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F E D E R A L R E S E R VE B A N K OF R I C H M O N D M A R C H 1959 A New Look In Business Finance The sweet potato, Mr. Webster says, is “a large, thick, sweet, and mealy tuberous root, which is cooked and eaten as a vegetable.” To the people of Williamston, a small Eastern North Carolina town, it’s much more than that. It’s a source of 110 jobs and weekly payrolls of $8,000 several months of the year and a means to a more profit able use of nearby farm land. H ere’s how it all came about. A few years ago Williamston—like so many other small towns— was scoring zero in its efforts to attract new in dustry. There were several small manufacturing plants, but jobs were scarce. Workers were leav ing town, and tobacco acreages had just been cut drastically. Townspeople, farmers—everyone— agreed that new industry was needed and needed badly. The trouble was that no one knew exactly what to do. Then the people decided to grab the bull by the horns and establish their own factory. The re sult was Martindale Foods, Incorporated—a suc cessful Eastern Carolina owned sweet potato canner whose market area already covers most of Southeastern United States. And there’s more to come. Already Martindale plans to double in size through the sale of new stock, the acquisition of another plant in adjoining Halifax County, and the addition of more vegetables to the company line. Almost everyone in the area has felt the beneficial effects of its operations. A typical success story? To a large degree it is, but the establishment of the Martindale factory involved an interesting new angle—a loan from the privately owned Business Development Cor poration of North Carolina. Conventional lenders were not equipped to provide the needed risk capi tal, so the project threatened to bog down from lack of funds before it got rolling. The Develop ment Corporation was contacted; it examined Martindale’s prospects carefully, liked them, and extended the credit necessary to launch the opera tions. W ithin a year, their faith in Martindale had been vindicated; the loan had been fully re paid with proceeds from a larger longer term loan from a conventional lender. DEVELOPMENT CREDIT CORPORATIONS The Martindale story typifies the work of state-wide 2 development credit corporations—the providing of risk capital to industrial firms that are unable to meet the standards for conventional long-term credit. State development corporations are en tirely privately owned and financed, but they have the quasi-public responsibility of fostering state economic development and are actively en couraged by the chartering states. Almost all aid is extended in the form of direct loans to firms, but some states also permit direct stock purchases, acquisition of plants for sale or lease to prospec tive customers, and loans to other development groups. State development credit corporations should not be confused with state development credit au thorities, local development corporations, or small business investment companies established under the provisions of the Small Business Investment Act of 1958. State-wide development credit au thorities— such as the Pennsylvania Industrial Development Authority—have much the same pur pose but are state authorities financed largely by state funds. Local development corporations— though similar in many respects—engage in more diverse development activities and confine their operations to a small part of the state. The small business investment companies will provide funds only for small businesses, will not necessarily oper ate over an entire state or within a single state, and may obtain a large part of their funds from the Small Business Administration. ORIGINS AND PRESENT STATUS State wide de velopment credit corporations are a New England innovation. Maine organized the first in 1949; New Plampshire authorized one a couple of years later; and Connecticut, Massachusetts, and Rhode Island followed suit in 1953. New York, Wiscon sin, Vermont, and North Carolina have since formed corporations. These nine are still the only active state-wide development credit corporations, but a number of other states are about ready to join the fold. Some have already chartered their corporations, others have passed enabling acts, and still more are devoting serious thought to the idea. The Fifth District, following North Carolina’s lead, is taking quite an active part in the move ment. South Carolina has already chartered a corporation and hopes to begin accepting loan ap plications by midyear. A bill to charter a West Virginia development corporation is now pending before the legislature, and Maryland is actively considering establishing a corporation. An ena bling bill was introduced in the Maryland legisla ture a few years ago, but no action was