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FE D ER A L R ESE R VE B A N K O F R I C H M O N D



O C T O B E R 1964

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In Ju n e of this year, some 310,000 persons in a
Fifth D istrict labor force estimated at 6^4 million
were classified as unemployed. Thus, without allow ­
ing for normal seasonal changes in labor force pat­
terns, the D istrict’s unemployment rate was 4.6% .
T his w^as wrell below the national rate which, without
seasonal adjustm ent, stood at 6.1% . The p ara­
graphs that follow exam ine some of the characteristics
of unemployment in Fifth D istrict states and, where
appropriate, offer some comparisons between the
D istrict and the nation. A s a necessary prelim inary,
the initial sections consider briefly how existing
techniques for m easuring unemployment affect in­
terpretation of the resulting statistics.

Identifying the Unemployed U n em p lo ym en t is
estim ated from sample surveys of households taken
one week in each month. A person is counted as
unemployed if during the survey wreek, by his own
testimony or that of another spokesman for the house­
hold, he did no work for pay and was seeking work.
If he did not actively seek work, he would never­
theless be considered unemployed if h e : (1 ) was
aw aitin g the results of job applications or inquiries
made during the previous 60 d ays; (2 ) w as w aiting
to be called back to a job after a layoff; (3 ) had a r­
ranged to start a new job within the next 30 days and
was not in school; (4 ) was prevented from seeking
a job by illness or by a belief that suitable work was
not available in his community.
Unemployment is popularly thought of as involving
loss of jobs by established workers with financial
responsibilities, thus threatening the welfare of de­
pendents and w eakening consumer demand. M any
less dram atic causes, however, can raise unemploy­
ment rates without these serious consequences. These
m ay include housewives entering the labor force or
teenagers seeking summer jobs. Even termination
of employment involves considerably less hardship in
some cases than in others.
Digitized for 2
FRASER


D!
?

Statistics on total unemployment have become
available for all D istrict states only since Jan u ary
1960 and experience w ith these data is too lim ited to
perm it reliable estim ates of seasonal variation. M ore­
over, they are not available in breakdowns which per­
m it analysis of the composition of unemployment.
Consequently, a detailed study of unemployment by
states must rely on state unemployment insurance
statistics, which are the best available information on
the subject. Unemployment insurance data cover
only a lim ited group of the unemployed, but they in­
clude most perm anent workers, whose joblessness is
of particular economic significance.
Total V ersus Insured Unem ployment T h e ch arts
at the bottom of page 3 reveal a close relationship be­
tween insured and total unemployment rates. The in­
sured rate represents the number of benefit recipients
expressed as a percentage of the estim ated number
of covered workers. The total unemployment rate
m easures the fraction of the labor force without jobs
each month during the survey week.
The specific relationship between these two rates
varies from state to state, depending on the industrial
structure within each state and on the provisions
of the various state unemployment compensation laws.
Important legal differences exist between state pro­
gram s, especially with respect to kinds of employ­
ment and sizes of establishm ents covered by in­
surance, the experience in covered employment re­
quired to become eligible for benefits, and the manner
of determ ining the duration of benefits. These dif­
ferences affect the com parability of the data and
should be taken into account in comparisons between
individual District states and between the District
and the rest of the country.
The left-hand panel on page 4 shows the percentage
of total employment covered by state unemployment
insurance program s for the nation as a wT
hole and for
each Fifth D istrict state. These program s do not

include Federal employees and ex-service personnel,
who are provided for in separate Federal programs.
For this reason a sm aller fraction of the work force is
covered in areas of relatively high Federal employ­
ment. The tendency to extend coverage to more in­
dustries and to sm aller firms is reflected in generally
larg er fractions of insured employment in 1963 than
in 1960.
Duration of Unemployment T he righ t-h an d ch art
on page 4 compares D istrict and national unemploy­
ment by duration. It shows the percentage distribu­
tion of unemployment insurance beneficiaries by num­
ber of weeks for which benefits were received. These
data do not include new entrants into the labor force
or the insured unemployed who have exhausted their
benefit rights. On the other hand, unemployment
compensation program s provide benefits up to 26
weeks and the chart probably reflects quite accurately
the duration of unemployment among established
w orkers whose joblessness ended in 14 weeks or less.
The chart shows Fifth D istrict patterns closely
resem bling those for the U nited States. For both the
D istrict and the nation the concentration w as heaviest
in the longer-duration categories. For the years
shown, about one fifth of the insured jobless remained
idle for 15 weeks or more, and around two fifths from
five to 14 weeks. The other two fifths typically found
reemployment within a month following layoff.
Interestingly, the data suggest that the improve­
ment in business between 1960 and 1963 had a some­
w hat greater impact in the District than in the nation.
D uring that period, the one-to-two-week category
increased in the D istrict and the five-to-fourteen-

