The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEL RESERVE BANK RICHMOND January 1952 o Num ber of ■ Mills I Woolen Mill EU I Worsted Mill 0 2 Woolen Mills mi 3 Woolen Mills E 3 4 Worsted Mills FIFTH DISTRICT INDUSTRY WOOLEN AND WORSTED MILLS T T Toolen textiles have not usually been associf r ated in the public mind with the South, which has long been the predominant cotton spinning sec tion, and, in recent years, increasingly important in rayons and the newer synthetics. Lately there has been an increase in woolen and worsted yarn and fabric output, a trend that is mirrored in the chart above and described in the article beginning on page 3. Also In This Issue ----------- Fifth District Trend Charts-.____________ Page 2 Agricultural Outlook for 1952___________ Page 5 Fifth District Newbriefs --------- ----------- Page 7 Business Conditions_____________________Page 9 Statistical Data_________________________ Page 11 National Business Conditions____________ Page 12 F e d e ra l R eserve Bank o f Richmond F if t h D is t r ic t T r e n d s BANK DEBITS CIGARETTE PRODUCTION The adjusted index of bank debits rose to a new high level in No vember, but it was less than .5% above October. Relative to a year ago the District’s gain in November was 12% . There were unusually large gains in tobacco marketing cities and in Columbia, South Caro lina, Newport News, Virginia and Bluefield, West Virginia. Despite the higher excise tax rate effective in November, cigarette production rose 8% more than seasonal from October to a level 12% ahead of a year ago. In the first 11 months of the year the Dis trict’s output of cigarettes was 6% ahead of a year ago. It seems likely that a gain will be registered in 1952, but not quite as large as in 1951. BITUMINOUS COAL PRODUCTION HOSIERY PRODUCTION - UNITED STATES November output of bituminous coal (adjusted) was 4 % higher than in October and 24% ahead of November 1950. The District output in the 11 months was 17% ahead of a year ago compared with a gain in the country as a whole of 5 % . In the period January 1 through December 1 foreign cargo shipments have been respon sible for the gain in loadings at the ports of Hampton Roads and Baltimore. Hosiery production in the United States rose 3% from September to October after seasonal correction, but was 12% under October 1950. It appears from trade reports that both November and Decem ber will show rises from the October level, but these likewise will run considerably below a year ago. Hosiery prices are too low for the industry in general to operate profitably and unless improve ment in retail demand continues, operations are likely to recede. BUSINESS FAILURES LIFE INSURANCE SALES Business failures in the District turned upward in November, hav ing risen 45% more than seasonal from October, but held at a level 18% under November 1950. Although operating conditions for finan cially weak concerns in several of our major industries have been such as to promote failures there is no evidence thus far that the November rise has establishead an upward trend. In fact, the rate of failures is still well below a level which might be anticipated by precedent. Life insurance sales in the District during November rose 2 % (ad justed) from October to a level 23% ahead of a year ago. Aside from August and September of 1950, in anticipation of a war clause November life insurance sales in this District are at an all-time high. This is a remarkable achievement in inducing people to save in a period when inflation has been threatening. i 2 y y t fc w M jiy jf l c /t e u * January 1952 Woolen and Worsted Textile Developments has again been focused on the wool indus try in the Fifth Federal Reserve District by the American W oolen Company’s purchase of the Premier Mill in Raleigh, North Carolina. Such a development is interesting as another illustration of the current rapid industrial expansion of the South. And, collaterally, since, in this case, the biggest factor in the wool industry is involved, it accentuates the question: will the woolen and worsted industry move South as the rayon and cot ton industries did? A spindles, looms in place (woolen and worsted grouped together) ; for purposes of this analysis, the dates se lected are 1939, 1943, 1945, and 1949. One of the most significant trends indicated by the data is that the total number of woolen spinning spin dles, worsted spinning spindles, and looms for the United States decreased each year from 1939 through 1949. On the other hand, the reverse situation prevailed in the Fifth District with the exception of looms, which were less in 1943 than in 1939. The net result has been that a steadily increasing per cent of the national wool machinery is to be found in the Fifth District. W orsted spinning spindles in this area amounted to a .72% of the national worsted spinning spindles in 1939 and 2.47% in 1949; woolen spinning spindles increased dur ing the same period from 3.20% to 6.23% of the na tional total; and looms in this area from 3.49% to 7.36% . Even though the Fifth District wool industry has experienced large percentage gains relative to the total industry, it still accounts for only a small portion of the United States wool industry. Most of the growth has occurred during the postwar period. W oolen spinning spindles in the Fifth District numbered 58.0 thousand in 1939, 64.3 thousand in 1943, 65.1 thousand in 1945, and 88.8 thousand in 1949. W orsted spinning spindles increased from 15.5 thou sand in 1939 to 22.1 thousand in 1943, to 29.1 thousand in 1945 and 45.4 thousand in 1949. W oolen and worsted looms numbered 1.7 thousand in 1939, 1.6 thousand in 1943, 1.7 thousand in 1945, and 2.8 thousand in 1949. t t e n t io n W ool Industry in the Fifth District Production of raw wool is of relative minor impor tance in this area, with the Fifth District states account ing for less than 2% of the national production of shorn wool. More than 85% of Fifth District’s wool produc tion comes from Virginia and W est Virginia. W hile some wool mills have been located in this area since the early years of our nation, most of the growth has occurred during the past few years. In the Facts for Industry’s latest report “ W ool Manufacturing Equip ment in the United States: 1949,” the states of the Fifth District are listed separately for the first time. This publication, together with Facts for Industry’s monthly publication, “ United States W ool Manufactures,” and Davidson's Textile Blue B ook, provide sufficient data to study the wool industry in the Fifth District from 1939 to 1949. Since a few mills do not report the num ber of looms and spindles, figures for the