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FED0
RICHMOND
SEPTEMBER 1950
AMERICAN VISCOSE CORPORATION PLAN T A T ROANOKE, VIRG IN IA
The Synthetic Industry
K in g Cotton no longer reigns supreme in
the Fifth Federal Reserve D istrict’s domain.
T h ere’s a new, and form idable, challenger for
suprem acy— synthetic fibers. This new indus
try has becom e one of prime im portance to the
D istrict in recent years. T he story of its de
velopm ent and grow th is told in the article
begin ning on Page 3.
Also In This Issu e
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Fifth D istrict T rend Charts__________ Page
2
A gricultu re & the K orean W a r ______ Page
6
Business Conditions & P rospects____ Page
8
M em ber Bank Earnings R ise_________ Page
10
Statistical D ata________________________ Page
11
FEDERAL RESERVE BANK OF RICHMOND
F if t h
CONSTRUCTION
d is t r ic t
trends
CIGARETTE PRODUCTION
CONTRACTS AWARDED
Total awards in July were up 24% from June on a seasonally
adjusted basis and 48% ahead of a year ago. Important gains
made from June to July in commercial, factory, apartments, and
hotels. Public works were lagging with one- and two-family houses
near an all-time high.
Tobacco manufacturers would have enjoyed a run at the con
sumer level on cigarettes for they can handle a greater amount of
business than they received. Output in this District in July drop
ped 2% from June seasonally adjusted but was 5% ahead of a year
ago. Export sales trend still down.
-+ + + -
BITUMINOUS COAL PRODUCTION
DEPARTMENT STORE SALES
July output down 25% from June seasonally adjusted due mainly
to miners’ holiday. July 19% ahead of a year ago. Car shortages
are appearing in some sections and manpower shortages are notice
able in others. Demand likely to improve markedly by year-end.
Department store sales, which had been rising in notable fashion
up through June in this District, gained 18% on an adjusted basis
from June to July. July sales were 20% ahead of July last year,
which was the highst seasonally adjusted month of 1949.
ACTIVE COTTON SPINDLE HOURS
BUSINESS FAILURES
July spindle hours down 4% from June on an
which is contrary to the cotton consumption figures
in this period. July spindle hours were 33% ahead
while cotton consumption figures were 40% ahead.
heavier weight yarns were spinning.
The booming business levels in July did not prevent business fail
ures from rising 42% in that month after seasonal adjustment. This
sharp jump was probably a result of the closing of the accounting
period on June 30 and the final realization of mainly losing opera
tions in the first half of the year.
adjusted basis
which rose 4%
of a year ago
This indicates
r2]
MONTHLY REVIEW
SEPTEMBER 1950
Vast DuPont Nylon Plant In Virginia
rriiMiiFi
wriirrrn
ib in ir h r
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M AR TIN SVILLE PLAN T M ADE BIG CONTRIBUTIONS TO W A R EFFORT
Synthetic Fibers—Fifth District Leads Nation
Rayon, N ylon, Dynel, Orion, Saran, Reevon— M an-M ade Materials Join With King Cotton
A s Leading Contributors T o South’ s Economic Advance
The synthetic fiber industry, which could “ go off to
war” with a minimum of conversion difficulties, is one
of the most promising young industries in the national
economy and an important source of manufacturing
employment and income in the Fifth District. Based
on the most recent achievements of the chemical indus
try, it is at the same time allied with one of the world’s
oldest occupations— the textile crafts.
Until fairly recently the textile industry in the South
meant the cotton textile industry, and for many years
King Cotton’s domain extended from field to factory.
But with the introduction of synthetic fibers, the South’s
textile industry raised its sights to new horizons, and its
industrial structure began to reflect the rising importance
of the chemical industry.
of the first industries to feel the impact of mili
tary mobilization is one in which the Fifth District
is the leading production center of the nation— the syn
thetic fiber industry. Chemicals used in the manufacture
of rayon and nylon are also the raw materials for ex
plosives and synthetic rubber. Rayon and other syn
thetic fibers now going into hosiery, apparel, and many
more civilian goods may have to be diverted to such
materials of war as airplane tires, parachute cloth and
shroud lines, and self-sealing tank linings.
ne
O
Although rayon plants have been working near capac
ity for many months, they have been unable to meet
requirements of their users. Anticipation of military
orders, on top of an already tight supply situation, has
brought on stockpiling attempts by weaving mills. Dur
ing the last war the entire output of nylon went to
Uncle Sam, and although the volume of production has
been increased, heavy war requirements would leave
little for milady’s wardrobe. Already, fears of nylon
yarn shortages have resulted in gray markets in which
resale prices have been more than triple primary quo
tations.
The First Break With Nature
From the dawn of civilization until the beginning of
this century, man used only those fibers supplied by
nature to make apparel and coverings. Thousands of
years went by before even the idea of making fibers
evolved, and then it took over two centuries before a
successful process was worked out for commercial pro
[3]
FEDERAL RESERVE BANK OF RICHMOND
duction of a man-made textile fiber. This first break
with nature in the textile business was the development
of rayon, and the first plant in this country was estab
lished in Pennsylvania in 1910.
The Fifth District’s leadership in the nation’s produc
tion of rayon began in 1917 when American Viscose
Corporation constructed a plant at Roanoke, Virginia,
for the manufacture of viscose yarn and fiber. During
the 1920s a number of rayon plants were established in
the District, with Celanese Corporation of America
locating at Cumberland, Maryland; Tubize Artificial
Silk Company at Hopewell, Virginia; American Enka
near Asheville, North Carolina; du Pont in Richmond
and Waynesboro, V irginia; Industrial Rayon Corpora
tion in Covington, Virginia, and another American V is
cose plant at Parkersburg, W est Virginia.
AMERICAN VISCOSE PARKERSBURG PLANT
ville and both of du Pont’s rayon plants in the District
— its acetate plant at W aynesboro, Virginia, and its
viscose plant near Richmond— have been expanded con
siderably since their initial operations.
