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A M I u Review

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1965

t h is

is s u e :

C H A N G IN G S E A SO N A L
PATTERNS

SIXTH

IN

FLORIDA

D IST R IC T

ST A T IS T IC S

D IST R IC T B U S I N E S S
C O N D IT IO N S




Interest Rates at Home and Abroad
O n e o f th e m a n y p ro b lem s w ith w h ich m o n eta ry p o lic y -m a k e rs m u st
c o n cern th em selv e s is th e rela tio n b e tw e e n in terest rates in th e U n ited
S tates and th o se abroad. If fo reig n in terest rates g et to o h ig h relative
to th o se at h o m e , an in cen tiv e m a y arise fo r U . S. c itizen s and b a n k s and
b u sin e sse s to sen d their d ollars ab road to earn th e ex tra in co m e; bu t
this ten d s to add to ou r b a la n ce -o f-p a y m e n ts d eficit and m a y u ltim ately
require rep u rch ase o f th o se d ollars w ith gold . In fa ct, o n e o f th e p rin ci­
p a l co n trib u tin g fa cto rs in our large b a la n c e -o f-p a y m e n ts d eficit o f the
la st se v e n years h as b e e n th e trem en d o u s o u tflo w o f U . S. m o n e y to
fo reig n co u n tries, p a rticu larly to E u ro p e and Japan. It w a s to m od erate
th is o u tflo w th at P resid en t K en n ed y in 1 9 6 3 p ro p o se d th e In terest
E q u a liz a tio n T a x and th at P resid en t J o h n so n ex te n d e d it early this year
and, at th e sa m e tim e, in itia ted th e V o lu n ta r y F o r e ig n C red it R estra in t
program .
T h e so lu tio n to this p ro b lem m ig h t seem , o n its fa ce , to b e sim p le—
if fo reig n in terest rates are to o h igh rela tiv e to U . S. rates, th en raise
d o m e stic rates. Y e t su ch a so lu tio n is d ecep tiv e. It a ssu m es a relation
b e tw e e n m o n e y flo w s and in terest rates th at a p p aren tly d o es n o t e x ist in
m a n y c a se s, and it a ssu m es th at E u ro p e a n in terest rates w o u ld rem ain
co n sta n t w h ile ours c lim b ed to m e e t th em , a resu lt th at m ig h t v ery w e ll
n o t occu r. F u rth erm o re, it ig n o res th e rep ercu ssio n s su ch a p o lic y m igh t
h a v e o n d o m estic e c o n o m ic activity. O n e o f th e h a rd est job s p o lic y ­
m a k ers h a v e had in recen t years is to try to r e c o n cile th e g o a l o f re­
d u cin g th e b a la n c e-o f-p a y m e n ts d eficit w ith th e req u irem en ts o f d o m estic
e c o n o m ic stab ility.
I n te r e s t R a te M o v e m e n ts
A n y a n a ly sis o f th e in terest rate p ro b lem m u st d istin g u ish ca refu lly b e ­
tw e en in tern a tio n a l m o n e y flow s th at are sen sitiv e to in terest rate differ­
en tia ls b e tw e e n co u n tries and th o se th at are n o t, as w e ll as b etw e e n sh ort­
term rates and lo n g -term rates. T h ere are m a n y d ifferent in terest rates,
a lm o st as m a n y as th ere are in d iv id u a l cred it tra n sa ctio n s, for ea ch
lo a n or secu rity issu e is in so m e w a y differen t from all oth ers. S in ce w e
c a n n o t co n v en ie n tly talk a b o u t su ch a m u ltip licity o f in terest rates, it is
c o m m o n to sp ea k o f “th e ” sh ort-term in terest rate. T h e m ea su re m o st
c o m m o n ly u sed for this c o n c e p t is th e rate o n 9 0 -d a y U . S. G o v ern ­
m en t T rea su ry bills. N o t th at this is in an y se n se a “ty p ic a l” sh ort-term
in terest rate. R a th er, it rep resen ts th e c lo s e st a p p ro x im a tio n to a rate
o f in terest p ure and sim p le sin ce th e risk o f n o n p a y m en t o f th e G o v ern ­
m en t’s sh ort-term o b lig a tio n s is so slig h t as n o t to b e rea lly co n sid ered
b y p u rch asers. O th er sh ort-term in terest rates o n b an k lo a n s, co m m er­
cia l p ap er, and so o n g en era lly are h igh er, partly to c o m p e n sa te for
so m e slig h t d eg ree o f risk.
T h e U . S. T rea su ry b ill rate fe ll q u ite rap id ly in 1 9 6 0 un d er th e in ­
flu en ce o f a m o n eta ry p o lic y th at w a s tryin g to co m b a t th e rece ssio n th at
started in th at year. A s th e e c o n o m ic e x p a n sio n h as p ro c e e d e d , sh ort­
term rates h a v e g rad u ally e a sed u p w ard in r esp o n se to in creasin gly
stron g p rivate d em a n d s fo r sh ort-term lo a n a b le fu n d s an d a heavier

reliance b y th e T reasu ry o n sh ort-term fin an cin g. L o n g ­
term rates, o n the oth er h an d , h a v e ch a n g ed h ard ly at all.
T h e average rate o n lo n g -term G o v e r n m e n t b o n d s, for
e x a m p le, is less than o n e -h a lf p ercen t h igh er th an it w a s
at the b o tto m o f the recessio n in 1 9 6 1 .
M o st foreign lon g-term in terest rates h a v e for years
b een higher than th o se in this cou n try. In m o st o f th e
w orld , cap ital is scarcer th an it is in th e U n ite d States.
S aving, i.e., n o t co n su m in g part o f p resen t in co m e , is
n ecessa ry to set asid e the reso u rces n eed ed to p ro d u ce
th e cap ital g o o d s that w ill in crea se p r o d u ctiv ity in th e
lo n g run. B u t savin g is m o re p a in fu l and difficult th e
lo w er o n e ’s in co m e; and in c o m e s in th e rest o f th e w orld
are low er, freq u en tly m u ch lo w er, th an in th e U . S. E v e n
in E u ro p e, per cap ita in c o m e s are for the m o st part less
than h alf the U . S. average.

1959

1960

19 6 1

1962

1963

1964

p en d in g o n w h eth er th e p ro ject to b e fin a n ced is ap p roved
or n ot. A s a resu lt, u n fa v o red secto rs m a y at tim es b e
starved fo r fu n d s, w ith resu ltin g u p w ard p ressu re o n in ­
terest rates.
(4 )
R e str ic tio n s o n m o v e m e n ts o f ca p ita l from o n e
co u n try to a n o th er w ere in tro d u ced b y m a n y E u ro p ea n
co u n tries du rin g W orld W ar II or e v e n b efo re. T h e orig i­
nal p u rp o se w a s u su a lly to red u ce th e d eficit in th e c o u n ­
try’s b a la n ce o f p a y m en ts, fo r at th e tim e m o st E u ro p ea n
c o u n tr ies’ reserv es o f g o ld an d fo r e ig n e x ch a n g e w ere very
low . S o m e o f th ese restrictio n s h a v e b e e n reta in ed to th e
p resen t tim e, e v e n th o u g h d eficits h a v e g iv e n w a y to
su rp lu ses and reserv es are n o w v ery co m fo r ta b le.
F o r all th e se rea so n s, lo n g -te rm in terest rates ab road
h ave g en era lly b e en h igh er th a n in th e U . S. F o r e ig n sh o rt­
term rates h a v e freq u en tly , b u t b y n o m ea n s a lw ays, b e e n
h igh er as w ell. S h ort-term rates are th e rates m o s t im m e ­
d ia tely a ffected b y ch a n g e s in m o n e ta ry p o lic y , and the
ch art sh o w s clea rly th e resu lts o f m ajor p o lic y ch a n g es.

