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MO N T H L Y R E V I E W of Financial and Business Conditions F ifth R eserve Federal D Federal Reserve Bank of Richmond, Richmond 13, Va. istrict June 30, 1947 Business Conditions H ERE was considerable irregularity in business movements in the Fifth District during May, but nothing bordering on a business recession was then visible. The trade level in the District, as measured by seasonally adjusted department store sales, in May exceed ed April by 1 per cent and was 9 per cent higher than the trade level for the same month a year ago. Other types of District stores, as reported to the Bureau of the Census, are still showing substantially larger gains than depart ment stores. Exceptionally large increases are continuing in the automotive trade and in building supplies. There was variability in the movements between April and May in the nine lines of wholesale trade. In the main, these trades are holding at high levels. The employment situation in the District has stabilized, and few further expansions are in sight in the next sev eral months. In numerous places there have been mod erate slow-downs in industrial activity, and a few plants have found it necessary to shut down temporarily. These are, in the main, small concerns, and thus far few workers have been adversely affected. Despite the high building costs and early general reports of reduced activity, building permits are showing a sur prising amount of strength. After adjustment for sea sonal variation, building permits in the Fifth District in May were 8 per cent higher than in April and 22 per cent higher than in May 1946. Reports are current that some wholesalers and retailers in the District are again purchasing supplies equivalent to their high rates of sales. It will be recalled that stores generally had adopted a policy in the spring of reducing inventories by purchasing considerably less than was being sold. These reduced purchases have had their effect on manufacturers’ activities as is shown in various industries of our District, notably cotton yarns, certain types of fur niture, some types of clothing, and certain finished cotton goods. It is interesting to note that some stores have resumed purchases equivalent to their rate of sales, and it indicates a strengthening factor in manufacturing output and employment. There are, no doubt, some stores which had accumulated much larger inventories relative to their sales and which are still purchasing smaller supplies than they are selling. At the going level of sales, however, most T stores' inventory positions should be in alignment by the beginning of fall. This would seem to indicate that many of the adjustments that have been taking place in the past two months in manufacturing activity will be essentially completed by the end of summer. One of the strong factors in the District’s business out look is the fact that the cotton textile industry reduced its spindle activity simultaneously with a reduction in market demand. In May the seasonally adjusted index of cotton consumption in the Fifth District dropped 13 per cent from the April level and was 6 per cent smaller than that of May 1946. This means that the manufacturers have been unwilling to produce for stock and that there will be no supplies of goods overhanging the market. The market demand for cotton goods is spotty. Some constructions— notably print cloths— are in extraordinar ily strong demand, and prices are strengthening. Other constructions are moving slowly, but even in these no weakness in price has been evident. It is becoming clear that there are not likely to be any material price concessions made in cotton goods until the price of raw cotton itself has dropped materially. It is further clear that nothing lower than around 30-cent cot ton (92.5 per cent of parity) need be anticipated through the calendar year 1948. Exports of cotton goods are con tinuing at the highest level on record and are a little more than double the level of a year ago. The demand for cotton goods required for inventory accumulation in the several stages of fabrication and distribution apparently has been eliminated, but the increased demand for exports has to a large extent offset this loss. The best anticipation that could be justified at this stage would be that cotton con sumption after the summer holidays will resume a level about the same as in the early part of the year. Cigarette output of the District dropped notably in May from April on a seasonally adjusted basis, but the major part of this is undoubtedly due to labor troubles. There has been little indication thus far that there has been any weakening in the demand for cigarettes. Lumber, which in 1946 approximated its production record of four decades ago, has become a drug on the market in the early months of 1947, and production has fallen sharply from the year-end, 1946, level. This does MONTHLY REVIEW 2 not mean that lumber production will stay at these reduced levels, but it is an indication that price and cost adjust ments must be made. The demand for lumber under those conditions which would permit the full development of housing facilities will be very much greater than current production. Rough lumber prices have broken sharply, but this is not true of finished lumber where facilities for production are much more limited. Speculative building of residences has fallen off notably from what it was over the past several months, but here and there an occasional development of considerable size has gotten under way. The current level of building per mits in the District must be fairly heavily weighted with commercial, industrial, and government projects. There have been some notable reductions in residential building costs in the form of increased labor efficiency, but these costs are still high and it remains to be seen whether or not new starts can be attained in volume under these costs. The lifting of restrictions on the number of square feet and the number of bathrooms has resulted in some activity in custom built houses. It is believed that considerably more of this type of housing will evolve. Although the record is not available for bituminous coal output for May, it is probable that a considerably higher level of production was attained than in April when a mourning holiday period was called. June production, h o w e v e r , will again be adversely affected because it is re ported that a substantial proportion of the miners has quit work in protest over the new labor bill. Such labor stop pages and holidays as have been occurring will have their effects largely on the volume of coal exports if miners re turn on July 7. This is unfortunate at a time when the nation's best efforts should be exerted to reactivate the production of foreign nations. The crop outlook in general in the Fifth District is in satisfactory shape despite the late spring. Cotton acre age will be in the neighborhood of 15 per cent higher than that of a year ago, but boll wTeevil emergence has been greater than normal, and this may in part offset a gain in production that might be expected from a larger acreage. Tobacco stands are spotty in many areas of the District. At this stage it does not appear that the poundage of tobacco will equal that of last year. However, climatic conditions in the next thirty days could change this out look completely. Tobacco prices will be lower than they were last year unless the crop is unusually short or some arrangement is made to finance purchases normally made by Great Britain. The price of cotton, on the other hand, on the basis of the current outlook appears to hold a sub stantial measure of strength. The spring pig crop was only a few per cent higher than that of a year ago in the District as well as in the nation. This does not offer much hope for much reduction in the price of meat this year. BUSINESS IN DEXES—FIFTH FEDERAL RESERVE DISTRICT Average Daily 1935-39 = 100—Seasonally Adjusted ................. May 1947 Apr. 1947 Mar. 1947 May 1946 290 258 270 132 296 198 254 159 299 302 235 132 239r 238 246 293 165r 272 144 246 152 307 300 238 134 279 153 239 250 77 437 174 255 148 279 233 199 127 228 150 287 296 244 154 90 266 126 341 191 109 308 268 167 69 278 114 317 200 121 147 129 345 260 163 65 277 114 271 164 108 126 145 277 266 155 42 240 96 188 134 114 161 85 Bituminous Coal Production*.................................... ................... Building Permits Issued............................................ .................. Cigarette Production .................................................. ................... Cotton Consumption .................................................... .................. Department Store Stocks............................................ ................. Electric Power Production........................................ Employment— Mfg. Industries* .............................. Furniture Sales— Retail ...................-........................ ............... Gasoline Consumption ................................................ Life Insurance Sales.................................................... ................. Wholesale Trade: Automotive Supplies** .......................................... ................ Dry Goods ............................................................... .................. ................... Hardware .................................................................. .................. Industrial Supplies** ...... -....................................... ................... Paper and Its Products**........................................ ................. Tobacco and Its Products**.................................. ................ Lumber Production .................................................... Wheat Flour Production............................................ *Not seasonally adjusted **1938-41 = 100 263 213 207 139 303 292 % Change May 1947 from A pr. 47 May 46 + 16 — 11 + 8 — 19 — 13 + 1 — 3 — 4— — + + 40 22 19 6 9 25 + 8 4- 13 — 3 — 17 — 4 — 9 — 8 + 30 — 4 -f 11 + 8 — 4 — 10 4- 7 — 8 — 1 +114 + 11 4- 31 + 81 + 43 — 4 + 7 MONTHLY REVIEW 3 The Banker Looks at the Soil Most people, when out driving in their local community on a Sunday afternoon, are impressed by the beauty of a wrell kept and well operated fertile farm. Fewer people are disturbed by the all too frequent evidences of poor soil management and exploitative practices. If they notice it at all, they are prone to dismiss it with the thought that it is the other man’s land and not their own. They fail to see that if John Jones, a farmer in their community, abuses his soil, the adverse effects of it will be felt by him, yes, but also to a greater or lesser degree by the entire community. Self interest demands that a banker view with alarm the exploitation and destruction of the soil and fertility on the farms in his banking community, whether the farmers are customers of his bank or not. O f all the aspects of soil management, bankers are per haps most affected by the problem of soil erosion and the problem of under-utilization of available land resources. Although these are but two of the numerous aspects of soil management, they are the two in which most bankers hold the greatest vested interest in having the farmers in their communities use their soil to the best advantage. All agree that the soil of a farm is the underlying basis for its present and future productivity. So far as the individual farmer is concerned it is the economic base of his farming operations. If he abuses his land through the use of exploitative practices or sheer neglect, the wealth producing capacity of the land— its productivity— will be wasted away. In fact, the land itself may go. The farmer who operates his farm at, say, 50 per cent of its practical capacity does so at the loss of income in much the same manner as a manufacturing concern that willfully operates at only 50 per cent of the level at which it could produce and sell its output at a satisfactory profit. In fact, the situation in the case of the farm may be more difficult to rationalize, in view of the family labor situa tion and the inability of most farmers to reduce their ex penses significantly as production declines. Banks are intimately tied in with the economic life of their community. If the economic development of their community is one of growth, the bank itself has the maxi mum opportunity to grow and proper. If, on the other hand, the wide scale dissipation of soil resources causes the economic position of the community to deteriorate, it is hard indeed, if not actually impossible, for the business firms in towns that function primarily as service centers for farming communities to grow and prosper. The same naturally holds for the banks in such communities, since the bank and the agriculture that makes up its farming community are too closely interrelated for banks to grow and prosper for any long period of time while farmers are becoming more and more depressed as their soil re sources are dissipated. STOPPING SOIL AND F E R T IL IT Y LOSSES It has been estimated that before the war at least 3 billion tons of soil from the croplands and associated pas tures of the nation were lost each year through erosion. These 3 billion tons contained an estimated 43 million tons of phosphorus, potassium, and nitrogen, the principal in gredients of commercial fertilizer, and a like amount of calcium and magnesium. The losses of nitrogen, phos phorus, and potassium were more than 60 times the amount of these elements of plant food used in the entire United States as commercial fertilizers in a typical pre war year. Unfortunately, the states of the Fifth Federal Reserve District pay all too heavy a share of this na tional cost from their meager “ welfare fund” — the agri cultural land of their farms. Importance of Sheet Erosion Much of the soil that washes away is lost through what is commonly known as sheet erosion— a slow insidi ous type of loss that occurs before our very eyes and yet so often goes undetected. It eats away the top soil wher ever the combination of ground cover, slope ,and soil characteristics are unable to slow up the run-off suffi ciently. Much of the top soil of the agricultural lands of the District is already thinner than it was when first cleared. In fact, on much of the land it is so thin, if it exists at all, that production of annual crops has been dis continued and the land either lies idle or has returned to timber. Sheet erosion however is an important problem on much of the remaining agricultural land of the Dis trict, where it is carrying away what top soil remains particle by particle, handful by handful, bushel by bushel, and ton by ton. The soil goes, and it takes away with it much of the available plant nutrients. It also takes humus, or organic matter, which is important in soils for many reasons. Or ganic matter is the storehouse for practically all of the nitrogen in soils, and it also supplies a considerable part of the other available plant foods. In fact, one-third to one-half of the total phosphorus, much of the sulphur and smaller amounts of calcium, potash, and other ele ments are held in the organic matter for use by plants. The presence of organic matter in the soil helps keep the soil in better physical condition, or tilth. Because of its absorptive nature, organic matter has a high water holding capacity and therefore will enable the soil to hold more water and be less susceptible to drought. Since most of the organic matter in the soil is contained in the top few inches, or what is commonly called the plowlayer, it is evident that sheet erosion which digs away at the top soil removes the most valuable portion of the soil from the standpoint of its agricultural use. Much of the cropland in the Fifth District lacks ade quate protection against erosion. Except for some of the hay crops, the cropland of the District is plowed one or more times each year and, particularly in the southern part of the District, a large portion of the cropland is in row crops. This type of cover affords the least protec tion of any against erosion. Since many of the soils on which crops are widely grown are especially susceptible to erosion by virtue of their slope and inherent properties, the more successful soil managers have in many cases used terraces, contour plowing, strip cropping, grassed water ways, appropriate rotations, and winter cover crops as means of preventing soil and fertility losses. It has not been so many years since it was a fairly com mon practice for farmers to burn their corn and cotton stalks. By so doing they took all of their crops from the soil