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FEDERAL RESERVE BANK OF RICHM OND



D E C E M B E R 1959

In th is p la n t the use o f a co n ve yo r system fo r sto ra g e o f fin ish e d

beds sim p lifie s the ta s k

o f asse m b lin g

an

o rd e r fo r

sh ip m e n t.

Seventy Years of Furniture
North Carolina began its rise as a furniture
manufacturing state partly because of the example
set by a Union soldier from Vermont. Captain YV.
H. Snow observed the hardwood timber around
High Point during the war and came back after­
wards to manufacture it into blocks and bobbins
for New England textile mills. In 1888, 16
years after he had brought North Carolina’s first
jand saw into the state, factory production of furni­
ture began in High Point. Encouraged by Snow’s
success in woodworking, local men organized a
furniture company, with capital of $9,000, and
began to manufacture cheap oak furniture from
local timber. The raw timber was readily avail­
able from nearby forests.
Some people claim that this was the first factory
production of furniture in North Carolina. Others
;laim that factory furniture manufacturing in the
state was first carried on by a Mebane woodwork­
ing firm, organized in 1881 by two brothers with
i small loan from a family friend and $275 saved
from their earnings as telegraph operators. This
tirm soon began to specialize in furniture and sold
its early bedroom suites for $9.
2




FROM THIS ACORN
From this small beginning
furniture manufacturing has grown over the past
70 years into one of the leading industries of the
state. At the time of the 1954 C e n su s o f M a n u ­
fa c tu re s 8%> of North Carolina’s manufacturing
production workers were employed in furniture
making. Over the same period North Carolina’s
share of the United States total of furniture manu­
facturing production workers increased from noth­
ing to just under 11%, a share second only to that
of New York in 1954. In the same year North
Carolina ranked fourth among leading furniture
producing states in the value added by manufac­
ture. The discrepancy between its rank with re­
spect to production workers and its rank with re­
spect to value added by manufacture reflects, in
part at least, North Carolina’s specialization in the
production of wood household furniture, not up­
holstered. At the time of the 1954 census 68% of
North Carolina’s furniture workers, compared
with 38% of United States furniture production
workers, were employed in production of wood
household furniture, not upholstered. This particu­
lar kind of furniture manufacture requires more la­

bor per dollar of value added than any other type.
If increases in the number of wage earners em­
ployed by furniture factories are taken as a meas­
ure of growth, furniture manufacturing grew most
rapidly in absolute terms in North Carolina dur­
ing the same three periods the national industry
was growing most rapidly: the World W ar II and
immediate postwar years, the period 1920-29, and
1900-09. North Carolina, however, increased its
rela tive share of the national furniture manufac­
turing employment total most rapidly during the
depression years. The number of wage earners
employed in making furniture in North Carolina
actually increased during the 1930’s, while furni­
ture wage earners for the United States and most
other leading furniture states wrere declining.
One explanation for this striking behavior of
furniture manufacturing in North Carolina during
the depression was the possible preference con­
sumers had for cheap furniture in that period.
North Carolina manufacturers had begun to up­
grade their furniture products only in the 1920’s.
WITH THIS TIM BER, LABOR, AND CAPITAL At the
time furniture manufacturing began in North
Carolina, probably the greatest advantage pro­
ducers there had was the abundant supply of hard­
wood timber. This advantage gradually diminished,
as indicated by the increased reliance of North
Carolina furniture producers upon out-of-state
lumber. In 1909 an estimated 8% of the lumber
used in North Carolina furniture plants came from
out-of-state; within the next ten years this figure
increased to 31%, and by the 1950’s a little more
than half of the lumber used in North Carolina
furniture plants came from out-of-state.
Average furniture manufacturing wage rates for
similar jobs generally have been lower in North
Carolina than in non-southern furniture manu­
facturing states, according to the Bureau of Labor
Statistics surveys. It is questionable that the lower
wage rates provided the North Carolina manufac­
turer with any competitive advantage at the end
of the 19th century. Nearly every report of the
early period notes that the available workers were
unskilled; one firm reported that for some jobs it
brought in skilled workers from outside areas.
W ith experience the labor force acquired skill, and
some manufacturers in the state claim that any
advantage they may have now rests in large part
upon the quality of their labor force.
Apparently it was not difficult for individuals
or a small group of men to obtain capital in
amounts necessary for the establishment of a new