1965

*Bonds of local authorities. All other countries, bonds of central
governments.
U. S. long-term interest rates are relatively low. Even Switzerland’s rate, for long the lowest in the world, has risen almost
to the U. S. level.

A n o th er factor h elp s to k eep E u r o p ea n lo n g -term in ­
terest rates high. W ith th e e x c e p tio n o f L o n d o n , E u r o p e a n
c ap ital m arkets d o not d o a very efficien t job o f m o b iliz ­
ing and m ak in g a v ailab le to b orro w ers e v e n th e lim ited
am ou n ts that are saved . M o re o f E u r o p e ’s sa v in g g o e s
into ca sh and less into secu ritie s and m o rtg a g es th an is
true in this cou n try. T h ere are sev era l rea so n s for this.
( 1 ) In the U . S., m o n e y flow s fairly sm o o th ly from
areas that have a tem p ora ry surplus o f fu n d s to areas that
are tem p orarily short. T h is d o e s n o t h a p p en as read ily in
E u ro p e b eca u se fun d s p la ced in a fo reig n co u n try , e v e n
a n eigh b orin g E u ro p ea n o n e , a lw ays run a risk o f lo ss
if th e fo reig n cou n try sh o u ld d ev a lu e its cu rren cy.
( 2 ) M o st E u ro p ea n c o u n tries h a v e suffered at lea st
tw o b ou ts o f seriou s in flation in the la st fifty years. T h is,
u n d erstan d ab ly, has m a d e m a n y p e o p le relu cta n t to p u t
their savin g in to a ssets to b e rep aid w ith a fixed a m o u n t
o f m o n ey if th ey h ave m o re th an a very sh ort tim e to
m aturity.
( 3 ) L aw s and cu sto m s th at d iscrim in a te a m o n g typ es
o f b orrow ers are fairly c o m m o n in E u ro p e. E u r o p e a n
cen tral gov ern m en ts so m etim e s in clu d e lo a n s to lo ca l
g ov ern m en ts in the b u d g et and m a y g iv e p referen tial
treatm en t to n a tio n a lized or fa v o red in d u stries b y in ­
clu d in g lo a n s to or ap p rop riation s for th em in th e b u d get.
T a x in cen tiv es m ay b e e sta b lish ed fa v o rin g in v estm en t in
certain geog ra p h ica l areas, su ch as th e so u th in the ca se o f
Italy. S everal E u ro p ea n g o v ern m en ts req u ire lic e n se s for
n ew secu rity issu es and ca n grant or refu se lic e n se s d e­



♦Average tender rate for 3-month Treasury bills.
** Average of daily or weekly call money rates.
French and British short-term interest rates
erally higher than U. S. rates. Except for a
1960, German rates have fluctuated near U.
Sw iss rates have generally been the lowest in

have been gen­
short period in
S. levels, while
the world.

T h e B ritish b a la n c e -o f-p a y m e n ts crises o f 1 9 6 1 and 1 9 6 4 6 5 , for e x a m p le , p ro m p ted th e B a n k o f E n g la n d to restrict
cred it sev erely . T h e F r e n c h a n ti-in fla tio n a ry p rogram in
1 9 6 4 raised sh o rt-term rates to h igh lev e ls. G erm a n y in
1 9 6 0 tried a restrictiv e m o n eta ry p o lic y to curb d o m estic
in flation b u t fo u n d th at th e h igh in terest rates in d u ced
su ch large in flow s o f sh o rt-term ca p ita l th at lo a n a b le fu n d s
b ec a m e , n ot le ss, b u t m o re p len tifu l. S in c e th en , th e G er­
m an au th orities h a v e relied less o n straigh tforw ard cred it
restriction s fo r a n ti-in fla tio n a ry m ea su res. S w itzerlan d is
a sp ecia l c a se , its sh o rt-term and lo n g -term rates b o th
b ein g a m o n g th e lo w e st in th e w orld . T h is is partly th e
resu lt o f d elib era te p o lic y , p artly th e resu lt o f S w itzer­
la n d ’s attra ctio n as a sa fe h a v e n o f e c o n o m ic and p o litica l
stab ility.
P o lic y P r o b le m s
T o return to our m u tto n s, as th e F re n c h so u n a cco u n ta b ly
say, th ere are so m e ty p es o f ca p ita l o u tflo w s fro m th e
U . S. th at are sen sitiv e to in terest rate d ifferen tials b e ­
tw een this co u n try and ab road and o th ers th at are not.
O n e typ e th at rather c lea r ly is se n sitiv e is w h a t is ca lled
in terest arbitrage. T o illu strate, le t us a ssu m e th at an
A m e r ic a n co rp o r a tio n h as so m e id le fu n d s to in v e st for
.

2 •

n in ety d ays (s a y until th e n ex t c o rp o ra tio n in c o m e ta x
p a y m en t is d u e ) . It has a w id e variety o f c h o ic e s o f
sh ort-term fin an cial assets it ca n b u y in th e U . S., b u t it
also m igh t put the m o n ey in to sh ort-term d eb t in stru m en ts
ab road if the return is higher. If it sen d s th e m o n e y abroad,
h o w ev er, it m u st take a cco u n t o f a risk th at w o u ld n o t
ex ist if it k ep t the m o n ey at h o m e — the risk o f a ch a n g e
in the ex ch a n g e rate b etw een the d ollar and th e foreign
cu rrency. It can p rotect itself again st this risk by h ed gin g
in the forw ard ex ch a n g e m ark et, b u t u su a lly at a cost.

In terest A rbitrage, New York and London
Percent

Percent

T R E A S U R Y BILL R A T E S

J

r>V
\

I
/

'

r

B ritish
I
. 3 - M onth T r e a s u r y B ills y
_____

^
U nited S t a te s

BILL R A T E D I F F E R E N T I A L '
_AND 3 - M O N T H F O R W A R D S T E R L IN G
_

/

J

R ates,
' • - ^ S p r e a d in F a v o r o f L o n d o n / -^- —

^

~

P rem ium '
D isco u n t-

- 3 - M O N T H C O V E R E D R A T E D IFFE R EN TIA L
N e t Incen tiv e to M ove F u n d s: T o L o n d o n *

_

To New
York
1965

British Treasury bill rates rose sharply in 1961 and 1964 in
response to balance-of-payments crises. The resulting spread in
favor of British bills was offset by higher costs of hedging ex­
change risks, however, so that the net incentive to move funds
to London was small for most of the period. A net covered in­
centive of more than one-half percent is generally considered
necessary to induce much flow of funds.