and never gave as much in return. Although the burning of stalks is less common today, there are still many farmers who try to shortchange their land by sup 4 MONTHLY REVIEW plying the soil with too little organic matter. Erosion coupled with the decline in organic matter and fertility adversely affects crop yields. Many times the operators attribute the drop in yields to too much or too little rain fall, or to any number of other things that merited little or none of the responsibility for the lower yields. This was done instead of placing the blame where the blame belonged, namely, on their poor soil management prac tices. a great deal of valuable research, and their findings can be drawn upon by all. Present day agricultural imple ments also make the job much easier today than ever before. In addition, large numbers of technically trained men on the staffs of the Land Grant Colleges and the De partment of Agriculture are available to work with the farmers on problems of soil management, to inventory the conditions of their farms, and to prepare recom mended programs of action. Erosion has made heavy inroads on much land where crop yields have been quite well maintained or increased. Lest the maintenance of yields lull people into thinking that safe farming practices are being followed, it is well to examine what really has happened. Actually, two oppos ing sets of forces are in operation. One set— the loss of top soil, the declining level of organic matter, and, close ly related thereto, the drop in fertility— operate to reduce crop yields. At the same time use of higher yielding varieties; increased use of commercial fertilizers, sprays, and fungicides; and better tillage practices tend to im prove crop yields. Another factor that has tended to im prove the average level of yields has been the retirement from cultivation of large amounts of “ worn out” land. The plea has been made in this article for stopping soil and fertility losses. It was pointed out that it is generally the productive capacity of the soil that gives a farm its value. The land is a resource in which the owner-operator has much of his capital invested, and from the use of which he expects to derive his income. Under such cir cumstances, the farmer can ill afford to abuse the land to the point that current yields are reduced or that future productive capacity is impaired. Even in livestock areas where most of the land is in grass the same type of deterioration of soil goes on. In grass areas the comparable situation is for the farmer to let the fertility of his pasture land drop to the point where it is difficult to maintain a good soil cover. This lowers the carrying capacity of the pasture, which is conducive to overgrazing. Both tend to accelerate run-off, and away goes the soil. Land is sufficiently variable that what works best in stopping erosion on one farm or in one field may be total ly inadequate on another farm or in another field on the same farm. Very often also the practices have to be used in some definite pattern. For example, terraces are an important practice in stopping erosion on many farms. However, use of terraces often calls for grassed run-off areas. Other erosion control practices that are of im portance in parts of this District are strip cropping, con tour plowing, contour furrowing, reforestation, and add ing enough lime, phosphate, and new seed to grass lands to support a sufficient growth of grass to hold the soil in place. At the individual farm level, therefore, the need is for farmers to recognize that soils are different and to determine how each soil area on the farm should be han dled. Having done these two things, they should proceed to institute the appropriate soil saving practices. NEED FOR INCREASED YIELD S Preventing Soil Losses Much Easier Today Some farmers have always done a good job of manag ing their soil. A generation ago to do a successful job required rare insight and ingenuity. Today the job-is much easier. Research workers in the Land Grant Col leges and the Department of Agriculture have conducted While farmers cannot afford to let the fertility of their farms decline or their soil wash away, it is just as true that they must do more than merely stop soil and fertility losses. Many farmers are tolerating yields of only half or less what they could achieve with better soil manage ment and farm management practices. Furthermore, achieving this higher level of yields would be one of the easiest ways for individual farmers to increase both their gross and their net farm income. Many of the farmers that could profit relatively most from a fuller utilization of their land are on farm units that are too small, considering their present mode of operation. Such farmers have three alternative courses of action aside from doing nothing. One approach is to increase the number o f acres in the operating unit. An other approach is to find gainful employment off the farm for the time that can be spared from farming operations. Many, if not most, small farmers can do neither of these things. As a practical matter, therefore, the only real hope for the majority of small farmers of improving their income is by increasing the economic size of their farming operations within the boundaries of their present farm. Higher rates of production is an important means of doing this.1 Higher Yields— A Means of Increasing Income Theoretically, farmers can go to such length to increase yields that the rise in costs of so doing will exceed the xH ereafter the term “ yield” w ill be used instead o f “ rate o f production.” The term yield though m ore lim ited in m eaning has the m erit o f brevity. MONTHLY REVIEW benefits. As a practical matter, however, it is most un usual for farmers with exceptionally favorable yields to find them associated with lower net incomes than would have been receivevd had yields been lower. This is borne out in numerous farm management studies, which quite generally reveal a fairly close and direct relationship be tween yields and whatever measure of net income is used in the study for analysis purposes. Most farmers know how to improve the yields on their farm, but most farmers do not know how to go about building up yields to the maximum level justified by costs and returns. To obtain assistance in determining what direction to go, and how far to go, farmers have the opportuinty to confer with local extension service personnel, local vocational agriculture teachers, the local personnel of the soil conservation service, and other professional agri cultural workers of State and Federal agencies. These people are in a position to give rather precise recommen dations based on a knowledge of research findings and local conditions. Lime and Phosphate Keys to Increased Yields of Grasses In the grass land sections of the District, the recom mendations for increasing rates of production center mainly around the application of lime and phosphate. The primary job is to increase grass production, especially the species that are most nutritious. One of the steps in doing this is to correct the soil reaction by the application of lime. Another step is the application of phosphate. For many permanent pastures these two practices are ade quate, but some will require reseeding and some also will require application of potash and any other plant nutrients of which there is a deficiency. From this it is seen that the practices that will control erosion in the grass land areas of the District are the same, except possibly in degree, as those that will achieve full production. In other words, it can be said with safety that the farmer who handles his pasture and hay lands in such a way as to get the highest yields has nothing to fear from erosion, unless the land is so steep or otherwise so unsuited for grass that it should be returned to timber. Winter Cover Crops Build and Conserve Soil Some farmers put winter cover crops on their cultivated land. Such crops make a two- or three-fold contribution. In the first place, they add organic matter to the soil and increase its fertility; secondly, they provide resistance to erosion; and in the third place, they often provide winter grazing. Aside from the use of winter cover crops, how ever, direct efforts to increase the productive capacity of cultivated land has but little to do with the