144-day bills maturing March 15 sold to yield 1.55%
while the 90-day bills were yielding 1.61% ; the second
issue, running 201 days and maturing June 30, yielded
1.50% as compared with 1.58% for 90-day bills. These
issues seem to be especially well fitted to the market.



They are particularly interesting to banks because the
proceeds may be deposited in tax and loan accounts. Be­
cause of this feature, not extended to other issues, banks
are willing to bid higher for these bills, thus causing a
distortion in the interest rate pattern.
The aforementioned increase in member bank hold­
ings of Governments has continued to concentrate in
short-term maturities. In the net, Fifth District mem­
ber banks almost doubled their holdings of Treasury
bills from June 30 through October 10, and increased
their holdings of certificates by 150%. Holdings of
notes fell off by about one-sixth, while bond holdings
showed relatively little change.
T axes and T a x E xem ptions
The new increase in corporate taxes from 47% to
52% on income in excess of $25,000 late in October,
and the new provision under which mutual savings

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D ecem ber 1951

banks and savings and loan associations are now sub­
ject to the regular corporate income tax, have been
made retroactive to April 1, 1951. Many banks have
been accruing taxes this year at a rate which would
take care of this latest increase.
The higher tax rate has put a further premium on
tax-exempt municipals, and purchases of non-Govern­
ment securities had increased Fifth District member
bank holdings substantially by October 10, when hold­
ings were $359 million, as compared with $320 million
a year earlier.
The corporate tax (but not the excess profits tax) is
to apply to mutual savings banks and savings and loan
associations only after reserves have been built up to
12% of deposits, and does not apply to earnings paid
out to depositors or share owners. It is not expected
that very many mutual savings banks and savings and
loan associations will be subject to this tax in the im­
mediate future, as the reserves of most of these are well
below 12%. After the 12% reserve has been established
the tax can, under the present law, be avoided by pay­
ing out earnings in dividends.
Classification of Business Loans
Sixteen large banks in the Fifth District report in
detail changes in large business loans, in cooperation
with the Voluntary Credit Restraint Committee. These
banks carry a large share of business loans in the Dis­
trict. They classify only their larger loans— lines over a
specified minimum which is not uniform between banks.
Consequently, the only definitive information furnished
by these reports is the extent to which these banks have
made new loans to customers carrying substantial lines
of credit. Due to obvious difficulties in classifying re­
payments, it is possible that they are not adequately
reflected in these data, thus causing an upward bias.
From June through mid-November classified loans at
these 16 banks showed an increase of $27.7 million,
while their total business loans rose by $8.0 million. A
further discrepancy is noted in that business loans of 51
weekly reporting member banks (including these 16
banks) showed an increase of only $2.8 million.

ASSETS A N D L IA B I L I T IE 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 millions)
Oct. 4,
Assets
Loans and investments ___________________
Loans (including overdrafts) ___________
U. S. Government obligations ___________
Other securities __________________________
Reserves, cash, and bank balances _________
Reserve with Federal Reserve Bank ____
Cash in vault ____________________________
Balances with banks ____________________
Cash items in process of collection _____
Other assets ________________________________

June 30, Oct. 10,
19501951 * 1951*

4,636
1,885
2,431
320
1,571
700
136
418
317
81

4,624
2,002
2,293
329
1,583
812
104
361
307
81

4,884
2,002
2,523
359
1,819
867
154
467
331
83

Total assets -------------------------------------------- 6,288
Liabilities
Demand deposits ------------------------------------------ 4,478
Individuals, partnerships, and corpora­
tions ------------------------------------------------------- 3,516
U. S. Government ________________________
101
States and political subdivisions _________
300
Banks -------------------------------------------------------481
Certified and officers’ checks, etc. ______
80

6,288

6,786

4,461

4,905

3,422
196
351
418
72

3,781
152
326
563
83

Time deposits ------------------------------------------------ 1,333
Individuals, partnerships, and corpora­
tions ------------------------------------------------------- 1,250
U. S. Government and Postal Savings __
31
States and political subdivisions _________
50
Banks -------------------------------------------------------2

1,343

1,380

1,231
35
60
18

1,262
42
59
17

Total deposits _______________________________ 5,811
Borrowings _________________________________
10
Other liabilities ____________________________
38

