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FEDERAL RESERVE BANK OF RICHMOND
J U L Y 31, 1 9 4 B

R I C H M O N D 13 , V I R G I N I A

Business Conditions

S

PECTACU LAR performances during June occurred
in department store and furniture sales and building
permits in the Fifth Federal Reserve District. Each of
these indicators in June established new high levels or
equaled previously established records.
Trade
Normally there is a decline of 11.4 percent in dollar
sales of department stores from May to June, but this
year June sales were within 1.5 percent of those in May,
and as a consequence the seasonally adjusted index rose
10 percent in this period to a new high level. Details by
departments are not yet available, but it is apparent
from the strength shown that the incidence must have
been store-wide. Strength in department store sales
carried over into the first three weeks in July.
Nationally sales of department stores in June rose
about 1 percent on a seasonally adjusted basis, and al­
though at a new high level it is still insufficient to give
much comfort to those industries in the Fifth District
whose operations are retarded for lack of demand. A
drop in seasonally adjusted department store inventories
of 4 percent in the nation and 8 percent in the Fifth Dis­
trict, however, brings the time closer when an increased
amount of new business by cotton and hosiery mills and
work clothing factories can be expected, even though
store purchasing policy remains conservative.
Operations of furniture factories of this District have
been adversely affected in recent months as aggregate
demand and supply have for the moment been brought
into balance at current prices. Employment level in this
industry in North Carolina and Virginia have gradually
receded since February or March largely as a result of
sales resistance in the lower-medium and cheap lines.
Retail furniture sales in the Fifth District in June rose
14 percent after seasonal corrections to the proximity
of the peaks made in June and November, 1947. If
national figures confirm the strength in demand shown
for furniture in the Fifth District it is probable that
furniture factories o f the District will resume opera­
tions at capacity levels. The chart on this page of this
Review shows the seasonally adjusted sales of depart­
ment stores and furniture stores in this District.
Though not contradictory in its indication, the June
index of bank debits in the Fifth District did not confirm
the strength shown in the trade series, having remained
at the same level as in May after seasonal correction.
Gains in the adjusted debits indexes occurred in Virginia



and the Carolinas, but these were offset by declines in
Maryland and the District of Columbia.
Building
Building permits rose 59 percent in value on a season­
ally adjusted basis from May to June to the highest
monthly total of record, which was 42 percent above the
recent peak figure of January 1948. There can be no
question regarding the strength in the building situation
when a gain such as that in June was witnessed. A l­
though mortgage money is reported to be tighter, and the
liberal financing permitted under F. H. A. Title V I is
no longer available, commercial banks have not hesitated
to expand their real estate loans, and it must be evident
that other lending sources such as insurance companies
and savings and loan associations are likewise expanding
loans on real estate mortgages. Real estate loans show
a steadily rising trend in the weekly reporting banks of
the Fifth District, and of the cities covered by these
banks only in Richmond, Norfolk and Charlotte has
there been any tendency for real estate loans to level off.
Cotton Textiles
Cotton consumption in the Fifth Federal Reserve Dis­
trict in June held at May levels on a seasonally corrected
basis. Spindle hours run during the month showed much
the same result. These operations were made possible by
working on order backlogs. New business written dur­
ing June was meager, and thus far in July there has been
no tendency on the part of consuming industries to pur­
chase other than for current fill-in needs. Trade indica-

FEDERAL RESERVE BANK OF RICHMOND

tions are that production in July and August will be
lower than that in the average monthly level in the first
half of the year. Prices of goods and yarns which con­
tinued to decline during June have largely stabilized in
July, and such goods as will be needed for fall will prob­
ably be booked in the next two or three weeks. Buying
pressure, however, at the domestic level does not seem
likely to result in a production level as high as in the
first half year.

probably stay at reduced levels for another month or
more.
Coal
Bituminous coal production declined 6 percent from
May to June on a seasonally adjusted basis. Much of
this reduction was due to car shortage and to mine disa­
bilities. July production will be substantially reduced be­
cause of the miners holiday. The United Mine Workers
new contract gave workers an increase of a dollar a day,
and at the same time doubled the welfare fund contribu­
tion of the operators from 10 cents a ton of coal mined
to 20 cents.

H osiery
Operations are still on a part-time basis in the seam­
less industry, but continue as high as yarn supplies will
permit in the full-fashioned lines. A stoppage at Du
Pont’s Bell, West Virginia, plant, where nylon materials
were manufactured will cause a reduction in August
supplies of nylon at hosiery mills. The stoppage, howT
ever, has been settled and reduced yarn supplies will be
temporary, particularly since a new nylon plant is ex­
pected to come in production this month at Chattanooga,
Tennessee. Hosiery prices which were weak during the
spring months have been holding steady of late. Supplies
of hosiery at the retail level are adequate and manufac­
turers inventories have been rising. Production will

Electric power production seasonally corrected estab­
lished an all time peak in March in the Fifth District,
and while April and May totals have been somewhat be­
low that level there is as yet no indication of a reversal
of the rising trend. Savings in the form of new commit­
ments for life insurance continue at a level more than
2y2 times the prewar 1935-39 rate. June figures season­
ally adjusted were about the same level as in May but
below levels of November and December 1947 and much
of 1946. Upward tendencies are shown in these figures

