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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 SfcKVILfc S I A I IUN A I I I n rth a n d and ty p in g s k ills . M o d e rn ; 2 P. M . M r . I l k ' ItriiH l.n , HIm- p ly in person , no telep ho n e c a lls ac M E A T R e lia b le , e x p e rie n c e d ; g^| C U T T E R — F u ll tim e . S uper ce ote d. M r. H I lo ji l l l[ . h u m s 4I>> fic e . $300, fee p a id . C all liu n ili/; U » > it* « a t tlu > n St. No a b ilit y ; w ith c it y re fe re n ce m a rk e t e xp e rie n c e o n ly . A p p ly I f r j i l / U llr , W IIMUJI, U i i d m i i u i and U iiiln iu t;. phone c a lls please 8 l l l l l I t ) , m i O i l (In . lltl'l Jlt.I.Tt,, HMt !i!PrtH>> t l d l i i I Ini > 3. VUirt St. 9 9 H 'O U S E W O R K E R Cook, liv e on 5 D E A L E R S — Need $50. T h e R iM iir I)I|M>| Se r v i c e s t a t io n atte C R E T A R Y — P e rm a n e n t p ositio n , d a ys, S undays, M o n d a y s o ff. E x p e ri- e xp a n sio n p ro g ra m can use 3 p a rt No w a s h in g , g re a s in g o r t j M E A T C U T T E R — E x p e rt. G ood s t a r t /p in g and g en eraj o f f ice w o rk fo r b!e tim e d e a le rs , a v e ra g e $2 to $3 per o d ^ ifl.c e r^ £ n t w y e r. l- g ir l id jB _ 0. P re vio u s f lyveen 1 :3 0 A. o rfh a n d not > qood t y p is t_ _ _ _ _ A U E S M A W ^-M aTor o il C H A N 1C — A u to m o b ile , sTraig' I ' IK I M , between 9 and 5._________ 9 D R A F T S M A N — A rc h ite c tu ra l b a cks a la r y , 1JM) H in t/ 10 good s a la ry a nd com m issi C R E T A R Y -N U R S E — D o c to r's of000; fee p a id ; com pany b e n e fits, e xce p t :e. A ge 35-50 p re fe rre d ./ «Wj-ite I (Jill! portuoLJy to p ro g re ss. A p p l ire th is p ap er 'rtA F T S M ; la k in g tak N IO R C L E R K S ERVl S T A T IO N SHTF Item s o r u nd er tem c G ood s a la r y a nd A b ilit y , a d u a te plus t 10 to 55. A p p ly <pediti a ph ic and n la i, t J lillih u i iz a tj 2.50 w e e k ly . H A N IC Unde aphi< WING M A C H IN E v a rio us cperienced on in dustl , f ilin g 1 sew m a ttre sse s and A bo ve y and b en efits. A II ca te j ft> u »k>., il> It. 1 1 r advan^ p o r tu n ity em n loye j Id w ith IT R E S S — Fu _ '—For fli l l ' l t l i l II y , good tip s' p a r tic u li Opportunity for m il H i m i, ! • national concert CHECK rable, but not la rg e l, care this ITR E S S — D in in g ro o m e xp e rie n c e lio n . M i e lu d in g age, education an ce ssary. A p p ly in p e rson a fte r j S IL K — P e rm a n e n t em - j ccri in a ll nho'.es e nre. ' • p io y m r n t, best p a y rc te , v o c u tio ri,! W l . O lk I M i n ;j »vrpil<>!\t * ;o r k in T c o n d it o n s , exper> Hui.__ ____________________v hT^aTT:1Stmt °E i S| int»> 4 , '® Lacom^w^h __ <M0 I M O-lBoWfttl f> * i ' I * 1 '^ y * I 6 inn M m ^^ferrt ap ^ I IT IO| IjM H iqnun H < fl m «l FINISHER *.A . < *l)(i*> »~ nlv 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