control of erosion. Only to the extent that the larger amount of organic matter in a high producing soil can absorb more moisure and thereby reduce run-off, can the higher pro ductive capacity of the soil be said to aid in the control of erosion. On the other hand, the control of erosion on cultivated land can be said to contribute to a higher level of crop yields. The role of winter cover crops already has been noted. Where the cover crops are legumes, the effect on fertility is even more pronounced than where they are grasses. Besides this, the control of erosion whether by mechanical or other means, stops soil and fer tility losses. The arresting of such losses results in im 5 proved crop yields even where there is no improvement in cultural practices. Regardless of the extent and direction of any causal relationships between the elimination of soil and fertility losses and the achievement of high yields, the fact remains that both pay high returns to the enterprising farmer. In view of the returns to be derived from good soil manage ment, it is depressing to realize what a large part of the total job remains to be done. Fortunately, some progress is being made. In recent years the rate of progress has been more rapid than ever before. Passages in “ Chart ering A Route for Agriculture in West Virginia,” a bulle tin that was prepared by the Postwar Planning Commit tee of that state and published by the West Virginia Agri cultural Experiment Station, illustrate the need for great er accomplishments. In this report it is pointed out that in 1944 West Virginia farmers used 1,600 tons of nitro gen, 17,000 tons of superphosphate, and 2,100 tons of pot ash for fertilizer purposes. Although this is a marked increase over earlier years, the report stated that five times as much of these fertilizer elements should be used anually by West Virginia farmers. The report also states that 600,000 tons of liming mate rials were used in 1944, also a marked increase over ear lier years. However the report goes on to state that West Virginia farms need an initial foundation application of 8 million tons of lime plus annual applications thereafter of 600,000 tons per year. Although these two illustrations are for West Virginia, conditions elsewhere in the District are more or less similar. Progress is being made, but the rate of progress needs to be greatly accelerated along all fronts. Tenancy has an important bearing on soil management in large parts of the District, particularly the cash crop areas. Traditional rental agreements in such areas are built entirely around crop enterprises. On many tenant operated farms soil conditions are such that a good soil management plan would provide for the development of improved permanent pasture and beef cattle or dairy en terprises. However, share rental arrangements involving important livestock enterprises are at least unusual if not actually non-existent in many communities. Thus, much research and educational work needs to be done in the development of equitable rental provisions for the shar ing of both expenses and receipts before this obstacle to sound soil management is removed. Meanwhile, the most rapid progress in achieving sound soil management pro grams will be on owner-operated farms. TH E CONTRIBUTIONS OF GOOD SOIL M ANAGEM ENT By way of summary, let us appraise some of the con tributions that good soil management can make to the economy of the various parts of the Fifth Federal Re serve District. First, let us look at w*hat it means to the farmers themselves. What It Means to Farmers Good soil management affords the farmer an opportu nity to keep his investment in his land intact, in fact actu ally to increase it. It enables him to increase the eco nomic size of his farm without enlarging his acreage. It means increasing his expenses, but, if operated efficiently, income will rise more than expenses, except at the outset, with the result that the net farm income will increase. 6 MONTHLY REVIEW It is generally accepted that money invested in good seed, fertilizers, and lime, up to the maximum levels of appli cation recommended by the respective Agricultural Ex periment Stations, gives about the highest rate of return of any money invested in the farm business. In other words, from the standpoint of the farmer’s own welfare, there is every reason to commend to the farm operators of the District that they as individuals institute good soil management programs for their farms. This includes among other things, the control of erosion and the achieve ment of high rates of production. flected in a higher level of farm income. It is fair, therefore, to conclude that a generally higher level of soil management throughout a community aids a bank both through its direct effect on the volume of loans to, and deposit levels o f farmers, and through the indirect effect on the mechandising and service trades in the com munity. Aiding in the development of such economic strength in the entire community is one of the best ways a bank in an agricultural community can insure itself of a good chance to grow and prosper in the years to come. How Bankers Can Assist Farmers What It Means to Bankers Now to shift and look at what good soil management can mean to banking and to business generally. It has been stated that farm expenses will rise if farmers achieve the desirable level of good soil management about which we have been talking. A part of this will reflect the ex penditures for larger amounts of lime and fertilizer, and the development of appropriate mechanical erosion con trol devices such as terraces. Also, a part of the in creased expenditure will be a natural outgrowth of the larger volume of business the farmers are doing. Ex cept at the outset, gross income will tend to rise more than expenses with a consequent rise in net incomes. All in all this means more total business in the trade territory. Mention was just made o f the fact that, at first, ex penses rise faster than incomes. If a farmer is going to improve his pasture or meadow it means a heavy applica tion of lime and phosphate and possibly potash and nitro gen. It also may mean reseeding. Terracing for the small farmer with insufficient equipment means custom work. All this costs money and the returns in the form of greater production are not so large before the second or third year. This lag in returns forces the farmer who wants to improve his land to make a choice. He must either go into debt to do the job, or improve a few acres a year out of whatever margin of income can be spared from other uses. The kind of credit that will enable the farmer to make most rapid progress in improving his land is the kind that will supply the funds when needed and provide for repayment in the second or third year after the soil treatments have had a chance to be re Now to consider what bankers can do to encourage better soil management. One of the first things for a banker to do is to develope the point of view that what ever helps each and every farmer in his banking commu nity to become a better farmer, and his farm a better farm, contributes to the economic strength of his community. It follows, then, that he is justified in concerning himself with ways and means of helping the farmers to help them selves to become better farmers. With some farmers it may involve no more than a few words of appreciation and an expression of respect for the way they are already going about becoming better farmers. A sincere compliment from a highly respected banker can mean a lot to a farmer. Other farmers may respond to a suggestion that they talk over some of their farming problems with their County Agent or other tech nically trained agricultural workers or a successful farmer in their community. Other farmers will need credit on appropriate terms. Today especially when there are indications that AA A benefit payments, that heretofore have been a stimulus to improved soil management, may be substantially reduced, there is an especially great need for bankers and other business leaders to provide a high quality of constructive leadership in helping farmers to realize that they simply cannot afford to let the curtailment of Government pay ments induce them to abandon the improved practices they have been following. Government payments or no Gov ernment payments, good soil management practices pay good dividends and they should by all means be expanded — not contracted. 