Full text of Economic Review (Federal Reserve Bank of Atlanta) : August 31, 1945, Volume 30, Number 8

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F E D E R A L
Volume XXX

Review

R E S E R V E

B A N K

O F

A T L A N T A

Atlanta, Georgia, August 31,1945

K in g s p o rt:

A n

In d u s try

Number 8

P a tte rn

h e industrial town of Kingsport, Tennessee, lying approx­
as a result of early railroad building, modern Kingsport is to
imately a hundred miles northeast of Knoxville, is unique a large extent the outgrowth of a later railroad venture. A
among other cities in many ways. Not die least of these is theplan to connect Charleston, South Carolina, with Cincinnati
way in which its industrial structure has taken shape. Unlike by rail had been advocated by John C. Calhoun as far back
that of most other towns, the industrial structure of Kings­ as 1832. A company was formed for this purpose in 1836,
port is not the result of haphazard growth or of promiscuous and a short stretch of 18 miles was constructed in South
encouragement. It does not consist of a congeries of factories Carolina.
and plants related to one another only by chance and united
Nothing more was done until 1887 when a new company,
only by physical proximity. On the contrary, the industries the Charleston, Cincinnati and Chicago Railway, took over
of Kingsport form a definite pattern that is the outcome of the project and built another short stretch in South Carolina
careful planning and guidance.
and one in Tennessee. Construction was again halted when
Many towns and cities throughout the South, and in fact the English bankers who had been backing the road failed.
throughout the nation, are hoping and working for an expan­ The property then passed into the hands of the Ohio River
sion of their local industries in the postwar period. Chambers and Charleston Railway Company at a foreclosure sale.
of commerce, civic clubs, and planning commissions under Under the new auspices the road was pushed southward from
various names are everywhere seeking to bring about such a Chestoa, Tennessee, to a point within five miles of Huntdale,
development. Whether industrial expansion of this sort will North Carolina. A further change in ownership occurred in
result in the maximum of long-run benefit to the communities 1902 when George L. Carter and his associates organized a
involved or in something less will depend to a very great ex­ new company that acquired the road and bought up large
tent upon the character of the planning that goes into it.
tracts of coal lands in what is known as the Clinchfield Sec­
Since Kingsport is a planned industrial community, its ex­ tion. The new management pushed the construction of the
perience should yield bench marks that may be of value to road from Huntdale to Spruce Pine, North Carolina.
The vicissitudes that accompanied changing ownership
these other communities now planning for their industrial
future. Kingsport can, in a way, serve them as a laboratory came to an end in 1905 when George L. Carter interested the
in which some principles of orderly and stable industrial present owners, through Blair and Company of New York, in
growth have been developed and are being given practical completing the road. One of the Blair associates, John B.
demonstration. Even though the experience of one community Dennis, took over the building of what is familiarly known
can never be exactly duplicated in another where conditions as the Clinchfield Route of the present Carolina, Clinchfield
may be quite different, it is nevertheless possible for towns and Ohio Railroad. Four years later the road had been com­
and cities to learn from one another and thus avoid costly pleted from Spartanburg, South Carolina, its southern term­
mistakes. The Kingsport experiment, therefore, can prove inus, through Kingsport to Dante, Virginia, and by 1915 it
very useful to other towns and cities throughout the Sixth had been extended as far as Elkhom City, Kentucky.
District as they seek to develop their industrial possibilities.
As a result of this protracted development, Kingsport again
There are really two Kingsports — old Kingsport and found itself on an artery of commerce, this time on one that
modern Kingsport. The present city, however, is not the re­ connected with many trunk rail lines within its 309-mile span.
sult of an organic growth from the old city. On the contrary, Although the chief purpose of the road was the hauling of
it is a new creation. The old city grew from the first perma­ coal from the Virginia field to South Carolina, Mr. Dennis
nent settlement made on the site in 1748. Lying on an im­ realized that success would depend upon the development of
portant post road between Virginia and middle Tennessee other types of tonnage along the route. In order to bring
and at die head of navigation on the Holston River, old about this development he contemplated the creation of in­
Kingsport acquired considerable importance as a shipping dustrial communities within the territory served by the road—
center and as an industrial town in die early decades of the communities that would not only use coal but that would also
nineteenth century. This importance began to wane, however, otherwise develop the natural resources of the area. Modern
when in 1850 it was decided that the East Tennessee, Virginia Kingsport, built upon lands acquired in the process of get­
and Georgia Railroad connecting Knoxville with Bristol ting a right-of-way for the railroad, is the outcome of Mr.
should go by way of Johesboro, thus by-passing Kingsport. Dennis* plan.
In furtherance of the plan to build at Kingsport a modern
The ravages of the Civil War and of the reconstruction period
completed the destruction of Kingsport’s economic position. industrial town, the Kingsport Improvement Corporation was
Although old Kingsport was almost destroyed economically organized to develop the lands that had been acquired by the

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railroad. This corporation was placed under the presidency
of J. Fred Johnson, who had been an official of the road. To
all intents and purposes the corporation and Mr. Johnson
were synonymous, and Kingsport is generally admitted to be
the shadow of one man. Behind the whole development, how­
ever, lay the inconspicuous but potent influence of Mr. Dennis
and his ideas. It had been an idea of Mr. Dennis that an in­
dustrial town could also be a beautiful and a wholesome
place in which to live and work. In order to realize this ideal
the corporation secured the assistance of the Bureau of
Municipal Research of the Rockefeller Foundation in draft­
ing the city charter providing for a city-manager form of
government. It also secured the services of Dr. John Nolen,
an eminent city planner, for the planning of the city itself.
Furthermore, the services of Columbia University were ob­
tained in organizing the town’s school system.
Planning for the general civic development of the town,
however, was not the primary function of the Kingsport Im­
provement Corporation. Its chief purpose was the seeking of
new industries for Kingsport and their integration in the in­
dustrial structure of the town. The creation of an in­
dustrial pattern, however, is not a task that is accomplished
overnight. It must begin with what is already there and then
take shape gradually through additions, expansions, de­
letions. and changing functions. Kingsport differs from most
cities in subjecting this process, which is ordinarily un­
controlled, to a considerable measure of guidance.
Old Industries
The coming of the railroad to Kingsport in 1909 had created
a nucleus of industries engaged in the utilization of some of
the local natural resources. Of these concerns the Kingsport
Brick Corporation and the Clinchfield Portland Cement Com­
pany, both organized in 1910 for the exploitation of local
shale beds, were the oldest. In addition to them there were
in the town shortly after its incorporation in 1917 the Kings­
port Extract Corporation, which made tanning extract from
the bark of local chestnut trees: the Kingsport Tannery, which
tanned approximately 125 hides a day; the Kingsport Pulp
Company, which produced soda pulp from yellow poplar,
gum. and maple cut in eight Southern states.
The first world war led to the establishment at Kingsport
of the Federal Dyestuff and Chemical Company, which em­
ployed 1.000 men. During the war also a few buildings in
which harness and saddlery were to be made were erected by
the Simmons Hardware Comoany of St. Louis. The end of the
war, which left a surplus of harness on the market, however,
led to the abandonment of this enterprise before the build­
ings were ever occupied by the concern that had built them.
During the vears after the end of World War I. Kingsport’s
pattern of industries changed in various ways. Some of the
early businesses disappeared. For examnle, the Kingsport
Extract Cornoration and the Kingsport Tannery, which had
merged to form the Grant Leather Company, went out of
existence when blight destroyed the chestnut trees in the
vicinity and when cheaper methods were found for produc­
ing tanning extract. The belting department of this business,
however, survived in the form of the Slin-Not Belting Cor­
poration that was organized in 1926 by H. J. Shivell. This
corporation is still an important member of the Kingsport
industrial community.
Another business death was that of the Federal Dyestuff



and Chemical Corporation. In 1918 this plant ceased opera­
tions and was dismantled. Because this enterprise was one of
Kingsport’s largest employers of labor at the time, its death
was a serious blow to the town, though the effect proved to
be only temporary.
Through mergers other concerns became units in much
larger industrial organizations. One of these firms was the
old Kingsport Brick Corporation, which merged with five
other companies to form the General Shale Products Corpora­
tion. The Clinchfield Portland Cement •Company was ab­
sorbed in the merger by which the Pennsylvania-Dixie Cement
Corporation was created. The Kingsport plant is the fourth
largest of all the plants operated by this corporation. Some­
time during the 1920’s the Kingsport Pulp Corporation was
absorbed by the Mead Corporation.
New Industries

Changes in the Kingsport industrial community came about
also through the establishment of new businesses. One of the
first of these was a plant established in 1919 by Corning
Glass Works for the manufacture of Pyrex. Closed down dur­
ing the 1920 depression, the glass plant was reopened in
1926 as the Blue Ridge Glass Corporation, under the joint

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ownership of the Coming Glass Works and two foreign con­
cerns — St. Gobain, Chauny et Cirey of Paris and Glaceries
Nationales Beiges of Brussels. This plant specializes in rolled
figured glass and wire safety glass, although it also pro­
duces special-purpose glass.
The largest. of the new industries to come to Kingsport
was the Tennessee Eastman Corporation, a subsidiary of the
Eastman Kodak Company. This concern in 1920 acquired a
Government-owned plant, which had been built by the Ameri­
can Wood Reduction Company, for the purpose of producing
methanol or woo’d alcohol, by the destructive distillation of
wood, and other chemicals needed in the manufacture of
photographic film. To supply itself with wood, the company
bought approximately 40,000 acres of forest land and timber
rights. It also built a 30-mile logging railroad out from
Kingsport and established a sawmill to process the lumber.
This mill had a capacity of about 35,000 board feet a day.
The so-called “chemical wood” consisted of limbs and tops of
trees and the slabs and ends coming from the sawmill. The
output of the mill found a partial market in the company’s
own planing mill and box plant, where boxes used in shipping
the company’s products were made. Lumber, in this case, was
merely a by-product of the manufacture of methanol. An-(
other by-product was charcoal of which a large part was
marketed in the form of briquettes, under the trade name
“Charkets,” for use in dining-car kitchens and for heating
freight cars carrying fruits, vegetables, and other perishable
commodities in winter. Charcoal was also marketed in lump
and prepared sizes for metallurgical and other uses.
During the decade of the thirties, a shift in the operations
of the Tennessee Eastman Corporation’s Kingsport plant was
considered advisable. On the one hand, more economical
methods of producing methanol than the old wood-distillation method had been opened by modem chemistry. On the
other hand, a strong demand for safety film for use in homemovie outfits and in X-ray photography was developing, and
safety film was made from cellulose acetate instead of the
more inflammable nitrocellulose. These two factors combined
to shift the Eastman operations from the production of
methanol to that of cellulose acetate.
Safety film alone, however, did not ghre a sufficiently large
outlet to permit the company’s gaining the advantages of.
large-scale production. In order to achieve economy of pro­
duction, therefore, other outlets were found in the production
of acetate rayon and a thermoplastic molding composition
named “Tenite.” Although many other by-products and
chemicals are also produced, these two things are now the
main products of the Eastman plant.
Another new industry to come to the city during the same
period was the. Kingsport Press, reputed to be the largest
book manufacturer in the world. This concern now turns out
almost 20 million volumes a year, with the capacity to
produce approximately 24 million.
A New Family of Industries
The establishment of the Kingsport Press was the result of
an idea arid of a chain of circumstances that illustrate the
way in which Kingsport’s industrial structure has taken
shape. The idea concerned the conversion of logs into books
in local plants and began with the presence of the soda-pulp
mill. Pulp was almost a surplus commodity in 1920, and
there seemed little likelihood that the operations of this plant