taken. OWNERSHIP AND CONTROL S to c k h o ld e rs of state-wide development corporations typically in clude not only individuals but also businesses and other organizations interested in state economic development. The average corporation has some 313 stockholders and $311,000 in outstanding com mon stock, but there are large variations among states. The Wisconsin corporation, for example, has around 110 stockholders and has issued only $25,000 worth of stock. North Carolina’s develop ment corporation—the largest of the corporations in terms of outstanding capital stock—has 1,860 stockholders and has sold all its authorized capital stock, $1,000,000. The South Carolina _ corporatlOll proposes to issue $250,000 worth of stock. O ne b o rro w e r fro m The Busin ess D e velo pm en t C o rp o ratio n of N orth C a ro lin a m a n u fa c tu re s this b e a u tifu l ceram ic tile . O f f ic ia ls o f sta te business d eve lo p m e n t co rp o ratio n s fre q u e n tly discuss p la n t lo catio n a n d o p e ra tio n s w ith th e ir b o rro w in g cu sto m ers. 3 Development corporations borrow substantial additional funds from commercial banks, mutual savings banks, savings and loan associations, in surance companies, and other financial institutions known as “members.” These lenders pledge to extend the corporations a certain amount of credit —often at a preferential rate—and frequently donate their services in credit investigations of loan applicants. Usually development corpora tions’ borrowings are limited to 8-10 times their capital and a single member’s participation to about 2 c/c of its capital and surplus. The North Carolina stipulations are fairly typi cal. The Development Corporation is granted the right to borrow up to 10 times its outstandingcapital stock at an interest rate not less than *4 ot" 1°/c above the then prevailing prime rate on un secured commercial loans. Limits on member participation are : commercial banks, 2 c/c of own capital and surplus ; building and loan associations, J/2 of 1% of outstanding loans; fire insurance com panies, .V /c of assets; other stock insurance com panies, 1c/o of capital and unassigned surplus; and other mutual insurance companies, 1c/o of un assigned surplus. Control of state-wide development credit cor porations rests in the hands of a board of directors elected by both members and stockholders. Dayto-day operations—like those of any corporation —are conducted by a slate of appointed officials. As a rule, member corporations elect around twothirds of the board members, the percentage vary ing from state to state. Stockholders have one vote per share ; members typically have one vote plus an additional vote for loan limits in excess of a specified figure. The North Carolina corporation has 21 direc tors, two-thirds of whom are elected by member institutions. Stockholders are allowed one vote per share, and members have one vote for each $1,000 in their loan limits. MEMBER PARTICIPATION The corporations have had reasonably good success in encouraging par ticipation by member institutions—by far their largest source of funds. At the end of 1958, the nine active corporations had 684 institutional mem bers—an average of 76 per state. Five hundred ten of these were commercial banks, 99 were sav ings banks, 30 were insurance companies, and 45 S ta te -w id e d eve lo p m e n t cre d it co rp o ratio n s a re ch arte re d un der sp e cial le g isla tiv e acts o f the sta te s in w h ich they a re lo cated . 4 were miscellaneous financial institutions. In all they had pledged to lend upon request $35.2 mil lion, of which the corporations had called $15.2 million. Outstanding stock at the time totaled $2.8 million. The Business Development Credit Corporation of North Carolina now has 139 members with aggregate loan limits of $4,465,000. Of this total, $2,444,000 is pledged by 92 commercial banks, $1,003,000 by 12 life insurance companies, and $1,018,000 by 35 savings and loan associations. The Corporation has already called $1,232,000 of the $4,465,000. THE CUSTOMERS Borrowers from state develop ment credit corporations are firms that are unable to obtain conventional financing. They must be considered good moral risks and must show reasonable promise but are not compelled to have as much capital or collateral as most lenders re quire. Some are large; some are sm all; almost all are manufacturers. A few are entirely new firms, others are moving in from out of state or establishing a branch, and the rest are state firms attempting to expand or improve operations. Typical of these are the following companies that have obtained credit at The Business Develop ment Corporation of North Carolina: manufac turers of industrial machinery and equipment, ceramic tile, industrial and medical gases, special metals and alloys, paper