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8 airtmore < MONTHLY Richmond a ^ .•Charlotte FEDERAL RESERVE BANK OF RICHMOND R I C H M O N D 13, V IR G IN IA J U L Y 31, 1 9 4 9 Business Conditions and Prospects I N his Midyear Economic Report to Congress on July 11, 1949, President Truman stated that “ In recent INSURED UNEMPLOYMENT IN FIFTH FEDERAL RESERVE DISTRICT WEEK ENDING JUNE II, 1949 months we have seen the abatement of postwar infla (IN THOUSANDS) tionary forces. W e are now in a transition period . . . Employment is still high, but unemployment has been increasing . . . Production is still high, but it is lower, particularly in some industries than it was last year. Business investment is at a high rate, but plans for new investments are being made with caution . . . Many of the price adjustments that have taken place have been healthy . . . But there is nothing healthy about unemployment or less production.” The dominant question of the day is whether or not the national economy is facing more recession. The following excerpt from a recent newspaper report is indicative of the difficulty in answering this question: “A feeling o f cautious uncertainty, brightened by oc casional touches of optimism, persists among business men in this area.” The foregoing might be applied to the business sen timent throughout the country as a general description of the economic outlook. On balance, however, it is clear that in recent weeks expressions of cautious op timism have become more prevalent. This feeling has been well expressed in a letter to this bank from a leading business executive who points out that “ In all SOURCE’ BUREAU Of EMPLOYMENT SECURITY, FED. SEC AGENCY events, price and business adjustments will continue for the next few months. After the long rise in prices and increase in national income that has taken in the metals group, exclusive of automobiles. O f place over the past several years, we can hardly expect these two, textile-mill products alone account for around the necessary readjustments to be completed in a few 35 per cent o f the total number of manufacturing pro months . . . However, I see some evidences of the duction workers employed in the Fifth District. Ob possibility that by the end of the year business will viously, a curtailment of production and employment pick up, production and traffic increase and a rebound in this industry hits Virginia, North and South Caro lina unusually hard. from the present rather low state of psychology.” Other indusries which have had relatively large de clines in employment include food and furniture. Based U nemployment As the accompanying Fifth District map shows, on the 1947 Census of Manufactures, the four indus insured unemployment registered increases during the trial groups noted account for over 50 per cent of year ended June 11, 1949 that ranged from 23.5 per production workers in this district. A significant aspect of unemployment in the district cent in the District of Columbia to 158.5 per cent in as a whole is the fact that the downturn in employment South Carolina. For the district as a whole the in in some of our most important lines occurred much crease o f 131 per cent was considerably higher than earlier than the date at which the post-war peak in the increase of 83.6 per cent recorded for the entire employment in all manufacturing industries was reached country. In this connection it is to be noted that the throughout the country. In other words, the period heaviest declines in post-war employment throughout of adjustment in these industries following the first the nation have occurred in the textile industries and Continued on page 7 FEDERAL RESERVE BANK OF RICHMOND CHART I CHANGES IN RESERVES AND IN COMPONENT FACTORS FIFTH FEDERAL RESERVE DISTRICT MILLIONS OF DOLLARS MONTHLY FIGURES MILLIONS OF DOLLARS 100 50 0 50 OTHER f•ACTORS 2 I_________ 100 MONTHLY REVIEW JULY 1949 The Balance of Payments of the Fifth Federal Reserve District—I The interregional balance of payments of the Fifth Federal Reserve District should be of particular con cern to bankers and businessmen in this area, for it is a reflection of the growth and status of the economy of the District. Just as the balance o f payments ac counts of the various nations reflect the basic changes in the economies of those nations so does the balance of payments account o f any given region reflect the basic structural changes within that region. In fact, there may even be a rather close parallel between shifts in the debtor-creditor status o f various countries and shifts in the debtor-creditor position of regions within the United States. In the past it has been customary to consider the Fifth District a “ debtor” region, but there has never been sufficient empirical data to sup port this assumption. Although it is not possible to construct for any Reserve district a complete balance of payments account (which would include all of the in ward or outward payments made across a district’s boundaries) and therefore to establish definitely its debtor-creditor status, available data on commodity and money flows between the Fifth Federal Reserve Dis trict and other areas may serve to throw some light on the District’s interregional position. Ideally, an interregional balance of payments account between a given Reserve district and the rest of the United States would be broken down as to (1 ) com modity trade, (2 ) private capital flow, (3 ) government and fiscal operations, (4 ) service transactions, and (5) miscellaneous items. Thus, in approaching the ques tion of the Fifth District’s balance of payments, it is obvious that the most desirable approach would be a precise determination of the District’s debits and cred its in each of these categories. However, it is very difficult to obtain a satisfactory record of commodity movements between districts within the United States; and it is even more difficult, if not impossible, to segre gate capital flows from payments arising from com modity movements. Nevertheless, it is possible to approach the interregional balance of payments of any Reserve district by (1 ) tracing the gain or loss of bank reserves between districts which undoubtedly serve to effect an equilibrium in the interregional balance of payments between districts, and (2 ) examining directly the commodity movements between a given district within the United States and outside. In this article it is proposed to examine briefly the net interdistrict flow o f reserve funds which represents the mechanism of interregional adjustment. In a sub sequent article it is hoped that this examination of money flows may be followed with a more direct ex amination of the District’s commodity trade account. The Fifth District’s Gains and Losses of Reserves From the statistical record, it is apparent that the Fifth District has experienced a substantial loss in re serve funds in the first half o f 1949. From December 31, 1948, through June 30, 1949, member bank reserve balances in the Fifth District declined approximately $92 million. However, changes in member bank reserve funds in a given district reflect both the interregional movements of funds on commodity and capital accounts and intra-regional movements of funds. In other words, there may be a drain of reserves from one region to another due to a loss on commercial and financial account; or changes in reserve balances may simply reflect purely intra-regional factors such as the local extension of Reserve Bank credit and the ctishoarding of currency within a region. Thus, a closer examination of the factors contri buting to the loss in reserve balances in the Fifth Dis trict thus far in 1949 reveals that the District had a much larger, loss on commercial and financial account with other districts than its net loss of reserve bal ances. In the first half of 1949, the District lost over $200 million o f reserve funds on commercial and finan cial transactions with other districts. This loss was partly offset by (1 ) the Treasury’s spending more in the Fifth District than it was absorbing via taxes, there by adding to reserve funds, and (2 ) a continued inflow of currency from circulation. (See Table I.) TABLE I CHANGES IN FACTORS AFFECTING RESERVES FIFTH FEDERAL RESERVE DISTRICT DECEMBER 31, 1948 — JUNE 30, 1949 (Thousands o* Dollars) Change Member bank reserve balances ........................................................ — 91,717 Factors accounting for ch an ge: Reserve Bank credit extended locally ......................................... Comm ercial and financial transactions ..................................... Treasury transactions ...................................................................... C urrency transactions ....................................................................... Other factors ........................................................................................ — 12,453 — 200,622 -f* 42,162 + 72,984 + 6,212 Source: 13 1 Federal Reserve Bank o f Richm ond. FEDERAL RESERVE BANK OF RICHMOND financial account with other districts, the Fifth Dis trict regularly experienced a drain in reserve funds due to Treasury transactions. In other words, in spite of the relatively high Government expenditures in this District during the war years, the Treasury was con sistently drawing reserve funds from this District, as is evident in Chart I. Explanation of Factors Reserve Bank Credit Extended Locally represents credit extended by the Reserve Bank within this District to banks (both rediscounts and advances) and to other quali fied borrowers under Sections 13A and 13B [which permit (1) rediscounts for Federal Intermediate Credit Banks, (2) direct loans to industrial and commercial concerns for working capital purposes, etc.]. This factor also rep resents the change in net float of the Reserve Bank (in other words, the excess of uncollected items over deferred availability items) which represents credit extended by the Reserve Bank without the acquisition of an earning asset. Increases in this factor then normally serve to increase member bank reserves. A plausible explanation for this normal pattern of gain on commercial and financial account and loss on Treasury account may be found in the fact that the excise taxes on tobacco, which is one of the Fifth Dis trict’s principal manufacturing industries, are paid at the source and enter into the supply price of the com modity when exported. Therefore, this results in a higher favorable balance on commercial account with other districts, and at the same time results in the Treasury’s drawing funds from the District due to the concentration of these collections in this District. Thus, both the normal inflow on commercial and financial account and outflow on Treasury account are probably exaggerated by the effect of the excise taxes, particu larly the excise tax on tobacco since the latter industry is of major importance in this District. Commercial and Financial Transactions represent the gain or loss in reserve funds in settlement of commercial and financial transactions with other districts. Domestic payments between individuals and corporations in differ ent Reserve districts are carried out for the most part by transfers in bank accounts, and indebtedness growing up between various districts is usually liquidated by means of payments through banks. These payments are nor mally credited through the Interdistrict Settlement Fund, which effects settlements between Federal Reserve Banks arising from the collection of checks and other items between districts. This factor then represents the net of the aggregate of all trade and financial payments between districts as reflected in transit clearings through the Set tlement Fund (adjusted for non-commercial transactions between Reserve Banks). Treasury Transactions represent the net increase or de crease in reserve balances due to Treasury receipts and expenditures affecting reserve balances in the district. Treasury receipts from tax payments and subscriptions to security issues increase the Treasury deposits in the Fed eral Reserve Banks and decrease member bank reserve accounts. Similarly, Treasury checks, coupons, and ma tured obligations are charged against ^Treasury deposit accounts at the Reserve Banks and are credited to mem ber bank reserve accounts. On balance, the sum of these transactions, as reflected in the Treasury deposit account at the Federal Reserve Bank, represents tne Treasury’s receipts-expcnditure pattern for this District affecting member bank reserve balances. Other Factor^ represent net change in capital accounts and miscellaneous liabilities and in bank premises and miscellaneous assets of the Federal Reserve Bank. Although it should be recognized that the movements in reserve funds indicated in Chart I may be in part seasonal (and pronounced seasonal movements are ap parent in this chart) and may in part represent tem porary and long-term adjustments in the interregional balance of payments, it is obvious from the chart that the experience in the first half of 1949 is a distinct reversal of the historical pattern in gains and losses of reserve funds for the Fifth District. If this changing pattern marks the beginning of a trend toward a con sistent loss on commercial and financial account only partly offset by a gain on Treasury transactions, it indicates some significant structural changes and per haps a shift in the District’s debtor-creditor position. In any case, the implications for the District could be rather serious if this drain of funds is prolonged for any period of time. For, in effect, this drain of reserve funds represents a loss in gold stock corresponding to an international loss of g old; and, therefore, the clearcut implication is a shrinkage in the credit base of this District. It is interesting to note that the loss of reserve funds on commercial and financial account with other Reserve districts and the gain of reserve funds due to Treasury transactions (i. e., Treasury expenditures— Treasury receipts) in the first half of 1949 is in contrast to the historical record of the District’s experience in the immediate prewar, wartime, and postwar period to the end of 1948. In the period from 1935 to 1948, the District consistently gained reserve funds on commer cial and financial account with other districts. O ff setting this inflow of reserve funds on commercial and Similarly, it is interesting to note the directional movement in the gains or losses in reserve funds due to commercial and financial transactions with each of the other Reserve districts. In the first half of 1949, it appears that this District lost substantial amounts of reserve funds to the Chicago, Philadelphia, Atlanta, and St. Louis Reserve Districts. These losses in reserves were offset in large part by this District’s drawing reserve funds from the New York Reserve District and by rather small gains in reserves from the other districts. (See Table II.) Currency Transactions represent an approximation of changes in the amount of money in circulation in this District which has an inverse effect on bank reserves. Ad ditions to circulation generally occur through shipments of money upon request of member banks with their re serve accounts being decreased correspondingly. Simi larly, shipments of currency from banks to the Federal Reserve Banks result in credits to member bank accounts. Although there is no way of measuring accurately those currency movements between districts which are affected outside of the banking system, this factor roughly approxi mates the gain or loss in reserve balances due to changes in the demand for currency and coin within this District. 4 MONTHLY REVIEW JULY 1949 T A B L E II Reserve Balance Changes— Fifth District and F IFTH D IS T R IC T 'S G A IN O R LOSS OF R E S E R V E FU N D S ON C O M M ER C IA L A N D F IN A N C IA L A C C O U N T W IT H O TH E R F E D E R A L R E S E R V E D ISTRIC TS DEC EM BE R 31, 1948 — JU N E 30, 1949 (Thousands o f D ollars) Com m ercial and financial transactions ............ ............................. — 200,622 Boston ................. ...................................................................... ............ N ew Y ork .............................................................................................. Philadelphia ..................................................................................... . Cleveland ....................... :................................ ....................................... .......................................... ............... A tlanta .................................... C hicago ....................... ............................................................................ St. Louis .......................................... ....................................................... M inneapolis .......................................................................................... Kansas City ..................................... ...................................................... Dallas ..........................................................................................:........... San Francisco ..................................................................................... + 60,097 +464,027 — 206,904 + 14,160 — 153,968 — 246,968 — 140,731 + 14,433 + 3,667 + 11,032 — 19,467 S ource: Federal Reserve Bank o f Richm ond. Finally, it should be noted that the gain or loss of reserve funds on commercial and financial account be tween the Fifth District and other districts has not been experienced with equal intensity throughout the Fifth District. From the record o f commercial and financial transactions with other districts, the loss in reserve funds can be segregated to show the loss from the Head Office territory and the Baltimore and Char lotte Branch territories. Segregated on this basis, it appears that the Charlotte Branch territory actually registered a gain in reserves during the first half of 1949 while the Baltimore and Richmond territories shared rather equally in accounting for the Fifth Dis trict’s loss in reserve balances. (See Table III.) TA B L E III FIFTH D ISTRICT H EAD OFFIC E A N D B R A N CH E S G A IN OR LOSS OF R ESE RV E FU N DS ON COM M ERCIAL A N D F IN A N C IA L A CC OU N T W IT H OTH ER F E D E R A L R E S E R V E DISTRICTS DECEM BER 31, 1948 — JU N E 29, 1949 (Thousands o f Dollars) Richm ond Comm ercial and financial transactions ......................... Boston ........................................... N ew Y ork ................................... Philadelphia ............................... Cleveland ..................................... A tlanta ......................................... C hicago ......................................... St. Louis ..................................... M inneapolis ................................. Kansas City ............................... Dallas ........................................... San F rancisco ........................... S ource: B altim ore Charlotte — 121,644 — 166,566 + + 38,131 +146,105 — 82,680 — 4,651 — ■ 31,441 — 142,102 — 64,415 + 16,337 + 1,202 + 19,082 — 17,212 + — — + + — — — + — — + 17,433 +394,097 — 67,134 — 29,705 — 163,741 + 13,403 — 71,935 + 2,943 — 2,153 — 4,281 + 5,423 5,844 50,986 61,571 42,988 33,594 119,939 5,274 4,335 5,012 3,092 8,807 94,350 United States The preceding discussion of recent changes in the Fifth District’s reserves has concentrated on the fac tors affecting the District’s reserve position without reference to the changing level of reserve balances in the country as a whole. Although these changes are dis tributed between reserve regions principally through the net interdistrict flow on commercial and financial ac count, a lag in the distribution of funds— or uneven dis tribution— may result in a District directly gaining re serves from (or losing reserves to) other regions yet not gaining or losing relatively to the country as a whole. Thus this relationship between the District’s changes in reserve balances and the overall change in reserve bal ances of all member banks in the United States may be an important consideration. Numerous difficulties arise in making a comparative analysis of factors affecting reserves in the Fifth Dis trict and the United States. For example, Reserve Bank credit extended locally is not comparable with total changes in Reserve Bank credit. (This District’s immediate participation in the System Open Market Account is allocated and does not represent an imme diate change in reserve funds.) However, since in creases in total Reserve Bank credit should accrue to individual Reserve districts outside New York through the interdistrict commercial and financial transactions factor, it is possible to make a rough comparison of factors affecting reserves in the Fifth District and the United States by combining changes in gold stock with Reserve Bank credit affecting reserve balances of all member banks, and by combining Reserve Bank credit extended locally with commercial and financial transac tions in the analysis of factors affecting reserve bal ances in the Fifth District. Using this rough method of comparing the Board of Governors’ statement of factors supplying and using reserve funds o f all member banks with the regional factors statement for the Fifth District, some signifi cant differences may be noted. (See Table IV .) (1 ) In the immediate postwar period through 1948, the District did not share proportionately (in terms of its holdings of total member bank balances) in the increase in member bank re serve balances in the country as a whole. (2 ) In spite of the loss o f reserve balances on in terdistrict commercial and financial account in the first half of 1949, the Fifth District did not experience a proportionate drop in reserve balances relative to that in the United States. Thus, the District’s proportion of total mem ber bank reserves increased from 4.07 per cent Federal Reserve Bank o f Richm ond. It is also apparent from Table III that there is con siderable variation in the flow of funds between the Richmond Head Office and the Baltimore and Char lotte Branches and the various other Reserve districts. For example, the Baltimore territory is gaining funds from Cleveland and Atlanta, while the Richmond and Charlotte territories lose to these Districts. Likewise, the Charlotte Branch registers a slight gain in reserve funds from the Chicago District, while Richmond and Baltimore experience heavy losses. FEDERAL RESERVE BANK OF RICHMOND T A B L E IV on December 31, 1948, to 4.23 per cent on June 30, 1949. (3 ) C O M P A R ISO N OF F A C T O R S A F FE C TIN G R E S E R V E B A L A N C E S U N ITE D S T A T E S A N D F IF TH D IST R IC T 1944 — JU N E 1949 During the whole postwar period, excepting the last six months, the District gained reserves relatively due to extensions of Reserve Bank credit and inflow of gold, but lost reserves relatively due to Treasury activities and outflow o f money in circulation. Conclusion This initial appraisal o f the Fifth District's balance o f payments from the standpoint of the interdistrict movement of reserve balances (with particular refer ence to the flow on commercial and financial account) requires considerably more interpretation of the un derlying factors, namely, commodity and capital flows. Some explanation of these flows of funds between the Fifth District and outside may result from an ex amination of the District's commodity trade account. Therefore, a subsequent article dealing with the com modity trade account, the principal item in the Dis trict's balance of payments, may furnish some clues as to the why of these money flows and constitute another step toward determining the interregional balance of payments of the Fifth Federal Reserve District. Factors accou ntin g fo r ch an ge: Mem ber Reserve Treasury N on-m em ber T otal bank B ank deposits deposits m em ber reserve credit w ith M oney in and other bank balances and gold F . R. circu F. R, reserves change stock banks* lation accounts (In m illions o f dollars) 1944 United States .... + 1 ,3 1 9 .0 Fifth D is trict........ + 92.1 5th Dist. as % o f U. S....... 4.38 7.0 1945 United States .... + 1 ,9 7 9 .0 F ifth D istrict .... + 90.5 5th Dist. as % o f U. S.........4.59 4.6 1946 U nited States .... + 239.0 F ifth D istrict .... 