week group declined, while other classes remained
about the same. The comparable groups for the na­
tion as a whole showed little change.
Industrial A ffiliation T h e in d u stria l affiliatio n
of the insured unemployed in 1963 is shown in the
left-hand chart on page 5. T his chart also shows
a close sim ilarity between the national and the Dis­
trict patterns. T ypically about half of the insured
unemployed were associated with m anufacturing,
about one sixth with contract construction, and about
one eighth with trade.
Developments between 1960 and 1963 affected the
industrial distribution of insured unemployment much
the same in the District as in the nation. The frac­
tion associated with m anufacturing declined for the
nation as a whole but remained substantially un­
changed for the District. A part from this, dif­
ferences were minor. M anufacturing, construction,
trade, and services accounted for 86% of all Dis­
trict insured unemployment in 1960 and 89% in
1963. The rem ainder originated in agriculture, trans­
portation and public utilities, and finance, insurance,
and real estate.
Sex and Age Characteristics T he d istrib u tio n of
insured unemployment by sex and age groups is
charted for 1963 in the right-hand panel on page 5.
For unemployed men, the fractions were much the
same in the D istrict as in the nation, although the
representation of older men was somewhat larger na­
tionally. Among unemployed women, however, those
under 45 represented a larger fraction in the District
w hile the over-45 group was relatively more nu­
merous nationally.

RATES OF UNEM PLOYM ENT
TOTAL (% of Labor Force) ■■ INSURED (% of Covered Employm ent)
Per Cent

Per Cent

J ___ I___ I___ I____I____I___ I____L

Note: 1964 data p artially estimated.
Source: U. S. Department of Labor and State Employment Security Agencies.




3

D istrict Experience, by States U n em p lo ym en t
patterns in various parts of the D istrict compare
favorably with those for the nation. R ates of total
unemployment in June, without seasonal adjustm ent,
w ere w ell below the national average in every part
of the D istrict except W est V irgin ia. There, how­
ever, the 7.1% rate represented a considerably
greater decline from Jun e 1963 than occurred either
nationally or in other D istrict states. Elsewhere in
the D istrict, Jun e rates w ere 2.7% in the W ashington
M etropolitan A rea, 5.3% in North Carolina, 4.3% in
M aryland, 3.6% in V irginia, and 4.1% in South
Carolina.
In June, North C arolina’s labor force exceeded
two million for the first time. V irgin ia’s labor force
numbered 1.6 million and M arylan d’s totaled 1.2 m il­
lion, w ith over 750,000 in the Baltim ore M etropolitan
A rea. T he comparable figure for South C arolina
w as one million and for W est V irgin ia 600,000. The
last two figures w ere sligh tly below year-earlier
levels, w hile all the others w ere higher. The labor
force in the W ashington M etropolitan A rea passed
the one m illion m ark for the first time in June.
About two thirds of these, however, are in suburban
areas and are also enum erated in the M aryland and
V irgin ia labor force figures.
M aryland and V irginia R ecen t tren d s in M a ry ­
land have closely paralleled those in the nation. For
the year ending with June, the state experienced
gains of about 2% in both the labor force and em­
ployment and a decline of more than 3% in the num­
ber unemployed. The close of the school year added
nearly 25,000 to the M aryland labor force between
M ay and June, but most of these w ere able to find
w ork and only 9,600 were added to the unemployed.
CO V ER ED EMPLOYM ENT AS PER CENT OF TOTAL

