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FEDERAL RESERVE BANK OF RICHMOND
RICHM ON D 13, VIRGINIA

MAY 31, 194B

Business Conditions
M P L O Y M E N T levels in the Fifth District, after
allowance for seasonal fluctuations and strikes, have
shown little aggregate change since January. Tobacco
rehandling has declined seasonally, leaving a considerable unemployment in numerous areas that will largely
remain until a new crop is again being processed. Food
industries continued to employ fewer people in March
where ordinarily February is the seasonal low point,
Construction employment fell more than seasonally to
February and had not moved back in stride until May.
The volume of construction work under way is sufficient
to expand construction employment to a new seasonal
peak this summer, but this employment will not be as
broadly distributed throughout the District this year as
last year.
Poor logging conditions lowered lumber employment
in the Carolinas, but did not materially affect workers in
other states. Furniture employment has leveled off
around 17 thousand in Virginia but had been edging upward to over 25 thousand in North Carolina through
March. However, some plants manufacturing case goods
at the low end of the price scale are reported to be working on a three-day week basis because of a lack of demand
resulting from too little price spread between low-end
and quality products. It is said these firms will bring out
a new line o f products in July priced at greater different
tials with respect to the quality goods.
Employment at shipyards in Maryland has risen sharply since the termination of a strike last summer. The
current level, however, has not reached that of the spring
of 1947, but prospects in the industry are conducive of
further improvement. Virginia shipyard employment
had been inching upward until March when a small lay
off was made. Larger cut-backs had been anticipated
for some time, but it is now believed that increased contract awards will probably result in some expansion.
Knitting mills and apparel concerns increased employment levels through the spring. Activity should level
off until mid-year when some cut-back will probably be
experienced unless a marked improvement occurs soon
in sales, particularly of knitted goods.
Cotton textile employment has shown little change
since November in North and South Carolina, but showed
some reduction in Virginia in recent months where there
is normally a loss o f workers back to farm activities at
this time of year. Cotton textile employment both in
spinning and weaving mills will be reduced substantially

by vacations in the first and second weeks of July. Un-

E



less there is a marked improvement in the rate of purchase of goods and yarns at present price levels, reduced
employment levels will continue beyond the second week
of July since few mills are favorably inclined toward inventory accumulation and since costs o f neither labor nor
cotton are likely to decline beforehand enough to lower
prices sufficiently to make a market for the full output
of goods and yarns. It is possible that a demand for
export or military purchases may appear to ward off
reduced employment in the industry but there are few
indications as yet that give support to these potentialities,
Employment levels in the paper industry, which held
on an even keel through most of 1947, have weakened
somewhat this spring despite a continued strong demand
for all paper products. This is probably a result of increased labor productivity due to technological improvements.
The growth in rayon production last year and up to
now has been due mainly to increased labor productivity
resulting from technological improvements since very
little change in employment in this industry has occurred
in this period. Industrial chemicals in West Virginia
show a slow but gradual increase in employment levels,
while these industries in Virgina show a stable level for
nearly a year.
Bituminous coal production of the District in April
improved from the March level on a seasonally adjusted
basis, but still remained 24 per cent below the same month
last year. The coal strike did not have any noticeable
adverse effect on sales of West Virginia reporting department stores. These have shown a steady rising trend
after seasonal correction since January, April sales being
at an all time high level for these stores,
Cotton consumption in the Fifth District rose 2 per
C in April over March on a seasonally adjusted basis,
ent
but the April level was 2 per cent below that month last
year. Hours run by the spindles in the District in April,
however, showed a gain of 6 per cent over that last
year. Orders on hand for both spinners and weavers
are running down, and thus far there has been little disposition of consumers to enter into new purchase agreements in sufficient volume to maintain current production
levels. There does not appear to be much question of the
maintenance of industrial consumption of cotton textiles,
except for bags and tire fabrics, but in the apparel uses
the physical quantity of sales at retail is receding and
prospects do not justify the expectation of offsets to this
reduction, when the loss of demand previously in evi-

FEDERAL RESERVE BANK OF RICHMOND
dence for building inventories and lower exports is taken
into account.
Trade levels in the District improved on all fronts in
April compared with March on seasonally adjusted fig­
ures. Retail furniture sales rose 2 per cent; department
store sales rose 1 per cent and all lines of wholesale trade,
except dry goods, electrical goods and automotive sup­
plies, rose from 1 to 14 per cent. Wholesale dry goods
sales declined 7 per cent and wholesale automotive sup­
plies declined 1 per cent while wholesale electrical goods
held at the same level as in March. As the situation ap­
pears at this time, the trend of furniture store sales is
probably downward, or flat at best; the trend of depart­
ment store sales is flat; trends of wholesale sales are
variable, with drugs and paper and dry goods flat, hard­
ware, electrical goods, automotive and industrial sup­
plies rising, groceries and tobacco falling.
Department store inventories in April showed no
change from the peak level of March on a seasonally ad­
justed basis. Relative to the 1935-39 base period inven­
tories in April were up 240 per cent; April sales relative
to the same base were up 221 per cent. This inventory
level is too high, according to opinions of several store
managers, and efforts are being made to reduce it. In
fact it will be reduced in the next few months, if sales
hold up reasonably well, for outstanding orders at the end
of April declined 21 per cent from March, 53 per cent

from January and were at the lowest level since 1942.
Even so outstanding orders at the end of April were still
12 per cent larger than sales in April. Since there is no
upward seasonal move in sales from April to May and
June, it is probable that further reductions in orders
would be necessary to reduce the inventory level.
In April credit sales in 19 department stores of this
District accounted for 56.2 per cent of total sales. A
year ago credit sales accounted for 52.2 per cent of total
sales. Installment sales accounted for 8.3 per cent of
sales of these stores in April 1948 and 6.5 per cent in
April 1947. Other credit sales accounted for 47.9 per
cent of total sales in April 1948 and 45.7 per cent in
April 1947. Collections during April 1948 on install­
ment receivables outstanding at the beginning of the
month amounted to 22.5 per cent, and 24.8 per cent in
April 1947. Collections during April 1948 on other re­
ceivables outstanding at the beginning of the month
amounted to 44.8 per cent, and in April 1947, 45.1 per
cent. It is apparent that as far as department stores are
concerned there is no cause for alarm over the credit
situation despite the slight lengthening of repayment
periods. It is probably true, however, that without the
enlarged credit sales, the total level of sales would not
be as high as they are at the present time.
Continued on page 7