F o r ex a m p le, su p p o se th at U . S. T rea su ry b ills are cu r­
rently y ield in g a 4 -p ercen t return and B ritish T reasu ry
b ills 6 p ercen t. A U . S. co m p a n y c o u ld b u y B ritish b ills
and gain 2 p ercen t in extra in terest. T h e B ritish b ills
w ill b e red eem ed in sterlin g n in ety d ays later, h o w ev er,
and in th e m ean tim e the sterling ex ch a n g e rate m ig h t d e ­
clin e en o u g h to w ip e out this profit. T o m a k e sure this
d o es n ot h ap p en , the co m p a n y c o u ld sell th e sterlin g for
fu tu re d eliv ery at a price agreed u p o n n o w . T h e n n o m a t­
ter w h a t a ctu ally h ap p en ed to th e sterlin g ex c h a n g e rate,
th e c o m p a n y w o u ld b e p ro tected . F o rw a rd sterlin g, h o w ­
ever, m igh t very w ell b e sellin g at a p rice lo w er th an th at
fo r sp o t sterlin g (i.e., for im m ed ia te d e liv e r y ). If th e “d is­
c o u n t on forw ard sterlin g” w ere, say, o n e p ercen t (c a lc u ­
la ted as an an nual r a te ) , th e B ritish b ills w o u ld still b e
p rofitab le, sin ce th e c o m p a n y w o u ld still retain h a lf o f its
ex tra 2 -p e r c e n t in terest return.
If B ritish in terest rates are h igh er th an A m e r ic a n , fo r­
w ard sterling w ill n o rm ally sell at a d isc o u n t sin ce th e
p o ssib ility o f p rofitable in terest arbitrage w ill attract p e o p le
to it. A s th ey h ed ge b y sellin g sterlin g forw ard , h o w ev er,
th e su p p ly o f forw ard sterlin g w ill in crea se and its p rice
w ill fall; this p ro cess w ill co n tin u e until th e forw ard d is­
c o u n t has grow n large en o u g h to o ffset, ro u g h ly , th e in ­
terest differential. T h is p r o cess d o e s n o t alw ays w o rk
sm o o th ly , h o w ev er, and there h a v e b e e n tim es, as in 1 9 6 0 ,



w h e n in cen tiv es to m o v e fu n d s ab road , e v e n after a llow in g
for th e c o st o f forw ard co v er, h a v e rem a in ed su b stan tial
for c o n sid era b le p erio d s o f tim e.
T h ere are, o f cou rse, m a n y p o ssib ilitie s o f arbitrage
o th er than b e tw ee n U . S. and B ritish T rea su ry b ills. B ritish
lo c a l g o v ern m en ts and c o n su m er fin an ce (“hire p u rch a se”)
c o m p a n ies b o rro w regu larly in th e L o n d o n m o n e y m arket
at sh ort term . It also is p o ssib le for in v esto rs to em p lo y
m o n e y for sh ort p erio d s in th e p rin cip al co n tin e n ta l m o n ey
m ark ets, as w ell as th o se o f C a n a d a and Japan.
O n e ty p e o f sh ort-term fo reig n a sset th a t d o e s n o t re­
quire h ed g in g for ex c h a n g e risk is th e “E u r o -d o lla r .” C er­
tain C an a d ia n and E u ro p ea n b a n k s, in clu d in g foreign
b ran ch es o f U . S. b a n k s, are p rep ared to a c cep t d e ­
p o sits o f U . S. d ollars th at carry an o b lig a tio n to rep ay
in U . S. d ollars, n o t lo c a l cu rren cy. T h e y a c c e p t th ese
d ep o sits, o f co u rse, w ith th e o b ject o f m a k in g a p rofit from
len d in g them . T h e y m ay len d th em to co m p a n ie s en gaged
in in tern a tio n a l trade or to b a n k s in oth er co u n tries, w h ich
in turn m a y len d th em to p e o p le or firm s w h o n eed to
m a k e p a y m en ts in dollars. T h is m a rk et in E u ro -d o lla rs
o rigin ally c a m e in to b ein g b e c a u se E u r o p e a n (p rin cip a lly
L o n d o n ) b a n k s w ere w illin g to p a y a slig h tly h igh er rate
o f in terest th an U . S. b a n k s c o u ld p a y to o b ta in th e se d e ­
p o sits and to len d th em at a slig h tly lo w er rate th a n U . S.
ban k s w o u ld ch arge. S in ce this E u r o -d o lla r b u sin e ss w as
o n ly a su p p lem en t to th e E u r o p e a n b a n k s’ regular b u sin ess
and c o u ld e a sily b e seg reg a ted fro m it, th e y w ere w illin g
to o p era te o n a sm aller m argin b etw e e n d e p o sit and lo a n
rates th an w ere U . S. b a n k s. U n til tw o years ag o , th e m ar­
gin w ith in w h ich E u ro -d o lla r len d ers c o u ld o p era te w as
co n sid era b ly w id er th an it is n o w , h o w ev er. U n til Ju ly o f
1 9 6 3 , all F D I C -in su r e d U . S. b an k s w ere lim ited to a
m a x im u m o f 2Vi p ercen t in terest th at th ey c o u ld p a y for
d ep o sits w ith a term o f n in ety d ays to six m o n th s. In July
1 9 6 3 , in co n ju n c tio n w ith P resid en t K e n n e d y ’s b a la n c e -o fp a y m en ts p rogram , th e m a x im u m p erm issib le rate w as
raised to 4 p ercen t for all d e p o sits over n in e ty d a y s; and
in N o v e m b e r 1 9 6 4 , rates for su ch d e p o sits w ere raised to
4 Vi p ercen t, w h ile th o se for d e p o sits o f less th an n in ety
d ays w ere raised to 4 p ercen t. A s a resu lt, th e sp read
b etw een L o n d o n n in ety -d a y E u r o -d o lla r rates an d rates
p aid b y N e w Y o r k b an k s on their n in ety -d a y to six -m o n th s
tim e certificates o f d ep o sit has n arrow ed irregularly from
ab o u t o n e and o n e-fo u rth p ercen t in 1 9 6 2 to ab ou t o n eh a lf o f o n e p ercen t.
S tatistical e v id e n c e as to th e effect o f in terest rate d if­

TI M E C E R T I F I C A T E S O F D E P O S I T ,
"NE W YORK, AND 3-M O N T H
I
EU RO -D O LLA RS, LONDON
\

___ „

.--A
/

London
3 - M o n t h E ur o -D ol l a r

N e w York
T i m e C e r t i f i c a t e s o f D e p o s i t,
9 0 -1 7 9 Days

1963

Interest rates on 3-month dollar deposits in London have con­
sistently been higher than rates paid on certificates of deposit
in New York. The differential shrank in 1963 when the ceiling
imposed by Regulation Q on these certificates was raised.

•3 •

feren tials o n ca p ita l m o v em en ts in to and o u t o f th e U . S.
is n o t very clear, b u t th e stu d ies th at h a v e b e e n m a d e,
p rin cip ally th o se o f P rofesso rs P h ilip B e ll and P eter K en en
and o f B en ja m in C o h en o f th e N e w Y o r k F e d e r a l R e se r v e
B a n k , d o seem to p o in t to a fe w fairly d efin ite c o n c lu sio n s.
A s far as sh ort-term cap ita l m o v em e n ts g o , it seem s p ro b ­
ab le th at trade cred it to E u ro p ea n s is in flu en ced b y in terest
rate co n sid era tio n s. T h a t is, in th e c a se o f E u ro p e, b a n k
lo a n s oth er th an th o se to o fficial in stitu tio n s and to b an k s
and b an k c o lle c tio n s ou tsta n d in g see m to flu ctu ate w ith
ch a n g es in in terest rate d ifferen tials b e tw ee n th is c o u n try
and E u rop e. T h e sam e is n o t true o f th e u n d er-d ev elo p ed co u n tries, w h ich p resu m a b ly h a v e less fr e e d o m o f
c h o ic e in fin an cin g their im p orts. T ra d e cred it to E u r o ­
p ean cou n tries is n o t a large c o m p o n e n t o f U . S. ca p ita l
ou tflow s, bu t an oth er co m p o n e n t, sh o rt-term d ollar cla im s
o f n on fin an cial in stitu tio n s, is siza b le. T h e flu ctu a tio n s in
this c o m p o n e n t seem to b e fairly c lo s e ly related to the
d ifferen tial b etw een B ritish and U . S. T rea su ry b ill rates
and to th e gap b etw een E u ro -d o lla r and U . S. T reasu ry
b ill rates. T h is e lem en t co rresp o n d s fairly w ell w ith th e
in terest arbitrage flow s d escrib ed earlier.
S o m e U . S. ca p ita l o u tflo w s d o n o t seem to b e re­
sp o n siv e to in terest rate d ifferen tia ls, a cco rd in g to th e
studies m en tio n ed a b ov e. In p articu lar, b a n k lo a n s to
foreign b an k s and official in stitu tio n s and b a n k and n o n ­
bank sh ort-term cla im s p a y a b le in fo reig n cu rren cies d o
n o t seem to sh o w any se n sitiv ity to rate sp read s. P erh ap s
the m o st sign ifican t e v id en ce , h o w ev er, is th at there seem s
to b e n o c o n sisten t rela tio n sh ip b e tw e e n an y im p o rta n t
typ e o f lo n g -term ca p ita l flo w in to or o u t o f th e U . S.
and lon g-term in terest rate d ifferen tials b e tw e e n this c o u n ­
try and th e rest o f the w orld . T h ere is so m e e v id e n c e th at
the ab solu te lev el o f U . S. in terest rates m a y affect the
tim in g, b u t n o t th e v o lu m e , o f U . S. p u rch a ses o f for-