Digitized for4
FRASER


1963

T otal unemployment in Ju n e rose in line w ith pre­
vious years, but joblessness declined among ex ­
perienced w orkers and insured unemployment fell.
New jobs in construction, trade, services, state and
local government, m anufacturing, and agriculture
were responsible for this decline. In the 12 months
ending with Jun e, M arylan d ’s m anufacturing in­
dustries reduced employment some 6,000, but non­
factory jobs rose 25,000, of which 2,000 w ere on
farms.
In V irgin ia, labor force and employment gains were
in the neighborhood of 3% , but total unemployment
w as 13% higher than in the previous June. The state
has experienced a large increase in its high school
and college age population and, as a result, this y ear’s
June increase in jobseekers more than doubled last
y e a r’s fig u re: 15,300 compared w ith 7,550. U nem ­
ployment due to actual job losses w as down, how­
ever, as shown by the sm aller number draw ing un­
employment compensation. V irg in ia’s insured un­
employment in June totaled 8,800, down 11% from
a year earlier. W orkers entering the V irgin ia labor
force in the first half of 1964 found a variety of job
openings in durable goods m an ufacturin g; con­
struction ; transportation, communications, and public
u tilities; trad e; finance, insurance, and real estate;
services; and government. Jobs w ere more numerous
than a year earlier in all m ajor lines except mining.
The Carolinas In N orth C aro lin a, both the labor
force and employment rose 1% between Ju n e 1963
and Jun e 1964, w hile unemployment declined by the
same proportion. E ntrants into the labor force this
June raised the unemployment figure by n early 28,000
compared to 18,000 a year ago. N evertheless, both
the number and the rate of unemployment w ere below
DURATION O F INSURED UNEM PLOYMENT
W eeks

1-2
3-4
5-14
15 and over

W eeks

1-2
3-4
5-14
15 and over
10
20
30
40
50
60
it of Labor and State Em ploym ent Security

1960

year-earlier levels, as new jobs became available in all
m ajor categories of employment, particularly in
m anufacturing, construction, and services. W eekly
rates of insured unemployment during June ranged
from 2.8% to 3.1% this year, significantly lower
than in Ju n e 1963.
C ontrary to the typical pattern, both the labor
force and employment in South C arolina were slightly
lower in June than a year earlier. The state’s labor
force remained above year-earlier levels through April
but slipped below the 1963 pace in M ay and failed
to recover the loss in June. The declines were largely
in agriculture. Nonfarm employment rose steadily
in the first half of 1964 and by June exceeded yearago levels in all m ajor lines except construction.
W eekly rates of insured unemployment averaged a
low 2.3% in June, compared to 2.7% a year earlier.
W e st V irginia C o n tin u in g im pro vem ent in W e s t
V irg in ia’s economic fortunes is reflected in that
state’s unemployment data for the 12 months ending
w ith June. Unemployment in the state rose to
42,700 in June, about in line w ith seasonal expecta­
tions. The total unemployment rate was a com­
paratively high 7.1% but was substantially lower than
the 8.3% rate last June, when 50,100 w ere jobless.
Employment in construction rose nearly 10,000 dur­
ing the first half of this year and moderate gains were
registered in other nonfarm lines. Even mining, long
a declining source of jobs, made a small contribution
to the improvement. The rate of insured unemploy­
ment dropped from 4.5% in June 1963 to 3.4% a
year later.
Favorable Trends Continue L ate repo rts from
around the District suggest a continuation of favor­

INDUSTRY A SSO C IA TIO N OF INSURED UNEM PLOYED
P ERC EN TA G E DISTRIBUTION
1960

able developments. Numbers and rates of total un­
employment declined further in Ju ly everywhere
except in W est V irgin ia, where employment decreases
in the government and agricultural sectors were only
p artially offset by gains in construction.
M aryland’s total unemployment rate dropped to
3.9% in Ju ly and its insured rate to 2.4% . These
were the state’s lowest summertime levels since 1957.
The labor force was below the Jun e level, but employ­
ment gains lifted the state’s job count to a new high.
The labor force, employment, and unemployment
all declined in V irgin ia during Ju ly . Employment
declines were seasonal and more people had jobs than
in any previous Ju ly . The total unemployment rate
was 3.2% , only a shade higher than last year when
the lowest Ju ly figure since 1957 w as recorded. In­
sured unemployment w as up slightly, but the 1.2%
rate was one of the lowest in the nation.
Unemployment declined in North C arolina in Ju ly,
w hile both the labor force and employment increased.
The unemployment rate w as 4.5% , down sharply
from June. Of the state’s 92,000 jobless, over one
third were newcomers to the labor force, and slightly
fewer than one third were experienced w orkers draw ­
ing unemployment compensation.
In South Carolina, the labor force, employment,
and unemployment rose in Ju ly , but the unem ploy­
ment rate declined to 4.1% . Employment increased
in agriculture and construction but rem ained stable
elsewhere. A s students return to classes, and fall
activity quickens in agriculture and in m any nonfarm
sectors, unemployment w ill in all probability drop to
even lower levels.