BUSINESS IN D E X E S— FIFTH FEDERAL RESERVE DISTRICT
AVERAGE DAILY 1935-39 = 100—SEASONALLY ADJUSTED

Automobile Registration* ............................................
Bituminous Coal Production*......................................
Building Contracts Awarded......................................
Building Permits Issued................................................
Business Failures—No...................................................
Cigarette Production ....................................................
Department Store Sales................................................
Department Store Stocks..............................................
Electric Power Production............................................
Employment—Mfg. Industries* ................................
Furniture Orders ..........................................................
Furniture Unfilled Orders............................................
Gasoline Consumption ..................................................
Life Insurance Sales......................................................
Wholesale Trade:
Automotive Supplies** ............................................
Drugs ............................................................................
Dry Goods .............................................................—Electrical Goods** ..................................................
Groceries ...............................................................-.....
Hardware ...................................................................
Industrial Supplies** ................................................
Paper and Its Products**........................................
Tobacco and Its Products**....................................
Building Contracts Awarded:
Apartments and Hotels............................................
Commercial Construction Contracts.......................
Manufacturing Construction Contracts................
One and Two Family Houses................................
Public Works and Utilities.................................... .
Residential Construction Contracts.......................
♦Not seasonally adjusted
**1938-41=100



Apr.
1948

313
102
331
336
40
283p
156
321
340
313
311
1,211
271
261
339
269
171
83
262
142
358
167
99

421

12]

Mar.
1948
140
320
91
326r
274
61
248r
153
317
340
265
135
320
307
1,001
265r
246
341
265
184
83
247
140
317
155
87
173
304
498
378
316
290

Feb.
1948
107
313
159
335
236
28
228r
151
306
339
252
134
415
348
912
246r
159
231
286
259
159
88
246
123
265
160
96
681
350
664
347
225
446

Apr.
1947
136
270
134
296
198
17
252
159
299
302
235
133
365
279
1,196
239
173
246
308
268
167
69
278
114
317
200
121
673
386
348
264
336
352

Apr. 1948 from
Mar. 48
Apr. 47
— 2
+ 12
+ 2
+ 23
— 34
+ 14
+ 2
+ 1
0

+ 16
— 24
+ 12
+ 70
+135
+ 12
— 2
+ 7
+ 13

— 2
+ 1
+ 21
+ 2
+ 6
— 1
+ 2
— 7
0
+ 6
+ 1
+ 13
+ B
+ 14

— 14
+ 11
+ 1
+ 13
+ 6
+ io
0
4" 2
+ 20
— 6
+ 25
+ 13
— 17
— 18

+ 45

+ '20

MONTHLY REVIEW

MAY 1948

Construction
The dollar volume of new on-site construction erected
in the United States in 1947 of $12.8 billion established
an all-time high record for any peacetime year. It was
112 per cent higher than in 1939, 28 per cent ahead of
1946, and came close to equaling the $13.4 billion peak
wartime level of 1942. In the first four months of 1948
the total ran ahead of the same months of 1947 by 32 per
cent. There was an abnormally high expenditure in
1947 for maintenance and repair of $7 billion which
brought the total outlay on construction to $19.9 billion
which was a new all-time high record by a wide margin.
Outlays for new construction, maintenance and repair
for the United States from 1915 to 1947 are shown in
the accompanying chart.

During this period a substantial increase occurred in
construction costs and in the number of workers em­
ployed in contract construction. In 1939 there were
1,150,000 workers employed in contract construction in
the nation; in 1947 there were 1,734,000 or 54 per cent
more than in 1939. The Department of Commerce’s
composite building cost index in 1947 was 94 per cent
higher than in 1939.
The above indicates the general nature of the problems
confronting the construction industry. First, there is
the unprecedented high demand for new construction
which, together with an abnormal demand for main­
tenance and repair, is taxing severely the capacity of the
industry. Second, the level of building costs is nearly
double pre-war. This tends to raise prices beyond the
ability to pay of many people and to restrict the market.
Third, the large increase in the number o f construction
workers raises many difficult problems regarding labor
relations, the training of new workers, and the main­
tenance of labor efficiency.
In light of the changes just mentioned it might be in
order to make some comment on the general relationship
of construction and employment levels in the entire
economy as well as on some of the financial consequences
of the currently high-valued new construction.




Construction and Economic Activity
The value of construction considered only for its con­
tribution to the production of goods and services does
not add to the total in any substantial way. Its relative
importance is less now than it was in the previous era of
prosperity in the 1920 decade. It was probably of small­
er importance in 1929 than it was in any of the four pre­
ceding years though documentary evidence on this point
is not precise. In 1947 construction put in place account­
ed for only 5 per cent of the gross national product; in
1929 it accounted for 8 per cent and in 1939, 4 per cent.
The importance of construction to the whole economy,
however, has much broader significance than its small
contribution to the gross national product. Construc­
tion is one of the most important components of invest­
ment expenditures which, together with consumption
outlays, determines the levels of income and employ­
ment. Thus it may be pointed out that if in any given
time period investment exceeds savings there will be a
tendency for income and employment to rise. Converse­
ly, if savings exceed investment there is a tendency for
income and employment to fall. Also it may be pointed
out that construction expenditure, like other capital in­
vestment, may have a multiple effect on economic activity
considerably greater than its original incidence. For
example, the increase in consumption outlay, consequent
to the original expenditure on construction, may induce
further increases in investment and a widespread ex­
pansion of economic activity. With more specific refer­
ence to the construction industry itself, employment
levels in the industries supplying its materials are widely
affected by construction expenditures, and transporta­
tion is more profitable when these expenditures are ris­
ing or are maintained at high levels. A clear illustration
of the direct multiple effect of the construction expendi­
tures without vouching for the accuracy of the multiple,
is the industry’s saying that for each man on the scaftold there are nine men backing him up.
Financial Consequences
The construction industry played an important part in
the inflationary developments in 1947 because of a mort­
gage credit situation that supported the volume of de­
mand for homes even after prices had risen well beyond
a stage that under normal financing conditions would
have found no buyers. Back of this financial support
to the housing market were the liberal guarantees of the
Federal Housing Administration under “ Title Six,” and
the G.I. loan guarantee of half of the appraised value—
or a maximum guarantee of $4,000. These loans per­
mitted the purchase of houses in which the buyers had
little or no equity and will have very little for years.
Then, too, in many places it is still cheaper to pay the
debt service charges required in home ownership than
it is to pay current rental.

