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- F E D tF j/y RESERVE BANKAjFJRICHMOND June 1953 United States Population, 1900 - 1960, with Selected Percentage Increases 1900 A Ithough population growth is but one of the i i major factors affecting long-term economic trends, it is a highly significant one. The article on page 3 points up areas of potential demand if the high rate of population increase continues. The cover chart depicts the population trend since 1900— and three projections to 1960. Also In This Issue - - Fifth District Trend Charts_____________ Page Trends in Fifth District Deposit Ownership___________________ Page April Call Report_______________________ Page Business Conditions and Prospects_____ Page Fifth District Statistical Data___________ Page 2 6 8 9 11 Federal Reserve Bank of Richmond F if t h d is t r ic t T rends CONSTRUCTION CONTRACT AWARDS NEW PASSENGER CAR REGISTRATIONS Commercial construction contract awards in April revived -1\)f from the adjusted March level and were back to approximately the adjusted levels established in February. Commercial construction awards in April were 83% ahead of a year ago. In the first four months of 11)53 this type of award was up 118% above a year ago. Registrations of new passenger cars in the Fifth District during March were up 39% from the previous month and 4 0 % ahead of a year ago. Registrations in three District states for April were 35%, higher than a year ago which was about in line with the increase in registrations nationally. Used car stocks are heavy but sales are likewise running well ahead of last year. CONSTRUCTION CONTRACT AWARDS CIGARETTE PRODUCTION Contracts awarded for factories in this District during 78% higher than in March (on an adjusted basis) and of a year ago. April awards were nearly as large as peak in December. In the first four months of 1953 factory construction were up 2 3 % from a year ago. April were 4 3 % ahead the recent awards fol Cigarette output in April (adjusted) dropped 8 % from the previ ous month and 4% below last year. This was mainly due to the afterm ath of the rise in price of the previous month. In the first four months of 1053 cigarette output was 2% ahead of a year ago. CONSTRUCTION CONTRACT AWARDS COTTON CONSUMPTION April awards for residential construction were 21% higher than March (adjusted) but failed by 29% to equal the level of April 1952. Although the April awards for apartments and hotels (adjusted) rose 9 6 % , they were still 60% under last year. One- and tw o-fam ily houses rose 7 % (adjusted) from March to April but the April figure was 6%, under last year. The in-between-season month of April in the textile industry witnessed a reduction of 4% in adjusted cotton consumption from March, but the April level was 10% ahead of a year ago. In the first four months of 1953 cotton consumption was 5% higher than a year earlier. In this same period cotton spindles were operated at a rate 11% higher than a year ago. June 1953 Economic Strength in Prospective Population Growth may be some question as to how much longer the business boom will continue, but it appears rea sonably certain that the population boom is in stride and on its way to another record-breaking performance this decade. It began in the early years of W orld W ar II, declined some in the mid-Forties, accelerated to a post war record rate of growth in 1947, and has surprised the experts by continuing to grow at a rate just under the postwar peak. On the first lap of its record-break ing performance, the popu lation boom added almost 20 million persons to the nation’s consumers in the past decade. This was the largest absolute gain in our history. It is estimated on the basis of a number of different projections that this mark may be exceeded this decade with a growth of 23 million. to almost 141 million. By 1947 it was apparent that this projection would fall short of the mark, and a revised estimate was made of 145 million. Even this short-run projection failed in approximating the actual count, er ring on the low side by 6.7 million. The increase of almost 20 million persons in the decade of the Forties was the largest on record and more than double the depression-stunted gain from 1930 to 1940. Significantly, over half this increase was packed into the last four years of the decade when the birth rate jumped by more than 25% to reach the highest level attained since the early Twenties. The upsurge peaked in 1947 with a rate of 26.6 births per thousand popu lation, compared with a rate of only 18.4 in 1934 and 1936. Although the rate has declined since, the W hile the gains in such 1947 total of 3.8 million items as industrial produc births was exceeded slight tion, employment, and in ly in 1951 and again in come have been in the 1952. Data are available headlines, the growth in Under ,1 0 10-19 20-44 45-64 65ond Over only for the first three Source 1950-United States Census of Population, t950 population has been re i960* "The Sutlaimng Economic Force# A«eodu o report fo the joint committee on tho Economic Report, p 13. months of this year, but ceiving relatively scant at the long-expected drop in tention. Yet, it has been an births has still not ma underlying force as well as terialized. In the first quarter the number of births was a reflection of the postwar boom. Tw o significant points 3% higher than a year ago and the birth rate was up should be noted. First, the impact of the unprecedented 2.5% . A decline, however, is still anticipated, and the growth in population from 1940 to 1950 has by no projected population curves shown on the cover chart means been exhausted. Its effects in promoting shifts are based on the assumption that the birth rate will de and growth in consumption and investment will be felt cline from 1952 to 1960. for years to come with undiminished strength. The de Based largely on the failure of the rate of population velopment of the economy in growing up to its greatly growth to decline in the last few years as anticipated expanded population is far from completed, and since a and on indications that the low and medium projections further large gain in population is due this decade, the of the Bureau of the Census shown on the cover chart economy is going to have to move ahead at a high rate assume unrealistic drops in the birth rate, a report pre just to hold its own. Continued improvement in the pared for the Joint Committee on the