4* 5.8 5th Dist. as % o f U. S.........4.54 2.4 1947 United States ...... + 1,8 42 .0 F ifth D istrict .... + 51.7 5th Dist. as % o f U. S.........4.32 2.8 1948 United States .... + 2,3 39 .0 F ifth D istrict .... + 38.6 5th Dist. as 1.7 % o f U. S.........4.07 1949 (through June) United States .... — 2,225.0 F ifth D istrict .... — 61.6 5th Dist. as % o f U. S.........4.23 2.8 + 5 ,7 79 .0 + 537.7 + 3 5 1 .0 + 47.7 — 4,890.0 — 491.7 9.3 13.6 10.1 + 4 ,8 2 3 .0 + 537.3 + 1 0 5 .0 — 39.2 — 3.165.0 — 405.0 11.1 — + + 79.0 — 1.6 + 2 1 4 .0 — 2.6 12.8 290.0 493.5 + 6 2 2 .0 — 303.6 — — + 1,5 14 .0 + 583.7 + 4 8 6 .0 — 457.2 — — 460.0 184.3 + 8 6 8 .0 + .2 40.1 38.6 19.0 81.8 — 138.0 + 7.0 430.5 + 2,4 14 .0 + 556.8 — 383.0 — 483.8 23.1 126.3 — 4,008.0 — 209.3 + 8 0 3 .0 + 53.7 5.2 6.7 + — 543.0 44.8 — 235.0 + 10.4 + + 899.0 89.9 + 81.0* -j- 4.1 10.0 5.1 ♦Adjusted fo r changes in Treasury cash and Treasury eurrency. S ou rce: Federal Reserve Bank o f R ichm ond. BUSINESS INDEXES-—FIFTH FEDERAL RESERVE DISTRICT AVERAGE D AILY, 1935-39=100?—SEASONALLY ADJUSTED % Change— Latest Month May 1949 Apr. 1949 290 197 328 187 287 573 133 252 314r 334 312 342 59 247r 111 115 315r 303 253 122 175r 202r 252r 274 242 253 179 312 179 363 1285r 414 245 304 428 292 285 128 232 111 112 303r 315 258 125 172 217 297 234 210 249 105 327 166 335 478 246 453 271 305 299 441 29 245 148 155 320r 323 256 135 173 248 474 299 200 253 + io — 2 — 37 + 17 — 54 + 4 + 20 +- 40 +243 — 9 + 40 + 17 + 1 4- 4 4- 3 — 1 4- 3 — 2 — 2 4- 2 — 7 — 15 4- 6 4- 3 — 4 -+ 86 — 2 — 29 0 — 44 — 44 — 33 4- 63 4-275 — 5 4- 9 +138 4- 2 — 22 — 23 — 3 — 4 0 — 10 — 27 — 23 — 62 — 3 4- 7 — 4 380 270 128 73 259 122 296 135 82 344 266 166 90 246 139 248 129 85 260 268 156 77 238 124 255 125 89 431 260 175 77 273 175 391 161 93 44" — — 4" — 44” — — + — — — — — — — June 1949 Automobile Registration1 ............................................. Bank Debits ...................................................................... Bituminous Coal Production ..... ............................... Building Contracts Awarded: ..................................... Commercial Construction Contracts ..................... Manufacturing Construction................................ .... Public Works and Utilities ..................................... Residential Construction Contracts ......................... Apartments and Hotels ............................................. One and Two Family Houses .............................. . Building Permits Issued ... ....................................... . Business Failures — No............................................... Cigarette Production .................................................... Cotton Consumption ...................................................... Cotton Spindle Hours .................................................. Department Store Sales3 ............................................ Department Store Stocks ............................................ Electric Power Production .......................................... Employment — Mfg. Industries1................................ Furniture Orders3 .......................................................... Furniture Shipments3 .........—....................................... Furniture Unfilled Orders3 ................................ ......... Furniture Sales — Retail.............................................. Gasoline Consumption .................................................. Life Insurance Sales .................................................... Wholesale Trade: Automotive Supplies2 ..................................... ......... Drugs.............................................................................. Dry Goods3 ...................................... ........................... Electrical Goods2 ....................................................... Groceries ....................................................................... Hardware ...................................................................... Industrial Supplies2 .................................................. Paper and Its Products2 .......................................... Tobacco and Its Products2 ...................................... 320 118 335 266 138 303 441 1145 285 479 69 249 115 119 311 311 ...... 1 Not seasonally adjusted. 2 1938-41 = 100 3 Revised Series—back figures available on request. 6 June 1948 Prev. Mo. 10 2 23 19 5 12 19 5 4 Year Ago 12 4 27 5 5 30 24 16 12 MONTHLY REVIEW JULY 1949 Business Conditions and Prospects Continued from page 1 phase of the post-war period was initiated earlier and is probably closer to completion than in many other lines of activity, particularly the durable goods in dustries. Cotton Textiles It has often been the role of the textile industry to lead the way in general cyclical fluctuations in business activity, entering the downward trend ahead of other major industries and completing the adjustment for an upturn before industry in general has touched bot tom. It has already been pointed out that the down turn in the textile industry antedated the current general recession, and it has been suggested in these columns during the past two months that improve ments in textile production might be looked for this fall. This opinion is strengthened by recent activity in household fabrics. During the week ended July 16 sup pliers of both branded and unbranded sheets and pillow cases shortened their discounts on the Type 128 sheets, effecting increases in list prices that ranged from 1 to 1 per cent. Several unbranded manufacturers raised slight ly prices on Type 140 sheets; and, at that time, ex pectations were that new price advances could develop within a few weeks. The significant point of this minor price movement lies in the unexpectedly heavy volume of orders received by mills on the heels of the new price quotations. Although the majority of sales have been for August delivery for participation in white sales, a number of sellers report orders for September delivery. Increasing activity in the print cloth market during the week ended July 16 was followed by a firming of prices as a number o f mills reported refusing orders at prices below the current quotations. The latest avail able information states that print cloth deliveries are beginning to tighten for spot and nearby dates. It is felt that this indication o f improvement in the textile industry may carry over into the cotton yarn market which has been probing for a bottom in prices and demand for a number o f months. Our textile industry correspondents are in almost complete agreement that excess inventories have been largely liquidated and that, with the current production curtailments and satisfactory unit volume of retail sales, it is reasonable to assume that improvements in mill volume will soon be forthcoming. Rayon Continuing the month-to-month improvement noted here last month, deliveries of rayon yarn and staple fiber for the United States in June (see table on page 11 ol this publication) were 14 per cent above the May figure. Compared with June 1948, however, shipments were off 27 per cent. Similarly, total rayon deliveries for the first six months o f this year fell 23.5 per cent below the figure for the corresponding period of 1948. Rayon Organon reports that as of June 30, producers’ stocks of rayon yarn and staple amounted to 69.2 million pounds, composed of 33 million pounds of viscose and cupra fila ment yarn, 17.3 million pounds oi acetate yam, and 18.9 million pounds of staple. Thus, total stocks of rayon yarn were 429 per cent higher than they were at the end of June 1948, while staple fiber stocks were up 350 per cent. The only type of rayon yarn and staple fiber for which deliveries during the first six months of this year exceeded shipments in the comparable period of 1948 was high tenacity viscose yarn. The increase of 15 per cent was due to the increasing use of this yarn in the production of tire cord and fabric. Rayon and nylon tire cord aand fabric output during the first quarter of this year amounted to a record 69 million pounds, accounting for 54 per cent of the total pro duction o f tire cord and fabric; cotton and chafer fabric accounted for 34 per cent and 12 per cent re spectively. Hosiery Another industry that