FEDERAL RESERVE BANK OF RICHMOND

It was true there were a great many people who did
not have the kind or amount of dwelling space they de­
sired in 1947 and were, therefore, in the market either
to purchase or rent. A housing shortage, however, is
not an absolute condition but a relative one; it is relative
to the effective demand for dwelling space. Rent ceil­
ings have permitted occupancy of space by some who
under rising rents probably would have doubled up as
in former years. Liberal mortgage credit for housing
has created a relatively much larger effective demand
than prevailed in former years. Actually the number of
housing units occupied relative to the population in
1947 was about the same as in 1940. Current Popula­
tion Reports, “ Housing” series p-70, No. 1, shows in
April, 1947 there were 39,016,000 occupied dwelling
units in the United States. There were 3.68 persons per
occupied dwelling April, 1947 which compares with
3.78 persons per occupied dwelling in April, 1940. This
latter figure is based on 34,855,000 occupied dwelling
units shown in the 1940 Housing Census Volume 11,
Part 1, U. S. Summary Table II, p-3 and the official
population figure of 131,699,275. This, of course, does
not take into account increased housing needs resulting
from geographical shifts in the population, but it does
give some support to the proposition that the demand is
the factor that is most out of balance, and this is in part
the result of easy credit.
Liberal credit has created a short-run demand that has
been well beyond the construction industry's ability to
supply, and nothing is accomplished by maintaining a
mortgage credit condition that gives rise to a demand in
excess of the current output of the construction industry.
As a consequence the price of housing has risen abnor­
mally relative to prices in general and has placed a higher
than desirable burden on those who must in the future
pay debts incurred in purchasing housing at present
prices. In numerous cases this burden of debt payment
could be carried only under conditions of further in­
creases in personal income. In many instances houses
have been purchased where the buyer has very little
equity in the property. Also it appears that many buyers
will not have an equity for many years sufficient to dis­
courage them from defaulting under slight adversity.
The inordinately large demands for construction rela­
tive to the industry’s ability to produce, resulting in prices
paid for housing well above a level in keeping with a
good number of purchasers’ incomes, have not only
created an abnormal debt service relative to income, but
have drawn heavily on many individuals’ liquid or in­
vested savings. Such a condition might result in a large
number of defaults with only small reductions in the
employment level, and this would thereby intensify and
prolong any readjustment problem.
There are two satisfactory ways of dealing with the
construction problem as it exists today. First, changes
could be made in building codes and in labor practices
that would work toward increasing the supply of con­
struction relative to the demand, and, second, the demand
could be reduced to a point which would be equal to the
going supply by restricting housing credit. The problem




of moderninzing building codes is one that has plagued
the industry for a long time, and not too much can be
expected along this line. As a practical problem a re­
striction in the volume of credit made available for pur­
chasing housing would be about the only approach that
would offer a reasonable chance of success in balancing
the demand for housing with the supply. “ Title Six”
expired on April 30th, and if not reenacted will probably
have the effect of reducing demand through more strin­
gent credit terms.
Fifth District Construction
Construction in the Fifth Federal Reserve District
did not decline proportionately to total construction in
the United States during the depression years of the
1930’s, and as a consequence of this and a larger propor­
tion of war construction, the District had maintained a
rising percentage of the national new construction total
all the way from 1930 to the peak year of war construc­
tion in 1942. Since 1942, however, the Fifth District
contribution to the national total has fallen steadily to
a lower percentage in 1947 than in 1939 as the table of
figures estimated by the Department of Commerce
shows:
T O T A L N E W C O N STR U C TIO N
(M illion dollars)

%

U nited States
1939
1940
1941
1942
1943
1944
1945
1946
1947

F ifth D istrict*

o f U . S.

6,062
6,807
10,308
13,353
7,734
4,073
4,595
10,007
12,825

598
674
1,111
1,462
800
405
402
836
1,048

9.5
9.9
10.8
10.9
10.3
9.9
8.8
8.4
8.2

♦Includes entire state o f W est V irgin ia

The Department of Commerce estimates of total con­
struction put in place do not go back farther than 1939
on a state basis, but the Fifth District’s proportion of
the contract awards for 37 states compiled by the F. W .
Dodge Corporation shows a similar rise in importance
of the District in this total during the depression years
of the 1930’s. There were several causes for the rising
proportion of Fifth District construction in the national
total. First, a large amount of government building was
effected in the District of Columbia. Federal govern­
ment employment there was notably increased, and this
in turn gave rise to demands for residential construction
in the Washington area. Second, the employment level
in the important consumer goods industries of the Fifth
District did not fall as much as the employment level
throughout the nation. Third, the early efforts at re­
covery, concentrated as they were in raising farm income
and in creating purchasing power at the consumer level,
because of the importance of consumer goods industries
in the Fifth District resulted in cyclical recovery in the
District better than resulted nationally. Fourth, in the
District, even in the depression, there was some expan­
sion o f manufacturing industries, particularly the rayon
industry. This development was contrary to the na­
tional trend.

F41

MONTHLY REVIEW

As previously mentioned Department of Commerce
estimates of total new construction are not available on
a state basis prior to 1939, but the large gain in the Fifth
District’s importance in construction activity compared
with the late years of the 1920’s can be shown in the
construction contract awards compiled by the F. W.
Dodge Corporation, and are graphically presented for
both residential awards and total awards below the next
paragraph.
It should be noted that residential construction con­
tract awards in the Fifth District had again nearly
reached the 1928 pre-depression peak by 1939, whereas
the 37 state residential contract awards did not regain
that level until 1946. O f the total construction contract
awards, those in the Fifth District exceeded the 1928
peak by 1940 whereas the 37 state total contract awards
did not exceed the 1928 level until 1942. Furthermore
the 1942 contract awards, (the all time peak in both the
District and nation) exceeded the 1928 level by 140 per
cent in the Fifth District, and exceeded the same level
by only 23 per cent in the 37 states.