firm during the early period of North Carolina
furniture manufacturing. Even as late as the 1930’s
individuals with only a few hundred dollars are
reported to have started new firms and through
high profit margins and reinvestment of earnings
built up relatively large-sized firms. Most firms
have grown through reinvestment of profits and
have remained closely held family firms. Today
it is probable that a larger initial investment is
needed to enter the business, which relatively few
individuals or small groups could provide without
reliance on outside sources of financing.
IN THESE M ARKETS
One of the most impor­
tant influences favoring the growth of North Caro­
lina furniture manufacturing in every period of its
history has been access to markets. At first North
Carolina furniture manufacturers sold primarily
in the southern states, where there was a market
for their early crude, heavy products, and to some
extent in northern markets for inexpensive furni­
ture. W ith the exception of a few firms, most
North Carolina producers relied largely upon
southern markets until 1921 when falling cotton
prices reduced the region’s buying power. Forced
by this change to sell elsewhere, southern produc­
ers began to upgrade their products to meet com­
petition in the other markets. It is estimated that
by 1926 about half of southern furniture production
was sold outside of the South and by 1931 about
two-thirds.
When southern furniture producers sought to
widen their markets in the 1920’s, the Southern
Railroad provided a direct line of transportation
to the consuming centers of the northeast. Initially
rail freight rates on furniture moving out of the
southern territory were low, reflecting the carriers’
attempt to encourage utilization of empty cars re­
turning north and west after bringing into the
South fabricated goods and farm supplies from
these territories.
Over the years as these rates increased there
was a gradual shift to truck transportation; one
estimate places the current volume of furniture
shipments by truck at 95%, and many firms have
their own fleet of trucks. Less rigid packing re­
quirements of motor carriers and the quicker
delivery possible when a shipment moves directly
from the manufacturing plant to the retailer’s store
explain in part the shift to truck transportation.
Because furniture is too bulky to be sold by
salesmen with samples and too much a style prod­
uct to be purchased sight unseen, periodic shows,
frequently called “markets”, have become custom­
3

ary in wholesale market centers for the industry.
These shows are usually held in a central show­
room. At High Point, the market center for North
Carolina and other southern producers, they are
held in the Southern Furniture Exposition Build­
ing, which opened in 1921. Before World W ar II,
four shows a year, one in each season, were cus­
tomary in Chicago and Grand Rapids. When the
spring and fall shows were dropped during the war
years, the smaller retailers felt 110 loss, because
they preferred to attend the markets during Janu­
ary and July when their own businesses were slow.
Larger retailers, however, could not get delivery
on orders placed at these markets in time for their
big February and August sales. After the war
they began to visit southern furniture producers’
factory showrooms as well as their year-round ex­
hibits in the showrooms at High Point in search
of merchandise.
These visits, which were concentrated in the
latter part of April and October, gradually became
“unofficial” markets at which producers introduced
their new styles. Although attendance at these
“unofficial” markets is only about a third of that
at the January and July markets, the buyers who
come represent a national market and the volume
of sales is said to be about the same as at the for­
mal winter and summer markets, which are at­
tended largely by regional buyers.
NUTURED BY M AN AG EM EN T Some furniture in­
dustry observers attribute the growth of the in­
These stud e n ts le a rn to sh ap e lu m b er into fu rn itu re p a rts in
a w o o d w o rk in g la b o ra to ry a t N orth C a ro lin a S tate C o lleg e .