eig n b o n d s. T h is ce rta in ly se e m s to im p ly th at rela tiv ely
little c o u ld b e a c c o m p lish e d to restrict th e o u tflo w o f
lo n g -term ca p ita l fro m this co u n try b y tryin g to raise
lo n g -term in terest rates m o d era tely . T h e sta tistica l e v i­
d en c e is n o t, o f c o u r se, c o n c lu siv e ; b u t ev e n if th ere is
in fa ct m ore sen sitiv ity th a n th e a v a ila b le d a ta in d ica te,
risin g U . S. lo n g -te rm in terest rates m ig h t n o t p ro ­
vid e a la stin g so lu tio n . T h e In ter e st E q u a liz a tio n T a x ,
p ro p o sed in Ju ly 1 9 6 3 , w a s d e sig n e d to add a p p ro x im a tely
o n e p ercen ta g e p o in t to th e in terest c o s t to fo reign ers o f
o b ta in in g fu n d s in this co u n try . S in c e th a t tim e , lo n g -term
in terest rates in m o s t E u r o p e a n co u n tr ie s h a v e risen alm o st
en o u g h to r e -esta b lish th e o ld r e la tio n sh ip b e tw e e n U . S.
and fo reig n rates after p a y m en t o f th e tax. In o th er w ord s,
b e c a u se fo reig n rates h a v e risen , th e ta x is le ss o f a d e ­
terrent to b o rrow in g h ere th an it w a s w h e n it w a s first
p ro p o sed .
T h e cu rren t b u sin e ss u p sw in g in th e U . S ., n o w in
its fifty -fo u rth m o n th , has d e p en d e d h e a v ily o n b u sin ess
sp en d in g o n p la n t and eq u ip m en t. T h e re is fa irly g en eral
a g reem en t th at su ch b u sin ess o u tla y s are in flu en ced to
so m e d eg ree at le a st b y lo n g -ter m in terest rate m o v em en ts.
It is n o t hard to u n d ersta n d , th erefo re, w h y m a n y p e o p le
are relu cta n t to se e lo n g -te r m in terest rates rise w h en
ch a n ce s are p o o r th a t su ch a d e v e lo p m e n t w o u ld h a v e
m u ch effect o n ou r b a la n c e o f p a y m e n ts and th ere is at
le a st a p o ssib ility th at it w o u ld h a v e so m e d am p en in g
effect on d o m e stic b u sin e ss e x p a n sio n . O th er p e o p le in ­
sist, h o w e v e r , th at lo n g -te r m rates m u st rise e v en tu a lly if
w e are ev er to so lv e ou r p a y m e n ts p ro b lem . In an y c a se,
m o st rea so n a b le p e o p le are agreed th a t th ere is n o sim p le
so lu tio n to th is v ery c o m p le x p ro b lem and th a t th ere is
n o su b stitu te fo r g o o d ju d g m en t and g rea t ca re in w e ig h ­
in g p o lic y d e c isio n s.
L awrence F . M ansfield

Changing Seasonal Patterns in Florida
A c o m b in a tio n o f e c o n o m ic and c lim a tic fa cto rs c o n tin u es
to k eep F lo rid a in th e ranks o f rap id ly ex p a n d in g region s.
F o r in sta n ce, in the ten y ea rs b e tw ee n 1 9 5 5 and 1 9 6 4 ,
th e p o p u la tio n o f th e state in crea sed o v er 5 0 p ercen t.
D u rin g th e sam e p erio d , o v er 5 6 0 ,0 0 0 n ew n o n fa rm job s
P ercen ta g e C h an ges in S e le c te d E co n o m ic Indicators
1955-64
U. S.

Population
Nonfarm Employment
Manufacturing Employment
Nonmanufacturing Employment
Farm Employment
Personal Income
Farm Cash Receipts
Department Store Sales
Bank Deposits
Bank Debits
n.a.

+ 15.9
+ 14.8
+ 2.5
+ 21.0
— 27.1
+ 59.1
+ 25.5
n.a.
+ 58.8
+ 102.6

Florida

+ 52.3
+ 58.4
+ 61.9
+ 57.8
+ 0.8
+ 113.7
+ 68.6
+ 154.4
+ 101.8
+ 112.3

N ot available.

w ere created . T h is rep resen ted an in crea se o f 5 8 .4 p er­
cen t, or a lm o st fou r tim es th e U . S. average. O v er 9 1 ,0 0 0
o f th ese n ew job s w ere in m a n u fa ctu rin g , w ith th e rem a in 


der in n o n m a n u fa ctu rin g ca te g o r ies. M o r e o v e r, w h ile farm
em p lo y m e n t w a s reg isterin g a su b sta n tia l lo ss in m o st
parts o f th e co u n try , F lo r id a a ctu a lly sh o w e d a sm all gain ,
and farm c a sh re ceip ts w e n t u p a lm o st 7 0 p ercen t.
It is n o w o n d er, th en , th a t p e r so n a l in c o m e in F lo rid a
in 1 9 6 4 w a s o v er tw ic e as la rg e as in 1 9 5 5 . B a n k in g fig­
ures sh o w th a t to ta l d e p o sits at all b a n k s grew fro m $ 3 ,1 0 7
m illio n in 1 9 5 5 to $ 6 ,2 6 9 m illio n in 1 9 6 4 , an in crea se o f
ju st o v er 1 0 0 p ercen t. S u b sta n tia l g a in s a lso w ere record ed
in su ch c o n su m er sp en d in g v a ria b les as d ep a rtm en t store
sa les and b a n k d eb its, w h ic h grew 1 5 4 p e rcen t and 1 1 2
p ercen t, r esp ectiv ely .
S h a rp

Seaso n al

P a tte rn s

B e c a u se o f its fa v o r a b le w in ter clim a te , th e S u n sh in e S tate
has lo n g b e e n a h a v e n fo r sn o w b o u n d citiz e n s o f north ern
c lim es. In a d d itio n , th e w arm w in ter w ea th er m a k es
F lo rid a an id ea l sp o t fo r th e p r o d u c tio n o f citrus and for
w in ter tru ck fa rm in g a ctivity. A ll th is ten d s to q u ick en
th e p a ce o f a ctiv ity d u rin g th e w in ter m o n th s an d to bring
a b o u t a d e c lin e in th e su m m er m o n th s.
T o g e t arou n d th e se a so n a l p ro b lem in a n a lyzin g e c o -

•4 •

C h a n g i n g S e a s o n a l P a t t e r n s in F l o r i d a

Thousands of Psraons

Thousands of Parsons

Within tite year, wide swings in Florida’s economic activity
occur because of seasonal forces.

