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FEDB

(RESERVE BANK A

n

RICHMOND

a n

o #
JUNE 1951

ESTIMATED OWNERSHIP OF DEMAND
INDIVIDUALS, PARTNERSHIPS
FIFTH

FEDERAL RESERVE DISTRICT

Phe above chart indicates that personal deposits,
which had declined in the two previous years,

end

D E P O S IT S

CORPORATIONS
(MILLIONS OF DOLLARS)

Also In This Issue

-

-

Fifth District Trend Charts______________Page

2

Review of Business Conditions—
Fifth District Economic Prospects__Page

5

ership of the different types of demand deposits

Recent Banking Developments__________ Page

8

held by banks of the Fifth Federal Reserve D is­

Statistical Data_________________________ Page

11

trict.

National Business Conditions___________ Page

12

made a decided comeback during 1950. Other im­
portant groups show even larger percentage gains.
The article on page 3 discusses trends in the own­




FEDERAL RESERVE BANK OF RICHMOND

F

if t h

d is t r ic t

T

r e n d s

COTTON CONSUMPTION

BITUMINOUS COAL PRODUCTION

(Seasonally Adjusted)

(SEASONALLY ADJUSTED)
(1935-1939 -100)

(1935 -1939 = 100)

Mainly as a result of strikes, but also due to the long stalemate
in new goods and yarn commitments, cotton consumption in April
(adjusted) dropped 14 per cent from March but continued 6 per
cent ahead of a year ago. May will show substantially the same
depressed condition, but some improvement can be expected in June.

A moderate rise in output combined with fewer working days in
April caused the seasonably adjusted index to rise 18 per cent from
March to a level 23 per cent ahead of a year ago. Coal demand is
rising in most consumption sources, and an adverse turn in the
Iranian oil situation could result in substantial industrial shifts
from oil to coal usage.

RETAIL FURNITURE SALES

TOTAL BUILDING CONTRACT AWARDS
(Seosonolly Adjusted)
(1935 * 1939 * 100)

( Seasonally Adjusted)
(1941 * 100)

1943

1944

1945

1946

1947

1948

1949

1950

1951

1 9 43

1944

1945

1946

1947

1948

1949

1950

1951

April sales (adjusted) recovered 8 per cent from March but were
6 per cent below a year ago. Indications are that the drop below
a year ago was caused by household appliances and television sales
rather than furniture, since furniture sales in department stores in
A.pril ran 12 per cent ahead of a year ago

Due primarily to sizable gains in factory construction and pub­
lic works, construction contract awards in April were 11 per cent
above March (adjusted) and 8 per cent ahead of a year ago. Com­
mercial structures and apartments and hotels showed sizable drops
both from the previous month and a year ago, but one- and twofamily houses showed a small increase over March and a 15 per
cent gain over a year ago.

NEW PASSENGER CAR REGISTRATIONS

BUILDING CONTRACT AWARDS - ONE and TWO FAMILY HOUSES
( Seasonally Adjusted)
(1935-1939 * 100)

(Not A sted F r Seosonol V riatio
dju
o
a
ns)
(1935-'39-100)

By all past standards, save those of last year, sales of new pas­
senger cars are still going strong. April registrations, partly esti­
mated, show a drop of 8 per cent from March and 7 per cent below
a year ago. The outlook is for lower sales mainly because of a re­
duction in output.




One- and two-family house construction continued at boom levels
during April. Indications are that a substantial part of this high
level of activity has resulted from financing commitments made
prior to the date of Regulation X and other controls. Unless financ­
ing terms loosen substantially, present level of activity is not ex­
pected to hold.

{2y

MONTHLY REVIEW

JUNE 1951

Trends in Fifth District Deposit Ownership
crease of almost 11% was concentrated in the larger
categories of deposit accounts, those above $10,000.
Both corporate (comprising 90% of the total amount)
and noncorporate reflected the increases in the larger
deposit accounts, but those in the corporate group al­
most doubled the percentage gain shown in the non­
corporate group.

in the Fifth Federal Reserve District held
total demand deposits of individuals, partnerships,
and corporations amounting to $4,622 million, or 5.3%
of the national total, according to estimates based on a
survey conducted as of January 31, 1951. This total
represented an increase of $293 million, or 6.8% , in the
twelve months ending on that date, and reflects largely
the exceptional rise in bank loans occurring in late 1950.
Total loans of member banks in the Fifth District rose
more than 20% from December 31, 1949 to Decem­
ber 30, 1950.
The survey disclosed little change in the relative im­
portance of the various ownership groups. Balances of
business concerns (which account for more than half of
total demand deposits) rose slightly over the previous
year, while personal deposits (including those of farm­
ers), accounting for more than a third of the total,
showed a relative decline. A m ong deposits of busi­
nesses, those held by retail and wholesale firms ranked
first in the aggregate, followed by manufacturing and
mining, other nonfinancial business (including service
establishments, contractors, amusement companies, and
business accounts of professional people), financial en­
terprises other than insurance, public utilities, and in­
surance companies in the District.

B

a n k s

Insurance companies increased their deposit accounts
by 9.4% during 1950. Again the increase occurred in
the larger size deposit accounts, those with $10,000 or
over; in those with accounts under $10,000, the deposits
declined.
Other nonfinancial business showed an increase of
3.4% for the twelvemonth period— interestingly almost
a whole percentage point above the national average.
Gains were reflected in all sizes of deposit accounts,
with the larger gains in the smaller size groups.
Wholesale and retail trade, comprising the largest
single group of business accounts, increased their de­
mand deposits by 3 .1% — an increase considerably be­
low the average for all business. Here the compara­
tively small rise occurred mainly in the deposit size
group of accounts of $25,000 or over, and was due
largely to heavy inventory accumulation following the
invasion of South Korea.
W ith the exception of public utility and insurance
company accounts, all business deposits in the Fifth
Federal Reserve District followed the national trend.
In the case of the utilities, the Fifth District increase
was five points larger than the national average, while
insurance company accounts increased nine points more
than the national average.

Business Deposits
Demand deposits of business firms accounted for
53.3% of the District total, and increased by 7.6% over
the preceding year. Nonfinancial business deposits rose
by 6.7% and financial businesses showed a rise of
12.3%. O f the total business accounts, corporate de­
posits (representing 73% of the total amount) showed
a gain of 9.1% for the year, while noncorporate accounts
rose by 3.8% .
The accounts of public utilities (which rose 14.2% )
showed the largest increase for the twelve-month pe­
riod. Increases occurred in all sizes of corporate ac­
counts, but the increase was chiefly in accounts of
$25,000 or over. Noncorporate accounts showed de­
creases in all size accounts except the smallest— $10,000
or less.*
The second largest increase came in financial busi­
ness other than insurance companies. Deposits of this
group (including primarily finance companies, invest­
ment trusts, and savings and loan associations) rose
13.4% over the previous year. Deposits in this group
have increased annually since the present type of sur­
vey began in 1944. A s in former years, most of the
increase occurred in the largest size deposit group, with
accounts of $25,000 or over.

