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FED /RESERVE BANK A RICHMOND FEBRUARY 1951 Manufacturing Employment Department Store Sales Percentage Increase From 1949 to 1950 In Fifth D istrict Business Indexes Retail Furniture Net Sates Bank Debits Bituminous Coat Production Life Insurance Sales Cotton Consumption Automobile Registrations Construction Contract Awards Furniture Manufacturers Shipments degree of recovery in various phases of business in the Fifth District from 1949 to 1950 was varied. The above chart shows outstand ing rises in construction and durable goods sales in 1950. T w o of the District’s large industries, cotton textiles and bituminous coal, made better than average advances, and interestingly these gains were made with only small increases in employ ment. A discussion of 1950 developments will be found in Business Conditions— 1950 Review, 1951 Preview and in succeeding articles on selected industries— pages 2 to 8, inclusive. T h e Also In This Issue - Furniture Output Breaks R ecord__ ___Page 3 Bituminous Coal Looks Up______ -______ Page 4 Record Year for Rayon Output__________ Page 5 Hosiery Output Rises____________________Page 6 Cigarette Output Maintained_ _ _ -__Page 7 Cotton Textiles Surge Forward__________ Page 8 Fifth District Agriculture— 1950 vs. 1951— 9 Statistical D a t a ___Page _________________ Page 11 FEDERAL RESERVE BANK OF RICHMOND Business Conditions—1950 Review, 1951 Preview h u n d r e d f i f t y will go down in the annals as the year when easy credit and war scare short ages turned a business revival into a boom. Historically a slackening in business spending has been accompanied by business recession, but in 1950 inventory accumula tion, sales of durables, home construction, voracious de mand and easy credit terms, sustained a business revival while business spending receded in the first half year. in e te e n N Am ong the outstanding developments of 1950 in the Fifth District was an inordinate expansion in bank cred it, particularly in the form of consumer credit in the first three quarters of the year and of commercial and indus trial credit in the last half year. Business loans in the Fifth District showed little of their customary hesitation in the spring and early summer of 1950, but continued upward almost without interruption since the summer of 1949; while similar loans in the U. S. as a whole were remaining relatively flat. This rise in business loans has been in no small part due to accumulating inventories in distributive channels and to the inflationary rise in prices. Accompanying a rise of 20.3% in loans of mem ber banks during 1950 was a gain of 7.4% in total de posits with demand deposits up 9.4% and time deposits practically unchanged. Reflecting both the rise in the volume of business and the price inflation bank debits in the Fifth District were 13% higher in 1950 than in 1949, with December debits 21% ahead of a year earlier. The construction industry played a major role in the Fifth District’s 1950 boom. By 1949 construction vol ume in the District was at boom levels and the 1950 volume superimposed a boom upon a boom. Contract awards for construction of all types in 1950 were 37% higher than in 1949, with one- and two-family houses and factory construction accounting for a substantial part of the gain. October brought stringent credit restric tions on home purchases, and these may have marked the beginning of curtailment in this sector. For the year 1950 one- and two-family house construction contract awards were 91% higher than in 1949. Factory con struction was in large volume from about mid-year through fall with the year’s total 164% ahead of 1949. Indications point to a further revival in factory construc tion in 1951 while practically all other types will prob ably be reduced either through credit constriction or through scarcity of materials. Trade levels in the District were good during 1950; for automotive and building supply firms they were ex cellent ; for the rank and file of soft goods they were up a bit. Registrations of new passenger automobiles in 1950 were 28% ahead of 1949, and truck registrations rose 18% . Retail sales of building suppliers rose 36% , wholesale appliance store sales gained 2 2% , furniture store sales were up 8 % , and department store sales gained 6 % . Sales in department stores were not uniform in all departments; the chief gains came in the home furnishings departments where furniture, appliances and television were responsible. W om en’s apparel sales in 1950 were 7% under 1949, men’s apparel was about even with 1949, while most other departments registered nominal gains. Of chief interest in the retail trades was the pattern made during the year. Trade levels in the District re sponded to the business revival in the early months of the year, hesitated somewhat in the spring, regained strength toward midyear, and with the outbreak of the Korean W ar zoomed upward. During July and August consumers purchased commodities on an unprecedented scale yet, in selective fashion— many recalled the various shortages of the late war, thought they knew exactly what to buy, and did so. Many soft goods were not affected but nylon hosiery, corsets, and other materials containing rubber, and to some extent, shoes, and the home furnishings group were most prominent among their purchases. Significant in maintaining production, after the autumn slowdown in retail buying, was the determination of manufacturers to commit for purchase or accumulate raw material inventories and for wholesalers and retail ers to accumulate finished inventories and build up order backlogs in addition. This development permitted manufacturers to continue expanding production levels and has prevented a temporary increase in unemploy ment pending the transition from production of civilian goods to war materials. District employment leveled off toward the end of 1950 but this was probably only a lull in a rising trend. One of 195 l ’s chief problems will be procurement of suf ficient manpower to produce goods at the rate at which they can be sold. Military manpower procurement is steadily rising and there will be many migrating to war production centers. Industries here, however, are fortu nate in that women are well adapted to their types of jobs and many more will be called into the labor force. Military installations again require more civilian em ployees, shipyards and aircraft factories will be expand ing during the year, and defense plants are reopening. All these will require a large number of workers. The current manpower situation is adequate but will almost certainly tighten. The District economy in 1951 will be different from that of 1950. Inflationary pressures will continue despite controls, with many consumer commodities and materials in short supply. Emphasis will be more and more on manpower. New defense plants will be constructed and stand-bys reactivated. Farm labor will be scare and crop harvesting a real problem. Servicemen will be in greater numbers in this area. i 2y FEBRUARY 1951 