MAY 1948

On a per capita basis the value of new construction in
the Fifth District had been well below that of the United
States prior to 1939. From 1939 through 1944 the value
of new construction per capita ran moderately higher
in the Fifth District than in the country as a whole, but
since 1944 the District level has been moderately lower
than the national level. This latter trend again is in
keeping with the District’s relative economic position in
the nation, as reflected by employment, retail trade, check
payments, and income. The per capita value of con­
struction in both District and nation are as follow s:
V A L U E OF CO N STR U C TIO N P E R C A P IT A
(D ollars)
U . S.
91.15
95.22
93.49
89.63
81.41
65.48
48.21
26.11
17.70
21.81
24.44
36.81
41.20
38.65
46.32
51.58
77.39
99.16
56.66
29.50
32.92
70.86
90.8 I f

1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947

F ifth
D istrict*
47.15
47.68
47.18
51.44
47.71
39.34
26.99
17.06
11.19
19.61
21.58
26.38
32.90
33.53
46.72
53.31
85.37
109.51
60.19
30.60
31.05
62.54
78.40f

♦Figures fo r 1925-1938 based on D istrict’ s percentage o f construction
contract awards, adjusted to com parability with subsequent figures.
fB ased on 1946 population.

There was a considerable expansion in expenditures
for factories in the Fifth District in 1946, but the amount
dropped substantially in 1947. There is some evidence
of a little improvement from 1947 levels in the early
months of 1948. The proportion of construction con­
tract awards for factory buildings in the Fifth District
relative to the 37 state total was 7.3 per cent in 1945,
11.0 per cent in 1946, and 7.2 per cent in 1947. There is,
therefore, no tendency indicated thus far of a relative
improvement in manufacturing facilities that would
point to further employment and income growth in the
Fifth District relative to the nation.
Residential building in the Fifth District is still the
dominating factor in the construction volume, but in
1947 it fell to 43 per cent of the total contract awards
compared with 46 per cent in 1946. Non-residential
building awards dropped from 33 per cent of the total
in 1946 to 28 per cent in 1947. Public works and utility
contract awards rose both in dollar amount and in per­
centage of total from 1946 to 1947 as the table shows:
C O N STR U C TIO N C O N T RA C T A W A R D S — FIFTH D ISTRIC T

The construction level in the Fifth District during
the depression of the 1930’s and in the early war years
was relatively better than the national construction level
and was in keeping with the District’s increasing propor­
tion of the national income in this period. In fact the
District's increased proportion of national construction
in the above period was in part responsible for the rela­
tive increase in income payments.




M illion Dollars

Per cent o f Total

1945
N on-residential buildings
Residential buildings
P ublic works & utilities
T otal

1946

1947

1945

1946

196
68
125

309
429
198

249
362
237

50
18
32

33
46
21

1947
29
43
28

389

936

848

100

100

100

On a seasonally adjusted basis residential contract
awards in the Fifth District weakened substantially in

FEDERAL RESERVE BANK OF RICHMOND

cept present prices, but sales resistance is increas­
ing— mortgage money rapidly becoming tighter;
shortage of mortgage money for G. I. loans.
Area 4. Prospects for residential construction no
better than a year ago— Some materials bottleneck
still exists—-Buyers inclined to wait for lower prices
— no demand for public housing— no shortage of
mortgage credit.
Area 5. Prospects for residential building not as
good as last year— Demand for old houses has
weakened and prices of these properties have de­
clined— Demand for rental properties is very strong
— Small 4 and 5 room houses rent for $75-$90 a
month— Apartment rentals are high running from
$75-$90 for small apartments and these are beyond
the reach of those who made no more than $2,500 a
year.— An F H A survey indicates a demand for
4,500 additional houses, but that is believed to be
an overstatement of needs.

March, (our latest figures) after having risen in Feb­
ruary to the best level since January 1947. These, how­
ever, will probably rise from the March levels as ex­
cerpts from a spot survey shown later on indicate. Total
contract awards turned down moderately in March and
give thus far the impression of a leveling off process.
However, these tendencies remain to be confirmed in
future months. Current trends can be seen in the two
charts which follow:
F IFT H

D IST R IC T R E S ID E N T IA L

CONTRACT AWARDS

193 5-1 939 = 100, S E A S ADJ
50 0
400
300

200

Area 6. Outlook no better than a year ago— Buyers
expect prices of old and new houses to come down,
prices of old homes already down 20 per cent— No
demand here for public housing— Good mortgages
readily saleable at slightly increased rates, G. I /s
and F H A ’s hard to dispose of, considerable tight­
ening in other than good mortgages.

100

0
1939

1941

1943

1945

1947

Area 7. Residential construction outlook better than
last spring— Construction bottlenecks still exist,
but situation improving— Expect prices of houses
to come down— no demand for public housing— no
shortage of mortgage money.

Probably the most illuminating evidence regarding
the residential construction situation at this time are
excerpts from a spot survey made in eleven cities of the
Fifth District late in April as follow s:
Area 1. Prospects not as good as a year ago— Pros­
pective buyers accept present home prices out of
necessity— Three-fourths of the purchasers say they
are paying more than house is worth, but believe
buying now is better than renting and waiting de­
velopments.— No demand here for public housing—
no shortage of mortgage credit, but there is a tight­
ening of requirements, more selectivity better cred­
it risks, closer inspections and appraisals on the part
o f all lenders.
Area 2. Residential construction outlook better than
a year ago.— Construction impediments chiefly in
skilled labor.— Enough buyers at present prices to
keep building at high level— no demand for public
housing— Some signs of shortage of mortgage mon­
ey, particularly for G. I. loans.
Area 3. Outlook no better than last year— no serious
bottlenecks in evidence now— Buyers forced to ac~




[6]

Area 8. Outlook for residential building better than
a year ago.— Buyers are expecting prices to fall—
no shortage of mortgage money.
Area 9. Building outlook better than last year.—
Some material shortages still present— Divided
opinion on home price outlook— no demand for
public housing— no shortage of mortgage money.
Area 10. Residential prospects relative to last spring
equally as good in small residence field— Large vol­
ume of Title Six projects under construction, but
these are still short of requirements. Some bottle­
necks now, expected to increase with seasonal rise
in activity— Labor situation easier but wage rates
have not dropped.— Very much buyer resistance as
well as inability to finance in comparison with last
year.— Expectations are for some reduction in
prices, but not much— Old houses selling at lower
prices and both old and new houses moving slower—
more attention being given by buyers to quality,
marginal of poorly constructed houses more diffi­
cult to sell.— No demand for public housing— 603
and 608 F H A projects beginning to meet de­
mand— Mortgage money short at 4 per cent for AV*
per cent title II loans, tightening up on other mort­
gage loans also, building and loan companies pretty
well loaned up, borrowers looking more to banks
for mortgage credit, banks are lending on a more
conservative basis than heretofore.