7 MONTHLY REVIEW Banking Loans of the weekly reporting banks of the Fifth Fed eral Reserve District gave decided evidence in May and early June of leveling off from the steady upward trend of the past nine months. During the five-week period ended June 18, total loans fell from their May 14 peak of $495 million to $492 million. Totals on the four W ed nesdays between these two dates ranged from $490 mil lion to $492 million as compared with the range of $492 million to $494 million of the six weeks preceding May 14. The occurrence of a similar leveling-off period in the same months of last year leads, however, to the question as to whether the decline is a temporary one to be followed by a renewal of week-to-week gains or a stop or reversal of the two-year growth of loans that has occurred. During the five weeks, commercial, industrial, and agri cultural loans declined from $257 million to $251 million, while real estate loans and “ other” loans continued their upward movement, the former rising $2 million to $87 million and the latter increasing by $1 million to $110 million. Loans to brokers and dealers for purchasing and carrying securities remained constant at $5 million and loans to others for the same purpose declined from $38 million to $37 million. The chart below shows the changes that have occurred during the past twelve months in the major classes of loans outstanding. LOANS OF WEEKLY REPORTING MEMBER BANKS H O LD IN G S OF U N ITE D S T A TE S G O VE R N M EN T O B L IG A T IO N S W E E K L Y R E P O R T IN G M EM B E R B A N K S F ifth D istrict (M illions o f dollars) Date Bills C. o f I. N otes Bonds* T otal May 14 21 28 16 18 13 173 181 177 69 69 64 998 998 997 1,256 1,266 1,251 June 15 11 11 167 171 178 62 59 60 995 998 997 1,239 1,239 1,246 4 11 18 ♦Includes obligations guaranteed by the United States. Withdrawals of Treasury funds— concentrated princi pally in the first and third weeks of June— led to a small decline in the reserve funds of Fifth District member banks during the five-week period. Currency transac tions had little net effect upon reserves as gains were just about offset by losses, and commercial and financial trans actions alternately withdrew and supplied funds, a sub stantial inward movement taking place in the first week of June followed by a smaller yet considerable outflow in the following week. Locally extended reserve bank credit similarly fluctuated from week to week as the reserve po sition of member banks was reflected in Treasury bill transactions and changes in the volume of borrowings at the Federal Reserve Bank. A summary is presented in the table below from which it may be seen that the gains from commercial and financial transactions and the small net increase in reserve bank credit were insufficient by $7 million to offset the losses from Treasury transactions and the increased currency demand. F A C TO R S A F F E C T IN G M E M B E R B A N K R E S E R V E S F ifth D istrict Change fo r 5 weeks ended June 18, 1947 (M illions o f dollars) Factors increasing ( + ) or decreasing (— ) reserves: Reserve bank credit extended locally Comm ercial and financial transactions Treasury transactions Currency transactions Other fa ctors N et change in reserve balances .+ 3 +38 .— 47 — 1 — * — 7 ♦Less than $500,000 1946 1947 In spite of a $1 million increase in portfolios of securi ties other than United States Government obligations, total investments of weekly reporting member banks de clined $9 million to $1,366 million between May 14 and June 18. As may be seen from the table following, there were decreases in holdings of all types of Governments other than certificates of indebtedness, which increased by $5 million to $178 million. May saw deposits of Fifth District member banks, as measured by average daily deposits of the last half of the month, remaining substantially at the level of the preced ing month, and since there was but a slight change in the total deposits of member banks in the United States, the proportion held by the Fifth District banks remain un changed. There was some redistribution among the states of the District as Maryland, the District of Columbia, and West Virginia increased fractionally while the remaining three states lost similarly small amounts. The table below gives the comparative holdings for April and May. 8 MONTHLY REVIEW A V E R A G E D A IL Y T O T A L D E PO SITS* OF M EM B E R B A N K S Last h a lf o f M ay Last h a lf o f A p ril $ thousands 977,429 M aryland 618,610 R eserve City Banksi C ountry Banks 358,819 927,893 D istrict o f Columbia 907,252 Reserve City Banks 20,641 Country Banks 1,270,386 V irginia i 290,642 Reserve City Banks 979,744 C ountry Banks 540,055 W est V irginia 814,832 N orth Carolina Reserve City Bankss 369,517 445,315 Country Banks 416,491 South Carolina 4,947,088 F ifth D istrict 103,300 U. S. (M illions) % o f U .S. $ thousands 989,798 629,767 360,031 933,278 912,403 20,875 1,264,587 287,319 977,268 542,979 804,822 365,254 439,568 412,773 4,948,237 103,284 .95 .60 .35 .90 .88 .02 1.23 .28 .95 .52 .79 .36 .43 .40 4.79 100.0 % o f U.i .96 .61 .35 .90 .88 .02 1.22 .28 .94 .53 .78 .35 .43 .40 4.79 100.0 ♦Excluding interbank demand deposits. ASSETS A N D L IA B IL IT IE S OF M EM BER B A N K S F ifth Federal Reserve D istrict M ay 28, 1947 Prelim inary (M illions o f D ollars) Chg. from Reserve A p r. 30, *47 A ll city Other m ember m ember m ember all member banks banks banks banks ITEM S Assets 2,326 707 1,468 151 686 317 82 4,274 1,232 2,797 244 1,343 711 124 — 26 + 12 — 39 + 2 — 31 + 4 + 8 227 3 310 5 — 25 0 58 37 3,049 193 79 5,696 — 18 2,022 286 35 1,702 450 2,472 2 13 160 1,973 85 43 1,845 860 2,833 6 14 196 3,995 371 77 3,547 1,310 5,305 8 27 356 — 51 — 15 — 23 — 13 — 1 — 52 — 6 2,647 3,049 5,696 — 53 Loans and investments 1,948 525 a. Loans and discounts 1,329 b. U. S. G ov’ t obligations 93 c. Other securities 656 Reserves, cash, and bank balances 393 a. Reserves with F. R . bank 43 b. Cash in vault* c. D<emand balances with banks 83 in U. S. 2 d. Other bank balances* e. Cash items in process 135 o f collection 42 3. Other assets* 2,647 4. Total assets + 3 — 53 Liabilities and Capital 5. 6. 7. 8. 9. 10. 11. Gross demand deposits a. Deposits o f banks b. W a r loan accounts c. Other demand deposits Tim e deposits T O T A L DE PO SITS B orrow ings from F. R. bank Other liabilities* T otal capital accounts* Total liabilities and capital accounts + + 3 2 ♦Estimated Details m ay not add to total due to rounding. O W N ER SH IP OF D EM AN D DEPOSITS Increases in the non-business demand deposits of banks of the Fifth Federal Reserve District more than offset the slight decline in business deposits to bring about an in crease in total demand deposits of individuals, partner ships and corporations o f $136 million in the seven-month period from July 31, 1946 to February 26, 1947. The gains were found principally in personal deposits and in the deposits of non-profit associations which rose from their July levels by $69 million and $67 million respec tively. Gains and losses among business concerns were unevenly distributed, the largest losses being shown in deposits of trade establishments, which fell by $36 million, while the greatest gain wras shown by manufacturing and mining concerns whose deposits increased by $13 million. The table below presents the February pattern of owner ship, together with the changes in the dollar amounts of each class from preceding survey dates. CH AN GES IN O W N E R S H IP OF D EM AN D DE PO SITS OF IN D IV ID U A L S , P A R T N E R S H IP S A N D C O R P O R A T IO N S F ifth Federal Reserve D istrict (Estimates in m illions o f dollars)* Dollar Increase Am t. out Percent o f standing or Decrease from Total Type o f H older J a n .1946 Feb. 26, ’ 47 Feb. 26, ’ 47 July 1946 T otal Business N onfinancial busin ess: M anu factu ring & M ining P ublic utilities Trade Other nonfinancial Financial busin ess: Insurance companies Other financial Personal Trust funds N onprofit association Foreign T otal 2,223 50.7 — 13 + 90 1,916 43.7 — 15 + 53 581 231 853 251 307 13.3 5.3 19.4 5.7 7.0 + 13 + 5 — 36 + 3 + 1 + 53 + 3 — 35 + 33 + 38 83 224 1,805 85 271 1.9 5.1 41.2 1.9 6.2 + 7 — 6 + 69 + 17 + 67 + + + + + — + 136 + 355 4,383 