Economic Report, standard of living will require an accelerated rate of ex The Sustaining Economic Forces Ahead, estimates that pansion in production and investment. by 1960 the nation’s population will be in the neighbor In brief, the population changes of the past and pres hood of 175 million. The gain for the decade would ent decades provide the potential for further long-term be over 23 million as compared with the increase of 20 growth in our economy on a par with, and perhaps in million from 1940 to 1950. Additional food, clothing, excess of, the “ abnormally” high levels of recent years. shelter, transportation, and classrooms will have to be Twice the Gain of the Thirties provided for this increment, along with, if the past is A brief look at the unexpectedly large growth of any indication, a higher standard of living for the popu population in this country from 1940 to 1950 helps ex lation in general. plain why fast-expanding productive capacity found it Second Highest Regional Gain difficult to satisfy postwar demand for goods and serv T h ere ices. The population of the country in 1940 was 132 million, and it was estimated that by 1950 it would be up A n important factor to business in the growth of population is the geographical shifts that occur, creat ■ {3 y Federal Reserve Bank of Richmond the inability to make much progress, relatively, after the war l>ecause of the shortages of labor and materials. ing new market patterns and opportunities for new and expanded industries and distributive facilities. The eight states of the South Atlantic Division* including the five Fifth District states, recorded the second largest regional gain in population from 1940 to 1950, 18.8rr as compared with 14.5% for the nation. Maryland and Virginia were among the ten states having the greatest percentage increases, the former seventh in the nation with a growth of 28.6% and the latter tenth with a gain of 23.9% . The projected population growth will be marked by continued population shifts toward the Far West and the Southeast. However, there is some question that the District's growth will be as large relative to the nation's as it was during the past decade when expansion of Federal Government activity had such a marked im pact on the population growth of Maryland and Vir ginia. Nevertheless, the Bureau of the Census expects the District of Columbia, Maryland, and Virginia to re alize higher percentage gains than the average tor the country. It expects also that these gains will more than offset the smaller-than-average growths in W est Vir ginia, North Carolina, and South Carolina, with a net addition to the District’s population of around 2 million this decade. Such a growth would be the equivalent of the 1950 total population of the three largest cities in the District— Baltimore, Washington. D. C., and Rich mond. The point does not need to be la1x>red. Everyone is familiar with the overcrowding, double shifts, and con version of such facilities as jails, poultry* houses, school buses, garages, and churches into classrooms. The first progress report of a survey of school facilities conducted by the Office of Education of the Federal Security Agen cy reveals that 6% of the reporting states' school chil dren attend classes in quarters not designed for such use, 7% are housed in buildings over 50 years old, 20% are in buildings rated unsafe because of fire risk, and 21 % attended classes in buildings with antiquated or no in door sanitary facilities. Despite the unprecedented volume of funds expended on school construction in the last few years, only meager inroads have been made on accumulated needs. Based on data from the survey mentioned in the preceding paragraph and from the Department of Commerce, school construction contracts awarded in 1952 were only 19%. of estimated needs in 1952 in Maryland, 12% in W est Virginia, and 7% in North Carolina. Data are not at hand for the other states of this District, but it has been indicated that similarly low ratios hold also in Virginia and South Carolina. The Three R’s in Jails, Service Stations, and Chicken Houses One of the aspects of recent and prospective imputa tion growth that indicates continuing needs for capital outlays of boom-like proportions in certain fields the rest of this decade is shifts in age groups. As shown on the accompanying chart, the estimated increase in total population between 1950 and 1960 will occur unevenly among various age groups. In the two groups, tinder 10 years and 10 to 19 years, the increase is expected to be around 12.5 million. This additional potential school load will confront local education boards already strug gling with the problem of inadequate school facilities and the wherewithal with which to expand them. The problem has been accentuated by its relatively sudden emergence. Due to the declining number of births dur ing the early Thirties, the effects of the depression, and military drafts and job opportunities of the war years, there was a net decline in enrollment in elementary and secondary schools over the last two decades. With the opening of the current decade the situation was sharply reversed, and school enrollment began to in crease at the rate of a million a year. The war babies had begun entering school, but unfortunately facilities were inadequate for the increased load. In fact, the school plant in most states was inferior to what it had been prior to the war. This was a consequence of the lack of maintenance and addition during the war and i 4 y Referring to 1952 needs only, the survey makes the following national estimates: new construction $9.4 bil lion, remodeling and rehabilitation $535 million, site acquisition $498 million, and new buses $165 million. Taking into account the increase in enrollment expected between 1952 and 1960, it has been estimated (The Sustaining Economic Forces Ahead) that additional new construction amounting to $6 billion will be needed, and that replacement in the same j>eriod will require outlays of $4 billion. All told, estimated current and prospec tive school needs call for total outlays of almost $21 bil lion by 1960. On an annual basis this would be $2.3 billion— which if actually expended would be a strong offset to any likely downturn in, say, residential con struction. From Abnormal to Normal? Residential construction deserves particular attention in a survey of prospective economic activity because it has been