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could be stabilized unless its output could be converted into
book paper. On the other hand, the production of book paper
in the United States was at a level sufficient to meet all cur­
rent requirements. In order to justify the building of a paper
plant to absorb the output of the pulp mill, a new agency
would have to be created to consume the output of the paper
plant.
Mr. Dennis took this problem to a life-long friend, Joseph
H. Sears, who was the onetime head of the large publishing
house of the D. Appleton Company, now D. Appleton-Century
Company. Mr. Sears advanced the idea, long held by him, of
producing a .uniform series of the so-called classics of litera­
ture in cloth binding to sell for a dime a copy through the
Woolworth chain stores and the large mail-order houses. In
order to implement this idea, Mr. Sears suggested the forma­
tion of a new publishing house that would not only publish
the proposed series of classics but would also be able to
secure book-manufacturing contracts from other publishers
who had no manufacturing facilities of their own.
The outcome of these negotiations was the organization of
the new publishing house of J. H. Sears and Company and
of a book manufacturing concern to be known as J. J. Little
and Company — the Kingsport Press. The creation of these
two concerns gave sufficient assurance of a local market for
book paper to warrant the building of the necessary paper
plant. The Mead Corporation, an Ohio concern, was there­
upon induced to take over the pulp mill and build a onemachine paper plant.
In the fall of 1922 both the Mead paper plant and the
printing plant were under construction. The printing plant
had established itself in the group of connected steel and
concrete buildings, erected by the Simmons Hardware Cqmpany for the Grant Leather Company but never occupied.
By the following spring both paper and books were in
production.
At first the Kingsport Press also manufactured its own
book cloth because no regular book-cloth manufacturer was
able to meet the specifications of quality, texture, and price
for the kind of books it was then producing. By 1925, how­
ever, the market for inexpensive classics had begun to fade,
and the firm turned to the manufacture of better grades of
books — trade books, school and college textbooks, and sub­
scription sets. Local labor had been given in-plant training
that made possible the production of high-quality books.
Moreover, the Mead Corporation, which is today one of the
nation’s largest book-paper units, had so increased its papermaking facilities that it was able to furnish the book plant
with better grades of paper. The plant then no longer needed
all the inexpensive cloth it was able to produce, but it was
unable, on the other hand, to supply its own needs for betterquality cloth. Much of the better fabric had to be purchased
elsewhere, chiefly from the Holliston Mills of Norwood,
Massachusetts.
Meanwhile, Holliston Mills was looking for a Southern lo­
cation for a bleachery and for another plant in which to
manufacture certain types of book cloth, especially those
that were being bought by the Kingsport Press. The outcome
of this situation was the sale of its book-cloth plant in 1926
by the Kingsport Press to Holliston Mills, which built a com­
bined bleachery and book-cloth finishing plant on several
acres of land leased from Kingsport Press.

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In addition to the Tennessee Eastman plant, the Kingsport
Press, and the related paper and book-cloth plants, other im­
portant, though smaller, concerns have been established in
the city since World War I. Among these is the Borden Mills,
a cotton gray-goods plant established in 1925, which before
the present war was manufacturing an average of more than
900,000 yards of cloth a week. Most of this plant’s output
consists of shirtings and percales that are sent elsewhere to
be bleached and printed, but it also produces book-cloth
fabric that is sold to the Kingsport Press.
Two years after the coming of Borden Mills, the Kingsport
Foundry and Manufacturing Company was organized. This
concern manufactures heavy castings for the chemical in­
dustry as well as for other special-process industries, such as
those producing soap, alkali, and sugar. Special furnaces are
provided for the handling of nonferrous metals and alloys
used in the production of pure nickel, monel, bronze, and
aluminum castings.
Another addition to the Kingsport industrial community
was a plant of the Southern Oxygen Company, whose main
office and plant are located at Arlington, Virginia. This con­
cern manufactures commercial oxygen, acetylene, and carbondioxide gases. Two hosiery mills that have since passed out
of existence also located in Kinesnort — the Fisher-Beck Mill
in 1928 and the Miller-Smith Mill in 1932. Another concern
that came and went was the Kinssport Silk Mill. The build­
ing that had been occupied by this concern, however, is now
occupied by the Smoky Mountains Hosiery Mill, which came
to Kingsport in 1936.
Other firms that make up the industrial community of
Kingsport are two dairy-products establishments, various
service industries, utilities, a newspaper publishing concern,
and building materials companies. The town, of course, is
supplied with the usual complement of commercial, financial,
and professional services.
An examination of the group of major industries that
collectively constitute the economic heart of Kingsport dis­
closes certain well-marked characteristics, no one of which
is of great significance in itself. Taken together, however,
they are of great importance. The industrial personality of
Kingsport is largely the result of this combination.
One of the most striking characteristics is the close, but
not complete, dependence of the town’s industries upon local
or near-bv raw materials, although this was more important
in the earlv development of these industries than it is today.
Actually, the range of natural resources in the immediate
vicinity of Kingsport is quite limited. Aside from agricultural
lands and forests, they consist mostly of shale and building
and silica sands. Sixty-five miles to the north and easily ac­
cessible by rail are the Virginia coal fields. About the same
distance to the south are extensive zinc workings. Although
the citv does not lie within the cotton
belt, Kingsport is nevertheless close
enough to it to make cotton eco­
nomically available to plants using
cotton as a raw material.
The oldest industries exhibit the
greatest dependence upon these raw
materials. The shale beds are the
basis of both the brick and cement in­
dustries, the upper stratum of yellow
shale being used for brick because of



its greater plasticity and the lower stratum of blue shale
being used for cement. For the manufacture of cement, lime­
stone is brought from a quarry just a few miles away over
the Virginia line and gypsum from the Saltville region in
southwestern Virginia. Bituminous coal from the Virginia
fields supplies both industries with fuel.
The glass industry at Kingsport rests upon the presence of
large deposits of sand that is 99 per cent silica. Other in­
gredients in glass-making, however, such as soda ash and.
lime are obtained from the Carolinas and Virginia.
Forests supplied the raw materials for the’now defunct ex­
tract plant, the pulp mill, and the Tennessee Eastman Cor­
poration when it was primarily interested in the manufacture
of wood alcohol. When the Mead Corporation had absorbed
the pulp mill and expanded its operations to include the
production of paper, the radius from which wood was drawn
was widened until it now extends over parts of eight Southern
states. Moreover, the manufacture of better grades of paper
led to the use of sulfite pulp from Scandinavia and from
other Southern mills to mix with the soda pulp produced at
Kingsport. Clay to serve as paper filler was imported from
Hoth England and from Georgia. Other minor raw materials
used in paper-making were brought in from various points
outside the immediate area.
Although the Tennessee Eastman Corporation was at first
a large consumer of both wood cut on its own properties and
cordwood purchased from farmers in the region, this condi­
tion ceased with the passing of the methanol business. When
the company turned most of its attention to the manufacture
of cellulose acetate products, its main raw material was cot­
ton linters. This step severed its immediate dependence upon
local raw materials. With the diversion of cotton linters to
war use during recent years, the company has turned to wood
pulp coming from the Pacific northwest for part of its raw
material. A complete divorce has thus come about between
Kingsport’s largest industry and the natural resources of the
region in which it operates.
Cotton, of course, is the raw material that Borden Mills
uses, and the source of supply is as wide as the whole cotton
belt. There is consequently no necessary relation between the
presence of this mill in Kingsport and any locally produced
raw material.
It seems, therefore, that local natural resources were much
more important in the earlier phases of Kingsport’s develop­
ment than they are today. The condition that sustains the in­
dustrial growth of the city is much more' the kind of inter­
relation that exists among the various industries of the town
than it is any close relation between these industries and the
natural resources of the immediate region.
One of the most striking features of Kingsport’s industrial
community is its high degree of diversification. With the
exception of a short period in the late
1930’s when three hosiery mills oper­
ated in the city, Kingsport has never
had more than one plant belonging
to any given industry.
Diversification, however, is not only
a characteristic of Kingsport’s in­
dustrial structure; it is also a char­
acteristic of the product of many of
Kingsport’s individual industries. The
output of the Tennessee Eastman Cor­

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poration, for example, consists not only of chemicals and
other products that go into the manufacture of photographic
film but also includes cellulose acetate, which enters a wide
variety of wearing-apparel fields as rayon. In the form of
“Tenite” this product reappears in an extremely hetero­
geneous array of other uses, industrial and nonindustrial.
The Mead Corporation produces book paper for the Kings­
port Press and paper for magazines, tablets, envelopes, drink­
ing cups, labels, maps, calendars, sheet music, and other
articles as well. Holliston Mills makes book cloth for the
Kingsport Press and also shade cloth and window shades, in
addition to labels and tags for articles requiring serviceable
markings, such as clothing and mattresses. The Kingsport
Press, itself, although it concentrates its attention solely on
the manufacture of books, produces books of various kinds.
The Blue Ridge Glass Corporation makes a large number of
different kinds of glass to solve different lighting problems
and to satisfy the tastes of individual architects.
From an economic standpoint, diversification is of great
importance not only to the individual industries but to the
whole community. When a concern manufactures a number
of diverse products, the total demand for its output consists
of the sum of the separate demands for the individual pro­
ducts. The demand for any commodity, of course, is rarely
constant. It is ordinarily subject to various fluctuations, some
seasonal in character and others of a cyclic nature, rising
with business prosperity and falling with business depression.
All demands, however, do not necessarily move in the same
direction at the same time. In a group of commodities satis­
fying quite different consumer demands, therefore, it is
probable that fluctuations in the demands for some commodi­
ties may be compensated for or offset by fluctuations in the'
demands for others. Thus a firm that produces a variety of
different products may find the total demand for its output
to be much more stable than would be the case if the firm’s
position depended entirely upon one product.
The kind of economic stability that an individual concern
achieves for itself by diversifying its output is also secured
by a town that possesses diversified industries. Not all in­
dustries are affected to the same degree at the same time by
changes in business. While some industries may be suffering
from a downward turn in business, others may continue
operations at their old level, or, indeed, they may increase.
This appears to have been the case in Kingsport where it is
said “there was no depression” during the 1930’s. Un­
doubtedly the expansion of Tennessee Eastman’s operations
during that period played a large part in mitigating the
effects of the general business recession. In Kingsport, never­
theless, it is the consensus that the diversification of the
town’s industrial pattern was the major factor in the com­
munity’s escape from the worst effects of the depression.
Interdependence
Diversification as it has been achieved in Kingsport, how­
ever, is more than the mere bringing together in one com­
munity of a number of different industries. It includes a
high degree of interdependence among these industries with
respect to raw materials and markets.
The extent to which Kingsport industries find a large part
of their raw materials in the products of other industries in
the community is surprising. The Kingsport Press, for ex­
ample, gets approximately 60 per cent of its paper from the



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Mead Corporation and almost 90 per cent of its book cloth
from Holliston Mills. Holliston Mills, in turn, gets at least
part of its fabric from Borden Mills. In its physical growth,
the town has been very largely built with brick and cement
produced in the local plants. The Slip-Not Belting Corpora­
tion uses for the belts that it makes a waterproof cement
made from cellulose acetate produced by the Tennessee East­
man Corporation.
This sort of interdependence with respect to raw materials
is obviously conducive to economic operations. A concern
that can find its essential raw material in the product of a
neighboring industry has a clear advantage, other things be­
ing equal, over one which must bring in its raw materials
from a distance.
Although the individual industries depend a great deal on
their neighbors for raw materials, they depend on one another
much less for markets. Kingsport Press, for example, may
get much if not most of its raw materials locally, but only a
small fraction of its books are sold locally. It may buy al­
most all its book cloth from Holliston Mills, but for Hollis­
ton Mills the Kingsport Press is only a partial market.
Similarly the book plant provides a market for only a minor
part of the paper output of Mead Corporation. The Southern
Oxygen Company may supply all the carbon dioxide used to
clean pipe lines in the Tennessee Eastman plant, but this is
only a fraction of its output. The Tennessee Eastman Cor­
poration may buy a large proportion of its chemical castings
from the Kingsport Foundry and Manufacturing Company,
but such buying would nevertheless be but a partial market
for the products of this latter concern. Markets for the
products of Kingsport industries, therefore, extend beyond
the local community and in many cases are nation-wide.
That Kingsport’s most important industries sell in nation­
wide markets is a factor that has contributed to the economic
stability of the whole community. The complete shutdown of
any one industry, for example, would rob its neighbors of no
crucial part of their markets. Wide markets serve to insulate
the various industries from one another and thus tend to pre­
vent the propagation throughout the ranks of industry'of
some business misfortune befalling only one of them.
Financial and proprietary independence contribute to the
same end. Although Kingsport’s industries are functionally
interdependent, they are completely independent with respect
to ownership, finance, and management. When a group of
complementary industries is integrated under a single manage­
ment the possibility that the whole complex may be manipu­
lated as a whole in the interest of just one part is always
present. Independence of ownership, on the other hand, per­
mits each industry to grow and develop freely, fitting itself
into the economic context that it finds most profitable for
itself.
“Foreign” Ownership
Two other characteristics of Kingsport industries are the ex­
tent to which they represent the investment of outside, or
“foreign,” capital and exist as branch plants or subsidiaries
of larger business units. Some of the industries, such as
Tennessee Eastman Corporation, the Mead Corporation, the
Blue Ridge Glass Corporation, the Southern Oxygen Cor­
poration, Holliston Mills, Borden Mills, and the Kingsport
Press, represent incursions of nonlocal capital. Others, for
instance the brick and cement plants, began as locally owned
industries but through mergers have become branches of