products, textiles, wood products ; owners of grain storage facilities; and processors of poultry, soybeans, vegetables, meat and seafood, and dehydrated alfalfa. Loans have varied in size from $2,000 to $400,000. TYPES OF LOANS Customers o f development credit corporations borrow for a variety of pur poses. Around 69% of the loans of the North Carolina corporation have been for the construc tion of new or expanded plants, 17 c/o have fi nanced machinery and equipment, 12 c/c have sup plied working capital, and 2 c/c have provided funds for refinancing existing indebtedness. Loan terms vary considerably to meet the needs of the individual borrower. North Carolina loans have averaged $83,000, about typical of those in other states. Ordinarily, loans are secured by first and second mortgages on real estate, chattel mortgages, assignment of accounts receivable and life insurance, securities, and various other assets. Some, however, are not secured. Loans generally run for 5 years or more and are often repayable in monthly or quarterly instalments. Interest rates vary but usually are in the neighborhood of 6 -7 °/o , plus in some cases certain additional service costs the first year. OPERATING EXPERIENCE Development c re d it corporations so far have had quite good loan ex perience, to a large degree because of their careful screening of loan applications. By December 31 last year, they had made 398 loans totaling $28.9 million and had incurred only 5 losses—a mere $94,015. Maine, New Hampshire, and Connecti cut were the only states that had experienced any losses at all. None of the North Carolina loans even have delinquent instalments at the present time. Aggregate loans outstanding at the end of last year were $19.1 million, several times the level a few years ago when only a small number of cor porations were in operation. Massachusetts had the largest volume of loans—$7.0 million—quite a bit ahead of the second place New York’s $5.9 million. North Carolina—with over $2 million— fell third in line. Development corporations would undoubtedly be larger if they did not place economic development ahead of profits. They do not compete with other lenders, they make every effort to place loans with conventional financial institutions so as to conserve corporation funds, and they encourage borrowers to shift financing to other lenders once the opera tion becomes a suitable risk for such institutions. Most development corporations—despite the low interest rates they charge—have been able to report profits in recent years as a result of efficient operations, low borrowing rates, free credit assist ance from members, and in some cases state tax remission. The North Carolina corporation, for example, has been in the black every year since it began operations. The corporations so far have added nearly all profits to loss reserves, and no corporation has yet paid a dividend. Because of the public service nature of their operations, many authorities doubt that dividends will ever be paid. Most stock holders expect none. THE FUTURE The growth in the number of devel opment credit corporations seems assured for some time. Most states have considered the idea, and several corporations will probably launch opera tions before long. It seems less likely that exist ing corporations will expand much because of the increasing difficulty in selling stock. Although all are quite small, some are now near their loan limits so that further growth will require the sale of additional stock, transferring “seasoned” loans to conventional lenders, increasing permissible member contributions, or going “public” by bor rowing from the Small Business Administration. Other major questions concerning their future include the effect of small business investment com panies upon their operations, their abilities to withstand a protracted business decline should one develop, and the extent to which they encounter competition from Government lending agencies. 5 HOUSING AIDS RECOVERY HOUSING STARTS The number of houses started began an expansion in April 1958 which reached a four-year high by year-end. Demand for new houses strengthened just as the recession reached bottom and provided a timely contribution to the gathering forces of recovery. Home construction thus reaffirmed its role as a counteracting force to economic decline, having cushioned recession and abetted recovery in 1948-50 and 1953-55. V a lu e o f m o rtg ag e s o f $ 2 0 ,0 0 0 or less record ed per month fro m A u g u st 1957 th ro u g h O cto b e r 1958 $ B illio n s 1957 1958 20 19 18 17 . 