is glad to have seen the pass ing of the second quarter of the year with its severe price declines and curtailments of output of selected items is the hosiery industry. O f the two branches of this industry, the seamless type had the pipelines from manufacturer to consumer filled fifteen months ago. As a consequence of the rapidity with which machines of all types were placed into production fol lowing the war, a tremendous over-production ensued which has plagued the seamless producers down to the present time. In fact, although a considerable number of the machines added have been taken out of pro duction during the past several months, it is likely that curtailed operations will continue until more of the marginal producers have been forced out of the pic ture. Indications are, however, that wholesalers and retailers have reduced their inventories to such an ex tent that substantial improvements in both fall and spring business may be anticipated. About eight months ago improvements in the fiber supply as well as installations of new semi-automatic long section machines brought about over-production in the full fashioned branch of the industry. The effect has not been so serious with respect to volume of op erations, but this branch has suffered from a drastic price adjustment of approximately 40 per cent. Cur rently, most of the mills in this district are running their 51 gauge equipment full time, but the demand for 45 gauge 30 denier hose has been greatly reduced during recent months. Representatives of the industry in this district are of the opinion that the price structure is now fairly well stabilized. One of our leading manufacturers [7] FEDERAL RESERVE BANK OF RICHMOND reports, “ I believe this price adjustment has about reached the bottom and that our industry will recover slowly from this point. Inefficient manufacturers and those who have not purchased modern labor-saving machinery will fall by the wayside.” Another pro ducer points out that although the price movement of full fashioned hosiery has been drastically downward for the past six months, “ we feel that prices will soon level off . . . In view of our optimism for fall busi ness we have not planned any further curtailment. Bituminous Coal Contending that overproduction in the coal industry had “ created menacing instability,” Mr. John L. Lewis ordered all hard and soft coal miners to observe “ a brief stabilizing period of inaction” during the week begin ning June 13. Only one week of work followed this lay off before many o f the mines in this district shut down for a vacation period extending from June 25 to July 4. This, in turn, was followed by the beginning on July 5 of the three-day work week in bituminous mines. As a result of the work stoppage and vacation pe riod, coal output in the Fifth District during June was about 37 per cent less than in the preceding month, after seasonal adjustment. Curtailment of output will continue with the short work week which Mr. Lewis has stated will prevail until further notice, presumably until new wage contracts are signed or until business conditions in the bituminous coal industry improve to the satisfaction of the labor representatives. For the first six months of this year, however, out put of soft coal in this district was only 2 per cent less than in the comparable period of 1948, as compared with a national reduction o f 11 per cent. The 85.7 million tons mined in the Fifth District during the first half of this year was 34 per cent o f the total bituminous production in the country. It has been estimated that under the short week, national production will average slightly more than 35 million tons a month. Consumption, including exports, will total about 45 million tons, and if the short work week continues, the national coal inventory would amount to about 17.5 million tons by the end of No vember. Although industrial stocks of bituminous coal at the beginning of June averaged 73 days’ supply, there was a wide disparity in holdings. No single industrial group, except electric power utilities, had as much as the average supply; retail dealers, for example, held only a 15-day supply. Construction According to the F. W . Dodge Corporation, con struction contracts awarded during June showed little change in total amount from the June 1948 figures in either the Fifth District or in all states east of the Rockies. Some of the largest projects included in the June awards in this district were apartment buildings and a dam and reservoir in Virginia; 45 apartment build ings in Prince George County in Maryland; 44 apartment buildings in Guilford County, North Carolina; and 40 apartment buildings in Richland County, South Carolina. For the first six months of this year total building contracts awarded in the district were off 12 per cent from the comparable period of 1948. Residential con struction contracts, which comprised 38.4 per cent of the total, were down 10.7 per cent from the first six months of 1948; non-residential, accounting for 40.2 per cent of the total building contracts awarded, showed a negligible change; and public works, making up 21.4 per cent of the total, showed a decline of 31.7 per cent from the 1948 figures. In this field a very significant feature is the pros pective growth in volume and importance of state and local government outlays. Private construction pro grams are already suffering curtailment, and state and municipal capital outlays should serve as an important offset to consequent declines in income during the year ahead. Historically, capital expenditures of state and local government have risen and fallen with the fluc tuations in private investment outlays. Now the pros pect is that state and municipal spending will be an important counter-cyclical factor. This should be particularly marked in the Fifth Dis trict. Maryland, for example, has a four-to-five year program for overhauling its 4,500 miles of roads that will entail $200 million. O f this amount, a bond issue of $100 million has already been authorized and an initial installment of $22.5 million was sold on July 15. The Virginia State Highway Commission expects to offer for sale, after Labor Day, $18.5 million of revenue bonds for the purpose of financing a new bridge at Yorktown and the acquisition of the James River Bridge System and the Chesapeake Bay Ferries. West Virginia has just sold an initial installment o f $4.5 million o f bonds of an authorized issue of $50 million for secondary farm-to-market roads. Similarly, South Carolina is expected to issue $5 million of highway bonds during the second half of the year. The State of North Carolina is entering the bond market this year for the first time in several years. It is expected that before the end of the year $82.5 million of bonds will have been sold to finance the initial projects of a $233 million program for improvements and new con struction of highways, harbors, and schools. Outlays of such magnitudes will constitute a major element of strength in the economy o f the Fifth District during the next twelve months. Furniture The spotty business sentiment earlier described was in clear evidence at the furniture markets held during July in High Point, Chicago, Grand Rapids, and New York. Uncertainties existing at the retail level were indicated by the reluctance of dealers to anticipate fall needs; buying was limited to immediate requirements with the average dealer placing orders for his needs from 30 to 60 days. Conflicting views concerning fall prospects were expressed by manufacturers, but the weight of opinion appeared to hold that the low point [81 MONTHLY REVIEW JULY 1949 has been passed and that production will show an up turn over the first half of this year that may measure as much as 20 per cent. Manufacturers’ shipments for the first five months of this year averaged around 28 per cent below 1948. Due to the decline in demand, many producers have been operating less than 40 hours a week. However, there are indications that this fall will witness the seasonal upturn in furniture business that was char acteristic of pre-war years. If this materializes, it is believed that a majority