5,804
4
42

6,285
4
45

Total liabilities _________________________ 5,859
Total capital accounts _________________
429

5,849
438

6,334
452

Total liabilities and capital accounts__ 6,288
Demand deposits adjusted ________ ________ 3,580
Number of banks _________________ ____ _____
477

Although the limited coverage of these classified loans
must be kept in mind, it is interesting to note changes
in classified loans reported by these 16 banks since last
June. Loans to commodity dealers, which typically in­
crease substantially in the fall as a normal part of financ­
ing the movement of crops, accounted for virtually all
of the June-November increase in classified loans in the
Fifth District. The only other business group increasing
its borrowing by nearly the amount that commodity
dealers did was food, liquor, and tobacco manufacturers.
Loans to textile, leather, and apparel dealers showed a
sizeable decline, as did loans to metal and metal product
manufacturers. Classified according to purpose of loan,
virtually all of the increase was in loans for non­



defense purposes. Loans for defense supporting activi­
ties showed a small increase from June 27 to October 10,
but fell off slightly by mid-November. Defense loans
declined from midyear through the middle of November.
A notable contrast exists between trends in types of
classified business loans reported in the Fifth District
and in the United States. Total business lending in the
United States has been increasing at a much more
rapid rate than in the Fifth District. Loans to com ­
modity dealers and to food, liquor, and tobacco manu­
facturers, while important in the national picture, have
not accounted for nearly as large a share of the total
increase in classified loans as in the Fifth District.
Equally important in new loans on the national level
have been loans to metal and metal products manufac
turers (which declined in the Fifth District) and loans
to public utilities. The most outstanding contrast ap­
pears when loans are classified according to purpose.
Defense loans have shown a net decline in the District,
but have accounted for more than a sixth of the total
increase in classified loans in the nation since midyear.
W hile loans for defense supporting activities have ac­
counted for less than a tenth of the increase in classified
loans in the District, more than a fourth of the increase
in the nation was in this type of loans. Loans for non­
defense purposes, accounting for virtually all of the in­
crease in loans in the District, represent only slightly
more than half of the increase for the United States.

6,288
3,540
475

6,786
3,859
476

Data may not add to totals because of rounding.
* Preliminary.

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F e d e ra l Reserve Bank of Richmond

FIFTH DISTRICT NEWSBR/EFS
TRADE

INDUSTRY

FINANCE

GOVERNMENT

CURRENT DEVELOPMENTS I N —
0

Complementary Growth of Chemicals and Textiles
Paces Industrial Expansion in Fifth District
One of the more interesting reports received recently
is that Celanese Corporation may establish a southern
headquarters in Charlotte involving the construction of
a $4 million building on a 100-acre site. If this plan
materializes and Celanese transfers part of its adminis­
trative and sales force and laboratory staff from its
New York office, the move will further bolster the claim
of this area to being the synthetic fiber center of the
nation.
Although Celanese Corporation’s $50 million fiber
production plant in Rock Hill, S. C., has been in opera­
tion only three years, it has announced that its capacity
will be doubled and its fiber output diversified at a cost
that may approximate the original outlay. Another Dis­
trict plant now being enlarged under this company’s
expansion program is the giant fiber production plant
near Narrows, Va.
One of the world’s newest synthetic fibers, Orion,
will make its initial commercial appearance in staple
form in the new du Pont plant now under construction
in Camden, S. C. This unit, scheduled for completion
next spring, adjoins the Orion filament yarn plant which
commenced operation in July 1950. The Fifth Dis­
trict, thus far, appears to have “ exclusive rights” to
the newest form of the synthetic fiber inasmuch as Orion
staple is being produced in developmental amounts at a
pilot plant in W aynesboro, Va.
Another “first” for the District will be re­
corded when the du Pont plant at Kinston,
N. C., begins commercial production of another
new miracle fiber, Dacron, in both continuous
filament and staple form. Ground was broken
for this $32 million plant last April, and the con­
struction schedule calls for production to begin
in 1953. Estimates are that the Kinston plant
will produce more than 12 million pounds of
Dacron polyester yarn and 25 million pounds
of staple annually.
November marked the 10th anniversary of du Pont’s
nylon plant at Martinsville, Va. This plant, which has
more than doubled the acreage of its original site, will
employ about 3,200 workers when the newest addition
is completed around the end of this year. Its annual



