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RESERVE BANK/o f ) RICHMOND

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October 1
954

CHANGES IN MAJOR SOURCES OF
FIFTH DISTRICT INCOME
1953 vs. 1952

ncome payments in the Fifth District estab­
lished a new high level in 1953 with all states
and the District of Columbia showing increases.
This was due mainly to gains in manufacturing
payrolls and in trade and service industries. In­
come losses from the previous year occurred in
agriculture, construction, and mining, as the above
chart shows, and the article beginning on page 3
discusses in some detail.

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Also In This Issue

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Fifth District Trend C h arts____________ Page

2

Cash A t W o r k _________________________ Page

7

Business Conditions and P rospects_____ Page

9

Fifth District Statistical D a ta ___________ Page

11

Federal Reserve Bank of Richmond

F if t h

D is t r ic t

TOTAL CONSTRUCTION CONTRACT AWARDS

T rends
DEPARTMENT

STORE S A L E S
150

125

100

75

Owing to sizable declines in contracts for school buildings and
public works and utilities awards, total construction contract awards,
seasonally adjusted, in August declined 12% from July and were
also 12% lower than August a year ago. In the first five months
of 1954, however, contract awards for all types of building were
up 5 % from a year ago.

Department store sales, average daily seasonally adjusted, rose 3%
from July to August and thus recovered the loss recorded between
June and July. The August level of sales this year was 3% higher
than last, but accumulated total sales for eight months were down
4 % from last year.

ELECTRIC POWER

CONSTRUCTION CONTRACT AWARDS

PRODUCTION

400

300

300

200

-

—

1946

1947

1948

1949

1950

1951

1952

1953

200

100

1954

Commercial construction contract awards rose 35% , seasonally
adjusted, from July to August, and stood 25% ahead of a year ago.
Although the August adjusted level is considerably below earlier
months this year, the accumulated total for eight months is up 37%
from last year.

Production of electric power in the District dropped 2 % from
June to July (latest figure) and July was, in turn, 2 % lower than
July 1953. Accumulated total production for eight months was 2%
larger than the y e a r ago figure, but the seasonally adjusted index
has been in a moderate downward trend since last Fall.

COTTON CONSUMPTION

RETAIL FURNITURE STORES NET SA L ES
140
120

100
80
60

The improved level of furniture store sales which had prevailed
from May through July this year was not maintained in August.
August sales (seasonally adjusted) dropped 6% from July to a
level 7% under August last year and near the lowest level of 1954.
In the first eight months of this year accumulated sales were down
8% from last year.

Cotton consumption in July rose from June after seasonal cor­
rection; it rose 6% further from July to August to the best level
of 1954 thus far. But even with this rise, the August consumption
level was 5% smaller than August last year, and the accumulated
total for the first eight months of the year was down 7 % from a
year ago.




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October 1
954

£

Income Payments
1953 was a good year in the Fifth Federal Reserve
District and income payments to individuals in the Dis­
trict totaled $20,759 million, a gain of $676 million or
4 % over 1952. The increase during the year, however,
was not quite up to the record for the nation as a whole
where income payments rose 6% over 1952.

of the total) was derived from property, and $1,217 mil­
lion (5.9% of the total) came from unclassified sources.
The proportion of wages and salaries, property income,
and other income rose slightly from 1952 to 1953 at the
expense of proprietors’ income. This was no doubt
due to the sharp decline in farm income.

Due to the smaller rise in income in the Fifth District,
the proportion of the national total fell from 7.82% in
1952 to 7.67% in 1953. This incidentally, is the Dis­
trict’s smallest proportion of the national total since
1949 when it was 7.66% . It also compares with a peak
proportion of the national total of 7.97% in 1942, with
7.34% in 1939, 6.84% in 1932, and 5.96% in 1929.

That there still remains vast room for improvement
is shown by the rank of Fifth District states among the
states of the nation in total income payments. North
Carolina 16, Virginia 18, Maryland 19, District of Co­
lumbia 29, W est Virginia 30, and South Carolina 31.
A somewhat different ranking is found in per capita
income payments for the Fifth District states. In 1953
the District of Columbia ranked 5th, Maryland 12th,
Virginia 36th, W est Virginia 40th, North Carolina
45th, and South Carolina 46th.

Outstanding contributors to the District’s rising in­
come were payrolls in manufacturing industries which
totaled $4,260 million in 1953 and were 9.1% above
1952. Other sources of strength in the District’s
economy were in the trade sector where income pay­
ments amounted to $5,074 million, a gain of 5.8%
during the year. Gains in income payments by state
and local governments were more than sufficient to
offset declines at the Federal level, totaling $4,848 mil­
lion in 1953 or 2.1% more than in 1952.
Income payments from agriculture, mining, and con­
struction contributed sour notes to the economic per­
formance. Agricultural payments at $1,274 million in
1953 were off 8.7% from 1952. Income payments from
the mining industry amounting to $510 million in 1953
were 6.3% smaller than in 1952, while construction
income payments of $934 million were 2.1% .
Nonclassified sources of income payments in 1953
amounted to $3,859 million and were 4.1% higher than
a year earlier.
Per capita income payments in the Fifth District
during 1953 averaged $1,361, a gain of $35 or 2.6%
over 1952. Per capita income in the District, however,
fell to 79.6% of the national average compared with
80.7% in 1952.
O f the $20,759 million of income payments in the
District in 1953, $14,809 million came from wages and
salaries (71.3% of the total), $2,920 million (14.1% of
the total) came from proprietors, $1,813 million (8.7%

Perspective can be gained in the relative rates of
growth in the District and the nation if 1953 is com ­
pared with 1929 or approximately a generation ago. In
this 24-year period, the combination of growth in the
economy and rising prices caused income payments in
the nation to rise 227.5% . In the same period, income
payments in the Fifth District rose 321.2% with every
state of the District showing larger increases than the
nation with the exception of W est Virginia.
The largest growth in income payments between 1929
and 1953 in the Fifth District occurred in South Caro­
lina, where the gain was 448.6% .
North Carolina showed a growth in this 24-year peri­
od of 376.1% , second largest rise of any state in the
District. Virginia was the only other state in the
District which more than quadrupled its income pay­
ments in the period, with a gain of 347.1% .
Income payments in Maryland between 1929 and 1953
rose 298% compared with 321.2% for the District and
227.5% for the nation.
The rise in income payments in the District of
Columbia between 1929 and 1953 was 292.9% , some­
what less than either Fifth District or nation.
Income payments in W est Virginia rose 207.1% from
1929 to 1953, the smallest increase in the District.