MONTHLY REVIEW Furniture Output Breaks Record to other lines. Lack of better paying alternatives in the manufacturing in the Fifth Federal R e furniture manufacturing areas is also a factor. The same serve District broke all records in 1950. Shipments situation does not exist, however, in hardwood lumber from factories reporting to the Southern Furniture production. Here the loggers are among the lowest paid Manufacturers Association in the first eleven months workers in the country and considerable diversion of were valued 46% ahead of the same months in 1949 and employment could easily take place. Future supply of 16% ahead of similar months in the previous peak year furniture thus depends chiefly on the supply of lumber of 1948. and diversion of unskilled labor from the furniture fac Record furniture output in 1950 was due chiefly to in tories. ventory accumulation by the retail trades, since net sales W ill the retail demand for furniture be adequate to of retailers in the Fifth District rose only 7 % (1950 maintain the rising rate of production that has been in over 1949) and a similar gain occurred throughout the evidence for the past year ? The question is easier asked nation. Inventories of Fifth District retailers increased than answered. 34% and the trend is still upward. The gain in retail sales of furniture in 1950 over Factors on the positive side are the rising level of per 1949 is due primarily to the unusually high sales level sonal income and an apparent willingness of individuals during July, August, and September. Subsequent fig either to purchase on credit or to dig into past savings ures have been running below those a year earlier. This for durable commodities, together with the still high sales performance, however, level of residential construc has in no way deterred re tion and the necessity of Southern Fu r n it u r e Man u fac ture rs ' Sh ip m e n t s tailers from booking orders buying furniture to equip PER CENT PER CENT for new supplies. There has these new homes. On the been a moderate setback in negative side are the tight new business b o o k e d by ened terms of credit (with manufacturers since August, further restriction probable but these new bookings are if demand outruns supply), running well ahead of those increased taxes— with future of any previous year, and increases a practical cer unfilled orders stand at the tainty— and the breaking up highest level on record. of households by withdraw Manufacturers h a d ex als of men for the armed pected good business before services, or migrations to the January opening of the Home Furnishings Market defense production areas where renting rather than own ing is the rule. and the Merchandise and American Furniture Marts in C hicago; but orders received and those some dealers Experience during W orld W ar II showed both manu tried to place were much heavier than expected. Many facture and retail sales of furniture rising to higher levels producers are sold up through the first quarter and some than previously experienced and holding at those levels. manufacturers have refused to accept new accounts. Actually physical volume held at a flat level, for prices Credit restrictions have apparently taken the edge off over most of the period were little changed due to price consumer buying, but have not deterred retailers from ceilings— a situation now looming. extending their commitments. This is understandable Furniture prices have been rising very rapidly since when so much comment has been made regarding the June 1950, with a gain of more than 12% from June to impending shortages of durable goods. There is strong November and further rises in evidence in the Chicago indication that some materials for furniture manufacture markets. A considerable drop in physical volume of out may be in short supply later on, but the consensus is that put could, therefore, be experienced and still give the in enough lumber, veneers, glues, finishing materials, and dustry a better dollar volume in 1951 than in 1950. joining hardware will be available for normal production Past experience does not indicate that 195 l ’s physical during the first half year. volume will be much lower than 1950’s, though it might Such materials as springs and hardware will probably fall below the recent peak month. be in short supply later in the year, but manufacturers A s the situation now stands and evidenced by current should be able to design their products so as to reduce strength in furniture prices, demand for furniture in these requirements to a minimum. Chief consideration in 1951 should be adequate to take the entire output of the the outlook for new furniture supply would appear to be manufacturers. There are, however, many things under labor supply, both in the factories and in the hardwood consideration which could change conditions quickly. A lumber producing mills. general freezing of wages and prices, combined with an The majority of workers in furniture factories are be yond the age for military service, so that the skilled labor other sharp increase in taxes would certainly curtail supply is not likely to be diverted in important numbers consumer buying. u r n itu r e F i 3 Y FEDERAL RESERVE BANK OF RICHMOND Bituminous Coal Looks Up of bituminous coal in United States mines sufficient to take care of their expanded needs. totaled 506.3 million tons in 1950, a gain of 68.4 Electric power utilities increased their bituminous coal million tons or 15.6% over 1949. Mines in the Fifth consumption in 1950 over 1949 by 8.9% and the month District accounted for 162.2 million tons or 32% of the ly consumption in November, latest data of record, 1950 total as against 138.1 million tons or 31.5% of the shows this consumption to be within striking distance of 1949 total. The District’s contribution to the national the previous peak established in 1948. The continued total in 1950 was the highest proportion on record. growth in kilowatt hour output will mean a continuation Within the District and out of the 1950 total of 162.2 of the sharply rising trend in bituminous coal consump million tons, W est Virginia contributed 89.1% , Virginia tion by the utilities, despite the fact that the trends in 10.6%, and Maryland 0.3% . In 1949 these percentages both gas and oil consumption are still upward. w ere: W est Virginia 89.7% , Virginia 9.9% , and M ary Exports of bituminous coal, which had dropped to land 0.4% . very low levels early in 1950, have recovered substan Estimated consumption from the known domestic tially since the first quarter of the year. W hile the ten sources in 1950 totaled 451.7 million tons, a gain of months’ total ran 20% below a year ago, exports on an 1.3% over that in 1949. It is apparent, therefore, that annual basis at the current rate would put them about the rise in coal production in midway between 1949 and 1950 from the previous year 1948 totals. Except for a strike early was due in the main to the BITUMINOUS COAL PRODUCTION demand for stockpiling. It in 1950, the labor situation FIFTH FEDERAL RESERVE DISTRICT AS