Continued on page 6

BUSINESS IN DEXES—FIFTH FEDERAL RESERVE DISTRICT
AVERAGE DAILY 1935-39 = 100—SEASONALLY ADJUSTED

Automobile Registration* ............................................
Bituminous Coal Production*.....................................
Building Contracts Awarded.......................................
Apartments and Hotels...............................................
Commercial Construction Contracts.......................
Manufacturing Construction Contracts..................
One and Two Family Houses.................................
Public Works and Utilities........................................
Residential Construction Contracts.......................
Building Permits Issued................................................
Business Failures—No...................................................
Cigarette Production......................................................
Cotton Spindle Hours....................................................
Department Store Sales.......................... .......................
Department Store Stocks.............................................
Electric Power Production...........................................
Employment—Mfg. Industries* .................................
Furniture Orders ............................................................
Furniture Shipments .......................................................
Furniture Unfilled Orders............................................
Furniture Sales—Retail ...............................................
Gasoline Consumption ..................................................
Life Insurance Sales.......................................................
Wholesale Trade:
Automotive Supplies** ...........................................Drugs ..............................................................................
Dry Goods ...................................................................
Electrical Goods** ....................................................
Groceries .......................................................................
Hardware ......................................................................
Industrial Supplies** .................................................
Paper and Its Products**........................................
Tobacco and Its Products**....................................
*Not seasonally adjusted

June
1948
327
171
335

272
441
29
244p
148
155
344
311

300
253
431
260
170
77
273
175
391
161
93

**1938-41 = 100




[2 ]

May
1948
106
326
189r
366
312
461
418
320
523
314
277
31
232r
148
152
314r
337
254
134
216
282
907
263r
252
408
253
172
89
262
138
387
153
92

Apr.
1948
129
313
104
324
872
382
268
321
266
421
336
40
271
156
158
321
340
256
135
313
311
1211
270
196
261
339
269
171
83
262
142
358
167
99

June
1947
123
286
161
267
357
257
343
196
357
215
275
27
238
140
142
317
270
226
131
420
324
910
299
176
232
288
257
169
83
282
124
346
194
107

June 1948 from
May 48
June 47
0
— 10
— 8

4- 14
+ 6
+ 25

— 13
+ 59
— 6
4- 5
0
4- 2
+ io
— 8

+
+
444444-

+ 14
0

0
4- 9
+ 50
4- 1
4- 1
— 7
— 3
4- 41
4- 13
— 17
- 13

+ 6
+ 3
— 1
— 13
4“ 4
4- 27
+ 1
4- 5
+ 1

27
60
7
3
6
9
9
15

JULY 1948

MONTHLY REVIEW

Municipal Income Taxation
A “ best seller” in the early 1880’s was, strangely
enough, a book dealing with economics and advancing
a new social philosophy that was based on a very simple
plan of tax reform. The title of this unique volume was
Progress and Poverty, written by Henry George in San
Francisco in 1879. In brief, George proposed to “ appro­
priate all rent by taxation (and) to abolish all taxation
save that upon land values.” His impassioned and elo­
quent plea for the “ single tax” so captured popular sup­
port that in 1886, after having moved from San Fran­
cisco, he was persuaded to become a candidate for the
office of mayor of New York and, it is claimed, would
have overcome the narrow margin by which he was de­
feated had there been an honest count of votes.
Although the fundamental ideas of Henry George
are still advanced by an active organization, actual tax
experience has moved in a diametrically opposite direc­
tion. The tax structure in this country has become more
and more complex and tax patterns are as numerous
and varied as are the units of state and local government.
This trend and situation are not likely to be halted or
corrected by the present search of municipalities for new
sources of revenue. Despite record revenues during the
post-war period, cities and towns the country over are—
for reasons too well known to need listing here— seeking
new sources of revenue in order to meet the rising cost
of municipal living.
In these efforts to increase municipal revenues there
are discernible two broad trends which, in many cases,
are co-existent. On the one hand, cities in a number of
states are stressing new local taxes and hitherto unused
non-tax sources of revenue. For example, during 1947
Pennsylvania enacted a law that permits some 3,200 local
governments to levy any of a wide number of taxes;
under this “ financial home rule” any taxes may be adopt­
ed which the Commonwealth itself may employ but does
not levy. Similarly, a bill recently introduced in the
Kentucky Senate would afford cities much greater dis­
cretion in tapping non-property tax revenue sources than
had formerly been the case. The nature of such attempts
to augment municipal income aligns them with the po­
litical theory of “ home rule” which, in the sphere of local
government, contends that there should be a delegation
of power to permit decisions by municipalities on those
matters pertinent to their particular interests. In this
category, it is held, belong attempts to broaden the muni­
cipal tax base and thus relieve the traditional dependency
upon property as the principal tax base of local govern­
ments.
A second trend that has become more pronounced in
recent years is the pressure for increased municipal shar­
ing in state-collected tax receipts. In a leading move in
this direction New York State enacted a program in 1946
designed to provide municipalities with definite amounts
of financial assistance on a per capita basis. Rhode Island
has a similar revenue program, and in a number of other
states, Minnesota, Michigan, and Maryland to mention