Following the general curtailment of plant and equip
ment expenditures during the Great Depression, rayon
facilities in the District entered a period of expansion
that has continued to the present time. The big Celanese
plant at Narrows, Virginia, got into production late in
1939, and subsequent additions to its capacity have been
made at a cost of $15 million. A few months ago Cela
nese announced plans for still further expansion of this
plant which is expected to increase staple fiber produc
tion by 200,000 pounds per week. Its giant Celriver
plant at Rock Hill, South Carolina, has been operating
since September 1948.
Production figures by states are not available, but it
is likely that the 11 plants in this District produce at
least 5 0% of the output of the nation’s 33 plants.
Virginia— Top Producer
Until 1930 Pennsylvania was the leading rayon pro
ducer in the nation, but soon thereafter Virginia moved
into first place and at present accounts for around onethird of the nation’s output. According to the 1947
Census of Manufactures, Virginia’s six rayon plants
and one nylon plant accounted for 3 1 % of the value
added by manufacturing by the country’s synthetic fiber
industry. (Separate data are not published for rayon
and other fibers.) The major component of value added
by manufacturing is labor, and in 1947 the total wage
and salary bill of Virginia’s synthetic fiber plants
amounted to almost $59 million. Thus rayon produc
tion accounted for one dollar out of about every nine
dollars paid as wages and salaries by all manufacturing
industries in the state in 1947. About one employee
out of 11 in Virginia’s manufacturing enterprises is em
ployed in the rayon industry.
American Viscose has also increased its rayon capac
ity in this District. During W orld W ar II it more than
doubled the capacity of its Front Royal plant (which
had just begun operations in late 1940) and since the
end of the war has raised the capacity of its staple
fiber plant at Nitro, W est Virginia, to nearly 100 mil
lion pounds. For future expansion, this company is
holding a large tract of land in Radford, Virginia. In
dustrial Rayon Corporation is similarly holding a tract
of 1,200 acres on the Ohio River near Point Pleasant,
W est Virginia. The American Enka plant near Ashe
Expanding Markets
Reflecting effective cooperation between producers
and users of rayon, spectacular progress has been made
in widening markets for filament yarn and staple fiber.
Already a dominant material in such diverse products
as women’s suitings and automobile tires, rayon has
developed new markets in carpets, upholsteries, drap
eries, top coatings, and all-year suits for men. Short
ages and price increases in carpet wools this year have
accentuated rayon’s style advantage and relative price
stability in the field of floor coverings. Consequently,
most large carpet companies at their June and July open
ings this year displayed lines containing specially de
signed rayon fibers. A s in suits, rayon is blended with
wool in the manufacture of carpets, but some floor cov
erings are being made entirely of synthetic fibers. The
ENKA UNIT IN NORTH CAROLINA
[4]
SEPTEMBER 1950
MONTHLY REVIEW
nooga plant in July 1948, stated that thereafter threefifths of total nylon production of 60 million pounds
would be in the South and almost one-third would be
in Virginia.
Developments Ahead
The District’s leadership in this field is indicated by
the fact that the first commercial production of dynel
(Carbide Vinyon N ) is taking place in the South
Charleston, W est Virginia, plant of Union Carbide and
Carbon Corporation. Initial output of this new staple
fiber, used for a wide variety of industrial and consumer
products, is about two million pounds annually. The
company has, however, already started construction of
an addition to this plant that will triple present output.
Odenton, Maryland, is the site of two chemical syn
thetic fiber plants licensed by the Dow Chemical Com
pany— National Plastics Products Company producing
saran monofilaments and the Saran Yarn Company.
One of the two chemical synthetic fiber plants in South
Carolina is Reeves Brothers, Inc., at Spartanburg. This
plant produces polyethylene fiber marketed under the
trade name of Reevon.
Current attention in the synthetic fiber field is focused
on du Pont’s $15 million orlon plant at Camden, South
Carolina. This latest headliner in the fiber industry
was originally intended for such uses as auto convertible
top coverings, awnings, garden furniture, and similar
heavy duty products; but dyeing problems and other
early difficulties have been overcome and orlon will
appear on the market in a wide variety of uses includ
ing men’s and women’s apparel and blankets.
Du Pont’s Camden plant, in production since June,
will reportedly employ at least 500 people this year.
Even before the new filament plant got into production,
du Pont announced construction would be staried this
summer on a new unit to manufacture orlon in staple
form to compete with wool. This plant, adjoining the
continuous filament yarn plant in Camden, may prov ide
1,000 additional jobs in the Camden area. Although
the present capacity of the filament plant has not been
CELANESE MARYLAND INSTALLATION
Glasgow, Virginia, plant of James Lees and Sons Com
pany, for example, is manufacturing carpets made en
tirely from cellulose acetate yarn.
Test Tube Miracles
W hile rayon represented the first break with nature
in the field of fiber production, complete independence
was not achieved until nylon and vinyon were intro
duced in 1938. Synthetic fibers are man-made materials
produced from chemical elements or compounds. Rayon,
however, is not completely a man-made fiber, inasmuch
as it is based on cellulose, a natural material, and built
up only partially from that basic element. Thar is, the
chemical identity of cellulose is not completely destroyed
in the manufacturing process. The true synthetics, on
the other hand, are made from materials built up entirely
from their basic elements, the chemical identities of
which are not preserved in the manufacturing process.
The wholly synthetic products were the first success
ful attempts to create a fiber enabling the textile indus
try to produce better fabrics. A s A . E. Buchanan, of
the du Pont Company expressed it with respect to
nylon, “ For the first time, man had quit trying to imi
tate a worm and had struck out with his own intelligence
to create a fiber that was meant to make a stocking
instead of a cocoon.” {Journal of Commerce, June 26,
1950.)
A s in rayon production, the Fifth District has been a
leading producer of true synthetic fibers right from the
word go. Six of the nation’s 18 non-rayon fiber plants
are now located within the Fifth District. In view of
the relatively large capacity of some of these plants it
is likely that District plants will account for consider
ably more than one-third of the national output of
chemical synthetic fibers this year.