4



dustry in North Carolina to an innovating entre­
preneurial spirit, as yet unhampered by tradition,
because the North Carolina segment of the in­
dustry, even at 70 years of age, is relatively young
and willing to experiment. On the other hand,
some of the most significant innovations in the
North Carolina industry have taken the form of
joint projects, which probably resulted from tra­
ditions of cooperation gradually built up through
the years.
In the family-owned firms characteristic of
North Carolina furniture manufacturing, the entre­
preneurs typically have been natives of the state.
In many instances present entrepreneurs have in­
herited plants established by their fathers or grand­
fathers, and they frequently have ties with the
management of other furniture firms through kin­
ship or previous business association.
W hat is known about the men who have estab­
lished new firms in recent years suggests that in
many cases they have had some previous asso­
ciation with furniture manufacturing, as superin­
tendent of a plant, as a production worker, or per­
haps as a resident of a furniture manufacturing
town. In the early period of furniture production
in the state, the occupational background of men
establishing new firms apparently was more varied,
including law, dentistry, medicine, teaching, and
various kinds of business.
Although native capital and businessmen con­
tinue to control North Carolina furniture manu­
facturing for the most part, within the last 20
years there has occurred a very slight but percep­
tible growth in the number of concerns controlled
by out-of-state interests, beginning in the 1940’s
with the acquisition of several local plants by cor­
porations with headquarters in older furniture
producing states. W ithin the past ten years two
large northern manufacturers have expanded into
the state by building new plants there.
AND ITS NOTABLE DECISIONS
The decisions
management made during the 1930’s to expand
capacity and to mechanize more fully laid the
groundwork for volume production of mediumpriced and better grades of furniture after the de­
pression. Once the capacity existed, it was simple
to upgrade the product by using better styling. In
the 1930’s the application of production line
methods to woodworking was taking place on a
large scale. The new capacity built in the 1930’s
incorporated conveyors and changes in factory
layout to take account of the new methods. Another
radical change in production techniques was the

use of synthetic resin adhesives, which first ap­
peared on the American market about 1935. The
use of the new adhesives permitted faster and
stronger bonding of furniture veneers and parts,
and a better product.
Notable group projects undertaken by North
Carolina and other southern furniture producers
include the organization of the Southern Furni­
ture Manufacturers’ Association, the establishment
of an engineering curriculum in furniture manu­
facturing at North Carolina State College, and
support of a reforestation project.
The Southern Furniture Manufacturers’ Asso­
ciation, generally regarded as the strongest trade
association in furniture manufacturing, began in
1902 under the name of North Carolina Case
W orkers’ Association. In 1911 the organization
took its present name and opened its membership
to manufacturers of any kind of furniture if they
were located within the territory south of the Ohio
and east of the Mississippi Rivers. The focus of
activity in early years was on traffic problems. By
1920 the traffic activities of the association includ­
ed quoting rates between points for members,
a u d itin g freight bills, collecting “overcharge
claims” for members, representing the industry
before the Interstate Commerce Commission, and
negotiating with carriers for more favorable rules
on minimum weights, packing requirements, and
related matters. The collection and analysis of
industry statistics was begun in 1919, and since
then the association’s statistical activities have
ramified to include an analysis of nearly every
measurable factor in furniture manufacturing.
A four-year course in furniture manufacturing
and management, leading to an engineering degree,
was established at North Carolina State College
in January 1947. In December of that year the
Furniture Foundation, Incorporated, was set up
to support the program financially. The Foun­
dation includes furniture producers in North Caro­
lina and other southern states. Graduates of the
program have been hired by furniture supply in­
dustries as well as by furniture manufacturers.
Another group project, started in 1953, wras the
formation of the Furniture, Plywood, and Veneer
Council of the North Carolina Forestry Associ­
ation. Furniture, plywood, and veneer producers
joined with forestry leaders to form the Council
and a year later entered into an agreement with
Duke Power Company and the Southeastern
Forest Experiment Station of the United States
Forest Service to conduct research in the growing



S a w m illin g schools m ay red uce lu m b e r w a s te b y e n co u ra g in g
p recisio n s a w in g to fu rn itu re m a n u fa c tu re rs ' sp e c ific a tio n s.

of better quality trees and in the use of existing
low quality hardwoods. Through a variety of
programs the Council is attempting to demonstrate
to timberland owners the profitability of good
forestry practices. Sawmill training schools and
conferences have been conducted to teach small
sawmill operators to grade logs, to saw them to
get the best quality lumber, and to season the
lumber. Tree seedlings from the North Carolina
Division of Forestry nurseries have been bought
by Council members and distributed free to inter­
ested landowners; one free tree is donated by the
Council for every tree purchased by a landowner,
up to a total of 5,000 free trees per landowner.
A M IG HTY O A K IS G RO W IN G Over the years
the very early advantage North Carolina furniture
producers had in the form of abundant local timber
supplies has diminished; but other changes associ­
ated with the development of furniture manufac­
turing in North Carolina promise support for con­
tinued growth of the industry. The development
of an experienced labor force, the expansion and
modernization of capacity for mass production of
furniture, and the acquisition of a national repu­
tation for products are typical of advantages ac­
quired over the years. These advantages, together
with the possible benefits of new long range proj­
ects for training a supply of managerial personnel
and developing existing forest resources, seem to
assure the continuance of North Carolina among
the ranks of leading furniture producing states.
5