PER CENT OF UNITED STATES is interesting to note that the in the coal mines has been changes in coal consumption quiet. Many mines in the b e t w e e n 1949 and 1950 District have o p e r a t e d among the various consum throughout most of the year ing outlets were far from on a three- and four-day week. Employment is m od uniform. Essentially, all of erately below a year ago, but the gain in consumption was with a rising demand it accounted for by rises in the would seem probable that consumption of electric pow both hours of work and er utilities and coke ovens. some increase in employ A small gain was recorded ment would be witnessed in steel mills, while all other during the current year. The industrial sources showed lower consumption, with the railroads being most promi operators have voluntarily given the miners an increase nent among those declining, due in part to reduced of 20 cents in hourly wages, with the obvious hope that this will continue the industry’s operation without the freight traffic. In the first quarter of 1950, in comparison with the perennial bickerings and strikes, actual or potential. same quarter of 1949, consumption of bituminous coal The competitive situation with other sources of energy is not such an important consideration at the present declined 13.3% ; in the second quarter the decline was reduced to 1% ; while in the third quarter practically all time in the outlook for the bituminous coal industry, as consuming outlets were running ahead of the previous all sources will probably be called on for a greater vol ume of production. The shortage in metal supplies, par year, the total gain being 0.8% . This trend continued through the fourth quarter of the year, but the small in ticularly steel, may also have an adverse effect on the construction of new diesel locomotives and thereby fur crease in total consumption for the year was due to the losses sustained in all sources in the first and, in some ther delay diversion of railroads’ utilization of coal and make it necessary to continue in operation many of the sources, in the second quarter of the year. Even the railroads, which have been moving as rapidly as possible steam locomotives which have been retired from service. toward diesel locomotion, showed an increase in coal The National Association of Purchasing Agents has consumption from the middle of the year as a result of indicated that in many instances consumers are recon the heavy traffic load in this period. verting their equipment from oil to coal, feeling that the Consumption of bituminous coal by industrial con latter will be in more substantial supply than the former. cerns other than coke ovens, steel and cement mills, Prices of bituminous coal have not shared in the up showed a 2% decline for the year as a whole; but the ward trend that has been characteristic of most other trend in consumption of these establishments is rising prices since June. In fact, the Bureau of Labor Statistics quite rapidly and may be expected to continue during November coal price index was only a fraction of one 1951. Expansion in industrial operations has made it per cent higher than in June. However, the recent wage necessary for firms to reconvert in many instances to coal increase will probably cause a rise in prices. consumption, since supplies of oil and gas would not be o d u c tio n P i 4 y MONTHLY REVIEW FEBRUARY 1951 1950 Record Year for Rayon Output rayon industry broke all records during 1950 with shipments of 1,235.0 million pounds of rayon filament yarn, staple fiber and tow. Average monthly shipments for the year were equal to the average month ly capacity of 103.3 million pounds. This compares with average monthly shipments of 81.3 million pounds and an average monthly capacity of 99.7 millions pounds in 1949. The 1950 average was 13% above the previous peak in 1948 and 201% above the 1939 average. T Rayon gray goods have likewise experienced price in creases during the past six months. In most cases, De cember prices were still below the 1948-49 high, the exception being the price of gabardine which now is slightly higher than in 1948. h e The rayon industry in 1951 will undoubtedly be af fected by the military situation. During the four war years, 1942-45, 19% of total rayon fiber consumption went for military uses. In 1945, the peak year of mili tary consumption, 24% of all rayon fibers went for this purpose. Complete figures are not available for 1950, but some indication can be seen from a tabulation by Rayon Organon of invitations to bid on Government contracts which amounted to twelve million yards of rayon fabrics, or approximately 5% of the estimated 1950 production of broad woven goods. This figure does not include bids for high tenacity tire yarn which will be a large rayon contribu tion to the defense program. W hile shipments of tire yarn to civilians were at the usual r a t e in December, these allotments are expect ed to be reduced in coming months. In September, the National Production A d ministration placed this yarn on the list of those items which manufacturers were not to build up undue inven tories. On December 1, N. P .A . ordered equitable dis tribution of high tenacity yarn defense contracts among manufacturers. This yarn will be used not only for tires but also cargo and flare chutes and airplane fuel cell fabrics. Should the cutback of rubber consumption for automobile tires cause a temporary over-supply of tire cord, the slack would be felt in cottons rather than rayon, since manufacturers prefer rayon cords to cotton cords, when the proportion of synthetic rubber is being increased. Total shipments of rayon fibers in 1950 were 30% ahead of 1949’s. Staple and tow showed a much larger increase— 6 1 % — than filament yarn— 23% , with the gain in consumption caused largely by increased use of acetate staple and tow in newly developed mass markets for rayon men’s clothing and floor covering fields. Comparison of men’s clothing (first 9 months of 1950 vs. 1949) shows that rayon and nylon made up 50% of the summer weight suits in 1950 and 44% in 1949. D ur ing the same period, 49% of the separate dress and sport trousers was made from ray on fabrics against 40% in 1949. The Clothing Manu facturers Association recent survey of 488 stores indi cated that retailers plan to have 45% of summer suit stock in all rayon for 1951. Vaulting wool prices and improved rayon fabrics have caused carpet makers to turn to rayon and they are increasingly using blends of rayon and wool for rugs— one leading firm has already an nounced an all-rayon carpet. Shipments of viscose high tenacity filament yarn have shown the smallest gain, being only 8% higher for 1950 than for 1949. This was due not to the lack of demand but to a strike at the Lowland, Tennessee, plant of the American Enka Corporation— other producers operated at capacity. In the textile slump of 1949, rayon producers’ stocks reached a postwar high (during M ay) of 70.2 million pounds. They were reduced sharply in 1950 and by D e cember 1st were down to 14.4 million