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larger business groups. In the case of the Kingsport Press, the
majority of the stock that was originally held by outside
owners has been relinquished and has come into the possession
of the active managers and representatives of the plant. In a
sense, therefore, this concern may now be considered locally
owned.
In current thinking about industrialization in the South, a
widespread prejudice is in favor of small locally owned in­
dustries and against branch plants of “foreign”-owned cor­
porations. The Kingsport experiment, however, has shown
pretty conclusively that wealth is created and distributed
where capital goes to work and not where it happens to be
owned. A town’s or a region’s prosperity depends a great deal
more upon its having the use of capital in the form of in*
dustrial plant and equipment than it does on the domicile of
the owners. Indeed, in Kingsport it is felt that outside owner­
ship and branch-plant status has brought to the town’s in­
dustries a quality of managerial ability that is seldom found
in small local establishments.
To have brought together a group of industries, many of
them from the outside, that utilized local natural resources
without being completely dependent upon them and that were
highly diversified but at the same time functionally interde­
pendent while remaining financially independent — this was
in itself an instructive achievement. Equally instructive, how­
ever, was the way in which it was done, for this particular
industrial pattern did not arise by chance. It was the result
of forethought and planning. The first step in planning for such an industrial pattern
was the visualization of the kind of community that was
wanted. In practice this meant a selective rather than an in­
discriminate encouragement for industries to locate in Kings­
port. Industries such as brick, cement, and glass that made
direct use of local natural resources were, in a way, indi­
genous and needed no special encouragement. Others, how­
ever, that had wider options in the choice of location could
be encouraged or discouraged as the case might be. If the in­
dustrial community was to develop according to the desired
pattern, therefore, it would be necessary to establish certain
tests by which a prospective industry could be rated as de­
sirable or undesirable.
Tests of Desirability
One of these tests was the quality of management and the
financial responsibility of the concern contemplating location
in Kingsport. Painstaking investigations were made through
banks and other agencies to assure the city planners on these
points.
To be welcome in Kingsport an industry was also required
“to fit into the community.” In practice this meant that it
should be to some extent complementary to industries already
there and that its management would be willing to work har­
moniously with the managements of
the other industries.
Another test of desirability was
whether or not the prospective in­
dustry would fit the available labor
supply. Kingsport takes considerable
pride in the quality of its labor supply,
which consists largely of the native
population of East Tennessee and
neighboring states within a radius of



perhaps 25 miles of the city. Industries were sought that
would as a group give balanced employment to men and
women, and to skilled and unskilled workers. No industry
that would have to import the bulk of its labor from the out­
side was encouraged to locate in Kingsport.
Moreover, employment must be given on favorable terms.
So-called sweatshop industries or concerns interested only in
exploiting “cheap Southern labor” were not encouraged. Pro­
gressive labor-relations policies were considered important
from both an industrial and a social standpoint. This implied
neither encouragement nor discouragement of trade-union or­
ganizations. The Tennessee Eastman Corporation, for ex­
ample, pursues an enlightened policy of labor relations but
is unorganized. The Kingsport Press, also pursuing an en­
lightened labor policy, is on the other hand 100 per cent
organized.
Finally, the city planners sought to make certain that the
officers or managers of the prospective industry were men
who would take an active and interested part in carrying on
the civic functions of the town and who would contribute to
the welfare of the community in all its aspects. The result of
this policy has been the development of a keen social and
civic consciousness throughout the business community.
An industry that would fill an appropriate niche in the in­
dustrial pattern of the town and at the same time measure up
to these standards was not necessarily one that just happened
along. Ordinarily it had to be sought out by personal inquiry
and then be induced to locate in Kingsport. Success in this
stage of the process depended to a very large extent upon the
wide acquaintanceship, the soundness of judgment, and the
integrity of character of Mr. Johnson and his associates.
Methods
The most characteristic features of the process of persuading
an industry to locate in the city have been negative. There has
been, for example, a complete absence of any special induce­
ments, such as tax exemption, free sites, free buildings, and
other open or disguised subsidies that are so common else­
where. An industry locating in Kingsport is expected to bear
its full share of the cost of maintaining the community and
not live as a parasite on its fellows. For an industry to be
unwilling or unable to do so would mark it at once, in the
opinion of Kingsport, as undesirable from a social and from
an economic point of view.
Nor has any strictly financial assistance been offered to
new industries. It is true that some of the financial backers
of the railroad and their friends have from time to time made
investments in certain Kingsport industries. In part these
have been made to show the backers’ faith in the industrial
possibilities of Kingsport. Mostly, however, they have been
made as investments would have been made by these men in
other enterprises. Usually they have been of a temporary
nature. In no sense whatever has there
been any organized community financ­
ing of new industries.
Cheapness of labor has not been
held out as a bait to new industries.
The quality, not the cheapness, of the
available labor supply has been em­
phasized, and a generally high-wage
policy has been encouraged. Indeed, on
one occasion a plant that had located

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in Kingsport and had subsequently indulged in wage cutting
that involved it in serious labor troubles was actively en­
couraged to leave the town.
Affirmatively, the only things that are really offered to a
prospective new industry are a sound economic opportunity
and the helpful co-operation of the city and the industrial
community.
The wisdom of these methods that are so contrary to those
by which some towns seek to expand their industries is borne
out in the record of Kingsport’s steady and substantial
growth. The population of the Kingsport urban area, which
was 7,652 in 1920, had grown to 15,886 in 1930. By 1940 it
had reached 23,738, and in 1945 it is estimated at 27,000.
According to a report to the Board of Mayor and Alder­
men by the Kingsport Planning Commision, 3,714 manu­
facturing jobs were available in 1929. The onset of the de­
pression caused a slight temporary slump in employment, the
low point being reached in 1931 when the number of manu­
facturing jobs was 3,012. By 1935 the figure had risen to
3,824, and in 1937 it was 6,484. The year 1939 saw employ­
ment in manufacturing reach 8,000, and 1941 saw it go to
10,000 and 1943 to 15,000. The operation of a large war
plant in the city carried employment in manufacturing to
almost 20,000 in 1944 and 1945. Part of the slack that will
be occasioned by the discontinuance of this plant, however,
will be absorbed in the planned expansion of some of the
permanent industries.
Between 1935 and 1941 wages paid in manufacturing in­
creased almost fivefold; freight-car traffic more than doubled,
as did the number of telephones and Post Office receipts. By
all available indexes Kingsport came through the disastrous
decade of the 1930’s without any serious bad effects. It never
sank as low as many other communities, and its recuperative
forces quickly set it upon a steady upward trend.
Summary

For the benefit of other communities that care to profit from
its experience, therefore, Kingsport has demonstrated certain
important principles of sound industrial growth. It has
shown, in the first place, that a considerable development of
industry can be created on a relatively slender basis of
natural resources if care is taken that the individual in­
dustries are of a sort that will to some extent mutually sup­
port one another. Moreover, the whole group of industries
can be characterized by a high degree of stability and re­
sistance to adverse business fluctuations provided the in­
dustries are diversified, functionally interdependent, and
financially independent.
Furthermore, it has demonstrated that the first step in
building such an industry pattern is to discover from a care­
ful consideration of the current situation what industries
seem to have real economic opportunities in view of the labor
supply and other factors implicit in the existing industrial
complex. The second step is, then, to seek out diligently such
industries and persuade them of the opportunities that exist.
Finally, Kingsport has demonstrated that industrial de­
velopment can be achieved without promiscuous subsidization
and the offering of special favors to new industries. Such
practices have too often been easy substitutes for the kind of
intelligence, hard work, and careful planning that have been
the true foundations of Kingsport’s success.
Earle L. Rauber



87

S ix t h D is t r ic t I n d e x e s
D EPARTM ENT S T O R E SA LES*
A d ju s te d * *

D IS T R IC T ..................
A tla n ta .....................
B a to n R o u g e . . .
B ir m in g h a m ___
C h a t t a n o o g a .. .
J a c k s o n ..................
J a c k s o n v ille ___
K n o x v ille ..........
M ia m i.......................
M o n tg o m e r y .. .
N a s h v ill e .............
N ew O r le a n s ...

U n a d ju s te d

J u ly
1 9 45

June
1 9 45

J u ly
1944

J u ly
1945

June
1945

J u ly
1 9 44

300
345
320
277
326
320
376
373
294
326
312
341
248
378

277
292
295
260
258
239
335
317
244
30.1
268
291
214
322

262
278
267
2 61
280
259
329
349
260
261
265
288
225
330

225
245
249
216
230
224
300
266
209
184
223
241
188
276

233
254
254
233
246
222
297
285
219
205
232
262
193
2 81

197
198
207
204
197
181
263
250
184
1 47
189
203
171
241

DEPARTM ENT ST O R E S T O C K S
A d ju s te d * *

D IS T R IC T ..................
A tla n ta ....................
B ir m in g h a m .. . .
M o n tg o m e r y .. .
N a s h v ill e ...............
N ew O r le a n s ...

U n a d ju s te d

Ju lv
1 9 45

June
19 45

J u ly
19 44

J u ly
19 45

Ju n e
19 45

J u ly
1944

197
295
185
298
377
132

2 00
347
155
257
343
125

187
259
172
290
358
161

203
286
168
238
326
121

203
318
1 46
234
320
1 17

19 2
251
1 55
232
310
1 48

C O T T O N C O N S U M P T IO N *

TO T A L .........................
A la b a m a ...............
G e o r g i a ..................
T e n n e s s e e ..........

C O A L P R O D U C T IO N *

J u ly
1 9 45

Tune
19 45

Ju ly
1 9 44

J u ly
1945

Ju n e
1945

Ju ly
1944

137
137
138
121

151
160
148
130

147
153
148
121

163
177

163
1 77

163
17,1

i3 3

i3 3

146

C O N S T R U C T IO N C O N T R A C T S

D IS T R IC T ...................................................
R e s id e n tia l...........................................
O t h e r s .....................................................
A la b a m a ................................................
F l o r i d a ...................................................
G e o r g i a ................................................
L o u i s i a n a ..............................................
M is s is s ip p i.........................................
T e n n e s s e e ...........................................

Ju ly
1 9 45

Ju n e
1 945

J u ly
1944

108
39
141

147
40
1 99
94
2 51
1 69
24
1 88
1 06

87
53
1 04
58
1 22
7,1
100
41
82

73
226
146
204
114

G A S O L IN E TAX
C O L L E C T IO N S

M A N U FA C TU R IN G
EM PLO YM EN T***

SIX S T A T E S ............. '
A la b a m a ...............
G e o r g i a ..................
L o u is ia n a .............
M is s is s ip p i..........
T e n n e s s e e ..........

Ju n e
1 9 45

M ay
19 45

1 37
165
126
130
142
124
125

HOr
1 69
130r
131
14 6r
128
1 27

June
1 9 45

M av
1 9 45

Ju n e
1944

133
146
1 42
114

1 32
145
141
114

130
142
1 37
1,14

110

110

110

143

142

138

129

1 29

125

C R U D E PETRO LE U M P R O D U C T IO N
IN COASTAT. LO U ISIA N A A ND
M IS S IS S IP P I*

U n a d j u s t e d ..
A d j u s t e d * * ..

