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FEDERAL RESERVE B A N K OF R I C H M O N D



JUN E 1965

CHARACTERISTICS OF THE FIFTH DISTRICT LABOR FORCE
W h en classes end this month, thousands o f students

poses, a person without a paying jo b must be looking

throughout the Fifth District will enter the labor
fo r c e ; some permanently, others only tem porarily.
Som e housewives will quit jobs held during the school

for w ork or must fit at least one of the follow ing
descrip tion s: awaiting the results of recent applica­
tions for w o r k ; waiting for a scheduled return to

year and will leave the labor force to vacation with
the family. Numbers o f men and wom en not cu r­

w ork after a la y -o ff; waiting to start a new job
scheduled to begin within a m o n th ; deterred by

rently w orking in paid job s will enter the labor force

illness from actively seeking w o r k ; discouraged from
jo b hunting by the belief that no suitable w ork is

to seek paid employm ent or to help with the family
farm or business.
Since anyone old enough to w ork may join or de­
part from it at will, the labor force is a concept
fraught with statistical complications.

In fact, many

statisticians might happily devote their efforts to
other problem s were not labor force characteristics
of such great im portance to all who study, plan, or
administer matters o f econom ic and social policy.

locally available.

T he unem ployed and the employed

together make up the labor force.

P eople outside

the labor force obviously do a great deal o f important
w ork, but unpaid volunteer w ork, regardless of value,
does not bring the w orker into the labor force.
P o p u la tio n and L a b o r

F orce

C ivilia n

resident

population has grow n since 1960 at an average annual

Because of this importance, those responsible for

rate of 2 % in the Fifth District com pared to 1.5%

measuring the labor force are constantly pressed for

in the nation.

m ore detail. A lthough most states have been pub­
lishing labor force data since 1960 or earlier, many

has grow n about 1.8% per year com pared to 1.3%

local and regional details remain difficult to obtain.
D e fin itio n and S ig n ifica n ce

T h e civ ilia n

lab or

force includes all persons 14 years o f age and over
w ho are either em ployed or unem ployed according
to criteria developed by the Bureau of the Census
for use in m onthly surveys of the national labor force.
T hese national surveys are based on a gradually
changing sample of 35,000 households and are co n ­
ducted in calendar weeks which include the 12th day
of each month. In order to produce the desired re­

nationally.

Concurrently, the D istrict labor force

Thus the fraction of civilian population

outside the labor force continued to rise between 1960
and 1964, from about 6 1 % to 6 2 % in the District
and from 6 0 % to 6 1 % nationally.

CIV ILIAN RESIDENT POPULATION
Mil.

sults quickly and at relatively low cost, the national
sample has been designed to represent the nation as
a whole. T he various states estimate their ow n labor
force characteristics with form ulas based on unem­
ploym ent insurance data supplemented by additional
labor market inform ation.

T he local estimates are

designed to reflect the definitions used in the na­
tional survey.
A ccord in g to these definitions, em ployed persons
include all w ho did any w ork during the survey week
as paid employees or as owners of a business, a
professional practice, or a farm, or w ho worked at
least 15 hours as unpaid helpers in a family business
or on a family farm. A lso counted am ong the em­
ployed

are

all

persons

tem porarily

absent

from

regular jobs (w ith or without pay) because of ill­
ness, weather, vacations, labor-management disputes,
or for various other reasons.
T o be counted as unem ployed for statistical pur­

2


Md. Met. D.C.*
‘ Partially estimated.

Va.

W. Va.

N. C.

Sources: U. S. Department of Commerce, Bureau
of the Census and State Departments of Labor.

S. C.

T h e chart on page 2 shows the geographical dis­
tribution of F ifth District resident civilian population
and its labor force com ponents in 1960 and 1964. In
July of last year, the Fifth District civilian labor
force numbered some 6.7 million, about 3 8 % of the
civilian resident population. Nationally, the labor
force accounted for 3 9 % of civilian residents.
T he
proportion of the population in the labor force varied

T he decline in Fifth District unem ployment between
1960 and 1964 was considerable, especially in view
of the grow th that took place in the labor force as
a whole. T he number of people without job s dropped
from 337,000 or 5.0 % of the labor force in 1960 to
285.000 or 3 .9 % in 1964. District unemployment
rates were consistently below national levels, which
averaged 5.9 % from 1960 to 1963, then dropped to

somewhat am ong geographical subdivisions o f the

5.2 % in 1964.