T O T A L IN C O M E P A Y M E N T S TO IN D IV ID U A L S
(Millions of dollars)
1942

1943

1944

1945

1946

1947

1948

1949

1950

1951

1952

2,033

2,449

2,577

2,539

2,723

2,851

3,065

3,070

3,420

3,867

4,144

4,402

District of Columbia

1,260

1,456

1,518

1,617

1.727

1,743

1,825

1,891

2,093

2,305

2,416

2,507

Virginia ___ ___

Maryland ___

..

.

.

1953

___

2,133

2,457

2,646

2,679

2,834

2,980

3,247

3,230

3,551

4,073

4,340

4,413

West Virginia ________

1,094

1,253

1,381

1,497

1,642

1,890

2,094

1,943

2,115

2,340

2,414

2,435

North Carolina ___

1,872

2,270

2,536

2,651

3,012

3,223

3,446

3,361

3,859

4,290

4,404

4,599

956

1,153

1,291

1,319

1.420

1,508

1,681

1,586

1,763

2,128

2,365

2,403

9,348

11,038

11,949

12,302

13,358

14,195

15,358

15,081

16,801

19,003

20,083

20,759

.

South Carolina
Total
Source:

„ .

__

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“ Survey of Current Business,” U . S. Department of Commerce, Office of Business Economics, August 1954.




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Federal Reserve Bank of Richmond

Maryland
Maryland showed the largest increase of any of the
District states in income payments between 1952 and
1953. Its gain of 6% was equal to that of the United
States as a whole. Income payments originating in
Maryland during 1953 amounted to $4,402,000,000 and
were exceeded in this District only by Virginia and
North Carolina.
Accounting for Maryland’s better than average per­
formance was a larger rise in manufacturing payrolls,

M AJOR SO URC ES OF INCOME PA Y M EN T S
1953

Agriculture Construction Government Manufacturing Mining

TradeSService

Other

better performance in construction, and a smaller de­
cline in farm income.
Manufacturing payrolls in
Maryland rose 12% from 1952 to 1953 compared with
a 9% gain in the District and 11% in the United
States. Income from trade and service showed the
same gain as the District and the nation. Income pay­
ments derived from construction rose 1% in Maryland
during 1953 whereas the District showed a drop of 2%
and the United States a gain of 4 % .
Income payments originating from governments in
Maryland was 4 % higher in 1953 than in 1952 com ­
pared with gains of 2% in the District and 5% in the
United States. Income payments in agriculture were
down 4 % in Maryland in 1953 compared with a District
decline of 9 % and a national decline of 12%. Income
payments derived from mining were off 2% in M ary­
land, declined 6 % in the District, but rose 2 % in the
United States. Unclassified sources of income in Mary­
land rose 4 % , the same as in the District but less than
the 6% gain in the nation.
Maryland accounted for 1.63% of national income
payments in 1953 compared with 1.62% in 1952, 1.52%
in 1939, 1.57% in 1932, and 1.34% in 1929.
Per capita income payments in Maryland during 1953
were $1,857, a gain of $103 or 5.9% over 1952. Per
capita income in 1953 was 8.7% above the national level
compared with 6.7% above in 1952.

District of Columbia
Income payments in the District of Columbia during
1953 totaled $2,507,000,000 an increase of $91,000,000
or 4 % over 1952. This increase was the same as that
shown for the Fifth Federal Reserve District but smaller
than the 6 % gain for the nation.
In 1953, 48.3% of the total income payments in the
District of Columbia originated from government
sources and in spite of the cutback in employment of
the Federal Government, income payments from gov­
ernment increased 4% in 1953 compared with 1952.
Manufacturing activity, of little consequence in the
District of Columbia, accounted for only 3.1% of in­
come payments but rose 5% between 1952 and 1953.
This compares with an increase of 9% in the District
and 11% in the nation. Income payments derived from
trade and service industries in the District of Columbia,
and accounting for 27.2% of total income payments,
rose 3% in 1953 over 1952. This compares with a
6% gain both in the Fifth District and in the nation.
Income payments contributed by the construction in­
dustry during 1953 were 1% smaller than in 1952 while
unclassified sources of income rose 6% compared with
a rise of 4% in the Fifth District and 6% in the nation.
Per capita income payments to residents of the Dis­
trict of Columbia were $2,109 in 1953, a decline of $26
or 1.2%. This decline was due to a larger amount of



income originating in Washington being paid out to
residents in the states of Virginia and Maryland and
to an increase of 1.2% in the population. Per capita
income payments of District of Columbia residents were
23.4% higher than the national average in 1953 com­
pared with 29.9% higher in 1952. The highest average
per capita income on record for the District of Columbia
was 1951 ’s $2,136.