MONTHLY REVIEW

MAY 1948

Area 11. Building prospects no better than a year
ago for residential construction— many individuals
priced out of the market— Large multiple unit pro­
jects absorbing supply of materials and skilled la­
bor, making home building by individuals difficult
and expensive.— Some materials shortages present;
likely to get worse later on— Buyers expect ownerbuilt houses to increase and prices of old houses to
rise slightly, $7,500 type house is now in adequate
supply— no pressure for public housing— no short­
age of mortgage money at fair rates of return to
investor.

The general import of these comments is that the out­
look for the volume of houses built in the spring and
summer of 1948 is about the same as in that period of
1947, with some cities better and some worse. Material
shortages exist, but are not indicated to materially im­
pede construction progress. Consumer resistance is in­
dicated or implied in most areas, but sufficient demand
exists to keep the industry operating at capacity level for
sometime yet. No demands or pressures exist for pub­
licly owned housing. Mortgage money is available in all
areas, but weaker risks are no longer financed. Interest
rates have firmed, and appraisals have tightened.

PRINCIPAL A S S E T S AND L I A B I L I T I E S
FIFTH DIS TR ICT M E M B E R BANKS

AVERAGE DAILY TOTAL DEPOSITS* OF
MEMBER BANKS
Last half of Mar. Last half of Apr.
% of
% oi
$ thousands U.S. $ thousands U.S.
Maryland
996,366
.94
989,275
.93
Reserve city banks
630,916
.60
628,437
.59
Country banks
365,450
.34
360,838
.34
District of Columbia
917,534
.87
897,779
.85
Reserve city banks
.85
895,905
876,636
.83
Country banks
21,629
.02
.02
21,143
Virginia
1,266,977 1.20 1,259,215 1.19
Reserve city banks
288,737
.27
295,379
.28
Country banks
978,240
.93
.91
963,836
West Virginia
590,631
.56
584,559
.55
North Carolina
833,509
.79
.78
824,426
393,017
.37
387,843
.37
Reserve city banks
Country banks
440,492
.42
.41
436,583
.41
South Carolina
432,335
.40
428,600
5,037,352 4.76 4,983,854 4.70
Fifth District
105,965 100.0
United States (miilions) 105,774 100.0
’•'Excluding interbank demand deposits

1941

1 9 43

1945

1947

Business Conditions

Continued from page 2

With prices of hosiery and cotton textiles generally
soft as a result of consumer resistance it will be interest­
ing to note the degree of success attained by labor in
securing higher wage rates. Without an increase in




wage rates, even with full employment in manufacturing,
the income of the District will probably be downward
this year as a result o f a decline in farm income and its
radiated regional effects.

FEDERAL RESERVE BANK OF RICHMOND

ITEM S

F E D E R A L R E S E R V E B A N K OP RICHM ON D
(A ll Figures in Thousands)
M ay 12,
Chg. in A m t. From
1948
4-14-48
5-14-47

DEBITS TO IN D IV ID U A L ACCOU N TS
(000 om itted)

Total Gold Reserves...............................$1,064,036
Other Reserves .....................................
18,160
T otal Reserves ................................... 1,082,196
Bills Discounted ...................................
12,623
Industrial Advances ............................
49-f*
Gov. Securities, Total.......................... 1,321,511
407,928
Bonds ........................... ........................
Notes ....................................................
127,083
Certificates ........................................
270,539
Bills ,.......................................................
515,981
Total Bills & Securities...................... 1,334,183

— 20,565
+ 58,937
— 2,017
+
2,564
— 22,582
+ 61,501
—
91
—
3,996
3 + 4 9
— 15,904
— 78,209
+ 28,975
+362,425
+
1,965
+105,433
— 11,499
— 80,967
— 35,345
— 465,100
— 15,992
— 82,156

U ncollected Items ...............................
Other Assets .........................................
Total Assets .......................................

237,753
25,070
2,679,202

— 21,390
—
2,566
— 62,530

—
288
+ 10,113
— 10,830

Federal Reserve Notes in C ir........... 1,614,319
823,871
Deposits, Total .......................................
Members’ Reserves ...........................
724,025
U. S. Treas. Gen. A c c t...................
80,287
Foreign ...............................................
16,890
Other Deposits ..................................
2,669
Def. A vailability Item s........................
203,308
Other Liabilities ...................................
897
Capital A ccounts .................................
36,807
Total Liabilities ............................... 2,679,202

— 13,343
—
277
+
2,152
+
5,231
—
3,332
—
4,328
— 47,204
—
94
—
1,612
— 62,530

—
+
+
+
—
+
—
+
+
—

49,331
40,659
5,527
45,338
10,583
377
4,409
167
2,084
10,830

41 R E PO R TIN G M E M B E R B A N K S — 5th D ISTRIC T
(A ll Figures in Thousands)
M ay 12,
Chg. in A m t. From
ITEM S
1948
4-14-48
5-14-47
Total Loans ..................................
Bus. & A g r i...............................
Real Estate Loans...................
A ll Other Loans........................
Total Security H oldin gs.............
U. S. Treasury Bills ...............
U. S. Treasury Certificates ...
U. S. Treasury Notes .............
U . S. Gov. Bonds .......................
Other Bonds, Stocks & Sec....
Cash Items in Process o f Col..
Due from B anks...........................
Currency & C oin.........................
Reserve with F. R . Bank.........
Other Assets ................................

Deposits o f Individuals .................
Deposits o f U. S. G ov....................
Deposits o f State & Local Gov..
Deposits o f Banks .........................
Certified & Officers’ Checks.........
Total Tim e Deposits.........................
Deposits o f Individuals .................
Other Tim e Deposits..... ...............
Liabilities fo r B orrow ed Money...
A ll Other Liabilities.........................
Capital A ccounts ..............................
Total Liabilities ................................