District. The labor force accounted for 4 0 % of the
civilian population in N orth Carolina and 4 3 % in

variation within the region, from low s in the District
of Columbia and V irginia to highs that have persisted

m etropolitan W ashington but dropped as low as 3 3 %
in W est V irginia.

in W est V irgin ia despite marked improvement.
W est V irgin ia’ s jobless, which typically numbered

T he labor force data com piled for the District of
Columbia cover the entire W ashington M etropolitan

73.000 or 11.5% of the state’s labor force in 1960,
averaged 47,000 or 7 .9 % in 1964.

A rea which overlaps adjoining parts of V irginia and
M aryland.

Rates have continued to show wide

Growth Slowed in 1962

G ro w th o f the civ ilia n

Thus, the m id -1964 estimate of 6.7 m il­

population and labor force has maintained a fairly

lion in the Fifth District labor force involved a rough
adjustm ent of the figures to eliminate this double

constant pace since 1960 except for tem porarily
smaller gains in 1962. T he slower grow th rates in

counting.

T he resulting figure reflects an increase

the labor force that year, shown in the left-hand

o f some 450,000. or somewhat more than 7 % , since

chart on this page, are attributable to several factors,

1960.

which tended to retard grow th somewhat m ore na­

L abor force grow th since 1960 has displayed

considerable

geographical

variation :

up

9%

in

tionally than locally.

First, the armed forces were

M aryland, 8 % in Virginia, 7 % in N orth Carolina,

increased nationally relative to 1960-1961 levels by

and 4 % in South Carolina in contrast to a 7 % de­

about a quarter o f a million, some of w hom were

cline in W est V irginia and an

drawn from

18%

rise in the

burgeoning W ashington M etropolitan Area.




the civilian labor force.

Second, as

pointed out in the M ay 1963 M on th ly L abor R eview ,

LABOR FORCE A G E A N D SEX CHARACTERISTICS
% OF TOTAL C IV IL IA N EMPLOYMENT
Per Cent

1950
Source:

1960

1950

1960

U. S. Department of Commerce,
Bureau of the Census.

3

hand chart on page 3 has reversed itself since 1960

published by die United States Department of Labor,
Bureau of L abor Statistics, there was a general slow ­
ing dow n in the entry into the labor force of white
T hird, the

in the nation but may have continued in the Fifth
District. T he fraction of older people in the na­
tional labor force, especially those 45 and over, has

M anpow er Development and Training A ct became
law in M arch 1962 and began to provide retraining

recently remained fairly stable but is expected to
diminish quite sharply in the next ten or fifteen years.

opportunities which eventually drew a g ood number
of form erly unem ployed persons tem porarily out of

proportion of wom en in the labor force continues to

collar w orkers and m iddle-aged wom en.

W hereas age patterns have been changing, the
rise.

the labor force. A s the chart shows, these influences
were milder in the Fifth D istrict than in the nation,

A s the chart on page 3 shows, the 1960 D is­

trict labor force was one third female, a shift of about

and grow th soon resumed pre-1962 rates locally and

5 percentage points since 1950 when w om en com ­

nationally.

prised only 2 8 % of the w ork force.

More

Youthful

Labor

Force

B eca u se

of

the

sistently contained a slightly larger proportion of

scarcity of inform ation, District details must be in­
ferred from national trends and from limited local
data.

T he Fifth D is­

trict labor force com pared to the national has con ­
wom en, and the female com ponent during the 1950’s
grew slightly faster in the District than in the country

National figures show 2 1 % o f the 1964 labor

as a whole. Several o f the D istrict’s important
manufacturing industries, such as textiles, apparel,
and tobacco, em ploy a relatively large number of

force under the age of 25 com pared to 17% in 1960.
T his youthful com ponent has been the fastest grow in g
age group since 1960 in the national labor force.

wom en.