A G E AND SEX OF INSURED UNEM PLOYED
P ER C EN T A G E DISTRIBUTION
1963
MEN

Source:

U. S. Departm ent of Labor and State Em ployment Security Agencies.




5

SOURCES OF HOME I

Savings & Loan
Associations
F

32°°

Individuals
and O thers
/

J

Savings and Loan
Associations
43%

15°°
Agencies 4%^B.r.i

A
^




/ N . M u t u a l S a v in g s
/
^s.
B anks
Life Insurance 1
\
ll ° o
M
Com panies
I
20%
/ Com m ercial n.
Banks
\y / |S

*
k
L

lif e Insurance /
Com panies /

\
\

Mutual
Savings
Banks

/C om m ercial^
/
Banks

Jm

of Governors of

/^ In d iv id u a ls
and O thers
11%

the Fe

'« System,

14%

IORTGAGE FINANCING
According to estimates of the Housing and Home Finance A gency, the outstanding volume
of all mortgage indebtedness on one- to four-fam ily nonfarm dw ellings at the end of last
ye ar amounted to $182 billion.

This w a s $116 billion, or 176% , greater than at the end

of 1953.
The bulk of this residential m ortgage indebtedness is held by m ajor types of fin ancial in­
stitutions.
Savings and loan associations, life insurance com panies, com m ercial banks, and
mutual savings banks held about 85% of the total in both 1953 and 1963.
Federal agencies
and "individuals and others," including m ortgage com panies and pension funds, held the
rem ainder.
Savings and loan associations, in particular, have steadily expanded their share of the
total over the past decade.
At the end of last y e a r these institutions held as much as life in­
surance com panies, comm ercial banks, and mutual saving s banks combined.
At that time
home m ortgages m ade up 74% of the assets of savings and loan associations and 50% of
mutual savings bank assets.

They occupied a considerably less significant position in the in­

vestment portfolios of life insurance com panies and com m ercial banks.
O ver the past five years, the conventional mortgage has become steadily more im portant
in residential financing, and at the end of last ye a r conventionals accounted for 64% of the
total.
FHA-insured loans also grew slightly in relative significance, but V A -gu aranteed mort­
gages as a fraction of the total fell sharply.

HOM E M O R TG A G E DEBT OUTSTANDING
BY TYPE OF FIN A N CIN G

HOME M O R TG A G ES AS PER CENT O F ASSETS
OF M A JO R FIN A N CIAL INSTITUTIONS
1963

FH A-lnsured
|

| V A -G u ara n te e d

Com m ercial
Banks

Conventional
Life Insurance
Com panies

M utual Savings
Banks

Savin gs & Loan
A ssociations

25

50

75

100

$ Billions




125

150

175

200

5 t h D IS T R IC T P E R S O N A L I N c o m 1 9 6 3
TOTAL
P£K CAPITA
JtMILLION
DOLLARS
2.786
MAHYLMV
9,163
Z,645
3,315
district of C
olum bia
2,057
8,907
VIRGINIA
2>,348
WEST VIRGINIA
1,883
8 ,6 0 /
1,807
NORTH CAROLINA
SOUTH CAROLINA
3,944
1,588
3 6 ,6 0 0
2 ,0 9 9
F IF T H V !S T R IC T
rn m m m m
m m m m mmmm