100.0 _ 5 11 27 172 15 79 2 ♦Owing to rounding, details m ay not add to totals. Complete data on the seven preceding sem i-annual surveys o f deposits ownership m ay be found in the M onthly R eview o f this Bank fo r June 30, 1946 and O ctober 31, 1946. The $13 million increase from July 1946 shown by deposits of manufacturing and mining concerns was just proportional to the increase in the total of demand de posits of individuals, partnerships and corporations. Since the institution of the surveys, however, a seasonal decline of these deposits has been noted in the first-of-the-year surveys of ownership. Thus the increase in the dollar amount that occurred from July to February represented a substantial gain in view of this seasonal factor. A p parently the reconversion drains upon the funds of these concerns have been reversed and increased cash require ments brought about by increased current expenses arc being reflected in larger bank balances. Deposits of public utility, transportation and communi cations concerns reversed their previous declining trend and increased sufficiently to maintain the relative position reached in July 1946. Here again greater liquidity re quirements have been reflected in the increased deposits carried by these firms. The large units commonly found in these fields are as a rule quite careful to maintain their funds at a level consistent with their requirements and the level of deposits serves as an accurate measure of the requirements of the concerns. As might have been expected deposits of trade estab lishments showed some decline from their July level. The first half of 1946 saw but little change as compared with the almost steady growth that had occurred in the inter survey periods prior to that time. Indications then were that forces were operating to reduce cash balances of these firms even in the face of greater cost of goods sold and other increased expense items. Balances had been accu mulated in many cases without regard to estimated re quirements for funds, and inventory requirements and in creases in credit sales have tended to reduce bank balances of these establishments. Other non-financial establishments decreased slightly in relative importance although registering a small dollar gain. This is a heterogeneous group which includes con struction contractors, amusement places, hotels, laundries, MONTHLY REVIEW garages, repair shops, and the business accounts of pro fessional people. There are obviously conflicting forces 9 at work to determine the total deposits carried by the members of this group. For many members financial re quirements rose in varying degree during these months as in the case of trade establishments. However, it is probable that many establishments were carrying bank balances prior to this time that were considerably in ex cess of their requirements and that increased requirements were simply reflected in increased use of previously held balances. In addition, the seven months between July and February saw some slackening of demand for the products of service establishments and it is possible that this was reflected in reduced requirements for some mem bers of this group of deposit owners. . The deposits of insurance companies increased substan tially on a relative basis while other financial business lost in relative importance due to a decline in actual dollar amount of balances. Personal deposits continued the growth that has been characteristic of the years covered by the surveys, increas ing by four per cent. As in former years the increase in deposits held by farmers contributed to the gain in total personal accounts; farmers’ accounts grew from $317 million to $362 million, a fourteen per cent gain in the seven months covered. Personal accounts other than farmers showed a gain o f two per cent during the same period. Trust funds of banks showed a twenty-six per cent gain, rising to $85 million while the most spectacular gain of the period was shown by the non-profit associations, which grew by thirty-three per cent and increased in rela tive importance from 4.8 per cent of total demand de posits of individuals, partnerships, and corporations to 6.2 per cent. 10 MONTHLY REVIEW D EBITS TO IN D IV ID U A L A CC O U N TS FE D E R A L R E S E R V E B A N K OF RICHM O N D . (000 om itted) (A ll Figures in Thousands) June 18 ITEM S 1947 Total Gold R eserves................................. $ 918,152 Other Reserves ............................. ............ 12,656 Total Reserves ........................................ 930,808 Bills Discounted ................................ 9,128 Industrial Advances ....................... ■ 0 Gov. Securities, T ota l................................ 1,420,339 Bonds ......................................................... 44,840 Notes ......................................................... 22,766 Certificates .............................................. 376,164 Bills ........................................................... 976,559 Total Bills & Securities........................... 1,429,467 U ncollected Items ................................ 275,868 15,731 Other Assets . .......... ................................... Total Assets ........ ................................... 2,651,874 Fed. Res. Notes in C ir............................. $1,654,314 Deposits, Total .......................................... 729,247, Members’ Reserves ............................... 711,959 U. S. Treas. Gen. A c c ........................... 517 Foreign .................................... .................. 14,725 Other Deposits ........ ............................ . 2,046 Def. A vailability Item s............................. 232,410 Other Liabilities .................................. 762 Capital A ccounts ............... . . . . . .............. 35,141 Total Liabilities .................................... 2,651,874 Chg. in A m t. from 6-12-46 5-14-47 + 19,882 — 86,947 4,475 — 2,940 — + 15,407 — 89,887 9,037 — 7,491 — 28 0 — + 20,619 — 52,934 — 11,819 — 663 + 1,116 — 86,932 — 18,756 + 24 ,66 8 + 64,573 — 4,502 — 61,999 + 13 ,12 8 + 100,299 + 37 ,82 7 + 774 — 16,447 + 37,260 — 38,158 ■ — 9,336 — 53,965 — 6,539 — 34,432 — 12,748 — - 246 + 2 4 ,69 3 + 32 + 418 — 38,158 + 6,313 — 46,282 + 6,292 40,070 8,708 3,796 + 73,217 + + + 22 3,990 37,260 41 R EPO RTIN G M E M B E R B A N K S — 5th D ISTRIC T (A ll Figures in Thousands) June* 18Chg. in A m t. from 1947 5-14-47 6-12-46 — 3,471 + 89,544 Total Loans ................................................ $ 492,270 Bus. & A g r i ............................................. 250,875 — 6,348 + 71,371 Real Estate L oa n s.................................. 87,173 + 1,936 + 30,251 A ll Other L oa n s...................................... 154,222 + 941 — 12,078 Total Security H o ld in gs........................... 1,336,736 — 8,715 — 380,194 U . S. Treasury Bills .............................. 11,147 — 4,849 — 19,584 U. S. Treasury Certificates ................. 178,042 + 4,958 — 223,488 U. S. Treasury N otes .............................. 60,032 — 9,296 — 117,684 U . S. Gov. Bonds .................................... 997,299 — 487 — 25,816 Other Bonds, Stocks & Sec................... 90,216 + 959 + 6,378 Cash Items in Process o f C ol................. 160,383 • — 10,806 + 19,123 Due from B an ks.......................................... 130,935* + 6,134 — 13,569 Currency & C oin ........................................ 41,577 + 764 + 1,837 Reserve with F. R. B an k ....................... 333,211 — 8,744 — 15,852 Other Assets ................................ 72,212 — 1,412 — 9,130 Total Assets ................................................ $2,567,324 — 26,250 — 308,241 T otal Demand D eposits..............................$1,913,419 Deposits o f Individuals ......................... 1,431,758 Deposits o f U. S. Gov............................. 16,191 Deposits o f State & Local Gov.......... 111,821 317,347* Deposits o f Banks ................. ................ Certified & Officers’ C hecks............... 36,302 Total Tim e D eposits.................................. 399,176 Deposits o f Individuals....................... 382,446 Other Tim e D eposits.............................. 16,730 Liabilities fo r B orrow ed M on ey............. 2,760 A ll Other L ia bilities............................. 