N o recent age groupings are available for the Fifth
D istrict’s labor force, but broad classes estimated for

Sources of Employm ent

M a n u fa c tu r in g is the

biggest single source of job s am ong the m ajor sectors
of the econom y, providing nearly one fourth of all

the population as a whole reveal a different pattern
of developm ent in the District com pared to the na­
tion. Since 1960, the population group under 18

civilian employment in the nation and over 2 2 % in

has increased only 7 .4 % in the District com pared to

the Fifth District.

9 .1 % nationally, and the 18-to-64 group rose 7 .0 % in
the District com pared to only 4 .9 % nationally. T he
dow nw ard trend in the number of youthful w orkers

is divided into its durable and nondurable goods com ­
ponents in the chart on this page, governm ent p ro­
vides more Fifth District job s than any other activity.

revealed in the Census data graphed in the right-

Trade ranks third in the District but second in the

Except for manufacturing, which

INDUSTRIAL DISTRIBUTION OF EMPLOYMENT
% OF TOTAL C IV IL IA N EMPLOYMENT
Fifth District

United States

Durable Goods
Nondurable

Goods

Government
Trade
Services and Misc.
Contract Construction
Transportation and Public
Utilities
Finance, Insurance,
and Real Estate
10
Sources:

15

U. S. Department of Labor and State Departments of Labor.


4


20

0
Per Cent

10

15

20

SEASO N A L V A R IA TIO N
FIFTH DISTRICT
Average M on th =100

Partially estimated.

Arm ed Forces A lth o u g h civ ilia n w o rk e rs p e r ­
form most of the productive services that generate
regional flow s of income, members o f the armed
forces are counted in the total labor force and fre ­
quently provide im portant purchasing pow er in
specific localities. In July 1964, servicem en and
w om en numbered 382,000 in the Fifth District,
equivalent to m ore than 5 % of the total labor force.
T he armed forces total reflected an increase o f about
40.000 since 1960, but the
practically unchanged.

percentage

remained

A b ou t 4 0 % of the D istrict’s resident service people
are located in V irginia, where they equal about 9 %
of the total labor force. O nly about a thousand are
stationed in W est V irginia. Between these extremes,
armed forces personnel amount to around 6 % of the
total labor force in South Carolina, 5 % in N orth
Carolina, and 4 % in Maryland.
Nationally the armed forces numbered about 2.7
million in 1964, up some 200,000 from the 1960
level, and represented 3 .5 % o f the total labor force
in both years.
Seasonal

nation as a whole.

T he fastest grow in g sector o f

D istrict employment since 1960 has been services
and miscellaneous enterprises.

Nationally, services

and governm ent showed about the same relative
grow th between 1960 and 1964 and led all other
sectors. Relative declines occurred at the national
level in both durable and nondurable good s manu­
facturing and in transportation, comm unications, and
public utilities. In the District, durable goods manu­
facturing maintained its standing as a source of jobs
while nondurables and the utilities group declined as
in the nation.
Since the bars on the chart represent persons em ­
ployed in nonfarm wage and salary job s expressed
as a percentage of total civilian employment, the
categories shown do not add to 100% . T he main
classes of employment not specified in the chart are
agricultural workers, domestic employees, and those
w h o are self-em ployed.

T he excluded groups ac­

Changes

E m p lo y m e n t

in

the

F ifth

District typically drops to a seasonal low in F ebru­
ary, rises to a peak in July, and begins to decline
in A ugust toward the next February low. T he
civilian labor force follow s much the same pattern.
Seasonal agricultural workers, students, and n on ­
farm workers seeking tem porary job s at certain
times during the year account for most of these
seasonal variations.
Seasonal swings are greater and m ore erratic in
unemployment than in the larger and m ore stable em ­
ployment series. A s shown on the chart on this page,
unemployment usually begins the year at a seasonal
high, but drops sharply as econom ic activity gains
spring momentum.

In June, students flood the jo b

market in hopes o f finding summer employm ent and,
if unsuccessful, keep on trying well into July.