mmmm m m m m mmmm
mmwmmmm m m m wm m m m m m m m mmrnmmmmm

The nation’s personal income rose $21.6 billion, or
nearly 5% , last year, reaching a record $461.6 billion.
Data released recently by the Department of Com­
merce show that the D istrict of Columbia and 47
states, including all five in the Fifth Federal Reserve
District, shared in last y e a r’s gain. Total personal
income declined only in North and South Dakota and
Montana. P er capita income also rose to a new high
for the nation as a whole and in all states except the
Dakotas, Montana, and Idaho.
Income in the D istrict L a st y e a r ’s a g g r e g a te in ­
come gains in F ifth D istrict states, including the
District of Columbia, amounted to nearly $2 billion,
bringing the total figure to a record $36.6 billion.
The increase over 1962 w as slightly better than 5% .
Gains in individual D istrict states compared favorably
with those in the rest of the country. Absolute in­
creases exceeded $500 million in both M aryland and
V irgin ia and amounted to $424 million in North
Carolina. South Carolina, W est V irgin ia, and the
D istrict of Columbia recorded respective gains of
$199 million, $124 million, and $108 million.

mmmmmm

•

Relative gains in total personal income ranged from
3.8% in W est V irgin ia to 7.1% in M aryland. For
other parts of the D istrict, increases came to a little
better than 4% for the District of Columbia, ju st over
5% for each of the Carolinas, and 6% for V irginia.
The figures for M aryland, V irgin ia, and the Caro­
linas topped the percentage gain in total personal in­
come for the U nited States as a whole. M arylan d’s
percentage increase was equaled or exceeded by only
seven other states.
Per capita income also recorded sizable growth,
reaching new highs in all parts of the Fifth District.
Income per person in 1963 amounted to $3,315 in the
D istrict of Columbia, $2,786 in M aryland, $2,057 in
V irgin ia, $1,883 in W est V irgin ia, $1,807 in North
Carolina, and $1,588 in South Carolina. In absolute
terms, per capita gains were above the national
average in M aryland, W est V irgin ia, and the District
of Columbia and only $1 short of the national average
in V irginia. On a percentage basis, the growth in
per capita income w as larger than the nation’s 3.4%
in all five D istrict states, w ith increases ranging from
3.8% in W est V irgin ia to 5.3% in M aryland. Per

ILIAN INCOME RECEIVED FOR PARTICIPATION IN CURRENT PRODUCTION
BY SOURCE, 1950 AND 1963
MARYLAND


8


_

DISTRICT OF COLUMBIA

VIRGINIA

capita income in M aryland and the D istrict of Co­
lum bia exceeded the national average of $2,449 by
14% and 35% , respectively. In other D istrict states,
the per capita figures ranged from 64.8% of the n a­
tional level in South C arolina to 84% in V irginia.
M ajor Changes in ’63 H igh -lev el econom ic ac ­
tiv it y in 1963, coupled w ith h igh er w ag e ra tes,
brought a $1.6 billion increase in w age and salary
paym ents in the District. Gains in this important in­
come component were especially large in m anufactur­
ing, wholesale and retail trade, services, and in the
government sector of the D istrict’s economy. Con­
struction also made a substantial contribution. In
addition, property income, made up of rents, divi­
dends, and interest, rose sharply, recording a larger
proportional gain than any income component except
that arisin g from government employment. Other
labor income and transfer payments, such as social
security pensions, unemployment insurance, and vet­
eran s’ benefits, made sm aller, but significant, con­
tributions to the increase in D istrict personal income.
Proprietors’ income, or earnings of self-employed
people and owners of unincorporated enterprises, de­
clined slightly in 1963. T his w as due entirely to a
$141 million drop in farm proprietors’ income which
more than offset gains of proprietors in nonfarm
activities. Declines in farm proprietors’ income oc­
curred in all District states except South Carolina
and were especially pronounced in V irgin ia and
North Carolina, both of which suffered severe
drought damage in the summer of 1963.
Industrial Sources of Income C lose to seven
tenths of the D istrict’s 1963 total personal income
originated in the private nonfarm sector of the
economy. Federal, State, and local governmental
activity generated a little more than one fourth, with
agriculture accounting for the remainder.