n o m ic a ctivity, e c o n o m ists o fte n reso rt to se a so n a lly ad ­
ju stin g th eir data. T o d o th is, th ey ca lc u la te , o n th e b asis
o f p a st d ata, se a so n a l fa cto rs th a t in d ica te w h a t th e se a ­
so n a l flu ctu a tio n s are lik e ly to b e. T h e r e is a sea so n a l
fa cto r fo r e a c h m o n th , an d th e avera g e fo r th e year is
eq u a l to 1 0 0 . T h u s, if th ere w ere n o se a so n a l flu ctu ation s,
e a c h m o n th w o u ld h a v e a se a so n a l fa cto r e q u a l to 1 0 0 .
A fa cto r o f o v e r 1 0 0 in d ica tes th a t m o re th an th e yea rly
a v erage o f a ctiv ity occu rred in th at m o n th , an d th e re­
verse is tru e fo r fa cto rs o f le ss th an 1 0 0 . W h en th ese
fa cto rs are a p p lied to th e actu a l d ata, th e y p ro d u ce a
series in w h ic h th e se a so n a l flu ctu a tio n s h a v e b e e n m in i­
m ized . T h e effects o f su ch an a d ju stm en t c a n b e se e n in
th e series o n n o n farm em p lo y m en t. T h e d a sh ed lin e o f
th e ch a rt rep resen ts th e actu a l d a ta b e fo r e ad ju stm en ts
w ere m a d e, w h ile th e so lid lin e sh o w s th e sa m e d a ta after
se a so n a l ad ju stm en t.
E c o n o m ic

G ro w th
of

an

Changes

th e

S tru c tu re

Econom y

H a s th e su sta in ed e c o n o m ic g ro w th in F lo r id a b e e n a c­
co m p a n ie d b y structural c h a n g es th a t h a v e altered se a ­
so n a l p attern s o f activity? T o find o u t, se a so n a l fa cto rs
in 1 9 5 5 and 1 9 6 4 fo r sev era l e c o n o m ic tim e series w ere
co m p a red . O n th e b a sis o f th is co m p a r iso n , it appears
th a t th ere d efin itely h a s b e e n a le sse n in g in th e am o u n t
o f se a so n a l flu ctu a tio n th a t o c cu rs in F lo rid a . C h an ges
in th e se a so n a l fa cto rs fo r b a n k d e p o sits and n o n fa rm e m ­
p lo y m e n t are g o o d ex a m p les. B a n k d ep o sits in F lo rid a are
ty p ic a lly h ig h in th e w in ter, d rop off in th e sp rin g and su m ­
m er, an d th en b eg in to b u ild b a c k u p in th e fa ll. H o w e v e r ,
th e size o f th e rise and fa ll h a s d im in ish ed o v er tim e.
T h e sa m e te n d e n c y m a rk ed th e se a so n a l fa cto rs for n o n farm e m p lo y m en t. T h e 1 9 6 4 fa cto rs are n o t as large as
th e 1 9 5 5 fa cto rs in th e w in ter m o n th s n o r as lo w as th e
1 9 5 5 fa cto rs in th e su m m er m o n th s, in d ica tin g th a t the
m o n th ly d ifferen ce b e tw e e n th e le v e ls o f e m p lo y m e n t is
d im in ish in g .
W h y sh o u ld th is occu r? T w o ty p es o f c h a n g e s ap p ear
to b e resp o n sib le. F irst, so m e o f th e a ctiv ity th a t m o v e d
to F lo rid a d u rin g this p erio d w a s n o t as su sc ep tib le to
se a so n a l flu ctu a tio n s as w ere th e o ld er in d u stries. S eco n d ,
so m e o f th e tra d itio n a lly se a so n a l ty p es o f a ctiv ity h a v e
b e c o m e le ss se a so n a l th a n th e y w ere in earlier p eriod s.
M o d e r a t in g

However, the changing structure of Florida’s economy has
caused the seasonal swings to become smaller.




In f lu e n c e s

T h e sh ifts th a t h a v e o ccu rred in m an u fa ctu rin g em p lo y ­
m en t illu strate h o w se a so n a l flu ctu a tio n s in a b ro ad c a te ­
g o ry m a y d im in ish as its v a rio u s secto rs grow . In 1 9 5 5 ,
m a n u fa ctu rin g w a s h e a v ily d o m in a te d b y th e p ro d u ctio n
o f lu m b er an d w o o d p ro d u cts and fo o d p ro c essin g , b o th
o f w h ic h are h ig h ly se a so n a l in n atu re. T h e se tw o c a te ­
g o ries, ta k en to g eth er, a cco u n te d fo r a lm o st 3 6 p ercen t
o f to ta l m a n u fa ctu rin g e m p lo y m en t in th a t year. T h e rela ­
tiv e im p o rta n ce o f th ese in d u stries h a s d im in ish ed stea d ily
o v er th e y ea rs, h o w ev er, so th a t in 1 9 6 4 th e y a cco u n ted
fo r le ss th a n 2 3 p ercen t o f th e total. In co n tra st, th e in ­
d u stries th at h a v e gro w n at th e fa stest p a ce , su c h as m a ­
ch in ery , elec tric a l eq u ip m en t, an d tra n sp o rta tio n eq u ip ­
m en t, h a v e b e e n le ss se a so n a l in nature. A s th ey h a v e
b e c o m e rela tiv ely m o re im p ortan t, th ey h a v e c a u sed th e
m o n th ly flu ctu a tio n s in m a n u fa ctu rin g e m p lo y m e n t to d i-

•5 •

m in ish . P ea k s still o ccu r in th e w in ter m o n th s and lo w s
in th e su m m er, b u t th e d ifferen ces b e tw e e n th e h ig h s and
lo w s are co n sid era b ly less in 1 9 6 4 th a n th ey w ere in 1 9 5 5 .
T h e se c o n d typ e o f c h a n g e in F lo r id a ’s se a so n a l p a t­
terns results from sh ifts in th e v a ca tio n sch e d u le s o f
visitors. O n ce, F lo rid a w a s c o n sid e r e d “ v isita b le ” o n ly
during th e w in ter m o n th s w h e n p a lm trees and sa n d y
sh ores h a v e an e sp ecia l ap p eal. In re cen t y ea rs, h o w e v e r ,
F lo rid a has b e e n able to a llev ia te th is im b a la n ce so m e ­
w h at b y offering sp ecia l a ttraction s and red u ced rates
during th e o ff-p ea k m on th s. T h is sh ift sh o w s u p very w ell
in se a so n a l factors for e m p lo y m en t in h o tels and lo d g in g
p la ces an d in p erso n a l serv ices, b o th o f w h ich are tou risto rien ted , as w e ll as h e a v ily se a so n a l in nature. T h e h igh
w in ter-low su m m er p attern s still p ersisted in 1 9 6 4 , but
the sw in gs w ere less sev ere in b o th c a se s th an th ey w ere
in 1 9 5 5 . T h is d o es n o t m ea n th a t th e w in ter to u rist trade
is fa llin g off. Q u ite th e con trary; it h as co n tin u e d to grow .
W h at it d o es m ea n is th at th e n u m b er o f su m m er visitors
has grow n rela tiv ely m o re rap id ly, and th is, in turn, has
ten d ed to spread activity in th e to u rist trade m o re ev en ly
over the year.
M ore S ta b ility
T h e n et o u tco m e o f th e g row th o f n o n se a so n a l in d u stries
an d th e d im in u tio n o f th e sw in g s in se a so n a l in d u stries
is a m o re stab le e c o n o m y . M o r e p e o p le are ab le to h o ld
a job th e year rou n d , in co m e flo w s m o re ev e n ly , and
co stly fa cilities ca n b e k ep t in u se. T h is co m e s as a w e l­
co m e relief for an area th at in th e p a st h as b e e n fa ced
w ith ch ro n ic sla ck durin g so m e parts o f th e year. T h u s
F lo rid a n o t o n ly has b en efited b y th e grow th in th e m a g n i­
tu d e o f e c o n o m ic activity but from a c h a n g e in th e tim e
pattern o f this activity as w ell.
N . D . O ’B a n n o n

This is one of a series in which economic developments in
each of the Sixth District states are discussed. Develop­
ments in Tennessee’s economy were analyzed in the June
1965 R e v ie w , and a discussion of Alabama’s economy is
scheduled for a forthcoming issue.

