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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 h e -3 Y 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 ^ 5y 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 i 6y 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. <7 y 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 'I 8 y 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