INTEREST IS A
Interest is a two-sided coin as far as John Q. Public is
concerned. One side is the interest he pays on his home,
automobile, and appliance loan. The other is the interest
income he receives from his savings deposit, life insurance,
and other similar assets. Although many people borrow more
than they lend, Mr. Public on balance is more of a lender
than he is a borrower. At the end of last year,
consumers and nonprofit institutions, such as private schools
and hospitals, held interest earning assets totaling
some $420 billion—over 2Vi times as much as the debt
on which they had to pay interest. All told, they were
lending only a shade less than all life insurance companies,
savings institutions, and commercial banks combined.
Here's the w ay consumers' and nonprofit institutions' interest
bearing assets and debts stacked up on December 31 last year:

Time Deposits and Savings Shares

$143.3 bill on

Life Insurance Savings ........ .

83.4 bill on

Pension Fund Savings .....................

64.8 bill on

U. S. Government Savings Bonds

47.7 bill on

Mortgage L o a n s.......................................

27.9 bill on

Municipal Bonds ........ ............................

25.4 bill on

U. S. Government Marketable Bonds

16.4 bill on

Corporate and Foreign Bonds ..............

9.6 bill on

Other Loans ..............................................

1.4 bill on

Total Interest Bearing Assets ....

$419.9 bill on




TWO-SIDED COIN




M ortgage L o a n s ..........................................

$112 .2 bill

Consum er Loans ......

3 7 .4 bill

Security Loans ..........

5.5 bill

O ther B ank Loans ...

2 .0 bill

M iscellaneous Loans

4 .8 bill

Total Interest Bearing D e b t .........

$ 1 6 1 .9 billion

Important differences in the industrial structures
of the states making up the Fifth Federal Reserve
District are often lost sight of because the District
is so frequently referred to as a whole. Manufac­
turing as an employer, however, is relatively more
important in some District states than in others.
Even more significant are the differences in the
kinds of manufacturing industries accounting for
the industrial activity in the various states.
June of this year appears to have been a fairly
typical full-employment month, comparatively free
of industrywide vacations and strikes. At that
time manufacturing concerns had on their payrolls
over two-fifths of total nonfarm workers in North
and South Carolina compared to slightly less than
a third of these workers in Maryland, Virginia,
and West Virginia. In the District of Columbia
manufacturing industries accounted for just 4 %
of nonfarm employment.
A M ATTER OF G EO G R A PH Y?
The nature of the
District’s manufacturing industry seemingly differs
with geographic location. In W est Virginia and

Maryland, the northernmost states, durable goods
industries accounted for three-fifths of total manu­
facturing employment in contrast to one-sixth in
South Carolina, the southernmost District state.
Virginia fell in the middle of these two extremes
with durable goods accounting for almost twofifths of manufacturing employment. North Caro­
lina, whose distribution of manufacturing indus­
tries resembled that of both its South Carolina and
Virginia neighbors, had about one-fourth of total
manufacturing employment in durable goods cate­
gories. The exception to this pattern was the Dis­
trict of Columbia with all its manufacturing work­
ers in nondurable industries.
W hat were the specific industries causing this
diversification among the states? They ran the
gamut from hard goods to soft goods, from smelt­
ing steel to manufacturing paper, from building
ships to spinning yarns, and from making bricks
to canning foods. Each state was a different story.
M ARYLAN D In Maryland two durable goods in­
dustries headed the list of manufacturing employ­
ers. The primary metals industry, principally
steelmaking, was in first place but transportation
equipment, mostly airplane construction and ship­
building, was a close second. Together these two in­
dustries employed almost one-third of the 265,000
workers on manufacturing payrolls in June. In
third and fourth positions employmentwise were
food and apparel representing more than one-fifth
of manufacturing employment. Another one-fifth
of these workers were in four industries with an