In

A ugust, some w ho fail to find w ork begin dropping
out of the labor force, presumably resigned to other
activities, while others find farm jobs.
and

O ctober,

seasonal

w ork

in

In September

agriculture

and

students returning to school reduce unemployment

count for about one fourth of all civilian employm ent

to the lowest levels o f the year.

in the District com pared to less than one fifth in

w ork begins to dry up, joblessness starts to rise

the nation as a whole, with agricultural employm ent

tow ard the next seasonal high.

accounting for most o f the difference.

W h en seasonal farm

Em ploym ent

D uring the past winter, the high level in Fifth

outside the nonfarm wage and salary category is

District unem ployment occurred in February, when

generally declining in relative importance and has

312.000 were without jobs.

decreased much m ore regionally than nationally in

10 % , the lowest winter peak since District labor

the past few years.

force data first became available in 1960.




T his was, by m ore than

5

WW
There are 209 colleges, universities, and junior col* in the Fifth District states and the District of Columbia
today. Seventy-five are state-supported; 134 are priv or church related. Last fall enrollment in these schools
totaled approximately 403,000, a figure almost double'* of ten years ago. State-supported schools accounted
for about 6 0 % of District enrollment.
North Carolina, with 59 schools and 2 5 % of thejJP»s, leads the Fifth District in college enrollment. Vir­
ginia has 46 institutions of higher learning and 20% o« students. M aryland, with the largest university in the
District, has 43 schools and 2 1 % of the college populati Enrollment at the 25 institutions of higher learning in
South Carolina constitutes 10% of the District total, w another 10% are enrolled in West Virginia's 20 colleges
and universities. The District of Colum bia has 16 schc with 14% of a H
District students.
The number of first-year students entering the D ;,s schools has doubled in the last decade, reaching
97,000 last fall. This year approxim ately 48,000 de s wi,l be conferred in the Fifth District, compared with
only about 30,000 ten years ago.

ENROLLMENT IN INSTITUTIONS BY TYPE
FALL 1964

EARNED DEGREES CONFERRED4

ENROLLMENT IN PUBLIC A N D PRIVATE
INSTITUTIONS
C.

ENROLLMENT IN DISTRICT COLLEGES

Number

FALL

40,000 r

FALL 1964

Men
Technological Colleges

Women
Private Institutions
Public Institutions

Theological Colleges

j
■

Other Professional Colleges*

1 1

Two-Year Colleges

u

1

Teacher's Colleges
98%

71%

58%
66%

Liberal Arts
Colleges

Universities

01—
50

100
150
Number (Thous.)
*Schools of Art and Professional Colleges.

Source: U. S. Department of Health, Education, and Welfare.



S. C.

W. Va.

D. C.

Va.

Md.

N. C.

1954
Source:

Source:

U. S. Department of Health, Education, and
Welfare.

1958

I960

1962

1964

U. S. Department of Health, Education, and
Welfare.

I—

I____ l____ I____ l____ I____ I------ 1------ 1—

'54-'55
'57-'58
'60-'61
‘ Estimated for last three school years.
Source:

U. S. Department of Health,
Welfare.

'63-'6
Education, and

M EASURING THE BALANCE OF P A YM EN T S DEFICIT
Since 1958 the deficit in the United States balance

method of classification depends partly upon the pur­

of payments has been an increasingly serious problem ,

pose for which the net balance is com puted.

not only for this country but for foreign countries as

frequently included in the settlement category are:

well. T he annual deficits have significantly in­
fluenced dom estic and international econom ic policies,

(1 )
Changes in U . S. m onetary reserves. These
include changes in the gold stock, in holdings of con ­

and the period has been marked by lively discussion
of the problem both at hom e and abroad. T he dis­

vertible foreign currencies by U . S. monetary au­
thorities, and in the U . S. position at the Interna­

cussion has implied that continuing deficits are un­
desirable and should be eliminated, but there has been
a decided lack of agreement am ong various G overn ­

tional M onetary Fund.
(2 )
Changes in liquid liabilities to foreign o f­
ficial holders. These include foreign official hold­

ment departments, and am ong economists generally,
on how a deficit or surplus should be measured.

ings o f deposits in U . S. banks, U nited States T reas­
ury bills and other m oney market instruments, and