$

payroll of almost $11 million is estimated to provide
between one-fourth and one-third of the personal in­
come of the entire county in which this plant is located.
An interesting investment, in view of the cur­
rent oil difficulties in the Middle East, is the
pilot plant being built by Union Carbide and
Carbon at Institute, W . Va., for developmental
work on synthetic fuels. This plant, estimated
to cost about $11 million, will be the only one
of its kind in the country and is designed to
use various types of coal in developing methods
of commercial production of critical chemicals
and synthetic petroleum by the hydrogenation
of coal. This company will also build at In­
stitute a $5 million plant for the manufacture of
Allethrin, a synthetic insecticide for essential
civilian and military purposes.
In Charlotte, N. C., it has been announced that the
Reichhold Chemical Co. is spending $2 million to en­
large its plant for the production of chemicals for the
textile and plywood industries.
Indicative of the modern trend of locating industrial
plants in rural areas is the new factory of BrunswickBalke-Collender Co. at Marion, Va. This 330,000 sq. ft.
plant for the production of reinforced plastic parts is
scheduled to go into operation during December.
Other additions to the District’s textile industry now
under construction include the follow in g: a million dol­
lar synthetic sewing thread spinning plant now nearing
completion by Belding-Hemmingway near H enderson­
ville, N. C .; a $3 million nylon hosiery knitting mill
being built by Berkshire Mills at Andrews, N. C .; the
$4 million Hatch mill of Deering-Milliken at Columbus,
N. C., for the production of fancy w oolens; and a $2 mil­
lion rayon weaving plant of Peerless Mills at Belton,
S. C. Designed in the modern industrial style of onestory buildings, the large cotton mill and bleachery now
under construction by Utica & Mohawk Cotton Mills
near Clemson, S. C., will permit completely integrated
operations from raw materials to finished products. Cost
data are not available, but the plant will have about
550,000 sq. ft.
Tools for W ar and Peace
A very interesting addition to the industrial structure
of the Fifth District may materialize in the near future
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D ecem ber 1951

according to a report in the November 17 issue of Busi­
ness W eek. This source states that negotiations for a
1,300-acre site at Asheville, N. C., for the location of the
first plant of Oerlikon Tool & Arms Corp. of America
are reaching the final stages. The new company, a sub­
sidiary of a Swiss armament company called Oerlikon,
will manufacture explosives, small and medium weapons,
and, in peacetime, machine tools, electronic equipment,
and business machines.

15 more of its modern coal-burning steam switching
locomotives involving outlays of about $1.5 million. At
present, the Roanoke shops are working on six new
heavy-duty freight engines and a large number of 70ton hoppers.
The C & O Ry. is spending over $300,000 for con­
struction of a 600-car storage yard at its N ew port N ew s
docks. The additional facilities for coal and merchan­
dise exports will be completed next February.

Armament-producing industries in W est Vir­
ginia will be considerably augmented by the
projected construction at Point Pleasant of a
huge U. S. Army plant for the manufacture of
gun barrels. The $32 million installation will
be erected on the site of the W est Virginia Ordi­
nance Works.
A million-dollar tool plant is under construction at
Hampstead, Md., by Black & Decker Mfg. Co. The
company, largest manufacturer of portable electric tools
in the world, expects to occupy the new quarters next
spring.
New Trade and Distribution Facilities
W . T. Grant has opened to N orfolk shoppers a new $1
million store. The four-story building has 65,000 sq. ft.
of merchandising space and is one of the ten largest
stores in the Grant chain. Another retail outlet in the
Old Dominion is planned by W oodw ard & Lothrop for
location in Alexandria. The two-story building and
parking lot is scheduled to open next fall.
A new $500,000 steel and aluminum distribut­
ing plant has been opened by Hill-Chase Steel
Co. in Baltimore. The new 40,000 sq. ft. build­
ing is almost double the size of the original
warehouse. Another distributing facility in the
Baltimore area is planned by Alexander Smith &
Sons Carpet Co. in the form of a $250,000 of­
fice, showroom, and warehouse.
Additional textile storage facilities are being con­
structed by Spring Mills, Lancaster, S. C., at its Grace
plant. The three-story, 120,000 sq. ft. addition is ex­
pected to be completed by next spring.
Manchester Board & Paper Co. is building a $100,000
waste-paper storage unit in Richmond that will increase
its storage capacity by 30% . The steel and concrete
structure is scheduled to be completed by next April.
“ . . . On the Land and in the Air”
The Norfolk & Western has placed an order with the
Virginia Bridge Co. of Roanoke for 1,000 70-ton, all­
purpose gondola cars costing about $6.5 million. In its
own Roanoke shops, Norfolk & Western plans to build