Ju ly
1 9 45

157
186
169
145
170
140
136

1 10
115
97
108
104
114
132

Ju n e
1945
1.1,1 .
116
100
106
107
122
123

Ju ly
1944
99
103
87
93
102
95
118

EL EC TR IC P O W E R P R O D U C T IO N *

C O S T O F L IV IN G

ALL IT E M S ..
F o o d ...............
C lo th in g ...
R e n t...............
F u e l, e l e c ­
tric ity ,
a n d ic e ..
H o m e f u r­
n is h in g s .
M is c e l­
la n e o u s . .

June
19 44

J u lv
1 9 45

June
1 9 45

Ju lv
1 9 44

225
225

209
210

,193
193

SIX STA TES.
H y d ro ­
g e n e ra te d .
F u e l­
g e n e r a te d .

June
19 45

M ay
1 9 45

Ju n e
1944

272

279r

264

2 41

277r

230

313

282

308

ANNUAL RA TE O F TU RN O V ER O F
D EM AN D D E P O S IT S
J u ly
1 9 45

June
1945

J u ly
1944

U n a d j u s t e d ..
1 6 .7
1 7 .8
1 4 .7
. 1 8 .9
A d ju s te d * * . .
1 5 .6
1 7 .2
I n d e x * * ............. 6 0 .3
6 6 .7
7 3 .0
• D a ily a v e r a g e b a s i s
‘ • A d ju s te d fo r s e a s o n a l v a r ia tio n
*•*,1939 m o n th ly a v e r a g e = IK);
r R e v is e d

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B e g in s

D e m o b iliz a tio n

among all business developments in the District

mills is now expanding and will no doubt continue at a high

communications with the Japanese leaders with respect to the
end of the war in the Pacific. In common with other sections
of the United States, the Sixth District has been devoting an
overwhelming part of its industrial establishment to supply­
ing the needs of war, and naturally the war-contract cancella­
tions will have severe and far-reaching effects on the economy
of some centers of the District. Absorption of released war
workers and of discharged members of the armed services
will be a process that will not be accomplished overnight,
and during the time that process is being accomplished busi­
ness and industry within the District can hardly be expected
to maintain the levels of activity that have been experienced
during the war years.
A review of the situation at each of the principal urban
centers of the District’s six states serves to indicate the size
and nature of the reconversion problem.
Alabama
Alabama has had a large stake in wartime industrial expan­
sion, and some of its cities will suffer severely as a result of
contract cancellations, but on the whole the state should re­
cover promptly. Birmingham, the third largest population
center in the District, will have a fairly easy problem of con­
version. Although the Birmingham area, which takes in all of
Jefferson County, has been an active participant in war
work, the expansion in its population has been only moderate.
Birmingham is the center of Alabama’s heavy industries
and of its iron-ore and coal-mining region. Its industrial es­
tablishments are well diversified. Mining industries of the
area employ about 13,000 workers, and steel and metal work­
ing industries employ about 50,000 additional workers. The
Tennessee Coal, Iron and Railroad Company is the largest
employer in this field and can be expected to maintain its
operations at somewhere near capacity level for some time to
come. Birmingham’s largest strictly wartime employer was
the aircraft modification plant of the Bechtel-McCone-Parsons Corporation. This plant, with some 7,000 workers, has
already experienced a sharp cutback in employment.
Anniston is another Alabama city that should come through
the transition period without too much disturbance. The city
has had no single wartime plant on which its prosperity de­
pended. One of its concerns, which manufactured bombs and
shells, employed about 1,400 workers, and near-by Fort Mc­
Clellan had about 1,500 civilian employees. Outside of these
two war-purpose employers, however, Anniston is largely
concerned with textile, chemical, lumber, and iron-and-steel
manufacturing activities that should continue during peace­
time.
Decatur will experience a considerable setback. It had
three principal wartime establishments that employed, earlier
this year, about 1,000 persons each: The Ingalls Shipbuild­
ing Corporation, the Decatur Iron and Steel Company’s ship­
building plant, and the Army Air Forces Pilot School. Em­
ployment at the Ingalls plant is now way down, and Decatur
Iron and Steel is practically closed. The city is an important
textile-manufacturing center, and employment in the textile

cities that have not become dependent upon wartime manu­
facturing activities. Gadsden will experience the greatest cut­
backs of the three. It has played a prominent part in supply­
ing war demands, and the Lansdowne Steel and Iron Com­
pany, as an ordnance manufacturer, has been an important
employer. The Goodyear Tire and Rubber Company’s de­
velopment at this place has also been related to war produc­
tion.
Hardest hit in Alabama are Huntsville, Mobile, Sheffield,
and the Childersburg-Sylacauga-Talladega community. Hunts­
ville has depended for its wartime prosperity upon two
ordnance plants — the Redstone Arsenal and the Huntsville
Arsenal. These two plants together regularly employed about
10.000 persons, but this number has declined by about 2,000
during the last five months.
A giant shipbuilding industry developed at Mobile during
the war. The cessation of shipbuilding activity there will re­
sult in a severe shock to the industrial life of the area.
Shipbuilding at Mobile, which at peak employed about
40.000 workers, was represented primarily by the Alabama
Drydock and Shipbuilding Company, the Gulf Shipbuilding
Corporation, and Waterman Steamship Company. These
three companies employed about 27,000 workers in July of
this year. In spite of its importance as a wartime shipbuild­
ing center, Mobile has fairly good prospects, for its port is
modernly designed and equipped and occupies a strategic po­
sition for world trade. Current industrial employment at
Mobile is only about 6,000 or 7,000 above what it was in
1940. Gulf Shipbuilding Corporation in particular expects
to continue operations at a high level for some time.
The postwar prospects of Sheffield are quite closely tied
up with Reynolds Metals and Reynolds Alloys, which to­
gether employed about 4,700 workers in July of this year.
The production of explosives offered the chief wartime em­
ployment in the Childersburg-Sylacauga-Talladega com­
munity. Plants of the Brecon Loading Company and of the
Alabama Ordnance Works are already in the process of be­
ing closed, and will be closed in about 60 days. Together,
these two plants employed about 7,500 workers in July of
this year, compared with about 13,000 in early May.
Florida
Florida’s reconversion prospects are good at some spots and
not so good at others. Jacksonville experienced considerable
shipbuilding activity during the war, but this work never
completely dominated the industrial life of the area. The
St. Johns River Shipbuilding Company employed about
14.000 workers a year ago, but employment at the plant de­
creased by more than 5,000 workers in the first two months
of this year and by July of this year had declined to 4,000.
The Gibbs Gas Engine Company and the Merrill-Stevens
Dry Dock and Repair Company together regularly employed
about 6,000 workers, and the United States Naval Air Station
alone carried about 9,000 civilian workers.
The outlook at Miami is good. The principal wartime
changes at Miami were the commandeering by the Army and

o m in a n t

during the month of August was the wave of war-con- level for some time.
Dtract
cancellations that set in following fhe beginning of Gadsden, Montgomery, and Tuscaloosa are other Alabama




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Navy of many hotels and restaurants, the establishment of a
number of war plants, and the emergence of the city as an
important air-transport center. In mid-August the War De­
partment announced that 83 Miami Beach hotels leased by
the Army would be vacated within 90 days. The Army, how­
ever, is retaining five hotels to be used as convalescent cen­
ters. With the turning back of the hotels and the end of
gasoline rationing and other wartime controls, the Miami
area is preparing for the greatest tourist season in its history.
In spite of its position as a place of amusement and re­
laxation, the Miami area developed some important war
plants. Total employment in these plants earlier this year
was about 6,000, confined primarily to the plants of the
Miami Shipbuilding Company, Consolidated-Vultee Aircraft
Corporation, Biscayne Tent and Awning Company, MerrillStevens Dry Dock, and Dade Dry Dock. Many of these work­
ers have already been displaced, but apparently they will be
able to find employment quite readily within the area. The
development of the air-transport industry of Miami will be
accelerated rather than retarded with the cessation of the
war. Pan-American Airways and Eastern Air Lines both have
extensive installations at Miami where about 8,000 workers
have been regularly employed. Delta Air Lines is also es­
tablishing facilities at Miami, and National Air Lines is ex­
panding its existing facilities. Moreover, Miami currently is
moving into the greatest construction activity it has ever
experienced;
Panama City and Tampa are already experiencing severe
cutbacks in employment. Panama City, located in northwest
Florida, experienced a remarkable expansion during the war.
The population of the county in which the city is located
more than doubled during the war years, rising from 20,686
in 1940 to an estimated 44,806 in 1943. The J. A. Jones Con­
struction Company, which was the chief eftnployer in the
area, at one time employed some 14,000 workers but by July
had only about 8,000 and by the end of the year will
probably be entirely closed down.
Employment at Tampa also became greatly concentrated
in the shipbuilding industry. Hillsborough and Pinellas
Counties, in which Tampa and its neighboring cities lie, ex­
perienced a major population expansion. In 1940 the popula­
tion of the two counties was 209,693, and by November 1943
the population had risen to an estimated total of 301,425.
Shipbuilding, represented principally by the Tampa Ship­
building Company, Tampa Marine Corporation, and McCloskey and Company, accounted for more than half of the
total employment in essential war work. Earlier this year
Tampa Shipbuilding Company had about 9,500 workers,
McCloskey and Company about 5,000, and Tampa Marine
Corporation about 1,000. After dismissals in mid-August fol­
lowing contract concellations, Tampa Shipbuilding Com­
pany still had about 5,800 men, McCloskey and Company
2,100, and Tampa Marine Corporation about 350.
Georgia
As is the case with the other states of the District, war-contract cancellations in Georgia affect some centers more
severely than others. Probably the most highly specialized
war-industry center was Brunswick, but the wartime boom
in Brunswick has already been over for some time. The
Brunswick area, including all of Glynn and parts of Mc­
Intosh and Camden Counties, had a 1940 population of about



8 9

25.000 people. At one time during the war this population
had increased to almost 75,000, but it had fallen to about
50.000 by the early part of this year. This expansion in
population was largely occasioned by the establishment of
two shipbuilding plants at Brunswick. The plant operated by
the J. A. Jones Construction Company employed approxi­
mately 16,000 workers at one time last year, but this num­
ber had decreased to about 6,500 in July of this year. Can­
cellation in August of the company’s Maritime Commission
contract for 11 coastal cargo ships will leqd to the dismissal
of a good part of the remainder.
Savannah has been another of the District’s outstanding
wartime-boom centers. Chatham County, of which Savannah
is the seat of government, had a prewar population of
117,970. Currently, the population is estimated at about
160,000. In Savannah, as in Brunswick, a good part of the
city’s expansion was based upon the shipbuilding industry.
One of these shipbuilding companies, the Southeastern Ship­
building Corporation, had almost 14,000 employees last year,
but for the past several months this number has undergone a
continual decrease, and by July of this year it was down to
about 7,000. The other principal shipbuilding company, the
Savannah Machine and Foundry Company, has regularly
employed about 3,000 workers. With the virtual end of ship­
building at Savannah in sight, the city can quite obviously
expect a period of severe adjustment. Since Savannah is
Georgia’s principal port and is the state’s second largest city,
it is probable that the readjustment can take place with a
minimum of difficulty.
Macon is still another Georgia city that will experience-a
severe readjustment period. The city and its immediately
surrounding territory have experienced an increase of more
than 20 per cent in population during the war years. The
number of employed workers in the area has risen from
about 51,000 to about 75,000. By far the largest single em­
ployer in the area has been the Government. Wamer-Robins
alone regularly employed about 11,000 people, and Camp
Wheeler and Robins Field together had about 2,000 more.
Macon’s other principal wartime establishment was the
Reynolds Ordnance Plant employing approximately 5,000
workers. This plant has now been closed except for a skeleton
crew of about 500. It is probable that work at the Govern­
ment plants will be drastically curtailed in ensuing weeks.
Georgia’s other principal population centers can expect a
fairly easy conversion process. Columbus and Rome, as
textile centers, can probably make the transition with scarcely
a halt. Rome has a well-diversified manufacturing industry
producing cotton textiles, rayon yarn, stoves, and furniture.
Columbus has 10 textile plants that together employ about
11.000 workers, and the plants need additional workers.
Near-by Fort Benning is a permanent military establishment
and for that reason will continue to be a large employer of
civilian workers.
The Atlanta area, the second largest population center of
the District, is also expected presently to absorb its displaced
war workers. The plant of the Bell Aircraft Corporation at
Marietta was the area’s largest single wartime employer. This
plant reached peak employment in February of this year with
more than 28,000 workers. By mid-August this year the
number of employees had declined to approximately 23,000,
and between 8,000 and 9,000 of these were immediately dis­