The first commercial production of nylon yarn was
begun by du Pont at Seaford, Delaware, in December
1939; a year later this company began construction of
its second nylon plant at Martinsville, Virginia— in time
for an important contribution in W orld W ar II. Nylon
production figures are unpublished, but du Pont officials
prior to commencement of operations in their Chatta
Continued on page 9
Cover photo and those at top of Pages 4 and 5 by Fairchild Aerial
Survey, Inc. Page 3 photo courtesy DuPont Corp. Photo at bottom of
Page 4 courtesy American Enka Co. Photo at bottom of Page 5 courtesy
Celanese Corp.
NE W CELANESE ROCK HILL, S. C., PLANT
[51
FEDERAL RESERVE BANK OF RICHMOND
The Agricultural Outlook and the Korean War
Expanding civilian and military requirements are creating a stronger demand fo r farm products. F arm
prices will probably continue to average above early 1950, but further increases should be moderate. N o shortage o f farm products is in prospect, and civilian supplies in the yea r ahead should be fu lly as large as in the
past two years. Increased production, particularly of cotton and livestock, is needed to m eet prospective re
quirements.
stronger demand for farm products is expected as
a result of greatly increased defense expenditures,
injected into an economy already operating at high levels
of production and employment. Resulting increase in
personal income together with military needs will pro
vide farmers with heavy price incentives to further the
war effort through high levels of efficient production.
Consumers will have fully as much food in the year
ahead as in the last two years— and they can expect to
pay more for it than they did in 1949 and the first half
of 1950. N o shortage of farm products is in prospect.
High level farm output and sizeable carryovers of most
farm products give considerable assurance that civilian
supplies will not be reduced next year.
large part of the general rise in food prices is due
to higher meat prices which in early August were 26%
above the first week in January and 16% higher than
a year before. In contrast, average food prices rose 14%
from January to August, prices of farm products in
creased 16%, and prices of all commodities other than
farm and food products were up 5% .
A
W hile the rise in farm and food prices has been long
and well sustained, continued substantial increases from
July levels are not likely as the situation now stands. It
is likely that many prices rose too fast in July and that
some recession will take place. H og prices, which jump
ed $5.00 a hundred from June to July, leveled off and
lost about a fourth of the gain by mid-August. Prices
of slaughter steers of all grades, fairly steady during
most of the summer, were about the same in August as
in May. Grain prices in mid-August had also leveled
off, and wheat and corn were about the same as in the
first week of June.
Farm and Food Prices Higher
Prices of farm products important in this area have
risen sharply since the middle of June. H ogs, eggs,
broilers, cotton, and grain have shared in the rise, and
the new crop of bright tobacco is being marketed at
prices well above last year. A s a result of the price rise,
farm income for the Fifth District may well be about
the same in 1950 as it w'as last year.
Prices of farm and food products on a national scale
have also been moving upward since the first of the
year as business conditions improved and urban em
ployment and income rose. Civilian employment is very
high— in July it totaled 61.2 million, 1.5 million higher
than a year before and 4.3 million more than in January
1950. Unemployment in July 1950 was 3.2 million,
down 1.3 million from January and 0.9 million less than
the year before. Industrial wages are at record high
levels— and threatening to rise further.
Supplies of Farm Products Large
Supplies of most farm products for the year ahead
appear adequate to meet both civilian and military needs.
If mobilization remains on a partial basis, with added
military and defense expenditures in a $15 to $25 bil
lion zone, further price increases for farm and food
products should be moderate, although heavy demand
for meat may eventually cause more substantial price
increases for cattle and hogs. Only in the case of cotton
does the supply situation appear tight, but the effect on
cotton prices may have already been largely anticipated
by the markets.
Total food production in 1950 is expected to be a little
above the last two years and 38% above the 1935-39
average. Civilian per capita food consumption will also
be equal to the last two years, but somewhat below the
peak year of 1946. F ood consumption per person in
1950 should be 11% larger than in 1935-39. Higher
1950 production is noted in the case of truck crops,
sugar crops, meat animals, poultry, and dairy products.
Paralleling the rise in urban employment and income,
prices received by farmers have come back sharply from
the cyclical low of 233 in December 1949 (73 points
below the all time high of 306 in January 1948). In
July the index stood at 263, a rise of 13% from the
December low point. Livestock prices led the rise, and
increased 32% in the seven months ending in July.
By June the B.L.S. consumers’ price indexes for food
in Norfolk, Richmond, Baltimore, and Washington were
about 5% higher than at the beginning of the year.
Further sharp rises in food prices occurred in late June
and early July, and on July 18 the wholesale food price
index reached 175, twelve points higher than in June
and more than 20 points above last winter’s low. Since
then wholesale food prices have leveled off and in midAugust were slightly lower than a month earlier. A
A substantial stimulus to increased livestock produc
tion is found in the large carryover of feed and high
production of feed crops this year. The carryover of
corn on October 1 will probably be around 950 million
bushels— one of the largest on record. W hen the 1950
corn crop, estimated on August 1 at 3,168 million
bushels is added, a near-record supply of around 4,118
million bushels is available for the year ahead. Total
[6 ]
MONTHLY REVIEW
SEPTEMBER 1950
supply of all feed grains and by-product feeds for next
year will be within 2% of the record supply of 1949.
somewhat by the strong demand for stocker and feeder
cattle.
Increased Production Needed
On balance, the substantial stock of grain and cot
ton under government price support have had a mod
erating effect on recent price rises as farmers repaid
their loans or as CCC sold from inventory. For ex
ample, farmers placed 3.2 million bales of 1949-crop
cotton under loan and then redeemed it as prices ad
vanced. By August 3 less than 400,000 bales remained.
The CCC has also offered 1948-crop pooled cotton regu
larly for public bids, and through August 11, 1950 had
sold almost 1.2 million bales of the 3.8 million acquired
when the cotton was pooled a year before.