Fifth District may be slightly understated. Analysis of the wool industry normally concerns it self with woolen spinning spindles, worsted spinning As the following table shows, the growth has not been evenly distributed among the Fifth District states: Woolen and Worsted Machinery in Place Fifth Federal Reserve District Woolen Spinning Spindles (number) ( % of total) Worsted Spinning Spindles (number) (% of total) Woolen & Worsted Looms (number) ( % of total) 1939 MarylandVirginia_ North CarolinaSouth CarolinaFifth District_______________ 8,520 19,884 18.260 10,152 1,200 14.7 34.3 31.5 17.5 2.0 * 2,700 6,048 6,762 58,016 100.0 15,510 * 17.4 39.0 43.6 167 388 263 646 268 9.6 22.4 15.2 37.3 15.5 100.0 1,732 100.0 5.6 30.8 5.2 41.1 17.3 100.0 1919 MarylandVirginiaWest Virginia— North CarolinaSouth CarolinaFifth District- 8,690 22,954 9,650 38,060 9,442 9.8 25.8 10.9 42.9 10.6 * * 18,072 27,360 39^8 60.2 154 851 143 1,134 479 88,796 100.0 45,432 100.0 2,761 '"Data withheld. Source: Davidson*s Textile Blue Book , and U. S. Department of Commerce— Facts for Industry. ^ 3 ^ F e d e ra l R eserve Bank of Richmond The greatest growth has occurred in North Carolina and South Carolina, while the industry has suffered a decline in W est Virginia. Since 1949, two new woolen mills have been estab lished in this area; expansion of the industry in the Fifth District has, however, not been limited to these new mills. Incomplete data as of July, 1951 show that worsted spinning spindles in North Carolina and South Carolina amount to 71.0 thousand or 3.99% of the na tional total, as compared with 2.47% of the national total in 1949. Handling of Raw W ool In discussing the wool industry in the Fifth District, it may be useful to look into some general characteristics of the woolen and worsted industry. Many processes are required to move wool from the sheep’s back to man’s back. The first of these processes is shearing (cutting the fleece from sheep, most of them descend ants of the Spanish merino sheep) which usually takes place once a year. The fleece is rolled into bundles, packed with other fleece in sacks, and shipped to a ware house or market center wThere it is graded on the basis of average fineness of fiber, strength of fiber, and length of fiber, with many different grades, some attributable to breed and others to environment. W hile breed deter mines the possibility of a fleece, such things as weather, water supply, and type of soil have decided effects on wool grades. Four wool grading systems are in use— counts, blood, South American and pulled wool system, with the first mentioned system the most widely used. A t this stage of processing, the fleece is known as “ grease w ool” and allowance must be made for shrink age (average 6 0 % ) which will occur when the fleece becomes “ clean w ool.” A fleece is not a single grade but made up of several grades. The process of sepa rating the fleece into grades is known as wool sorting. W ool may also be obtained from pelts of sheep slaugh tered for mutton and then is known as pulled wool. Another class is carpet wool, which comes from primi tive sheep which grow a hairy coat over the fine wool. After the wool is cleaned by wool-scouring and car bonizing (chemical removal of vegetable matter), the fibers are blended in the desired combination and oiled. A t this stage, the process divides into two separate operations— woolen and worsted. The preparation of woolen yarn is simpler than that of worsted yarn. appearance as distinguished from the rough and bulky appearance of woolen yarn. The yarn may be dyed be fore or after weaving. W eaving converts the yarn into fabrics of varying designs and after several finishing operations, the cloth is ready for sale. The location of the wool industry within the Fifth Federal Reserve District is seen in the map on the cover. Interestingly and contrary to what the layman would probably have guessed, the wool industry has frequently not followed the “ beaten path” made by the other textiles— cotton and rayon. Mills are located as far north as Baltimore and are largely in the moun tainous areas of Virginia and W est Virginia. In North Carolina and South Carolina, the wool industry does tend to parallel the location of the cotton industry. One woolen mill and four worsted mills are located in Gas ton County, North Carolina, which has the largest num ber of wool mills in any Fifth District county and is the center of the combed cotton yarn industry. Even in the Carolinas, however, wool mills have seemed to locate in the mountains further west than the cotton industry. O f the 67 wool mills in the area, only 15 manufacture worsted yarn or fabric. One worsted mill is located in Shenandoah County, Virginia, nine in North Carolina and five in South Carolina. Probable Future Developments The future of the woolen and worsted industry in the Fifth Federal Reserve District probably will be affected by two sets of circumstances. First, should conditions in New England remain static and wages and other cost factors make it more difficult for wool manufac turers to operate, it seems logical that more northern plants will either move South or locate branches here. On the other hand, wool is indubitably facing increased competition from synthetic fibers. Not only has rayon shown marked ability to imitate wool, but more recent fibers such as nylon, orlon, and vicara give promise of a quality perhaps equal, if not superior in some ways to wool. The competition of synthetic fibers is not limited to improved quality. The higher price of wool in the international market, particularly following the outbreak of the Korean W ar, has given an added impetus to the use of synthetics. Most new wool machinery is equipped to produce not only wool cloth but similar cloth made from synthetic fibers. New or modernized mills should, therefore, be in a position to switch from production of wool to syn thetic fabrics with relative ease, should consumer de mands so direct. The “ natural” woolen and worsted industry in the Fifth District still represents a fairly small portion of the national industry, but there seem to be good basic reasons to believe that its growth in one form or another will continue and it may well be a relatively rapid one. W oolen c a r d in g d is e n ta n g le s lo c k s and bunches, straightens the individual fibers, removes impurities, mixes the stock, and arranges the fibers in a lap or rope ready for spinning. W oolen spinning then converts the fibers into yarn suitable for weaving. W orsted carding is more intensive than woolen carding and before spin ning, worsted fibers undergo an operation known as combing, wThich gives