singled out to an increasing extent lately as one of the props of the boom that may soon decline in strength. It is pointed out that the annual growth in number of households and families, a key to housing de mand, has been declining since 1951 and that the indi cated trend through most of this decade is downward. Hence, it is argued, the abnormal demand for housing in the postwar period will soon be in the limbo of past glories of a boom. After the close of World W ar II, new households were formed at a very high and rising rate. The growth reached a peak in 1948 when the net increase topped June 1953 1.5 million, but since then the rate of household forma tion has dropped over 4 0 ^ , being estimated at 900,000 for the year ended April 1952. The primary reason for the decline stems from the low birth rates of the Thirties which are now' being reflected in reduced num bers of persons of marriageable age. Toward the end of this decade the number of persons reaching marriageable age will l>egin to increase, and in the late Sixties the country is likely to experience the greatest increase in its history. This should give rise to a housing boom that may make the number of residential starts in recent years suffer in comparison. In the meantime, however, it is not at all certain that housing construction will decline sharply. To begin with, the estimated increase of some 23 million persons this decade will have to be housed. A reasonable esti mate of new residential units called for by this growth can be based on recent experience regarding the size of households. In addition, prospective housing activity will be influenced by the number of replacements, ex penditures on maintenance, and rehabilitation of sub standard units. Taking all these factors into account, the Housing and Home Finance Agency has estimated that close to 1.5 million nonfarm units will be needed each year of this decade. A more recent estimate (see The Sustaining Economic Forces Ahead) sets annual housing needs in the eight years to 1960 at 1.2 million. These are estimates of needs, not effective demand. Nevertheless, they are indicative of the possibility that the “abnormal” housing activity of the past four years, resulting in average annual starts of almost 1.2 million units, could become a normal level of activity the rest of this decade. $2.5 Billion vs $866 Million Another area in which the prospective increase in population is going to accentuate an already tremendous backlog of needs is hospital facilities. Despite expendi tures on hospital construction averaging $803 million annually in the three years, 1949-51, almost two and one-half times the average in the preceding three-year period, it has been estimated that at the opening of 1952 the backlog of needed hospital construction amounted to $14 billion. Although this is an estimate, based on data submitted by each state as required by the Hospital Survey and Construction Act, it is indicative of the gen eral level of current needs. Alxmt $1.9 billion of this backlog represents the cost of providing veterans’ hospitals and hence a Federal Government obligation if and when undertaken. The Joint Committee report previously cited estimates that in order to clean up most of the remaining backlog by 1960 at “about as fast a rate as appears feasible while keeping up with increasing population and offsetting continuing obsolesence/’ about $2.5 billion of new con struction would l>e required annually from 1954 to 1960. This is in striking contrast to the $866 million of hospi tal construction estimated to have been put in place in 1952. The same report provides data showing that as of January 1, 1952, the additional hospital facilities needed in the Fifth District would require outlays of almost $1.5 billion. In contrast, the total amount of bond offerings in the Fifth District in 1952 for all types of capital projects was only $422 million. And note that the $1.5 billion figure makes no allowance for replace ment or growth of population in the years immediately ahead. Needs Not Effective Demand Space permitting, other areas of activity could 1>e ex amined to assess the potential growth latent in current needs and stemming from the impact of prospective growth in population. Public utilities, highways, busi ness plant and equipment, new industries, suburban re tail outlets are all influenced to a considerable extent by growth and geographical shifts in population. If the flow- of investment in recent years should be measured against the accumulated needs and the demand arising from all these sources, the postwar boom would not ap pear as abnormally high as is indicated by historical comparisons. The feasibility of the needs spoken of should l)e con sidered in terms of effective demand— willingness and financial ability. Obviously, the latter could fall far short of effectuating the potential growth indicated by current needs and prospective increases in markets. Nevertheless, if the economy is to go forward— or even hold its own— business and government must shape their current and future operations and plans for capital projects to fit the new sociological and economic pattern that emerged from World W ar II. There is little justi fication now for economic myopia; the pessimism of the Thirties regarding opportunities for growth has been dissipated by the dynamic nature of the growth in popu lation and the peremptory drive of the population for an ever-l)etter standard of living. An increase of 20 mil lion in the population during the Forties— more than double the gain in the preceding 10 years— and an ex pected further increase of 23 million this decade sets an economic stage on w’hich opportunity and growth should have featured roles. Recommended reading on this subject: The Sustaining Forces Ahead, prepared by the staff of the Joint Committee on the Economic Report, 1952 ; U . S. Department of Commerce, Markets After the Defense Expansion, 1952; G. Colm, The American Economy in 1960, National Planning Association, 1952; Joseph S. Davis, Our Changed Population Outlook and Its Significance, American Economic Review, June 1952. Federal Reserve Bank of Richmond Trends in Fifth District Deposit Ownership ownership of demand deposits of individuals and busi ness firms. These periodic surveys, in addition to providing further insight into our economic structure and significant changes in it, also provide a means whereby individual banks may