of the manufacturers will be able to maintain normal work weeks throughout the fall period. According to well-informed furniture dealers and manufacturers, the price level as a whole is approxi mately 10 per cent below what it was in January. In addition, the improved quality of the products repre sents an increase in value of from 10 to 20 per cent. In the judgment of most manufacturers, the price decline and the improvement in quality exceed cost re ductions from lower cost of materials and from im proved techniques. One of the district's leading furni ture manufacturers holds that “ Price corrections in furniture have taken place to the full extent that they can, unless material or labor costs come down . . . most concerns are now operating on a very narrow margin and must have a reasonable volume of business in order to enjoy that margin.” Retail Trade The latest available figures for department store sales show the Fifth District to be continuing its betterthan-average performance. For the four weeks ended July 16 it was the only Federal Reserve District to show a gain in sales over the comparable period of 1948. Whereas declines ranged from 3 per cent to 11 per cent in department store sales in the other districts, a gain of 1 per cent was recorded by the reporting stores in the Fifth District. Preliminary retail trade data for June show that changes from a year ago in cities throughout the dis trict range from a decline of 12 per cent to a gain of 9 per cent. For the district as a whole, retail trade for the first six months of this year was only 2 per cent under that of the same period in 1948; for the nation the decline was about 4 per cent. The district’s average was boosted mainly by the gain of 2 per cent in the relatively large volume of sales o f Washington stores, but gains were also realized in Raleigh; Charles ton, South Carolina; Columbia; and Charleston, West Virginia. Agriculture Harvest of wheat and other small grain is now vir tually complete in the Fifth District. Yields were variable, but for the district as a whole they averaged approximately the same as last year. About 26.3 mil lion bushels o f wheat were harvested, which was about equal to the 1948 production. Oats production was 38.3 million bushels, an increase of 36 per cent over 1948, and barley production increased 10 per cent, to talling 7.9 million bushels this year. Total production of corn for grain in the district in 1949 is estimated at 178.9 million bushels, about one million less than last year. Yields are expected to average about the same as last year. The Fifth District’s production of flue-cured to bacco in 1949 will probably total 1,023 million pounds, an increase of nearly 5 per cent over 1948. Most of the increased production is due to a larger acreage. Yields, except in South Carolina, are below those of 1948. However, yields for 1949 will probably average about 1,230 pounds per acre and be second only to the 1948 yield of 1,246 pounds. Exports of flue-cured tobacco from the United States in 1949 are expected to exceed last year although it is not known what effect the recently announced aus terity program of the British Government will have on United Kingdom imports of America tobaccos. A leading business executive in the industry in this dis trict states that it is likely that British tobacco pur chases from this country will approximate the earlier estimated requirements of 175 million pounds. He adds, “ if their purchases should be materially reduced from this figure, it would necessarily have some ten dency towards a weaker market and more tobacco would have to be taken in under the Government Loan Pro gram than otherwise would be necessary.” Hatchery production in the district in the first six months of 1949 was a little over 125 million chicks. This was 28 per cent more than in the same period last year. Chick production for flock replacement is now complete in this area. The demand for chicks for commercial broiler production has weakened some what because of relatively low broiler prices. In the last two months broiler prices generally were nine to twelve cents a pound under prices at the same time a year earlier. Broiler prices this summer have been lower than prices o f heavy hens a good part of the time; normally, the reverse condition prevails. Summary The foregoing comments have been based in large part on replies from prominent business executives to a re quest for their opinions concerning conditions and pros pects in the industries of this district. While there was a natural divergence of views, the weight o f opinion of our correspondents fell on the slightly optimistic side. About 70 per cent of the replies indicated the feeling that the low point had been reached in the particular in dustries covered. Within this group of replies some felt that although they could see no upturn in the immediate future, their particular industries would hold their own from this point on. A larger number felt that an upturn was in sight, basing their judgment on present trends and developments. Only 30 per cent of the businessmen con tacted felt that the industries they represented still had some distance to go on the downward path of re adjustment. 191 FEDERAL RESERVE BANK OF RICHMOND F E D E R A L R E S E R V E B A N K O F RICH M O N D (A ll Figures in Thousands) July 13 C hange in 1949 6-15-49 ITEM S D E B ITS TO IN D IV ID U A L A CC O U N TS Total Gold Reserves .............................$1,077,313 Other Reserves ..................................... 17,225 Total Reserves ................................. 1,094,538 Bills Miscounted ................................... 10,665 Industrial Advances ........................... 26 Govt. Securities, T otal........................ 1,209,607 Bonds .................................................... 499,466 Notes ...................................................... 22,925 Certificates ......................................... 434,529 Bills ...................... ................................. 252,687 Total Bills & Securities .................. 1,220,298 U ncollected Items ............................... 239,469 Other Assets ......................................... 23,792 Total A s s e ts ......................................... 2,578,097 + — + — — — — — — — — — — — 18,261 897 17,364 684 4 39,708 17,353 128 17,841 4,386 40,396 14,661 1,898 39,591 + 10,982 + 2,253 + 13,225 — 7,274 — 29 — 188,059 + 88,986 — 104,222 + 114,264 — 287,087 — 195,362 — 13,972 + 848 — 195,261 Federal Reserve Notes in C ir........... 1,543,935 770,385 Deposits, Total ..................................... M embers’ Reserves .......................... 726,562 U. S. Treas. Gen. A cct.................. 14,952 Foreign ................................................ 24,574 Other Deposits ................................... 4,297 D ef. A vailability Items........................ 217,501 Other Liabilities ................................. 546 45,730 Capital A ccounts ................................. Total Liabilities ............................... 2,578,097 + — — + + + — — + — 4,562 35,745 54,099 14,439 2,029 1,886 9,632 86 1,310 39,591 — — — — + — — — + — 75,374 106,402 16,267 93,030 3,862 967 19,768 262 6,545 195,261 51 R E PO RTIN G B AN K S— 5th D ISTRIC T ITEMS — — + — + + + — + + — + + — + — 6,549 8,327 2,568 273 43,451 5,109 17,122 96 15,476 5,840 12,708 7,893 6,105 43,273 90 4,991 — — + + + + — — — + — 4+ — Total Demand Deposits Deposits o f Individuals D eposits o f U. S. Govt. Deposits o f State & Local Deposits o f Banks Certified & Officer’ s Checks Total Tim e Deposits ............... Deposits o f Individuals .... Other Tim e Deposits ........... L iabilities fo r Borrow ed M oney .... A ll Other Liabilities ........................... Capital A ccou n ts ................................. T otal Liabilities ............................... — 5,149 + 8,785 — 4,281 — 21,014 + 13,283 — 1,922 + 2,879 501 + 3,380 1,125 1,142 454 4,991 — + — — — — + — + — + + — 26,799 29,219 1,597 4,040 12,593 36,468 7,913 27,815 1,463 13,316 13,165 2,872 728 16,399 6,201 — — 46,371 75,211 25,773 36,997 62,644 627 716 15,796 15,864 31,660 600 3,049 10,595 46,371 ♦Net Figures, reciprocal balances being eliminated. **Less losses fo r bad debts. June 1949 % Chg. from June 1948 M aryland .................... $29,381,000 Dist. o f Columbia .... 