Agriculture’s most effective contribution to the war
effort lies in higher levels of efficient production of the
kinds of farm products needed by the nation. In gen
eral, free prices are useful guides to what is needed and
to the most profitable course for farmers to follow. W hile
the demand for most farm products should be stronger
in the year ahead, the behavior of prices in the last eight
months and prospects for the future indicate that in
creased production of livestock and cotton are particu
larly needed. A high level, partially mobilized economy
with expanding personal income will demand more beef
and pork. Similarly, reduced cotton production this
year when civilian and military requirements are in
creasing, indicates that higher cotton production will be
needed next year. Increased production of feed grains,
hay, and pasture is also warranted as hog and cattle
production increase.
The effect of CCC inventory operations on prices is
limited by the legislative provision that products ac
quired under price support may not be sold for less
than the current support price plus 5 % , plus reasonable
carrying charges. This restriction does not apply to
commodities in danger of spoilage, sales for export, or
to price support loans, for in this latter case the farmer
may sell the commodity and repay the loan whenever
he wishes. A recent proposal to relax this restriction
on domestic sales of CCC stocks in order to restrain
increases in food prices is not included in the price con
trol legislation now being considered in Congress.
T o be of maximum benefit to the nation and of most
profit to farmers, higher levels of production should be
attained as efficiently as possible. Increased farm
mechanization in this District in recent years together
with improved crop varieties, better fertilizer practices,
and more intensive insect control have helped farmers
control costs and operate efficiently.
W hile CCC stocks of grain, cotton, and tobacco are
welcome assets in a period of rising prices, its other
inventories appear generally to be of limited usefulness.
Secretary Brannan has reported considerable difficulty
in moving C C C s stocks of butter, cheese, nonfat dry
milk solids, and dried eggs at the prices required under
present legislation.
Farmers will have an additional incentive toward
efficient production because the war effort is expected
to cause some increases in prices and taxes paid by
farmers and in production costs. The supply of hired
and cropper farm labor may be reduced as employment
in defense plants expands and the armed forces increase
in size, and farm wages will tend to rise.
Total U. S. cotton production for 1950 is estimated
at 10.3 million bales, and the total supply for the 1950
crop year will be around 17.3 million bales. This is a
reduction of 19% from the 1949 supply of 21.4 million
bales. Increased mill consumption of cotton now exists
and is almost certain for next year because of increased
military and civilian demands. Mill consumption may
be around 10 million bales although this is dependent
upon the extent of military purchases. The outlook for
cotton exports is uncertain, but if exports total 4.5
million bales, carryover next year may be reduced to less
than 3 million bales. In view of the tight supply situa
tion, cotton farmers can reasonably expect some in
crease in acreage allotments next year.
In the event of full-scale mobilization, price ceilings
on farm products can be expected, but this should not
deter farmers from increasing production now. The
Defense Production A ct of 1950, now under considera
tion in Congress, provides that the price ceiling for any
farm product, if and when set by the President, may not
be below (1 ) the parity price or (2 ) the average price
received by farmers on June 15, 1950.
It appears that price ceilings, if and when set, will be
above current prices for eggs, milk, butterfat, potatoes,
chickens, peanuts, wheat, and corn and other feed
grains. All of these products are currently under parity.
On the other hand, prices of cotton, beef cattle, and hogs
are above parity and above the June 15 prices received
by farmers, and the new crop of flue-cured tobacco, for
which no market price was available on June 15, is
currently averaging above parity. For these latter com
modities price ceilings, if applied, are likely to be some
what below current prices. Price ceilings, if and when
applied to farm products, will also be on goods farmers
buy and thus leave farm purchasing power near this
summer’s favorable levels.
Meat production in 1950 is expected to be about 3%
larger than in 1949. Most of the increase will be in
pork, while beef production may total about the same
as last year. In the fall of 1950 hog marketings will be
larger because of a 3% increase in the spring pig crop.
Supplies of better grades of fed cattle should also be
larger this fall than in 1949 because of the increased
number of cattle on feed this summer. Slaughter of
grass cattle, now increasing seasonally, will be limited
[ 71
FEDERAL RESERVE BANK OF RICHMOND
Business Conditions and Prospects
business in the Fifth Federal Reserve Dis
trict in July was confined mainly to the trade level.
Production figures, in many lines, declined during the
month, but this was due to vacations rather than to a
dearth of business. In fact, business 011 hand in the tex
tile industries practically assures a rising rate of opera
tions tempered only by the availability of manpower.
o o m in g
B
RETAIL FURNITURE STORE SALES
FIFTH F E D E R A L RESERVE DISTRICT
PER CENT
•
(1941=100)
PER1 CENT
1
250
200
200
•A/
-
Larger demand for coal is in the offing and output can
be expected to move upward. Construction continued
at a high level and will probably keep the demand for
building materials at peak levels during the next several
months while completions are effected.
y
~
m
11o u
150
100
100
........i, i ii i
50
The buying spree in July and early August, though
pronounced in spots, was not quite as intense as might
have been thought while it was going on. Daily average
department store sales in the Fifth District for July were
20% higher than a year earlier and compared with a
gain of 6% in June. The gain, however, was sufficient
to push department store sales’ indexes in all states of
this District into new high ground and probably at an
adjusted level which will stand as a peak for some
months to come.
1942
1943
1944
1 945
1946
1947
1 948
1949
50
1950
There was no evidence to indicate that a large num
ber of people were unduly tapping their savings for
July expenditures. The sales and redemptions of savings
bonds continued much the same trend that had been
shown in the earlier part of the year, while time deposits
showed no extraordinary change.
Wholesaling showed considerable improvement in
July as retailers anticipated requirements or replen
ished inventories. Prominent among the gains from
June to July on a seasonally adjusted basis were auto
motive supplies, hardware, dry goods, electrical goods,
and industrial supplies. AW wholesalers showed sub
stantial gains over a year ago except those dealing in
tobacco products. In these firms it is apparent that a
greater amount of direct retailer dealing with the manu
facturer has been instrumental in holding down tobacco
wholesalers’ sales volume.