a few, proposals have been made and adopted for muni­
cipal sharing in new and continuing state levies.
In many states cities are seeking both new local taxes
and larger shares of state tax receipts, but in all instances
the moves are dictated by the necessity of meeting in­
creasing municipal expenditures that cannot, for the
most part, be covered by already over-loaded property
taxes. As a consequence, the tax structures of our muni­
cipalities are getting a “ new look” in the form of the new
taxes being adopted by hard-pressed communities. Un­
fortunately, in many cases the design of these new fa­
cades does not suit the basic architectural, so to speak,
pattern of municipal tax structures. Many of the new
levies probably merit the criticism levelled against sales
taxes by E. R. A. Seligman ( “ Studies in Public Finance,”
1925, p. 131) to the effect that they constitute “ the last
resort of countries which find themselves in such fiscal
difficulties that they must subordinate all other princi­
ples of taxation to that of adequacy.”
Adoption of the Income Tax
One of the more interesting outgrowths of the search
for new sources of revenue has been the adoption by a
few, and the consideration by many, cities of a municipal
income tax. It might be pointed out that dependence
upon the income tax as an important source of revenue
is a comparatively recent development in the United
States, even on a national basis. In 1894 an unsuccessful
attempt was made to reintroduce the income tax that
had first made its appearance during the Civil War, but
it was not until 1913 that a constitutional amendment
made possible the use of a federal income tax. Similarly,
attempts had been made prior to that time on the part of
our states to enact income taxes that would operate suc­
cessfully, but the experience of Virginia was typical: in
1909 and 1910 only slightly more than $100,000 was
raised by the imposition of a state income tax. In fact, in
over 30% of the counties of this state no tax was col­
lected at all. In 1911, however, Wisconsin attempted to
profit by the mistakes of earlier state income taxes and
adopted a measure in which administrative provisions of
the tax had been carefully studied. Wisconsin’s success
during the first four years of the life of its new tax led
other states to enter this field, and at present over twothirds of the states employ income taxes.
Municipal income taxes, in turn, did not appear on
the scene until very recently.1 The initial adoption in this
1It is interesting to note, however, that an ordinance enacted in 1820 by
the City Council of Charleston, South Carolina, permitted the city to levy
a tax upon different form s of property, and am ong other things, a tax was
laid upon “a ll profits or income a risin g from the pursuit of any faculty,
profession or occupation, trade or employment.” On the basis of the ex­
ceptions and exemptions specifically stipulated in the ordinance a case
was brought to court in which it w as contended that the salaries of bank
officials should be considered as personal property and therefore subject
to the provision that in m a k in g the assessment on real and personal
property, the assessor should estimate the assessment at one-half the
value thereof. It was held by the court that there was no doubt but “that
incomes and profits, labour, wages or hire, are included under the nomen
generaHssim um of personal property.” ( L in in g v. C ity Council of
Charleston, 1 M e Cord 345, 1821.) It is also interesting to note that one
of the p rin cip al difficulties in the levying of income taxes today by states
and m unicipalities, viz, the problem of non-residents, was encountered
in the im position of this tax by Charleston in 1821.

[3]

FEDERAL RESERVE BANK OF RICHMOND

country was by Philadelphia in 1939, but as late as Feb­
ruary of this year income taxes had been enacted by only
four local governmental units.2 Beginning in March,
however, adoptions began to mushroom in Pennsylvania
and by the middle of July it was estimated (News Letter,
Municipal Finance Officers Assoc., July 16, 1948) that
about 55 local governments in that state had taken the
necessary steps to tap this new source of municipal reve­
nue. The adoption by Columbus has been followed by
voter approval in Youngstown and Springfield for in­
come taxes, with still other cities in Ohio, viz, Akron
and Cleveland, considering the advisability of enacting
similar taxes. It is reported that the St. Louis income tax,
which was invalidated last year by the Missouri court,
will be reintroduced as a consequence of permissive legis­
lation recently signed by the Governor. Still other cities
that have been recently publicized as considering the in­
come tax are Minneapolis, Dearborn, Los Angeles, and
San Francisco.
One of the practical barriers in the way of widespread
enactment of municipal income taxes is the constitutional
and statutory limitations that preclude the use of such a
tax by the local governments in many of the states that
themselves levy an income tax. Such is the case in four
of the five states of the Fifth Federal Reserve District.
Specific provisions in the Constitution of Maryland and
in the statutes of Virginia and North Carolina prohibit
the levying of taxes upon income by political subdivi­
sions. An income tax was adopted by West Virginia in
1935 but abolished in 1943; at present it appears that
under Article 10, Section 9 of the Constitution of West
Virginia municipal authorities may levy an income tax
only if authorized by the State Legislature. South Caro­
lina as does Maryland, Virginia, and North Carolina,
imposes a state income tax, a portion of the proceeds of
which is allocated to the counties. In the absence of en­
abling legislation it appears that South Carolina munici­
palities cannot enact income taxes.
An active interest in municipal income taxes is being
currently shown not only because of the novelty of the
tax but because of the possibility that it may grow in the
favor of municipal authorities and experience a wide­
spread adoption. Reference has already been made to the
many cities that have recently adopted this tax and to
communities in which it is under consideration. It may
be too early to hold that this recent experience will form
the basis for a continuing trend of adoptions, but it is
clear that the motivating factor in these enactments and
considerations stems from a basic difficulty common to
municipalities the country over, viz, increasing costs of
local government and the consequent need for greater
revenues.
The Factor of Yield
Unfortunately, perhaps, but nevertheless a fact, one
of the principal factors dominating the practical con­
sideration of a municipal income tax is the efficiency of
its imposition in terms of the dollar yield. On this score
"“ Prior to 1940 taxes on net incom e fo r local purposes were collected only
in the D istrict o f Columbia. In the imm ediate prew ar years, the com bined
revenues from the D istrict’ s individual and corporate taxes ranged be­
tween 1 and 2 m illions.” L. H. Kim m el, Governm ental Costs and T ax
Levels. The B rookings Institution.