5,202,000 V irgin ia ...................... 26,954,000 W est V irgin ia .......... 7,696,000 N orth Carolina .......... 17,477,000 South Carolina .......... 10,929,000 F ifth D istrict ........$97,639,000 S ou rce: % Chg. from 6 Mos. *48 6 Mos. ’ 49 +47 $135,627,000 — 6 56,564,000 +44 116,210,000 +34 25,266,000 — 53 75,612,000 + 4________ 45,510,000 0 $454,789,000 — 14 +36 + 7 — 54 — 27 — 9 — 12 D E PO SITS IN M U T U A L S A V IN G S B A N K S 8 Baltim ore Banks Total Deposits .......... $393,446,443 M ay 31, 1949 $393,504,008 $ 774,433 $ 4,454,436 $ 4,321,358 . 1,011,967 23,115 17,151 26,385 971,300 22,806 20,316 27,245 5,651,845 125,114 102,533 155,901 5,703,849 121,699 110,637 157,140 46,153 220,188 80,251 69,208 12,968 114,571 30,162 12,068 128,550 54,542 234,397 98,557 72,678 11,947 143,111 36,503 12,991 121,541 272,417 1,342,173 495,756 426,984 77,228 729,391 184,039 83,545 716,599 297,468 1,358,369 554,684 438,735 68,898 644,341 204,421 80,703 709,560 60,555 104,105 76,423 41,843 61,073 91,088 78,071 43,198 3)51,588 580,488 461,744 263,007 327,932 543,665 469,631 280,367 21,335 21,846 34,009 31,890 179,024 19,993 492,118 915,379 21,410 25,133 39,096 33,580 181,666 21,157 505,678 91,480 129,720 133,039 210,568 190,211 1,037,612 114,922 2,842,936 535,166 127,853 150,848 226,421 186,890 1,055,450 118,657 2,656,124 502,609 47,988 136,417 29,971 52,713 25,221 48,177 138,600 33,515 58,700 27,602 274,110 809,022 173,872 337,946 151,164 246,056 778,245 186,249 335,855 155,981 .$4,051,810 $4,101,591 $23,415,076 $23,120,695 Maryland Frederick ...... H agerstown .. North Carolina Kinston ...... Raleigh ....... W ilm ington South Carolina Virginia Charlotte! Danville 6 Months 1949 Clarksburg ... H untington Parkersburg D istrict Totals 1948 C OTTON C O N SU M PT IO N A N D ON H A N D — B A L E S June 1949 June 1948 A u g. 1 to June 30 1949 1948 Fifth District States: 311,942 Cotton G row ing S tates: Cotton consum ed .................. 538,091 Cotton on hand June 30 in consum ing establishments 901,685 Storage and com presses .... 4,383,129 United Btates: Cotton consumed .................. 600,495 Cotton on hand June 30 in 1,058,697 4,406,538 Spindles active, U . S............... 19,464,000 S ou rce: 401,949 3,739,978 4,371,238 702,805 6,567,289 7,692,718 7,342,735 8,726,930 1,416,944 1,624,512 800,347 1,734,787 1,676,082 21,473,000 Departm ent o f Com m erce. C OTTON C O N SU M PTIO N — F IF T H D IS T R IC T N . C arolina S. C arolina F. W . Dodge Corp. June 30, 1949 6 Months June 1949 ............................... M ay 1949 ............................... June 1948 ............................... 6 Months 1949 ...................... 6 Months 1948 ...................... C ON STR U C TIO N C O N TRA C TS A W A R D E D STATE S June 1948 D istrict o f Columbia W ashington ............. $ 788,243 Change in A m t. From 6-15-49 7-14-48 Total Loans ........................................... $ 793,007** Bus. & A g r i......................................... 348,958 195,436 Real Estate Loans ........................... A ll Other Loans ..................... ......... 257,422 Total Security H oldings .................... 1, 716,726 U. S. Treasury Bills ...................... 85,594 U. S. Treasury Certificates .......... 210,967 40,499 U. S. Treasury Notes U . S. fjo v t. Bonds ........................... 1, 236,546 143,120 Other Bonds, Stocks & Sec........... Cash Items in Process o f Col............. 219,805 179,244* Due from Banks ................................... Currency & Coin ................................. 69,070 Reserve with F. R. Banks ................ 475,928 Other Assets ......................................... 48,757 T otal Assets ....................................... 3, 502,537 ,637,977 ,049,135 28,583 133,631 385,164* 41,464 616,548 568,101 48,447 3,400 20,258 224,354 ,502,537 June 1949 W est Virginia (A ll Figures in Thousands) July 13 1949 (000 om itted) A m t. From 7-14-48 June 30, 1948 $393,465,624 S ou rce: 163,762 157,237 219,245 1,025,314 1,346,286 140,530 134,215 167,509 862,398 1,023,790 V irgin ia 7,650 9,800 15,195 69,759 109,359 District 311,942 301,252 401,949 1,957,471 2,479,435 Departm ent o f Commerce. PR IC E S OF U N F IN IS H E D C OTTON T E X T IL E S June 1949 A verage, 17 constructions .............. Printcloths, aerage (6) .................... Sheetings, average (3 ) .................... T w ill (1 ) ................................................ Drills average (4 ) ............................. Sateen (1) .............................................. Ducks, average (2) ........................... 60.22 63.12 54.83 62.44 55.29 80.34 58.30 May 1949 June 1948 61.27 64.42 55.65 62.47 56.11 81.06 60.10 81.83 89.08 67.08 116.15 71.14 128.15 63.27 N o te : The above figures are those fo r the approxim ate quantities o f cloth obtainable from a pound o f cotton w ith adjustm ent fo r salable waste. S ource: Departm ent o f A griculture. 10 MONTHLY REVIEW JULY 1949 B U ILD IN G PE R M IT FIG U R ES SOFT C O A L PR O D U C T IO N IN TH O U SAN D S OF T O N S Total Valuation June 1949 June 1948 Maryland Baltim ore ..................... Cumberland ................. F rederick ..................... H agerstow n ................. Salisbury ....................... V irgin ia D anville ......................... L yn chburg ................... N o rfolk ......................... Petersburg ..................... Portsm outh ................... Richm ond ..................... Roanoke ....................... W est V irginia Charleston .................... Clarksburg ................... H untington ................... N orth Carolina A shville ......................... Charlotte ....................... Durham ......................... Greensboro ................... H igh P oint ................... R aleigh ......................... R ocky Mount ............... Salisbury ....................... W inston-Salem ............ South Carolina Charleston .................... Colum bia ...................... . Greenville .................... . S partanburg ................. Dist. o f Columbia W ashington ................ $ $ 6,619,260 71,815 451,735 112,074 268,441 65,156 206,224 1,034,005 208,505 176,705 1,565,911 1,495,280 379,953 523,428 2,674.835 158,039 164,070 3,324,307 591,703 451,084 142,865 441,509 1,719,480 62,810 2,888,325 118,276 4,867,602 868,688 1,842,429 256,026 319,265 215,430 166,700 767,156 245,120 2,928,511 511,625 1,258,000 329,515 3,119,687 181,225 66,640 477,872 122,135 437,773 1,043,591 104,770 679,058 799,565 466,550 812,195 W est V irgin ia . , 10,568 V irginia .................. ... 1,216 M aryland ................ 51 F ifth D istrict . 11,835 U nited States 35,274 % in D istrict 33.6 S ource: June 1948 % Chg. 6 Mos. 1949 6 Mos. 1948 14,500 1,860 151 16,511 53,118 31.1 — — — — — 77,209 8,165 878 85,752 255,391 33.6 77,525 9,539 863 87,927 286,277 30.7 27 35 66 28 34 % Chg. — — — — 0 14 56 2 11 Bureau o f Mines. R A Y O N Y A R N SH IP M EN T S A N D STOCKS 15,799,114 4,230,254 $ 39,206,614 $141,076,636 $ 36,116,132 $149,618,305 . D istrict 6,147,350 19,225 70,475 96,385 156,980 June 1949 REGION S Rayon Staple Rayon Staple yarn fiber yarn fiber S o u rce : June 1949 May 1949 June 1948 shipments .................. ... 56,800,000 shipments .................. ... 10,800,000 stocks ........................ ... 50,300,000 stocks ........................ ....18,900,000 51.700.000 7,700,000 50.200.000 20.400.000 68.300.000 22.400.000 9.500.000 4.200.000 R ayon O rganon TOBACCO M A N U F A C T U R IN G June 1949 % Change from June 1948 Sm oking & Chewing tobacco (Thousands o f lb s .)....... 17,331 Cigarettes (Thousands) .... 3 ,735,291 Cigars (Thousands) .......... 