Per Cent

N early four fifths of the Fifth D istrict’s total per­
sonal income in 1963 represented civilian income re­
ceived for participation in current production. This
refined income m easure is arrived at by subtracting
from total personal income those portions accounted
for by pensions and other transfer paym ents and by
m ilitary paym ents. A breakdown of the refined
statistic by broad industrial sources provides a con­
venient bird’s-eye view of the D istrict’s productive
structure.
For the D istrict as a whole, m anufacturing was the
chief source of civilian income earned in current pro­
duction in 1963, accounting for one fourth of the
total. Other commodity-producing industries, such
as farm ing, mining, and contract construction, con­
tributed 13%. A pproxim ately 24% originated in
distributive industries, of which wholesale and retail
trade are the most important. The civilian portion
of the government sector generated 20% and service
industries accounted for the rem aining 18%.
The charts on pages 8 and 9 compare the various
parts of the Fifth D istrict with respect to broad in­
dustrial sources of civilian income earned in current
production. In the D istrict of Columbia, where the
Federal Government is the preeminent employer,
close to one half of the 1963 total came from govern­
mental sources. The rest w as provided principally
by services and trade, each of which is of m ajor im ­
portance in the economy of this highly urbanized
area. On the whole, commodity production plays
only a minor role in the economy of the nation’s
capital, although private construction activity and a
modicum of m anufacturing contribute to civilian in­
come. In W est V irginia, on the other hand, output
of commodities, m ainly manufactured items and
m ineral products, accounted for nearly one half of

CIVILIAN INCOME RECEIVED FOR PARTICIPATION IN CURRENT PRODUCTION
BY SOURCE, 1950 AND 1963
WEST V IR G IN IA

-------




_

,
r —*

NORTH C A R O LIN A

„
_
Per Cent

SOUTH C A R O LIN A

Trade

G ovt.

Other

9

1963 civilian income from current production. Fed­
eral, State, and local governments and service in­
dustries contributed sm aller proportions of income
in W est V irgin ia than in any other Fifth D istrict
area. T rade was also relatively less important than
in other District states. In 1963, government ac­
tivity accounted for only 11.4% of W est V irg in ia’s
civilian income from current production while trade
and the service industries provided 13.3% and
15.7%, respectively.
From the standpoint of income sources, M aryland
and V irgin ia are strikin gly alike. Both derive more
of their income from governmental sources than the
other Fifth D istrict states, partly because large num­
bers of the residents of each hold Federal Government
jobs in the W ashington Metropolitan A rea. In 1963,
governm ent’s contribution to current civilian produc­
tion income came to about 23% in both M aryland
and V irgin ia.
Moreover, m anufacturing was of
roughly equal importance in the two states, account­
ing for 22.5%; of civilian production income in M a ry­
land and 21.1% in V irginia. Service industries were
relatively more important in the two states than in
other Fifth D istrict states, with 1963 proportions
am ounting to 19.8% for M aryland and 18.1% for
V irgin ia. T rad e’s share was roughly the same as that
of services’ in V irgin ia but was somewhat lower in
M aryland, where it came to 17.7% of the total. Con­
struction contributed 7% of current production in­
come in each state, more than in any other area of
the F ifth District.
The data also reveal a comparably close resem ­
blance between the economies of the two Carolinas.
M anufacturing, the chief income producer in both
states, accounted in 1963 for nearly one third of
North C arolina’s civilian production income and more
than a third of South C arolina’s. The figure for
South Carolina is the highest in the D istrict. T rade
ranked next to m anufacturing as an income source in
both states, providing 17.8% of civilian income from
current production in North C arolina and 16.3% in
South Carolina. Only in these two states is farm ing
a relatively important source of income. In 1963, in­
come from farm ing contributed 10% of current
civilian production income in North C arolina and 7%
in South Carolina, compared with less than 2% in
M aryland and W est V irgin ia and about 2.5% in V ir­
ginia. Both the government sector and the service
industries played a sm aller role in the C arolinas than
in any other District state except W est V irginia.
A S h ift of E m p h asis T he ch arts on p ages 8 and
9 show that important changes have taken place in
the Fifth D istrict’s sources of income over the past