it would appear that an income tax offers attractive pos­
sibilities to revenue-hungry communities. The Philadel­
phia tax was resorted to after a decade of financial dis­
tress that was marked by an over-loaded debt structure,
declining real estate valuations and revenues, and annual
deficits. An attempt to alleviate the difficulties through
the use of a sales tax proved unsuccessful. In 1940, the
first year of operation of the income tax, the yield was
almost $15 million and averaged $19.5 million during the
first three years. In 1943 the rate was reduced from
1.5% to 1%, but because of the war-induced rise in per­
sonal incomes, the average yield from 1943 through 1946
was $22.6 million. With a 1% rate the Philadelphia in­
come tax has produced about half as much as the real
estate tax and about one-fourth of the total receipts in
the general fund. Since 1941, following 19 consecutive
years of deficits, the city budget has been balanced.
In 1946 Toledo enacted and passed by referendum an
income tax that is similar to that of Philadelphia in many
respects with the added feature of being applicable to
corporate net profits. Like Philadelphia the Toledo tax
applies to income earned in the city by non-residents as
well as residents. Similarly, a low flat rate is used and
collections are primarily at the source. With a rate of 1%
the tax provided Toledo with over $4 million in the 10month period following its effective date of application
on March 1, 1946. Estimated receipts for 1947 amount
to about $5 million. Whereas in 1945 property taxes ac­
counted for 48% of the total revenue of Toledo, in 1946
their proportion was 32% and income taxes provided
26% of the total revenue collected in that year.
The current bountifulness of municipal income taxes
is demonstrated also in the case of smaller cities and
towns. For example, two of the towns in Pennsylvania
that recently adopted this tax have population counts and
tax rates of 25,000 and 7 mills and 20,000 and 5 mills.
Estimated income tax collections are $345,000 and $105,000 respectively. The magnitude of these single-source
amounts may be better appreciated if we note that in
1946 average total tax revenue of 200 cities with a popu­
lation from 25,000 to 50,000 amounted to a little over
$900,000 (as reported by the Bureau of the Census,
Summary of City Government Finances in 1946.)
The Problem of Burden
Against the factor of yield from the imposition of a
municipal income tax must be set the burden thereby
placed on the taxpayers. A full consideration of this
point, with all its theoretical implications, is beyond the
scope of this brief note, but a few pertinent points might
be made. The nature of most of the income taxes so far
adopted by municipalities might be criticized as being
inequitable because of the absence of allowances for per­
sonal credits and because of the application of a flat rate.
Groves ( “ Trouble Spots in Taxation” , Princeton Uni­
versity Press, 19 8) offers a rebuttal to such contentions
by pointing out as to the absence of credits that “ the al­
ternatives to the net income tax— the property tax and
the sales tax— also offer no exemptions, or at least none
designed to allow the taxpayer his family living ex­
penses.” Groves also holds that “ The advantage of dis­

f41

MONTHLY REVIEW
allowing exemptions is that the resulting base is large,
stable, and conveniently adapted for collection at the
source.” However, he feels that “ It would be desirable,
if feasible, to allow at least some very limited exemptions
in any income tax.” With respect to the flat rate at which
the tax is now generally levied Groves argues that it
facilitates collection at the source and avoids reliance
upon an unstable element in the income tax revenues.
“ At the worst,” he states in the work cited, “ this tax is
genuinely and consistently proportional, which is more
than can be said for either the sales tax or the property
tax.”
It has been contended also that the rate of 1%, which
is the maximum in the great majority of cases, cannot
be considered as a material burden to any taxpayer. Ob­
viously, such an argument carries much more weight
during prosperous times than it would during a period
of depressed business conditions. It is also pointed out
in this connection that the income tax measures up to
the ability-to-pay principle to a more satisfactory extent
than do property or consumption taxes.
Application to Non-Residents
Another argument dealing with the burden imposed
by a municipal income tax on taxpayers is based on the
advantage that such a tax offers by being applied to the
so-called “ daylight citizens” — those persons who are
non-residents but who work in the city and consequently
use many of its facilities. In a suit between Richmond,
Virginia, and Henrico County involving the annexation
of certain suburban territory, it was contended by some
residents of the suburban area that they did not need
city services. In replying to this assertion the court stated,
“ Moreover, it is no answer to an annexation proceedings
to assert that individual residents of the county do not
need or desire the governmental services rendered by
the city. A county resident may be willing to take a
chance on police, fire and health protection, and even
tolerate the inadequacy of sewerage, water, and garbage
service . . . but when the movement of population has
made him a part of a compact urban community his in­
dividual preferences can no longer be permitted to pre­
vail.” If permission may be had to add to this statement
it can be pointed out that aside from the services which a
person living outside the city proper may or may not
elect to use, if given a choice, he must and does avail
himself of many of the facilities and services of the city
if he is a non-resident worker in that city. It is patently
unjust to have the whole financial burden of the provi­
sion and maintenance of the shared services and facili­
ties borne by the resident taxpayers. It should also be
kept in mind that the trend of decentralization, or that
aspect of it in which peripheral areas of cities are grow­
ing much faster than the old city areas, will bear ad­
versely on city revenues after the acute housing shortage
has been satisfied. It is then likely that property values
in the city proper will decline with consequent fresh diffi­
culties to those communities overwhelmingly dependent
upon property-tax revenues.
Closely allied to the other problems of the burden of
a given tax is that of multiple taxation. This problem is a