make comparisons of their own dej>osit structures with the average for banks of similar size in the District. All categories of individual and business demand de posits increased in this District from January 1952 to January 1953 with one exception— foreign demand de b i t s , a relatively insignificant category in the District, declined by 15% to $12,000,000. The increase in the District came primarily from the extension of loans by commercial banks here. Member hanks, which hold over 70% of total loans and investments in the District, expanded their loans outstanding by $229,000,000 from January 1952 to January 1953. Additional expansion in demand deposits resulted from loans extended by nonmenil)er banks, from transfers of funds from other districts, and from U . S. Treasury expenditures here of funds realized from the sale of Government securities to banks. This widespread increase in deposit balances carried with commercial banks reflected the need for greater “cash*' holdings than formerly to transact the increased level of business and personal economic activity. More active use (more rapid turnover) of deposit balances and of currency is another means of providing funds for increased activity and this reduces the need for the and business firms had $300,000,000 more money in demand deposits with commercial banks in the Fifth Federal Reserve District on January 31, 1953 than a year earlier. They had $1,373,000,000 more than in January 1946, their total “cash in the bank” on the current date amounting to $5,401,000,000. Wholesale and retail traders, manufacturing and min ing firms, and other nonfinancial businesses held 45% of this near-record total on the banks* books at the end of January. This group of depositors have maintained about this same percentage of the total throughout the postwar years. Financial business concerns have achieved a signifi cant increase over the postwar period in their share of total demand deposits of individuals, partnerships, and corporations at commercial banks in this District. Fi nancial businesses, including insurance, investment, fi nance, and real estate companies, increased their de posits from $270,000,000 in January 1946 to $487,000,000 in January of this year— from 6.7% of the total to 9 .0% . Personal accounts of individuals, on the other hand, although increasing by $433,000,000 over the seven-year period, declined from 40.5% of the total to 38.3% . The principal characteristics of demand de|>osit own ership in this District are presented in the accompany ing tables. These figures are based on estimates which are derived from a sample of commercial banks in the District which participate in the annual survey of the / x d iv id u a ls O W N ERSH IP OF DEM AND DEPOSITS OF IN D IV ID U A LS, PARTNERSHIPS, AND CORPORATIONS All Fifth District Commercial Banks (In millions of dollars) Amount Change __From Year Ago Per Cent of Totals Outstanding Dollar Per Cent Jan. *53 Jan. *52 Jan. ’53 Jan. *52 Jan. ’46 Type of Holder 2,894 2,715 +179 + 6.6 53.6 53.2 Total business.................................... 53.0 2,407 2,266 + 141 + 6.2 44.6 44.4 Nonfinancial business--------------46.3 726 693 + 33 + 4.8 13.5 M fg. and m ining____________ 13.6 13.1 286 259 + 27 +10.4 5.3 Public utilities .......................... 5.1 5.7 1,006 967 + 39 18.6 Trade ____________ __________ + 4.1 18.9 22.0 389 347 + 42 + 12.0 7.2 Other nonfinancial --------------6.8 5.4 487 449 + 38 + 8.4 9.0 Financial business-------------------8.8 6.7 138 127 + 8.4 Insurance companies................ 2.5 2.5 1.8 + 11 322 349 + 27 + 8.5 Other financial ...... ................... 6.5 6.3 4.9 2,066 1.978 + 88 + 4.5 Personal ............... ............................ 38.3 38.8 40.5 + 2.6 438 427 8.1 8.4 Farm ers....................... .................. 8.7 + 11 1,629 1,551 + 5.0 + 78 Others.............................................. 30.2 30.4 31.4 98 82 +20.1 Trust funds......................................... 1.8 1.6 1.7 + 16 330 312 Nonprofit associations .................... + 5.8 6.1 6.1 4.8 + IB 12 14 Foreign ................ .............................. -1 4 .7 2 .2 .3 .1 T ota l..................................................... 57401 5,101 A6 Y +300 + ” ^9 100.0 Toiho loolo June 1953 Business firms, not including financial types of busi ness, held $2,407,000,000 on deposit with Fifth District commercial banks at the end of January this year, $141,000,000 more than in January a year ago. Certain service-type industries such as theatres and other places of amusement, hotels, garages, and laundries (which are classified in the survey as “ All Other Nonfinancial Businesses" ) accounted for the largest dollar and per centage increase over the year in the nonfinancial busi ness category. These firms held $42,000,000 more on deposit with District banks this year than last, an in crease of \2c/( to $389,000,000. Public utility, transj>ortation, and communications firms also showed a large increase from a year ago. On the 1953 date, their de mand deposit balances totaled $286,000,000, \0l/2c/< more than in January 1952. creation of new money to facilitate increased business activity. Historically, however, increased economic ac tivity has been accompanied by increases both in the supply of money and in the rate at which existing money is being used. Two of the many factors which bring this alxmt are the institutional forms of credit exten sion and the customs and habits of society in the mak ing of payments. D E M A N D D E P O S IT O W N E R S H IP — F IF T H D IS T R IC T B Y S IZ E O F C O M M E R C IA L B A N K S P E R C E N T A G E H E L D B Y P R IN C IP A L C L A SSE S O F O W N E R S January 31* 1953 _________ Deposit Size o f Banks*_________ $10,000,000 $1,000,000Less than and over $10,000,000 $1,000,000 Type of Holder Total business -----------------Nonfinancial business ...___ M fg. and mining ___ Public u tilitie s --------Trade -------------------- ~ ___ Other nonfinancial Financial business ____ ___ Insurance companies .