10


13 years. Although the data for 1950 and 1963 are
not strictly comparable due to use of different bench­
m arks, the differences are not sufficiently great to
affect the picture presented. For the most part, this
is a picture of long-range and pervasive changes in
the basic economic structure of the Fifth District.
The data show a sharply declining share of income
originating in agriculture and grow ing proportions
generated in nonfarm activities, p articularly manu­
facturing, services, and government. F arm in g’s con­
tribution to income in the two C arolinas w as only
about half as large in 1963 as in 1950, while in other
D istrict states the reduction has been even sharper.
M anufacturing’s share has, on the other hand, risen
steadily in each Fifth District area except the Dis­
trict of Columbia. Its grow th has been most signi­
ficant, perhaps, in W est V irgin ia where, since 1950,
it has displaced m ining as the chief income producer.
Income from services has become a larger part of
total income throughout the D istrict over the past
13 years. T rade, however, is generating relatively
less income than in 1950 throughout the D istrict ex ­
cept in W est V irginia, where its share has risen
fractionally.
W hile these trends are the product of complex
social as well as economic forces, they are closely re­
lated to basic changes in the spending habits of Fifth
D istrict residents. The average resident of this area
is apparently spending more of his income for medical
care, education, financial and legal counseling, and
other types of personal and business services and less
for food, clothing, and other commodities than was
the case 13 years ago. The proportion of income
stemming from governmental activities has risen
appreciably, in part because of the necessity to pro­
vide schools, highw ays, personal protection, and other
facilities demanded by a larger and more highly
urbanized population.
These shifts in relative importance of m ajor types
of economic activities have gen erally followed na­
tional trends. In some sectors the pace of change
has been more rapid in the F ifth D istrict than in the
nation as a w ho le; in others it has been slower.
Income from m anufacturing and services increased
proportionately more in the D istrict than in the na­
tion, while income from trade declined relatively less.
A s a result, D istrict residents’ share of the nation’s
income from each of these three sources was slightly
larger in 1963 than in 1950. On the other hand, the
D istrict’s share of the nation’s income from gov­
ernmental sources and from farm ing was less in
1963 than in 1950.

THE FIFTH DISTRICT
BAN KIN G DEVELOPMENTS

The banking community has played an active role
in the expansion of the Fifth D istrict’s economy so
far this year. B anking statistics reveal a significant
grow th in overall credit extended by the D istrict’s
member banks, with increases in all loan categories.
Individual banks have also shown substantial ex­
pansion in total resources, some of it resulting from
a continuation of recent consolidation and m erger
trends. Moreover, a number of new banks have
been established.
Loan Expansion M id y e ar call report d ata in d i­
cate that D istrict member banks expanded their loans
in the first half of this year at a pace substantially in
C H A N G ES IN LO A N S, INVESTMENTS
AN D DEPOSITS
FIFTH DISTRICT MEMBER BAN KS
|

Jan.-June 1964




Jan.-June

1963

advance of that in the same period last year. The
chart on this page compares the two periods. On
June 30 gross loans of all D istrict member banks
stood at $6.7 billion, 16% higher than a year earlier.
The increase for the first six months of 1964
amounted to nearly 7% .
Strong demand for commercial and industrial loans,
reflecting strength in the D istrict’s business com­
m unity, was a m ajor factor in this expansion. B u si­
ness loans rose 8.2% in the first half, reaching a level
of $2 billion, and on Jun e 30 were nearly 15% above
a year earlier. Classified business loan data indicate
that expansion w as most rapid in loans to wholesalers
other than commodity dealers and in construction
loans.
R eal estate loans also moved up rapidly in the first
half, outstripping their robust performance in the
same period of 1963. The overall increase for the first
half of this year came to over 9% , but most of this
took place in the first quarter. Expansion was at a
substantially reduced pace in the second quarter.
The rem aining categories, taken together, rose 5% in
the first half, somewhat more than in the same
period last year.
Call report data indicate a slightly sm aller per­
centage increase in consumer loans in the first half
of this year as compared with the like period of 1963,
8.7% against 9.1% . But this y e a r’s pace m ay have
been affected adversely by the Jun e truckers’ strike,
which prevented delivery of m any new cars. Loans
to farm ers, which have shown a high degree of
volatility over the past two years, increased nearly
24% in this y e a r’s first half. Periodic sharp rises in
these loans in 1963 and 1964 m ay be associated in
some m easure with the drought suffered by large
sections of the D istrict in these two years.
Data on loan behavior since the end of Jun e are
confined to gross loan totals for all member banks
and to detailed breakdowns of the loan portfolios of
the w eekly reporting banks only. These data indi­
cate that loan expansion continued in the third
quarter, as total loans of all District members rose
an additional 1.7% between June 24 and September 9.
Figures for the weekly reporting banks suggest that
11

C H A N G E S IN NUMBER O F BAN KS AN D BRANCHES
FIFTH DISTRICT*
December 31, 1963 to August 31, 1964
Com m ercial Banks
Num ber of b anks, beginning of period...................