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missed when the plant’s contracts for B-29 bombers were
canceled. Additional workers will be released rapidly, and
probably by mid-September only a skeleton crew will be
maintained.
Louisiana
The principal population centers of Sixth-District Louisiana,
Baton Rouge and New Orleans, may anticipate a relatively
smooth conversion period. Though strenuous use was made
during the war of the industrial facilities of Baton Rouge,
these facilities for the most part were not strictly war-purpose
plants. The Standard Oil Company of Louisiana operates in
north Baton Rouge one of the largest oil refineries in the
world. Baton Rouge also has two important synthetic-rubber
plants that were established during the war. Another im­
portant part of the city’s industries is represented by chemi­
cal- and allied-products plants.
Cancellations announced in August brought sharp reduc­
tions in employment in New Orleans. An ordnance plant an­
nounced on August 17 that it would release 2,500 workers
within the following 10 days and the remainder within two
months. At the same time, Consolidated-Vultee Aircraft Cor­
poration announced that it was releasing more than 1,000
workers from among its 5,500 employees, but that 1,500
would be retained for about six months to complete PBY
patrol bombers that were on the assembly line. Higgins In­
dustries, Incorporated, too, announced that about two thirds
of its 5,300 workers were to be dismissed on August 20 be­
cause of the cancellation of war contracts amounting to more
than 20 million dollars.
New Orleans’ shipbuilding activities wfere likewise sharply
curtailed. The city’s shipbuilding and ship-repair industry is
represented by some 13 establishments. The most important
in point of number of employees is the Delta Shipbuilding
Company, Incorporated, which for many months has oper­
ated a Government-owned shipbuilding facility. At one time
the company employed about 20,000 workers, but by the first
part of August this year the number had dwindled to 5,000,
and the remainder face dismissal by October. Todd-Johnson
Drydock, Incorporated, engaged in converting Liberty cargo
ships into troop carriers, hopes to continue working its 3,500
employees without cutbacks so long as troop movements
continue. Pendleton Shipyards, Incorporated, which is en­
gaged in ship-repair, assembly, and conversion work, also
hopes to avoid cancellations and cutbacks in the near future.
This plant employs about 2,300 workers.
These various employee dismissals will end wartime-boom
conditions in New Orleans temporarily, but the city has great
industrial strength and, because of its strategic position at the
mouth of the Mississippi River, may be expected soon to
overcome its conversion problems.
Mississippi
Prospects for Sixth District Mississippi’s principal urban
centers during the reconversion period seem unusually good.
Employment in the Biloxi-Gulfport area will experience some
contraction when its Government establishments, regularly
employing more than 5,000 workers, are closed up or their
activities curtailed. The area’s seafood-processing plants and
its tourist industry, however, should soon restore the balance.
The Jackson area, defined as including all of Hinds County
and parts of adjacent Madison and Rankin Counties, has
been no wartime-boom area, but it has experienced sharply



increased wartime activity. The area’s population was in­
creased from a prewar total of approximately 136,000 to a
current total of about 150,000. Jackson itself has shown an
estimated population gain of 17,285 since 1940. Government
establishments are the largest single employing group, but
they have regularly employed not many more than 1,500
people. Jackson’s manufacturing companies are relatively
small employers, and their conversion problem will not be
serious. The end of the war actually will not mean much of
a recession in Jackson. Since it is the center of a currently
booming oil industry, the city very likely will go right on
expanding with scarcely a halt.
Pascagoula, with its adjacent territory, has been Missis­
sippi’s principal wartime-boom center. With a prewar popu­
lation of 18,720, the area at one time during the war had
more than doubled in population, but currently the popula­
tion is about 30,000. Most of the industrial employment in
the area, at least 90 per cent of it, has been furnished by the
Ingalls Shipbuilding Corporation. This company at one time
had about 12,000 employees, but the number has now been
reduced to about 6,500. At the moment the company has an­
nounced a need for an additional 2,000 workers.
The Ingalls management has shown great enterprise, and
the company has every prospect of continuing operations at
its present scale for some time to come. Recently, the com­
pany was awarded a 37-million-dollar contract for fourteen
12,000-ton cargo ships for the Brazilian Government. These
ships will be operated by Lloyd Brasilero for the Merchant
Marine Commission of Brazil and will ply between Brazilian
ports and New Orleans and New York. Currently, the com­
pany is working on a contract for seven 18,000-ton vessels to
be assigned to the Moore-McCormack Lines. Moreover, In­
galls is supplementing its shipbuilding activities with the
production of Diesel-electric locomotives. With this step, the
Ingalls company is the first shipyard to enter the railroadlocomotive field.
Vicksburg was pretty well by-passed insofar as war pros­
perity and boom conditions were concerned, and its re­
conversion problems should, therefore, be relatively mild.
The population of Warren County, of which Vicksburg is the
principal city and the seat of government, actually declined
during the war period by about 4y 2 per cent. The number of
displaced war workers will not be very large. The LeTourneau Company, working primarily on war contracts,
regularly employed about 1,000 workers, and four Govern­
ment establishments employed about 1,000 additional workers.
Tennessee
In Sixth-District Tennessee, the principal population centers,
consisting of Bristol-Kingsport, Chattanooga, Knoxville, and
Nashville, will experience no great setback now that the end
of the war with Japan is at hand. Except for Holston
Ordnance Works, which manufactured explosives, it is
probable that most of the Bristol-Kingsport industries can
convert to peacetime operations without a great deal of cur­
tailment in total employment. Manufacturing employment of
the area in 1940 was 17,844, but it had risen to more than
20,000 in the earlier part of this year.
Chattanooga should-also experience no great difficulty in
converting to peacetime work. The Chattanooga area has
some 230 factories producing a well-diversified list of articles
such as textiles, iron and steel, chemicals, and finished-lum-

M

o n t h l y

R e v ie w

o f th e F e d e ra l R e s e rv e B a n k o f A t la n ta f o r A u g u s t 1945

ber products. Except for The Trinler Works, producing tank
treads, the Wheland Company, producing 90 mm. guns, and
the Hercules Powder Company TNT plant, the companies
produced basically the same products during the war as they
did in 1940. A favorable factor in the conversion process in
Chattanooga is the actual decrease that has occurred in the
civilian population of the area during the wartime years.
The immediate outlook for the Knoxville area is favorable.
The area has a good deal of inherent manufacturing strength,
having a large number of textile- and apparel-producing com­
panies and several iron- and steel-products companies. The
Aluminum Company of America and the Clinton Engineer
Works have been the principal wartime employers in the
region. The plants of Alcoa will by no means be wartime
casualties, but during the process of reconversion some dis­
placement of workers may be expected. The Clinton Engineer
Works, on the other hand, is one of the famed mystery plants
engaged in the production of atomic bombs, and its industrial
future is completely uncertain. Construction of this plant at
one time engaged about 60,000 workers, but what its current
employment is has not been revealed, though it is probably
still about 60,000. At all events, the Clinton plant is ab­
sorbing great numbers of released workers from other
Tennessee ordnance plants and may eventually employ as
many as 80,000 workers, which is the reported maximum.
The industrial pattern of Nashville was not particularly
changed during the war. Principal manufacturing industries
are those producing chemicals, textiles and apparel, food and
related products, and iron and steel. Except for employment
opportunities offered by the aircraft manufacturing plants
of Consolidated-Vultee and Tennessee Aircraft and by three
army installations, Nashville never became dependent upon
strictly war-purpose employment. Consolidated had a peak
employment of about 6,500, but by July of this year its em­
ployees numbered less than 2,000.
The Outlook In Brief

The surrender of Japan is certain to cause major disturbances
to business within the District. War-contract cancellations
have already attained large volume apd have led to the dis­
charge of a great number of war workers. Moreover, the
District must presently find jobs for about a million dis­
charged servicemen. The shock occasioned by drastic cut­
backs in Government expenditures will be largely absorbed
by the expansion of civilian activity to meet accumulated
civilian orders.
Overriding all other considerations is the fact that wartime-financing procedures have created a vast flood of pur­
chasing power that provides an expansionary setting for the
conversion process. The staffing of labor-starved retail and
service establishments and of textile-manufacturing plants
and lumber operations in the District will go a long way
toward absorbing displaced war workers and discharged war
veterans. Except in a few troublesome spots this absorption
should be accomplished with a minimum of difficulty. The
immediate business future of the District is one that should
be viewed with reasonable optimism.
The long-run business future of the District is one that
will largely be a reflection of the course taken by the national
economy. In that economy the District has every reasonable
prospect of holding its own.




9 1

S ix t h D is t r ic t S t a t is t ic s
IN STALM ENT C A S H LO A N S
N um ber
of
L e n d ers
R e p o r tin g

L ender

P er C ent C hange
J u n e 1 9 4 5 to J u ly 1 9 4 5
O u ts ta n d in g s

V o lu m e

—2 9

F e d e r a l c r e d it u n i o n s ..................
S ta t s c r e d it u n i o n s .........................
I n d u s tr ia l b a n k i n g c o m p a n ie s
I n d u s tr ia l lo a n c o m p a n ie s ___
P e r s o n a l f in a n c e c o m p a n ie s . .
C o m m e rc ia l b a n k s ..........................

+
+

+
+
+
+
+

21
10
24
1
2

—
+
+

1

3
10
0
17

3

RETAIL FU R N ITU R E S TO R E O PE R A T IO N S
N u m fie r
of

Ite m

P er C ent C h an g e
J u ly 1 9 4 5 fro m

R e p o r tin g

J u n e 1 9 45

J u ly 1 9 4 4

95
89
89
94
S4
77

— 8
— 4
— 10
— 1
+
3
+ 12

+ 15
+ 34
+ 12
+ 8
+ 15
+ 25

T o ta l s a l e s ..........................................................
C a s h s a l e s ..............................................
I n s ta lm e n t a n d o th e r c r e d it s a l e s . .
A c c o u n ts r e c e iv a b l e , e n d of m o n th
C o lle c tio n s d u r in g m o n t h ....................
I n v e n to r ie s , e n d of m o n t h ....................

W H O L E S A L E SA LES AND IN V E N T O R IE S* — JULY 1 9 4 5
SA LES
I te m

F irm s
R e p o r t­
in g

A u to m o tiv e s u p p lie s .
C lo th in g a n d
f u m i s n i n g s ..................
D ru g s a n d s u n d r ie s ..
D ry g o o d s ..........................
E le c tric a l g o o d s .............
F r e s h f ru its a n d
v e g e t a b l e s ....................
C o n f e c tio n e r y ..................
G r o c e r ie s — fu ll lin e
w h o l e s a l e r s ..................
G r o c e r ie s — s p e c ia lty
lin e w h o l e s a l e r s . . .
B e e r ......................................
H a rd w a re — g e n e r a l..
H a r d w a r e — in d u s tr ia l
P a p e r a n d its

Ju n e
1 9 45

J u ly
1 9 44

N o . of
F irm s
R e p o r t­
in g

P er C ent C h an g e
J u lv 1 9 4 5 fro m
June
19 45

Ju ly
1944

+

+ 47

9

—

7

+ 24

6

4
9
11
6

+
+
—
—

4
5
8
7

+ 24
+
7
— 12
+ 27

3
5
4

+
o
— 1,1

— 6
— 30
+ 22

— 11
—
,1

+
2
— 26

3

— 39

+ 56

7
6

T o b a c c o a n d its
p r o d u c t s ....................... ..
M is c e l la n e o u s ...............
T O T A L .......................