Although the scare buying was of lesser intensity in
this District than in some of the others, nylon, durable
goods, and foodstuffs such as coffee and sugar were in
unusual demand. Am ong the most wanted goods were
things which people anticipated would be either short or
out of production due to the war effort, such as televi
sion sets, household appliances, floor coverings, and
furniture.
Interestingly, the rise in department store sales was
attained mainly on credit. Cash sales were about the
same level in July as they were a year ago. Open ac
count credit was up 18% and installment credit up 44% .
Passenger car sales were at an all-time high level
in the Fifth District in June, latest month for which
all state figures were available. Tw o states in July, how
ever, revealed lower figures than in June which may
have been caused by either smaller demand or shortages
of dealers’ stocks. New autos have been in very strong
demand, and used car prices in August were strength
ening somewhat, a contra-seasonal trend. Part of the
high demand for automobiles is due to the anticipation
of shortages as well as to the desire to finance pur
chases before consumer credit regulation, with possibly
stricter terms, could be applied. Consumer loans of
reporting member banks in the Fifth District continued
to rise at an accelerated rate up to late August.
The buying wave at the consumer level sent the stores
scurrying for new supplies. Outstanding orders of the
reporting stores in this District rose 124% from June
to July to a level 66% above a year ago. This is hardly
indicative, however, of a strong inventory accumulation
trend because last year outstanding orders of these
stores were at an extremely low level in relation to
either inventories or sales.
Some indication of the buying movement can be seen
in the chart on this page which shows retail furniture
sales, adjusted for seasonal variation. Retail furniture
sales in July were at a far too high level to be sus
tained for any period of time without substantial wage
increases or other income expansion. The situation in
furniture was somewhat different from that in depart
ment stores since cash sales show about as much in
crease from June to July as credit sales, and cash sales
actually show a bigger gain over a year ago than credit
sales.
(SEASONALLY ADJUSTED)
1
250
Housing starts already underway will maintain build
ing operations at a high level probably well through the
fall months of the year. Thus far credit restrictions and
anticipations of further restrictions do not seem to have
had much effect on sales of speculatively built houses,
but the evidence indicates that material shortages will
have a retarding influence on construction before the
18]
MONTHLY REVIEW
SEPTEMBER 1950
year is over. A n increasing number of fairly substan
tial factory expansions have taken place, and it may be
that the level of building will hold perhaps not greatly
below current levels provided materials have already
been acquired for such projects.
Construction contracts awarded in the Fifth Federal
Reserve District in July rose 24% from June, after
seasonal adjustment, to a level 47% ahead of a year
ago, whereas earlier in the year residential construction
had been prominent in the gains registered. July showed
a substantial increase in commercial and factory build
ing and in apartments and hotels. Factory buildings
in July, for example, were just double the volume of a
year ago and apartments and hotels, which had been
lagging to some extent earlier in the year, rose to 72%
above a year ago.
Farm prices in North and South Carolina have been
in a sharply rising trend and, to a lesser extent, the
same has applied to V irginia; on the other hand, there
has been little improvement in farm prices in M ary
land and only a small gain in W est Virginia. These
variations, of course, are due to the weighting of the
importance of various products in the various states.
Since an important part of the farm income of the D is
trict comes from the Carolinas and Virginia, previous
indications of farm income in the District must be re
vised upward. Cotton prices in particular have shown
considerable strength, and they are currently running
at a level higher than at any time since the spring of
1948. Tobacco prices likewise are running considerably
above a year ago.
The rise in cotton goods’ prices, which has been quite
sharp in a short-run period, does not leave these goods
high in relation to prices early in 1948. A s a matter
of fact, the sharp rise that has taken place in print cloths
since the end of May followed a considerable recession
from December which leaves the current level about
half-way between the peak in 1948 and the bottom in
1949.
Expansion in production and employment bids fair
to continue in the Fifth Federal Reserve District
through the indefinite future. If, however, the war situ
ation tones down and military procurement continues
at the currently indicated level, i,ull output of the cotton
textile industry might not be absorbed by the domestic
economy, at the retail price levels which will have to
prevail under the going price level at which “ gray
goods” are selling. On the other hand, our increasing
imports of many commodities may have the effect of
again increasing the volume of cotton goods exports.
Synthetic Fibers—Fifth District Leads Nation
Continued from page 5
announced, it is believed it does not top 10 million
pounds annually— a drop in the bucket for the textile
fabric market (estimated total production of chemical
synthetic fibers amounted to only a little more that 1%
of total domestic fiber consumption in 1948). A s the
first commercial producer of the fiber, however, the plant
affords another example of the District’s leadership in
this dynamic industry.
Locational Advantages
Regions are rarely able to explain their attraction
of a given industry and its successful growth completely
in terms of specific advantages afforded. Fortuitous
circumstance and timing have often been important in
accounting for the location of industry. It seems, how
ever, that concentration of the synthetic fiber industry
in the Fifth District can be explained chiefly in terms
of required resources with wfhich the District is en
dowed.
In the Fifth District these may be summed up in
terms of adequate labor, tremendous quantities of
water, large plant sites, good transportation facilities,
and proximity to basic raw materials, required chemi
cals, fuel, and customers. Meeting these requirements
of the synthetic fiber industry made sites in the Dis
trict an almost inevitable choice. Few industries can find
so many of their requirements satisfied as well in a
single region as do rayon and other synthetic fibers in
the
Fifth District.
The Fifth District should hold its leading position in
the increasingly important alliance between textile and
chemical industries. The magic accomplishments of
chemical laboratories, together with the market appli
cations of synthetic fibers by the textile industry, are
adding substantially to the productive capacity of the
District’s economy. The jobs created benefit not only
the towns and cities in or near which the plants are
located but afford employment opportunities that are
county-wide and in some cases cut across state lines.