1 L .......J------ S— 1 1 1 1 — i . ____1----- 1----- 1----- 1----- 1----- 1----- 1----- M on th ly v a lu e o f n e w re s id e n tia l co n stru ctio n , A u g u st 1 958, in se a s o n a lly ad ju ste d a n n u a l rate s 195 7 —D ecem ber Spending fo r re sid e n tia l b u ild in g in th ree recession s is sh o w n in m onthly p erce n tag e ch a n g e s, a ccu m u late d fro m the b eg in n in g of each recession M illio n s 1.4 1.3 1.2 1.1 1.0 N u m b er o f n e w houses starte d each m onth from A u g u st 1957 thro u gh D ecem b er 1 958, e xp re sse d as s e a s o n a lly a d ju ste d a n n u a l rate Housing sta rts in th re e p o s tw a r recession s a re sh o w n in these m o n th ly p erce n tag e ch a n g e s, a ccu m u la te d fro m the b eg in n in g o f e ach recession MORTGAGE RECORDINGS Investors found mort gages to be increasingly attractive outlets for their funds in late 1957 and early 1958 as inter est rates on corporate and Government securities declined. Greater availability of mortgage credit proved vital in accelerating home-building activ ity in 1958, as it had in the two earlier postwar recessions. RESIDENTIAL CONSTRUCTION E X P E N D I T U R E S Spending for new residential construction put more money to work in the economy in 1958 than in any prior year except 1955. Expendi tures on home construction began to expand last summer and contributed to recovery from the 1957-58 recession. In the two earlier periods they began to increase as recession progressed, thus providing an offset to declining activity. Cotton Dethroned In District The story of Fifth District cotton is a story of change—long-run growth and more recent de cline. Last year’s crop was the smallest since 1878. Yields per acre were at an all-time high, but the acreage from which the crop was produced was the smallest since the records began in 1866. AN EARLY CROP Cotton was first grown in the Fifth District by the Jamestown colonists, and from their experimental plantings, cultivation of the crop gradually moved southward into the Carolinas. Despite this early beginning, cotton was grown primarily for home use throughout the colonial period and did not become a major crop until after the Revolutionary War. Production then increased in response to rising demand. The English invention of power weav ing and spinning machinery had created a growing demand for raw cotton from England’s textile mills, and the American invention of the cotton gin, making possible faster separation of the seed from the lint, made it easier to supply this new demand with American cotton. Tobacco, prin cipal District crop of the colonial period, had begun to decline because the soil had become exhausted from the constant planting of tobacco. Indigo and rice, other important colonial crops, had become increasingly unprofitable. The labor which had been used in growing these crops could be profit ably used in producing cotton, and farmers eagerly seized the chance to produce the new crop. S u p p lie s of cotton g re a te r th an d em an d h a v e resu lted in la rg e stocks a g a in s t w h ic h p rice -su p p o rt lo an s h a v e been m ad e . 8 As cotton production expanded, the cottongrowing area became a one-crop economy devoted almost exclusively to the production of cotton as a source of income. The expansion was tem porarily interrupted by the W ar Between the States, which disrupted production, freed the slave labor force, and brought in its wake the break down of the plantation way of life. The needs of cotton production led to the development of the farm tenure system. The former slaves became sharecroppers providing the labor, the landowners furnished the land, and the merchants advanced the credit for supplies. Production of the fiber increased under this new farming organization, and it became so important to the economy as to gain the title of “King Cot ton” in the 1880’s. It reigned supreme for sever al decades, and it was during the time cotton was king that production in the Fifth District hit an all-time high at 2.8 million bales. This was in 1911. District acreage planted to cotton continued to expand, however, until 1918. That year the 4.3 million acres of cotton harvested represented slightly more than one-fifth of total cropland har vested. During cotton’s monarchy, farmers in Virginia and the Carolinas produced one of every five bales of cotton grown in the nation. The num ber of cotton farmers hit a high of nearly 350,000 in 1924, when 44 c/c of all farmers in the District were growing cotton. District farmers that year received nearly one-third of their income from the sale of cotton and cottonseed. COTTON PRODUCTION DECLINES A succession of events has led to a steady downtrend in the District’s production of cotton since the peak of 1911. The first was the boll weevil which invaded the southern tip of South Carolina in 1917 and gradually migrated northward to Virginia’s cot ton area by 1922. Heaviest boll weevil damage occurred in 1921 and 1922, when there was severe infestation in South Carolina. Per-acre yields in that state dropped