{ 4 j*

/foflMfy

October 1
954

(/£ H 6 C U ^
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Virginia
income payments in Virginia, due in large part to
drought, dropped 22% in 1953 from 1952.
Income payments received from governments in 1953
slipped 1% in Virginia compared with a District rise
of 2% and a national rise of 5% . Manufacturing pay­
rolls in Virginia were up 7% while Fifth District pay­
rolls rose 9% and national payrolls 11% in this period.
Income payments in the trade and service industries in
Virginia increased 6% from 1952 to 1953— the same
increase shown for the District and the nation. V ir­
ginia construction payrolls eased off 1% from 1952,
while they fell 2% in the District and rose 4 % in the
nation.
Virginia payrolls in mining industries, due to adverse
conditions in bituminous coal, were off 10% in 1953
compared with a 6 % decline in the District and a 2%
gain in the nation. Unclassified sources of income
payments in Virginia in 1953 were 5% larger than in
1952, a somewhat better showing than the 4 % increase
in the Fifth District.
Per capita income payments in Virginia during 1953
were $1,361, a gain of $23 or 1.7% over 1952. More
than 60% of the increase in income payments available
for per capita calculation came from larger allocations
of income originating in the District of Columbia to
Virginia residents.

Income payments of $4,413,000,000 in the state of
Virginia during 1953, an all-time high record, were 2%
over 1952, but this increase wras less than the Fifth
District or the national gain.
Principal reasons for the smaller increase in Virginia
than in the District can be attributed mainly to agri­
cultural and mining industries and to a somewhat
smaller gain in manufacturing payrolls. Agricultural

West Virginia
1953 was not a particularly good year in the W est
Virginia economy, but it was better than in four other
states of the nation which showed losses from 1952 to
1953 and better than three states which were even with
1952. Income payments in W est Virginia during 1953
totaled $2,435,000,000 a 1% gain over 1952. This was
the smallest increase shown in the Fifth District, but
very little smaller than that shown in Virginia and
South Carolina.
W est Virginia’s $21,000,000 gain in income payments
was the result of gains in manufacturing payrolls, in
trade and service income, in construction payrolls and
unclassified payments which were in part offset by de­
clines in government income payments in mining pay­
rolls and in agricultural income. „ The latter dropped
19% from 1952 to 1953.
W est Virginia is least affected of the five District
states by government income, but the decline between
1952 and 1953 was responsible for a reduction of
$35,000,000 in income payments. Mining payrolls in the
state were off 7% or $29,000,000 in 1953. Manufactur­
ing payrolls in the state rose 9 % or $49,000,000 from
1952 to 1953, the same percentage gains as in the Dis­
trict. Trade and service income in the state rose 6 % or
$32,000,000 during 1953, the same rate of gain as in the
District and the nation. Construction payrolls increased



{

21% or $17,000,000 from 1952 to 1953, a percentage
gain exceeded by only one other state in the Union.
Per capita income payments in W est Virginia in 1953
were $1,257, an increase of 1.9% over 1952. This was
a larger gain than shown in total income payments due
to a decrease of 1.1% in population. W est Virginia’s
per capita income declined from 75.0% of the national
average in 1952 to 73.6% in 1953.

MAJOR SOURCES OF INCOME PAYMENTS
1953

WEST

V IR G IN IA

Percent
2 5 ----

Agriculture Construction Government

5y

Manufacturing

Mining

Trade ft Service Other

Federal Reserve Bank of Richmond

North Carolina
North Carolina income payments in 1953 totaled
$4,599,000,000, a gain of $195,000,000 or 4% over 1952,
the same rate of increase as in the Fifth District but
smaller than the national rise of 6 % .

trade and services establishments ($65,000,000). O ff­
setting these increases in part were farm income, down
$41,000,000 and construction payrolls, down $3,000,000.
The Old North State showed the largest increase ( 7 % )
in government income payments of any state in the
District, a gain comparing with 2% for the District and
5% for the nation. North Carolina’s manufacturing
payrolls increased 6% during 1953, the smallest gain
for any state of the District, not counting the District
of Columbia. The 6% increase in manufacturing pay­
rolls compares with a gain of 9% in the Fifth District
and 11% in the nation.

Contributing toward increased income payments in
North Carolina between 1952 and 1953 were govern­
ment ($57,000,000), manufacturing ($72,000,000),

MAJOR SOURCES OF INCOME PAYMENTS
1953

Income payments per capita in North Carolina were
$1,097 in 1953, a gain of $39 or 3.7% over 1952. The
increase in per capita income in North Carolina was
only slightly smaller than in the nation and as a conse­
quence the state’s per capita income was 64.2% of the
national average in 1953 compared with 64.4% in 1952.

Agriculture

Construction Government Manufacturing

Mining

Trode ft Service

North Carolina accounted for 1.70% of total national
income payments in 1953 compared with 1.72% in 1952
and a peak proportion of 1.77% in both 1950 and 1951.
Other comparisons are: 1939, 1 .55% ; 1932, 1.21% ;
1929, 1.17%.

Other

South Carolina
average dropped from 66.2% in 1952 to 64.1% in 1953.
The state’s per capita income in 1952 had risen above
that of North Carolina owing to increased construction
activity on the atomic energy project.

South Carolina income payments in 1953 totaled
$2,403,000,000, a gain of $38,000,000 or 2% over 1952.
Factors contributing to increased income between
1952 and 1953 in South Carolina w ere: government,
up $5,000,000; manufacturing, up $49,000,000; trade
and service, up $26,000,000. Offsets were a slight de­
cline ($8,000,000) in agricultural income and a sharper
one ($38,000,000) in construction. The decline in con­
struction payrolls was due to the tapering off of con­
struction at the Savannah River atomic energy project.

South Carolina accounted for .88% of the total in­
come payments in the nation during 1953 compared
with .92% in 1952 which was the peak proportion for
this state. In 1939 the state’s contribution was .70%
of the national total, in 1932, .55% and in 1929, .53% .