The Carolina Coach Co., affiliate of National
Trailways, has acquired a site in Richmond for
$135,700 on which it plans to erect a bus termi­
nal that will greatly enlarge the present center
and services. The Gary Steel Products Corp.,
makers of steel plate products, will open a fac­
tory in Rocky Mount, N. C. for the manufac­
ture of truck and trailer bodies. Operations are
expected to begin early next year and employ
about 150 workers.
The Glenn L. Martin Co. is moving back into the
Signal Depot’s plant in Baltimore, used in W orld W ar
II for construction of B-26 Marauder bombers. In ad­
dition to the 200,000 sq. ft. of floor space the aircraft
company is now using in this building, expanding de­
fense orders will require it to take over another 250,000
sq. ft. by year end; by next summer almost 1.5 million
sq. ft. of floor area will be utilized by the company in
this plant which now employs about 2,000 workers.
Martin is also expanding production space at its Middle
R iver plant by over 1.5 million sq. ft. and its storage
area in Baltimore by more than 220,000 sq. ft. at three
different locations in the city.
The Impact of Rearmament on Capital Outlays
In order to accelerate expansion of productive facili­
ties in those sectors of the economy where it is most
needed for the defense program, certificates of necessity
are issued by the Defense Production Administration.
These certificates permit rapid tax amortization of the
new facilities by authorizing the holders to deduct from
taxable income 40% to 100% of the cost during the
next five-year period. The first certificates were issued
October 30, 1950; through November 5, 1951, authori­
zations have been granted for construction of facilities
essential to the defense effort totaling over $10 billion.
O f this amount, almost $500 million or 4.8% repre­
sented proposed investment in the Fifth District. This
is a relatively small share of the national total since on
the basis of number of production workers employed
in manufacturing the District portion would approxi­
mate 8.5% . The actual data are primarily a consequence
of the relative unimportance of heavy industry in this
five-state area.

i 9Y

F e d e ra l R eserve Bank of Richmond

Business Conditions And Prospects
business situation in the Fifth District during
October and the first half of November continued to
show mixed trends. Manufacturing output on balance
moved toward lower levels, while trade and construction
continued to improve. Loss of employment in industries
manufacturing consumers’ goods was a little more than
offset by rises in service industry and construction em­
ployment. Despite the operating setbacks that have oc­
curred in the District since June, over-all manufacturing
employment is now within 4% of its wartime peak in
1943.
The November 1 crop report reduced the estimated
cotton crop to 15,771,000 bales, a sharp and unexpected
drop of 1,160,000 bales, or 7 % . The Fifth District crop
estimate was reduced 46,000 bales, or 3 % , in the same
period. This reduction in the cotton crop changes the
Fifth District business situation considerably. Domestic
mill consumption of cotton in the first quarter of the crop
year got off to a poor start, poor enough to indicate an­
nual consumption of no more than 9.5 million bales.
Even so total requirements, including exports, will prob­
ably leave a carry-over of considerably less than 3 mil­
lion bales. Largely as a consequence of this situation
combined with the holding movement, the price of cotton
jumped above 43 cents a pound early in November, thus
recovering most of the sharp price decline from July to
September. As yet there has been little expansion in de­
mand for goods and yarns. Prices of goods have failed
to follow cotton prices, but yarns have taken a substan­
tial jump. Mills were doing little better than breaking
even before the latest rise in cotton prices took place,
and, since demand for goods and yarns has shown little
improvement, the current prospect points to further cur­
tailment of mill operations to avoid operating losses. It
is difficult to envision mill operations continuing for any
period of time at current low levels, particularly when
the offtake at the retail level continues in good and im­
proving volume.