nearly one-half in 1921 an:l another one-sixth the following year. These low yields, coupled with low cotton prices, forced many farmers into the production of food and feed crops and other alternative enterprises, with a sharp de cline in cotton acreage. District production in 1922 was nearly 1.2 million bales below the 1920 crop. In the Great Depression of the early 1930’s market prices plummeted. Lower use of fertilizer caused per-acre yields to drop sharply. Cotton returns were so low that many farmers were again forced into the production of food and feed crops. By 1932 District cotton acreage was nearly 20% below the 1929 level. Despite the events which had brought tem porary cutbacks in both District and national pro duction, a cotton surplus had developed prior to the beginning of the depression in 1929. This led by 1933 to the establishment of the first of many government programs designed to reduce acreage and control production. These programs have taken a variety of forms. Farmers were paid in 1933 to plow up cotton that was already growing. A crop control law enacted in 1938 limited the acreage a farmer could plant in cotton. This legislation, which established a system of acreage allotments, marketing quotas, and penalties for noncompliance, was in effect from 1938 through 1943 and again in 1950. These same control measures were reimposed in 1954 and have been in operation each year since. The Soil Bank program made still further at tempts to reduce cotton acreage in 1956, 1957, and 1958 by paying farmers for each acre of their cot ton allotment not planted. Even before the Soil Bank era, however, many District farmers underplanted their allotments each year. This resulted in further reductions in the acreage allotted to each District state in subsequent years. COSTS AND MARKETS District farmers’ average yields and returns from cotton are low compared with those of western growers. This factor has been important in the decrease in cotton produc tion in this area. Comparison of changes from 1947-49 to 1957 in yields, costs, and returns on cotton farms in the southern Piedmont and those on irrigated cotton farms in the High Plains of Texas indicate that cost advantages there may be increasing. Crop yields per acre have risen 13% on southern Pied mont farms since 1947-49, compared with a 31%, rise on the irrigated farms in the Texas High Plains. Total cost per unit of production has jumped 15% here as against a 7% increase in the Texas area. An \ \ c/ ( gain in net income on south ern Piedmont cotton farms about equals the 12% increase on the irrigated Texas farms, but the re turn per hour of work to the Piedmont farmer and his family is presently 33 cents compared with $3.07 to the Texas farm family. Loss of markets to competitors has also been significant in the decline of home-grown cotton. Foreign growers are now producing around threefourths of the world’s cotton crop contrasted with 30% in the 1890’s, and they are offering great quantities of cotton on world markets. As a re sult, this nation’s share of the world cotton mar ket has declined from about three-fifths of the total during the 1920’s to little more than one-third in the 1950’s. American cotton also faces keen competition from paper and synthetic fibers, products which now are found in many uses for which cotton alone was once considered uniquely suitable. Cotton’s biggest loss has been the industrial market, espeLa rg e a c re a g e s , irrig a tio n , an d m e c h a n iza tio n m ake cotton g ro w in g in the W e st much m ore p ro fita b le th a n in the D istrict. 9 The sh are of the n a tio n 's cot ton g ro w n in the D istrict h as fo llo w e d a ste a d y dow n trend o ve r fo u r d ecad es. dally the market for tire cord and bags. It has also lost ground relatively in the home furnishings market. Because of its losses to man-made fibers, cotton’s share of the nation’s mill consumption of all fibers has fallen from around 85% in the 1920’s to two-thirds of the total today. RESULTS OF THE DECLINE Since cotton was de throned, its position in the District’s economy has changed considerably. Last year’s cotton crop was one-fifth that of the peak year’s production in 1911. Cotton acreage last year was one-seventh the highest ever harvested and represented just 4% of all cropland harvested. District farmers in 1958 produced only one of every twenty bales of cotton grown in the nation, and the small cotton crops of the past couple of years have contributed little more than 5 cents to each cash dollar of the District’s farm income stream. In 1954—year of the most recent count—cotton was grown by only one-fourth of all farmers in the District, and this proportion has likely fallen since then. W ith the decline of cotton, the District has gradually revamped its economy. Permanent pastures and hay crops are now growing on many of the acres once planted to cotton. The production of beef and dairy cattle has followed this change to grassland farming. Small grains and corn are now being grown on other fields formerly devoted to the white fiber, and other types of livestock-— hogs, broilers, laying flocks, and turkeys—have come with the growing of these grains. Pine trees stand tall on many acres once white with cotton. 