$ 820,151
388,981
184,489
246,681
1,711,753
54,393
181,834
75,555
1,276,095
123,876
239,181
165,454*
67,929
480,010
57,454
3,541,932
2,698,830
1,997,291
71,847
214,808
366,291*
48,593
604,518
587,155
17,363
2,000
21,758
214,826
3,541,932

____
—

+
+
+
+
+
—
—
—

+
+
+
+
—

3,393
16,748
4,193
9,162
1,627
4,544
11,776
6,332
6,296
2,065
13,685
480
2,647
673
3,651
8,000

12,092
2,185
3,941
+
13,519
—
6,793
8,891
+
—
581
—
82
—
499
—
1,000
4,937
+
736
+
8,000
—
____
—

+ 125,867
+ 53,740
+ 45,522
+ 26,605
146,956
+ ' 34,099
83,467
—
15,334
—
84,895
2,641
+
+ 36,000
—
2,009
6,037
+
—
2,883
6,002
+
+ 22,058
+
+
+
+
____
—
—
—

+
+
+

35,161
2,185
344
25,210
1,444
9,554
13,049
10,372
2,677
11,610
1,258
10,298
22,058

*N et Figures, reciprocal balances being eliminated.

STATE S

C ON STR U C TIO N C O N TRA C TS A W A R D E D
% Change
March
from
1948
M arch 1947
3 Mos. ’ 48

M aryland ...................... $34,640,000
Dist. o f Columbia
12,927,000
V irgin ia .................. ...... 17,531,000
3,782,000
W est V irgin ia ............
N orth Carolina .........
13,203,000
South C arolina ............ .. 6,616,000
F ifth D istrict ..........$88,699,000
S ource: F. W . Dodge Corporation

M ONTHS

17
139
10
39
55
46
20

$ 72,881,000
27,358,000
46,166,000
28,743,000
30,920,000
21,103,000
$227,171,000

17
29
7
66
28

404
477
277
1,654
971

$ 294,000
559,000
358,000
1, 112,000
1,606,000

District o f Columbia
W ashington ...............
Maryland
Baltim ore ....................
Cumberland .................
Frederick .....................
H agerstown .................
North Carolina
Asheville .......................
Charlotte .....................
Durham .......................
Greensboro ...................

+
+
—
+
—
+
+

% Change
from
A p ril 1947

$ 732,797

+ 19

4 Mos.
1948

% Change
from
4 Mos. *47

$ 2,856,645

+ 14

971,029
20,360
19,760
26,649

+
—
+
+

15
2
10
9

3,802,159
78,618
72,057
103,702

46,938
227,747
96,507
74,182
11,253
117,185
33,948
13,928
123,443

+ 13
+ 20
+14
+ 30
+ 15
+ 36
+ 4
+ 9
+ 17

188,578
906,452
358,285
295,473
46,324
401,501
133,387
54,147
477,056

+ 7
+ 14
0
+ 22
— 7
+ 6
+ 2
— 5
+ 5

51,385
91,715
78,971
48,701

Raleigh ......................... ....
W ilm ington .................
W ilson ....................
W inston-Salem
.........
South Carolina
Charleston ...................
Columbia .....................
Greenville ...................
Spartanburg ...............
V irginia
Charlottesville ............
Danville ..................
Lynchburg ...................
N ew port News ...........
N orfolk .........................
Portsmouth .................
Richm ond ...................
Roanoke ....................... . .
W est V irginia
Bluefield .......................
Charleston ...................
C larksburg ...................
H untington .................
Parkersburg ...............

+ 9
+16
+ 26
+ 28

212,075
363,456
313,789
191,959

+ 9
+ 11
+ 17
+ 21

+
—
+
+

10
2
4
8

21,268
23,923
37,610
26,942
169,534
19,924
444,112
83,100

+
+
+
—
+
+
+
+

5
8
15
1
9
10
15
17

85,728
102,549
150,985
122,866
688,973
78,204
1,720,700
326,790

33,692
117,923
28,732
51,918
26,532

+ 8
+ 10
+ 9
+ 9
+ 11

160,142
510,797
122,671
223,274
101,771

+ 22
+ 13
+ 19
+20
+ 7

District Totals ............... .. $3,871,708

+ 16

$15,251,113

+ 11

+
—
+
+
+
+
+
+

5
4
13
10
13
8
10
15

COTTON CO N SU M PT IO N A N D ON H A N D — B A L E S
A p ril
A p ril
1948
1947
Fifth D istrict S tates:
Cotton consum ed ....................
420,429
430,183
Cotton G rowing S tates:
Cotton consumed ....................
731,266
772,399
Cotton on hand A p ril 30 in
consum ing establishments.. 1,809,879 1,790,194
storage and compresses...... 2,793,457 2,441,948
United S tates:
Cotton consumed ...................
829,730
882,390
Cotton on hand A p ril 30 in
consum ing establishments.. 2,185,881 2,504,402
storage and com presses..... 2,860,277 2,117,197
Spindles active, U . S ................. 21,694,000 21,808,000
Source: Departm ent o f Commerce
COTTON

C O N SU M PTIO N — FIF T H

A ug. 1 to A p ril 30
1948
1947
3,617,225

3,797,862

6,286,773

6,841,436

7,131,046

7,810,484

D IS T R IC T

(In Bales)
M ONTHS
N. Carolina S. Carolina V irgin ia
A pril 1948..........................
226,307
175,225
18,897
March 1948........................
239,732
181,265
20,149
A pril 1947..........................
228,298
182,066
19,819
4 Months 1948..................
692,591
907,428
75,237
4 Months 1947..................
921,337
714,936
77,427
S ource: Departm ent o f Commerce.

% Change
from
3 Mos. ’ 47

D istrict
420,429
441,146
430,183
1,675,256
1,713,700

PR ICE S OF U N FIN IS H E D COTTON T E X T IL E S
A p ril
1948

22
41
8
90
2
69
21

M arch
1948

A p ril
1947

83.42
102.71
72.08
79.86
70.42
97.61
63.27

Average,

COM M ERCIAL F A IL U R E S
Number o f Failures
Total Liabilities
District
U.S.
District
U.S.