T

h e

Banking
Aggregate expenditures in the District as represented
by bank debits established a new high level in October,
gaining 1% over September, on an adjusted basis, and
running 5% ahead of a year ago. Loans at the weekly
reporting banks have shown a belated seasonal rise,
which continued through October, with commercial
loans accounting for the bulk of the increase. Commer­
cial loans, however, have failed early in November to
carry through with the normal seasonal upsurge, due
mainly to a failure of textile and apparel industries loans
to follow through when food industries and commodity
dealers reached their seasonal peaks. Trade loans have
shown moderate expansion in recent weeks, but even
these lack normal vigor at this time of the year.
Demand deposits of weekly reporting banks continue



in an upward trend, with gains being particularly
marked in Washington, Richmond, and Roanoke. Time
deposits, which had risen slightly from May through
October, declined moderately in November. Time de­
posits have been showing an upward trend in Richmond,
Lynchburg, and Roanoke; a downward trend in Balti­
more, Charlotte, and Charleston, W est V irgin ia; and no
clearly defined trend in other cities.
B itum inous Coal
Bituminous coal production rose 5% , after seasonal
adjustment, from September but failed by 4% to equal
the level of a year ago. The employment level in bitumi­
nous mines of this District has been trending downward
for three years while production has been increasing
which reflects the improved productivity of greater
mechanization. Domestic consumption of bituminous
coal for September was running about 2 million tons
under a year ago. This has been offset by expansion of
the rising export demand. Overseas shipments through
Hampton Roads ports alone have totaled over 20 mil­
lion tons in the first nine months of this year, compared
with only 1 million tons a year ago and with less than
16 million tons in the peak year 1947. Continuation of
this export pace, owing to the recurrence of dollar ex­
change shortages in France and England, is contingent
on funds supplied by the United States for these pur­
chases.
Trade
Department store sales, after seasonal correction, rose
2% from September to October to a level 7% above a
year ago and stocks dropped 2% in October from the
previous month but continued 4% ahead of October
1950. District department store sales over the past year
have been erratic, but the general trend is upward and
has been moving at an annual rate of about 5% .
Furniture store sales held up well in October, havingbeen within 1% of the September level, on an adjusted
basis, and 8% ahead of a year ago. A gain in instal­
ment sales nearly offset a reduction in cash sales during
the month. Collections of accounts receivable continued
to improve, while inventories rose 1% for the first gain
since February. Sales of household appliance stores in
October rose 25% above the September level to within
10% of a year ago.
New passenger automobile registrations in September
were within 1% of the August level and, while they
were 24% under September 1950, they compare favor­
ably with all previous years. Commercial car registra­
tions gained 8% from August to September and were
only 5% under a year ago.
Sales trends in the wholesale trades were mixed, with
automotive supplies, drugs, electrical goods, and tobacco
increasing, and dry goods, groceries, hardware, indus­
trial supplies, and paper declining from September to

D ecem ber 1951

jfi/A C s a ^

demptions of this denomination rising rapidly through
1945 and rising more gradually since that time. Sales
of the $1,000 denomination had exceeded redemptions
in all previous months until March of 1950 but since
March of 1950 sales have exceeded redemptions only
once.

October, after seasonal correction. All lines except dry
goods and automotive supplies were higher in October
than a year ago but, in the case of dry goods, October a
year ago was a very high figure, with current sales in
this line being exceeded in only five previous months of
record.

These Savings Bond trends are significant. They
indicate that the holders of the two smallest bonds are
increasing their purchases and that purchases may even
overtake redemptions. In the denominations of $100
and above the evidence seems clear that, in periods of
substantial retail trade rises, redemptions did not in­
crease in proportion but rather the new bond sales fell,
which would indicate a preferred utilization of income
for goods and services over savings. In the case of the
$500 and $1,000 denominations, other investment out­
lets seem to have been preferred to Savings Bonds.