In A pril 1963, a Committee headed by E. M .
Bernstein, form er research director of the Interna­
tional M onetary Fund, was appointed by the U . S.

most U . S. Governm ent bonds and notes.
(3 )
Changes in liquid liabilities to foreign private
holders. T hese include the same types o f short-term

Budget D irector to review the adequacy of balance
of payments statistics and to evaluate various ways
of measuring surpluses or deficits in the balance of
payments. T he report of this Committee, recently

claims enumerated in ( 2 ) , but the holders are private
foreign individuals and businesses, foreign com ­
mercial banks (including foreign branches of U . S.
b an k s), and certain international organizations.

made public, recom m ended significant changes in the
method of com puting the net balance in our inter­

(4 )
Special Governm ent transactions. Included
are prepayments of debts by foreign governments,

national accounts.

advance payments on military exports, and sales of

W h a t is a Deficit or Surplus? It is so m e tim e s
said that the deficit is measured by the excess of
payments to foreigners over receipts from foreigners,
but this statement is not very meaningful. A double­
entry system is used in recording a nation’s inter­
national transactions, so each payments item is as­
sociated with a receipts item (o r com bination of
item s) of equal magnitude.
Consequently, aside
from problem s of obtaining complete and accurate

Items

nonmarketable, m edium -term , nonconvertible se­
curities to foreign governm ents.
Sales of non­
marketable, convertible securities are sometimes in­
cluded in this category, but they are show n as liquid
liabilities to foreign official holders in the accom pany­
ing table and chart.
The Balance on “ Regular Transactions”

The

table on page 9, based on prelim inary balance of

But equality in the tw o sides of the balance of

payments data fo r 1964, illustrates three ways of
measuring the net balance. T he balance on “ regular
types o f transactions,” the sum m ary figure most
frequently encountered, is considered by some to be

payments does not mean that there is no surplus

a rough measure of the long-term balance of pay­

statistical inform ation, total payments must equal
total receipts for any given period of time.

or deficit.

T o determine the net balance, the items

ments problem

that eventually must be resolved.

Thus, it treats as settlement items not only changes

in the balance of payments are divided into tw o
groups, with those in one group placed “ above the

in U . S. m onetary reserves and liquid U . S. lia­

line” and the remainder placed “ below the line” and

bilities to foreigners, but special Governm ent trans­

classified as “ financing” or “ settlement” items.

actions as well.

If

the receipts and payments listed above the line do

T he latter are undertaken primarily

for the purpose of preventing our reserves from being

not balance, a deficit or surplus exists which is equal

reduced as much as they w ould be from the normal

to the total o f the settlement items below the line.

play of market forces.

W ays

of Computing Deficit or Surplus

It is

possible, therefore, to com pute the net balance in a
nation’s international accounts in numerous ways, de­
pending upon which items are listed above the line
and which included in the settlement category.

8


T he

Thus, it is argued, to show

them above the line, and hence as reducing the deficit,
w ould understate the magnitude o f the deficit that
needs to be corrected.
The “ Liquidity” Balance
the figure

representing

A n o th e r v ie w is that

the balance

of

payments

surplus or deficit should measure changes in the
ability o f the United States monetary authorities to
defend the external value of the dollar. C onse­
quently, it is argued, it should measure changes in
our net liquidity position. But this leads to the
problem of deciding which o f our claims against
foreigners and which of our liabilities to foreigners
are liquid. A relatively m inor problem concerns

deposits ow ned by private foreigners, is treated as
a settlement item, but an outflow of short-term U . S.
capital is considered a regular transaction that in­
creases the deficit.
Critics maintain that this asymmetrical treatment
of liquid assets and liabilities is misleading and un­
justified. It implies that the motivations affecting

the classification of the special transactions described

for residents of foreign countries as for residents of

above.

the United States.

One approach includes all of these transac­

the behavior of private individuals are not the same
M oreover, it implies that each

tions above the line on the grounds that they all

dollar held by private foreigners requires as much

tend to reduce the effect of a deficit on our liquidity

reserve protection as each officially held dollar, de­

position.