___ Other fin a n cia l_____ ___ Trust fu n d s --------------------Nonprofit associations __ ____ ...... P e rso n a l--------Foreign .. — — 32.2 28.8 5.3 1.7 15.9 5.9 3.4 1.3 2.1 0.4 3.5 63.9 ------- T o ta l----------------------------------___ 100.0 47.0 41.0 12.5 3.2 18.9 6.4 6.0 0.9 5.1 0.8 3.8 48.4 -------- 100.0 61.4 49.3 15.2 7.3 18.8 8.0 12.1 4.0 8.1 2.8 8.3 27.1 0.4 Nearly three-fourths of the demand deposits of all types of business firms are owned by incorporated con cerns. Among the nonfinancial businesses, incor porated firms held 7\c/< of the total on January 31, 1953, and in the financial business category they held 78% of the total. In each case the increase in deposit balances over the year was greater in the corporate forms of business than in the noncorporate forms. De mand deposits of financial noncorporate firms declined by nearly 6% over the year, while incorporated financial businesses increased their balances by over 11% . 100.0 * Total deposits o f Individuals, partnerships, and corporations held on December 31, 1945. Commercial banks are the traditional lenders of mon ey, and because of the organization of our banking sys tem the extension of new loans generally results in the creation of new deposit money. In addition, some new money is called for because the timing of salary, wage, rental, and many other types of payments follow longestablished patterns— weekly, semimonthly, monthly, etc. The timing of so many payments acts as a drag on the increasing use (velocity of turnover) of money, and new' money is needed to permit a higher level of exj>enditures for the economy. D E M A N D D E P O S IT O W N E R S H IP — F IF T H D IS T R IC T B Y S IZ E O F D E P O S IT A C C O U N T P E R C E N T A G E H E L D B Y P R IN C IP A L C L A SSE S O F O W N E R S January 31, 1953 Size o f Demand Deposit Accounts Type o f Holder Total business _________ __ .... Nonfinancial business .... M fg. and m in in g -----Public u tilitie s-----------Trade __________________ Other nonfinancial — Financial business In su ran ce____________ _ Other fin a n cial______ Trust fu n d s ---------------------- ..... Nonprofit associations — Personal ~ ___ Foreign ___________________ Increase in Deposit Balances Widespread Financial businesses held $38,000,000 more on de posit at Fifth District commercial banks on January 31, 1953 than on that date a year ago. This increase in their bank balances raised their proportion of the total of District demand deposits of all individuals, partner ships, and corporations slightly to 9 % , continuing a trend which has been experienced throughout the postwar years, not only in this District but in other parts of the country as well. The relatively more rapid growth in deposits of financial concerns reflects both sides of the ever-expanding consumer credit and individuals' liquid savings picture. Increased activity of sales finance and personal loan companies is accompanied by larger cash working l)alances, on the one hand, while the continuing high level of personal savings in the form of life in surance payments and the purchase of savings and loan shares leads to increased bank balances held by these tyi>es of businesses. T o t a l _____________________ _ $10,000$25,000 $25,000 and over 30.7 26.9 3.2 1.3 17.3 5.0 3.8 0.4 3.4 0.1 3.4 65.8 55.6 46.4 9.1 2.7 24.0 10.6 9.2 1.8 7.4 0.3 5.3 38.7 0.1 76.1 61.9 25.1 10.1 18.3 8.4 14.2 4.9 9.3 4.0 9.1 10.3 0.5 100.0 100.0 100.0 Less than $10,000 Individuals had considerably more money in their personal accounts at District commercial banks on the survey date in 1953 than a year ago, an increase of $88,000,000 raising their total balances to $2,066,000,000. The percentage increase over the year, however, was less than the average for all types of accounts so that personal deposits represented a smaller percentage of the total in 1953 than in 1952. These accounts have exj>erienced a moderate decline in relative importance since 1947 when they came to 41.2% of total demand deposits of individuals and business firms. This year they made up 38.3% of the total. J rr i n ♦f Federal Reserve Bank of Richmond April Call Report T \ e p o s ito r s represents a loss of reserve funds to other parts of the country. Member banks had to dispose of nearly $170 million of L\ S. Government securities over the period in order to meet the needs of their depositors. Reduction of $123 million in Treasury Bills held provided most of the funds realized from this source. The banks also reduced their holdings of all other classes of Federal securities except nonmarketable bonds. liquidated their demand accounts carried JL s with Fifth District member banks at a faster clip over the first four months of this year than in any of the other post World W ar II years, after having raised their balances to the highest level ever attained on De cember 31, 1952.* The combined statements of con dition provided by all the District's member banks as of April 20, 1953 reveal that withdrawals, occurring in all the principal categories of demand deposits, totaled $432 million since the first of the year. Individuals and business firms reduced their demand balances with member banks here by $271 million in this period, while bankers cut their accounts at other banks by $111 million. The summary balance sheet presented on this page reveals how the District's bankers met their customers' demands for funds. Approximately $39 million of the funds drawn out of demand accounts was redeposited in time deposits at the District's member banks. About $390 million represented a loss of cash or of balances carried with other banks as shown by a reduction of $222 million in the balances held in these accounts and of $167 million in U. S. Government securities. Balances that the District’s member banks have on deposit at other banks were reduced by $92 million from the first of the year to April 20. O f this loss, $17 million represented E A R N IN G A SSE T S F IF T H D IS T R IC T M E M B E R B A N K S (millions of dollars) Dec. 31, 1952 Loans and Discounts (Gross) 2,299.1 Commercial and industrial Iran* 827.7 Loans to farmers ___________ 54.6 Loans to brokers and dealers in secu rities_______________ 13.4 Other loans for purchasing and carrying securities ...... 102.5 Real estate loans: On farm la n d _____________ 47.3 On residential p ro p erty __ 416.2 On other properties______ 152.7 Instalment loans to individuals: Retail automobile p a p e r__ 150.9 Other retail p a p e r ________ 61.2 Repair and modernization loans .. ..................... 35.9 _____ _______ Cash loans 93.2 Single payment loans ______ 277.5 Loans to banks _____ __ 5.4 All other lo a n s _____________ 60.6 U . S . Government Direct Obli gations ____________________ 2,631.9 Treasury b ills ________________ 353.1 Treasury Certificates o f In debtedness _________________ 235.9 Treasury notes ................ ........ 472.9 Nonmarketable bonds________ 141.9 Other bonds maturing within 5 years o f call report date 829.0 Other bonds maturing in over 5 y e a rs____________________ 599.0 Other Securities ........ .... .... 428.7 .. ..... . SU M M A R Y B A L A N C E SH E E T F IF T H D IS T R IC T M E M B E R B A N K S December 31, 1952 and April 20, 1953 (millions o ! dollars) A pr. 20, 1958 Change 12 31 52 4. 20 53 A SSE T S: Reserves, cash and bank bal ances ----------------------------------Loans and discounts (incl. overdrafts and less reserves for lo s s e s )-------------------------U. S. Government securities Other securities--------------------A ll other a sse ts______________ 1,915.3 1.693.0 -2 2 2 .3 2,273.3 2,633.7 426.8 89.1 2,339.4 2.466.6 429.2 4 - 66.1 — 167.1 + 2.4 Total a sse ts__________________ 7.338.3 90.5.. 7.018.7 —319.6 L IA B IL IT IE S : — Demand d ep osits------------------5,323.6 Time d eposits________________ 1,472.9 B orrow ings__________________ 5.1 Other lia b ilitie s____________ 60.8 Capital accou n ts------------------475.9 Total liab ilities______________ N ote: 7,338.3 4,891.2 1,511.4 72.5 55.5 488.1 -4 3 2 .4 -r 38.5 + 67.4 5.3 7,018.7 -3 1 9 .6 Change 1 2/31/52 to 4 /2 0 /5 3 2,365.6 + 66.5 830.1 65.4 + + 2.4 10.8 15.9 •f 2.5 103.9 + 1.4 49.0 414.9 157.0 + — + 1.7 1.3 4.3 164.3 72.7 + + 13.4 11.5 37.1 97.3 283.5 10.9 63.6 + + + + + 1-2 4.1 6.0 5.5 3.0 2,464.9 230.6 — 167.0 -1 2 2 .5 200.4 465.9 143.4 — 35.5 — 7.0 + 1.5 826.2 — 2.8 598.3 431.0 — + 0.7 2.3 Although total assets of all member banks in the Dis trict were reduced by $320 million, bankers here met customers' demands for loans in a larger total amount than in the comparable period last year. The increase in total loans outstanding of $66 million was spread over nearly all categories of borrowers. Real estate loans 011 residential property was the only category showing net repayments. Instalment loans to individuals ac counted for nearly half the total loan increase : and about one-half of these instalment loans went for the purchase of automobiles. The sale of Government securities and the increase in loans altered somewhat the asset structure of District meml)er banks. Loans and discounts, which accounted for 4 3 ^ of total earning assets at the beginning of the year were raised to 4 5 '* , while Government securities dropped from 49'/< to 479r of the total. May not add to totals because o f rounding:. a reduction in reserve balances held with the Federal Reserve Bank of Richmond. Additional reserve funds were realized from borrowings from the Reserve Bank, so that the total of reserve funds lost in the period amounted to approximately $84 million. Since all the factors within the District which affect member bank reserves operated to increase them over this period, this ♦The article on page 6 discusses the increase over 1952 by principal classes o f owners. A pr. 20, 1953 •{ 8 y June 1953 Business Conditions and Prospects primarily responsible for the high level of activity in the Fifth District continued to show strength during April. The construction industry— one of the strong props in the District as well as in the na tional economy— continued to be very active in April, though largely in the nonresidential sector. Durable consumer goods sales, particularly in the passenger automobile field in March ran 40% ahead of a year ago and two states showed April gains of 19% and 4 6% . Although furniture store sales (adjusted) receded somewhat from the previous month, they were still moderately ahead of last year. Department store sales dropped moderately below April of last year but this was due to the shift of Easter. March and April combined were well above last year. Machinery and transportation industries continued to operate near peak levels. Seasonal letdowns have been noted in textile and apparel lines, but the slackening so far is nothing more than seasonal. Bituminous coal output in the District appears to be holding its own at a level 19% under a year ago as the effects of last year’s exports and the mild Winter fade into the background. Although employment is still at peak levels in the transportation equipment and machinery industries, the stimulative effects of defense expenditures in the Dis trict have been substantially reduced from a year ago. Defense contracts awarded to Fifth District firms in the first quarter 1953 were 33% under the same quarter a year ago. Federal defense budget cutbacks, which apl>ear likely, may well have moderately adverse effects on 1x>th construction and shipbuilding in this District. In the financial sector, District member bank loans continued their uptrend though the April gain was only 1% . The weekly reporting banks, however, showed business and real estate loans leveling off near their all-time peak while consumer loans continued their sharp rise. Time deposits of all member banks rose 0.6% during April while demand deposits, excluding interbank, declined 3 .7% . Borrowings from the Fed eral Reserve Bank continued heavy, and at the end of April were 85% above a month earlier and 156% ahead of last year. a c to r s F Construction Construction contract awards in April rose 32% above March (after seasonal correction) to a level 5% ahead of a year ago. Sharp changes occurred between March and April in all sectors except one- and twofamily houses. Relative to a year ago, however, all the nonresidential sectors showed gains, with commer cial structure awards up 8 3% , factory awards up 4 3 % , and public works and utilities awards up 7 2% . The substantial gain in public works and utilities was due to the awarding of two large contracts for dam construc tion near Roanoke Rapids, X . C. Although awards for apartments and hotels nearly doubled from March to April, they were still 60% under April last year. Awards for one- and two-family houses rose 7% more than seasonal from March to April but were 6% under a year ago. In the first four months of 1953 nonresidential con struction awards in the District were up 30%., with commercial up 113% , factory up 2 7% , education off , and other nonresidential up 4 8 % . In this same period residential construction awards were down 22.5% , with apartments and hotels down 52% , oneand two-familv houses down 9% and other residential down 6 5% . Awards for public works and utilities in the four months were up 39% from last year and total construction contract