JULY 1948

pervasive one that was made more difficult by the use
of Federal and state income taxes. Obviously, the diffi­
culties would be aggravated by the widespread imposi­
tion of income taxes by local governments and particu­
larly so should those states that levy income taxes permit
their political subdivisions to also levy such taxes. In
handling jurisdictional difficulties and other aspects of
multiple taxation it is generally recognized that larger
units of tax administration and collection enjoy a dis­
tinct advantage over smaller ones and that this advantage
is particularly marked in the case of income taxes. This
being the case, serious consideration will have to be given
to an income tax centrally collected and locally shared.
It should be noted, however, that the imposition by local
governments of income taxes of the type currently being
enacted— with little, if any, allowance for exemptions
and deductions and with fiat rates— mitigates some of
the problems of duplication.
Fluctuating Revenues
The probable adequacy of revenues from the operation
of municipal income taxes under current conditions has
been noted, but it might be well to revert to this point
for a final consideration of a feature regarded by some
as an unfavorable one. Termed a “ fair-weather” tax, it
is contended and supported statistically that income tax
revenues are “ cycle-sensitive” and fluctuate sympatheti­
cally with business conditions. This is a very important
characteristic to be considered by municipalities inas­
much as it would be foolhardy to adopt a tax to be used
as one of the major sources of revenue that would be
characterized by wild gyrations in the annual yield over
a period of years.
There is no doubt that a graduated personal income
tax levied by municipalities would produce revenues in
amounts that would move up and down with the business
cycle. However, proponents of the use of income taxes
by local governments hasten to point out that a tax with
a minimum of exemptions and levied at a flat rate should
satisfy reasonable requirements of stability. Should in­
stability of revenues exceed expectations, however, it
might be possible to counteract annual fluctuations by
building up a reserve during prosperous years to be
drawn upon during hard times. For the most part, how­
ever, the practical application of such a policy by a gov­
ernmental unit has yet to be established— the experience
of the war years notwithstanding, inasmuch as a con­
siderable portion of surplus funds accumulated during
that period represented involuntary reductions of muni­
cipal expenditures.
Conclusion
In those states that do not levy an income tax current
developments indicate that continued consideration will
be given to the adoption by municipalities of some form
of income tax. In those states that do levy an income
tax it might be expected that agitation will continue to
grow for a return of part of the state-collected income
tax revenues to the originating communities. There are,
of course, difficulties in effecting such a distribution, and
it might be that variants of forms of shared income taxes

FEDERAL RESERVE BANK OF RICHMOND

will be developed; New York State, for example, dis­
tributes part of its personal income tax receipts on the
basis of locally assessed property taxes, whereas in
Maryland state income tax receipts are shared with
counties and municipalities on the basis of the taxable
income (differentiated as between investment income
and all other income) of the individual residents of the
respective counties and municipalities.
At any rate, it may be expected that municipal interest

in income taxes will continue as long as the finance offi­
cers of towns and cities are pressed to match increasing
expenditures with adequate revenues. As it has been ex­
pressed by one authority, “ The income tax is too im­
portant and meritorious a means of revenue to be ig­
nored on so large a front of expenditure as State and
municipalities represent.” (Committee on Intergovern­
mental Fiscal Relations, in “ Federal, State, and Local
Government Fiscal Relations” .)

AVERAGE DAILY TOTAL DEPOSITS* OF
MEMBER BANKS
Last Half of May LastHalf of June
%of
% of
$ thousands U.S. $ thousand? J.S.
Maryland
987,463
.93 998,169
.94
627,227
.59 635,073
Reserve city banks
.60
Country banks
360,236
.34 363,096
.34
896,966
.84 902,628
District of Columbia
.85
.82 880,590
Reserve city banks
875,353
.83
.02 22,038
Country banks
21,613
.02
Virginia
1,270,193 1.20 1,266,748 1.19
304,327
.29 301,390
Reserve city banks
.28
Country banks
965,866
.91 965,358
.91
581,564
.55 586,829
West Virginia
.55
North Carolina
816,310
.77 813,287
.76
381,024
.36 378,752
Reserve city banks
.35
435,286
.41 434,535
Country banks
.41
427,944
.40 420,158
South Carolina
.40
4,980,440 4.69 4,987,819 4.69
Fifth District
United States (millions)
106,223 100.0 106,322 100.0
^Excluding interbank demand deposits

PRI NCI PAL A S S E T S AND L I A B I L I T I E S
FIFTH DI S TRI CT M E M B E R BANKS

1941

1943

1945

1947

Business Conditions
Continued from page 2

for Virginia and West Virginia; other state figures are
flattening off or tending downward.
Conclusion
Department store and furniture store sales made an
unusually large rise from May to June on seasonally ad­
justed bases. There have been no developments in the
District of a nature that would indicate a substantial im­
provement in the purchasing ability of the people of the
District and, therefore, these trade figures must be look­
ed upon as partly an increased willingness of people to
spend for these purposes, and partly because of promo­
tional efforts and price concessions. There is no indica­




tion that fear of rising prices was a motivating factor in
these sales increases.
The best impression that can be given of the produc­
tion outlook for the District is that cotton goods and
yarns, hosiery, and work clothing will be below spring
levels on a seasonally adjusted basis. Employment levels
will ease somewhat in non-seasonal industries. Con­
struction will continue to fully employ available workers.
Rayon will continue to expand. Lumber output will back
down somewhat, and some prices will ease because of
marginal mill production and a cautious inventory poli­
cy of retail yards. Bituminous coal output will be limited
only by the supply of freight cars and workability of
mines.

r6 1

JULY 1948

MONTHLY REVIEW

DEBITS TO IN D IV ID U A L A CC OU N TS

F E D E R A L R E SE R V E B A N K OF RICHM ON D
(AH Figures in Thousands)
July 14,Chg. in A m t. From
1948
6-16-48
7-16-47

ITEMS

Total Gold Reserves.....................................$1,066,331
Other Reserves .............................................
14,982
Total Reserves ........................................... 1,081,313
Bills Discounted ..............................................
17,939
Industrial Advances ...................................
55
Gov. Securities, T otal................................... 1,397,666
Bonds ............................................................
410,480
Notes ............................................................
127,147
Certificates ..................................................
320,265
Bills ..............................................................
539,774
Total Bills & Securities............................... 1,415,660
Uncollected Items .........................................
253,441
Other Assets .................................................
22,944
Total Assets ................................................ 2,773,358