South Carolina’s decline in farm income was 3 % ,
puny compared with declines of 9 % for the District and
12% for the United States. Government income pay­
ments were 1% higher in 1953 than in 1952 compared
with a 2% gain in the Fifth District and a 5% gain
in the nation. Manufacturing payrolls during 1953
rose 8% compared with a gain of 9 % in the Fifth
District and 11% in the nation. Income from trade
and service industries in South Carolina rose 5% in
1953 as against 6% in the District and 6 % in the nation.
Unclassified sources of income in the state rose 4 % , the
same as in the District, but less than the 6 % increase
in the nation.
South Carolina’s per capita income in 1953 was
$1,095, an increase of $7 or 0.6% over 1952. This gain
was considerably smaller than that shown in the
nation, and South Carolina’s percentage of the national



4 e

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October 1954

/fonM A/ /fa/im t'

Cash At Work
all segments of the bank’s operations must be coordi­
District member banks had $1,721,000,000 in
nated if maximum benefit is to be derived from each.
cash accounts at m id-1954. If they could keep this
vast amount of funds invested during the year, say at
The second part of the answer to our question rests
3% per annum, it would yield a gross income of nearly
on the various kinds of cash accounts a bank must
$52 million— enough to pay about a third of their total
maintain. There are four principal classes of cash ac­
operating expenses.
counts : cash in vault, reserve with Federal Reserve
W hy should bankers forego earnings of this magni­
Bank, balances with other banks, and cash items in
tude to say nothing of the implied economic waste in
process of collection. The over-all level of cash needed
carrying “ idle” cash ? The immediate answer is a com­
is simply the sum of the amounts needed in each of these
pelling o n e : They could not stay in business if they did
categories, and each is subject to a different set of in­
not maintain these nonearning funds. Banks are among
fluences.
the very few kinds of corporations with liabilities that
Every bank has characteristics peculiar to its own
range from ten to twenty
policies, its deposit struc­
ture, and the economic en­
times the amount of the
PERCENTAGE OF TOTAL ASSETS HELD AS CASH
vironment in which it oper­
owners’ equity. They are
BY FIFTH DISTRICT MEMBER BANKS
ates. N e v e r th e le s s , there
the only corporations with
are some general principles
an overwhelming proportion
which apply in all cases and
of their liabilities payable on
within which in d iv id u a l
request. T h i s constitutes
banks can and do operate to
the art of banking: H ow
can assets be arranged so
advantage.
that the bank can at all
Cash needs of commercial
times meet the demands of
banks today arise principally
its creditors (depositors)
from two sources : (1 ) to
while at the same time earn­
meet the demands of de­
ing a satisfactory profit ?
posit customers, both sav­
This is an art because the
ings and demand, and (2 )
highest earning assets are
^
/
Collection Items
^
to meet legal requirements
generally more risky and
for cash reserves. Other
less liquid than assets yield­
needs for cash exist but in­
ing a smaller return. Be­
variably they can be traced
yond a certain point higher
back to one of these two basic needs.
earnings are obtained at the expense of liquidity and
safety.
Reserve Balances
The alert bank administrator will sacrifice neither
For member banks of the Federal Reserve System,
safety nor liquidity for earnings— he knows that longreserve requirements are stated as percentages of time
run profitability rests on the confidence he gives to his
deposits and of net demand deposits (gross demand de­
depositors through the management of his bank. But
posits less balances due from other banks and cash items
neither will he knowingly permit unnecessarily idle
in process of collection). The reserve requirement is
funds to lie in his vaults or his bank accounts. H e will
figured on average daily net deposit balances over week­
constantly campaign to find idle dollars and to put them
ly periods for central reserve and reserve city member
to some profitable employment. Unfortunately, finding
banks and over semimonthly periods for all other mem­
such dollars is not as simple as it seems.
ber banks. By the end of the reserve computation
Precisely how much cash does a bank need ? Part of
period, therefore, the bank administrator must have
the answer rests on the over-all liquidity needs of the
arranged his account so that, on the average, his reserve
particular institution which are not based on cash alone
balance was equal to or greater than the legal require­
but rather on the availability of cash under both normal
ment.
and abnormal conditions. This means that the secon­

F

ift h

The reserve account of a member bank at its Reserve
Bank is rarely static. Numerous payments are made
to and from the account every day. One of the principal
uses of the account is in the settlement of local and outof-town collection items. Checks drawn by a bank’s
customers may be presented by other banks through
the Federal Reserve System for collection. Conversely,

dary reserve of the bank (earning assets readily con­
vertible into cash without significant loss) must be
adequately managed to provide a source of funds which
will, when need arises, supplement both cash on hand
and that being realized from maturing assets. T o re­
duce cash accounts to a minimum, the secondary reserve
policy must be enlightened and well-executed. Indeed



i 7 y

Federal Reserve Bank of Richmond

needs. The characteristics of customer demands based
on past experience, with a suitable margin for error,
together with the availability of cash replenishments
will determine the general level to be maintained. A
bank located in Richmond, for example, can replenish
its vault cash within the hour; one located some dis­
tance away may not be able to obtain additional cur­
rency and coin until the next day.

checks deposited by the bank’s customers may be sent
for collection to the Reserve Bank, the proceeds of the
collection being credited to the bank’s reserve account.
The bank administrator must be constantly ready to
meet these fluctuations in his account while at the same
time maintaining a reserve position which, averaged
over the reserve period, will meet the legal requirements.
In addition to check clearings, payments to and from
the reserve account may result from bank wire transfers
of funds, deposits or withdrawals of currency, trans­
actions with the U. S. Treasury, and transactions with
the Federal Reserve Bank.
The first and foremost prerequisite in the efficient
handling of a bank’s reserve account is, therefore, prompt
and accurate knowledge of the status of the account on
a day-by-day basis. This knowledge must include not
only the details of transactions in the reserve account but
also changes in the deposit structure of the bank. On
the basis of the knowledge available, the administrator
of the account must make decisions throughout the
reserve computation period as to whether he has excess
funds in the account which should be profitably em­
ployed elsewhere or whether he is running below his
needed average and must look for funds to build up
his average to the required level by the end of the period.