the yarn a straight, smooth, clean 4 4 V January 1952 The Agricultural Outlook for 1952 in the Fifth District can reasonably expect production gains are expected this year, although the another good year in 1952 for they should be operat increase is not likely to exceed the one made in 1951. ing in a high-level economy featured by large defense Increased production in 1952 will probably prevent expenditures, full employment, a presumption of slowly any material increase in average prices of farm prod rising prices, and hence a strong demand for farm ucts, although higher production will raise gross farm products. income. Most or all of the increase will be needed to Since farm production is likely to be higher in 1952, pay higher production costs. Net farm income in 1952 average farm prices will not be very different from those is estimated by the Bureau of Agricultural Economics witnessed last year. Gross farm income may be up as at about $15 billion— about the same as in 1951. B A E ’s much as 5% , with most of the increase offset by higher estimate may be on the low side, but it does seem un farm costs. Realized net in likely that net farm income come of farmers in 1952 is in 1952 will have more pur estimated to be about the chasing power than in 1951 INCOME OF FARM OPERATORS same as in 1951. b e c a u s e o f in c r e a s e s in U N ITED STATES These were the general prices paid by farmers. BILLIONS OF DOLLARS conclusions reached by farm 40 Financial Position of and home economists at the Farmers Generally Annual Agricultural O u t Strong look Conference held at the a r m er s F Department of Agriculture in Washington. Bankers and other farm lenders can expect an in c r e a s e d d e m a n d fo r fa rm Strong Demand for Farm loans this year. Although Products to Continue the general financial posi 20 Chief among the reasons tion of farmers is strong, ris f o r e x p e c t in g h ig h le v e l ing production and living business activity, e m p lo y costs and the desire to make ment, and consumer income in c r e a s e d c a p ita l invest 10 this year is the defense pro ments in la n d , b u ild in g s , gram which is designed to machinery, and livestock are total nearly a fifth of na e x p e c t e d to ca u s e m a n y tional spending for goods farmers to expand their bor 1942 1944 1946 1948 1950 1952 1941 1943 1945 1947 1949 1951 rowings. and services. A s a result * INCLUDING GOVERNMENT PAYMENTS. wages and incomes of city In 1951 the total assets of SOURCE: USDA, BUREAU OF AGRICULTURAL ECONOMICS. people are likely to increase, A m e r ic a n fa r m e r s w e r e and unemployment will con about $143 billion as com tinue small. Export demand pared to less than $13 bil for cotton, tobacco, and some other farm products should lion in debts. Most of the assets were in real estate, live be fairly good in 1952 despite fiscal difficulties and pro stock, machinery and other physical goods which have posed import restrictions in some countries importing been rising in value in terms of current prices. Finan United States farm products. cial assets alone totaled $22 billion and were about 175% as large as total debts owed. This stands in sharp con Somewhat more food and other farm products will be trast with 1940 when farmers' debts were double their available for consumers this year. Food prices may financial assets. average a little higher than in 1951, chiefly because 30 marketing and processing costs are expected to increase, but civilian food supplies and consumption per person will be a little higher. Retail meat prices in 1952 seem unlikely to average much different from 1951, although more beef and a little less pork will be available. Farm Income and Expenses to Rise Farm production in 1951 will probably total 3% more than the year before when final figures are drawn. Continued high production is needed in 1952. Further Good Demand Ahead for Cash Crops Prices for the 1951 flue-cured tobacco crop are ex pected to average about 52 cents per pound as com pared to 54.7 cents in 1950; flue-cured production, how ever, was up about 12% . M ore of the leaf fell in the lower grades in 1951 and this is believed to be chiefly responsible for the lower average price. Total disappearance of flue-cured during July 1951June 1952 will likely be higher because of larger -I s y F e d e ra l R eserve Bank of Richmond Cattle prices in 1952, even with a higher slaughter, exports and increased consumption in this country. In view of the strong demand in prospect, 1952 flueare expected to average about the same as last year in cured prices should average near 1951 levels, or pos view of the strong demand. Larger marketings should ease some of the upward pressure on price ceilings. sibly a little higher if the grade distribution of the crop H og marketings during the first six to eight months is more nearly normal. Flue-cured acreage allotments of 1952 should be larger than in 1951, and prices are for most farmers will be unchanged in 1952. In cotton, the outlook is for a continued tight supply likely to be about the same or a little lower. The present hog-corn ratio is less favorable for hog production than situation. The 1951 crop, according to the December 1 it has been for nearly three years. A s a result, the 1952 estimate, totaled 15.3 million bales. W ith a carry-over on August 1 of about 2.2 million bales and small im spring pig crop will be smaller, and hog prices in the fall of 1952 could be somewhat higher than a year earlier. ports, the total supply for the year beginning August 1 Egg and Poultry Production Higher is about 17.8 million bales. Estimates of the 1951 crop have been materially re More layers will be on farms at the beginning of duced since last August, and 1952, and egg production in c o t t o n p r ic e s h av e ris e n the first three quarters of sharply. In mid-December the year should be larger MEAT* CONSUMPTION PER PERSON AND the 10-market average for than in the same period in AVERAGE RETAIL PRICE - UNITED STATES Middling 1 5/16" was about 1951. E gg prices no higher POUNDS CENTS 42 cents per pound, 8 cents than in 1951 are expected higher than in August and during this period, and to only 3 cents under the ceil g e th e r w ith h ig h e r fe e d ing price. prices may result in farmers Exports and domestic mill starting fewer chicks. consumption in the 1950-51 I f fa r m e r s ra ise fe w e r crop year totaled 14.6 mil pullets this year— as seems lion bales. In the 1951-52 likely — lower egg produc crop year it is estimated that tion in the fall of 1952 could exports will be substantially raise egg prices above the above the 4.1 million bales fall period of 1951 and make