Deposits of Individuals
In the survey year, deposits of individuals other than
farmers increased 5.7% , compared with the national
average of 7.0% . Considering the record level of ex­
penditures during the latter half of the year, this in-

Manufacturing and mining showed the next largest
increase in business deposits for the year. Here an in­
*
It should be noted that, in discussing size of deposit accounts, no
information is availabe to indicate how many accounts moved from a
smaller to a larger classification, or to what extent individual accounts
changed during the year.




-3 y
f

C H AN G E S IN O W N E R S H IP O F D E M A N D D E P O S IT S O F
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
All Commercial Banks
Fifth Federal Reserve District
(Estimates in millions of dollars)
Amount
Per cent
Change from
Outstanding
of total
January 31, 1950
Dollar amt.
Per cent
Type of holder
Jan. 31, ’51 Jan. 31, ’51
2,464
53.3
+174
+ 7.6
Total business
Nonfinancial business 2,053
44.4
+129
+ 6.7
|-10.8
632
13.7
+ 62
M fg. and mining
-14.2
5.3
+ 31
Public utilities
248
- 3.1
874
18.9
+ 26
Trade
- 3.4
299
6.5
Other nonfinancial
+ io
+ 1 2 .3
+ 45
410
8.9
Financial business
+ 9.4
+ 10
Insurance companies 116
2.5
+ 1 3 .4
294
6.4
+ 35
Other financial
- 3.6
— 3
Trust funds
79
1.7
+ 9.4
6.2
Nonprofit associations 285
+ 24
+ 5.3
+ 89
38.6
Personal
1,786
+ 3.3
348
7.5
Farmers
+ U
+ 5.7
+ 78
1,438
31.1
Others
.2
Foreign
9
+
9
+ 6.8
+293
4,622
100.0
Total

—

FEDERAL RESERVE BANK OF RICHMOND

ESTIMATED
OW NERSHIP OF DEMAND DEPOSITS OF INDIVIDUALS,
PARTNERSHIPS, AND CORPORATIONS
ALL COMMERCIAL BANKS
Fifth District
Jan.
Feb.
Jan.
Jan.
Feb.
1945
1946
1947
1948
1944

Jan.
1949

Jan.
1950

Jan.
1951

(Millions of dollars)

Total business _________________________________
Nonfinancial business__________________________

1,610
1,420

1,889
1,665

2,133
1,863

2,223
1,916

2,389
2,003

2,302
1,976

2,290
1,924

470

504

529

581

607

2,464
2,053

631

570

632

200
560
190

228
725
207

228
888
218

231
853
251

242
890
265

205
876
263

217
848
289

248
874
299

Manufacturing and m in in g______________________
Public utilities, transportation and communica­
tions __________________________________________
Retail and wholesale trade ______________________
All other nonfinancial business _________________

190

224

270

307

386

326

366

Insurance companies ___________________________
All other financial business______________________
Trusts funds of banks ____________________________
Nonprofit associations ____________________________
Personal __________________________________________
Farmers _________________________________________
Others _____________________________ ____________
F oreign ___________________________________________

60
130
40
120
1,060

75
149
57
166
1,332
250
1,082

72
197
69
192
1,633
352
1,281
2

83
224
85
271
1,805
376
1,429

156
230
70
249
1,828
393
1,435
3

92
234
86
254
1,753
371
1,382
3

410

106
259
82
260
1,697
337
1,360

116
294
79
285
1,786
348
1,438
9

Total __________________________________________

2,840

3,443

4,028

4,383

4,540

4,398

4,329

4,622
53.3
44.4

Financial business _____________________________

10

(Percentage of total)

Total business _________________________________
Nonfinancial business__________________________

56.7
50.0

53.0
46.3

50.7
43.7

52.6
44.1

52.3
44.9

52.9
44.5

16.6

14.6

13.1

13,3

13.4

14.3

13.2

7.0
19.7
6.7

Manufacturing and m in in g______________________
Public utilities, transportation and communica­
tions __________________________________________
Retail and wholesale trade ______________________
All other nonfinancial business _________________

54.9
48.4
6.6
21.1
6.0

5.7
22.0
5.4

5.3
19.4
5.7

5.3
19.6
5.8

4.7
19.9
6.0

5.0
19.6
6.7

13.7
5.3
18.9
6.5

Financial business _____________________________

6.7

6.5

6.7

7.0

8.5

2.1
4.6
1.4
4.2
37.3

2.2
4.3
1.7
4.8
38.7
7.3
31.4

7.4

Insurance companies ___________________________
All other financial business______________________
Trusts funds of banks __________________ -_________
Nonprofit associations ________ —__________________
Personal ___________________________ _________ __
Farmers ___________________ ____ ________________
Others _____________________________ _____ — __
F oreign ___________________________________________

8.4

1.8
4.9
1.7
4.8
40.5
8.7
31.8
.1

1.9
5.1
1.9
6.2
41.2
8.6
32.6

3.4
5.1
1.5
5.5
40.3
8.7
31.6
.1

2.1
5.3
1.9
5.8
39.9
8.4
31.4
.1

8.9

2.4
6.0
1.9
6.0
39.2
7.8
31.4

2.5
6.4
1.7
6.2
38.6
7.5
31.1
.2

Total __________________________________________

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Note:

.4

Detailed figures may not add to totals because of rounding.

crease in deposits of individuals would seem to indicate
a high level of personal income after taxes. It is sig­
nificant, however, that time deposits (held principally
by individuals) have not kept pace— from December 31,
1949 to December 30, 1950, time deposits held by mem­
ber banks in the Fifth District increased about 1% ;
when the latter half of the year is considered, time de­
posits show a decrease of approximately 1% .

receipts from farm marketings declined almost 1% dur­
ing the year 1950.
Other Demand Deposits
Demand deposits of nonprofit associations rose 9.4%
from January 1950 to January 1951. Increases oc­
curred in all size groups but again the bulk of the in­
crease was in deposits of $25,000 and over. These ac­
counts have reflected increases each year since 1948.

Demand deposits of farmers (w ho held nearly onefifth of total individual deposits) increased by 3.3%
during the year. This was almost one percentage point
above the national increase. In the Fifth District, cash
receipts from farm marketings for the year 1950 rose
6 % above receipts for 1949, but the increase occurred
entirely in the late months of the year. The first six
months of 1950 showed a decline of almost 5% from the
previous year. F or the United States as a whole, cash



The only decrease in demand deposits held by banks
in the Fifth District for the year occurred in balances
of trust funds, which accounted for practically 2 % of
total demand deposits. The decrease of 3.6% was in
decided contrast to the national picture, since trust funds
of banks, on a national basis, showed an increase of al­
most 9 % . Decreases occurred in those deposit accounts
under $25,000, while those above $25,000 remained the
same as formerly.