Bank Announcements
A m e r i c a n B a n k & T r u s t C o m p a n y , Hartselle, Alabam a,
a new ly organized nonm em ber bank, opened fo r business
on July 1 and began to rem it at par fo r checks drawn on
it when received from the Federal R eserve B ank. Officers
are R . O. Camp, Chairm an o f the Board; H. A . Bartlett,
P re s id e n t; and. M ilto n D . W o o d , C a sh ier. C a p ita l is
$200,000, and surplus and undivided profits, $300,000.
On July 23, T h e F i r s t N a t i o n a l B a n k o f T u c k e r ,
Tucker, Georgia, a new ly organized m em ber bank, opened
fo r business and began to rem it at par. Officers are John
H. Cunningham , Chairman o f the Board; B. Olin Cox,
President; W. Clyde G reenway, Vice President; and W il­
liam H . W hite, Vice President and Cashier. Capital is
$250,000, and surplus and other capital funds, $250,000,
as reported by the C om ptroller o f the Currency at the tim e
the charter was granted.
The N a t i o n a l B a n k o f W e s t M e l b o u r n e , W est M el­
bourne, Florida, a new ly organized m em ber bank, opened
fo r business on July 31 and began to rem it at par. Officers
include T. E. Tucker, Chairman o f the Board; E. D. P ot­
ter, President; and E. G. Litka, Vice President and Cashier.
Capital is $150,000, and surplus and other capital funds,
$150,000, as reported by the Com ptroller o f the Currency
at the tim e the charter was granted.




Debits to Demand Deposit Accounts
Insured Commercial Banks in the Sixth District
(In Thousands of Dollars)

June
1965
STANDARD METROPOLITAN
STATISTICAL AREASf
Birmingham . . .
1,276,430
56,013
Gadsden . . . .
162,717
Huntsville . . . .
421,586
Mobile.......................
Montgomery . . .
272,265
Tuscaloosa . . .
76,745
Ft. LauderdaleHollywood . . .
495,642
Jacksonville . . .
1,357,589
1,815,956
M iam i.......................
Orlando . . . .
411,838
Pensacola . . . .
192,522
1,050,594
Tampa-St. Petersburg
W. Palm Beach . .
352,647
Albany .......................
81,971
Atlanta . . . .
3,765,775
Augusta . . . .
184,019
Columbus . . . .
188,170
Macon.......................
189,916
Savannah . . . .
235,171
Baton Rouge . . .
416,086
Lafayette . . . .
108,337
Lake Charles . . .
112,749
New Orleans . . .
2,168,357
Jackson . . . .
486,540
Chattanooga . . .
483,467
Knoxville . . . .
365,576
Nashville . . . .
1,168,755
OTHER CENTERS
Anniston . . . .
Dothan.......................
S e lm a.......................
Bartow.......................
Bradenton
. . .
Brevard County . .
Daytona Beach . .
Ft. MyersN. Ft. Myers . .
Gainesville . . .
Monroe County . .
Lakeland . . . .
O c a la .......................
St. Augustine . .
St. Petersburg . .
Sarasota . . . .
Tallahassee . . .
Tampa.......................
Winter Haven . .
Athens .......................
Brunswick
. . .
Dalton.......................
Elberton . . . .
Gainesville . . .
G riffin .......................
LaGrange . . . .
Newnan . . . .
R o m e .......................
Valdosta . . . .
Abbeville . . . .
Alexandria . . .
Bunkie.......................
Hammond . . . .
New Iberia . . .
Plaquemine . . .
Thibodaux
. . .
Biloxi-Gulfport . .
Hattiesburg . . .
La u re l.......................
Meridian . . . .
Natchez . . . .
PascagoulaMoss Point
. .
Vicksburg . . . .
Yazoo City . . .
Bristol
. . . .
Johnson City . . .
Kingsport . . . .

May
1965

June
1964

1,226,447
55,094
159,645
405,997
269,212
77,090

1,145,964
55,409
167,730
396,215
230,733
77,566

+4
+2
+2
+4
+1
—0

+11
+1
—3
+6
+ 18
—1

+11
+7
+8
+9
+ 11
+5

456,315
1,300,402
l,676,648r
418,471
184,820
1,006,054
337,355
84,122
3,593,980
174,239
184,580
189,663
228,071
402,832
98,5%
107,925
2,053,227
483,712
447,948
405,148
1,145,514

425,242
1,173,684
1,573,560
422,068
177,714
962,606
305,797
68,770
3,317,396
195,609
183,206
187,880
230,597
362,531
84,635
99,753
1,952,309
435,464
441,079
370,018
996,880

+9
+4
+8
—2
+4
+4
+5
—3
+5
+6
+2
+0
+3
+3
+ 10
+4
+6
+1
+8
— 10
+2

+ 17
+ 16
+ 15
—2
+8
+9
+ 15
+ 19
+ 14
—6
+3
+1
+2
+ 15
+ 28
+13
+ 11
+ 12
+ 10
—1
+ 17

+8
+ 13
+8
+1
+ 14
+7
+7
+ 22
+ 12
+2
+11
+ 10
+4
+ 19
+ 19
+7
+ 11
+11
+ 10
+8
+9

+6
+ 13
+4
+ 19

55,057
50,801
35,334
32,064
54,975
204,151
78,729

52,120
49,667
35,858
30,552
46,091
199,940
73,726

51,892
44,883
34,018
26,878
54,303
184,544
71,411

+6
+2
—1
+5
+ 19
+2
+7

+ ii
+ 10

+5
+ 10
+2
+ 19
-J-l
+ 13
+4

65,912
70,128
29,634
104,256
50,821
19,486
253,936
87,956
100,138
593,841
55,268
65,159
38,078
78,465
11,373
64,803
28,485
20,430
22,378
62,947
47,065
10,034
110,335
5,595
29,498
30,341
8,369
24,417
80,827
44.867
34,054
56,645
29,290

61,148
67,804
26,223
101,840
48,304
16,333
242,779
85,038
102,564
573,010
57,517r
59,321
35,898
76,563
14,718
63,637
27,865
18,642
23,884
61,073
43,023
8,827
104,553
5,482
32,800
30,317
8,543
18,943
77,381
44,499
34,688
58,156
33,471

58,675
65,237
24,318
78,039
47,439
17,184
241,170
79,237
87,359
534,674
49,801
55,336
39,567
69,341
13,353
58,265
25,033
19,890
23,810
63,488
41,008
9,164
96,887
5,125
26,487
29,079
8,241
19,440
76,972
41,593
31,303
55,045
29,482

+8
+3
+ 13
+2
+5
+ 19
+5
+3
—2
+4
—4
+ 10
+6
+2
— 23
+2
+2
+ 10
—6
+3
+9
+ 14
+6
+2
— 10
+0
—2
+ 29
+4
+1
—2
—3
— 12

+12
+7
+ 22
+ 34
+7
+ 13
+5
+11
+15
+11
+ 11
+18
—4
+ 13
— 15
+ 11
+14
+3
—6
—1
+ 15
+9
+ 14
+9
+11
+4
+2
+ 26
+5
+8
+9
+3
—1

+6
+ 10
+ 20
+12
+6
+1
+5
+3
+ 14
+ 11
+9
+15
+4
+ 14
+8
+7
+11
+4
+1
+4
+ 11
+ 10
+ 11
+ 13
+ 10
+1
+7
+7
+7
+8
+4
+4
+2

41,331
33,665
27,495
64,441
64,450
123,422

44,636
32,907
30,058
61,372
60,705
127,331

46,514
30,913
24,448
55,% 2
61,501
111,129

—7
+2
—9
+5
+6
—3

— 11
+9
+ 12
+15
+5
+ 11

+4
+ 16
+ 13
+ 10
+8
+ 14

+4

+11
+8
+ 13
+12
+ 12
+7
+8

+ 10

SIXTH DISTRICT, Total 24,790,447
Alabamaf . . . .
Floridaf . . . .
Georgiaf . . . .
Louisiana--*
?
. .
Mississippif* . .
Tennesseef*
. .