exported last year and mill the e g g -f e e d r a tio m o r e consumption may total 9.5 profitable. m illio n b a le s . The r e s u lt B r o i le r p r ic e s a re n o w would be a carry-over next about the same as a year August 1 not much larger ago, although feed prices are than last year. higher, and as a result prof 1942 1944 1946 1948 1950 1952 In v ie w o f th e sm all its of broiler producers have 1941 1943 1945 1947 1949 1951 carry-over in prospect and been severely reduced. It is ♦EXC LUDES LARD. SOURCE: USDA, BUREAU OF AGRICULTURAL ECONOMICS. the c o n t in u e d s t r o n g d e expected that broiler prices mand, it would appear that in 1952 will average about more cotton production is the same as in 1951 but needed and that prices for the 1952 crop should be somewhat higher than the low levels of the last three favorable. N o quotas or acreage allotments will be in months. The supply of poultry meat will be larger in 1952. effect on cotton in 1952. Meat Supplies to Increase Although fewer farm chickens may be raised, increased Consumers can expect somewhat more meat in 1952, broiler output and increased slaughter of mature chick but livestock prices should average about the same as ens will offset the reduction in farm chickens raised. last year. Milk Production Steady Total meat production may be up about 5% , and In 1952 consumer demand for milk will continue strong, milk production will be about the same, and average prices received by farmers should be somewhat higher. A part of the increase in the average prices will result from more milk being consumed in fluid form instead of going into manufacturing uses. Rising feed and labor costs are expected largely to offset increases in milk prices in 1952, leaving milk production slightly more profitable than in 1951. civilian per capita meat consumption is likely to average 144_146 pounds in 1952 as compared to 141 pounds in 1951. Pork production will probably be a little less than in 1951 while an increase of around 10% in beef and veal production is expected. Livestock feeding ratios in 1952 will be somewhat less favorable than in 1951 because of higher feed prices. Feed supplies for 1952 are somewhat smaller but still reasonably adequate. \ 6 y January 1952 FIFTH DISTRICT NEWSBRIEFS CURRENT DEVELOPMENTS IN — Newport News Shipbuilding and Dry Dock Co. began its second “ mile-of-tankers” in the three years on November 29 with the laying of the keel of the first of a series of six super-tankers for the Esso Shipping Co. The vessel will be 628 feet long with a displace ment of 26,800 tons. During 1949 and 1950 the Penin sula yard completed 10 super-tankers for Esso. In cluded in the new contracts will be four oil carriers for Texaco Oil Co. $32 million rayon staple plant at Nitro, W . Va. The permit did not contain an allotment of con trolled materials, but it is understood that the company will apply for these in a second period allotment. Included in the initial period permit was approval to obtain over $11 million in pro duction machinery and equipment. Started in January 1951, the building is scheduled to be completed early in 1953. Also in the Hampton Roads area— the Navy has announced contract awards for construction at the Norfolk Naval Air Station of turbo-prop engine test cells involving outlays of $598,409. Bids are under consideration by the Navy for the construction of buildings to house its pro posed radio receiving station at Northwest, Va. This station will be one of three installations composing a new Atlantic Fleet communica tions center. The over-all cost is reported at $12 million. It is reported that B. F. Goodrich Chemical Co. has perfected a new process that will augment the nation’s rubber-producing capacity by over one-fourth. The new technique is in use at the world’s largest rubber plant located in Institute, W . Va. which is operated by this company for the Government. In another sector of the chemical industry, Davison Chemical Corp. of Baltimore has been granted a certifi cate of necessity for the construction of a plant to re cover uranium from phosphate rock and for the produc tion of triple super-phosphate. The Baltimore Paint and Color W orks reports that construction is under way on a 40,000 sq. ft. expansion of its new Annapolis Road plant in Baltimore. Units already completed at this 8-acre site include a resin and varnish plant and an industrial finishes division. T h e Increased shipments handled by the Western M ary land Railway have led that carrier to undertake an ex tension of its Baltimore pier at a cost of $1.5 million. District Shares Growth of Chemical Industry It has been reported that about one-half of the rearma ment-induced chemical plant expansion will be located in the South. Participating in this program to an im portant extent is W est Virginia which already has plants of most of the principal chemical companies in the coun try. One of the recent highlights of the capital-funds market was the $300 million loan obtained by Union Carbide and Carbon Co. from two large insurance com panies to finance new chemical plant construction dur ing the next three years. In connection with this pro gram, Union Carbide has applied for a certificate of necessity from the Government to build a $33 million synthetic fiber plant near Spray, N. C. This company has already started construction of additional facilities at its South Charleston, W . Va. plant for the production of a plasticizer needed for military purposes. The new installation, which will more than double the present capacity for producing this chemical, is expected to be in operation before the end of 1952. New Textile Facilities Glen Raven Knitting Mills, Inc. has begun construc tion of a building to house its tricot division in Bur lington, N. C. The new mill will provide 14,000 sq. ft. of floor space and is scheduled for completion during the first half of 1952. N o cost figures are available. The Minette Mills of Grover, N . C. reports initial con struction on new facilities for making bedspreads and upholstery fabrics. The new addition will expand pres ent output by 20% and add 16 new jacquard-type looms to the present set-up of 26 machines. The expansion program of Fieldcrest Mills is in various stages at its different plant locations. A t Fieldale, Va., a 30,000 sq. ft. addition to the finishing plant is under construction and is ex pected to be completed during the early part of 1952. A t Spray, N. C. the company has finished remodeling its former woolen mill buildings and installing the machinery in the conversion to a rayon mill. American Viscose Corp. has been granted a construction permit for a partially completed