In appraising customer cash needs the efficient banker
learns much from past experience. H e knows that at cer­
tain times of the year in his community, needs for cash
are much greater than at other times. F or example,
throughout the country cash needs increase considerably
just before Christmas. In the tobacco areas of the
Fifth District the bankers know that their customers
require more cash than usual from late Summer through
the Fall of the year to handle the marketing of tobacco.
In addition to these broad seasonal needs there is the
periodically recurring need to meet payrolls, generally
a well-established pattern in each community and one
the banker quickly learns to appraise.
Cash Items in Process of Collection
The level of cash items in process of collection results
entirely from customer actions— the bank has little or
no control over it. The bank administrator can only
recognize it, learn its patterns, and recommend the utili­
zation of funds according to it. The most common
transaction causing an increase in this account is the
deposit of a check drawn on an out-of-town bank. The
customer’s deposit account will be increased by the
amount of the check (although he may not be permitted
to draw against the amount until the check is collected)
and it will be added to the total of items in process of
collection.

Bankers’ Balances
Second largest of the cash accounts maintained by
member commercial banks today are the balances with
other commercial banks, commonly called “ due from
banks.” Correspondent banking developed in this
country long before the organization of the Federal
Reserve System or even the National Banking System.
Banks maintained cash balances with other banks in
order to assure their customers that bank notes issued
by them would be honored at par in the larger centers.
Today, the collection of checks is still one of the
reasons for maintaining correspondent bank balances
but this has considerably diminished in importance with
the rapid growth of the nation-wide check collection
system administered by the Federal Reserve Banks.
(O ver $1 trillion in checks were handled in 1953.)
However, a number of other functions have been added
to this initial function of collections, and it is in the
light of these functions that decisions have to be made
as to exactly how much cash should be tied up in these
accounts. Am ong the principal functions to be appraised
by the bank administrator according to his own particu­
lar needs, many of which are available from correspond­
ent banks only, are, more expert investment, credit, and
administrative advice; the buying, selling, and safe­
keeping of securities in the larger money centers; loan
participations; foreign exchange transactions; and
numerous others.

The principal way in which the bank administrator
can work to reduce the level of funds in this account
is through a careful analysis of the routing of checks
with the purpose of reducing the amount of time the
collections take. This may involve mailing schedules,
correspondent relations, or fuller use of Federal Reserve
facilities. Every day knocked off collection time means
a better potential utilization of funds.
Conclusion
The amount of cash held by commercial banks has
important meaning for the over-all level of economic
activity as well as for the administration of the indi­
vidual banks.
T o o conservative a policy with regard
to cash holdings might result in the denial of many
legitimate requests for bank credit from local customers.
T oo lax a policy might lead to disastrous loss of liquid­
ity. Detailed attention to the cash position is essential
not only for the efficient operation of the individual
banks but also for the most efficient functioning of the
nation’s financial system.

Cash in Vault
The amount of cash to be kept on the bank’s premises
is almost entirely a matter of customer over-the-counter



i

8

y

/ fm / M / $

October 1954

sck&
ujl

Business Conditions and Prospects
indicators in the Fifth District have been
following a see-saw pattern. Most lines of manu­
facturing activity improved in August over the seasonal­
ly low levels of July with the cotton textile industry
establishing its best level of the year. The trade level
was mixed with department store sales showing a better
than seasonal rise and furniture store, household appli­
ance store, and automobile sales showing declines.
u s in e s s

Manufacturing employment in Virginia, North Caro­
lina, and South Carolina rose from the July level to a
point near the best levels of 1954 due both to improved
business conditions and to seasonal factors. Construc­
tion contract awards failed to maintain the high levels
of both July and August 1953, and awards for resi­
dential, educational buildings and for public works and
utilities declined.
Farm income in the Fifth District in June was 4%
under a year ago and farm prices in August ranged
from a gain of 2% in South Carolina to a decline of 9%
in W est Virginia— all states showing decreases except
South Carolina.
The employment situation continued to improve and
insured unemployment in the District declined 45,900
or 15.4% to 142,000 between August 7 and September
4.
Banking
Deposits of all member banks on August 25 were
0.6% higher than on July 28 and 1.6% higher than
August 26, 1953. The chief gain came in time deposits
which were up 1.2% during the month and 8.6% during
the year. Loans and investments of the member banks
rose 1.7% during August and 2.4% from a year ago.
Loans were up 0.4% during the month and 2.9% dur­
ing the year. Holdings of Government securities rose
3.3% during the month, but were only 0.7% ahead of
a year ago. Interestingly, holdings of other securities,
which rose 0.1% during August, were 10.2% ahead of
a year ago. Bank borrowings at the end of August
were 12.3% lower than a month earlier and 56.6%
below a year ago.
Between August 4 and September 22, commercial,
industrial, and agricultural loans of the weekly reporting
banks were up $45.4 million. Banks in North Carolina
accounted for $13.6 million of this gain. Banks in
Washington, D. C., accounted for $14.3 million, those
in Richmond $10.7 million, and those in Baltimore $5.1
million. Decreases were shown for this period in Lynch­
burg and Charleston, W est Virginia, and very little
increase was shown elsewhere. Bank debits of the
reporting banks in the District were at the same sea­
sonally adjusted level in August as in both July and
August a year ago. Reserve balances of the member
banks in this District on August 25 were 5.9% smaller
than a month earlier and 5.7% below a year earlier.