<4 ^

MONTHLY REVIEW

JUNE 1951

Review of Business Conditions—
Fifth District Economic Prospects
defense contracts and clarification of pricing
regulations have almost ended the lethargy that
has prevailed in new business written by Fifth District
firms in the past two months. Seasonally adjusted trade
figures are again reflecting the basic strength in con­
sumers’ in c o m e s — A p r il im p r o v e d somewhat over
March and indications are that May will show some
further improvement.
Production, though cut back in some plants, is very
high— and, in fact is still near peak levels. Principal ex­
ceptions are in the seamless hosiery industry where sub­
stantial cutbacks have been made, but in former years
such cutbacks would have been considered mainly sea­
sonal. Construction activity continues to be a factor of
strength in the District’s economy, but changes are tak­
ing place in its composition.

R

is in g

levels have seen their low point and that a rising trend
may be again under way. This factor alone is of con­
siderable importance in its effect on the nondurable
goods industries of this District for it presages re­
sumed buying at both wholesale and retail levels and
fuller operations of plants now cut back.

Construction
Total construction contract awards in April were
11% higher than March, after seasonal correction, and
8% ahead of the high level of April 1950. Sparking
the April over March rise were the 64% increase in
factory construction and 66% gain in public works and
utilities, both after seasonal correction. These increases
were in part offset by a 30% reduction in commercial
construction and a drop of 22% in apartments and
hotels. One- and two-family
houses were, somewhat sur­
In the financial sector, it
prisingly, at approximately
FIFTH DISTRICT EMPLOYMENT AUGMENTED BY:
is interesting to note these
the same adjusted level as in
developments: N e t c a s h ­
March.
ings of savings bonds were
In summary and relative
smaller in April than in any
to a year ago, commercial
month of the first quarter;
construction is down 26% ,
time and savings deposits
factory erection up 190%,
rose m oderately; and the
apartments and hotels down
rise in adjusted bank debits
74% , one- and two-family
THOUSANDS
was halted in April.
houses up 15% , and pub­
60
Durable goods industries,
lic works and utilities up
40
particularly in m a c h in e r y
4 9% . It may be questioned
20
and transportation e q u ip ­
whether the current level of
1948
1949
1950
1951
factory construction can be
ment, continue to show ris­
maintained under presumed
ing employment trends and
these industries, together with the uptrend in Federal
conditions of growingly tight materials suppplies. This
applies particularly to nondefense structures, where even
employees, have accounted for a substantial part of the
increase ever since the outbreak of the Korean war.
allocations of materials may not permit more than a
major fraction of those planned.
New passenger car and truck registrations continue to
run modestly ahead of these very high months last year.
Residential housing has been sustained in the face
of tighter credit conditions, though the major part al­
Trade
most certainly represents pre-regulation commitments.
April department store sales (adjusted) rose 10%
Tighter mortgage money and slightly higher interest
over March and indications are that the May totals will
rates, along with heavier down payments, are expected
be about 2% ahead of April. Furniture store sales also
to reduce one- and two-family house construction dur­
showed improvement, after seasonal correction, from
ing the remainder of the year. Construction of multiple
March to April with the largest gain occurring in cash
sales. Sales of wholesalers adjusted, however, showed
housing structures has already been cut back substan­
considerable irregularity, with drugs, groceries, indus­
tially and will probably remain low except in defense
trial supplies and tobacco showing increases and auto­
areas.
motive supplies, dry goods, electrical goods, hardware
Bituminous Coal
and paper showing decreases. Most lines of wholesale
Though the coal industry is operating considerably
trade, however, are still running substantially ahead of
below capacity levels, April output rose 18% (adjusted)
a year ago.
over March and was 23% ahead of a year ago. Demand
It was obvious in the early months of the year that
by principal domestic consumers is rising and exports
the rate of consumer buying had run well ahead of the
are expanding substantially. The outlook is for a higher
upward trend in income and would have to fall back
level of production, but the industry can hardly produce
into line. April performance of department store and
furniture store sales gives some indication that trade
at capacity except for the seasonal period next winter.



A5 y

FEDERAL RESERVE BANK OF RICHMOND

Lumber
Employment levels in the lumber industry reached a
peak in March and have held at that level. Supply and
demand are currently in balance, but new orders are
running somewhat below production and shipments.
The hard wood market has eased considerably due to
relaxed buying by furniture factories and the leveling
off of residential construction. If reduction occurs in
residential construction, some easing will be seen both
in lumber production and prices.
Hosiery
Production in seamless hosiery mills is operating
around 50% of capacity at the present time, and price
reductions in the full fashioned end of the business in­
dicate some cutback may also be witnessed there. R e­
duced production in both lines, however, should hardly
exceed two months’ duration, for retail demand is being
maintained and store inventory positions are improving.
Rayon
Rayon shipments in April dropped 3 % below the
March level, mainly because of fewer working days
rather than reduced demand. There has been no stock
accumulation by producers and at the end of April they
were carrying only a three days’ supply. Spokesmen in

the industry believe that production will be at capacity
for the rest of the year. A new 12 million pound rayon
tire yarn and tow plant (Eastern Rayon Corporation,
Parkersburg, W est Virginia) has been authorized in this
District and some concerns have indicated they are in­
creasing capacity of existing plants.
Textiles
W ith the issuance of the new pricing order by the
O P S, it is believed that new textile business will be
forthcoming in volume as soon as price schedules can
be computed, and the same thinking applies to the syn­
thetic weavers. The goods market has displayed a firmer
tone and fill-in orders have been executed recently.
Durable goods production is being cut back and, as soon
as reduced quantities of these goods are available in the
market, results should be favorable to the textile indus­
tries since more people will have funds available for off­
set purposes. Despite the lack of new business in tex­
tile markets for the past two months, production has
been held at high levels despite strikes. April consump­
tion of cotton (adjusted) in this District was 14%
below March but 6% ahead of a year ago. The industry
will probably be straining production facilities by fall,
though a summer cut back for want of desired grades of
cotton is likely.

Fifth District Economic Prospects
time to time, and in order to broaden and im­
prove the quality of its information, the Federal R e­
serve Bank of Richmond requests information from a
group of industrial and financial leaders and covering
all geographic areas of the District. In m id-M ay some
thirty individuals were queried on various phases of
economic activity and asked for facts and their informed
opinions on the effects of the defense program on their
areas, the construction situation and outlook, real estate
developments, inventories, consumer expenditures and
savings, agriculture, and the effect of credit controls.
Consensus of their opinions was as follow s:

F

rom

The Defense Program and Its Effects
Expanding defense orders are a m ajor factor of
strength in the present and prospective high level of
business activity. Reports from the textile areas par­
ticularly stress the growing importance of Government
orders though noting that they are not heavy as yet.
Shipbuilding and aircraft industries are expanding
rapidly. The Newport News Shipbuilding and Dry
Dock Company reports an increase in its backlog of
$100 million since July 1950, with the current level near
$200 million. Glenn Martin’s backlog totaled $400 mil­
lion at the end of April which was more than double the
figure at the end of December.
Manpower requirements to date have been met with­
out much difficulty, though such m ajor defense areas
as Baltimore, Hampton Roads, and Charleston, South
Carolina, report critical shortages of skilled labor, par­
ticularly in shipbuilding and metalworking trades. Pri­



vate shipyards in the South Atlantic region reported
employment in February up 70% from June, with Navy
yard employment in this area up 40% in the same pe­
riod. Federal Government employment in the executive
services in the District of Columbia, Maryland, V ir­
ginia, and South Carolina amounted to 373,600, an in­
crease of 16% since June 1950.
There is no evidence of serious shortages of materials
throughout the District apart from the general shortage
of steel and lesser shortages of copper and cement.
Lumber supply and demand are about in balance. Bitu­
minous coal supply should be adequate for all demands,
while rayon and nylon supplies will be insufficient to
meet the growing requirements.
The defense program has already resulted in sub­
stantial factory expansion, reactivation of standby plants
and construction of new facilities in this District. Prom i­
nent among the large units are the atomic energy plant
in South Carolina (which may absorb a billion dollars)
and expansion of Bethlehem Steel, Sparrows Point,
Maryland, totaling $164 million.
Plant and Equipment Excluding Defense
During the fall of 1950 and the first quarter of 1951,
expenditures on plant and equipment (other than de­
fense) in the Fifth District reached new record levels.
Throughout the District respondents indicated that e x ­
penditures on plant and equipment have been “ unpre­
cedented,” “ substantial/’ and “ at high levels.” Steady
modernization and expansion of the textile industry
have accounted for the m ajor part of these expenditures,

i 6y

MONTHLY REVIEW

designed to expand synthetics, both fiber and weaving.
A major project is D uPont’s new Dacron plant at Kins­
ton, North Carolina. Other important industrial facili­
ties include Monsanto Chemicars $90 million research
laboratory at Charleston, W est Virginia, and some $63
million of miscellaneous construction for which certifi­
cates of necessity and accelerated amortization have been
issued. W hile expenditures for plant and equipment
other than for defense have continued at high levels,
there is some evidence of a slowdown. Several leading
bankers note a recent slackening with no large new
planned expenditures in sight. Others feel that, after
completion of present planned expenditures, a slowdown
due to restrictions, either Government or credit, may
occur.
Other New Construction
Residential construction, generally high in the first
four months in one- and two-family houses, apartments
and hotels, is down substantially. Most materials are
in adequate supply with only sporadic shortages of se­
lected materials reported. Prices of new homes have
increased 10 to 12% over a year ago, though the rise
appears to have ceased. Sales volume is declining for
higher priced homes.
There is a general shrinkage in supply of mortgage
funds due mainly to the lower price in Government
bonds. Insurance companies and other lenders have
shown less willingness to lend on real estate, mortgage
rates are higher, and the tightening of mortgage money
was reported to be the chief immediate and prospective
deterrent to residential construction.
Bankers polled generally report that Regulation X
has thus far had only a moderate effect on residential
construction, but they agree it will have an important
effect within the next two or three months. Shortage
of structural steel is delaying construction in a number
of areas and in some instances planned programs have
been indefinitely withdrawn.
Real Estate Developments
The real estate market is still firm but shows signs
of weakening. Final sales prices are generally below
quoted prices, though quotations in many instances are
undoubtedly high. Lenders report a definite slackening
in demand for real estate credit, as reflected in appli­
cations.
Inventories
Manufacturers’ inventories in the Fifth District have
increased only nominally in physical terms. The dollar
increase has been fairly substantial, owing to the larger
than average price rises, but these increases are largely
in raw materials rather than finished products, excep­
tions being in the hosiery industry.
Inventories continue at record levels in most lines
of wholesale trade, with a rising trend in electrical ap­
pliances, industrial supplies, and jewelry. In other lines
of wholesale trade stocks are at high levels but no longer
rising. Retailers’ inventories continued to rise through
the first quarter of 1951 and were at a level 20 to 25%



JUNE 1951

above a year earlier. Some reduction, however, occurred
in April and this has probably carried over into May.
In furniture stores inventories declined during March
and April, showing a further decline from March. Many
respondents attributed the high level of retail inven­
tories of durables to the influence of Regulation W .
Consumer Expenditures and Saving
Retail trade levels, after reaching a very high peak
in January, receded sharply to March, then turned mod­
erately upward in April and May. Time deposits of all
member banks increased slightly in April but are almost
unchanged over a year ago. Mutual savings bank de­
posits have risen for two months but are likewise at
about the same level as a year ago. Net cashing of sav­
ings bonds in this District declined considerably during
April to the smallest figure since November 1950. Sales
of life insurance are continuing at very high levels with
April 9 % ahead of that month last year.
Agriculture
Farmers in this District will increase their acreages
of tobacco this year 14% , cotton 3 9% , and peanuts 4 % .
The price outlook for these cash crops are highly favor­
able. A strong export and domestic demand is in pros­
pect for flue-cured tobacco, with prices averaging as
high as or higher than last season’s 55 cents a pound.
Cotton supplies are tight. Price ceilings have been
placed at 45.76 cents a pound for W hite and Extra
W hite Middling 1 5 /1 6 ” . Peanut demand is expected to
be strong with prices above those of 1950.
Farm labor supply appears reasonably adequate, al­
though the number of farmers and hired workers is
below last year and some difficulty in obtaining seasonal
labor is expected. Farm wage rates on April 1 were
13% higher than a year ago and rising. Farmers had a
record amount of machinery at the beginning of 1951,
probably enough if kept in proper repair to maintain
farm production at expected high levels in 1951. H ow ­
ever, production of some new type machines may not
be sufficient to meet this year’s demand.
Reflecting higher farm prices and crop prospects, the
1951 outlook for farm income is favorable. Agricultural
debt in the District appears reasonable in view of in­
come prospects.
The Effect of General Credit Controls
The combination of general credit controls (particu­
larly recent Federal Reserve open market operations),
the Voluntary Credit Restraint Program, and the selec­
tive controls, is definitely becoming increasingly effec­
tive in curtailing bank credit expansion in the Fifth
District. Up to late May, the post-M arch 3 develop­
ments in the bond market have exerted far more im­
portant influence on bank credit than either the Volun­
tary Credit Restraint Program or the selected credit
controls. The consequent discouragement to lenders to
liquidate Government securities has appreciably affected
the mortgage market and the immediate outlook for
construction activity.