A 7 }> F e d e ra l Reserve Bank of Richmond A t Union, S. C., the Run-Prufe Hosiery Mills is adding 6,000 sq. ft. of floor space to its present plant. The undisclosed capital outlay for the additional plant and equipment will create about 125 new jobs. W est Virginia Sells Bonus Bonds Employing the unique procedure of selling directly to the retail market, the state of W est Virginia dis posed of $37.5 million of veterans’ bonus bonds during the first two weeks of December. $30,622,000 of the controversial bonds were acquired by banks of the state and other private investors and $6,878,000 were bought by W est Virginia state investment funds. The securities will pay the holders an average annual interest rate of 2.225%. Belding-Heminway Co.’s new $2 million plant at Hendersonville, N . C. began operations during Decem ber, producing Nymo Monocord thread from du Pont nylon. Employment at the new unit is expected to reach 100 within a few months. Utilities Continue to Blueprint Expansions An issue of $67.5 million of bonus bonds was offered to investment bankers last May, but in view of the statement by the National Volun tary Credit Restraint Committee that the offer ing did not conform to the Voluntary Credit Restraint Program, no bids were submitted. After subsequent unsuccessful attempts to clear the issue with credit restraint authorities, a plan was drawn up to sell the bonds on the open re tail market, with banks within the state acting as agents during the subscription period and with state investment funds taking up the slack, if any, of unsold bonds. A t Union, S. C. the Lyes Ford Tri-County Power Authority has announced plans to construct a $114 mil lion hydro-electric installation on the Broad and Congaree Rivers. The application filed with the Federal Power Commission stated that two dams across the Broad River, at Blairs and Frost Shoals, and a regu lating dam on the Congaree River near Columbia would be constructed. Combined output at the Blairs and Frost Shoals would be 380 million k.w. hours annually; the Columbia plant would generate about 115 million k.w. hours a year. One project beyond the blueprint stage is the huge new steam generating plant to be built by the South Carolina Electric & Gas Co. on a 122-acre site on the Savannah River in Aiken County. Construction for the first two generat ing units will begin early in 1952. These 75,000 k.w. generators, capable of producing more than a billion k.w. hours of power annually, should be ready to go on line by April 1953 and will cost about $25 million. It is intended ultimately to increase the total capacity of the plant to 300,000 k.w., involving an aggregate investment of about $45 million. The president of the com pany stated that the new plant would have power available for the nearby Savannah River Atomic Energy Plant as well as for the Com p a n y ’ s se rv ic e area in 22 S o u th C a ro lin a counties. The Blue Ridge Electric Corporation has announced its intention of building a $15.5 million dam and hydro electric plant on the South Fork River in A sh e County, N. C, The addition of a third generating unit is planned by Monongahela Power Co. to its plant at Albright, W . Va. The cost of the new installation will be about $17 million. The Chesapeake & Potomac Telephone Co. plans capital outlays of about $4.6 million for improvements and expansions. Included are additional facilities in Silver Spring and Hyattsville, Md. costing about $1.8 million and installation of dial equipment in E ssex, Md. at a cost of $1.2 million. Under authority of the constitutional amendment pro viding for the bonus bonds, statutes were enacted levy ing additional taxes on cigarettes and beer and increas ing prices of alcoholic liquors. These revenue measures brought in $2,634,603 during the first five months they were in effect. On an annual basis, the amount avail able for servicing the bonds would be over $6.3 million. It is reported that when additional funds are needed for bonus payments to veterans of W orld W ars I and II, the state will offer a second installment of $37.5 million of bonds. Income Tax Gains Importance in State Revenues A trend toward income taxes as producers of the greatest single source of state revenue is disclosed by recent data. Virginia, North Carolina, and Maryland— all in the Fifth District— increased from six to nine the number of states reporting income taxes as their largest sources of tax revenue in 1951. Virginia and North Carolina in the previous year had collected the largest amounts of revenue from gasolene taxes, while a sales tax had been the main revenue-producer in M ary land. However, the sales tax continues to be the chief reliance of many state revenue systems, 21 states report ing it as their top source of tax revenue in 1951. In the other states of the Fifth District, gasolene taxes accounted for the largest percentage of tax revenue in South Carolina, while W est Virginia again led the na tion with the highest percentage— 58% — of revenue from the sales tax. In this state the sales tax total in cludes a mining severance tax which is reported sepa rately in other states. i 8^ January 1952 Business Conditions and Prospects h e business situation in the Fifth Federal Reserve District continues to exhibit the mixed trends so evident during the past two or three months. The trade level in November continued to be the strong factor. Production of soft goods, in a moderately depressed state in much of the last half-year, is consolidating and somewhat better operations appear in prospect for the early part of the new year. Seasonal factors have re tarded the construction industry, while the financial situation displays evidence of a strengthening economy. Prices of the commodities produced in the District are either stabilizing or rising moderately. Although some prices are at a no-profit level, the outlook is more hopeful. T P rodu ction Trade Although consumption of cotton in the District mills declined 1% (after seasonal adjustment) from October to November and to a level 7% below November 1950, numerous mills stepped up their working time in both November and December. It is probable, however, that long holidays will put December operations under those of November. The market situation, however, evidences more stability and a considerable amount of new busi ness, though selective, has been written for the first quarter. Textile prices are generally firmer and appear more likely to rise than fall. In other wx>rds, some im provement can be expected in cotton textile operations, though it is not likely that the high rate of last spring will be soon witnessed. Department stores in the