Others would include all except the sale

spite the differing m otivations o f the tw o types o f

o f nonmarketable, medium -term, convertible United

holders and despite the necessity for transfer of the

States Government securities to foreign monetary
authorities, arguing that the convertible feature makes

privately held dollar claims to official holders before
they becom e reserve liabilities of the United States.

these bonds liquid liabilities.
A m ore serious problem , and one giving rise to

Finally, it is argued that none o f these measures
adequately express the international liquidity position

considerable controversy, concerns the treatment of

of the United States because the tremendous volum e

private liquid assets and liabilities. T he present
approach, and that illustrated in the “ liquidity”

of liquid assets held by United States residents may
well pose a greater threat to our international re­

balance, treats increases in our liquid liabilities to

serves than dollars held by foreigners.

private foreigners as reductions in our international

T hose w ho favor the asymmetrical treatment of

liquidity but does not consider increases in privately-

liquid assets and liabilities point out that our lia­

held United States claims against foreigners as in­

bilities consist largely of highly liquid bank deposits
and short-term Treasury obligations, while our

creases in liquidity. Thus, an inflow of foreign
short-term capital, such as an increase in U . S. bank

foreign assets are mainly in the form of much less

U N IT E D S T A T E S B A L A N C E O F P A Y M E N T S ,

1964'

Regular
Balance
Pay­
ments
Merchandise Trade
M ilitary Sales and Expenditures
Non-M ilitary Services
Remittances and Pensions

18.6
2.8
6.9
0.8

Receipts
25.2
0.8
10.5

Net
Balance

Settlement
Items

Liquidity
Balance
Net
Balance

Settlement
Items

Official
Settlements
Net
Balance

+ 6.6
-2 .0
+ 3.7
-0 .8

+ 6.6
-2 .0
+ 3.7
-0 .8

+ 6.6
-2 .0
+ 3.7
-0 .8

-4 .3
+ 0.6

-4 .3
+ 0.6

-4 .3
+ 0.6

+ 0.2
-4 .0
-2 .1
-0 .9

+ 0.2
-4 .0
-2 .1
-0 .9
+ 0.3

+ 0.2
-4 .0
-2 .1
-0 .9
+ 0.3
+ 1.5

Settlement
Items

U. S. Government Capital
G rants and Loans
Scheduled Repayments
Foreign G ov't Nonliquid Capital
Private Long-Term Capital
Private Short-Term Capital
Errors and Om issions
Special Governm snt Transactions
Liquid Liabilities to Private Foreigners

4.3
0.6
4.3
2.1
0.9

0.2
0.3

0.3
1.5

+ 0.3
+ 1.5

0.7

+ 0.7

+ 0.7

+ 0.7

0.4

+ 0.4

+ 0.4

+ 0.4

0.1

+ 0.1
-0 .2
+ 0.3

+ 0.1
-0 .2
+ 0.3

+ 0.1
-0 .2
+ 0.3

+ 1.5

Liquid Liabilities to Official Foreigners
Marketable Holdings
Nonm arketable Convertible U. S.
Treasury Securities
U. S. M onetary Reserves
Gold
Convertible Currencies
IMF G old Tranche Position
Total

0.2
0.3
40.9

40.9

-3 .0

+ 3.1

-2 .7

+ 2.8

-1 .2

+ 1.3

Figures may not balance because of rounding.

1Preliminary.



9

liquid bank loans, acceptances, and comm ercial
credits. M oreover, in many countries private hold­
ings of foreign assets, especially those o f com m ercial
banks, are very closely controlled by the central bank,
and thus differ very little from official holdings.

ments concepts

discussed.

T he

table

shows,

for

example, that in 1964 the deficit 011 regular trans­
actions was $3.1 billion, the liquidity balance $2.8
billion, and the official settlements balance $1.3 bil­
lion.