awards were up 5 % . Due to the economy drive, the Air Force has recently eliminated $146 million from its planned construction program. Among the projects dropped are the RaleighDurham Municipal Airport on which $19 million had teen scheduled for expenditure; the Seymour-Johnson Field at Goldsboro, N . C , $9.7 million; Mvrtle Beach, S. C. airport, $9.2 million. The Army and Navy are reworking their construction programs and it may be that some of their Fifth District projects will likewise be eliminated. Textiles April is usually an in-l)etween-season month in the cotton textile industry, and this year was no exception. Cotton consumption dropped 4 % more than seasonal from March but continued 10% higher than in April 1952. Weakness in contract prices around the middle of April turned into strength by the end of the month when a substantial amount of forward coverage was effected. Prices early in May had more than recovered previous losses. The industry is fairly well sold up on its third quarter production of goods but sales yarn backlogs have declined moderately. Yarn prices, how ever, have shown no weakness as a result, and with the industry in general facing a fairly optimistic outlook for the third quarter, the chances are yarn spinners will do fairly well in this period. Current strength in the industry can be attributed mainly to its attaining high style apparel preference over synthetic products— a situ ation the synthetics could not be expected to take sit ting down. In fact they are organizing to regain their previous position and the intensified competition will l>e interesting to say the least. In April the statistical picture in synthetics showed shipments of rayon and acetate yams 29% higher than a year ago, with filament yams up 36% and staple and tow up 12% . In the first four months of 1953 filament yarns were 31% ahead of similar months of 1952, while staple and tow shipments were down 9C‘<. i 9Y Federal Reserve Bank of Richmond Apparel manufacture in this District was at an alltime high level in March and continued during April ahead of a year ago but seasonal factors were respon sible for some letdown in April. The hosiery industry is at its period of seasonal reces sion though production is continuing well ahead of a year ago. Some indication of future price weakness in full-fashioned has appeared lately but it is not be lieved that this will become general. Trade Maintenance of current levels ot business activity both in the District and the nation obviously depends on con tinuing demand for goods by the consuming public— and this composite demand is reflected in the level of re tail trade. The durables segment of retail trade is cur rently at an inordinately high level, high both in histori cal perspective and in relation to consumer income. A substantial portion of these durable consumer goods sales are dependent upon consumer credit. Money is tight at the present time and it is an interesting question as to whether consumer credit will be available— and at an attractive price— to maintain the sales level which durable goods have recently attained. Thus far. District automobile sales have shown a sub F if t h stantial revival from last year, and though still well un der the August 1950 peak, they are only exceeded by eight individual months of 1950. Indications are that the automobile sales rise has continued in May and will carry through June. District furniture store sales ( adjusted ) dropped 6% from March to April but were a modest 1% ahead of April 1952. This is a good performance in view of a drop of 22% in residential construction contracts dur ing the first four months of the year. Furniture store inventories were down 1% (adjusted ) trom March and were 7'.'r higher than a year ago. Accounts receivable were up 17% from last year. Average daily department store sales (adjusted) in the District were down 6 c/c from March but remained 4% ahead of a year ago. Dollar sales in April, with out correction for Easter or working days, were down 1.8% from last year but the combined March-April sales were up 3.2%,. Department store inventories (ad justed) rose 4% from March to April and were 11% ahead of a year ago. Disregarding the individual month's changes, the general trend of inventories is about in line with that of sales and no particular con cern should l>e felt over inventories, providing the sales level continues on its upward trek. d is t r ic t b a n k in g Dist. of Columbia W ash in gto n ___ __ $1,034,086 Maryland Baltimore --------__ 1,395,668 25,484 Cum berland------__ 23,373 F red erick --------- ___ 38,958 Hagerstown ----- ___ North Carolina ___ 58,649 A sh eville _______ . 354,563 Charlotte 82,884 D urham -------------___ G reensboro------- ___124,218 18,666 K in sto n ________ ___ 180.762 Raleigh ........... ___ 45,673 Wilm ington ___ 15,044 W ils o n _________ 138,746 W inston-Salem .___ South Carolina 78,394 Charleston______ 166,545 C o lu m b ia _________ 111,555 Greenville ......— 62,366 Spartanburg — ___ Virginia 28,058 Charlottesville ___ Danville .. 36,997 48,840 L yn ch b u rg------- ___ 48,486 Newport News .___ 262,640 N orfolk . 32,191 Portsmouth ___ ___ 612,290 R ichm ond_________ 120,123 Roanoke _______ ___ W est Virginia 42,574 B lu efield _______ ___ 164,329 C h arlesto n ____ ___ 32,784 C larksburg------- ___ 69,957 H u n tin g to n ----- ___ 30,702 Parkersburg----- ___ District T o ta ls __ ___$5,485,605 t a t is t ic s 50 R E P O R T IN G M E M B E R B A N K S D E B IT S T O D E M A N D D E P O S IT A C C O U N T S* (000 omitted) April April 1952 1953 S (000 omitted) 4 Months 1953 4 Months 1952 $1,050,843 $ 4,128,643 3 4,350,101 1,281,970 26,893 22,491 34,686 5.530,620 101,384 92,514 147.156 4.971.069 98,847 £7,803 137,480 57,095 322,943 75,049 103,899 17,671 191,204 43,184 16.504 121,063 242,171 1,448,670 340.069 470,734 80,369 798,777 179,685 67,361 578.865 240,718 1,365,741 313,020 420,181 74,966 709,157 173,928 71,281 513.973 75,499 148,320 101,542 66,077 322,068 632,781 450,227 260,708 297,889 566,639 414,658 270,565 24,008 30.620 42,003 43,569 234,622 26.041 554,683 111,026 101,029 151,435 192,806 195,396 1,020,461 122,260 2,419,352 477,405 96,968 131.969 174,126 183,566 951,340 105,326 2,220,594 450,633 44,495 151,154 31,385 68,873 29,485 $5,148,897 175,878 658,112 138,517 285.802 117,290 $21,928,545 203,878 639.854 147,130 286.135 117,565 $20,787,100 Change in Amount From May 13, A pril 15, May 14, Items 1953 1953 1952 Total Loans ____________________ $1,398,530** 4 - 4,547 +201,561 Bus. & Agric______ __________ 646,811 4 - 3,150 4 - 76,909 Real Estate L o a n s___________ 259,272 312 4* 13,589 All Other L o a n s --------------------508,668 4*111*555 4* 1,040 Total Security H o ld in g s______ 1,684,711 U . S. Treasury B ills__________ 110,679 U . S. Treasury C ertificates__ 119,569 285,410 U . S . Treasury N o te s________ U . S . Treasury B o n d s______ 941,271 Other Bonds, Stocks & Secur. 