i 7)
>

FEDERAL RESERVE BANK OF RICHMOND

Recent Banking Developments
developments in the early months of 1951
penalty is attached to sales and presumably loans now
look considerably less attractive to lending institutions,
underwent sharp and varied changes. Chief among
despite recent minor increases in interest rates.
these developments was the sharp rise in loans in the
Throughout the postwar period the price of long­
first quarter and then a levelling off in late April and
term Governments had been held within a very narrow
early May. Reserve requirements were increased and
range, with investors able to sell substantial amounts of
prices of Government securities declined below par for
their holdings at will and without loss. Funds thus ac­
the first time in years. A new type of longterm Govern­
quired were used to make loans or purchase higher
ment security was offered to discourage shifting from
yielding investments. A s the Federal Reserve System
Governments to loans. Selective credit controls were
acquired substantial amounts of these securities in main­
tightened or expanded in scope. And, in recent weeks,
taining Government bond prices, the banking system
voluntary action on the part of lenders to restrain busi­
was furnished with an equivalent amount of reserves.
ness borrowing has been initiated and appears to be
This has been especially important in the Korean war
receiving a growing measure of sincere support from the
period— actually Federal Reserve holdings of Govern­
commercial banks.
ments rose from $18,331 million in mid-1950 to $22,910
Rapid loan expansion, which had begun well before
million at the end of March.
the Korean crisis, continued
Under our system of frac­
through the first quarter of
tional reserves, each dollar
FIFTH DISTRICT MEMBER BANK LOANS
1951. It centered in busi­
DECEMBER 1950 and APRIL 1951
of these new reserves served
ness lending and was gener­
MILLIONS OF DOLLARS
as the base for potential
ally provided by the larger
0
250
500
750
1000
credit expansion of about
b a n k s. W eekly reporting
six times the amount of new
bank data indicate that loan
reserves.
portfolios may be levelling
In late March and early
off. Real estate loans of
April further action to re­
Fifth District banks have
strict nonbank sales of long­
not
increased
materially
term Governments was ini­
since last fall, largely due
tiated. Between March 26
to restrictive action on the
and April 6 holders of the
part of the banks them­
S G RftVM T LO
IN LE
EN
ANS TO INDIVIDUALS AMOUNTING TO M RE THAN $3000 INCLU0ED IN CO M
O
M ERCIAL AND INDUSTRIAL LOANS
2 y2's of June and December
selves. Consumer loans, in­
1967-72 were offered con­
fluenced by Regulation W
version into 2yi c nonmarketable bonds maturing in
\ /o
and the end of scare buying, levelled off in late 1950
1980 and callable in 1975, with the option of convert­
and have continued near this record high level.
ing these long-term issues into a five-year marketable
Many factors have served to slow down the rapid
note carrying a l ^ o interest rate. Since the note bears
rise in bank loans extended from the second half of
a rate below the current market level, exchanges in­
1950 through the first quarter of this year. By Feb­
volve a penalty and only bona fide long-term investors
ruary 1 legal reserve requirements had been upped to
were interested in acquiring the new bonds. Some $8
6°/o on time deposits, and to 14 and 20% on net de­
billion of the $19.7 billion outstanding was converted
mand deposits at country and reserve city banks re­
by public subscription, and an additional $5.6 billion
spectively. This increase of 2 % of net demand deposits
was converted by Treasury investment accounts and
and 1% of time deposits brought reserve requirements
the Federal Reserve System.
to the maximum prescribed by law (except for central

B

a n k in g

reserve city banks). In the Fifth Federal Reserve Dis­
trict member banks found that this action froze roughly
$90 million of reserves; for the nation the total approxi­
mated $2 billion. Here the restrictive effect was largely
offset by sales of Government securities, many of which
were absorbed by the Federal Reserve System in fur­
nishing the banks with additional reserves.
In early March the maintained Government bond
market by the Federal Reserve System ended, with the
market receiving only moderate support since. Sub­
sequently, prices of long-term Governments have dipped
below par, with important implications for future loan
policy.
Since many Governments are quoted under par, a




Restraints on lending have not been limited to gen­
eral credit controls. Selective credit controls, concen­
trating on special types of lending activity, had pre­
viously come into the picture and continued to operate.
In January and February Regulation X , which pre­
scribes minimum down payments and maximum ma­
turities for real estate loans, was expanded to include
multi-unit residences and nonresidential construction.
In mid-January Regulations T and U (limiting the
amount to be borrowed against the security of stocks)
were further tightened. Margin requirements were in­
creased from 50 to 75% . Conversely, the maximum loan
value of stocks was lowered from 50 to 25% of current
market value.

A8 y

JUNE 1951

MONTHLY REVIEW

In March action was taken to restrict further expan­
sion of business loans through cooperation of lenders
under the program for voluntary credit restraint. The
Voluntary Credit Restraint Committee has concen­
trated on restraining loans for super-normal inventory,
for speculative investments or purchases, for retiring or
acquiring corporate equities in the hands of the public,
for postponable capital outlays by state and local gov­
ernments, and long-term loans for such purposes as
construction of facilities to improve the competitive po­
sition of producers of nonessential goods, to expand and
modernize non-defense-supporting distribution or serv­
ice lines, and to expand or modernize consumer goods
plants not related to the defense effort.
These measures have made a contribution toward de­
creasing lending activity, though what contribution each
has made is difficult to assess. In conjunction with
other factors, including direct controls, they appear to
have contributed importantly toward a reassessment of
inventory and credit policy on the part of businessmen
and bankers. Lending has further been restricted by a
feeling by many bankers that real estate loans have
reached or passed what might be considered the safe
level, and by the disappearance of “ scare buying” by
consumers.

Loans
Loans of Fifth District member banks passed the $2
billion mark this spring for the first time in history.
The 477 member banks on the April 9 call date showed
net loans of $2,026 million— up $85 million from year
end 1950, and at a level almost three times as high as
at the end of W orld W ar II.
L O A N S A N D D IS C O U N T S
F IF T H D IS T R IC T M E M B E R B A N K S
(Dollar amounts in millions)
June 30, Dec. 30, Apr. 9,
1951p
1950
1950
778
717
581
54
43
55
9
12
13

Commercial and industrial loans
Loans to farmers
Loans to brokers and dealers in securities
: loans for purchasing or carrying s 2curities ______________________________
Real estate loans:
On farm land
..
On residential property
On other properties -----Instalment loans to individuals:
Retail automobile paper --------Other retail paper
Repair and modernization loans
Cash loans -----------------------------------Single-payment loans to individuals:
Less than $3,000 ----------------------------$3,000 and over ------------------------------Loans to banks ---------------------------------All other loans ------------------------------------

45

57

64

44
376
129

44
390
136

45
380
143

107
36
23
70

117
46
24
74

115
47
24
74

81
139
3
50

84
158
59

84
164
4
63

LOANS— Gross
Reserves _______

1,752
19

1,962

2,048

21

22

LOANS Net ____

1,733

1,941

2,026

478

477

477

Number of banks .

2

Data may not add to totals because of rounding,
p Preliminary.