+
—
+
+
—
+
+
+
+
+
+
—
—
+

54,329
341
53,988
1,639
4
50,128
9,335
1,493
34,706
4,594
51,763
34,575
866
70,310

+ 74,476
+
2,344
+ 76,820
+
8,411
+
55
— 36,341
+366,349
+ 104,689
— 82,271
— 425,108
— 27,875
+ 15,122
+
6,395
+ 70,462

Federal Reserve Notes in C ir................... $1,619,309
Deposits, Total .............................................
876,787
Members’ Reserves ...................................
742,829
U. S. Treas. Gen. A cct............................
107,982
F oreign ..................................... ..................
20,712
Other Deposits .........................................
5,264
Def. A vailability Items...............................
237,269
Other Liabilities .........................................
808
Capital A ccounts .........................................
39,185
Total Liabilities ....................................... 2,773,358

+
+
+
+
+
+
—
—
+
+

10,896
74,030
10,823
55,625
4,214
3,368
15,582
101
1,067
70,310

— 32,365
+ 66,358
+
8,715
+ 54,861
0
+
2,782
+ 32,500
+
254
+
3,715
+ 70,462

51 R E PO RTIN G M EM BER B AN K S— 5th D ISTRICT
(A ll Figures in Thousands)
July 14,
1948

ITEMS

Chg. in A m t. From
6-16-48
7-16-47

Total Loans ....................................................$ 819,806f
Bus. & A g r i.................................................
378,177
Real Estate Loans.....................................
193,839
A ll Other Loans.........................................
253,382
Total Security H oldings............................... 1,704,133
U. S. Treasury Bills .................................
49,126
U. S. Treasury Certificates ....................
218,880
U. S. Treasury N otes ...............................
68,314
U. S. Gov. Bonds ....................................... 1,238,009
Other Bonds, Stocks & Sec...................
129,804
Cash Items in Process o f Col...................
232,970
Due from Banks.............................................
176,372*
Currency & C oin...........................................
68,342
Reserve with F. R. B ank..........................
492,327
Other Assets ..................................................
54,958
Total Assets .................................................... 3,548,908

+
—
+
+
—
—
+
—
+
+
—
+
+
+
—
—

812 +119,105
3,235 + 50,651
4,868 + 44,995
4,771 + 29,051
30,601 — 103,946
38,702 + 32,122
4,933 + 12,976
3,928 — 19,016
2,709 — 138,943
4,387 +
8,915
5,168 + 37,858
13,054 + 16,158
4,835 +
7,412
4,885 — 3,111
926 +
5,398
13,109 + 78,874

T otal Demand Deposits.................................$2,713,188
Deposits o f Individuals ........................... 2,023,362
65,580
Deposits o f U. S. Gov................................
Deposits o f State & L ocal Gov.............
196,275
Deposits o f Banks .....................................
385,791*
Certified & Officer’ s Checks..................
42,180
Total Tim e Deposits.......................................
600,752
Deposits o f Individuals.................. ........
583,965
Other Tim e Deposits.................................
16,787
Liabilities fo r B orrow ed M oney................
4,000
A ll Other Liabilities.....................................
17,209
Capital A ccounts ...........................................
213,759
T otal Liabilities ........................................... 3,548,908

—
—
+
—
+
—
—
—
—
+
—
—
—

10,688
35,354
17,645
2,995
12,434
2,418
825
338
487
3,300
1,699
3,197
13,109

+
+
+
+
+
+
—
—
—
—
+
+
+

90,260
4,632
36,558
25,561
20,195
3,314
17,409
14,747
2,662
2,200
383
7,840
78,874

*Net Figures, reciprocal balances being eliminated.
tLess losses fo r bad debts.

STATES

CON STRU CTIO N CO N TRA C TS A W A R D E D
% Change
% Change
May
from
from
1948
May 1947
5 Mos. ’ 48 5 Mos. ’ 47

Maryland ............................ $30,023,000
Dist. o f Columbia.............. 4,668,000
V irgin ia ............................... 29,016,000
W est V irgin ia .................. 8,477,000
N orth Carolina ................ 16,447,000
South Carolina ................ 9,454,000
F ifth D istrict ................$98,085,000
Source : F. W . Dodge Corporation.

M ONTHS

$138,218,000
35,917,000
89,887,000
48,778,000
66,071,000
39,700,000
$418,571,000

+28
+13
+ 7
+65
+ 3
+46
+21

463
426
283
2,543
1,632

$ 337,000
1,080,000
264,000
$2,529,000
2,161,000

% Change
from
June 1947

June
1948
District o f Columbia
W ashington ...............
Maryland
B altim ore .....................
Cumberland .................
Frederick .....................
H agerstow n .................
North Carolina
A sheville .......................
Charlotte .....................
Greensboro .................
Kinston .......................
R aleigh .......................
W ilm ington
...............
W ilson ...........................
W inston-Salem ..........
South Carolina
Charleston ...................
Columbia .....................
Greenville ...................
Spartanburg ...............
Virginia
Charlottesville .........
Danville .......................
L ynchburg ...................
N ew port N ews .........
N orfolk .......................
Portsm outh .................
Richm ond ...................
Roanoke .......................
W est V irginia
Bluefield .....................
Charleston ...................
Clarksburg .................
Huntington
...............
Parkersburg ......................
District

Totals

.............