pounds, a figure 35% lower than on December 1, 1949, and 79% below the May 1949 high point. Stocks of filament yarn were clown 42% from a year ago, but staple and tow stocks fell only 3% . This small decline in staple and tow stocks was clue to the fact that while rayon stocks generally were still high in December 1949, those of staple and tow had by this time been well worked down. While prices of most rayon yarns and staple fibers remained steady during the first six months of 1950, the rises since mid-year have brought the levels to approxi mately those prevailing before the textile slump of 1949. i 5 The rayon industry will be confronted during 1951 by the defense effort and shortages of production ma terials and labor. Faced with limited supplies of dis solving wood pulp and cotton linters, from which rayon is made, some yarn manufacturers are already reducing deliveries, but these are expected to be temporary. If high tenacity yarn requirements are stepped up rapidly, it is probable that conversions of textile yarn will be the first result with new plant expansion coming later on. H ow much of the rayon supply will be needed by the Government in 1951 is not yet known, but a shortage of civilian goods could result. If supplies permit, rayon can be expected to make further gains in the men’s clothing, carpet, and tire cord fields in 1951. )> FEDERAL RESERVE BANK OF RICHMOND Hosiery Output Rises hosiery industry manufactured more hosiery during 1950 than in any other year of record. Pro duction was 11% above 1949 and averaged 13.3 million dozen pairs per month. This increased production was moved into distribution channels since manufacturers stocks were little changed during the year and averaged less than two months supply. Shipments during 19S0 averaged 13.4 million dozen pairs per month and showed a gain of 9% over 1949. T h e The increase in shipments from 1949 to 1950 was un evenly distributed among the various types of hosiery. Largest gain (3 0 % ) was in women’s seamless nylons and the largest decline (2 6 % ) was in women’s fullfashioned and seamless rayons. The three largest hosiery groups— women’s full-fashioned nylon (accounting for 32% of the total 1950 ship ments), men’s half-hose and slack socks (2 9 % ) and ank lets (2 0 % ) showed varying degrees of change in ship ments. W om en’s full-fash ioned nylon shipments were 15% greater than in 1949; men’s half-hose and slack socks 9 % ; and anklets 6 % . The gain in men’s socks and anklets came largely in the last five months of the year with some increase during the first quarter. On the other hand, the gain in w o men’s full-fashioned hosiery was mainly in the usually slow summer period. The general trend in shipments of hosiery for women (per capita) has been downward during the past decade as the chart indicates. This is due largely to the longer wearing quality of nylons and to some extend to the bare-legged habit in the warm months. Per capita ship ments of men’s hosiery shows some increase from 1940 to 1950 with two of the intervening years showing de cided increases. Service men undoubtedly wore out more socks than the average civilian and at the same time quartermaster stocks were undoubtedly increased causing the high per capita shipment of men’s hose dur ing 1943. The high per capita shipments of men’s hose during 1946 was due to the necessity for men to re furnish their wardrobes when released to civilian life and to fill the pipelines in retail and wholesale establish ments. The increasing per capita shipment of children’s socks is perhaps due to the large rise in incomes of those families formerly in the low income groups where chil dren, who previously went barefooted, are wearing socks. Producers’ per capita shipments have limitations as a measure of per capita consumption, owing to variations in inventories of retailers, wholesalers, and jobbers. These inventories were probably a factor in the sharp rise in per capita shipments for 1950. Latest figures available show that on December 1st stocks of women’s and children’s hosiery in department stores were valued 42% higher than a year earlier. On the other hand the only measure of consumption, dollar sales of women’s and children’s hosiery in department stores, was 8% higher in 1950 than in 1949 while unit shipments of w o men’s full-fashioned nylons increased 15% and ship ments of women’ s seamless nylons 30% during the same period. Per capita shipments in pairs for 1950, there fore, overstate per capita consumption to the extent that shipments exceed retail sales, after accounting for price changes. One of the most interest ing developments of the year was the survey made for the National Association of Hosiery Manufacturers by Elmo Roper and released on May 2nd. The survey found that few women complained about the price of hosiery and that neither production nor distribution were major problems in the industry. The report further revealed that two-thirds of all adult women go bare-legged at some time and that 85% of the women feel that stock ings are essential to good appearance. The s u r v e y seems to support those who feel that if per capita con sumption is to be increased hosiery must be promoted out of the “ staple merchandise” category and sold on a fashion basis. W om en who buy neutral shades to go with everything average 14.0 pairs per year, while those who buy special shades, average 17.8 pairs per year. Prices of all kinds of hosiery remained fairly steady during the first half of 1950 but rose during the second half. The price of men’s anklets was increased substan tially in August and the usual summer reduction did not materialize for women’s full-fashioned hosiery. The hosiery industry faces two big problems in 1951 : labor supply and material supply. During W orld W ar II 100% of nylon production went for military purposes. The national economy is not fully mobilized at this time and probably will not be during 1951. Nylon production capacity has been increased 300% since the end of W orld W ar II and further expansions are planned. If military usage of nylon runs to large quantities it would seem probable that the diversion would come largely from users other than hosiery. i 6 )► MONTHLY REVIEW FEBRUARY 1951 Cigarette Output Maintained production in the United States approxi mated 393 billion in 1950, a gain of 2 % over 1949. Fifth District production in 1950, however, was essen tially the same as that a year ago. The gain apparently came in Kentucky, which has been increasing its propor tion of the total in the past seven or eight years. In the first ten months of 1950, cigarette production in the Fifth Federal Reserve District accounted for 79.9% of the U. S. total. In similar months of 1949, the District’s proportion was 81.5% . ig a r e tte C 1939. Absorption of these increased costs by the indus try has been possible only by the very large expansion in volume of production which has held the rise in unit costs to a level in keeping with the rise in cigarette prices. Brand competition continued in 1950 at its usual ex tremely