A griculture
Farm income in the Fifth District during June was
9.4% smaller than a year ago compared with a national
decline of 3.6% . In South Carolina the decline during
the month was 14%, in Maryland 11%, in Virginia 9 % ,
in North Carolina 6 % , and in W est Virginia 5% .
Farm prices in South Carolina during August were
up 2.2% from a year ago but in other District states
they declined, from 2.7% in North Carolina to 8.6%
in W est Virginia. For the remainder of the year the
prospect is for somewhat poorer returns from cotton
marketings and somewhat better from tobacco market­
ings. South Carolina, however, will probably be hurt
on both scores.
Based on September 1 conditions, tobacco production
in the District is estimated to be up 8.5% from last year
with Maryland down 1% , Virginia up 24% , W est V ir­
ginia down 6 % , North Carolina up 11% , and South
Carolina up 14%. District cotton production, as indi­
cated on September 1, will amount to 890,000 bales,
23% less than a year ago, with South Carolina’s crop
down 30% , North Carolina’s down 11% , and Virginia’s
very small crop of 10,000 bales down 44% .
Construction
Construction during August remained in the high
area of the boom in progress ever since 1950, but the
seasonally adjusted level in August was 12% under
that of July and 12% under August a year ago. For
the first eight months, however, contract awards were
5% larger than in the same period of 1953. Relative
to a year ago, residential construction contract awards
were up 46% while nonresidential awards were down
36% . The decrease in nonresidential awards from last
year was due to a drop of 67% in awards for factory
building, of 30% in educational building awards, and
of 23% in other nonresidential awards. These were
offset in part by a 25% gain in commercial construc­
tion. Public works and utilities were off 63% after
seasonal correction from July and 7% below a year ago.
Trade
Dollar sales of department stores in August were at
the same level as a year ago, but differences in working
days raised the average daily seasonally adjusted index
3% from last year. This was the same gain shown
from July to August while the accumulated figure for
eight m onths. was down 4 % . Registrations of new
passenger automobiles for all states of the District dur­
ing July were down 16% from June and 10% under
July 1953, with seven months’ totals down 4 % . Tw o
states and the District of Columbia for August show a
decline of 12% from July and 17% from a year ago,
and a decline of 12% for the first eight months.
The improved level of District furniture store sales

i 9 }>

Federal Reserve Bank of Richmond

which had prevailed in May, June, and July failed to
hold in August. August sales, seasonally adjusted,
declined 6 % from July, 7% from a year ago, and the
first eight months’ total was down 8 % . Furniture
store receivables at the end of August were 3% below
a year ago, and collections were down 9 % , indicating
some slowdown in payments. Household appliance
stores continued to do fairly well. August sales of
these stores (unadjusted) were down 2% from July,
but stood 16% ahead of a year ago.
Gasoline consumption (adjusted) in the District
during June (latest figure) was up 5% from May and
2% ahead of a year ago. For the first six months of
the year, however, gasoline consumption was at the
same level as a year ago.
M anufacturing
Man-hours in all manufacturing industries in the
District for all states are available for July. In this
month man-hours were down 9 % from a year ago and
1.3% from June. Durable goods industries showed a
10.6% decline from a year ago and 1.4% from June;
and nondurable goods industries showed a decline of
8.2% from a year ago and 1.4% from June.
Man-hours for North Carolina, South Carolina, and
Virginia were up 3.5% in August over July, but 6.9%
under August 1953. Durable goods industries regis­
tered an increase of 3.4% during the month but a de­
cline of 5.4% during the year. Nondurable goods
industries were up 4.6% during the month but declined
5.9% during the year.
Man-hours in the furniture industry rose 10.9% from
July to August and were within 6.4% of August 1953.
In textile mill products, man-hours during August rose
3.9% from July to a level 6.3% below a year ago. A
rise of 3.2% occurred during the month and a drop of
6.6% during the year in broad-woven fabric mills.
Yarn and thread mills improved their operations 2.7%
during the month but were still 12.7% under a year
ago, while knitting mills showed a gain of 4.0% in man-




hours during August to a point just 0.9% under a year
ago. Full-fashioned hosiery mill man-hours in North
Carolina in August were 3.7% higher than in July and
within 1.2% of a year ago. The seamless hosiery mills
in North Carolina showed a rise of 7.6% during the
month and a gain of 4.8% over a year ago.
Cotton consumption (average daily seasonally ad­
justed) continued the improvement which began in
July, with August showing a gain of 6% to a level
within 5% of August 1953. The adjusted consump­
tion figures were at their best level of 1954. Spindlehour operations (adjusted) were up 22% from July
to August with the latter month 4 % under a year ago.
For the first eight months both cotton consumption and
spindle-hour operations were 7% under a year ago.
Hosiery output nationally (latest figure July) showed
a rather sharp drop of 13% from the previous month
and 16% under a year ago.
Apparel industries in the District improved consider­
ably between July and August with man-hours in the
three states up 6 % , but August was still 5% under a
year ago.
The chemical industries, on the other hand, showed
a reduction of 1% in man-hours during August and
were 10% under a year ago. South Carolina, however,
showed the same level in August as in July and 15.7%
ahead of a year ago. This was due to some improve­
ment in acetates and to new facilities in other synthetic
yarns.
Rayon and acetate shipments nationally were 4%
higher in August than in July though still 7% under
a year ago. Acetate filament yarn shipments were up
8% during the month and 5% ahead of a year ago,
while rayon shipments declined 4.1% during the month
to a level 36.2% below a year ago. Staple and tow
shipments were up 12% during the month to a level
50% ahead of a year ago, with rayon up 11% and 67%
for the year, and acetate up 15% during the month to
a level even with last year.

October 1
954

r M £W L
O

F if t h

D is t r ic t

S t a t is t ic a l

F IF T H D IS T R IC T IN D E X E S

B U IL D IN G PE R M IT F IG U R ES

Seasonally Adjusted: 1947-1949 = 100

Aug.
1954

°/o Chg.—

Maryland
Baltimore
__ $ 4,938,500
38,450
Cumberland__
Frederick ... _ _
100,260
Hagerstown __
530,465
Salisbury ____
82,450

Latest Mo.
Aug.
1954

July
1954

Aug.
1953

Prev.
Mo.