Savings B onds
Redemptions are still running ahead of Savings Bond
sales in this District, but the net redemption figure
was reduced substantially in October when sales rose
markedly and redemptions showed little change. O cto­
ber net redemptions of $5.6 million compare with a fig­
ure of $9.7 million in September. It is interesting to
note that there has been an upward trend since 1947 in
sales of Series E Savings Bonds in this District in the
$25 and $50 denominations, while redemptions have
trended downward in the $25 denomination and held
about flat in the $50 denomination. There has been a
downward trend in sales of $100 bonds, with redemp­
tions remaining about flat. Sales of the $200 denomina­
tion have been moving downward during 1950 and 1951,
with redemptions rising sharply to the spring of 1951
and since turning downward. Sales of the $500 denomi­
nation have been downward since 1944. Redemptions,
which rose rather sharply to 1946, have held about
steady since that time. The sales trend of the $1,000
denomination has been downward since 1943, with re­

In spite of the drop in wholesale prices and the reduc­
tion in manufacturing activity for some months past, the
cost of living in Baltimore, Maryland, the only District
city available for September, showed a rise of fourtenths of 1 per cent from June and 5 ^ % from Septem­
ber 1950. This is an all-time high peak and is probably
indicative of changes occurring in other cities of the Dis­
trict. The increased cost of living is an important factor
in tempering the demand for goods and services at the
present time.

D E B IT S TO I N D IV ID U A L AC C O U N TS
Oct.
1951

(000 omitted)
Oct.
1950

Dist. of Columbia
Washington
$ 1,199,192
Maryland
1,321,338
Baltimore
28,440
Cumberland
24,292
Frederick
33,026
Hagerstown
North Carolina
61,042
Asheville
370,749
Charlotte
122,247
Durham
109,798
Greensboro
59,618
Kinston
184,246
Raleigh
45,333
Wilmington
110,889
Wilson
Winston-Salem
204,507
South Carolina
84,140
Charleston
138,670
Columbia
112,818
Greenville
84,428
Spartanburg
Virginia
28,463
Charlottesville
54,968
Danville
46,857
Lynchburg
46,864
Newport News
232,421
Norfolk
26,669
Portsmouth
713,126
Richmond
122,745
Roanoke
West Virginia
49,719
Bluefield
165,708
Charleston
Clarksburg
36,272
Huntington
68,811
34,641
Parkersburg
District Totals
$ 5,922,037




$ 1,034,945

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
(000 Omitted)
10 Months
1950

10 Months
1951
$ 10,703,824

$

ITEMS

8,695,022

1,243,477
25,831
18,771
31,775

12,362,212
256,771
213,170
322,992
594,613
3,391,739
1,138,006
1,008,287
261,771
1,680,678
429,981
324,620
1,692,899
754,632
1,271,079
1,100,308
684,737

629,200
1,057,913
913,673
527,890

26,526
75,498
47,281
34,019
201,264
22,415
612,243
109,479

271,918
326,549
456,594
424,947
2,184,019
249,575
5,752,478
1,148,178

241,188
317,125
401,061
303,264
2,018,867
214,691
5,058,210
1,003,679

44,079
146,929
33,280
65,769
29,550
$ 5,415,314

470,782
1,522,073

410,377
1,307,206
302,177
585,800
267,745
$ 44,743,068

341,881

662,642
310,537
$ 52,314,492

+
—
+
+
+
+
—
+
+
+
+
—
+
+
+
+

4,642
3,329
1,630
6,377
51,424
35,100
1,918
5,948
5,123
7,171
31,998
5,023
7,343
4,058
1,296
95,738

+ 76,524
+ 47,307
+
147
+ 31,463
+ 142,527
+ 160,281
+ 105,385
— 14,577
— 130,216
+ 21,654
+ 12,750
+ 28,511
+ 14,059
+ 108,387
—
150
+ 382,608

Total Demand Deposits ________ 3,344,330
Deposits of Individuals _______ 2,467,374
Deposits of U. S. Government .
81,250
Deposits of State & Loc. Gov. ..
167,275
Deposits of Banks ____________
570,137*
Certified & Officers’ Checks ...
58,294
Total Time Deposits __________
637,841
566,031
Deposits of Individuals _______
Other Time Deposits _________
71,810
Liabilities for Borrowed Money .
27,500
All Other Liabilities __________
31,763
252,821
Capital Accounts _______________
Total Liabilities ______________ $4,294,255