keen pace. This competition among brands pre sages increased advertising budgets in 1951. If price changes are made, they will probably be in an upward direction, for costs in general are rising and it is ques tionable if the increase in production in 1951 will be large enough to hold unit costs down to the 1950 level. Within the Fifth District, a shift in production has been taking place for some time. Recent figures are un available but in 1948 Virginia accounted for 33.6% of Commercial cigarette exports, which had never been the District total and North Carolina for 66.4% . In of substantial importance to the industry prior to the 1942, Virginia had accounted for 43.6% , whereas North expiration of W orld W ar II, rose rather substantially Carolina’s proportion was 56.8%. A new plant in D ur in 1946 and continued at about that year’s level through ham, North Carolina, plus extended output in established 1948. By 1949, foreign countries had reactivated their plants in 1949 has probably tobacco industries and were accentuated the trend. Cig able to secure supplies of F ifth District C ig ar e tte Production arette production in V ir leaf tobacco. A s a conse ginia since 1943 has held quence, U. S. commercial reasonably steady, whereas exports fell considerably in in North Carolina a rising 1949 trend h a s continued. It exports of cigarettes were at would seem that the migra their high point in 1948 tion of cigarette manufac when 25.2 billion were ex turing to the areas where the ported ; 1949 showed a drop tobacco is grown, a trend of 23% . In the first ten which has been in evidence months of 1950 cigarette ex 40 years, apparently contin ports w e r e d o w n 2 7% , ues, and, if so, North Caro though figures do not in lina is the likely location for the new growth in cigarette clude tax-free cigarettes shipped abroad to the armed manufacturing. forces. Commercial exports plus shipments to the armed forces rose from a total of 7.9 billion in 1939 to a Cigarettes accounted for 79% of the total United peak of 53.5 billion in 1943. They dropped 34.7 billion States tobacco used in tobacco products in 1948, com in 1949, but still represent an important volume of busi pared with 58% in 1940 and 45% in 1930. Growth in ness to the industry. The monthly figures of commer cigarettes’ sales is responsible for the 52% rise in total cial exports during 1950 gave some indication that the tobacco products output between 1940 and 1949 and downward trend may have been stopped. 80% between 1930 and 1948. Output of tobacco prod ucts in forms other than cigarettes has shown a pro Domestic consumption of cigarettes is affected to some gressive decline since 1930. Internal revenue figures extent by changes in the income level of the people, but since 1948 indicate a continuation of these trends, but the rise in domestic consumption of 2.5% in 1950 over at a slower rate. 1949 shows no close relation to the 7.4% increase in per sonal income. Personal income is still rising and indica Cigarette prices were raised 3% in August 1950, the tions are that it will continue to rise during 1951. D o first change since August 1948. Cigarette prices are now mestic consumption of cigarettes should, therefore, rise. 28% higher than in 1939 and 20% higher than in 1926 though part of the increase is due to higher taxes. This Employments levels in the cigarette industry in V ir rise of 20% compares with an increase of 72% in prices ginia have been in a moderate downward trend for sev of all wholesale commodities. In contrast with the in eral years. North Carolina employment in cigarette crease in cigarette prices, leaf tobacco prices are several factories declined in 1950 from the 1949 level though times higher than they were immediately prior to W orld production in the two states held steady in 1950 at the W ar II. Flue-cured tobacco in 1950 at approximately 1949 level. If an increase in 1951 cigarette production 55 cents a pound is 3.7 times higher than in 1939 and in the Fifth District can be effected without an increase burley tobacco, around 49 cents in 1950 is 2.8 times in employment and without substantial turnover of ex higher than in 1939. The hourly wage rate in cigarette perienced workers, larger output per man-hour might be factories in 1950 was $1,271, an increase of 127% over sufficient to offset rises in other costs. i 7y and 1950 FEDERAL RESERVE BANK OF RICHMOND Cotton Textiles Surge Forward cotton textile industry in the Fifth District in for want of raw material. Operations beyond the sum 1950 operated at the highest level since 1943 and mer of 1951, as far as cotton supplies are concerned, would be contingent on the size of the new crop and the similar conditions which established the previous peak size of exports permitted. The Department of A gricul for the industry during W orld W ar II are again in evi ture is calling on cotton farmers for a 16 million-bale dence. Cotton consumption in District mills in 1950 was crop this year, though doubts are expressed that such a 22 °/ higher than in 1949, 8 % higher than in 1948, but o crop can be produced. In the past, today’s record prices 8 % below the peak year 1942. (o f 42-45 cents) would undoubtedly have brought out all The cotton textile industry was among the leaders in of the supply required, and they will be a potent force recovering from the recession in m id-1949. Output rose this year. Below normal temperatures this winter will sharply in the last half of 1949 and held fairly steady at hold down boll weevil emergence in the spring and, the top of the rise during the first half of 1950. Prior to given a normal growing season, next year’s cotton sup the Korean W ar, the industry had started selling its ply may be adequately expanded. third quarter output and indications at the time were T he that a moderate rise would be witnessed in third quarter production. W ith the outbreak of the Korean W ar, heavy bookings caused a very sharp increase in output during the last six months of 1950. A s of late January, the industry was mostly sold Fifth District through the first half of PER CENT 1951; indeed much of the production for the last half of the year has been booked. The trend of output is still upward and this will prob ably continue until practical capacity is reached. In the current crop year (ending July 31, 1951), it seems probable that the cot ton textile industry in the nation will consume between 10.5 and 11.0 million bales of cotton. If manpower losses do not prove heavy and if demand warrants, the industry can probably produce goods and yarns involving more than 12 million bales in the crop year ending July 31, 1952. One very prominent difficulty to the attainment of such a level of operations is that cotton supply may not be large enough to permit it. A s Dr. Claudius T . Marchison, Economic Advisor of the American Cotton Manu facturers Institute, has pointed out, by using the figure of 10.5 million bales as domestic consumption for the current crop year, together with export allocations al ready scheduled for the first eight months, plus 