IN V E N T O R IE S

P er C ent C hange
J u lv 1 9 4 5 fro m

34

—

,1

15

—

8

— 34

,11
■3
11
3

10
— 15
+
3
— 2

— 0
+ 18
+
7
+ 15

6
3
5

—
—

7
1

+ 20
+ 87
— 5

3

— 16

— 20

—
—
—

+
5
— 16
+
1

— 10
— 5
— 4

— 13
— 17
— 13

12
19
148

4

—

8

3
9
4

7
15
72

* B a se d o n U . S . D e p a r tm e n t of C o m m e rc e f ig u r e s
D EPARTM ENT S TO R E SA LES A ND S T O C K S
SA LES
P la c e

ALABAMA
B ir m in g h a m ...
M o b ile ..................
M o n tg o m e r y ..
FLO R ID A
J a c k s o n v il le . . .
M ia m i..................
O r la n d o .............
T a m p a ..................
G E O R G IA
A tla n ta ...............
A u g u s t a .............
C o lu m b u s ___
M a c o n ..................
L O U ISIA N A .
B a to n R o u g e . .
N ew O r le a n s ..
M IS S IS S IP P I
J a c k s o n ...............
TEN N ESSEE
B r is to l. ; .............
C h a t t a n o o g a ..
K n o x v ille ..........
N a s h v ill e ..........
O TH ER C IT IE S * .
D IS T R IC T ................

N o . of
S to r e s
R e p o r t­
in g

IN V E N T O R IE S

P er C ent C hange
Ju ly 1 9 4 5 fro m
June
1 9 45

Ju ly
1 9 44
+
7
— 3
+ 25

—

3

—

14

—

7

—6
—

7

—
—

10
4

—

9

+
+
+
+

16
24
9
14

+
+

24
23

—6

+
+
+
+

12
11
20
10

—

3

+

24

3
4
4

—

1

—
—
—

10
10
12

18
93

—

5

+ 19
+ 15
+
7
+ 18
+ .1 9
+ 16

—6

6

N o . of
S to r e s
R e p o rtin g

Per C ent C hange
Ju ly 1 9 4 5 fro m
June
1945

Ju ly
1944

4

+

15

+

8

3

+

2

+

3

3

+

4

+

12

—10
—2

3
3
5
26
69

+ 14
+ 18

+

7

+ "5

+

3

+ 17

-c 3

— 18

+ 1

+ 10

+ 13
—

+
+

H
+ 2
+ 2
+ 0

5
2

+ ” 5
+
4
+
5

• W h e n l e s s th a n 3 S to re s r e p o r t in a g iv e n c ity , th e s a le s a r e g r o u p e d
to g e th e r u n d e r " o t h e r c i t i e s ."

9 2

M

o n t h l y

A d d itio n s

to

R e v ie w

o f th e F e d e ra l R e s e rv e B a n k o f A t la n ta f o r A u g u s t 1945

F e d e r a l R e s e rv e

the latter part of July and up to the twenty-second
of August, the Federal Reserve Bank of Atlanta an­
nounced the addition to the Federal Reserve Par List of
banks and banking offices in the Sixth Federal Reserve Dis­
trict. Three of these offices are in Alabama, three in Florida,
three in Louisiana, and 31 in Tennessee. Checks of the Ala­
bama banks will be handled by the Birmingham office of the
Federal Reserve Bank of Atlanta. Checks of the Florida banks
will be cleared at par thr6ugh the Jacksonville office of the
Federal Reserve Bank of Atlanta. The New Orleans branch
of the Federal Reserve Bank of Atlanta will handle checks of
the Louisiana banks at par. Checks of the Tennessee banks
will be handled by the Nashville branch. The location, names,
and chief officers of these banks are set out in the following:
u r in g

D

ALABAMA
Camden: The Bank of Camden. S. C. Godbold, president;
and W. P. Agee, Jr., cashier.
Guntersville: The Citizens Bank of Guntersville. E. H.
Couch, president; and T. W. Milner, cashier.
Russellville: Citizens Bank and Savings Company. W. A.
Gresham, president; Foster Gavin, executive vice president;
M. C. Hester, vice president; and C. W. James, cashier.
FLORIDA
Jacksonville Beach: The Beach Bank. Fred C. Allen, presi­
dent; William A. Stanly, vice president; W. M. Mason, vice
president; and Frank B. Brown, cashier.
New Smyrna Beach: Bank of New Smyrna. John R. De­
Berry, president; Merton E. Sear, vice president; and W. R.
Quigley, cashier.
Pahokee: Bank of Pahokee. H. M. McIntosh, president;
Rupert Mock, vice president; and E. F. Mclllwain, cashier.
LOUISIANA
Alexandria: Guaranty Bank and Trust Company. J. W.
Beasley, president; F. T. Brame, vice president; A. Wettermark, vice president; J. W. Beasley, Jr., vice president; Gus
Gehr, vice president; C. W. Crockett, vice president; C. A.
Broussard, vice president and trust officer; and Ross
Colingo, cashier.
Camp Livingston: Camp Livingston Facility (Banking
Facility of Guaranty Bank and Trust Company, Alexan­
dria). P. L. Merritt, manager.
Pineville: Guaranty Bank and Trust Company (Branch
of Guaranty Bank and Trust Company, Alexandria). T. B.
Farrar, manager.
TENNESSEE
Blountville: Farmers Bank of Blountville. R. F. Bell,
president; N. A. Long, vice president; and W. S. Blevins,
cashier.
Bumpus Mills: Farmers and Merchants Bank. J. G.
Walker, president; J. E. Pugh, vice president; and Russell
Wallace, cashier.
Byrdstown: Pickett County Bank and Trust Company.
S. 0. Huddleston, president; J. G. Crouch, vice president;
and John Taylor, cashier.
Carthage: Smith County Bank. H. B. McGinness, presi­
dent; B. W. Chitwood, vice president; L. A. Ligon, vice
president; and A. C. Read, cashier.



P a r

L is t

Celina: The Bank of Celina. E. P. Fowler, president; J. A.
Howard, vice president; and R. L. Donaldson, cashier.
40Chapel Hill: First State Bank. L. B. Harris, president; T. R.
King, vice president; and W. E. Stammer, cashier.
Clinton: Union Peoples Bank. W. W. Underwood, presi­
dent; J. H. Wallace, vice president; and H. F. Rutherford,
cashier.
Cumberland City: Citizens-Cumberland City Bank. G. L.
Landiss, president; W. S. Minor, vice president; and Alex
Dougherty, cashier.
Dandridge: Jefferson County Bank. Arthur Holtsinger,
president; George C. Zirkle, vice president; and H. B.
Jarnagin, cashier.
Dover: Dover-Peoples Bank and Trust Company. W. C.
Howell, president; L. S. McElroy, vice president; and W.
L. McElroy, cashier.
Eagleville: Bank of Eagleville. J. F. Blackwell, president;
J. T. Graham, vice president; W. T. Lowe, chairman and
vice president; and J. G. Wade, cashier.
Granville: The Jackson County Bank (Branch of Jackson
County Bank, Gainesboro). A. H. Willoughby, manager.
Indian Mound: Farmers Bank and Trust Company. T. W.
Seay, president; C. H. Webb, vice president; and W. H.
Tippit, cashier.
Jonesboro: The Banking and Trust Company. Mrs. B. P.
Roach, president; B. P. Roach, vice president; and W. C.
Allison, vice president and cashier.
Lebanon: Lebanon Bank and Trust Company. 0. W.
Stephens, president; F. M. McDaniel, vice president; How­
ard Hancock, vice president; L. B. Simpson, vice presi­
dent; and Richard M. Hawkins, vice president and cashier.
Limestone: Farmers and Merchants Bank. Thad A. Cox,
president; D. B. Pence, vice president; and W. J. Probst,
cashier.
Livingston: Union Bank and Trust Company. E. D.
White, president; S. J. Bilbrey, vice president; and Bedford
McDonald, cashier.
R e c o n n a is s a n c e
S ix th D is tr ic t S ta tis tic s io r J u ly 1 9 4 5 c o m p a r e d w ith J u ly 1 9 4 4
PER C E N T D E C R E A S E

^

P E R C E N T IN C R E A SE

Department IH H IIiltles
Department UHtte Stocks
F u r n itu a ililli
Gasoline ^TalUHRctioiiB
CottoHBnsumption
Bank ibebits
Member ijlliik Loans
Member B a n I H H i l i § ,
Demand D e p H I l i i d
—

40

30

20

10

0

10

20

30

.

4-

35

M

o n t h l y

R e v ie w

o f th e F e d e ra l R e s e rv e B a n k o f A t la n ta f o r A u g u s t 1945

McEwen: The Union Bank. Dan McCord, Jr., president;
N. L. Williams, vice president; and W. M. Frazee, cashier.
Mosheim: Mosheim Bank. R. R. Wisecarver, president;
W. M. Reed, vice president; and Onnie Cox, cashier.
Mount Juliet* Bank of Mount Juliet. F. M. McDaniel, presi­
dent; J. S. Hatfield, vice president; W. W. Hamblen, vice
president; and Annie Lou McDaniel, cashier.
Mountain City: The Farmers State Bank. I. W. Nave,
president; W. B. Mount, executive vice president; W. W.
Hawkins, vice president; J. C. Muse, vice president; and
R. J. Howard, cashier.
New Tazewell: Citizens Bank. Mark Lewis, president and
cashier; and William Lewis, vice president.
Niota: Bank of Niota. C. B. Staley, president and cashier;
and H. A. Collins, vice president.
Norene: The Peoples Bank. C. N. Reeves, president; Dave
Henderson, vice president; M. B. Beadle, vice president; and
Mary Ruth Smith, cashier.
Portland: The Farmers Bank. G. W. Venters, president;
J. V. Kerley, vice president; and R. W. Enders, cashier.
Rutledge: Citizens Bank and Trust Company. 0. C.
Hickle, Jr., president; S. L. Maples, vice president; and
C. D. Sheets, vice president and cashier.
Spencer: The Citizens Bank. M. S. Hitchcock, president;
Ella B. Worthington, vice president; and J. L. Graham,
cashier.
Sweetwater: Sweetwater Bank and Trust Company. C. B.
Randolph, Jr., president; and Sam J. Pickel, vice president
and cashier.
White Pine: The Citizens Bank. J. R. Allen, president;
J. C. Bell, vice president; and C. A. Catlett, cashier.
Whites Creek: Whites Creek Bank and Trust Company.
M. E. Link, president; C. B. Bidwell, vice president; T. J.
Wilkinson, vice president; and W. F. Teasley, cashier.
Whitleyville: The Jackson County Bank (Branch of Jack­
son County Bank, Gainesboro). Paul Birdwell, manager.
These additions to the Federal Reserve Par List, all of
which will have become effective by September 1, bring the
total number of nonmember banks on the Par List in the
Sixth Federal Reserve District to 164. Moreover, all banks
that are members of the Federal Reserve System are required
to be on the Par List. Since member banks in the Sixth
Federal Reserve District now number 318, there will thus be
482 banks in the District that will be par clearing after the
first of September.
The 164 nonmember par-clearing banks are divided among
the states of the Sixth District as follows: Alabama 12,
Florida 34, Georgia 26, Louisiana 6. Mississippi 2,. and
Tennessee 84. The figures for nonmember par-clearing banks
in Louisiana, Mississippi, and Tennessee, of course, refer
only to the Sixth District portions of those states.
The 318 member banks are divided among the Sixth Dis­
trict states as follows: Alabama 83, Florida 62, Georgia 59,
Louisiana 30, Mississippi 17, and Tennessee 67. These mem­
ber banks also have 90 branches, of which 20 are in Ala­
bama, 22 in Georgia, 24 in Louisiana, and 24 in Tennessee.
The total number of nonmember banks in the Sixth Dis­
trict is 742. These banks have 43 branches. Alabama has 133
nonmember banks, Florida 106, Georgia 241, Louisiana 55,
Mississippi 78, and Tennessee 129. Georgia has 3 nonmember
branch banks, Louisiana 16, Mississippi 14, and Tennessee 10.