District gave a wholesome performance in November when sales rose from O cto ber 4 % more than is normally seasonal to a level 15% ahead of November 1950. Owing partly to very sloppy weather conditions in two weeks of December the Christmas trade has apparently fallen below expecta tions and the adjusted index of December sales will probably show a decline from November. This, how ever, would hardly indicate a reversal in the upward trend of sales in evidence since the fall of 1949. De partment store stocks continue their downward trend and declined 2% (adjusted basis) from October to November to a level only 2%> ahead of a year ago. Con sidering the general upward trend in sales stocks can no longer be considered uncomfortably high. Operations improved somewhat in the hosiery indus try in November and in early December largely as a re sult of fill-in requirements for the Christmas trade. Sales of hosiery at the retail level have been good but not spectacular and the store inventory situation is in a more satisfactory position. It seems likely that purchasing policies of retails and wholesales will be on a handto-mouth basis for some months, or until some extraor dinary factors combine to give more impetus to retail demand; but even so, demand on the hosiery producers should be at a better level than prevailed in the summer and fall of 1951. The price structure in the hosiery in dustry is still inordinately low and must rise soon in order to prevent serious difficulties for many units in the industry. Although sales of furniture stores dropped 3% (sea sonally adjusted) from October to November, they re main at high levels and 2% ahead of November 1950. Furniture store inventories, now well in line with the going sales volume, have ceased declining and orders to manufacturers may be expected more in line with the retail sales volume. This would indicate some im provement at the manufacturer’s level. Despite an increase in excise taxes from $3.50 to $4.00 a thousand, cigarette production in November rose 8% from October (after seasonal correction) to a level 12% ahead of a year ago. There is reason to believe that a further increase in cigarette demand will occur in 1952 although the gain will probably be very mod erate. Household appliance store sales in November failed by 2% to equal seasonal performance and ran 10% under a year ago. It is noteworthy that sates of this type of goods are five times higher than in prewar years. Inventories of household appliances remain high, but they are not large in relation to current sales and pro duction of such items may well fall in the coming year due to the defense program. Passenger automobile reg istrations in October declined 4% from September to a level 32% below October 1950, but truck sales rose 6% during October to a level 3% ahead of a year ago. There has been a fairly good balance between the supply and demand in automobiles despite the fact that production in 1952 is expected to be considerably below 1951. Bituminous coal production in November rose 4% (adjusted basis) over October and was 24% ahead of November 1950. This is the highest adjusted output since May 1949. The demand outlook on the domestic front indicates some further improvement and the ex port level is approaching the 1947 record. A continu ance of this trend is likely in 1952. A s the miners’ con tract expires at the end of March it is logical to antici pate a further building of stock piles. Coal prices are rising and any further increase in wages will probably cause them to rise further. The furniture industry improved its operations mod erately this fall and with retail inventories well worked down from the high levels early in the year, it is quite possible that furniture factories will secure a volume of 4 9> F e d e ra l Reserve Bank of Richmond Total loans of the weekly reporting banks reached a peak of $1,204 million on April 11, 1951 and had de clined $154 million by August 15. By December 19 they had risen to $1,213 million, a new high level. Com mercial, industrial and agricultural loans had regained the greater part of their loss from the spring peak while “ other” loans, or those largely to consumers, showed a steady upward trend throughout most of the year. Real estate loans, which had been in a moderate down trend during most of the year, moved upward quite sharply in the last half of November and early December. A l though demand deposits dropped $20 million in the week of December 19 from the previous week they were $287 million higher than a year ago and the trend is still upward. It should be noted that the adjusted index of bank debits established a new high level in November 1951. Although November’s gain over October was nominal, this index of total payments stood 12% higher than a year ago and with a price level averaging only 3-4% higher. D E B IT S TO IN D IV ID U A L A C C O U N T S 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 business in coming months comparing favorably with all but the inordinately high months of late 1950 and early 1951. Banking Nov. 1951 (000 omitted) Nov. 1950 Dist. of Columbia Washington $ 1,139,653 11 Months 1951 $ 9,650,080 955,058 $ 11,843,477 1,260,047 26,272 22,228 33,342 1,166,593 26,220 19,118 30,979 13,622,259 283,043 235,398 356,334 11,807,127 256,201 199,265 313,165 North Carolina Asheville Charlotte Durham Greensboro Kinston Raleigh Wilmington Wilson W inston-Salem 59,927 352,972 139,762 108,103 28,847 174,196 42,059 50,226 194,882 57,523 340,553 107,216 99,666 19,464 178,580 40,096 28,658 179,532 654,540 3,744,711 1,277,768 1,116,390 290,618 1,854,874 472,040 374,846 1,887,781 569,164 3,290,695 1,191,825 963,820 235,910 1,598,691 394,422 312,983 1,648,910 South Carolina Charleston Columbia Greenville Spartanburg 73,969 138,543 109,692 74,284 67,837 110,427 106,383 69,863 828,601 1,409,622 1,210,000 759,021 697,037 1,168,340 1,020,056 597,753 Virginia Charlottesville Danville Lynchburg Newport News Norfolk Portsmouth Richmond Roanoke 27,939 54,888 47,648 47,709 228,899 26,840 617,523 122,228 25,949 56,784 46,586 39,810 196,511 24,004 534,077 107,793 299,857 341,437 504,242 472,656 2,412,918 276,415 6,370,001 1,270,406 267,137 373,909 447,647 343,074 2,215,378 238,695 5,592,287 1,111,472 53,408 162,490 34,051 71,899 30,829 $ 5,555,855 42,636 149,246 31,877 64,174 26,752 $ 4,949,965 524,190 1,684,563 375,932 734,541 341,366 $ 57,869,847 453,013 1,456,452 334,054 649,974 294,497 $ 49,693,033 Maryland Baltimore Cumberland Frederick Hagerstown West Virginia Bluefield Charleston Clarksburg Huntington Parkersburg District Totals $ (000 Omitted) 11 Months 1950 ITEMS Dec. 12, 1951 Change in Amount from Nov. 14, Dec. 13, 1951 1950 Total Loans ____________________ .