250,000 bales earmarked for Canada, plus another 100,000 bales that went out before export restrictions were effected, the carry-over on July 31, 1951 would be reduced to 2,334,000 bales. Fie further noted that this amount must carry the industry for the three months following July 31, since new crop cotton is not available to mills before that time. A carry-over of 2,334,000 bales is not equal to three months' supply of cotton at a production rate of between 10.5 and 11.0 million bales, even if every pound of it were of the proper grade and staple. It is probable, therefore, that during the fall of 1951 there will be a considerable cutback in textile operations Employment levels in yarn and thread mills and in broad woven fabrics mills in the District have been rising, though recent data do not show industry employ ment at the high point of 1948. There are moderate numbers of unemployed tex tile workers in most mill areas, but few of these are Co tto n Co n su m ptio n . PER CENT skilled workers. It seems reasonable that employment levels will continue to rise as more mills add shifts to their operations. I n s o doing, however, skilled operations will have to be manned by employees who are not so skilled and this will reduce output per manhour in the added shifts. During W orld W ar II important numbers in this District shifted their occupations from textiles into other activities, such as shipbuilding, Government work, and war plants. Opportunities for such shifts are not so great in the Fifth District at the present time, since the alternative sources of employment are not so numerous, but it may be that later developments will create them. Defense plant work in areas outside this District may also drain some workers who normally could be re cruited by the textile industry. For the short run, how ever, these factors are not of great importance and cur rent indications are that the level of cotton textile em ployment will rise during the first half of 1951 and that the industry’s output will approach the monthly peak established in 1942. Exports of cotton goods in 1950 were considerably below those of 1949, but the trend in the 1950 monthly figures indicates that the decline has stopped. W ith a shortage in raw cotton the world over and a reduction in our exports of raw cotton, it seems likely that a greater demand for export of cotton goods will be forthcoming this year. If the market is left freely available to all com ers, a gain in exports would put further pressure on the prices of these goods. If prices are fixed, the chances are there will be little or no increase in export allocations. i 8 y MONTHLY REVIEW FEBRUARY 1951 Fifth District Agriculture—1950 vs. 1951 . Farm prices in early 1951 averaged nearly 25% higher and prospects are f o r higher farm incomes Agri cultural production— particularly of hogs, cotton, tobacco, and grain— should be higher in 1951. The farm price rise helped push food prices to new highs. Weather, insects, and government policy in respect to price controls are clearly the prime factors for 195Vs farm outlook. In some respects 1950 was a mixed year for agricul ture, but it was definitely the year in which “ the tide turned” . After a two-year decline, farm prices steadied in the first half and, after mid-year, advanced rapidly with the December farm price average nearly 25% above a year before. July was the first month in which cash receipts were higher than a year before, and this was primarily due to the sharp rise in prices. In October cash receipts again exceeded the same month of 1949 and November and December probably did too. The national total for the year is estimated at $27.8 billion, 1% under 1949. By contrast, cash farm receipts in the Fifth District Net farm income declined in 1950, but the decline (first eleven months) were about 6 % higher than in was smaller than forecast. The year’s total may have reached $13.3 billion, 6 % under 1949, and the smallest 1949, while for the United States they were down 2 % . net since 1945. North Carolina and Virginia were higher than in 1949, Farm output in 1950 continued at a high level, though while Maryland, W est Virginia, and South Carolina somewhat under the pre were lower. vious year. W heat produc Farm Prices Rise FARMERS’ N E T INCOME - U NITED S T A T E S tion was down 10% , corn A s 1950 began, the out was off 7 % , and the cotton BILLIONS OF DOLLARS look f o r farm prices was crop was off nearly 40% . somewhat less than opti Government agricultural policies shifted in 1950— the emphasis changed from con trol on certain crops to ex pansion of most farm prod ucts to meet the needs of a war economy. CCC stocks acquired for price support sold more readily as prices moved upward in the last half of the year and had a moderating effect on prices. Farm debt, b o t h realestate and non-real-estate, increased in 1950. Credit expansion in the first half of 1939 1941 1943 1950 was restrained by less Source-- USDA, Bureau of Agricultural favorable p r i c e prospects and acreage restrictions. In the latter half of the year it was stimulated by a more favorable outlook for prices and prospective shortages of some goods. Farm Income Lower, But Rising A year ago the outlook for farm income was rather discouraging. Prices had declined rather steadily for two years, cash production expenses were near their postwar peak, and the acreage of important cash crops like wheat, cotton, peanuts, and potatoes was being reduced. Although farm prices ceased to decline and began to move slowly upward in the first half of the year, the rise was hardly equal to the usual seasonal movement. Cash receipts from farm marketings lagged behind 1949 for many months, and the total for the first half of 1950 was 9% under the first half of the previous year. mistic. Farm prices had de clined for two years, and in December 1949 were about 24% under t h e postwar peak reached in January 1948. Prices held barely steady in the first quarter of 1950, and the small rise in the sec ond three months of the year was largely seasonal. In June the index of prices received by farmers (19101 4 = 1 0 0 ), was 247, only 14 points above the previous December, and in each of the 1945 1947 1949 1951 first six months of the year Economics average prices had been un der the same month in 1949. The outbreak of the Korean W ar started off a wave of speculative buying which was accentuated by the steadily worsening prospects for cotton and by seasonal declines in livestock marketings. A s a result farm prices rose sharply from June to July, and the price index reached 263, a gain of 16 points from June. Following the sharp July rise, average farm prices rose more slowly through November and then jumped again in December. The December 1950 index of prices received was 286, a rise of 23 points from July and 53 points from the previous December. A large part of the rise in the last quarter was due to higher prices for crops, particularly cotton and tobacco. December cotton prices averaged 40 cents, a rise of 52% in one year. Prices of meat