511,641
2,950,142
1,084,609
864,154
216,446
1,420,111
354,326
284,325
1,469,378

72,354
118,541
106,404
72,201

Change in Amount from
Oct. 17,
Nov. 15,
1951
1950

Total Loans _____________________ $1,179,948**
Business and Agriculture
568,271
Real Estate Loans __________
236,156
All Other Loans ______________
390,094
Total Security Holdings ________ 1,845,123
U. S. Treasury Bills __________
277,586
U. S. Treasury Certificates
127,583
U. S. Treasury Notes _________
316,429
U. S. Treasury Bonds ________
930,559
Other Bonds, Stocks & Secur.
192,966
Cash Items in Process of Col. ....
335,936
Due from Banks _______________
213,210*
Currency and Coin _____________
84,170
Reserve with F. R. Bank ______
581,133
Other Assets ____________________
54,735
Total Assets _________________ 4,294,255

10,640,534
229,981
180,147
282,186

56,423
377,754
170,731
105,033
44,747
177,245
39,948
76,831
193,971

Nov. 14,
1951

+
+
—
—
+
—
+
—
+
+
+
+
+

63,267
47,946
5,839
960
24,542
2,440
3,673
683
4,356
27,500
528
770
95,738

+ 314,443
+211,093
+
2,660
+ 24,744
+ 72,898
+
3,048
+ 28,831
+
3,158
+ 25,673
+ 22,500
+
5,751
+ 11,083
+ 382,608

* Net figures, reciprocal balances being eliminated.
** Less losses for bad debts.

iu y

F e d e ra l R eserve Bank of Richmond

S E L E C T E D F IF T H D IST R IC T B U SIN E S S IN D E X E S
A V E R A G E D A IL Y

1935-39 = 100— S E A S O N A L L Y AD JU STE D
Oct.
1951

Aug.
1951

185
430
153
420
50
235
149
328

329

156
294

187
423
160
571
45
250
153
350
352
156
322

% Change—-Latest Month

Oct.
1950

433
161
391
42
244
145
337

Automobile Registration1_______________________ _____ _ _____
_
Bank Debits--------------------------------------------------------------------------------Bituminous Coal Production----------------- ------------- ----------------------- _____________
Construction Contracts Awarded---------------------------------------------- _____________
Business Failures— No.................................................................... .......____________
Cigarette Production----- ------------- ----------------------------------------------_____________
Cotton Spindle Hours------------------ ---------------------------------- -------------____________
Department Store Sales----------------------- -------------------------------------- ___ _________
Electric Power Production .............. .................. ........ ............ ........
Employment— Manufacturing Industries1--------------------------------Life Insurance Sales................................................................................_____________

Sept.
1951

259
411
166
462
68
207
163
313
327
152
279

Prev. Mo.

+

1
1
5
7
16
4
3
3

+

0
12

+
+
—
—

+
—

Year Ago

+

24
5
3
15
38
18
11
8

+
+

3
18

+
—
—
—
+
—

1Not seasonally adjusted.
Back figures available on request.

W H O LESALE TRADE
Sales in
Oct. 1951
compared with
LINES
Oct.
Sept.
19K0
19R1
— 16
+27
Auto supplies (9) -------------+10
Electrical goods (6) -------------- ____ + 5
+26
-------------------- ____ + 8
Hardware (13)
+12
Industrial supplies (6) --------- ____ + 1 9
.... + 1 0
+ 6
Drugs & sundries (13) --------+ 6
Dry goods (12) -------------------- ____ — 3
[-20
+12
Groceries (48) -----------------------15
+14
Paper & products (6) -----------21
+12
Tobacco & products (9) -------- 3
+17
Miscellaneous (87) ----------------- 8
+14
District Totals (209) ......—

B U IL D IN G P E R M IT F IG U R ES
Stocks on
Oct. 31, 1951
compared with
Oct. 31 Sept. 30
1950
1951
— 2
+ 12
— 25
+ 14
0
+ 26
— 5
+ 41
0
+
9
— 14
+ io
+ 7
+
4
+
+
+

Oct.
1951
Baltimore
Cumberland
Frederick
Hagerstown
Salisbury

Danville
Lynchburg
Newport News
Norfolk
Petersburg
Portsmouth
Richmond
Roanoke

A

R E T A IL F U R N IT U R E SAL ES

Maryland ( 7 )
___
District of Columbia (7)
Virginia (18)
________
West Virginia (9)
North Carolina (15)
_
South Carolina (6)
District ( 62)
_
IN D IV ID U AL CITIES
Baltimore (7)
—
Washington, D. C. (7) --------Richmond Vsu (6)
_______
Charleston W* Vs-# (3)