A study made by the Bureau of Business and Economic
Research of the University of Maryland in 1947 showed
that of the factory force of 8,675 in the Cumberland
plant of Celanese Corporation, only 2,870 were residents
of Cumberland. O f the rest, 4,042 commuted from
other parts of Maryland, 1,343 from W est Virginia,
and 420 from Pennsylvania residences.
Capital funds for research in synthetic fibers and
for plant construction are enormous— $40 million, for
example, went into the construction and equipment of
the Celanese plant near Rock Hill, South Carolina.
Investment per worker in the rayon industry is now
estimated at $10,000 to $12,000. Multi-million dollar
investments in the form of synthetic fiber plant and
equipment add substantially to capital formation, which
is one of the principal determinants of District income.
FEDERAL RESERVE BANK OF RICHMOND
Member Bank Earnings Show Rising Trend
I
N line with expanding economic activity both in the
Fifth Federal Reserve District and throughout the
nation, Fifth District member banks found their earn
ings rising to a new high figure for the first six months
of 1950. Actually, all items in the composite earnings
statement of the member banks of this District showed
an increase, with the exception of “ Earnings on U. S.
Government Securities” (which remained constant) and
“ Losses, Charge-Offs and Transfers to Valuation R e
serves” (which declined 7 .8 % ).
On an annual basis, the 477 Fifth District member
banks’ net profits stood at 9.5% of average total capital
accounts, as compared with 8.9% during the similar
period of 1949, and were somewhat above earnings of all
member banks throughout the nation— which averaged
8.5% this year, as compared with 8.1% last.
Recoveries (including transfers from valuation re
serves, but excluding recoveries credited directly to
valuation reserves) were substantially higher than dur
ing the first half of 1949. Losses and charge-offs (in
cluding transfers to valuation reserves but excluding
losses charged directly to valuation reserves) were some
what smaller. Net losses, charge-offs, and transfers to
valuation reserves were $1.8 million, $0.6 million less
than for the first half of 1949.
Profits, before income taxes of $28.1 million, were
14.1% above a year ago, and the Fifth District exceeded
the 12.3%) increase shown by all member banks in the
United States.
Continued and fairly rapid expansion of bank loans,
wrhich were at an all-time high of $1,783 million on June
30, accounted for the major part of the net current earn
ings increase for the period.
Taxes on net income, at $8.8 million, increased 18.9%
over the first six months of 1949, leaving net profits after
taxes of $19.3 million. This represented an increase of
12.1% above net profits for the first half of 1949.
Expenses of member banks also continued to rise, but
the increase of 5.3% was at a smaller rate than either
profits before income taxes (which increased 14.1% )
or net profits (which increased 12.1% ) over the same
period in 1949.
M E M B E R B A N K E A R N IN G S , F IF T H D IS T R IC T
F IR S T H A L F 1949 A N D 1950
(thousands of dollars— first half of 1950 preliminary)
First Half
ITEM
Interestingly, cash dividends, though increased 7.1%
over the same period of 1949, were actually at an annual
rate of 3% of total capital accounts. Member banks of
this District were clearly strengthening their capital
positions, since they carried more than two-thirds of
their net profits this year to surplus.
Current operating earnings for the first half of the
year (at $74.4 million) were 7.4% higher than during
the corresponding period of 1949. The largest part of
this increase in earnings was in earnings on loans, which
were 52.3% of total earnings and 11.0% above a year
ago. This reflects the fairly rapid increase (1 3 .7 % ) in
loans during the twelve months from m id-’49 to m id-’ 50.
Interest on U. S. Government securities showed vir
tually no change from the first half of 1949, but all other
earnings moved up 8.9% .
Current operating expenses for the first half of 1950
(at $44.6 million) increased 5.3% over the first half of
1949.
1949
First Half
1950
Per Cent
Increase
Earnings: _________________________
On U. S. Government securities
On loans1________________________
All other________________________
69,342
20,391
35,060
13,891
74,441
20,395
38,912
15,134
Expenses ________________________
42,339
44,586
5.3
Net current earnings before
income taxes-------------------------------
27,003
29,855
10.6
Recoveries, profits, and transfers
from valuation reserves2_______
2,019
2,297
13.8
7.4
11.0
8.9
Losses, charge-offs and transfers
to valuation reserves3___________
4,430
4,084
Profits before income taxes______
24,592
28,068
14.1
—
7.8
Taxes on net income____________
7,377
8,769
18.9
Net profits________________________
17,214
19,299
12.1
5,776
6,189
7.1
11,438
13,110
14.6
Cash dividends declared4________
Net profits after dividends______
1 Includes charges on loans other than interest ( charges estimated).
2 Recoveries credited to valuation reserves not included.
3 Losses charged to valuation reserves not included.
i Interest on capital notes and debentures, and dividends on pre
ferred stock, estimated and included.
r io i
MONTHLY REVIEW
SEPTEMBER 1950
PRINCIPAL ASSETS
AND
L IA BILITIES
OF
UNITED S T A T E S AND F IF T H
L A S T W EDNESDAY OF
LOANS AND IN VES TM EN TS
5th Dist.
Data
BILLIONS OF DOLLARS
MEMBER
BANKS
D IS T R IC T
MONTH
F IG U R E S
LOANS
U .S .
5th Dist.
U.S. GOVT. S E C U R IT IE S
BILLIONS OF DOLLARS
U.S.
5th Dist.
BILLIONS OF D O LLARS
DEMAND DEPOSITS, ADJ.