$1,199,799** Business & Agricultural _____ . 582,892 Real Estate Loans __________ 241,242 All Other Loans _____________ 390,313 Total Security Holdings _______ 1,860,049 U. S. Treasury Bills __________ 303,085 U. S. Treasury Certificates _____. 126,507 U. S. Treasury Notes ________ 308,176 U. S. Treasury Bonds ________ 918,233 Other Bonds, Stocks & Secur . 204,048 Cash Items in Process of Col. .... 294,952 Due from Banks _______________ 198,538* Currency & Coin _______________ 85,311 Reserve with F. R. Bank ______ 585,812 Other Assets ____________________ 56,157 Total Assets _________________ 4,280,618 + + + + + + — — — + 19,851 14,621 5,086 219 14,926 25,499 1,076 8,253 12,326 11,082 40,984 — 14,672 1,141 + 4,679 + 1,422 + 13,637 + 70,748 + 40,427 — 2,991 + 35,739 +170,576 +192,198 + 92,619 — 30,457 — 113,682 + 29,898 + 12,100 — 9,049 + 6,239 + 114,931 — 357 + 365,188 Total Demand Deposits ________ 3,332,140 Deposits of Individuals _______ . 2,498,492 Deposits of U. S. Government . 52,182 Deposits of State & Loc. Gov. _ 197,653 Deposits of Banks ------------------ . 529,949* Certified & Officers’ Checks ... 53,864 Total Time Deposits ---------------629,772 Deposits of Individuals _______ 557,270 Other Time Deposits ------------72,502 Liabilities for Borrowed Money 33,800 All Other Liabilities __________ 31,915 Capital Accounts _______________ 252,991 Total Liabilities _____________ $4,280,618 __ 12,190 + 31,118 — 29,068 + 30,378 — 40,188 — 4,430 — 8,069 — 8,761 692 + 6,300 + 152 + 170 + — 13,637 +294,059 +205,013 — 10,643 + 43,646 + 51,516 + 4,527 + 22,152 + 5,588 + 16,564 + 31,900 + 5,994 + 11,083 + 365,188 * Net figures, reciprocal balances being eliminated. ** Less losses for bad debts. January 1952 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 Nov. 1951 Automobile Registration1------------------------------------------------------Bank Debits__________________________________________________ _______________ Bituminous Coal Production--------------------------------------------------- _______________ Construction Contracts Awarded------------------------------------------- _______________ Business Failures— No------------------------------------------------------------ _______________ Cigarette Production_________________________________________ _______________ Cotton Spindle Hours________________________________________ _______________ Department Store Sales*--------------------------------------------------------- ................. .......... Electric Power Production___________________________________ Employment— Manufacturing Industries1-----------------------------Furniture Manufacturers: Shipments---------------------------------Life Insurance Sales_________________________________________ _______________ 435 168 469 61 263 145 118 334 Oct. 1951 Sept. 1951 Nov. 1950 177 433 161 391 42 244 145 114 368 154 327 329 185 430 153 420 50 235 149 109 354 156 316 294 217 388 136 569 74 235 158 103 343 151 440 271 % Change—-Latest Monti Prev . Mo. Year Ago — + + + + + + — + + 4 0 4 20 45 8 0 4 4 1 3 2 __ + + — — + — + + + — + 32 12 24 18 18 12 8 15 13 1 16 23 1 Not seasonally adjusted. *1947-1949=100. Back figures available on request. W H O L E SA L E TRADE Sales in Nov. 1951 LIN ES compared with Nov. Oct. 1950 1951 Auto supplies (13) ______________ + 5 + 1 Electrical goods (6) _____---- -------- + 5 0 + 6 — 10 Hardware (12) ___________________ Industrial supplies (7) ----------------0 — 15 Drugs & sundries (16) ----------------- + 1 9 + 4 Dry Goods (12) ___________________ + 5 — 6 Groceries (60) ____________________ + 9 — 5 — 4 Paper & products (6) ----------------- + 4 Tobacco & products (11) -------------- + 9 — 6 Miscellaneous (75 _________________ — 5 — 18 District Totals (218) ___________ + 5 — 8 B U IL D IN G P E R M IT F IG U R E S Stocks on Nov. 30, 1951 compared with Nov. 30 Oct. 31 1950 1951 + 8 — 2 + 3 0 — 14 + 21 + 2 0 + 41 + 9 — 7 —1 2 — 14 + 7 + 1 ----+ 7 + 6 + 21 + 1 +14 — 2 Nov. 1951 Nov. 1950 11 Months 1951 11 Months 1950 $ 4,219,590 13,075 747,186 92,450 69,937 $ 6,078,195 27,840 207,050 441,427 977,525 $ 77,403,845 2,044,328 2,808,041 3,948,070 1,520,495 $ 76,472,075 1,055,590 1,987,416 4,308,100 2,563,355 224,158 190,985 403,374 828,730 193,518 233,290 1,277,378 421,277 2,759,913 229,175 36,803 930,555 76,483 132,650 5,828,536 413,852 3,630,779 2,908,634 1,997,521 21,893,701 3,183,975 5,304,377 26,020,051 15,132,920 5,637,263 5,891,572 1,736,501 14,764,393 5,028,525 3,854,141 31,006,694 16,089,934 370,142 74,840 725,731 590,998 62,800 171,000 5,864,443 1,172,893 7,927,843 12,725,810 1,622,048 6,898,994 118,791 1,015,749 1,771,635 6,986,519 134,785 1,947,492 177,103 307,299 294,979 121,193 3,522,861 487,337 727,151 150,970 1,127,185 291,384 53,660 819,763 6,393,035 19,553,845 9,106,693 14,469,833 3,005,354 12,374,246 3,736,635 1,379,337 13,902,874 3,989,895 28,181,336 16,237,867 15,364,450 4,156,926 15,876,235 3,976,547 3,757,747 11,522,827 95,284 357,237 430,850 84,565 276,085 342,960 475,050 56,015 1,653,946 11,383,532 9,108,599 2,518,780 3,011,163 9,772,990 10,383,624 5,803,408 Maryland Baltimore Cumberland Frederick Hagerstown Salisbury Virginia Danville Lynchburg Newport News; Norfolk Petersburg Portsmouth Richmond Roanoke Number of reporting firms in parentheses. Source: Department of Commerce. R E T A IL F U R N IT U R E SALES West Virginia Percentage comparison of sales in periods named with sales in same periods in 1950 Nov. 1951 11 Mos. 1951 Maryland (6) -------------------------------------+25 — 2 + 8 + 1 District of Columbia (7) ------------------Virginia (18) -------------------------------------+ 3 — 5 West Virginia (9) -----------------------------+47 + 2 North Carolina (14) ---------------------------+24 — 4 South Carolina (6) ---------------------------+ 9 — 9 District (60) ------------------------------------+16 — 1 INDIVIDUAL CITIES Baltimore (6) _________________________ +25 — 2 Washington, D. C. (7) ---------------------+ 8 + 1 Richmond, Va. (6) ___________________ 0 — 11 Charleston, W . Va. (3) ______________ +29 + 2 Charleston Clarksburg Huntington STATES North Carolina Asheville Charlotte Durham Greensboro High Point Raleigh Rocky Mount Salisbury Winston-Salem Number of reporting firms in parentheses. South Carolina Charleston Columbia Greenville Spartanburg D E P A R T M E N T ST O R E O P E R A T IO N S (Figures show percentage change) Sales, Nov. ’51 vs. Nov. ’50 .. Sales, 11 Mos. ’51 vs. 11 Mos. ’50 _________________________ Stocks, Nov. 30, ’51 vs. ’50 — Outstanding orders, November 30, ’51 vs. ’50 Current receivables Nov. 1 collected in Nov. ’51 ---------Instalment receivables