animals declined in September, and were well un der last summer’s high in October and November. Some > 9 J 1 . FEDERAL RESERVE BANK OF RICHMOND recovery was made in livestock prices in late December as hog marketings declined, and at the end of the year meat animal prices averaged only 3% under July. Wholesale food prices in July were about 14% higher than in January, and retail prices were up about 7 % . Some food prices had increased more— meat was nearly 32% higher. July retail food prices in this District had also risen sharply— 7% in Richmond and 8 % in Balti more. In late summer and fall a material decline in whole sale meat and broiler prices was reflected in a leveling off of retail food prices. In the Fifth District retail food prices were fairly steady from July through November. Subsequent price advances have carried retail food prices to a record high level. of boll weevil. The North Carolina yield of 152 pounds of lint per acre was 41% under the previous year. Tobacco farmers, however, enjoyed one of the most prosperous years in history. Flue-cured prices averaged around 55 cents, nearly 8 cents above 1949, and the total crop was about 13% larger. In this District farmers sold 1,137 million pounds of flue-cured, about 16% more than in the previous year. Total production of peanuts picked and threshed in the District was up 7 % , and prices in November averaged 1 to 2 cents a pound above last year for farmers’ stock peanuts. Total food production in 1950 was slightly above 1949 and 40% above the 1935-39 average— food grains were lower, but meat animals, poultry, and dairy products in Crop Production Lower, but Livestock Increases creased. Meat production was up 4% and poultry 7 % . Agricultural production in 1950 continued at a high Food consumption per capita was also a little larger level, but was down somewhat from 1949. A small in and 12% higher than in 1935-39. crease in marketings of live Price Support Costs Down stock and livestock products — Price Ceilings Possible UNITED STATES FARM PRICES was more than offset by a A s 1951 began farm price (December 1949-December 1950) decline in crops. discussions centered m o r e PER CENT OF 1910-1914 AVERAGE PER CENT OF 1910-1914 AVERAGE Wheat production totaled on price ceilings than on 1,027 million bushels, 114 price support. F or most million less than the year be farm products the need is fore, and 3,131 million bush increased production to meet els of corn were produced, the needs of a war economy 248 million u n d e r 1949. instead of reduced produc Most of the decline was due tion to avoid surpluses. to reduced acreage. Both Given good weather more corn and wheat had acreage production s e e m s assured allotments in effect in 1950, since restrictions have been and corn yields were lower removed f r o m the 1951 than in 1949, but wheat crops of corn, wheat, cotton, yields were up. Corn yields and potatoes. W inter wheat in the District, however, av acreage is up over three mil eraged higher. In Virginia lion a c r e s and the 1951 the 1950 yield was 49 bushels per acre, 18 bushels higher spring pig crop will be about 6 % larger. Flue-cured than in 1939-48 and, interestingly, two bushels above the tobacco acreage allotments in 1951 will be up 9 % . Iowa yield. Price support outlays in 1951 should show significant Cotton, one of the major cash crops in this area, declines, and if prices rise further CCC stocks will be brought very little cash to many cotton farmers. Cotton reduced more. For example, CCC’s butter stocks, which prices averaged $50 to $60 a bale higher than in 1949, in August totaled 191 million pounds, were nearly sold but in many counties the crop was nearly a failure and a out in late 1950 as butter prices rose. Except for eggs much smaller acreage was planted. The total U. S. crop and potatoes, price support will generally be available was 9.9 million bales as compared to 16.1 million in this year for the same products as in 1950. 1949. T otal acreage harvested was 17.8 million— with Price ceilings were placed on wholesale and retail the exception of 1945 and 1946, the smallest since 1884 prices of farm products on January 26. The ceiling for and one-third less than in 1949. The average yield was any product is the highest price charged from December 265.4 pounds of lint, 7% under the previous year. 19 through January 25. For any product whose farm In this district cotton production declined 75% in price is under parity or June 1950 levels, the ceilings Virginia, 61% in North Carolina, and 28% in South may be raised sufficiently to reflect increases in the farm Carolina. Acreage was down about a third, and yields price up to these levels. dropped sharply in Virginia and North Carolina because U0)> FEBRUARY 1951 MONTHLY REVIEW PRINCIPAL ASSETS AND L IA B IL IT IE S U N ITED STA TE S AND F IF T H OF M EM BER BANKS D IS T R IC T LAST WEDNESDAY OF MONTH FIGURES LOANS LOANS AND IN V E S T M E N T S U.S. GOVT. S E C U R IT IE S BILLIONS OF DOLLARS 5th Dist. DEMAND DEPOSITS, ADJ. BILLIONS OF DOLLARS BILLIONS OF DOLLARS TIM E DEPOSITS U.S. 5th Dist. TOTAL D EP O S IT S BILLIONS OF DOLLARS BILLIONS OF DOLLARS U.S. U.S. 20.0 Data Partly Estimated D E B IT S TO I N D IV ID U A L AC C O U N TS (000 omitted) December 1950 Dist. of Columbia Washington 12 Months 1950 12 Months 1949 801,933 $10,701,734 $ 8,945,485 1,217,83 8 24,257 21,820 32,755 1,027,546 23,117 19,811 30,953 13,024,965 280,458 221,085 345,920 11,513,668 250,175 208,576 315,933 64,150 334,792 89,741 108,289 17,695 169,543 38,950 19,665 167,517 56,935 274,442 81,133 88,638 13,841 125,411 32,043 16,998 145,699 633,314 3,625,487 1,281,566 1,072,109 253,605 1,768,234 433,372 332,648 1,816,427 559,144 2,884,255 1,221,596 886,215 226,397 1,511,861 376,156 275,434 1,595,703 71,478 121,732 111,047 70,828 64,160 109,728 90,249 53,656 768,785 1,290,072 1,131,103 668,581 699,515 1,184,659 947,858 548,470 26,548 35,336 51,228 39,395 216,722 25,432 559,928 119,993 24,703 32,494 46,527 33,058 247,785 23,423 531,801 104,258 293,685 405,159 498,875 382,469 2,432,100 264,127 6,152,215 1,231,465 264,985 344,380 436,608 365,800 2,155,935 238,980 5,873,183 1,083,438 57,736 191,056 38,790 75,990 31,400 49,390 173,032 34,827 71,441 27,950 510,749 1,647,508 372,844 725,964 325,897 485,342 1,571,495 340,655 671,919 298,987 $ 5,203,575 $ 4,456,992 $54,892,522 $48,282,807 $ 1,051,654 Maryland Baltimore Cumberland Frederick Hagerstown North Carolina Asheville Charlotte Durham Greensboro Kinston Raleigh Wilmington Wilson W inston-Salem South Carolina Charleston Columbia Greenville Spartanburg Virginia Charlottesville Danville Lynchburg Newport News Norfolk Portsmouth Richmond Roanoke West Virginia Bluefield Charleston Clarksburg Huntington Parkersburg District Totals Deecmber 1949 $ 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) Change in Amount from Jan. 17, Dec. 13, Jan. 18, ITEMS 1951 1950 1950 Total Loans_________________ $1,138,240** + 9,189 4-267,179 Business & Agricultural 550,456 + 7,991 + 150,189 Real Estate Loans________ 245,973 + 1,740 + 36,607 All Other Loans___________ 355,765 + 1,191 + 83,312 Total Security Holdings____ 1,710,186 + 20,713 — 136,481 U. S. Treasury Bills _______ 118,254 + 7,367 — 34,162 U. S. Treasury Certificates . 