A pril 1948.......... ..............
M arch 1948........ ..............
A p ril 1947
..............
4 Months 1948 ..............
4 Months 1947.................
S ource: Dun & Bradstreet




+
+
—
—
+
+
+

A pril
1948

87.11
110.00
77.86
79.86
70.83
97.61
63.25

86.15
110.41
79.81
79.86
65.03
97.61
62.54

N o te : The above figures are those fo r the approxim ate quantities o f
cloth obtainable from a pound o f cotton with adjustm ents fo r salable
waste.

$15,296,000
17,481,000
16,080,000
71,361,000
59,500,000

D E P O S ITS

IN

M UTUAL

S A V IN G S

BANKS

8 B altim ore Banks
A p ril 30, 1948
Total Deposits

r8 1

............$393,221,652

M arch 31, 1948

A p ril 30, 1947

$392,783,344

$386,575,159

MONTHLY REVIEW

MAY 1948

B U ILD IN G PE R M IT

W H O L E S A L E T R A D E , 191 FIRM S

FIGU RES

Maryland
Baltim ore ...................................................................... $11,848,925
Cumberland ...................................................................
68,775
Frederick .........................................................................
299,850
H agerstown ..................................................................
201,880
Salisbury .......................................................................
338,347
V irginia
Danville ...........................................................................
1,218,062
Lynchburg ....................................................................
399,382
N orfolk ...........................................................................
1,202,330
Petersburg ....................................................................
110,600
Portsm outh ..................................................................
160,460
R ichm ond .......................................................................
1,313,932
Roanoke .........................................................................
1,271,040
W est V irginia
Charleston ....................................................................
518,631
Clarksburg ....................................................................
141,910
H untington ..................................................................
446,141
N orth Carolina
A sheville .........................................................................
256,594
Charlotte .........................................................................
791,219
Durham
.........................................................................
1,330,102
Greensboro ..................................- ................................
537,090
H igh Point ....................................................................
200,030
Raleigh .............................................................................
347,907
R ocky M ount ................................................................
101,650
Salisbury .........................................................................
156,765
W inston-Salem ............................................................
580,427
South Carolina
Charleston .....................................................................
281,378
Columbia ......................................................................
387,935
Greenville .......................................................................
635,350
Spartanburg ..................................................................
104,229
District o f Columbia
W ashington .................................................................. 5,012,119

$ 3,331,275
59,075
53,915
91,025
129,247
522,330
409,225
597,295
598,070
65,702
795,187
389,521
1,091,882
177,255
523,710
166,271
557,424
401,650
1,591,603
193,381
236,525
177,100
54,285
297,804
101,066
348,090
158,560
165,207
4,563,590

D istrict Totals ............................................................ $30,263,060
4 Months .........................................................................$91,043,849

$17,847,269
$59,295,203

S O FT C O A L PR O D U C TIO N IN T H O U SAN D S OF TON S
A p ril
1948

REG ION S
W est V irgin ia
V irgin ia ...................
M aryland .................
F ifth D istrict ,
U nited States , ,
% in D istrict

A p ril
1947

%
Chg.

4 Mos.
1948

4 Mos.
1947

%
Chg.

9,217
1,170
151
10,538
34,631
30.4

11,878
1,226
135
13,239
41,225
32.1

— 22
— 5
+ 12
— 20
— 16

46,811
5,398
534
52,743
174,138
30.3

56,442
6,179
751
63,372
207,182
30.6

—
—
—
—
—

TOBACCO

17
13
29
17
16

% Change
from
A p ril 1947

Sm oking & Chewing tobacco
(Thousands o f lb s .)..........
17,950
Cigarettes (Thousands) .... 30,036,168
Cigars (Thousands) ............
449,504
Snuff (Thousands o f lbs.)
3,871

+ 10

+ 9

+ 8
+ 12

LIN ES
A uto supplies (4 )* ..............
E lectrical goods ( 8) * ........
H ardware (9 )* ..................
Industrial supplies (4)*....
Drugs & sundries (11) *__
D ry goods (1 4 )* ..................
Groceries (59) * ..................
Paper & products (7 )* . ,
T obacco products (7 )* .....
Miscellaneous ( 68)* ..........
D istrict A verage (191)*

+
+
+
+
+
—
+
—
+
+
+

+
+
—
+
—
—
+

18
2
1
2
4
12
2
—
1
+ 3
— 13
— 5

8
21
15
3
4
4
3
7
2
1
3

+
+
+
+
+
+

50
45
12
6
20
6

"o
+ 39
+ 27

+
—
—
+
+
—

58
82
107
111
69
166
103
152
79
94

io
2
7
2
2
2

— 5
— 1
0

S ou rce: Departm ent o f Commerce.
♦Number o f rep orting firms.

R E T A IL F U R N IT U R E S A L E S
Percentage com parison o f sales in
periods named with sales in same
periods in 1947
A p ril 1948
4 Mos. 1948

STATE S
M aryland (5 )* ........................
Dist. o f Columbia ( 6) * ..........
V irginia (18)* ........................
W est V irgin ia ( 10) * ..............
North Carolina (1 5)* ............
South Carolina (9 )* ................
D istrict (6 3)* ......................

+ 19
+ 22

+ 12

+ 18
+ 14

+ 3
—1
+ 1
— 4
+ 8
+ 4

+ 19

+ 12

— 5
+ 14

— 9
— 1

+ 4
+ 7
+ 4

Individual Cities
Baltimore, Md., ( 5 )* ..............
W ashington, D. C., ( 6) * ........
Richm ond, V a., ( 6) * ..............
Charleston, W . V a. ( 3 ) * .....
Charlotte, N. C., (4 )* ............
Columbia, S. C., ( 3 )* ............

+ 22

—6

+ 3

—1
2

+ 56

♦Number o f reporting firms.