T he

Bernstein

Committee concept yields a

Finally, it is argued that as a reserve currency the

deficit of $1.5 billion.

dollar is used as money throughout the w orld and
that United States monetary authorities must co n ­
sider total foreign liquid claims as potential claims on

liquidity balance and the official settlements balance

our international reserves.
The “ Official Settlements” Balance If in flo w s
of foreign private capital in the form o f increases in
bank deposits or other liquid claims are treated the
same as outflow s of U . S. short-term capital, i.e., as
ordinary transactions above the line, the resulting
net balance is financed through changes in interna­
tional reserves and in foreign official holdings of
liquid claims on the U . S.
T he net balance thus
calculated is called the “ official settlements” balance.
T he

Bernstein

Committee recomm ended

an of-

fical settlements concept only slightly different from
that just described. T he Committee approach treats
advances on U . S. military exports as regular trans­
actions, but classifies nonconvertible U . S. G overn­
ment securities sold to foreign official m onetary in­
stitutions as settlement items.
Comparison of Various Deficits

T he a ccom p a n y­

ing chart and table show the differences in the size
of reported deficits using the various balance of pay­




T he difference between the

was unusually large in 1964, as foreign banks added
greatly to their U . S. assets.
T he chart, which permits a rough com parison of
the variously defined deficits over the 1958-1964
period, indicates that our international position has
changed in recent years.

F rom 1961 through 1964,

for example, the official settlements deficit averaged
only slightly more than half its average in the 19581960 period, and except for 1962, losses of monetary
reserves were small. Losses of reserves in 1965 have
been very large, however. Finally, special transac­
tions reduced the effects o f the deficits on our inter­
national liquidity position, but these declined sharply
in each of the last tw o years.
N o single figure can adequately show the inter­
national position o f the United States at any given
time. A n understanding of the com plex factors
affecting that position requires a thorough analysis of
all o f the m ajor sectors o f the balance of payments.
Nevertheless, in public reporting and discussion, the
tendency is to look upon one summary figure as the
measure of the deficit or surplus, and it is a matter
o f some im portance which measure is used.

THE FIFTH DISTRICT
PROSPECTIVE CROP PLANTINGS
T he D istrict’s total planted acreage o f principal
crops in 1965, according to current indications, will
be only around 1% below that in 1964 but the
smallest of record. T hou gh there probably will be
little difference in total crop acreage, some rather
dramatic shifts are indicated am ong the various
crops. This outlook for 1965 crop plantings is based
on the U . S. Department of A gricu ltu re’s M arch
survey of farm ers’ intended spring plantings, on the
new acreage-poundage program for flue-cured to ­
bacco, and on acreages seeded to winter wheat.

19.5% reduction in allotments came on the heels of
successive cuts o f 10% in 1964 and 5 % in 1963.
W ith the buildup in supplies continuing despite cuts
in acreage, the entire flue-cured tobacco program
seemed in jeopardy. Congress responded to this
situation by passing new legislation which restored
most of the reduction in acreage allotments and
placed the flue-cured support program on an acreagepoundage basis which features both acreage and
poundage controls.
The necessary m ajority o f flue-cured producers
voting in a special referendum approved the new
program on M ay 4.

A s a result, District flue-cured

N ew Flue-Cured Tobacco Controls
T he un­
certainty concerning the number of acres of flue-

tobacco allotments for 1965, including acreage re­
served for new farms, will total roughly 531,500 acres

cured tobacco grow ers would be permitted to harvest
was perhaps the biggest question faced by District

com pared

farm ers as they made plans fo r the current year’s
crop plantings. Supplies o f flue-cured were so large

with

the

original

1965

allotments

of

450,447 acres. T his is an 18% increase over the
earlier announced allotments for 1965 and is only

that 1965 flue-cured allotments last winter were cut

5 % below 1964 allotments.
Unlike the old program under which each farm er

19.5% from 1964, and announced acreage plans in
early M arch were about in line with this cut.
This

could market penalty free all the tobacco grow n on
his acreage allotment, the new program provides for




11

both an acreage allotment and a poundage quota for
each farm producing flue-cured. Each farm harvest­
ing within its acreage allotment can market 10%

District farmers in early M arch expected to plant
916,600 acres o f cotton this year, 4 % less than in
1964 and the smallest since 1958. Signup in the

m ore than the farm ’s poundage quota without penalty.
M arketings in excess o f the farm ’s quota will be

domestic cotton allotment program , first put into
effect for the 1964 crop, ended A pril 16 after being
extended beyond the original deadline twice. By

subtracted from its poundage quota the follow ing
year, however. A farm ’s poundage or marketing
quota is the product of its yield per acre and its
acreage allotment.