MANUFACTURING
M A K E -U P
VARIES AM ONG STATES




almost equal number of employees—fabricated
metal products, electrical machinery, printing, and
chemicals.
WEST V IR G IN IA
Surprisingly, since three-fifths
of W est Virginia’s manufacturing employment was
in durable goods industries, the nondurable chem­
ical industry had just fractionally fewer workers
on their June payrolls than did primary metals.
These industries together with stone, clay, and
glass, the third largest employer, accounted for
three-fifths of W est Virginia’s 129,000 manufac­
turing workers. Four other industries—food,
fabricated metal products, lumber, and machinery
—accounted for most of the remaining manufac­
turing employees.
Manufacturing employment in West Virginia
was centered in a relatively small number of indus­
tries as compared with Maryland, Virginia, or
North Carolina. The proportion of employment
concentrated in chemicals was four times greater
in W est Virginia than in the United States and
six times greater in stone, clay, and glass.
THE CAROLINAS
South Carolina’s industrial
structure was dominated by the textile industry
which employed 56% of its 227,000 manufacturing
workers. No other industry was near it in size.
In second and third positions, ranked by number
of workers, were the apparel and lumber industries
with 12% and 8% respectively of manufacturing
employment. Chemicals and food products each
had an additional 5%. This then is essentially a
nondurables economy centered in relatively fewer



industries than other District states.
North Carolina’s manufacturing structure—like
that of South Carolina— is dominated by the textile
industry which employed 46% of 476,000 manu­
facturing workers in June. In spite of this im­
portance of textiles, North Carolina’s manufac­
turing employment was spread among many of the
major manufacturing categories. The second and
third largest industries, by number of employees,
were two durable goods industries, furniture and
fixtures, and lumber and wrood products, with 9%
and 7% of manufacturing employment respective­
ly. Only fractionally smaller were four other in­
dustries—food, apparel, tobacco, and electrical
machinery—accounting for 23% of manufacturing
w’orkers. Although cigarettes, the major employer
in the tobacco category, had only 4% of North
Carolina’s manufacturing workers, the 19,000
workers in the state were one-half of the nation’s
workers in this industry.
V IR G IN IA
Of District states, Virginia had the
most diversified manufacturing structure with no
single industry dominant. The three largest groups
—textiles, food, and chemicals—were about equal
in size and together claimed almost two-fifths of
the 265,000 manufacturing workers in the state.
The next five industries, ranked by number of em­
ployees, were lumber, apparel, transportation
equipment, furniture, and tobacco with 36% of
manufacturing employment. Cigarette employees
on June payrolls made up about one-fourth of all
workers in this industry in the United States.
9

F I F T H district
W ith steel in production for the rest of this
year the economic atmosphere in the District has
cleared considerably. The steelworkers and most
of the coal miners idled by the strike are back at
work, swelling the flow of income and rebuilding
steel production at an unexpectedly rapid rate.
The uncertainty of midwestern ore supplies caused
by winter’s grip moving down over the Great
Lakes has no counterpart in the District’s steel
center. Ore boats have built up unprecedented
stockpiles in the Baltimore area. Major District
industries are continuing at the high levels of
activity which have been consistently reported in
recent months. At the present time the District’s
principal weaknesses seem to be appearing on the
farm scene rather than in the shops, warehouses,
or stores.
FARM INCOM E DOWN
Net farm income in the
District took a big drop in 1959, being reduced by
about 15% from the extra-good year of 1958. A
combination of poorer weather, lower prices, and
smaller government payments has cut farmers’
cash receipts by over $100 million. Another rise
in farm production expenses, a result of cultivat­
ing more land and paying higher prices for manu­
factured items, is also helping to lower net income.
Taken as a whole, North Carolina farmers are ap­
parently being hit harder than those in other states
of the District.
After analyzing prospects for individual com­
modities, U. S. Department of Agriculture special­
ists at the recent Agricultural Outlook Confer­
ence concluded that farm income in the nation
would drop still further in 1960 if normal growing
conditions prevail. They anticipate, however, that
the relative decrease will be only half as great as
that which occurred in 1959.
OUTLOOK FOR 1960 Highlights of the outlook
for major Fifth District farm products, as seen by
USDx\ analysts, are as follows:
Indications are that demand for flue-cured to­
bacco will be unchanged next year. The total of
domestic use and exports may be slightly greater
than this year’s crop, but stocks on hand at the
beginning of the 1959 harvest were still equal to