10 Cotton’s decline has brought with it a decrease in the number of farmers. And it has helped bring about an even greater drop in the number of tenant farmers. Industrial plants in fields that once produced cotton now provide off-farm work for many part-time farmers and full-time employ ment to many who have left the farms. COTTON FIGHTS BACK The demand for cotton remains large. Compared with the newer syn thetics, cotton fabrics have many inherent ad vantages that make them still much desired by the consumer. They are said to be cooler, more ab sorbent, and to take dye better than competing fabrics. In addition, textile research has developed new processing methods which overcome some of cot ton’s inherent disadvantages. W ith these new finishes have come wrinkle-shed cottons and washand-wear cottons that require little or no ironing and have many stay-clean features. Still another development has brought the combining of cotton with the newer man-made fibers to produce the blended fabrics that have the advantages of both types of fibers. As cotton looks to the future, it can take hope from the fact that during the past ten years cot ton’s proportionate use in the apparel market has increased, thus regaining some of the ground it had lost to the man-made fibers. This is especialIv true in the manufacture of women’s and misses’ wearing apparel. The Fifth District Recent reports make it clear that the Fifth Dis trict economy has continued to expand its opera tions. Seasonally adjusted nonfarm employment reversed its December decline in January to show increases in virtually all major categories; the total was up 0 .6 c/c —a sizable month-to-month gain. Manufacturing man-hours, compounded of employment and hours worked in the midmonth week, rang up similarly broad and even larger in creases, particularly in the industries producing durable goods. The indications of these comprehensive meas ures were confirmed by detailed information on individual lines of endeavor. Textiles have passed through a state of some market confusion arising from wage increases and expectations of lower priced cotton; demand pressures have apparently resolved the issue, and recently orders have been written as far ahead as for the fourth quarter’s output. The furniture industry reports January and February as months of excellent sales, and cigarette manufacturers produced at a seasonally adjusted record high in December, which was probably exceeded in January. BITUMINOUS COAL The chief exception to the general upward movement was the coal industry. Through the first half of February, mine produc tion continued at a rate above the recession lows of a year ago but still considerably below the highs of recent years. Current rates of steel pro duction and of other industrial activity are ex pected to produce an improved demand for the fuel, but it has not yet been reflected in coal output. Competition from residual fuel oils has led to recent price cuts on coal for eastern utilities. Other coal prices show stability or upward move ment, some having been marked up in January and others—particularly coal for metallurgical uses—reported as having increases in sight. An interesting development was the recent pro posal by eastern railways to give a New York City utility a preferential hauling rate on coal in excess of 3,000,000 tons per year if total purchases amounted to at least 5,500,000 tons. The com pany’s coal burning plants call for 3,000,000 tons per year, it is understood, and the additional 2,500,000 tons represent the fuel demand for which coal competes with fuel oil. The 50 cents per ton reduction in freight on this tonnage would improve coal’s competitive position—and, it is hoped, keep the hauling business for the railroads. RAILROAD EARNINGS The principal coal-haul ing railroads of the District (Chesapeake and Ohio, Norfolk and Western, and V irginian) showed 1958 operating revenues off about onefifth from the year before. This was due pri marily to a decline of one-third in foreign coal shipments through District ports during the year. The Atlantic Coast Line and Seaboard Air Line, still looking to a possible merger, showed decreases in operating revenues of 8% and 6 c/c respectively. The Southern had a better year, relatively speaking, than other major District roads with operating revenues off just 4 °/o. TEXTILES Early last month mills throughout the textile