Nov. 1 collected in Nov. ’51 -------Md. Sales, Nov. ’51 vs. ’50 + 1 3 .1 Sales, 11 Mos. ’51 vs. 11 Mos. ’50 ________ + 6.1 Rich. + 1 1 .9 Balt. + 1 3.2 Wash. + 1 1 .8 Other District Total Cities + 11.6 + 12.1 + 6.5 — 8.3 + + + + 4.1 5.6 + 4.0 — 6.6 + 4.9 — 0.9 — 8.6 — 1.6 — 10.9 — 3.9 — 7.3 30.6 49.2 47.4 45.2 43.8 16.1 D.C. + 1 1 .8 17.5 Va. + 1 2 .6 20.1 W .V a . + 2 2 .3 20.6 N.C. + 6.3 18.7 S.C. + 5.4 + + 4.1 6.4 0.1 6.7 + 7.1 0.0 + Dist. of Columbia Washington District Totals 4.1 U if 4,075,940 4,396,728 58,821,117 65,734,072 $27,883,889 $31,813,144 $350,169,742 $389,411,498 F e d e ra l R eserve Bank o f Richmond NATIONAL SUMMARY OF BUSINESS CONDITIONS (Compiled by the Board of Governors of the Federal Reserve System) General business activity continued to show little change at the end of 1951. Industrial output, construction activity, employment, retail sales, and wholesale prices remained somewhat below the peaks reached earlier in the year and were at about the same levels as at the end of 1950. Con sumer incomes and prices were above year-ago levels. Total bank credit outstanding and the privately-held money sup ply were also larger than at the end of 1950. Industrial Production The Board’s index of industrial production in November held steady at the October level of 218 per cent of the 193539 average. Nondurable goods output remained at the re duced October rate, while a small increase in production of durable goods was offset by a decline in mining. Steel production was at a new record as electric furnace utilization in November reached rated capacity for the first time since early 1949 and despite scrap shortages, steel mill activity increased slightly further in early December. Re finery output of nonferrous metals was practically unchanged from the postward high of October. Over-all activity in producers equipment and munitions industries continued to expand somewhat. Auto assembly declined further in No vember and December; assemblies will be close to 1.1 mil lion units in the fourth quarter, about one-third below the corresponding period last year. Output of the textile and leather industries was unchanged in November following sharp curtailment in previous months. Paperboard production, however, continued to de cline in November, while output at most paper mills ap parently remained at very high levels. Reduced minerals production in November reflected largely a cut in crude petroleum which more than offset fur ther expansion in bituminous coal mining. Iron ore mining decreased somewhat more than seasonally from earlier rec ord levels. Construction Value of construction contract awards declined seasonally in November, reflecting decreases in most categories of pri vate awards. The 76,000 housing units started in Novem ber brought the 11-month total to 1,023,000 units, 21 per cent less than the record started in the comparable 1950 period. Expenditures for construction put in place, allow ing for seasonal influences, were little changed from Octo ber, and about as large as in November 1950. Employment Seasonally adjusted employment in most nonagricultural lines in November remained at or close to October levels, and total nonagricultural employment continued slightly below the mid-1951 peak. At 40.3 hours, the average work week at factories was little changed from October, while average hourly earnings rose slightly to a new peak of $1.62. Unemployment increased by 200,000 to 1.8 million, reflecting to some extent the seasonal curtailment of outdoor activities. Agriculture Crop prospects declined further during November and output for the year is now estimated to be only 2 per cent larger than in 1950. Grain production is indicated to be 6 per cent smaller, while cotton output, though substantially below early estimates, was reported to be 53 per cent greater than last year’s small harvest. Meat production has been increasing seasonally and is now at about year-ago levels; egg production in November was 6 per cent above last year. Distribution Seasonally adjusted department store sales showed little change from the third to the fourth quarter and the value of holiday sales was about the same as in 1950. Dollar volume of sales for the year is expected to be approximately 3 per cent larger than in 1950. Inventories held by department stores showed a further decline in the fourth quarter, after seasonal adjustment. Commodity Prices The average level of wholesale commodity prices con tinued to show relative stability from mid-November to the fourth week in December. Changes have been largely among agricultural commodities and seasonal in character. Although the December 10 Government cotton crop estimate of 15.3 million bales was 480,000 below the November estimate, in the week following release of the report raw cotton prices declined about \y2 cents per pound, about as much as they had advanced in late November. The consumers price index advanced .6 per cent from midOctober to mid-November reflecting chiefly a rise in food prices and increased excise taxes. Bank Credit Total bank credit outstanding at banks in leading cities increased further in November and the first half of Decem ber. The increase was dominated by a continued rise in bank loans to business, particularly to commodity dealers; food, tobacco, and liquor manufacturers; and metal and metal products manufacturers. The rise in business loans was particularly marked in the first half of December. De posits and currency of individuals and businesses continued to increase in November and early December, largely be cause of expansion in bank loans and investments. Banks in the larger financial centers increased their in terest rates on new loans to prime business borrowers by % per cent, from 2^4 to 3 per cent, in December. This was the second increase in the rate on these loans in two months. Member bank reserve positions have generally been under some pressure since late November due in part to seasonal factors. Federal Reserve holdings of Government securities were unchanged until late December when short-term securi ties were purchased to maintain orderly market conditions. Security Markets Yields on U. S. Government and high-grade corporate se curities were steady during the first half of December and rose thereafter. In late December, yields on most types of bonds were considerably higher than a year ago and money market tightness was reflected in higher rates on all types of short-term paper. On December 3 the Treasury an nounced the offering of new 1% per cent certificates of in debtedness to holders of the 1.1 billion dollars of 2% per cent Treasury bonds of 1951-53 maturing December 15.
@FedFRASER