% Change
from
6 Mos. ’ 47

6 Mos.
1948

+ 13

774,433

+ 21

$ 4,321,358

971,300
22,806
20,316
27,245

+ 11
+ 9
+ 17
+ 16

5,703,849'
121,699
110,637
157,140

+
+

54.542
234,397
98,557
72,678
11,947
143,111
36,503
12,991
121,541

$

+
+
+
+
+
+
+
+
+

24
24
4
19
22
65
11
13
12

297,468
1,358,369
554,684
438,735
68,898
644,341
204,421
80,703
709,560

+
+
+
+
—
+
+
—
+

14
15
1
19
2
13
1
3
7

+ 20
+ 14
+ 9
+ 17

327,932
543,665
469,631
280,367

+
+
+
+

11
11
16
19

61,073
91,088
78,071
43,198

+ 10
0
7
9

21,410
25,133
39,096
33,580
181,666
21,157
505,678
91,480

+
+
+
+
+
+
+
+

9
8
16
9
10
18
26
30

127,853
150,848
226,421
186,890
1,055,450
118,657
2,656,124
502,609

+
—
+
+
+
+
+
+

6
1
13
7
13
10
12
17

48,177
138,600
33,515
58,700
27,602

+
+
+
+
+

32
21
26
24
18

246,056
778,245
186,249
335,855
155,981

+
+
+
+
+

21
13
18
19
10

+ 18

$23,120,695

$ 4,101,591

+ 12

COTTON C O N SU M PT IO N A N D ON H A N D — B A L E S
June
1948

June
1947

F ifth D istrict S tates:
..............
402,173
365,144
Cotton consumed
Cotton G row ing States;
703,819
638,181
Cotton consumed
’.............
Cotton on hand June 30 in
consum ing establishments.. 1,419,938 1,380,611
storage and compresses.... 1,622,049 1,167,002
United S tates:
Cotton consumed . ................
801,142
729,412
Cotton on hand Jujie 30 in
consum ing establishments.. 1,741,450 1,684,658
storage and compresses.... 1,673,619 1,233,283
Spindles active, U. S.~ ..............21,479,000 21,322,000
Source: Department o f Commerce.

A ugu st 1 to June 30
1948
1947
4,420,749

4,560,278

7,685,286

8,187,318

8,719,452

9,347,031

COTTON CON SU M PT IO N — F IFTH D ISTRIC T
(In Bales)
N. Carolina S. Carolina

MONTHS

June 1948 ......................
219,469
May 1948 ......................
218,882
June 1947 ......................
190,147
6 Months 1948................ 1,345,779
6 Months 1947................ 1,318,375
S ou rce: Departm ent o f Commerce

167,509
163,542
157,573
1,028,642
1,044,423

D istrict

V irgin ia

402,173
401,351
365,144
2,478,780
2,476,116

15,195
18,927
17,424
109,359
113,318

P R IC E S OF U N F IN IS H E D C OTTON T E X T IL E S
June
1948
Average, 17 constructions..................
Printcloths, average ( 6 ) ........................
Sheetings, average ( 3 ) ........................
Twill (1) ......................................................
Drills, average ( 4 ) ...................................
Sateen (1) ...............................................
Ducks, average ( 2 ) .................................

M ay
1948

June
1947

77.33
88.56
67.08
79.86
69.52
97.61
63.27

80.54
96.15
69.27
79.86
70.12
97.61
63.27

83.34
106.82
73.65
79.86
63.07
97.61
62.54

N ote: The above ^figures are those fo r the approxim ate quantities o f
cloth obtainable from a pound o f cotton with adjustments fo r
salable waste.

CO M M ER C IA L F A IL U R E S
N um ber o f Failures
Total Liabilities
D istrict
U .S.
D istrict
U .S.

June 1948 ......... ............... 12
............... 16
M ay 1948
June 1947 ......... ............... 11
6 Months 1948 ............... 94
6 Months 1947... ............... 46
S ou rce: Dun & Bradstreet




+
1
+ 21
+185
+ 83
+ 14
+ 19
+ 39

(000 om itted)

$12,163,000
13,814,000
18,982,000
$97,338,000
95,808,000

DE PO SITS IN M U T U A L S A V IN G S B AN K S
8 B altim ore Banks
June 30, 1948
Total Deposits

r7 1

................$393,465,624

May 31, 1948

June 30, 1947

$392,812,787

$387,270,578

FEDERAL RESERVE BANK OF RICHMOND

B U ILD IN G PE R M IT FIGU RES

W H O L E SA L E TR AD E — 175 FIRMS

T otal Valuation
June 1948
June 1947
M aryland
$
Baltim ore .................................................................. $6,619,260
Cumberland ..............................................................
71,815
Frederick ..................................................................
451,735
Hagerstown ..............................................................
112,074
Salisbury ..................................................................
268,441
V irginia
D anville ......................................................................
379,953
Lynchburg ..................................................................
523,428
N orfolk ......................................................................
2,674,835
Petersburg ................................................................
158,039
Portsmouth ..............................................................
164,070
Richm ond ..................................................................
3,324,307
Roanoke ....................................................................
591,703
W est V irginia
Charleston ................................................................
1,719,480
Clarksburg ................................................................
62,810
H untington ..............................................................
2,888,325
North Carolina
Asheville ....................................................................
245,120
Charlotte ....................................................................
2,928,511
Durham .......................................................................
511,625
Greensboro ..............................................................
1,258,000
H igh Point ................................................................
329,515
Raleigh ......................................................................
3,119,687
R ocky Mount ..........................................................
181,225
Salisbury ..................................................................
66,640
W inston-Salem ........................................................
477,872
South Carolina
Charleston ................................................................
679,098
Columbia ..................................................................
799,565
Greenville ..................................................................
466,550
Spartanburg ............................................................
812,195
D istrict o f Columbia
W ashington ..............................................................
4,230,254

6,584,045
91,500
294,625
115,545
280,658
650,919
433,298
572,560
128,900
119,255
912,032
679,547
354,645
84,325
369,425

5,611,074

D istrict Totals ........................................................$36,116,132
6 Months .................................................................. $149,618,305

$ 22,476,109
$ 99,016,778

SOFT CO A L P R O D U C TIO N IN T H O U SAN D S OF TONS
June
1948

REGIONS
W est V irginia .......
V irgin ia ...................
M aryland .................
F ifth D istrict
U nited States ....
% in D istrict....