T he

yield

is based

upon the

average yield for the highest three years during the
period 1959-1963, but may not be less than 8 0 % nor
more than 120% of the average yield for those same
years of the com m unity in which the farm is located.
T he preliminary yield computation is then adjusted
by the application of a national yield factor necessary
to give the total crop desired.
The old acreage control program remains in effect
in 1965 for other types of tobaccos. A creage allot­
ments were cut 10% for hurley and 15% for M ary­
land tobaccos, but allotments for V irginia fire-cured
and sun-cured tobaccos were unchanged from 1964.
Planned acreages of these tobaccos are not quite in
line with announced allotments. District hurley p ro ­
ducers expressed intentions to reduce acreage 8 % ,
while M aryland farmers indicated they w ould plant
13% less acreage than a year earlier. O n the other
hand, despite unchanged allotments, V irginia firecured grow ers planned to increase acreage 3 % , and
sun-cured producers said they intended a 6 % cut.
More Soybean Acreage Expected

F a rm ers

do

taking part in this program , cotton grow ers agree to
reduce their farm ’s effective cotton allotment by
about 3 5 % . Thus the cut in cotton acreage from
last year may be somewhat greater than was indi­
cated by the M arch survey.
Less Grain and H ay Acreage T h e D is tr ic t’s
seeded acreage o f its m ost important food grain,
winter wheat, is 17% smaller than last year.

This

is in rather sharp contrast to a 4 % increase for the
nation. T he big reduction in the D istrict’s wheat
acreage is in line with the heavy signup by District
farmers in the wheat program . A s a result, more
than twice as much District wheat acreage is in the
program this year than last.
Total

1965 feed

grain acreage in the District

probably will be only 2 % below a year earlier but
10% less than average. Decreases of 10% in oats
and 5 % in sorghum s account for all of the intended
reduction. A creage diverted from feed grain p ro­
duction under the feed grain program is around onetenth larger than last year, how ever, and the cut
could be bigger. A s for hay, District farmers plan
to harvest slightly less acreage than last year and 4 %
less than the 1959-63 average.

not indicate in M arch the acreage of soybeans in­
tended for harvest as beans. A s farm ers made their
planting plans for 1965, however, the outlook for
beans was rather favorable. If grow ers’ announced
intentions to plant soybeans for all purposes are
realized and if the ratio of acreage harvested for beans

acreage of the various seasonal groups of Irish p o­

to the total planted acreage is about the same as last
year, the D istrict’s acreage harvested fo r beans will
be about 8 % larger than in 1964 and 2 8 % above the

District sweet potato grow ers this year planned
to increase acreage 1 % above a year ago. A n indi­

average for 1959-63.

This would be a new record

and w ould mark the nineteenth consecutive yearly
increase in soybean acreage.

Biggest increases over

a year ago are planned in the Carolinas, with a

Potatoes and Sweet Potatoes Indications in early
M arch called for slight changes from 1964 in the
tatoes. If realized, the anticipated changes will o ff­
set each other and total District Irish potato acreage
in 1965 will be about the same as last year.

cated 10% increase in N orth Carolina is almost o ff­
set by expected declines in other District states.
Conclusion

It sh ou ld be re m e m b e re d that these

estimates are based in large part upon intentions e x ­

15% larger acreage intended in South Carolina and

pressed in M arch.

a 10% increase indicated in N orth Carolina.

different since farm ers may well have altered their

Peanut Acreage Same,

Cotton Down

P eanu t

T he final outcom e could be much

plans before the planting season was over.

W eather

acreage allotments for 1965 are the same as in 1964,
and V irginia-C arolina producers are planning to

conditions, labor prospects, later decisions concerning

plant 299,000 acres, the same as last year.

may easily have affected their actions.

First o f­

Governm ent program s, and other econom ic factors

ficial estimate of the acreage to be harvested for nuts
will not be made until A ugust, but on the average
District grow ers usually harvest around 9 7 % of their
planted acreage of peanuts for this purpose.

12


PHOTO CREDIT
Official U. S. Navy Photograph.