519,509 Snuff (Thousand o f lb s .)3,252 S ou rce: + + + — 2 3 8 1 6 Mos. 1949 94,851 175,498,113 2,681,923 20,330 % Change from 6 Mos. *48 — + — — 3 2 3 5 Treasury Department. R E P O R T ON R E T A IL F U R N IT U R E S A LE S Percentage com parison o f sales in periods named with Bales in tame periods In 1948 June 1949 6 Mos. 1949 COM M ER C IA L F A IL U R E S STATE S — 4 — 5 M aryland (4 )* .......................... . District o f Columbia (6 )* .... V irgin ia (1 9 )* .......................... W est V irginia (1 0 )* .............. N orth Carolina (1 1)* .............. South Carolina (1 0)* .............. D istrict (6 0 )* ........................ M ONTH S +11 + 5 —11 — June 1949 .......... May 1949 ........... June 1948 .......... 6 Months 1949 . 6 Months 1948 . 6 —10 — 15 —11 — 4 — 13 —10 — 5 S ou rce: IN D IV ID U A L CITIES Dun & Bradstreet. —10 DEPARTM ENT STORE TRADE — 25 — 8 Richm Baltim ond ore Stock June 30, 1949 com pared with May 31 June 30 W ashington Other Cities District Percentage change in June 1949 sales compared with June 1948: — 7 — 7 0 — 4 — 4 Percentage change in 6 mos. Bales 1949 compared with 6 mos. in 1948: — 3 — 5 + 2 — 4 — 2 Pctge. change in stocks on June 30, 1949 compared with June 30, 1948: — 6 — 4 — 1 — 9 — 3 Pctge. change in outstanding orders June 30, 1949 from June 30, 1948: — 45 — 43 — 34 — 52 — 39 Pctge. change in receivables June 30, 1949 from those on June 30, 1948: + 6 + 1 +12 — 4 + 6 1948 1949 1948 1949 — 16 + 6 — 7 — 7 — 3 — 11 — 5 — 20 + 8 + 4 + 3 — 33 + 5 + 6 + 1 Percentage of current receivables as of June 1, 1949 collected in June: 32 48 48 45 44 Pctge. of installment receivables as of June 1, 1949 collected in June: 15 19 20 21 19 — 4 Maryland Dist. of Col. Virginia W . Va. N. Caro. S. Caro. Percentage change in June 1949 Bales from June 1948 sales, by States: — 7 0 — 6 — 7 — 4 — 2 Percentage change in 6 months 1949 from 6 months 1948 sales: — 5 + 2 — 3 0 — 9 — 1 — 10 — 22 — 27 — 2 — 23 — 5 — 12 — 2 — 2 — 9 S ou rce: Departm ent o f Commerce. ♦Number o f reporting firms. $ 28,161,000 28,374,000 12,163,000 $232,635,000 97,338,000 — W H O L E S A L E T R A D E , 180 FIR M S A uto supplies (8 )* .............. E lectrical goods (6 )* ........ Hardware (1 2)* .................. Industrial supplies (4 )* .... Drugs & sundries (9 )* ----D ry Goods (1 2)* .................. Groceries (5 6)* .................... Paper & products (5 )* ..... T obacco & products (5)*.... Miscellaneous (6 3 )* * ............ D istrict Totals (180)* .... $ 597,000 746,000 337,000 $5,645,000 2,529,000 — 5 ♦Number of reporting firms. L IN E S 828 776 463 4,581 2,543 +11 2 + 5 — 14 — 13 — 33 — 23 — 31 Net Sales June 1949 compared with May June 28 30 12 207 94 Total Liabilities D istrict U . S. — 4 — 5 Baltim ore, Md. (4 )* ................ W ashington, D. C. (6 )* .......... Richm ond, Va. (6 )* ................ Lynchburg, Va. (3)* ............ Charleston, W . Va. (3)* ....... C harlotte, N. C. (3)* ............ Columbia, S. C. (3)*.............. N um ber o f Failures D istrict U. S. + 19 0 — 21 8 7 2 2 — 3 — 2 — 6 + + + + + 4 + 3 — 4 — 5 + 6 + 1 m i FEDERAL RESERVE BANK OF RICHMOND NATIONAL SUMMARY OF BUSINESS CONDITIONS (Compiled by the Board of Governors of the Federal Reserve System) Industrial output declined further in June. Depart ment store sales declined somewhat more than usual in this period, while sales of automobiles were maintained in record volume. Construction contract awards in creased further. Prices of basic commodities showed some recovery from mid-June to mid-July; the average level of all wholesale commodity prices showed little change. Industrial Production The Board's seasonally adjusted index of industrial productiton in June was 169 per cent of the 1935-39 average— 3 per cent lower than in May and 13 per cent below the postwar peak level reached in October and November 1948. The decline in June reflected mainly further curtailment of output in most durable goods industries and a marked decline in activity in the coal mining industry. Production of nondurable goods as a group was maintained at the reduced levels prevailing in April and May. Iron and steel production decreased sharply in June and declined further by mid-July. Output of open hearth steel in June was at 85 per cent of capacity, while electric steel ouput, following a decline of onethird from the reduced May level, was at 39 per cent of capacity. Activity in most machinery industries was curtailed further in June. Production of lumber and of stone, clay and glass products remained about 11 per cent below last year’s level. Output of passen ger automobiles, which had been reduced in May by a labor dispute at the plants of a major producer, in creased considerably in June and was at a new high rate in mid-July. Activity in the textile industries increased somewhat in June from the very low levels reached in May. Output of apparel wool textiles showed a further re covery from the April low point. Production of manu factured foods rose slightly in June. Newsprint con sumption, however, decreased from the record May rate, and activity at petroleum refineries and chemical plants also declined somewhat. Minerals production decreased in June reflecting largely a marked reduction in coal output as a result of a work stoppage and the beginning of the annual vacation period. Coal output remained at a low level in July with most mines operating three days a week. Production of crude petroleum was curtailed slightly in June and somewhat more in early July. Construction Value of construction contracts awarded in June, according to the F. W . Dodge Corporation, increased further to 946 million dollars as compared with 880 million in May and 935 million in June 1948. The increase reflected chiefly a further rise in awards for private residential work and an expansion in awards for public utility construction. The number of new housing units started in June totaled 100,000, according to the Bureau of Labor Statistics. This was 5,000 more than in May and equal to the postwar high reached in May 1948. Distribution Value of department store sales showed somewhat more than the usual seasonal decline in June and the Board’s adjusted index was estimated to be 284 per cent of the 1935-39 average, as compared with 292 in May and 307 in June of last year. Sales in the first half of July remained near the June level, after allow ance for the usual seasonal changes. Railroad revenue freight shipments decreased further from May to mid-July. In addition to marked reduc tions in the volume of coal loadings, shipments of various other industrial goods were in smaller volume than in earlier months. Commodity Prices Prices of nonferrous metals and some other indus trial materials advanced from mid-June to mid-July, following sharp declines in recent months. Steel scrap prices, however, decreased further by 5 per cent. Prices of hogs and pork showed marked seasonal increases in this period, while prices of worsted fabrics, paints, and some other finished products were reduced. The average level of consumers’ prices increased slightly in June as small advances in prices of foods were partly offset by further declines in clothing and housefurnishings. Bank Credit Required reserves of all member banks were reduced by about 800 million dollars on June 30 with the ex piration of the temporary reserve requirement authority granted to the Board of Governors by Congress in August 1948. Subsequently, during the first three weeks of July, Government security holdings at the Reserve Banks declined by about one billion dollars, reflecting sales of bills and certificates made in response to a strong market demand for these securities. Business loans at banks in leading cities were re duced further during June and the first half of July, but the declines were somewhat smaller than in other recent months. Holdings of Government securities in creased by over one billion dollars in the first half of July. Security Markets Shortly before the reduction in reserve requirements, the System announced a change in open market policy. These developments were reflected in sharp declines in yields on Government securities early in July. System sales of bills and certificates checked this decline, but the resulting yields were still substantially below pre vious levels. Prices of other securities— bonds and common stocks —advanced steadily in the first three weeks of July. 1121
@FedFRASER