145
153
70
191
226
97
94
117r
166
103p
108p
165

New passenger car registra­
tion* --------------------------------------- ----Bank debits ____________________
153
80
Bituminous coal production* __
Construction contracts ________ 168
Business failures— num ber___... 228
Cigarette production................ ............
Cotton spindle h o u rs__________ 115
Department store sales ________ 120
Electric power production ...............
Manufacturing employment* __ ___
Furniture store sales ___________ lOlp
Life insurance sales ___________ 170
* Not seasonally adjusted.
Back figures available on request.

D ata

146
153
103
191
196
104

+ 14

— 16

0

Yr.
Ago

10
0
—
22
—

Aug.
1953

8 Months
1954

8 Months
1953

$ 3,401,770
36,125
63,125
237,314
54,600

$ 41,553,810
481,925
814,406
2,077,846
1,192,336

$ 56,386,590
440,290
1,910,267
1,891,952
848,892

— 9

120

+22

+ 3
— 2
—
1
—
6
+ 3

116
164
112

109
161

+ 6

W H O L E SA L E TRADE

LINES
Auto supplies _____________ Electrical goods —___ ______ Hardware
_ _ .... __________ .
Industrial supplies ________
Drugs and sundries _______ Dry goods ________ _ _____
_
Groceries __________________
_
Paper and its products _ .
.
Tobacco products ___ _
Miscellaneous __________ ____ District Total ______________

.

Sales in
August 1954
compared with
Aug.
July
1954
1953
0
+ 3
— 13
+ 1
— 7
— 1
— 1
— 5
+ 68
+ 9
NA
NA
— 4
+94
+ 17
4-11
+ 8
0
+ 1
0
+ 1

Stocks on
August 31, 1954
compared with
Aug. 31, July 30,
1953
1954
NA
NA
—25
— 8
— 10
+ 1
— 2
0
0
+ 3
NA
NA
+ 14
+ 12
NA
+ 9
— 3

NA
+ 1
+ 1

N A Not Available.
Source: Bureau of the Census, Department of Commerce.

D E P A R T M E N T ST O R E O P E R A T IO N S
(Figures show percentage changes)
Other
Wash. Cities
Rich. Balt.
Sales, Aug. ’54 vs Aug. ’53 .. + 2
Sales, 8 Mos. ending Aug. 31,
’54 vs 8 Mos. ending Aug.
— 2
31, ’53 .........................
Stocks, Aug 31, ’54 vs ’53 ..
Outstanding orders,
Aug. 31, ’54 vs ’53

+

3

9

— 5

0

+ 1
— 3

— 6

— 3

— 7

— 8

— 5

— 8

— 1

+

— 2

— 1

33.6

Instalment receivables, Aug.
1, collected in Aug. ’54 __

47.5

1
40.2

34.4

10.7

14.3

15.9

16.0

D.C.

Va.

W .V a.

N.C.

S.C.

+3

+ 9

—1

— 10

—4

—6

Sales, Aug. ’54 vs Aug.
’5 3 .................. ................. -




14.5

i

508,904
250,605
1,294,958

7,215,240
1,637,382
5,166,029

9,987,413
1,933,586
4,435,289

226,165
3,583,963
676,752
718,982
275,637
1,522,900
290,665
168,749
253,600
1,071,269

228,455
3,710,955
608,221
516,081
311,606
882,977
177,439
81,518
240,600
374,920

2,531,679
15,110,434
4,212,592
7,473,591
3,413,210
9,397,606
2,162,118
1,453,099
2,022,800
8,548,258

1,999,232
25,299,079
4,545,144
7,452,688
3,701,007
17,785,252
3,217,480
1,586,324
1,520,731
5,505,402

409,744
681,747
711,150
356,655

95,233
716,554
317,250
134,588

2,311,206
6,739,489
5,268,210
2,081,329

3,850,608
6,271,770
4,195,542
706,262

3,006,868

9,998,329

38,726,482

56,364,066

$32,129,333

$229,864,687

$278,494,544

IN D IV ID U AL CITIES
— 2
Baltimore, Md___ ________
+ 5
— 4
Washington, D. C________
+ 7
— 7
Richmond, Va. ___________
+ 6
— 12
— 19
Charleston, W . Va. ______________
* Data from furniture departments of department stores as well
as furniture stores.

39.4

Md.

2,214,783
81,434
459,964

F U R N IT U R E SA L E S*
(Based on Dollar Value)
Percentage change with corresponding period a year ago
August 1954
8 Mos. 1954
STATES
— 2
Maryland ________
+ 5
— 4
Dist. of Columbia
+ 7
— 4
— 6
Virginia _______ _
— 19
— 17
West V irgin ia____
— 6
— 10
North Carolina_____________
— 1
South Carolina_____________
+ 5
— 6
0
D istrict___________________

Dist.
Totals

— 1

Open account receivables, Aug.
1, collected in Aug. ’54 __

— 1

+

2,850,019
2,868,584
3,162,878
1,560,427
12,037,026
1,371,050
5,984,531
13,076,043
12,250,423
1,498,697

South Carolina
Charleston
Columbia ___
Greenville ____
Spartanburg _

2

— 7
— 7

2,041,568
1,712,391
3,437,999
2,285,394
10,232,872
1,539,086
4,781,093
23,012,993
8,084,364
1,145,850

North Carolina
Asheville
_ _
Charlotte
D u r h a m _____
Greensboro
High Point __
Raleigh . . . ___
Rocky Mount _
Salisbury ____
Wilson ______
Winston-Salem

12

247,179
997,517
230,860
101,482
1,914,615
135,250
178,190
1,510,768
2,471,135
100,210

Dist. of Columbia
W a sh in gto n __

—

+ 16
— 7
— 4
+ 3

305,055
679,044
354,130
113,371
908,062
202,850
291,979
6,702,276
1,057,619
284,600