888

N ew banks org an ized ........................................................

15

Mergers and absorptions................................................

19

Number of banks, end of period.................................
Net chan ge.........................................................................

884
—

4

B ranches
Num ber of branches, beginning of period..............

1,681

New branches establish ed..............................................

87

Banks converted info branches...... ..............................

19

B ranches discontinued........................................................

5

Number of branches, end of period..........................

1,782

Net chan g e.........................................................................

+

101

Net C hang e in Banking O ffices.........................................

+

97

*ln d u d in g six W est Virgin ia
the Fifth District.

outside

counties w hich

fa ll

the growth over the more recent period w^as also dis­
tributed over all important loan categories. Business
loans at these 19 banks gained 0.3% between the end
of Jun e and September 9, and the “all other” category
rose 1.7% . Real estate loans apparently regained
some of their first quarter vigor, rising more than 4%
in the same period, while agricultural loans advanced
an impressive 41% .
S o urces of F u n d s D em and deposits of D istrict
member banks declined 0.8% in the first half, com­
pared w ith a considerably larger reduction in the
same period last year. Tim e and savings deposits, on
the other hand, rose nearly 9% , outstripping the rapid
increase of a year earlier. Growth of the latter de­
posits was an important factor not only in supplying
banks with loan funds but also in determ ining the
kinds of loans bankers made. Total deposits in­
creased 2.4% over the period.
Despite the increase in deposits, the sizable ex ­
pansion in loans was accompanied by a curtailm ent
in bank investment activities. Total investments of
D istrict member banks fell 4.7% in the first half, as
D istrict banks reduced their holdings of U . S. Gov­
ernment securities by $212 million, or more than 8% .
H oldings of municipals, however, continued to rise,
although at a slower pace than last year. The gain in
m unicipals in the first half of this year was $80 m il­
lion, nr about 9% . The decline in Governments was
Digitized for 12
FRASER


concentrated heavily in short-term s, with under oneyear m aturities falling almost 24% . Securities other
than Governments and municipals, including a few
unguaranteed bonds of Federal agencies, fell 20% .
More recent data indicate some change in these
first half trends in the third quarter, w ith respect both
to deposits and investment portfolios. Between
June 24 and September 9, for exam ple, gross demand
deposits at all D istrict member banks increased 4.3%
while total deposits rose 3.7% . T im e and savings
deposits moved up at a pace somewhat below that of
the first half, gaining 2.7% . M oreover, D istrict banks
increased their investments in this period. Total in­
vestments rose 1.5% , w ith gains in holdings of both
Governments and other securities. Figures for the
19 w eekly reporting member banks, which also show
investment increases, indicate that additions to Gov­
ernments portfolios were entirely in the under onevear and five-year or over m aturity classes.
B an k in g S tru c tu re M e rg ers, co n so lidatio n s, and
the establishment of new banks are continuing to
change the structure of Fifth D istrict banking. In
the first eight months of 1964, 15 new banks were
organized, while 19 were elim inated through mergers
and absorptions for a net decrease of four banks. At
the beginning of the year, the 888 D istrict banks had
1,681 branches. B y A ugust 31, they had added 87
new branches, converted 19 absorbed banks into
branches, and discontinued five branches for a net in­
crease of 101. These developments resulted in a
net increase of 97 banking offices.
The greatest changes took place in V irgin ia, largely
as a result of a 1962 statutory revision which per­
mits banks to acquire branches through m erger on
a statewide basis. Ten of the 15 new banks organized
in the D istrict in 1964 are in V irginia, which also
had the greatest number of new branches, with 28.
V irgin ia also accounted for 11 of the 19 banks con­
verted into branches.
M aryland was the next most active state in struc­
ture changes with four new banks, one elim inated
through m erger, and a net increase of 20 additional
branches. W est V irgin ia w as the only state in the
Fifth District in which the banking structure re­
mained unchanged.

PH O TO CREDIT
Cover — Adult
Schools.

Education

Program ,

Richmond

Public

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