227,782 Cash Items in Process o f Col. _ 312,562 Due From B a n k s_______________ 173,071* Currency and Coin — 81,955 Reserve with F . R . B a n k s_____ 562,650 Other A s s e ts ----------- ------------ -----58,872 Total A sse ts__________________ 4,272,351 — — — •f -444-f - 57,284 58,680 3.646 3,215 3,228 1,401 16.984 8,676 4,531 9,084 2,771 62,011 —140,535 — 153,867 — 50,435 1,071 4 - 64,699 4139 + 18,322 — 331 4 - 3,251 + 8,260 4* 3,762 4- 94,290 Total Demand D e p o sits---------- 3,226,500 Deposits o f In d ividu als_____ 2,440,701 Deposits o f U . S. Government 81,826 Deposits o f State & Local Gov. 191.308 Deposits o f B a n k s----------------450,062* Certified & Officers* Checks ~ 62,603 — 100,677 2,550 - 62,603 — 9,588 - 11,446 — 14,490 + 21,945 4 - 55,873 - 25,861 — 104 — 7,431 532 Total Time D e p o sits___________ 675,340 Deposits o f Individuals_____ 595.961 Other Time Deposits — ......... 79,379 Liabilities for Borrowed Money 56,700 43,244 A ll Other L ia b ilitie s___________ Capital A cco u n ts----------------------270,567 Total Liabilities ..... - ............ ~J$4,272,351 - f 2,936 4 - 2,670 4266 4 - 33,500 4146 4* 2,084 - 62,011 4> 4— 4+ 44- * N et figures, reciprocal balances being eliminated. *♦ Less losses for bad debts. < 10 )• 25,004 25,073 69 25,900 8,962 12,479 94,290 June 1953 F if t h d is t r ic t St a t is t ic a l SE L E C T E D IN D E X E S B U IL D IN G P E R M IT F IG U R E S A vg. Dally 1935-39=100— Seasonally Adjusted A pril 1953 % Chg.— A pr. 1953 M ar. 1953 215 490 Latest M o. Y r. Prev. A go. M o. +39 A pr. 1952 169 455 139 506r Automobile Registration* Bank Debits 486 Bituminous Coal Production 111 112 Construction Contracts _____ 533 405 i i Business Failures— N o ._____ 40 47 66 Cigarette Production ________ 224 243 233 ± xi Cotton Spindle Hours . 163 158 139 —3 Department Store S a le s**___ — 6 115 404 Electric Power Production___ 380 0 Manufacturing Employment* 158 151 194 181 Retail Furniture: N et Sales 183 ±5 394 —2 L ife Insurance Sales _________ 343 388 * N ot seasonally adjusted. ** 1947-1949=100. Back figures available on request. 122 t l — 19 + 5 -2 9 ii 111 t u. t l3 W H O LESALE TRADE L IN E S Auto supplies ( 8 ) ___ Electrical goods (4 ) Hardware ( 1 3 ) ______ Industrial supplies (9 ) Drugs and sundries (12) Dry goods (14) Groceries (48) Paper and products (5 ) Tobacco products (10) Miscellaneous (93) ____ District Totals (216) Sales in A pril 1953 Compared with M ar. 1953 Stocks on A pril 30, 1953 compared with A pr. 30, M ar. 31, 1953 1952 — 4 - 1 ±? i i — 7 — 2 —18 6 — —1 ± ! - ± i 7 I 2 *1 +27 +23 - 7 0 0 +11 4 Number o f reporting firms in parentheses. Source: Department o f Commerce. Maryland Baltimore -------$ 8,737,535 Cumberland __ 57,075 Frederick ____ 133,840 Hagerstown __ 107,000 Salisbury_____ 193,802 Metropolitan Areas Rich. Balt. W ash. — 4.0 — 7.6 Other D ist. Cities Totals — 1.4 — 0.5 — 1.8 Sales, 4 Mos. ending A pr. 30, *53 vs 4 M os. ending A p r. *52 + 1.4 Stocks, A pr. 30, *53 vs *52 _ + 1 4 .5 + 1.0 + 0.2 + 4.9 + 2.9 + 7.8 + 9.1 + 9.9 + 9.5 Outstanding Orders A pr. 30, *53 vs *52 ______ 5.7 + 1 6 .7 + 0.6 + 8.7 + 4.9 Open account receivables A p r . 1 collected in A p r. *53 ------31.7 48.1 44.0 38.3 41.7 14.0 W .V a . 15.4 13.6 D .C . 13.5 V a. N .C . S.C . — 1.4 —2.2 —2.6 + 3 .1 + 6 .4 Instalm ent receivables A p r. 1 collected in A pr. *53 ____ Md. Sales, A pr. *53 vs A p r. * 5 2 ____________________ —7.7 - 11.8 •I n April 1952 4 Months 1953 4 Months 1952 $ 3,901,135 30,550 97,406 147,207 111,937 $ 24,666,860 187,900 929,297 1,023,263 405,926 $ 18,663,765 93,650 1,054,763 507,798 393,661 Virginia D anville_______ Lynchburg ___ Newport News N orfolk Petersburg ___ Portsmouth __ Richmond ____ Roanoke _____ Stau nton _____ 243,453 327,015 173,853 1,329,054 354,500 191,955 1,176,795 1,159,256 98,110 1,677,614 127,725 178,858 1,683,144 113,875 280,135 1,736,929 709,017 83,010 1,766,029 1,180,916 741,487 7,311,560 706,900 962,165 5,298,368 3,780,756 476,435 2,459,634 712,251 4,918,448 5,784,174 622,799 4,892,907 6,413,890 3,565,802 523,835 W est Virginia Charleston ___ Clarksburg ___ Huntington __ 652,774 133,307 472,500 651,459 102,585 497,278 2,635,218 1,171,893 1,680,574 2,058,666 317,705 1,367,965 North Carolina A sh eville_____ 481,239 Charlotte_____ 2,912,957 Durham --------395,662 Greensboro ___ 1,085,653 H igh Point 499,675 Raleigh ............ 11,332,625 Rocky Mount _ 320,982 Salisbury ____ 117,290 W inston-Salem 1,013,160 238,548 1,916,393 432,647 518,229 284,610 883.086 420,648 730,960 886,229 1,026,453 12,102,510 2,475,432 4,445,983 1,793,483 14,350,670 2,129,757 567,371 2,842,132 1,236,886 8,719,087 3,343,671 2,474,633 990,665 6,516,633 1,300,180 923,037 3,592,431 South Carolina C h arlesto n ___ Columbia ____ Greenville ____ Spartanburg _ 109,269 459,335 2,344,833 183,345 1,847,979 2,237,517 2,243,200 326,143 476,035 2,365.316 4,053,160 610,769 1,013,867 771,090 777,250 82,455 D ist. of Columbia W ashington __ 4,862,967 5,531,434 20,213,119 16,767,912 District Totals „..$41,208,696 $27,069,430 $123,527,296 $107,722,128 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 changes) Sales, A p r. ’53 vs A pr. *5 2 ___ d a ta R E T A IL F U R N IT U R E SA L E S Percentage comparison o f sales in periods named with sales in same periods in 1952 ST A TE S A pril 1953 4 M os. 1953 Maryland ( 6 ) ------------------------------- + 2 5 +10 D ist. o f Col. ( 7 ) _________________ — 6 —10 Virginia ( 1 7 ) ____________________ 4 -2 + 2 W est Virginia ( 1 0 ) ______________+ 3 + 3 North Carolina ( 1 4 ) ____________ + 2 + 3 South Carolina ( 6 ) ----------------------+ 3 + 6 D istrict ( 6 0 ) ___________________ + 3 — 1 IN D IV ID U A L CITIES Baltimore, M d. ( 6 ) _______________+ 2 5 Washington, D . C. (7 ) ___________ — 6 Richmond, V a . (6 ) ________________ + 4 Charleston, W . V a. ( 3 ) __________ — 13 Number o f reporting firm s in parentheses. y +10 — 10 0 +20