Percent Change
Year-to-date
6 Months
June 1965 from
from
May
June
1965
1965
1964
1964

3,266,802
7,617,345
6,147,229
3,512,161
1,089,733
3,157,177

23,877,104r 22,358,643
3,161,255
7,202,151r
5,920,186
3,351,435
1,088,584
3,153,493

3,022,881
6,766,166
5,493,787
3,135,313
1,017,445
2,923,051

+3
+6
+4
+5
+0
+0

+8
+9
+ 13
+ 12
+9
+7

♦Includes only banks in the Sixth District portion of the state. tP artially estimated,
r Revised.

•6 •

S i x t h D i s t r i c t S ta tis tic s
Seasonally Adjusted
(All data are indexes, 1957-59 =

Latest Month
(1965)

One
Month
Ago

Two
Months
Ago

100, unless indicated otherwise.)

One
Year
Ago

SIXTH DISTRICT

Latest Month
(1965)

One
Month
Ago

Two
Months
Ago

One
Year
Ago

May
June
May
June

8,563
157
122
135

8,731r
157
125
144

8,690r
157
116
139

7,% 9
144
109
143

June
June
June
June
June
June
June

122
119
123
134
68
1.7
40.5

121
118
123
135
67
1.7
40.9

121
119
122
129
64
1.8
40.8

117
114
119
125
80
2.1
40.3

July
July
June

214
173
177

213
174
179

208
171
172

183
149
158

INCOME AND SPENDING
May
Personal Income, (Mil. $, Annual Rate)
Manufacturing P a y r o lls .................................. June
Farm Cash R e c e ip ts ........................................May
May
Department Store Sales*/** . . .
June

6,878
141
115
125

7,055r
138r
137
127

6,985r
143
113
132

6,274
128
122
118

June
June
June
June
June
June
June

114
109
115
125
81
3.0
42.3

114
109
115
124
77
3.2
42.2r

114
109
115
125
69
3.1
41.5

108
104
109
106
87
3.3
41.3

FINANCE AND BANKING
Member Bank L o a n s*........................................July
July
Member Bank Deposits*.................................. July
Bank D e b it s * / * * ..............................................June
June

192
141
150

190
139
149

187
139
143

163
128
134

G EO R G IA

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate) . .
Manufacturing P a y r o lls ..................................
Farm Cash R e c e ip ts ........................................
C r o p s ...............................................................
Livestock .........................................................
Department Store S a l e s * / * * .......................
Instalment Credit at Banks, *(Mil. $)
New Loans .........................................................
Repayments....................................................

June
June

198
190

214r
188

220
185

PRODUCTION AND EMPLOYMENT
Nonfarm Employment........................................
M anufacturing..............................................
Apparel.........................................................
Chemicals...................................................
Fabricated M e t a ls ..................................
Food...............................................................
Lbr., Wood Prod., Furn. & Fix. . . .
Paper .........................................................
Primary M e t a ls ........................................
Textiles.........................................................
Transportation Equipment
. . . .
Nonmanufacturing........................................
Construction..............................................
Farm Employment..............................................
Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .
Construction Contracts*..................................
R e sid e n tia l...................................................
All O th e r.........................................................
Industrial Use of Electric Power . . . .
Cotton Consum ption**..................................
Petrol. Prod, in Coastal La. and Miss.**

June
June
June
June
June
June
June
June
June
June
June
June
June
June
June
June
June
June
June
Apr.
June
June

122
122
149
116
129
107
100
110
111
99
143
123
120
80
2.3
41.1
147
162
134
128
111
178

122
121
149
115
129
108r
99r
109
112
98
144
122
121
76
2.3
41.4r
147
155
139
126
113
176

122
121
148
115
130
108
100
108
112
98
142
122
119
73
2.4
41.5
181
174
188
127
115
175

118
116
140
112
121
105
96
106
106
96
124
118
113
87
3.0
40.6
147
159
136
123
106
169

July
July

206
189

206
189

203
184

178
166

July
July
June

160
148
163

161
151
166r

158
146
164

143
133
147

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate)

179
173

FINANCE AND BANKING
Member Bank Loans*
All B a n k s.........................................................
Leading C i t i e s ..............................................
Member Bank Deposits*
All B a n k s.........................................................
Bank D e b it s * / * * ..............................................

May 46,165 46,965r 46,503r 42,927
157
144
June
157
158
124
132
May
125
125
May
144
157
158
158
116
122
114
May
108
July
148p
139
143
133

IMCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate) . . May
Manufacturing P a y r o lls .................................. June
Farm Cash R e c e ip ts ........................................ May
Department Store S a l e s * * ............................. June

FINANCE AND BANKING
Member Bank L o a n s ........................................
Member Bank D e p o s its ..................................
Bank D e b its * * ...................................................

Avg. Weekly Hrs. in Mfg., (Hrs.)
FINANCE AND BANKING

LO U ISIA N A

PRODUCTION AND EMPLOYMENT
Nonmanufacturing

Avg. Weekly Hrs. in Mfg., (Hrs.)

.

.

MISSISSIPPI

ALABAM A

PRODUCTION AND EMPLOYMENT
Nonfarm Employment........................................
Manufacturing..............................................
Nonmanufacturing........................................
Construction..............................................
Farm Employment..............................................
Insured Unemployment, (Percent of Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .

PRODUCTION AND EMPLOYMENT

6,156
147
127
111

6,303r
145
126
114

6,245r
148
117
110

5,710
131
118
120

115
115
115
113
78
2.5
41.7

115
114
115
113
79
2.3
41.5

115
114
115
113
76
2.5
42.1

111
108
113
113
82
3.2
40.8

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate)
Manufacturing P a y r o lls .......................
Farm Cash R e c e ip ts .............................
Department Store Sales*/** . . .

May
June
May
June

3,569
166
118
99

3,517r
174
121
100

3,550r
169
134
101

3,324
152
139
109

. .

June
June
June
June
June
June
June

126
134
122
126
83
2.4
40.2

126
133
123
127
68
2.4
41.6

125
132
122
128
62
2.8
41.2

121
124
119
130
89
3.4
40.4

FINANCE AND BANKING
Member Bank Lo a n s*.............................
Member Bank Deposits*.......................
Bank D e b its * / * * ...................................

July
July
June

220
169
161

217
168
170

220
168
164

197
158
151

May
June
May
June

7,378
152
107
120

7,512r
152r
107
129

7,452r
150
111
120

6,858
141
103
124

June
June
June
June
June
June
June

122
126
121
141
79
2.5
40.9

122
125
121
144
80
2.6
41.3r

122
125
120
136
80
3.0
41.0

117
120
116
134
93
3.3
40.3

FINANCE AND BANKING
Member Bank L o a n s*........................................July
July
Member Bank Deposits*...................................July
July
Bank D e b it s * / * * ..................................
June

203
158
168

203
164
181

203
159
186

177
141
155

PRODUCTION AND EMPLOYMENT
June
June
June
June
June
June
June
July
July
June

197
160
154

200
160
155

197
157
158

175
144
142

Avg. Weekly Hrs. in Mfg., (Hrs.)