June
1947

15,090
1,933
106
17,129
53,208
32.2

13,680
1,630
164
15,474
47,424
32.6

6 Mos.
1948

+
+
—
+
+

10
19
35
11
12

6 Mos.
1947

78,013
9,514
805
88,332
283,108
31.2

%
Chg.

LIN ES
Auto supplies ( 7 )* ..........
E lectrical goods ( 6 ) * .....
H ardware (8 )* ................
Industrial supplies (3 )*..
Drugs & sundries (11)*..
Dry goods (1 2 )* ................
Groceries (5 3)* ................

87,352
9,439
1,079
97,870
311,070
31.5

June
1948
Sm oking & chew ing tobacco
(Thousands o f lb s .)..................
Cigarettes (Thousands) ............
Cigars (Thousands) ....................
Snuff (Thousands o f lb s .)..........

16,989
,700,959
479,949
3,291

+ 9
+ 9
+ 11
+ 1

STATES

11
1
25
10
9

78
98
75

— 1
+ 24
+ 11

— 3
+ 8
0

+ 6
+ 22
+ 19

+ "i
0
+ 2

113
71
166
103
147
111
103

+ 8
+ 4
— 1

+ 1
—1
+ 5

+ 5
—
+
+
+

+

4

+ 8
+ 4
0
—8
+ 7

4
9
9
23

— 4

+ 2

+ 30

♦Number o f reporting firms.

D E PA R TM E N T STORE T R A D E
Richm ond

Baltim ore

P ercentage chg. in
+ 13
—
P ercentage chg. in
+ 7
+

W ashington

Other Cities

D istrict

June 1948 sales, com pared with sales in June 1947:
1
+13
+15
+10
6 months sales ’ 48, com pared with 6 months in *47:
1
+ 4
+ 9
+ 5

Percentage ch g.’s in stocks on June 30, ’ 48, com pared with June 30, ’ 47:
—6
+ 14
+ 7
+15
+ 8

+ 7
+6

P ercentage chg. in outstanding orders June 30, ’ 48 from June 30, ’ 47:
— 3
— 7
+ 2
+10
— 1

+ 9

Percentage chg. in receivables June 30, ’ 48 from those on June 30, '4 7 :
+ 37
+ 14
+18
+26
+21

+2

Percentage o f current receivables as o f June 1, ’ 48, collected in J u n e:
33
48
48
49
!
45
Percentage o f instalm ent receivables as o f June 1, ’ 48, collected in J u n e:
17
21
22
23
22

R A Y O N Y A R N SHIPM EN TS A N D STOCKS
June
1948
68,300,000
22,400,000
9,500,000
4,200,000

May
1948 ,
68,700,000
22,000,000
9,500,000
4,000,000

June
1947

Maryland

53.800.000
15.400.000
8.400.000

6.100.000

S ou rce: Rayon Organon.




— 7
— 2
+ 1

— 4
+ 9
+ 7
+ 5
+11
+ 33

Individual Cities
Baltimore, Md., ( 5 )* ...............
W ashington, D. C., ( 5 ) * ......
Richm ond, V a., (6 )* ...............
Charleston, W . V a., ( 3 )* ......
Charlotte, N . C., ( 4 )* .............
Columbia, S. C., (3 )* ...............

S ource: Treasury Department.

Rayon yarn shipments, lbs.............
Staple fiber shipments, lbs.............
R ayon yarn stocks, lbs.....................
Staple fiber stocks, lbs.....................

— 5
+ 47
+ 29

1
1
15
1
1
9
7
7
6
2
3

Percentage com parison o f sales in
periods named with sales in same
periods in 1947
June 5948
6 Mos. 1948

M aryland (5 )* .........................
Dist. o f Columbia (5 )* ...........
V irginia (1 6 )* .........................
W est V irginia (1 0)* ...............
N orth Carolina (1 5 )* ...............
South Carolina (1 0 )* ...............
D istrict (6 1)* .......................

c Chg.
/o
6 Mos.
from
1948 6 Mos. ’ 47
97,686
172,016,335
2,764,582
21,319

+
—
+
+
+
—
+
+
+
+
+

R E T A IL F U R N IT U R E S A L E S

TOBACCO M A N U F A C T U R IN G
% Chg.
from
June ’ 47

40
4
31
12
10
2
8
1
6
0
+ 7

S o u rce : Departm ent o f Commerce.
♦Number o f reporting firms.

%
Chg.
—
+
—
—
—

+
+
+
+
+
+
+
+
+

Miscellaneous (6 0 )* ......
District A verage (175^

914,456
982,090
381,900
690,890
134,110
777,469
82,800
107,225
310,610
260,586
194,575
69,450
287,595

R atio June
N et Sales
Stocks
collections
June 1948
June 30, 1948
com pared with com pared with
to a cc’ ts
June
May June 30 M ay 31 outstand’g
1947
1948
1947
1948
June 1

I 81

Dist. o f Col.

V irgin ia

W . V irgin ia

P ercentage chg. in June ’ 48 sales from
— 1
+13
+18
+23

N. Carolina S. Carolina

June ’ 47 sales, by
+12

states:
+ 7

P ercentage change in 6 m onths 1948 sales from 6 months 1947 sales:
+ 1
+ 4
+ 9
+14
+ 6
+ 5

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