Net loans have risen $293 million— almost 17% —
since m id-1950. By far the greater part of the increase
since June 1950, as well as during the first quarter of



this year, has centered in business lending. Commer­
cial and industrial loans have climbed $197 million since
m id-1950. If the $25 million increase in single-payment
loans to individuals of $3,000 and over (which are
largely business loans) are included, 75% of the entire
increase in loans was in business lending. Since busi­
ness lending tends to concentrate in the larger banks,
and since this type of lending accounted for most of the
dollar volume of the loan increase, it would follow that
the greater proportion of the dollar increase in loans
would center in the larger banks.
Changes in other loan categories were noteworthy in
that little movement was recorded. Many banks have
felt for some time that they held enough real estate
loans and these loans have shown a minor decline.
Residential mortgage holdings fell off by $10 million
during the first quarter, but this was in considerable
measure offset by an increase in real estate loans on
other nonfarm properties. Farm mortgages showed
only a very slight increase.
Consumer loans (excluding single-payment loans to
individuals of $3,000 and over) were virtually un­
changed during the quarter. A minor decline in the
amount of retail automobile instalment loans held was
reported, but this was largely offset by a slight rise in
other retail instalment paper owned.
Loans to farmers showed a substantial percentage in­
crease (m ore than 2 5 % ), but this $11 million increase
during the quarter carried no great weight in the total
change. A ll of the increase was in direct loans to farm­
ers whereas loans guaranteed by the Commodity Credit
Corporation continued to decline.
A $3 million decline in loans to brokers and dealers
for purchasing and carrying securities during the first
quarter was more than offset by a $7 million increase in
other loans for purchasing and carrying securities.

Securities
A substantial share of the funds required by the
sharp loan expansion and the increased reserve require­
ments was provided by the sale of U. S. Government
obligations.
Holdings of Governments by Fifth District member
banks fell off $170 million during the first quarter, and
at $2,275 million were about 12% larger than banks’
holdings of loans. Interestingly, less than four years
ago holdings of Government securities by Fifth Dis­
trict member banks were more than double their out­
standing loans.
Maturities were considerably lengthened during the
first quarter. Holdings of Treasury bills declined by
$55 million, and note holdings (taking into account ex­
changes of certificates of indebtedness for notes) de­
clined by $59 million. Net sales of $59 million of bonds
maturing in ten years or less were reported. Holdings
of longer term bonds were virtually unchanged, although
an increase of $9 million in bonds maturing in from ten
to twenty years and a decline of $11 million in bonds
of more than twenty years’ maturity were reported.

A9 >

FEDERAL RESERVE BANK OF RICHMOND

Holdings of non-Government securities declined $9
million from the record $336 million at year end 1950.

tional stock to the bank is smaller by the amount in
which the excess profits tax liability is reduced.

Deposits
Demand deposits of Fifth District member banks
showed the usual spring trend, declining $243 million.
Most of the decline ($180 million) was in deposits of
individuals, partnerships, and corporations. Adjusted
demand deposits followed the same trend, dropping from
$3,657 million at the year end to $3,542 million on April
9. Deposits of banks fell $141 million, while miscella­
neous demand liabilities were off $26 million. Offset­
ting was the substantial increase ($107 million) in U. S.
Government demand deposits, to a total of $227 million.
Time deposits showed a slight rise during the first
quarter. Drawing down of savings accounts for the
purchase of consumers’ goods has occurred on a mod­
erate scale. Savings accounts of individuals, partner­
ships, and corporations showed a negligible decrease
during the first quarter while all other classes of time
deposits showed small increases.
Capital
Total capital accounts of Fifth District member banks
continued their steady rise, increasing $13 million ( 3 % )
during the first quarter. Much of this increase reflects
first quarter’s earnings, but some was new capital. Many
banks seem to feel that they need more capital to com ­
pensate for the larger risks involved in higher loan
portfolios. The deposit uptrend of recent years has also
been considered, as has the new excess profits tax,
which may be related either to capital or to “ average
earnings” . A s broadening of the capital base may les­
sen the excess profits tax liability, the net cost of addi­

(000 omitted)

April
1951

District Totals




April
1950

4 Months
1951

4 Months
1950

784,834

$ 4,229,414

$ 3,101,350

1,216,264
23,538
20,385
31,169

895,610
19,366
17,172
26,446

4,892,030
97,570
79,210
127,089

3,800,810
82,538
66,269
104,018

55,021
321,889
93,535
99,547
14,058
137,290
40,430
16,294
155,001

48,686
264,477
81,910
77,047
11,714
120,485
30,458
14,544
125,108

235,123
1,366,417
388,166
406,433
63,688
630,616
164,649
77,109
654,979

189,771
1,046,539
307,745
310,822
50,063
533,741
126,807
57,294
525,027

71,874
118,361
105,723
64,723

60,133
101,872
83,632
46,988

293,443
493,564
450,719
273,634

240,560
401,443
337,270
192,275

26,757
27,073
44,970
40,677
205,777
24,237
495,167
107,729

23,360
22,103
36,790
30,744
210,602
21,493
457,323
94,443

105,957
122,673
188,323
162,791
840,916
99,592
2,131,591
442,872

90,977
94,815
150,153
832,917
81,107
1,857,989
364,672

42,295
132,286
32,503
61,554
28,739

41,685
124,087
28,164
56,094
25,995

188,880
594,673
138,343
265,162
118,374

149,407
477,982
110,593
217,750
97,704

$ 4,900,084

$ 3,983,365

$20,324,000

$16,111,620

$ 1,045,218

$

(Dollar amounts in millions)

Assets
Loans and investments ______________________
Loans (including overdrafts) ____________
U. S. Government obligations _____________
Other securities ___________________________
Reserves, cash and bank balances __________
Reserve with Federal Reserve Banks ____
Cash in vault ______________________________
Balances with banks _____________________
Cash items in process of collection ______
Other assets _________________________________

June 30, Dec. 30, Apr. 9,
1950
1950
1951p
4,501
1,733
2,471
297
1,408
658

4,722
1,941
2,445
336

348
301
77

749
125
445
367
80

4,628
2,026
2,275
327
1,556
780
133
369
275
82

Total assets ______________________________ 5,986

6,489

6,266

4,693
3,593

4,450
3,413
227
324
408
79
1,332
1,234
32
53
13
5,782

Liabilities
Demand deposits _____________________________
Individuals, partnerships and corporations
U. S. Government _________________________
States and political subdivisions _________
Banks ______________________________________
Certified and officers’ checks, etc. _________
Time deposits ________________________________
Individuals, partnerships and corporations
U. S. Government and Postal Savings ____
States and political subdivisions __________
Banks ______________________________________
Total deposits ________________________________
Borrowings __________________________________
Other liabilities ___________________________ _
_

1,686

101

4,190
3,278
136
320
384
72
1,341
1,257
30
52
2
5,531

120

326
549
105
1,328
1,235
31
50

6

12
6,021
1

35

40

39

Total liabilities _________________________ 5,572
415
Total capital accounts ----------------------------

6,062
426

5,827
439

Total liabilities and capital accounts

6

5,986

6.489

6,266

Demand deposits adjusted __________________ 3,369
Number of banks ___________________________
478

3,657
477

3,542
477

Data may not add to totals because of rounding.
p Preliminary.