9 3

S ix th D is t r ic t S t a t is t ic s
C O N D IT IO N O F 2 0 M EM BER BA NK S IN S ELE C TED C IT IE S
(I n T h o u s a n d s o i D o lla r s )

I te m

A ug. 22
1945

L o a n s a n d in v e s tm e n ts —
1 ,9 9 2 ,2 7 2
L o a n s — t o t a l ....................................
3 3 5 ,9 8 2
C o m m e r c ia l, in d u s tr ia l,
a n d a g r i c u lt u r a l l o a n s . .
1 7 4 ,3 8 9
L o a n s to b r o k e r s a n d
d e a le r s in s e c u r i t i e s . . . .
9 ,4 0 6
O th e r lo a n s fo r p u r ­
c h a s i n g a n d c a r r y in g
s e c u r i t i e s .................................
5 9 ,1 4 3
R e a l e s ta te l o a n s ....................
2 3 ,6 5 3
L o a n s to b a n k s ..........................
1 ,7 7 6
O th e r l o a n s .................................
6 7 ,6 1 5
I n v e s tm e n ts — t o t a l ..................... 1 ,6 5 6 ,2 9 0
U . S . d ir e c t o b l i g a t i o n s . . . 1 ,5 1 0 ,8 1 6
O b lig a tio n s g u a r a n t e e d
b y U . S ........................................
3 ,7 1 0
O th e r s e c u r i t i e s .......................
1 4 1 ,7 6 4
R e s e r v e w ith F . R. B a n k ___
3 6 1 ,9 0 5
C a s h in v a u l t ....................................
2 9 ,9 3 2
B a la n c e s w ith d o m e s tic
1 6 5,7 4 1
D e m a n d d e p o s it s a d j u s t e d . . 1 ,2 6 4 ,1 0 8
T im e d e p o s i t s .................................
3 9 2 ,4 2 9
2 5 3 ,6 8 3
U . S . G o v 't d e p o s i t s ..................
5 3 4 ,9 6 4
D e p o s its o f d o m e s tic b a n k s .
B o r r o w in g s ........................................

J u lv 25
1945

A uq. 23
1944

1 ,9 8 6 ,1 4 4 1 ,7 3 1 ,0 0 5
3 5 4 ,7 6 0
2 8 8 ,8 7 2

Per C ent C haqge
2 2 - 1 9 4 5 , fro m
J u ly 2 5
1945

A ug. 23
1944

+
—

0
5

+
+

15
16

—

2

+

11

1 7 8 ,3 9 4

1 5 6 ,5 5 2

1 2 ,5 4 2

5,422

— 25

+ 73

6 3 ,7 0 5
3 5 .4 7 0
2 4 ,3 7 6
2 5 ,9 1 6
3 ,3 3 9
742
7 2 ,4 0 4
6 4 ,7 7 0
1 ,6 3 1 ,3 8 4 1 ,4 4 2 ,1 3 3
1 ,4 9 4 ,9 5 2 1 ,3 0 3 ,9 7 6

— 7
— 3
— 47
— 7
+
2
+
1

+ 67
— 9
+ .1 3 9
+
4
+ 15
+ 16

+ 5 43
+
4
+
3
+
3 '

—
+
+
+

83
22
21
15

+
+
+
+

+
+
+
—
+

2
18
33
21
21

577
1 3 5 ,8 5 5
3 5 1 ,1 4 6
2 9 ,1 6 7

21,546

1 1 6 ,6 1 1
3 0 0 ,2 4 2
2 6 ,0 8 8

1 4 2 ,9 4 0
1 6 1 ,8 5 4
1 ,2 3 0 ,5 3 7 1 ,0 7 0 ,0 0 6
3 8 2 ,8 6 5
2 9 4 ,6 7 5
2 9 4 ,3 7 7
3 2 0 ,7 2 8
4 9 7 ,5 8 0
4 4 2 ,0 4 1

16
3

2
14
8

D EB ITS T O IN D IV ID U A L BANK A C C O U N T S
( I n T h o u s a n d s of D o lla r s )
N o. oi
B anks
R eo o rtin er

?ex C e n t

C hange
*u lv 1 9 45 iro m

J u lv
1 9 45

Ju n e
1 9 45

Ju ly
1 9 44

3
3
2
3
4
3

1 7 ,7 5 6
1 8 2 .1 3 3
7 ,0 8 0
1 0 ,1 0 2
9 8 ,7 3 1
3 5 ,4 7 1

2 0 ,3 3 2
2 2 4 ,9 6 3
8 ,5 6 0
1 1 ,2 8 8
1 2 6 ,7 1 3
3 9 ,6 0 6

1 6 ,2 4 1
1 7 7 ,0 6 9
5 ,5 0 2
9 ,7 6 0
11 4 ,2 9 1
3 3 ,8 8 3

—
—
—
—
—
—

13
19
17
11
22
10

+
9
+
3
+ 29
+
4
— 14
+
5

3
6
10
2
3
3
3

1 6 2 ,4 2 2
1 3 3 ,1 6 5
1 7 4 ,5 2 3
2 8 ,2 9 '
2 5 ,4 7 7
2 6 ,0 4 9
6 9 ,2 6 8

1 9 4 ,1 3 2
1 5 3,4 3 1
2 1 0 ,4 0 0
3 3 ,7 2 3
2 8 ,2 0 5
3 2 ,3 7 1
8 2 ,2 5 5

1 6 7 ,6 5 3
1 1 0 ,7 5 6
1 4 4 ,9 9 6
2 5 ,0 4 2
2 3 ,6 5 1
2 1 ,9 0 0
7 6 ,8 9 8

—
—
—
—
—
—
—

16
13
17
16
10
20
16

—
+
+
+
+
+
—

3
20
20
13
8
19
10

S a v a n n a h ..........
V a ld o s ta .............

2
4
3
2
4
2
3
2
4
2

8 ,2 9 3
4 7 6 ,7 2 5
3 3 ,4 5 '
1 1 ,4 6 0
3 2 ,6 9 9
1 ,8 7 0
4 0 ,9 7 9
5 ,9 2 4
6 6 ,0 3 4
1 0 ,2 5 7

9 ,8 7 1
5 4 6 ,7 6 9
3 9 ,3 7 0
1 3 ,1 6 ?
4 0 ,1 5 0
1 ,9 7 2
4 3 ,3 0 3
6 ,2 3 0
8 2 ,2 9 8
7 ,7 7 4

8 ,6 6 3
4 6 0 ,0 5 5
3 4 ,1 5 8
1 4 ,9 0 8
3 2 ,5 2 3
1 ,7 8 7
4 5 ,0 3 9
4 ,4 9 5
9 7 ,2 7 4
6 ,6 0 2

—
—
—
—
—
—
—
—
—
+

16
13
15
13
19
5
5
5
20
32

—
+
—
—
+
+
—
+
—
+

4
4
2
23
1
5
9
32
32
55

LO U ISIA N A
B a to n R o u g e . .
L ake C h a r le s ..
N ew O rle a n s ..

3
3
7

4 3 ,6 8 6
17,031
4 1 7 ,9 1 2

4 6 ,2 3 7
1 9 ,0 8 7
4 8 9 ,5 4 5

4 0 ,5 3 6
1 7 ,2 2 5
4 2 9 ,3 6 5

— 6
— 11
— 15

+
—
—

8
1
3

M IS S IS S IP P I
H a ttie s b u r g ...
T a c k s o n ...............
M e n d ’a n .............
V ic k s b u r g ..........

2
4
3
2

1 0 ,9 3 8
6 5 ,8 4 4
1 6 ,5 2 0
1 7 ,7 4 8

1 2 ,6 1 7
6 4 ,9 6 3
1 8 ,4 3 2
17 ,3 4 1

13 ,0 2 1
5 3 ,1 4 3
1 6 ,2 7 5
2 1 ,9 9 8

— 13
+
1
— 10
+
2

— 16
+ 24
+
2
— 19

TEN N ESSEE
C h a t t a n o o g a ..
K n o x v ille .............
N a s h v ill e .............

4
4
6

8 7 ,5 4 °
11 0.39S
1 9 8 ,9 2 5

1 04 8 6 7
1 3 4 ,7 7 4
2 5 0 ,3 8 6

9 0 ,3 4 5
1 0 5 ,9 7 6
1 7 1 ,4 7 5

— 17
— 18
— 2.1

— 3
+
4
+ 16

SIXTH D IST R IC T
3 2 C i t i e s ...............

104

2 ,4 7 0 ,1 7 2

2 ,9 0 4 ,7 2 7

2 ,4 4 7 ,5 0 9

— 15

+

1

7 9 ,1 6 3 ,0 0 0

9 8 ,1 2 1 ,0 0 0

7 2 ,9 0 9 ,0 0 0

— 19

+

9

P la c e *

ALABAMA
B ir m in g h a m .. .

M o n t g o m e r y ..
FLO R ID A
J a c k s o n v i l l e .. .
G i-e a te r M iam i*
-

P e n s a c o l a ..........
S t. P e te r s b u r g .
T a m p a ....................

G E O R G IA

B r u n s w ic k ..........
C o lu m b u s ..........
E1b e ’- to n .............
M a c o n ..................

U N IT ED STATES
3 3 4 C i t i e s .............

* N o t in c lu d e d in S ix th D is tric t to ta l

Ju n e
1 9 45

J u ly
1 9 44

9 4

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o n t h l y

R e v ie w

D is tr ic t

o f th e F e d e ra l R e s e rv e B a tik o f A t la n ta f o r A u g u s t 1945

B u s in e s s

N the basis of preliminary information, it appears that
department store sales increased in August by something
less than the usual amount. The July decline, however, was
much less than the usual decline for that month and as a
result the seasonally adjusted index for July was higher than
it has been*in any earlier month in the series. Wholesale
trade continues above that of the corresponding time last
year, and more life insurance is being written. Steel-mill ac­
tivity continues at a high rate. Present prospects are for
smaller crops of cotton, wheat, and corn but for increases
over last year in other crops.
Retail Trade

Sixth District department store sales apparently continued in
August, as they have for many months past, to reach new
record levels for the month. In the first two weeks of August,
sales reported by about 30 stores located all through the
District averaged 14 per cent greater than in the correspond­
ing weeks a year ago. Reported sales for the third week of
August were below those a year earlier. In that week many
stores were closed one day, following the announcement of
the Japanese surrender, and some stores were closed two days.
However, for the three weeks, total sales were up 6 per
cent from that period last year. It is probable that when
August reports are received from the 93 regularly Reporting
stores, the increase over August last year will be near the
average for the first two weeks. In any case, the increase over
July was probably less than the usual seasonal gain. The
August seasonally adjusted index may be expected to follow
the pattern of the last two years and decline somewhat
from the record level reached in July.
, In July as in June, department store sales in this District
declined, but the decrease was much smaller than usually
occurs in midsummer. The dollar amount of July sales was
down 8 per cent from June, but July was shorter by one busi­
ness day, and the daily average rate of sales declined only a
little more than 3 per cent. This is about one fourth as large
as the usual June-July decrease and resulted in a rise of 8
per cent in the seasonally adjusted sales index.
Cotton Production
The first estimate of cotton production for this year, made by
the United States Department of Agriculture on the basis of
conditions prevailing on August 1, indicates that in the six
states that are situated wholly or partly within the Sixth
Federal Reserve District the crop will amount to 4,415,000
bales. In the country as a whole, the crop is expected to total
10,134,000 bales. If these estimates prove to be correct the
reduction from last year’s production in this District’s six
states will be 11 per cent, and that for the United States
17 per cent.
The total for the Six States as a whole and for the states
of Alabama, Georgia, Louisiana, and Mississippi is the
smallest since 1941. The Tennessee crop is the smallest since
1935, and the estimate for Florida is the smallest in more
than 40 years. Only twice before — in 1941 and 1923 — in
more than 40 years has Georgia had a cotton crop as small
as that expected this year.