+
+
+
+

Charleston
Clarksburg
Huntington

^

Asheville
Charlotte
Durham
Greensboro
High Point
Raleigh
Rocky Mount
Salisbury
W inston-Salem

3
-t- 1
— 12
0

16
14
3
22

Charleston
Columbia
Greenville
Spartanburg

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)




$ 73,184,255
2,031,253
2,060,855
3,855,620
1,450,558

$ 70,393,880
1,027,750
1,780,366
3,866,673
1,585,830

1,078,800
220,034
269,194
824,000
177,745
233,565
2,673,695
652,787

153,772
184,797
296,597
2,123,960
219,173
210,545
1,567,792
1,665,281

3,406,621
2,717,649
1,594,147
21,064,971
2,990,457
5,071,087
24,742,673
14,711,643

2,877,350
5,662,397
1,699,698
13,833,838
4,952,042
3,721,491
25,178,158
15,676,082

555,341
68,932
211,410

1,181,314
211,700
720,727

5,494,301
1,098,053
7,202,112

12,134,812
1,559,248
6,727,994

208,210
1,216,261
331,895
626,067
203,210
484,055
279,457
63,340
391,652

218,210
2,107,622
1,806,663
856,325
242,426
1,835,685
116,825
1,120,100
1,299,313

6,274,244
18,538,096
7,335,058
7,483,314
2,870,569
10,426,754
3,559,532
1,072,038
13,607,895

3,868,702
24,658,475
15,750,530
14,637,299
4,005,956
14,749,050
3,685,163
3,704,087
10,703,064

173,823
617,360
456,070
173,807

474,948
1,130,063
506,210
1,048,468

1,558,662
11,026,295
8,677,749
2,434,215

2,735,078
9,430,030
9,908,574
5,747,393

South Carolina

__

Balt.
Rich.
Sales, Oct. ’51 vs. Oct. ’50 — + 7.4 + 17.7
Sales, 10 Mos. ’51 vs. 10 Mos.
’50 _________________________ + 5.7 + 5.4
Stocks, Oct. 30, ’51 vs. ’50 — + 3.3 + 1.8
Orders outstanding,
Oct. 30, ’51 vs. ’50 ________ — 21.5 — 27.5
Current receivables Oct. 1
49.8
28.2
C O llc L L c Cl 1X1 V/C
O ---------X
Instalment receivables Oct. 1
15.9
17.8
collected in Oct. ’51 — .....
Va.
Md,
D.C.
Sales, Oct. ’51 vs. ’50 +17.2 + 14.2 + 11.1
Sales, 10 Mos. ’51 vs.
10 Mos. ’50 ________ + 5.1 + 3.0 + 5.8

$ 5,396,460
103,850
103,375
614,997
34,599

North Carolina

Number of reporting firms in parentheses.
♦

$ 7,145,835
186,689
343,975
193,241
79,355

West Virginia

Percentage comparison of sales
in periods named with sales in
same periods in 1950
10 Mos. 1951
Oct. 1951
3
+ 16
+
1
+ 14
6
+
2
1
+ 28
- 7
+ 17
- 11
+
8
- 3
+ 14

STATES

10 Months
1950

Virginia

Number of reporting firms in parentheses.
Source: Department of Commerce.
A

10 Months
1951

Maryland

— 2
— 4
— 4

11
12
14

Oct.
1950

Wash.
+ 1 4 .2
+
+

3.0
9.7

Other District
Cities
Total
+ 11.6 + 13.3
+
+

3.1
1.4

+
+

Dist. of Columbia
Washington
District Totals

3.9
3.7

— 24.4

— 25.0
47.4

18.7
S.C.
+ 11.3

— 0.9

+

54,745,177

61,337,344

$322,285,853

$357,598,354

42.5

21.2
N.C.
+ 4.6

7,650,458
$35,202,255

— 24.9

44.2

3,637,505
$23,777,580

19.7
W .V a.
+ 1 6 .8
+

5.4

'
—

3.9

-1121-

■ -V
o


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102