industry announced wage increases. The initial reaction in cotton textile markets was one of considerable confusion as buyers and sellers 11 alike hesitated to do business in the face of much price uncertainty. Since then, however, much of the confusion and apparently all of the hesitation have been removed. The first development was mill declarations of in tentions of passing along at least part of the in crease in wage costs by raising prices on a wide variety of fabrics. These increases held firm as demand remained strong for immediate and near by deliveries. The next development was an in creasing volume of orders for delivery in the second quarter. Still, some buyers continued to bet that prices would weaken under natural market forces—the second quarter is normally a slow sea son in cotton textile mill sales—or under the im pact of increased output if mills went from the five-day workweek to a six-day week. Confidence in lower prices, however, appears to have waned, as the latest development is the re ceipt of orders for third and fourth quarter de liveries. Volume so far has not been heavy, but interest and inquiries are accumulating. This is a significant development since it is a sharp break with the policy and practice, long adhered to, of buyers’ restricting their orders to cover only im mediate and nearby needs. As orders have mounted for second quarter shipment and as buyers have reached out to the second half of the year, supply for nearby delivery has become tight for a number of fabrics. This, in turn, has strengthened indications of further higher prices, particularly for a number of print cloths. The price increases that have been made on a wide range of cotton gray goods have spread also to finished fabrics, to cotton yarns, and to synthetic cloth. Knitting mills continue very busy with every indication that this condition will hold through the first half. Producers of women’s seamless hosiery report fairly heavy order backlogs. The demand for full-fashioned hosiery, following a strengthen ing in January, has settled down at a lower but still relatively satisfactory level. FARM INCOME Bumper crop yields, continued high livestock production, and improved prices combined to bring about an 8% gain in District farmers’ cash returns from marketings during 1958. Equal percentage increases in receipts from livestock and crop marketings joined forces to record the $156 million upturn. And for the sec ond straight year, farmers received 44 cents of each cash dollar from the sale of livestock products. Cash receipts from farm marketings rose in all 12 District states, but the biggest gain— 14%—oc curred in North Carolina, hardest hit by the de cline in 1957. The Tar Heel state’s increase, in fact, accounted for more than three-fourths of the total increase realized in the District. A 32% jump in broiler income and improvement in income from tobacco—chief of the state’s cash crops—were im portant factors in the upturn. CONSTRUCTION January construction contract awards in the District reversed the 5-month de cline that had closed out 1958 and showed a twothirds gain over December after seasonal adjust ment. Most of the improvement came in public works and utilities w'hich rose to an all-time high. Nonresidential building awards also rose substan tially over the December level, while residential awards declined 7%. DEPARTMENT STORE SALES Early reports of February department store sales indicate that it was another month of high-level activity. If pre liminary figures are confirmed, the three months, December, January, and February, will show a record seasonally adjusted level of sales for three consecutive months. In fact, their average will be higher than any single month previous to this period except for the peak total of August 1958. BANKING Business loan demand perked up markedly in February after a slow January start. There were a few soft spots as always, but in creases for important types of business loans in the first three weeks of February contrasted with declines during the like weeks of most recent years. Other types of loans showed mixed trends. Real estate loans lost at least temporarily their claim to being the boomiest part of the loan picture, as out standings dipped fairly sharply the first three weeks of February. Consumer loans also slipped downward, but the drop was much less than ordi narily occurs this time of the year. Other kinds of loans—loans to banks and agricultural and security loans—showed less than their normal February vigor. P H O T O C R E D IT S C o v e r—The S alem Com pany, In co rp o ra te d 3 . M id- S tate Tile C o m p a n y , In c. • S e lm a S o y b e a n C o rp o ra tion 4 . Richm ond N e w s p a p e rs , tio n a l Cotton C o u n cil o f A m e ric a . In c. 8. & 9. N a
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