0 — 33,888 —267,609 U. S. Treasury Notes _____ 410,858 + 72,225 +278,922 U. S. Treasury Bonds ______ 1,002,986 — 28,929 —140,581 Other Bonds, Stocks & Secur. 178,088 + 3,938 + 26,949 Cash Items in Process of C o l278,842 — 4,010 + 64,481 Due from Banks______________ 186,417* — 21,170 + 13,428 Currency & Coin_____________ 68,940 — 10,132 + 4,966 Reserve with F. R. Bank 514,668 + 43,787 + 57,304 Other Assets__________________ 54,126 — 2,388 + 3,886 Total Assets_________________ $3,951,419 + 35,989 +274,763 Total Demand Deposits__ _ _ Deposits of Individuals Deposits of U. S. Govt______ Deposits of State & Loc. Gov. Deposits of Banks .................. Certified & Officers’ Checks.. Total Time Deposits_________ Deposits of Individuals Other Time Deposits________ Liabilities for Borrowed Money All Other Liabilities__________ Capital Accounts_________ Total Liabilities___________ $3,046,224 2,312,788 59,577 160,829 451,385* 61,645 610,467 555,628 54,839 20,600 33,273 240,855 $3,951,419 + + — + — + + + — + + — + 8,143 19,309 3,248 6,822 27,048 12,308 2,847 3,946 1,099 18,700 7,352 1,053 35,989 ♦Net figures, reciprocal balances being eliminated. ♦♦Less reserves for losses on bad loans. +224,954 +222,567 — 25,569 — 4,100 + 19,220 + 12,836 + 1,731 — 5,816 + 7,547 + 20,600 + 15,065 + 12,413 +274,763 FEDERAL RESERVE BANK OF RICHMOND S E L E C T E D F IF T H D IS T 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 A D JU STE D Dec. 1950 Automobile Registration1---------------- ------------------ --------Bank Debits...--------------------------------------------------------------- ______ Bituminous Coal Production--------------------------------------- ______ Construction Contracts Awarded-------------------------------- ______ Business Failures— No.------------------------------------------------ ______ Cigarette Production--------------------------------------------------- _____ Cotton Spindle Hours-------------------------------------------------- ______ Department Store Sales2-------------------------------------------- ______ Electric Power Production----------------------------------------Employment— Manufacturing Industries1-----------------Furniture Manufacturers: Shipments2----------------------Life Insurance Sales---------------------------------------------------- ______ Nov. 1950 217 388 139 569r 74 234 158 313 343 150 460 271 391 155 533 62 226 164 338 276 Oct. 1950 Dec. 1949 259 411 162 462 68 206 163 312 327 151 401 279 185 324 113 474 78 219 145 323 286 139 240 278 % Change— Latest Month Prev. Mo. _ + + — — — + + + — + + 16 1 12 6 16 3 4 8 5 1 15 2 Year Ago + + + + — + + + + + + — 10 21 37 12 21 3 13 5 25 8 48 1 1 Not seasonally adjusted. 2 Revised Series— back figures available on request. W H O LE SA LE TRADE Sales in December 1950 compared with Dec. Nov. 1950 LINES 1949 — 15 Auto supplies ( 7 ) -------------+ 15 Electrical goods ( 4 ) ______ + 44 + 3 — 12 Hardware (1 3 )----------------+ 41 — 3 Industrial supplies ( 6 ) ---+49 Drugs ( 9 ) _________________ 0 + 10 — 26 Dry goods (1 5 )----------------+ 23 Groceries (5 8 )------------------+ 17 Paper and products ( 5 ) — + 30 Tobacco and products (8) + 1 + Miscellaneous (8 2 )________ + 26 District Totals (2 0 7)----+ 22 B U IL D IN G P E R M IT F IG U R E S December December 12 Months 1950 1949 1950 Stocks on December 31, 1950 compared with Dec. 31, Nov. 30, 1950 1949 + 15 + + + 8 + 17 — 2 + 3 27 13 + 6 + 17 + 17 + Maryland Baltimore $ 10,514,225 Cumberland 31,000 Frederick 76,800 Hagerstown 67,600 Salisbury 156,410 Virginia Danville 109,492 Lynchburg 678,418 Newport News 95,005 Norfolk 723,840 Petersburg 55,175 Portsmouth 127,255 Richmond 702,082 Roanoke 2,255,866 West Virginia Charleston 315,101 Clarksburg 8,225 Huntington 457,910 North Carolina Asheville 315,669 Charlotte 3,830,241 Durham 437,493 Greensboro 2,100,855 High Point 251,505 Raleigh 650,892 Rocky Mount 92,034 Salisbury 49,450 W inston-Salem 2,273,063 South Carolina Charleston 787,518 Columbia 379,284 Greenville 1,302,840 Spartanburg 101,805 Dist. of Columbia Washington 2,744,850 District Totals $ 31,691,903 — 6 + 17 + 13 + 17 + + Number of reporting firms in parentheses. Source: Department of Commerce. + +R E T A IL F U R N IT U R E SALES Percentage comparison of sales in periods named with sales in same periods in 1949 December 1950 12 Mos. 1950 STATES 3 Maryland ( 7 ) -----------11 District of Columbia ( 7 ) . + 7 Virginia (1 8 )________ 13 West Virginia (10) — 10 North Carolina (12). 4 South Carolina (7) District (6 1 )_______ + INDIVID UAL CITIES Baltimore, Md. (7) ------------Washington, D. C. ( 7 ) -------Richmond, Va. ( 6 ) ------------Lynchburg, Va. ( 3 ) ------------Charlotte, N. C. ( 3 ) ------------ — + 3 + H + 2 + 16 + 4 4 + 6 — 13 + 12 - 20 Number of reporting firms in parentheses. Balt. Wash. + 4 + 2 + 2 + 2 + 17 + 5 Other Cities + 6 + 7 +21 Dist. Total + 4 + 4 + 16 +53 + 36 + 33 +42 $ 50,907,930 515,290 858,402 2,059,148 1,888,890 90,778 214,629 54,609 726,100 95,795 157,810 547,181 833,667 5,746,755 6,569,990 1,831,506 15,488,233 5,083,700 3,981,396 31,708,776 18,345,800 2,329,789 5,022,587 1,158,283 12,064,051 1,868,205 1,816,771 16,706,892 13,918,516 235,170 8,550 169,121 13,040,911 1,630,273 7,356,904 9,843,030 1,142,681 5,320,749 160,276 1,379,386 299,415 744,455 301,876 326,375 139,866 141,745 271,831 4,305,564 32,011,577 16,675,360 17,465,305 4,408,431 16,527,127 4,068,581 3,807,197 13,795,890 4,343,480 23,193,751 8,654,355 10,898,880 5,067,519 8,960,015 1,858,041 1,637,733 7,804,742 86,969 833,612 1,608,372 94,910 3,798,681 10,152,274 11,686,464 5,905,213 3,837,363 7,476,201 11,019,662 5,088,077 6,626,300 $ 19,776,391 68,478,922 $421,103,401 80,056,169 $307,317,202 + 38 29 44 42 42 40 18 17 17 14 Md. Sales, Dec. ’50 vs. Dec. ’49____ Sales, 12 mos. ’50 vs. 12 mos. ’49 $ 86,986,300 1,086,590 2,064,216 4,375,700 2,719,765 The North Augusta Banking Company, North Augusta, S. C., opened for business on January 15, 1951, and has agreed to remit at par for all its checks received from the Federal Reserve Bank. This bank is in the territory of the Charlotte Branch of the Federal Reserve Bank of Richmond, and its combined transit number-check routing symbol is 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) ----Sales, Dec. ’50 vs. Dec. ’49 Sales, 12 mos. ’50 vs. 12 mos. ’49 Stocks, Dec. 31, ’50 vs. ’49 — Orders outstanding, Dec. 31, ’50 vs. ’49_______ Current receivables Dec. 1 collected in Dec. ’50_______ Instalment receivables Dec. 1 collected in Dec. ’50_______ 3,468,900 4,275 32,750 65,250 56,418 ADDITION TO PAR LIST + ♦- Rich. + 5 + 6 + 30 $ 12 Months 1949 17 D.C. Va. The new institution was established with capital stock of $100,000.00 and surplus and undivided profits of $65,000.00. The officers are Herbert J. Upchurch, President, and E. E. Miller, V ice Presi dent and Cashier. s.c. + 3 + 4 + 4 W .V a. N.C. + 13 + 5 + 4 + 2 + 4 + 2 + 2 + 5 +11 H 2y