FLORIDA

TENNESSEE

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate) . .
Manufacturing P a y r o lls ..................................
Farm Cash R e c e ip ts ........................................
Department Store S a l e s * * .............................

May 13,621
June
190
May
142
June
174

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate)
Manufacturing P a y r o lls .......................
Farm Cash R e c e ip ts .............................
Department Store Sales*/** . . .

PRODUCTION AND EMPLOYMENT
Nonfarm Employment........................................
Manufacturing..............................................
Nonmanufacturing........................................
Construction..............................................
Farm Employment..............................................
Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .

June
June
June
June
June
June
June

FINANCE AND BANKING
Member Bank L o a n s ........................................
Member Bank D e p o s its ..................................
Bank D e b its * * ....................................................

July
July
June

132
132
132
109
92
2.2
41.8
211
162
160

13,847r 13,581r 12,792
188r
193
176
164
150
150
173
171
179
132
132
132r
109r
97
2.1
41.6r
211
162
162r

*For Sixth District area only. Other totals for entire six states.

130
132
130
109
96
1.9
42.6
206
158
163

128
128
128
104
86
2.7
41.1
182
145
142

* * Daily average basis.

PRODUCTION AND EMPLOYMENT
Nonfarm Employment.............................
M anufacturing..................................
Nonmanufacturing............................

Avg. Weekly Hrs. in Mfg., (Hrs.)

r Revised.

.

.

p Preliminary.

Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U. S. Dept, of Labor and cooperating state agencies; cotton
consumption, U. S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash
receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank.




•7 •

D IS T R IC T

B U S IN E S S

I ........ ............I ......................I...................... I
—
Billion* of Dollars
_Annual Rot*
S«as. Adj.

_

C O N D IT IO N S

It w a s a n o th e r m o n th o f e c o n o m i c e x p a n s io n in t h e D istr ic t, a lth o u g h a
s o m e w h a t s lo w e r p a c e p r e v a ile d th a n e a r lie r in t h e y e a r . N o n fa r m e m ­
p lo y m e n t g a in s in J u n e w e r e t h e s m a l l e s t s o fa r in 1 9 6 5 , a n d t h e in s u r e d
u n e m p lo y m e n t r a te d id n o t d e c lin e a n y fu r th e r . C o n s u m e r s a re s t ill b u y ­
in g , b u t n o t a t t h e e x u b e r a n t p a c e o f A p ril. L o a n s s lo w e d d o w n in J u ly
a fte r t h e ex tr a o r d in a r ily ra p id M a y -J u n e p a c e . C o n tin u e d h ig h liv e s t o c k
p r ic e s a n d g o o d

c ro p

p r o s p e c t s a r e e n c o u r a g in g t h e

r e g io n ’s fa r m e r s .

C o n s tr u c tio n o u tla y s a n d e m p lo y m e n t r e m a in o n a h ig h p la t e a u .
is

G a in s in e m p lo y m e n t s lo w e d in J u n e . N o n a g r ic u ltu r a l e m p lo y m e n t sh o w ed
th e sm a llest g ain o f th e y ear, w ith o n ly slig h t in crea ses o ccu rrin g b o th in
n o n m a n u fa ctu rin g and m a n u fa ctu rin g e m p lo y m en t. T h e rate o f in su red u n ­
e m p lo y m e n t rem a in ed u n ch a n g ed . A v e ra g e h o u rs w o rk ed in m a n u factu rin g
c o n tin u e d to d ec lin e from th e D e c e m b e r 1 9 6 4 h ig h , y e t in crea ses in m a n u ­
fa ctu rin g em p lo y m e n t in all six sta tes w ere su fficien t to m a in ta in p ayrolls
u n ch a n g ed .
P e r s o n a l in c o m e a p p a r e n tly r e c o v e r e d in J u n e . T h e M a y d e clin e w as
w id esp rea d , w ith o n ly M ississip p i sh o w in g an in crea se. In c o m p le te d ata in ­
d ica te th at reta il sa les d ip p ed further in Ju n e. Ju n e d e c lin e s in d eb its to
d em a n d d e p o sits, fu rn itu re store sa le s, and d ep a rtm en t store sa les ten d to
con firm th e w e a k n e ss in retail sa les. C o n su m er s a p p a ren tly ad d ed to their
sa v in g s at a so m e w h a t m o re rap id p a c e in Ju n e th a n in th e p rev io u s tw o
m o n th s and w ere so m e w h a t m o re ch a ry o f ta k in g o n in sta lm en t d ebt. A u to ­
m o b ile sa les in M a y set an a ll-tim e record .
Cotton C onsu m p tio n

T o ta l b a n k c r e d it e x p a n d e d s lig h tly fu r th e r in J u ly . L o a n s w ere virtu ally
u n ch a n g ed . B a n k s in lea d in g cities reg istered further g a in s in real esta te and
b u sin ess lo a n s; co n su m er lo a n s sh o w e d a n o ta b le d eclin e. In v estm en ts rose
so m e w h a t at all m em b er b a n k s, w ith a d d itio n s to U . S. G o v er n m e n t secu rities
e x c e e d in g red u ctio n s in h o ld in g s o f o th er secu ritie s. T o ta l d e p o sits d eclin ed
fo llo w in g sharp ga in s in th e tw o p r ev io u s m o n th s.
V*

V*

T h e a g r ic u ltu r a l e c o n o m y , b o ls t e r e d b y h ig h e r p r ic e s a n d a fa v o r a b le
c ro p o u tlo o k , c o n t i n u e s s t r o n g . G e n e r a l c o n d itio n s fo r all m ajor crop s are
g o o d th ro u g h o u t th e region . H a r v e stin g o f rice is u n d er w a y in L o u isia n a , and
o v er h a lf o f th e G eo rg ia and F lo r id a to b a c c o c ro p has b e e n h a rv ested and
cu red . P rices rec e iv e d b y farm ers fo r liv e sto c k rem a in h igh fo llo w in g th e sh arp
Ju n e in crea se. T h ro u g h th e first th ree w e e k s o f Ju ly, h o g p rices c o n tin u ed to
a d v a n ce, w h ile p rices fo r c a ttle, b ro ilers, an d eg g s rem a in ed e sse n tia lly u n ­
c h a n g ed fro m m o n th -ea rlier lev els. T o ta l c a sh r eceip ts fro m farm m ark etin gs
th ro u g h M a y are w e ll a h ea d o f la st y e a r ’s reco rd lev e l.

-P E R C E N T OF REQUIRED RE SERV ES
~

_

B o r r o w i n g s f r o m F. R. B a n k s

6.0 \

Excess Reserves

V.

__ * A a 4

-

r < r r T T > r r / .............V 7 . . . I ........... i
1963

1964

1965

O v era ll c o n s t r u c tio n c o n tr a c t v o lu m e c h a n g e d little d u r in g J u n e , fu r th e r
e x t e n d in g t h e d o w n tr e n d o f t h e fir st fiv e m o n t h s o f 1 9 6 5 . N o n r e sid e n tia l
and resid en tia l b u ild in g b o th sh o w e d an in crea se in Ju n e o v e r M a y . T h e m ain
w ea k n e ss in to ta l c o n tra ct v o lu m e th is y ea r h a s b e e n in n o n -b u ild in g p rojects,
i.e., ro a d s, b rid g es, and sp a c e -m issile p ro jects. M o rtg a g e fu n d s c o n tin u ed to
b e rea d ily a v a ila b le fro m b o th lo c a l and o u tsid e so u rces.

"Seas. adj. figure; not an index.




N o t e : D a t a o n w h ic h statem ents are b ased h ave been adjusted whenever possib le to elim in ate se ason al
influences.