D E P A R T M E N T STORE T R A D E
Richm ond

Baltim ore

W ashington

Other Cities

D istrict

Percentage chg. in A p ril 1948 sales, com pared with sales in A p ril 1947:
+ 2
+ 5
— 1
+ 3
0
Percentage chg. in 4 m onths’ sales 1948, com pared with 4 m onths in ’ 47:
+ 3
+ 5
+ 7
+ 6
+ 6

M A N U FA C TU R IN G
A p ril
1948

Stocks
R atio A p ril
A p ril 30, 1948 collections
to a cc’ts
com pared with
A p r. 30 Mar. 31 outstand’ g
A p ril 1
1948
1947

N et Sales
A p ril 1948
com pared with
A p ril
M arch
1947
1948

Total V aluation
A p ril 1948
A p ril 1947

4 Mos.
1948
65,017
109,818,015
1,841,142
14,684

% Change
from
4 Mos. ’ 47

+ 3
+ 1
+ 2

+ 14

Percentage chg. in stocks on A p ril 30, ’ 48, com pared with A p ril 30, ’ 47:
— 5
+ 15
+ 7
+19
+ 9
Percentage chg. in outstanding orders A p ril 30, ’ 48 from A p ril 30, ’ 47:
— 20
— 16
+ 1
— 18
— 24
Percentage chg. in receivables A p ril 30, ’ 48 from those on A p ril 30, '4 7 :
+ 41
+ 20
+20
+23
+24
Percentage o f current receivables as o f A p ril 1, 1948 collected in A p r il:
30
48
48
49
44
Percentage o f instalm ent receivables as o f A p r. 1, ’ 48 collected in A p r i l :
17
23
22
27
23

R A Y O N Y A R N SH IPM EN TS A N D STOCKS
A p ril
1948
R ayon
Staple
R ayon
Staple

yarn
fiber
yarn
fiber

shipments...................... 67,200,000
shipments...................... 22,300,000
stocks, lbs................... 9,100,000
stocks, lbs................... 3,600,000

S ou rce: R ayon Organon




M arch
1948
67,800,000
22,600,000
9,400,000
4,800,000

A p ril
1947
58.700.000
17.900.000
7.400.000
2.900.000

Maryland Dist. o f Col. V irgin ia

W .V irg in ia

Percentage chg. in A p ril ’ 48 sales from
+ 1
+ 5
+ 2
+ 4

N o. Carolina

So. Carolina

A p ril *47 sales, by states:
+ 4
0

P ercentage change in 4 m onths’ 1948 sales from 4 m onths’ 1947 sales:
+ 3
+ 5
+ 7
+13
+ 5
+ 7

FEDERAL RESERVE BANK OF RICHMOND

NATIONAL SUMMARY OF BUSINESS CONDITIONS
(Com piled b y the Board o f Governors o f the Federal R eserve System

Industrial production decreased in April and in­
creased in May owing chiefly to changes in coal pro­
duction and supplies. Department store sales were at
exceptionally high levels following the Easter shopping
period. Wholesale and retail price levels were higher,
reflecting chiefly increases in meat prices.
Industrial Production
The Board’s seasonally adjusted index of industrial
production declined 5 points in April to 187 per cent of
the 1935-39 average, reflecting chiefly lower output of
iron and steel resulting from the labor dispute at coal
mines, which began in the middle of March. Following
settlement of the dispute around the middle of April,
output of coal and steel increased and the total index in
May is expected to be around 190.
Steel production reached a low point of 71 per cent
of capacity in the third week of April, as compared with
a March average of 95 per cent, then advanced rapidly
to a rate of 97 per cent in the fourth week of May. Auto­
mobile output was substantially curtailed in the first 3
weeks of May, as pig iron and steel supplies continued
short and a work stoppage began at the plants of a major
automobile company. Lumber output, adjusted for sea­
sonal variation, declined 9 per cent in April, owing in
large part to work stoppages on the West Coast.
Output of nondurable goods showed a further slight
decline in April. According to preliminary indications
textile production was below the March level. Coke pro­
duction was sharply curtailed because of reduced coal
supplies. Activity in the rubber products industry and
in some chemical industries declined. On the other hand,
production of gasoline increased, and newsprint con­
sumption showed somewhat more than the usual sea­
sonal rise.
Coal production for the month of April was in about
the same small volume as in March. Output of crude
petroleum was maintained at a record level, and there
was an exceptionally large increase in output of iron ore.
Construction
Value of construction contracts awarded expanded
sharply in April, according to the F. W . Dodge Corpora­
tion, reflecting chiefly large increases in awards for pri­
vate residential construction and for religious and other
institutional buildings. Awards for manufacturing plants
and public works and utilities showed little change from
the levels prevailing in recent months.
Distribution
Department store sales, which usually decline after
the Easter shopping season, were maintained this year
and the Board’s seasonally adjusted index rose from 284
in March to 299 in April, with some further rise indi­
cated for May.
Railroad shipments of coal and coke showed a sharp
increase in the latter part of April following the end of




the coal strike. Shipments of perishable goods were
curtailed temporarily in the middle of May in anticipa­
tion of a rail strike which was subsequently called off.
Carloadings of most classes of manufactured goods con­
tinued to show little change in April and the first half of
May.
Commodity Prices
Wholesale prices of meats, livestock, and vegetable
oils advanced from the middle of April to the third week
of May, while most other farm products and foods
showed little change or declined somewhat.
Price changes were also mixed for industrial ma­
terials. W ool tops, coal, coke, and building materials
were higher in this period, reflecting in part freight rate
increases, while prices of steel, cotton grey goods, and
certain other materials were reduced somewhat. Price
reductions were announced for various electrical pro­
ducts.
Consumer prices in mid-April were 1.4 per cent higher
than in March and exceeded slightly the previous peak
reached in January. The advance in April reflected
higher retail prices for foods, owing chiefly to reduced
supplies of meats and fresh vegetables, and further
rises in prices for various consumer services.
Bank Credit
Little change occurred in member bank reserve posi­
tions in the last half of April and the first two weeks of
May. Treasury operations were largely neutral in their
effect on total bank reserves. A further moderate gold
inflow permitted a small reduction in Reserve Bank
credit. In the third week of May member bank reserve
balances were reduced considerably, in part as a result
of a transfer by the Treasury of funds from war loan
accounts to its balances at Reserve Banks. In addition,
member banks used reserve funds to purchase in the
market Treasury bills held by the Reserve Banks, with
the result that the reserves of many large city banks fell
temporarily below requirements.
Real estate and consumer loans continued to expand
at banks in leading cities during April and the first half
of May. Commercial and industrial loans increased
somewhat during May following a decline in earlier
months of the year.
Security Markets
Prices of common stocks showed a marked further
rise in the middle of May to a level 14 per cent below the
high of May 1946, according to Standard and Poor’s
index of 90 stocks. Volume of trading was unusually
large.
Following the Treasury announcement on May 13
that June and July certificate maturities would be re­
funded at 1-1/8 per cent, prices of Treasury bonds ad­
vanced sharply.