99,608 Capital A ccoun ts ........................... .. 152,361 Total Liabilities ........................................$2,567,324 — 11,336 + 33 ,91 8 — 35,610 + 1,105 — 17,313 + 6,564 — 255 — 257 + 2 — 7,750 — 8,045 + 1,136 — 26,250 — 323,419 + 10,962 — 299,895 + 17,572 58,721 + 6,663 + 17,065 + 16,105 960 ++ •—■ 8,240 — 3,690 + 10,043 — 308,241 ♦Net figures, reciprocal balances being eliminated. , DE 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 May 31, 1947 $385,215,236 ... A p r. 30, 1947 $386,575,159 May 1947. District o f Columbia W ashington ______ ..'.$ Maryland Baltim ore . . . . . . . . . ... Cum berland ................. F rederick ..................... H agerstown ................. N orth Carolina Asheville ........... Charlotte ................. Durham ............. Greensboro ................. Kinston ....................... R aleigh ......................... W ilm ington ................. W ilson ......................... W inston-Salem ......... South Carolina Charleston . . . . . . . . . . Columbia ..................... Greenville ................... S partanburg ............... V irgina Charlottesville ............. D anville . . . . . . . . . . . . L ynchburg ___________ N ew port N ews ........ N orfolk ....................... Portsm outh ................. Richm ond ................... . . . R oanoke ....................... W est Vinginia Bluefield ....................... Charleston ................. Clarksburg ................. H untington ............. P arkersburg ............... % Chg. from M ay 1946 5 Mos. 1947 670,568 + 8 $ 3,171,472 874,462 20,640 + 6 + 16 + 13 + 19 4.328,967 100,545 85,682 121,282 25,364 + + . ..... + 65,133 + + + + + 97,538 + 48j879 81,202 65,624 40,265 19,760 21,948 32,615 31,104 157,489 18,056 395,171 125,404 27,444 48,313 District Totals ............... 20 18 2 19 19 48 25 52 11 218,224 989,793 •452,736 307,176 60,731 481,139 168,483 71,451 553,639 + 3 + 18 + 28 + 23 243,640 409,736 333,539 198,912 % Chg. from 5 Mos. '46 + 5 + 8 + 14 + 22 + 18 + + + + + + + + + 22 27 12 20 22 39 7 38 30 + 1 + 23 + 29 + 30 — + + + + + + + 9 14 15 50 21 9 13 23 101,319 128,761 165,836 143,052 767,613 90,481 1,959,592 357,720 — + + + + + + + 9 29 18 28 17 8 15 23 + + + + + 70 32 34 26 10 166,753 576,467 130,839 233,906 118,506 + + + + + 29 20 21 18 22 + 13 $17,237,992 + !4 COTTON CO N SU M PTIO N A N D ON H A N D — B A L E S May May 1947 1946 F ifth D istrict S tates: Cotton consumed ........... 395,356 420,845 Cotton Grow ing S tates: Cotton consumed ............... 728,180 763,321 Cotton on hand M ay 31 in consum ing establishments 1,613,596 1,936,455 Storage & com presses. . 1,780,804 6,266,520 United States: Cotton consumed ............... 827,234 871,470 Cotton on hand M ay 31 in consum ing establishments 1,928,815 2,331,747 Storage & com presses. . 1,835,991 6,405,726 Spindles active, U. S.............. 21,624,002 21,351,204 A ug. 1 to May 31 1947 1946 4,155,195 3,707,363 7,566,609 6,736,242 8,629,564 7,641,287 COTTON CON SU M PT IO N — F IFTH D IST R IC T (In Bales) M ONTHS N o. Carolina So. Carolina M ay 1947 207,663 166,675 A p ril 1947 . 228,521 181,716 May 1946 229,620 168,318 5 Mos. 1947 , . , . . 1,128,611 880,364 5 Mos. 1946.. . . 1,057,277 792,054 V a. 18,467 19,819 18,829 95,894 85,210 Md. 2,551 3,363 4,078 16,045 16,821 D istrict 395.356 433,419 420,845 2,120,914 1,951,362 May 31, 1946 $364,434,391 PR ICE S OF U N F IN ISH E D COTTON T E X T IL E S May 1947 CO M M ER C IA L F A IL U R E S M ONTHS May 1947. . . ,.............. A p ril 1947. , ,............... May 1 9 4 6 ... . 5 Mos., 1947 ............. 5 Mos., 1946 ............. ........ N um ber Failures U. S, D istrict 7 378 277 7 1 92 1,349 35 9 431 S ou rce: Dun & Bradstreet Total Liabilities District u. S. $17,326,000 $ 291,000 16,080,000 358,000 3,656,000 4,000 $76,826,000 $1,897,000 89,000 19,217,000 A verage, 17 constructions .......... P rintcloths, average ( 6 ) . . . . ........... Sheetings, average ( 3 ) ........... ........... Tw ill (1) .................................... Drills, average ( 4 ) ................... ........... Sateen (1) .................................. ........... Ducks, average (2) ............... ........... 83.50 104.71 76.79 64.76 97.61 62.54 A p ril 1947 May 1946 86.15 110.41 79.81 79.86 65.03 97.61 62.54 50.72 54.90 45.67 51.94 46.85 66.58 44.92 N ote: The above prices are those fo r the approxim ate quantities o f cloth obtainable from a pound o f cotton with adjustments fo r salable waste. ’ , 11 MONTHLY REVIEW D E P A R T M E N T STORE T R A D E B U ILD IN G PE R M IT FIG U R E S M ay 1947 Maryland B altimore Cumberland Frederick H agerstown Salisbury . Total V aluation M ay 1946 $ 2,661,595 83,475 27,750 382,950 84,313 V irgin ia Danville ......................................................... Lynchburg ..................................................... N orfolk ........................................................... Petersburg .................................................... Portsm outh ................................................... Richm ond ....................................................... R oanoke ................................... ....................... W est V irginia Charleston ..................................................... C larksburg ................................................ .. H untington ..................................................... North Carolina Asheville ......................................................... Charlotte ......................................................... Durham ........................................................... Greensboro ..................................................... H igh Point ..................................................... Raleigh ........................................................... Rocky M o u n t .................................................. Salisbury ......................................................... W inston-Salem .............................................. South Carolina Charleston ..................................................... Columbia ......................................................... Greenville ....................................................... Spartanburg .................................................. Dist. o f Columbia W ashington .................................................. District Totals . .................................... 5 Months ..................................................... $ 4,599,745 41,510 76,950 104,550 724 584,250 424,498 1,699,980 114,100 107,200 1,547,201 264,821 72,494 261,360 266,985 47,450 69,484 887,370 261,733 349,348 47,200 443,813 161,071 80,828 234,610 324,879 750,200 739,558 260,775 360,974 438,900 356,600 148,370 431,887 113,466 1,217,950 229,300 218,308 94,412 204,940 65,700 76,610 204,602 288,318 506,121 114,950 102,057 109,646 147,222 128,875 108,650 3,599,383 $17,245,466 $76,840,669 4,009,699 $14,096,244 $80,833,552 CON STRU CTIO N CON TRA C TS A W A R D E D STATES M aryland ................... Dist. o f C olu m bia. . V irgin ia ..................... W est V irgin ia ......... N o. Carolina ........... So. Carolina ............. F ifth D i s t r i c t ----- % Chg. from A p r. 1946 — 41 + 70 + 57 — 38 — 28 — 48 — 19 A pril 1947 $18,410,000 . . 8,643,000 . . 23,454,000 , , 9,768,000 . . 18,352,000 . . 6,750,000 . .