TIM E DEPOSITS
TOTAL D EP O SITS
B ILLIONS OF DOLLARS
B ILLIONS OF DOLLARS
B ILLIONS OF D O LLARS
P o rlly Estim ated
L a te s t
Figures
P lotted :
F ifth D is tr ic t,
U nited
D E B IT S TO I N D IV ID U A L A C C O U N TS
(000 omitted)
July
July
7 Months
7 Months
1950
1949
1950
1949
District of Columbia
Washington
$
855,469 $
718,616 $ 5,797,705 $ 5,173,052
Maryland
Baltimore
Cumberland
Frederick
Hagerstown
1,103,714
23,744
17,737
28,817
908,505
19,361
17,035
27,009
7,127,030
154,256
122,275
189,873
6,560,350
144,475
119,568
182,910
North Carolina
Asheville
Charlotte
Durham
Greensboro
Kinston
Raleigh
Wilmington
Wilson
W inston-Salem
51,996
279,423
94,159
85,819
13,506
134,849
36,035
14,086
130,342
43,229
234,023
86,770
66,744
13,567
113,192
32,332
11,843
142,214
344,321
1,863,622
575,820
566,684
87,944
948,913
231,210
96,600
934,205
315,646
1,576,196
582,526
493,728
90,795
842,583
216,371
95,388
858,813
South Carolina
Charleston
Columbia
Greenville
Spartanburg
59,478
102,008
90,302
47,205
55,267
90,299
71,501
38,252
425,337
716,307
605,669
335,893
406,855
670,787
533,245
301,259
Virginia
Charlottesville
Danville
Lynchburg
Newport News
Norfolk
Portsmouth
Richmond
Roanoke
25,246
22,803
40,026
31,457
179,850
21,690
437,575
106,356
20,048
19,991
31,763
28,218
166,540
19,362
439,821
86,995
164,219
164,198
269,278
202,806
1,416,617
126,112
3,274,423
675,511
149,768
153,030
242,331
218,429
1,204,152
134,284
3,282,757
622,161
39,929
134,942
31,099
62,560
27,951
$ 4,330,173
36,339
115,481
26,888
52,360
23,631
$ 3,757,196
278,170
873.866
202.866
399,201
179,074
$29,370,005
310,449
924,503
200,760
390,306
174,795
$27,172,272
West Virginia
Bluefield
Charleston
Clarksburg
Huntington
Parkersburg
District Totals
U.S.
JU LY 2 6 ,1 9 5 0
S ta te s, JU N E 2 8 ,1 9 5 0
51 R E P O R T IN G M E M B E R B A N K S — 5th D IS T R IC T
(All Figures in Thousands)
ITEMS
Total Loans___________________
Business and Agricultural —
Real Estate Loans__________
All Other Loans___________
Total Security Holdings____
U. S. Treasury Bills _______
U. S. Treasury Certificates .
U. S. Treasury Notes ____
U. S. Treasury Bonds ______
Other Bonds, St’ks & Secur.
Cash Items in Process of Col.
Due From Banks_____________
Currency and Coin___________
Reserve with F. R. Bank
Other Assets_______________
Total Assets_______________
Total Demand Deposits_____
Deposits of Individuals
Deposits of U. S. Govt--------Deposits of State & Loc. Gov.
Deposits of Banks ________
Certified & Officers’ ChecksTotal Time Deposits_________
Deposits of Individuals___
Other Time Deposits_______
Liabilities for Borrowed Money
All Other Liabilities________
Capital Accounts------------------Total Liabilities------------------
August 16,
1950
$ 993,166**
442,001
233,501
329,781
1,752,687
86,184
82,219
321,422
1,101,520
161,342
257,637
154,570*
64,459
448,786
53,883
$3,275,188
$2,835,722
2,182,714
83,525
130,629
385,024*
53,830
612,393
566,012
46,381
16,950
2 2 ,6 9 3
237,430
$ 3 ,7 2 5 ,1 8 8
Change in Amt., From
July 12,
August 17,
1950
1949
+ 184,905
+ 33,476
+ 17,436
+ 83,480
1,244
+
+ 34,587
+ 14,851
+ 70,112
—
_ 39,481
4,594
- 10,929
—
47,888
—
865
— 133,215
7,433
+280,172
+
—
4,368
156,242
4,135
+
+ 17,692
+ 16,144
+ 43,173
—
—
30,967
14,468
—
7,619
3,435
+
1,769
9,657
+
+
1,985
3,345
+
+
+ 190,566
+ 10,194
—
706
+ 168,699
+ 126,025
+ 17,286
—
2,565
+ 39,203
- 18,219
—
10,018
— 10,077
2,132
+
+ 12,869
+ 11,357
— 3,832
—
4,081
3,787
2,192
—
—
45
1,889
+ 12,750
+ 12,350
797
1,115
+
+
1,185
+
+ 12,483
+ 190,566
+ 10,194
*Net figures, reciprocal balances being eliminated.
**Less reserves for losses on bad loans.
[ii]
FEDERAL RESERVE BANK OF RICHMOND
SELECTED FIFTH DISTRICT BUSINESS IN D EXES
(A V E R A G E
D A IL Y
1935-39 = 100— S E A S O N A L L Y
July
1950
Automobile Registration 1__________
Bank Debits_______________ ________________________________
Bituminous Coal Production----------- _______________________
Construction Contracts Awarded— ________________________
_______________________
Business Failures— No----------------Cigarette Production________________ ________________________
Cotton Spindle Hours______________ _______________________
Department Store Sales 2---------------- _______________________
Electric Power Production--------------Employment— M fg. Industries 1-----Furniture M frs: Shipments 2______
Life Insurance Sales------------------------ ________________________
June
1950
275
355
154r
408r
86
239r
138
332
300
139
297
290
372
115
507
122
235
133
393
317
ADJUSTED)
May
1950
July
1949
225
366
158
484
102
244
148
320
299
138
324
299
205
324
97
343
112
224
100
328
256
132
182
228
Change—-Latest Month
Prev. Mo.