almost two years’ needs at present rates of use.
Cigarette production has been increasing, but less
tobacco is being used per cigarette and the tobacco
leaf and stem are being used more efficiently. E x­
ports are unlikely to increase because of greater
production abroad and higher domestic prices of
several export grades of tobacco leaf.
Cotton exports and domestic mill consumption
during this marketing year are expected to in­
crease enough to use about as much cotton as was
produced in 1959. Present laws permit govern­
ment support and minimum resale prices to be re­
duced by almost 2 cents per pound in 1960, and the
market price would probably follow the reduction
since the Commodity Credit Corporation still holds
large stocks of cotton.
The 1959 peanut crop is about 10% smaller
than the large crop of 1958, but is still greater than
consumption at present prices. Both 1959 and
1960 farm prices are therefore expected to remain
F arm p rices h a ve fo llo w e d d iv e rg e n t tre n d s sin ce th e K o rean
W a r . Tobacco prices rose but cotton a n d p o u ltry p rices fe ll.

1950

1952

1954

1956

1958

DISTRICT FARM INCOME
$ B il.

3 .0 -

R ealized <ro ss Income
ized G

/

2.5 -

2 Q_

Production Exp en ses

1.5 -

R e a lize d net fa rm incom e in recent y e a rs h as been squeezed
by d eclin in g g ross incom e an d risin g pro ductio n e xp e n se s.

at government loan values, which were reduced
10% in 1959.
POULTRY PRICES SHOULD IM PROVE Both broiler
and egg prices dropped to postwar lows in 1959
as production reached new highs in the face of
declining demand. USDA economists believe that
broiler producers will grow fewer broilers in the
first half of 1960 than the large numbers produced
in the spring of 1959, so the price should strength­
en during this period. If this price increase occurs,
producers are unlikely to cut back production dur­
ing the second half of 1960 by as much as in 1959.
Total broiler marketings may thus again set a new
record in 1960.
Egg prices may go even lower during the first
few months of 1960 as production from existing
flocks increases seasonally. Prices should later
increase if poultrymen reduce the size of their
flocks as expected, so that the average price for
all of 1960 may be about 10% higher than the
1959 average of 32 cents per dozen.
PRODUCTION CYCLES AFFECT M EAT PRICES The
spring pig crop will probably be smaller than that
of 1959, which would provide basis for expecta­



tions that the lowr point for prices in the current
hog cycle wras reached in 1959. Production will
still be large enough, however, to keep hog prices
near their current levels during most of 1960,
except for seasonal strength in the summer.
Cattle numbers have been building up for about
twT years, and the increase in marketings which
o
started in 1959 can be expected to continue for
several years. Prices, therefore, will probably
continue to move lower in 1960. Marketings
should remain orderly unless the summer brings
drought conditions that would force many farmers
to market their cattle, as it did in 1953.
The USDA analysts look for somewhat higher
milk prices in 1960, since recent high beef prices
have encouraged farmers to reduce dairy cowr
numbers.
DISTRICT ECO N O M Y STEADY As measured by
seasonally adjusted employment and man-hours,
the District’s nonagricultural economy marked
time from September into October. W ith most
major District industries experiencing unusually
heavy demands for their products, a renewal of
the upward swring in terms of both total workers
and total working hours seems assured. Resump­
tion of activity in steel is not yet reflected in avail­
able statistics. During September and October
the continuing impact of the strike held seasonally
adjusted employment and man-hours in Maryland
durable goods manufacturing down at about onesixth below the same period in 1958. On the other
hand Maryland nondurable goods manufacturing
and both durable and nondurable goods in each of
the other four states of the District held firm in
October at levels from 2% below to 8% above
comparable 1958 figures in terms of seasonally ad­
justed employment and man-hours. Changes from
September to October were generally small and
offset each other so that the net change in all cate­
gories of District nonagricultural employment
combined wras negligible. North Carolina con­
tract construction and the transportation, com­
munication and public utilities category in all Dis­
trict states except North Carolina registered
noticeable decreases in employment relative to last
year’s October levels.
The production picture for the District meas­
ured in terms of manufacturing man-hours adds
little to the conclusions based on analysis of em­
ployment. Total man-hours in District manu­
facturing industries seasonally adjusted declined
0.1% from September to October. The October
figure, however, represented a 2.3% increase over
11

