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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 MANUFACTURING MAKE- U P VARIES AMONG STATES 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 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 G ro ss Income ized < / 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 twTo years, and the increase in marketings which 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
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