Year Ago
%
+
+
—
+
+
—
—
22
5
25
24
42
2
4
+
18
0
+
+ 53
+ 15
+ 19
+ 48
+
9
+
5
+ 33
+ 20
+ 18
+ 4
- f 88
+ 39
1
8
9
—
+
1 Not seasonally adjusted.
2 Revised Series— back figures available on request.
W H O LESALE TRADE
B U IL D IN G P E R M IT FIG U R E S
July
1949
July
1950
Maryland
Baltimore
$
Cumberland
Frederick
Hagerstown
Salisbury
5,184,475
75,075
148,441
1,533,155
135,855
Virginia
Danville
Lynchburg
Norfolk
Petersburg
Portsmouth
Richmond
Roanoke
197,110
192,743
1,098,323
2,116,130
559,595
3,034,261
892,125
West Virginia
Charleston
Clarksburg
Huntington
$
7 Months
1950
7 Months
1949
2,940,820
78,875
56,705
753,960
60,925
$ 51,036,055
716,815
1,485,596
2,481,240
947,832
$ 28,421,445
313,100
594,127
1,490,340
992,686
158,372
892,760
1,328,165
115,987
90,285
1,298,951
1,170,706
1,978,813
2,489,273
8,862,573
4,181,113
2,232,014
15,789,750
11,410,099
1,650,659
3,068,202
7,155,316
932,270
933,637
10,303,715
6,991,778
1,519,829
265,675
901,470
1,430,531
75,300
324,534
9,776,903
1,112,523
4,078,413
4,817,360
689,870
2,540,286
North Carolina
777,151
Asheville
3,020,470
Charlotte
480,720
Durham
947,760
Greensboro
349,242
High Point
523,800
Raleigh
564,884
Rocky Mount
265,986
Salisbury
W inston-Salem 1,089,784
173,147
1,225,478
1,293,590
685,669
218,270
387,145
131,665
155,825
483,339
3,075,820
18,258,894
10,169,988
7,588,874
2,407,094
9,165,585
3,080,502
2,162,560
7,653,133
1,693,125
13,547,491
4,680,740
6,777,242
1,695,782
4,658,425
934,048
772,437
5,484,040
South Carolina
Charleston
Columbia
Greenville
Spartanburg
109,036
773,805
1,039,725
465,617
1,410,807
424,108
2,463,300
1,822,089
1,826,763
6,672,082
4,780,674
2,381,663
2,848,272
4,026,773
6,591,681
2,578,541
District of Columbia
5,278,777
Washington
7,237,988
43,090,441
42,782,544
District Totals $ 33,541,019
$ 28,889,296
$240,893,085
$169,965,932
LINES
Auto supplies ( 8 ) _____________
Electrical goods ( 7 ) ___________
Hardware ( 9 ) _______ _____ ____
Industrial supplies ( 5 ) ________
Drugs and sundries ( 7 ) —..........
Dry goods (1 3 )________________
Groceries (6 0 )_________________
Paper and products ( 5 ) _______
Tobacco products ( 8 ) _________
Miscellaneous (8 7 )____________
District Totals
309,469
Cotton Growing States:
Cotton consumed__________
559,181
Cotton on hand July 31 in
consuming establishm’ts 1,112,879
storage & compresses—. 4,830,745
United States:
Cotton consumed_________
610,555
Cotton on hand July 31 in
consuming establishm’ts 1,307,560
storage & compresses___ 4,847,009
+
—
+
—
+
+
—
— "’ 8
— 5
—
+28
+ 11
— 2
— 3
— 3
—16
+ 16
+ 1
— 4
— 4
— 6
5
9
3
5
5
3
3
5
— 5
R E T A IL F U R N IT U R E SALES
STATES
Percentage comparison of sales in
periods named with sales in same
periods in 1949
July 1950
7 mos. 1950
Maryland ( 7 ) ____________
District of Columbia (7 ).
Virginia (1 9 )____________
West Virginia (1 0 ) ______
North Carolina (1 1 )_____
South Carolina ( 9 ) ______
District (6 3 )___________
+23
-10
^30
b36
-25
- 9
+20
+ 8
+ 7
+ 8
+ 11
+ 11
+ 9
+ 8
[-23
-10
-32
-27
- 7
- 9
-11
b 8
- 7
- 3
-10
- 2
-10
- 4
IN D IV ID U AL CITIES
Baltimore, Md. ( 7 ) .... ...........
Washington, D. C. ( 7 ) _____
Richmond, Va. ( 6 ) _________
Lynchburg, Va. ( 3 ) _______
Charleston, W . Va. ( 3 ) ____
Ch&rlotte, N. C. ( 3 ) _______
Columbia, S. C. ( 3 ) _________
July
Aug. 1 to July 31
1949
1950
1949
Number of reporting firms in parentheses.
-+ + + -
239,969 4,582,338 3,992,840
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 change)
415,310 8,045,134 6,986,269
739,209
4,128,371
Rich.
Balt.
Wash.
Other
Cities
Sales ,July ’50 vs. July ’49 ______ + 20
Sales, 7 mos. ’50 vs. 7 mos. ’49
Stocks, July 31, ’50 vs. ’49
Orders outstanding,
July 31, ’50 vs. ’49_________
+ 116
Current receivables July 1
28
collected in July ’50___ ______
Instalment receivables July 1
14
collected in July ’50___________
+21
— 1
- 4
+ 10
0
+ 5
+6
+8
+2
+3
+ 60
+61
+ 35
+ 66
45
45
49
42
15
18
17
17
+ 3
+ 6
454,426 8,869,511 7,795,404
884,730
4,146,398
Spindles active, July 31,
United States_____________ 20,525,000 19,007,000
Source: Department of Commerce.
b37
- 8
-25
-11
- 7
HL26
b ll
4- 8
- 2
+ 8
-♦ + + -
C O T T O N C O N S U M P T IO N A N D ON H A N D — B A L E S
July
1950
(2 0 9)_______
+ 70
+27
+54
+48
+ 7
+ 65
+21
+ 33
+ 12
+26
Number of reporting stores in parentheses.
Source: Department of Commerce.
•+ +
Fifth District States:
Cotton consumed_________
Sales in
Stocks on
July 1950
July 31, 1950
compared with compared with
July
June July 31 June 3(
1949
1950
1949
1950
[1 2 ]
+22
Dist.
Total
+ 17
@FedFRASER