S itu a tio n

In comparison with the 1944 crop, the reductions this year
are expected to range from 5 per cent in Mississippi to 11
per cent in Alabama, *13 per cent in Louisiana, 14 per cent
in Georgia, and 23 per cent in Tennessee and Florida. In the
July issue of this Review it was pointed out that the acreage
in cultivation to cotton in these six states on July 1 was
smaller by 5 pet cent than it was a year earlier and that the
reduction in acreage was due principally to three factors —
unfavorable planting weather, the shortage of workers at
planting time, and the prospective shortage of workers at
the time of harvest.
The August report by the Department of Agriculture re­
veals that the condition of cotton on August 1 was better
than it was a year earlier in Alabama, Georgia, Louisiana,
and Mississippi, but lower in Tennessee and Florida. The
estimated acreage yield is lower than it was a year ago in
each of these states except Florida.
A great deal of replanting was necessary in many parts of
the District, and plants are reported to be smaller than usual.
Because there has been more rainy weather than usual boll
weevils are more numerous and prospective damage from
boll weevils is greater. Weather conditions during the re­
mainder of the growing season will have an important effect
on the outcome of the crop.
Other Crops

Prospects for most other Sixth-District crops seem to have
improved during July. The August estimate by the Depart­
ment of Agriculture indicates a reduction from earlier esti­
mates of wheat amounting to 7 per cent. However, the esti­
mates of potatoes increased slightly, those for hay, tobacco,
and sugar cane increased 2 per cent, sweet potatoes 5 per cent,
and corn 6 per cent. Compared with 1944 crops, there is ex­
pected to be 3 per cent less corn, 11 per cent less wheat, and
1 per cent less sweet potatoes. The August estimates indicate
10 per cent more oats, 33 per cent more hay, 1 per cent more
tobacco and potatoes, 5 per cent more pecans, and 8 per cent*
more peanuts. In Louisiana the rice crop is estimated to be
up 6 per cent from that of last year, and the crop of sugar
cane for sugar 11 per cent. Florida has apparently produced
27 ner cent more sugar cane than it did in 1944.
The decrease, compared with last year, in the District’s
corn crop is due to reductions in Alabama, Tennessee, and
Florida that more than offset increases in Georgia, Louisiana,
and Mississippi. Small increases in wheat are indicated in
Alabama and Mississippi, but there are decreases in the
larger wheat-producing states of Tennessee and Georgia.
Oats, tame hay, and barley increased in all District states.
Sweet potatoes increased in Louisiana and Mississippi but
decreased in the other four states, while white potatoes de­
creased in Louisiana and Mississippi and increased in the
other four states. Crops of pecans will be considerably
smaller this year in Florida and Louisiana but larger in Ala­
bama, Georgia, and Mississippi. Reductions in peanut pro­
duction in Alabama, Louisiana, and Tennessee were in­
sufficient to outweigh in the Six-State total the increases in
Florida, Georgia, and Mississippi.

M

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o f th e F e d e ra l R e s e rv e B a n k o f A t la n ta f o r A u g u s t 1945

Cash Farm Income
Sixth-District farmers received a little more than 110 million
dollars for their crops, livestock, and livestock products
marketed in May, the latest month for which figures are
available. This amount represents a drop of 19 per cent
from April. Receipts from livestock and livestock products
were up 9 per cent, but cash received from crop marketings
was off 31 per cent. The largest decrease was in Florida and
reflects the reduction in shipments of the 1944-45 citrus
crop. Compared with May last year, total receipts were 3 per
cent larger in May this year, and for the first five months of
1945 the gain over that -part of 1944 was 13 per cent. For
the nation, the increase for the January-May period over a
year ago was only one fifth of one per cent. In this District
the largest increase, 30 per cent, was shown for Mississippi.
Florida had a gain of 19 per cent, Alabama 15 per cent,
Georgia 10 per cent, and Louisiana 5 per cent. There was a
decrease of about 1 per cent reported for Tennessee.
Industry
Although weather conditions have, on the whole, been
favorable, lumber mills continue to operate under the serious
handicaps of a labor shortage and the lack of machinery and
equipment replacements. It seems probable that a vast
amount of boxing and crating will be needed in connection
with the return of the armed forces from the Pacific area.
Mill operators are hoping, however, that more labor will
become available as workers are released from war plants
and as men are discharged from the Army and the Navy.
In the first two weeks of August steel-mill activity in Ala­
bama was at a rate of 94 per cent of capacity, approximately
the same rate as the July average and that for August last
year.
The rate of activity at Sixth District textile mills declined
further in July. Daily average consumption of cotton by
mills in Alabama, Georgia, and Tennessee has declined each
month since January. In July these mills used an average of
9,669 bales of cotton for each of the 25 working days of the
month. This was a drop of 9 per cent from the rate in June
and was 18 per cent below the average for last January.
July marks the end of the cotton season, and mill con­
sumption almost always declines in that month except in
unusual circumstances. The July average was 7 per cent
lower than that for July 1944, and it was, in fact, lower than

the rate for any month since September 1940. In the 12
months that ended with July mills in this District used a
total of 3,397,173 bales of cotton. This represents a decline
of only slightly more than 1 per cent less than the total for
the 1943-44 season but 12 per cent less than that for the year
ended July 1943 and 10 per cent less than that in the 1941-42
season.
Coal production in Tennessee and Alabama was slightly
less in July than it was in June. Allowing for the July 4
holiday, however, July was shorter by one working day, and
the daily rate of output was actually the same in July as
it was in June. It was also the same as it was in July of
last year.
Financial Developments
Continuing its rise, net circulation of this bank’s Federal
Reserve notes amounted on August 22 to 81,411,650,000. This
represents an increase since January 1 of 135 million dollars,
and an advance in the last 12 months of 294 million dollars.
The rise during the month of July amounted to 28 million
dollars, the largest for any month since last November. In
June and July, however, the increase has been almost wholly
in notes of the 5-, 10-, and 20-dollar denominations. In June
circulation of notes of the 50-dollar and larger denomina­
tions actually declined nine million dollars, and in July it
increased only one million.
At weekly reporting member banks in selected cities of
the District investments in United States securities on August
22 amounted to 1,511 million dollars, the largest on record.
Loans have declined somewhat in recent weeks.
Deposits of the weekly reporting banks continued to gain
in volume. The gain has been especially noticeable in time
deposits, which as of August 22 of this year were 33 per cent
above those of the corresponding date last year.
Wholesale Trade
Wholesale distribution of merchandise by Sixth District
firms declined 4 per cent from June to July and was up 1
per cent from July 1944. The only lines reporting increases
over June were clothing and furnishings, drugs and sundries,
and general hardware. Compared with July last year a num­
ber of lines reported increases, but sales of dry goods, con­
fectionery, groceries, and paper and paper products were
smaller. Inventories were 4 per cent smaller at the end of
July than a month earlier and were down 13 per cent from
a year ago.

INDUSTRIAL PRODUCTION

DEPARTMENT STORE SALES AND STOCKS

MEMBER BANK RESERVES AND RELATED ITEMS

Federal Reserve index. Monthly figures,
latest shown is for July.

Federal Reserve indexes. Monthly figures,
latest shown a re : sales, July; stocks, June.

Monthly figures, latest shown are for
August 15.




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o f th e F e d e ra l R e s e rv e B a n k o f A t la n ta f o r A u g u s t 1945

N a tio n a l B u s in e s s

activity declined further in July and the early
part of August and was sharply curtailed in the latter part
Iofndustrial
the month as munitions cutbacks were greatly accelerated.
Retail trade was maintained in July and early August at a
high level for this season of the year.
Industrial Production
Industrial production in July, the last full month of highlevel production for war, was 212 per cent of the 1935-39
average, according to the Board’s seasonally adjusted index,
as compared with 220 in June. Following the surrender of
Japan most munitions contracts were canceled, and as a re­
sult it is expected that munitions output and industrial pro­
duction will show much larger declines in August.
Production of aircraft declined about 20 per cent in July
and operations at shipyards and in other munitions industries
were reduced considerably from the June rate. Steel produc­
tion in July and the early part of August was about 5 per
cent below the June level. In the week following Japan’s sur­
render activity at steel mills decreased sharply to a rate of
70 per cent of capacity. Production of nonferrous metals con­
tinued to decline in July, while output of lumber and stone,
clay, and glass products was maintained.
Production of most nondurable goods declined somewhat
in July, but, as a group, output of these products was slightly
above a year ago. Cotton consumption was 14 per cent be­
low the preceding month and was 11 per cent below last
July. Activity in the meat-packing, canning, and baking in­
dustries, after allowance for seasonal changes, was down
somewhat from June. Production of alcoholic beverages rose
sharply as distilleries were released from industrial alcohol
production. Activity in chemical, rubber, and other non­
durable goods industries declined slightly.
Coal production declined about 5 per cent in July and the
first part of August from the June rate, while output of crude
petroleum continued to increase and was in record volume.
Contracts awarded for private construction continued to
rise sharply in July and were more than three times the low
level prevailing last summer, according to F. W. Dodge Cor­
poration data. Contracts for privately owned nonresidential
building showed the largest increase. On August 21, all re­
strictions over the construction of industrial plant were
removed.
Distribution
Department store sales declined much less than is usual from
June to July, and the Board’s seasonally adjusted index rose
from 201 to 218 per cent of the 1935-39 average. Sales in
July were 15 per cent larger than in the corresponding
period last year. During the first two weeks of August, sales
were about 20 per cent larger than a year ago.
Carloadings of most classes of railroad freight declined
somewhat in July and the early part of August and were be­
low the volume shipped during the same period last year.
Shipments of I.c.l. merchandise, however, were at about the
same rate as prevailed during the same period last year.
Commodity Prices
Wholesale commodity prices generally showed little change
from the early part of July to the early part of August. Fol­



S itu a tio n

lowing the announcement of peace negotiations prides of cot­
ton and grains declined somewhat — especially contracts for
delivery next year — while prices of most other basic com­
modities continued unchanged.
Retail prices advanced somewhat further in June. Food
prices rose 2 per cent and retail prices of clothing, housefurnishings, and miscellaneous items continued to show
slight advances.
Agriculture
Crop prospects improved during July and,'according to indi­
cations on August 1, total output this year will be only
slightly smaller than the record volumes of 1942 and 1944.
Of the major crops only production of cotton, corn, and
apples is expected to be less than a year ago. Marketings
this summer of most livestock products except hogs have
been about as large as, or larger than, the high levels of
recent summers.
Bank Credit
Loans and investments at reporting banks in 101 leading
cities declined by 1.2 billion dollars between the close of the
Seventh War Loan and mid-August. Reflecting repayments
on advances made during the drive, loans for purchasing or
carrying Government securities declined by a billion dollars.
Loans both to brokers and dealers and to other bank cus­
tomers decreased by approximately 500 million dollars each,
compared to drive and immediate predrive increases of 1.1
billion and 1.8 billion dollars respectively. While bank hold­
ings of Treasury bonds continued their steady week-to-week
increase, holdings of bills and certificates, which had in­
creased during the drive, began to decline again in late July
and August. On balance, the total portfolio of Government
securities declined by 350 million dollars. Holdings of other
securities showed a small increase over the six-week period.
Following the close of the Seventh Drive, deposits of busi­
nesses and individuals began to increase again as Treasury
expenditures transferred funds from war loan to private
accounts. The average level of required reserves accord­
ingly rose by about 500 million dollars between the driveend low point and mid-August. Reserve balances increased
by about 300 million dollars and excess reserves dropped by
about 200 million to around 1.2 billion outstanding; this
was still somewhat above the generally prevailing inter­
drive level of slightly less than a billion dollars.
Member bank borrowing from the Federal Reserve Banks,
which had declined to a minimum by the close of the Seventh
Drive, increased by 275 million dollars in the subsequent
six-week period ended August 15. Reserve funds were also
supplied to member banks through an increase of 125 million
dollars in Government security holdings at the Reserve Banks,
as well as by temporary fluctuations in other Federal Reserve
Bank credit and in Treasury deposits at the Reserve Banks.
Only partially offsetting increases in such funds were a cur­
rency outflow of 520 million dollars and a small decline in
gold stock. The currency outflow during July, 360 million
dollars, was the largest in the past few months; early August
increases were also substantial.
T h e

B o a rd

o f

G o v er n o r s.