the same month a year earlier. The net positive
change from the year-ago figure would very likely
have been much greater had it not been for the
effects of the strike.
INDUSTRY NOTES The textile industry is spin­
ning along under the pressure of large and fairly
well balanced backlogs of orders, rising prices, de­
creasing costs and abnormally low inventories. A
paradoxical period of several months during which
record-breaking forward orders have been accom­
panied by gradually decreasing production (as
measured by seasonally adjusted man-hours) is ap­
parently coming to an end. Preliminary indica­
tions are that textile industry man-hours in Octo­
ber after adjustment for normal seasonal changes
held about even with the September figure. Pro­
duction has reportedly failed to increase as rapidly
as general conditions seemed to warrant because of
bottlenecks in carding and spinning accompanied
by a greater proportion of heavy fabrics requiring
more cotton per yard of product. According to in­
dustry sources elimination of these bottlenecks is in
progress and may be expected to increase employ­
ment and output in line with the current unusually
heavy demand.
The approaching Christmas holidays are ap­
parently stimulating new pressures in the already
bustling textile markets. Print cloth prices very
recently increased by amounts up to ^-cent per
yard as cloth distributors bid for tight supplies,
sold as far ahead as the 1960 third quarter. The
only soft spot in woven fabric lines appears to be
automobile upholstery. Detroit manufacturers are
keeping orders at a minimum until the future of
steel becomes clearer.
As in textiles, sure signs of strength are to be
found in the District furniture industry in the
form of unusually heavy backlogs. Unfilled furni­
ture orders are about two-thirds higher than their
late 1958 levels, according to recent statistical evi­
dence. At present record levels of output orders
now7 on the books will support production well into
the first quarter of 1960. Demand appears to be
especially strong as compared with recent years in
medium to higher price lines wrhere good profit
margins are earned.
The recent trends in cigarettes are continuing:
near-record levels of production; sales and profits
continuing high through the third quarter of the
year; spirited promotion of new brands, especially
in the filtered and mentholated categories.
NEW FACILITIES FOR DISTRICT GROW TH Of spe­
cial significance to those interested in Fifth Dis­
12




trict economic developments, though difficult to
characterize, are plans currently in process to
modernize and expand existing facilities and to
build new production units writhin the District.
These plans are evident in all phases of textiles,
in all types of synthetic fibers, in industrial chemi­
cals, in food industries and to some extent in
specialized equipment and machinery. A healthy
growth in distributive channels including new re­
tail outlets is also apparent.
The trend in contract construction, however, has
been turning downward in recent weeks largely
because of shortage of steel. A single large public
utility contract in the Baltimore area held the Dis­
trict total for October even with or slightly higher
than its September level. Private industrial pro­
jects of the kind mentioned in the preceding para­
graph have been hardest hit, as evidenced by a
September to October decline of about one-third.
Construction news items currently support the
view that this condition will prove temporary as
steel supplies expand. In making a comparison
between 1959 and 1958 on a cumulative basis the
positions of private and public projects are re­
versed. Private construction for 1959 to date has
exceeded 1958 by about one-sixth while public
works and utilities lagged almost one-fourth be­
hind 1958.
BA N KIN G The lingering effects of the steel strike
have clearly been the dominant factors affecting
District banking activity in recent weeks. Ordi­
narily, loans begin their fall upswing in October,
but this year such was not the case. During the
four weeks ending October 28, total loans of the
District’s 20 large weekly reporting banks edged
a little downward. Declines occurred in four of
the seven main loan categories.
The banks still remain in a tight position be­
cause of pressures built up earlier, however. As
a result, they are still cutting back investments
and borrowing fairly heavily at the Federal Re­
serve discount window.
PH O T O C R ED IT S
C o v e r—C h a m b e r
C a ro lin a

of

C o m m e rce ,

2 . D re x e l

F u rn itu re

C a ro lin a S tate C o lleg e
P ly w o o d

an d

V eneer

T h o m a sv ille ,
Com pany

N orth

4 . N orth

5 . N orth C a ro lin a F u rn itu re ,
C o u ncil

8. D an

R ive r

M ills,

In c. - V irg in ia S ta te C h a m b e r of Co m m erce - Union
C a rb id e C o rp o ra tio n .

9 . N a tio n a l F ru it Prod u cts C o .,

In c. - B a ltim o re A sso cia tio n
Fu rn itu re C o m p a n y .

of C o m m erce - D re xe l

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