District Totals _$33,300,138

12

Virginia
Danville ____
H opewell_____
Lynchburg
Newport News
Norfolk
_____
Petersburg
Portsmouth __
Richmond . .
Roanoke __ ..
Staunton ___
West Virginia
Charleston
Clarksburg
Huntington __

—

+ 1

ii

y

Federal Reserve Bank of Richmond

F if t h D is t r ic t

B a n k in g

D E B IT S TO D E M A N D D E P O SIT A C C O U N T S*
(000
omitted)
Aug.
Aug.
8 Months
8 Months
1954
1953
1954
1953
Dist. of Columbia
W a sh in g to n ______ $1,156,152
$1,100,770 $ 9,236,217 $ 8,616,916
Maryland
B altim ore_________ 1,379,929
1,377,278
11,448,718
11,343,431
Cumberland ______
25,296
22,816
188,239
203,463
F re d erick _________
21,694
21,988
178,670
186,480
Hagerstown ______
34,274
35,730
286,231
300,575
Total 4 Cities .... 1,461,193
1,457,812
12,101,858
12,033,949
North Carolina
Asheville__________
62,673
61,210
487,782
490,593
C h a r lo tte _________
355,663
350,809
2,773,331
2,894,049
D urham _____ _
104,192
136,025
730,915
774,052
Greensboro________
119,365
114,755
943,501
952,624
High Point** _____
44,155
44,846
336,403
NA
Kinston ___________
27,024
32,591
167,260
176,963
177,092
160,518
1,500,129
1,494,016
Raleigh ___________
Wilmington ______
47,044
48,602
371,779
372,793
W ils o n ____________
28,651
32,538
154,796
151,717
W inston-Salem ___
148,745
161,363
1,180,295
1,183,495
Total 9 Cities __ 1,070,449
1,098,411
8,309,788
8,490,302
South Carolina
Charleston ________
73,343
74,034
589,929
631,173
Columbia _________
148,077
155,485
1,312,908
1,274,891
Greenville_________
108,737
110,181
861,821
897,872
Spartanburg ______
62,676
66,186
495,834
515,912
Total 4 Cities __
392,833
405,886
3,260,492
3,319,848
Virginia
Charlottesville ____
30,428
29,615
249,115
220,316
Danville __________
35,174
37,415
273,498
292,855
Lynchburg _______
49,149
47,574
390,387
387,081
Newport News __
48,722
44,946
376,081
385,970
Norfolk ___________
250,813
243,628
2,030,928
2,043,231
32,735
28,386
256,333
244,868
Portsmouth ______
Richmond _________
659,645
606,840
4,735,287
4,835,401
119,395
120,807
927,252
967,827
R o a n o k e __________
Total 8 Cities __ 1,226,061
1,159,211
9,238,881
9,377,549
West Virginia
Bluefield _____ _____
37,053
45,206
307,099
350,165
Charleston ________
155,058
168,423
1,343,533
1,351,510
Clarksburg________
29,914
31,546
248,567
269,200
Huntington ______
62,699
68,408
545,102
565,135
P ark ersb u rg_____
29,900
30,803
240,131
240,332
Total 5 Cities __
314,624
344,386
2,684,432
2,776,342
District Totals _____$5,621,312
$5,566,476 $44,831,668 $44,614,906
*
Interbank and U. S. Government accounts excluded.
**
Not included in District totals.
N A Not Available.




S t a t is t ic s
50 R E P O R T IN G M E M B E R B A N K S
(000 omitted)

Items

Sept. 15,
1954

Change in amount from
Aug. 11,
Sept. 16,
1954
1953

Total L o a n s ____________________ $1,441,550**
Bus. & Agric. ________________
636,408
Real Estate Loans ___________
286,353
All Other Loans _______________
536,941

+
+
+
+

Total Security Holdings _______ 1,871,795
U. S. Treasury B ills________ _
121,008
U. S. Treasury Certificates__
115,038
U. S. Treasury Notes ___ ___
290,603
U. S. Treasury Bonds ________ 1,082,998
Other Bonds, Stocks & Secur.
262,148

+
4,486
— 4,221
— 71,640
— 3,904

+ 49,795
— 42,821
— 157,727
— 42,584

+
+
+

+259,037
+ 33,890
+ 23,092
+
9,182
+
1,691
— 56,202
+
4,781

47,141
33,816
5,278
8,117

78,425
5,826
81,639

Cash Items in Process of C o l.__
Due from Banks ____________ _

368,226
202,719*

Currency and Coin ___________ _
Reserve with F. R. Banks _____

79,358
493,649

+ 14,170
+
3,395
— 24,911

Other Assets ___________________
62,949
Total Assets __________________ 4,520,246

—
506
+ 125,414

Total Demand Deposits _________ 3,416,579
Deposits of Individuals ______ 2,526,316
Deposits of U. S. Government
103,618
Deposits of State & Local Gov.
180,019

+ 122,710
+ 68,081
— 2,901

Deposits of Banks ___________
Certified & Officers’ Checks__

545,831*
60,795

— 3,718
+ 49,361
+ 11,887

+
+
+
+

+

38,231
3,899
22,347
13,785

70,570

+
7,007
+ 33,731
— 48,612
+ 12,934
+

14,841

—

5,887

1,380
3,346
4,726

+
+

67,012
59,474

+

7,538

Total Time D eposits___________

746,117

Deposits of Individuals ___
Other Time D eposits_________

659,748
86,369

Liabilities for Borrowed Money
All Other Liabilities____________

6,700
53,677

6,300
5,617

— 33,100
+ 10,564

Capital Accounts _______________ 297,173
Total Liabilities ______________ $4,520,246

2,007
+ 125,414

+ 19,087
+ 70,570

+
—
+

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

1 12 Y

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