51 R E P O R T IN G M E M B E R B A N K S- - 5 T H D IS T R IC T
(000 omitted)
Change in Amount from
May 16,
Apr. 11,
May 17,
ITEMS
1951
1951
1950
+267,749
Total Loans ___________________ $1,196,299** — 7,675
Business and Agricultural
593,664
— 8,798
+173,483
Real Estate Loans __________
241,250
+
1,369
+ 17,270
—
374
375,536
All Other Loans ____________
+ 79,916
Total Security Holdings ______
1,605,519
+ 36,306
■ 177,422
—
U. S. Treasury Bills ________
125,959
+ 34,087
+ 23,328
U. S. Treasury Certificates „
0
0
— 164,163
U. S. Treasury Notes ______
375,373
+
2,112
+140,645
U. S. Treasury Bonds ______
939,760
+
3,461
— 187,773
Other Bonds, Stocks& Secur.
— 3,354
+ 10,541
164,427
Cash Items in Process of Col.
268,582
+
8,564
+ 35,409
Due from Banks _______________
167,422*
— 9,898
+
5,820
Currency and Coin ____________
— 1,544
69,808
+
4,468
Reserve with F. R. Banks ____
518,453
— 9,199
+ 64,842
Other Assets __________________
54,812
+
1,266
+
2,240
Total Assets _________________ 3,880,915
+ 17,820
+203,106

D E B IT S TO IN D IV ID U A L .A CC O U N TS

Dist. of Columbia
Washington
Maryland
Baltimore
Cumberland
Frederick
Hagerstown
North Carolina
Asheville
Charlotte
Durhame
Greensboro
Kinston
Raleigh
Wilmington
Wilson
W inston- Salem
South Carolina
Charleston
Columbia
Greenville
Spartanburg
Virginia
Charlottesville
Danville
Lynchburg
Newport News
Norfolk
Portsmouth
Richmond
Roanoke
West Virginia
Bluefield
Charleston
Clarksburg
Huntington
Parkersburg

ASSET S A N D L IA B I L I T IE S
F IF T H D IS T R IC T M E M B E R B A N K S

Total Demand Deposits ________ 2,984,212
Deposits of Individuals _____ 2,222,074
Deposits of U . S. Govt. ______
130,313
Deposits of State & Loc. Gov...
171,176
Deposits of Banks ___________
405,624*
Certified & Officers’ Checks ..
55,025
Total Time Deposits __________
608,478
Deposits of Individuals ______
552,954
Other Time Deposits ________
55,524
Liabilities for Borrowed Money
14,200
All Other Liabilities __________
27,480
Capital Accounts ______________
246,545
Total liabilities _____________ $3,880,915

111,212

+
—
—
—
+
+
+
+
—
+
+
+
+

10,563
18,732
30,264
1,196
13,449
9,842
487
635
148
4,900
493
1,377
17,820

* Net figures, reciprocal balances being eliminated.
** Less losses for bad debts.

* 10 y
{

+189,426
+ 131,403
+ 38,837
+
2,000
+ 10,551
+
6,635
— 12,823
— 21,155
+
8,332
+
6,525
+
6,851
+ 13,127
+203,106

JUNE 1951

MONTHLY REVIEW

S E L E C T E D F IF T H D IS T R IC T B U SIN E S S IN D E X E S
AVERAGE

D A IL Y

1935-39=100— S E A S O N A L L Y
Apr.
1951

Automobile Registration1 ______________________
Bank Debits ____________________________________
Bituminous Coal Production ___________________________
Construction Contracts Awarded ______________
Business Failures— No. _________________________
Cigarette Production -----------------------------------------Cotton Spindle Hours ___________________________
Department Store Sales2 ______________________
Electric Power Production _____________________
Employment— Manufacturing Industries1 _____
Furniture Manufacturers: Shipments2 _______
Life Insurance Sales ------------------------------------------

A D JU STE D

Mar.
1951

Apr.
1950

217
432
149
502
70

430
176
558
62
237
149
326

Feb.
1951
191
423
132
641
51
238
165
341
339
152
330
283

238
356
143
517
76
197
141
323
296
138
301
257

221

166
297
337
153
351
290

281

% Change— Latest Month
Prev. Mo.
Year Ago

14

+

18

+
+
—

11
11

7

+
—

+
+
—

23
8

18
20
6
1
10
12
20

+
+
+
+
+
+
+

10
10
1
1
6

+
—

8
21

+
+
+
+
—

0

3

9

1 Not seasonally adjusted.

" Revised Series— back figures available on request.

W H O L E SA L E TRADE

B U IL D IN G P E R M IT F IG U R E S
April
1950

April
1951
Maryland
Baltimore
$
Cumberland
Frederick
Hagerstown
Salisbury

4 Months
1951

LINES
5,574,390
108,250
193,725
267,280
135,852

$ 28,121,215
323,935
533,540
643,185
722,478

$ 32,916,720
341,395
1,138,875
660,870
415,592

495,691
264,710
545,802
1,248,150
185,585
418,435
1,039,402
1,390,406

725,925
1,565,370
597,136
8,625,433
787,494
3,432,110
7,078,704
6,753,352

1,200,409
1,249,180
793,843
5,239,360
1,517,467
1,166,784
6,906,703
7,514,351

598,967
54,315
840,917

668,046
122,442
745,751

1,844,258
312,610
2,466,552

6,895,242
481,223
1,951,194

North Carolina
Asheville
281,122
Charlotte
1,592,456
Durham
701,650
Greensboro
492,545
High Point
309,915
Raleigh
878,995
Rocky Mount
219,419
Salisbury
92,610
W inston-Salem
664,727

474,806
3,106,811
1,104,627
1,062,663
546,685
3,180,255
1,033,279
203,655
1,230,183

2,759,800
9,364,127
2,239,424
2,923,614
1,245,389
4,652,220
1,244,206
539,345
4,105,204

1,749,223
9,240,714
8,308,387
3,763,691
1,237,631
7,004,891
2,072,377
1,443,088
3,747,241

5,827,890
77,375
47,015
281,015
354,874

$

Virginia
Danville
261,900
Lynchburg
320,246
Newport News
142,783
2,108,652
Norfolk
259,431
Petersburg
Portsmouth
321,510
2,269,817
Richmond
Roanoke
926,553
West Virginia
Charleston
Clarksburg
Huntington

South Carolina
Charleston
Columbia
Greenville
Spartanburg

Sales in
April 1951
Compared with
Mar.
Apr.
1950
1951

4 Months
1950

156,174
1,173,542
545,950
69,080

264,973
708,020
671,836
173,850

587,586
4,430,327
2,877,559
362,190

7,497,308
$ 34,662,868

23,548,224
$125,412,512

Sales, Apr. ’51 vs. Apr. ’50 ....
Sales, 4 Mos. ’51 vs. 4 Mos. ’50




Md.
— 5
+10

Balt.
— 4
+10
+30

— 3

45

44

36

39

15

18

15

16

D.C.
— 3
+11

3

12
0

7

+
—
—
—
—
—
—

1

31
3
15
2

19
14

+
+
+
+
+
+
+

34
54
15
17
7
39

+
7
+ 21
+ 13
2
+
— 4
+
8
— 1

20

__
+
+
+

—
+
+

22

39
30

4
2

5

Percentage comparison of sales
in periods named with sales in
same periods in 1950
4 Mos. 1951
April 1951
+
5
+ 18
— 7
— 16
— 1
• 16
—
+
3