$85,377,000 4 Mos. 1947 $ 77,946,000 28,042,000 73,872,000 24,896,000 49,852,000 19,272,000 $273,880,000 % Chg. from 4 Mos. ’ 46 — 6 + 46 + 35 — 20 — 17 — 47 — 4 Richm ond Percentage + 17 Percentage + 15 P ercentage + 34 P ercentage — 68 P ercentage + 59 Percentage 41 P ercentage 24 Baltim ore W ashington Other Cities D istrict chg. in M ay 1947 sales, com pared with sales in M ay 1946: +12 + 8 +10 +12 chg. in 5 m onths’ sales 1947, com pared with 5 m onths in *46: + 6 + 3 + 6 + 7 chg. in stocks on M ay 31, 1947, com pared with M ay 31, ’ 46: +13 +23 +35 +22 chg. in outstanding orders May 31, ’ 47 from M ay 31, *46: — 66 — 65 — 61 — 66 chg. in receivables M ay 31, *47 from those on M ay 31, ’ 46: +29 +33 +33 +36 o f current receivables as o f M ay 1, 1947 collected in M a y : 53 49 53 49 o f instalm ent receivables as o f M ay 1, ’ 47 collected in M a y: 30 25 32 27 M aryland D ist.of Col. V irgin ia W . V irginia N o. Carolina So. Carolina Percentage chg. in May 1947 sales fro m M ay 1946 sales, by sta tes: + 12 + 8 +15 +19 +14 +13 Percentage chg. in 5 m onths’ sales 1947 from 5 m onths’ 1946 sales: + 6 + 3 + +12 8 + +11 5 W H O L E S A L E T R A D E , 189 FIRM S LIN ES N et Sales M ay 1947 com pared with May A pr. 1946 1947 Stock May 31, 1947 com pared with M ay 31 A p r. 30 1946 1947 A uto Supplies ( 8 ) * ........... Drugs & sundries (1 1)* Dry goods ( 6 ) * ................. E lectrical goods ( 5 ) * . . . Groceries (7 0)* ............... H ardware (1 1)* ............. Industrial supplies ( 4 ) * . . P aper & products ( 3 ) * . . T obacco & products (9 )* Miscellaneous (6 2)* . . . . D istrict A vg. (1 8 9 )* .. + 52 + 3 + 5 +132 + 13 + 43 + 75 + 51 — 3 + 14 + 19 + 67 + 11 + 83 + 125 + 35 + 77 + 92 — — — + — + + — — — 15 10 5 21 2 7 10 1 5 4 + 17 + 64 + 41 — 2 R atio May collections to a cc’ts outstand’ g M ay 1 3 2 7 6 6 5 17 134 135 71 119 155 96 111 — 5 — 4 173 88 108 + — + — — + + + 1 S ou rce: Departm ent o f Com m erce ♦Number o f reporting firms. S ou rce: F. W . Dodge Corp. RE-TAIL F U R N IT U R E S A L E S RAYON YAR N DATA May 1947 A p ril 1947 May 1946 Rayon \ arn Shipments, Lbs.......... Staple Fiber Shipments, Lbs........ 60,400,000 17,900,000 60,000,000 18,600,000 56.900.000 15.900.000 R ayon Y arn Stocks, Lbs................... Staple Fiber Stocks, Lbs....... ........... 8,400,000 3,800,000 7,700,000 2,900,000 2.100.000 ST ATE S M aryland (5 )* ....................... D istrict o f Columbia (6 )* V irgin ia (1 9)* ......................... W est V irgin ia ( 7 ) * ................... N orth Carolina (1 6 ) * ............. South Carolina ( 1 0 ) * ............... F ifth D istrict ( 6 3 ) * ............. % Chg. from 5 Mos. ’ 46 IN D IV ID U A L CITIE S Baltim ore, Md., ( 5 ) * ............... W ashington, D. C., (6 )* Lynchburg, V a., ( 3 ) * ............... Richm ond, Va., ( 6 ) * ............... Charleston, W . V a., (3 )* Charlotte, N. C., ( 4 ) * ........... Columbia, S. C., ( 3 ) * ............... 8.700.000 S ou rce: R ayon O rganon TOBACCO M A N U F A C T U R IN G M ay Sm oking & C hew ing tobacco (Thousands o f l b s .) ........... 12,633 Cigarettes (thousands) . . . . 25,067,746 Cigars (thousands) ............. 473,968 Snuff (thousands o f l b s .) . . 3,478 % Chg. from 5 Mos. 1947 M ay 19461947 — — — + 30 16 5 8 75,713 133,685,645 2,273,329 16,370 —7 +2 —5 —4 ♦Number o f reporting stores. Percentage Chgs. in M ay and 5 Mos. 1947 Compared with Compared with M ay 1946 5 Mos. 1946 + 21 + 14 — 5 + 24 + 15 + 16 + 7 + 24 + 24 + 32 + 16 + 14 + 10 + — + + + + + 21 7 37 14 16 5 55 + 14 — 5 + 14 + 19 — 9 + 24 — 1 12 MONTHLY REVIEW SUMMARY OF NATIONAL BUSINESS CONDITIONS (Com piled b y the Board o f Governors o f the Federal Reserve System ) Output and employment at factories showed further slight declines in May, although employment in the econo my as a whole increased seasonally. Value of retail trade in May and the early part of June was at earlier record levels. The general index of wholesale prices advanced silghtly after the early part of May, with widely varying changes for individual commodities. Industrial Production Production of manufactured goods showed a further slight decline in May, while output of minerals increased considerably, and the Board’s preliminary seasonally ad justed index of industrial production was maintained at the April rate of 186 per cent of the 1935-39 average. Activity in durable goods industries in May was some what below the April rate, reflecting small decreases in most lines. Steel production increased, however, and was at the highest level since May 1945. Activity at electrical machinery plants declined somewhat further in May, and output of passenger cars and trucks was curtailed about 10 per cent, mainly because of a shortage o f steel sheets. Automobile production increased in the first three weeks of June but remained below the April rate. Nonferrous metal fabricating activity declined somewhat further in May; and output of most building materials continued to show a smaller increase than is usual at this season. Production of nondurable goods, as measured by the Board’s index, continued to decline in May. Output at cotton and most wool textile mills declined further. Cot ton consumption in May was about 10 per cent below the peak rate reached last November and apparel wool con sumption has been reduced by a larger amount. Output at wool carpet and rayon fabric mills, on the other hand, increased in that period. Production of most manufac tured food products declined somewhat in May after al lowance for usual seasonal changes. Activity in rubber products industries continued to be curtailed. Output of paperboard, however, rose to a new record rate, which was 84 per cent above the 1935-39 average. Production of most other nondurable goods showed little change or de clined slightly. Output of minerals rose 7 per cent in May, reflecting a substantial gain in fuels production to the highest rate on record. Output of coal advanced sharply after de clining in April because o f work stoppages early in that month, and output of crude petroleum advanced further to a new peak rate. Employment Manufacturing employment continued to decline some what in May, owing mainly to production curtailments in various industries, while employment in most other types of nonagricultural establishments increased some what. The number of persons unemployed in May de clined to about 2 million from a level of about 2.4 million during the first four months of this year. Construction Construction contract awards, according to the F. W. Dodge Corporation, were 12 per cent larger in May than in April, owing chiefly to a sharp rise in public awards. Value of awards for commercial and industrial buildings showed little change. Awards for private residential con struction declined further in value; the number of dwell ing units, however, showed little change, with an increase in apartments and a decrease in single-family dwellings built for sale or rent. Distribution Department store sales increased in May and the Board’s seasonally adjusted index rose from a level of about 275 in March and April to 290 per cent of the 193539 average, equaling the all-time high reached in August 1946. Sales in the first two weeks of June continued at the high May level. Retail sales at most other types of stores also increased in May and were at about the same levels as those pre vailing during the first quarter of the year, after allowance for seasonal changes. Loadings of railroad revenue freight increased in May and the first half of June, reflecting larger shipments of coal and ore. Shipments of manufactured goods, after allowance for seasonal changes, declined somewhat fur ther. Commodity Prices The general level of wholesale prices increased slightly from the beginning of May to the third week of June, reflecting chiefly increases in prices of cotton, corn rattle, and beef. Prices of wheat, flour, and vegetable oils de clined further. Crude rubber prices dropped from 25 cents per pound to 14 cents, which is 3 cents lower than the price prevailing at the outbreak of war in 1939. Prices of various other industrial materials showed further declines but some items like hides, coke, and steel scrap increased. Prices of automobile tires and soap were reduced, while prices of most other manufactured goods continued to show little change. Treasury Finance and Bank Credit During May and the first three weeks of June reserve funds were supplied by a substantial gold inflow and by a decline in foreign deposits at Reserve Banks. As a result member bank reserve balances increased and Reserve Bank holdings of Government securities declined further. Treasury debt retirement continued in May and June with redemption for cash of a part of certain bill issues and one billion dollars of certificates maturing June 1. Holdings of Government securities at member banks in leading cities declined somewhat in May and the early part of June. Commercial and industrial loans continued to decline, while real estate and consumer loans increased moderately. Treasury war loan deposits at commercial banks were reduced to about one-half billion dollars as a result of withdrawals for debt retirement. Deposits of businesses and individuals increased further in May and June, re flecting in part cash redemption of certificates held by these groups.