IN D IV ID U AL CITIES
Baltimore, Md. (7) ___________________
Washington, D. C. (7) _____________
Richmond, V a. ( 6 ) __________________
Charleston, W . Va. (3) ______________
Charlotte, N . C. (3) _________________

+14

+

+

46

— 29
— 9
— 14
— 6

Maryland (7) ________________________
District of Columbia (7) ____________
Virginia
18) ________________________
West Virginia (10) __________________
North Carolina (14) _________________
South Carolina (7) __________________
District (63) _______________________

District
Total
• 6
—
+ 1 1 -.
+25

+38

+
+
+

9
26
20
0
10

STATES

D E P A R T M E N T ST O R E O P E R A T IO N S
(Figures show percentage change)
Rich.
Sales, Apr. ’51 vs. Apr. ’50 ___ — 3
Sales, 4 Mos. ’51 vs. 4 Mos. ’50 + 1 5
Stocks, Apr. 30, ’51 vs. ’50 ____ + 3 2
Orders outstanding,
Apr. 30, ’51 vs. ’50 __________ + 27
Current receivables Apr. 1
collected in Apr. ’51 _________
26
Instalment receivables Apr. 1
collected in Apr. ’51 _________
13

+
+
+

8

17

R E T A IL F U R N IT U R E SA LE S

22,759,145
$139,971,832

Other
Wash. Cities
■ 3
—
■ 9
—
+11
+10
+24
+19

+
+

Number of reporting firms in parentheses.
Source: Department of Commerce.

883,938
4,393,063
2,464,529
514,706

Dist. of Columbia
Washington
3,397,945
District Totals $ 25,269,390

Auto supplies ( 8 ) __________ ....
Electrical goods ( 8 ) ______ ....
Hardware (14) ____________ —
Industrial supplies (7) ____
Drugs & sundries (12) ____
Dry goods (14) ___________
Groceries (61) ______________....
Paper & products (5) _____
Tobacco & products ( 10 )
....
Miscellaneous (97) _________
District Totals (236)
....

Stocks on
April 30, 1951
compared with
Apr. 30 Mar. 31
1951
1950

+
5
+ 18
• 17
—
— 4
— 13

Number of reporting firms in parentheses.

Va. W .V a. N.C. S.C.
— 5 — 7 ■ 12 ■ 6
—
—
+13 +17 + 5 + 9

i ii y

— 4
+ 16

+ 4
—

5

0
—

9

+ 5
— 4
+ 16

— 6
— 9
— 17

FEDERAL RESERVE BANK OF RICHMOND

NATIONAL SUMMARY OF BUSINESS CONDITIONS
(Compiled by the Board of Governors of the Federal Reserve System)

Output and incomes were generally maintained in April
and May, reflecting in part a further expansion in Federal
defense activities. Consumer demands for most durable
goods slackened further, and total value of retail sales was
only moderately above year-ago levels. Wholesale com­
modity prices decreased slightly in May and common stock
prices showed fairly marked declines. Bank loans to busi­
ness have shown little change since early April.
Industrial Production
Output at factories and mines in April, as measured by
preliminary figures for the Board’s seasonally adjusted in­
dex, was 222 per cent of the 1935-39 average, the same as
March. Not much change in this level is indicated in May.
The current level of industrial activity is about 15 per cent
higher than a year ago.
Production of durable goods showed little change in April
as output of industrial equipment increased somewhat less
than in other recent months; passenger car assemblies de­
creased 15 per cent; and production of furniture, television
sets, and most other household durable goods was reduced.
Output of metals and most building materials was main­
tained at or above earlier advanced rates. Activity in the
aircraft industry showed a further marked expansion.
Output of most nondurable goods was maintained in April.
Production of chemicals expanded further reflecting main­
ly increased output of synthetic rubber and other industrial
chemicals. Activity in the cotton textile industry decreased
owning in part to a labor dispute which was terminated in
early May.
Crude petroleum output expanded to new record levels in
April and early May, and production of anthracite rose sub­
stantially from the reduced March rate. Metal mining in­
creased as iron ore production rose more than seasonally.
Employment
Total employment in nonagricultural establishments in
April, seasonally adjusted, showed a smaller gain than in
other recent months. Employment in defense and related
activities continued to increase, while employment in con­
sumer goods industries showed moderate declines. Average
wage rates at manufacturing plants rose further. Unemploy­
ment declined to 1.7 million, one of the lowest levels reached
in the past decade except for the war years.

Atomic Energy Commission. The number of housing units
started in April showed a contra-seasonal decline to 88,000,
as compared with 93,000 in March and 133,000 in April 1950.
Distribution
Total retail sales decreased further in April. In the early
part of May, department store sales of durable goods slack­
ened somewhat further, while sales of apparel and most
other nondurable goods were maintained. Department store
stocks at the end of April continued at the advanced level
reached at the end of March and were nearly one-third above
the corresponding period in 1950.
Commodity Prices
Prices of 28 basic commodities have declined further since
the end of April and on May 25 were 7 per cent below the
February peak but 38 per cent higher than a year ago. Re­
flecting mainly declines in basic materials, the general level
of wholesale commodity prices has decreased slightly since
the end of April. Prices of finished goods have generally
changed little.
Consumer prices in mid-April were maintained at the
March level. Prices of foods declined slightly but apparel,
housefurnishings, and rents increased somewhat further.
Bank Credit and the Money Supply
Bank loans to business in leading cities showed little
change from mid-April to the third week of May, although
there is usually a decline at this season. Credit extended for
defense purposes continued to be substantial. Wholesalers
and retailers also borrowed substantial amounts, while com­
modity dealers made large repayments on loans.
Deposits and currency held by businesses and individuals
increased substantially in April, reflecting largely a shift of
funds to private accounts as Treasury balances were reduced
following the heavy inflow of tax receipts in March. At se­
lected banks in leading cities outside New York the rate of
use of demand deposits rose somewhat further.
Member bank reserve balances declined between early
April and mid-May, reflecting gold and currency outflows,
cash redemption of part of Federal Reserve holdings of the
weekly maturing Treasury bills, and increases in Treasury
deposits at the Reserve Banks.
Security Markets

Construction
Value of construction contract awards increased season­
ally in April, reflecting chiefly gains in most types of private
nonresidential awards. Total awards in May are likely to in­
crease further because of a very large contract issued by the




Common stock prices reached a new postwar high early
in May but subsequently declined to the lowest level since
mid-January. While yields on Treasury securities increased
somewhat in the first three weeks of May, there was little
net change in yields on high-grade corporate bonds.

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