Full text of Economic Review (Federal Reserve Bank of Atlanta) : August 31, 1946, Volume 31, Number 8

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Monthly

Review

FED ER A L R ESER V E BA N K OF ATLANTA
Atlanta, Georgia, August 31, 1946

Volume X X X I

D o
T h e fo llo w in g

q u o ta tio n s f r o m

Y o u

R e m e m b e r

p a s t is s u e s o f th e

M o n th ly

Number 8

W h e n ?

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f

A tla n ta c o v e r th e p e r io d s o f r e c e s s io n a n d r e c o v e r y a f te r W o r ld

(December 1918)
“Business men think that the era of high prices is here to stay
for some years because of the fact there is hardly a surplus
in any particular line. . . . The leaders of agricultural, indus­
trial, and commercial enterprises are not inclined to under­
estimate the Nation’s strength and power to recuperate; and
a gradual readjustment of business and the proposed plan of
demobilization of the Army give hope for a bright future.
. . . The opinion is general that the Government restrictions
and regulations should be lifted gradually. . . .
“With the prevailing uncertainty and high price of labor
and raw materials, manufacturers are inclined to play a wait­
ing game until the situation clarifies, and are not stocking up
with manufactured products. . . . The brick and building in­
dustry have been seriously handicapped during the war. Brick
stocks are now low, and, with little or no stock being accum­
ulated before spring, when the season opens, this indicates
higher prices, and the tendency to hold stocks has tightened.
The lumber millmen are complaining that shortage and in­
sufficient labor, poor car facilities, and Government restric­
tions are reducing the output.”

High Prices Here to Stay

(January 1919)
“While war wages were extremely high, compared with nor­
mal times, the cost of living increased in a gradual propor­
tion, and, with the general disposition of the American peo­
ple to spend money and enjoy heretofore luxuries, very little,
if any, real saving or spirit of economy has grown out of the
war conditions. There appears to be a disposition on the part
of the wage earner who purchased Liberty Bonds now to dis­
pose of the same, feeling that he has fulfilled his patriotic
duty.”
Holding Cotton for Thirty-five Cents (March and April 1919)
“The past few weeks have seen organized in the South a most
determined, and probably the most influential and powerful,
movement in the interest of the cotton grower. Meetings have
been held in the interest of this movement, attended by Gov­
ernors of the cotton producing States, large cotton farmers,
bankers and business men, and it is planned to extend the or­
ganization into every county of each cotton State, with a view
to having farmers hold off the market every possible bale of
last year’s cotton, until the price reaches 35 cents a pound,
and to reduce the acreage planted to cotton the coming sea­
son at least one-third.
“The question of farm labor still is a pressing problem;
Cost of Living Increases




W ar L

from all sections comes the report of a shortage. Discharged
soldiers do not appear to desire work on the farm, as only a
small percentage of those who left the farm to enter military
service have returned to their agricultural pursuits. . . .”
(May 25, 1919)
“Reports from practically all sections of the Sixth Federal
Reserve District indicate that business in almost all lines has
continued active during the past month. The retail trade is
still on the increase, and wholesale merchants also report an
increased volume of trade. This applies to all lines, but espe­
cially is it true with regard to the dry-goods business, and to
those lines which during the period of the war were more or
less restricted. A large increase has been noticeable in the
number of sales by automobile houses and jewelry stores.”
Foreign Trade Grows
(June 1919)
“Reports from New Orleans indicate a noticeable increase in
May in trade to Central and South American ports, as well as
to other foreign points.. . . Conditions existing at this time in
trade with Central and South America, Cuba and Panama are
reported to be better than those prevailing before the war.. . . ”
Retail and Wholesale Trade Increases

Real Estate Trading Active
(October 1919)
“The volume of building, both in residences and apartment
houses, continues in all of the cities of the district, and no
abatement is indicated in the near future, notwithstanding the
high prices for lumber and labor. A large number of houses
are constantly changing hands and the trade in farm lands
has also been active.”

(November 1919)
“There has never been a time when the economic situation in
the United States requires so much thought and consideration
by very influential citizen.. . . The restlessness in the public
mind is principally due to the cost of living, and while the
wage for individual labor has been climbing upward, the de­
mands are for still further increases which are made as a re­
sult of the high cost of living.”
Restlessness Over Cost of Living Growing

(November 1919)
“The cotton crop is the shortest on record in this territory.
The damage caused by the boll weevil has been very great,
and the infested area is still spreading.”
Holiday Buying Highest on Record
(December 1919)
“In only a few lines has there been any slackening of trade,
and the volume of holiday trade generally during the month
Cotton Crop Shortest on Record

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appears to be greater than has ever been experienced. Christ­
mas buying has been very heavy, and while the amount of
goods sold is equal to, or larger, than for any previous holi­
day season, it is undoubtedly true that in dollars and cents
the business will very greatly exceed that done for last year
or any previous year.”

“Reports from principal lumber producing sections show
that the curtailment of production is becoming more general.
Instances were recorded where mills have withdrawn from
the market entirely until orders previously accepted can be
shipped.”

(March 1920)
“A marked increase in the value of farm lands throughout
the district is indicated in the reports by Field Agents of the
Department of Agriculture. Georgia land values are reported
to have increased from 20% to 25% during 1919, and are
much more than double those of five years ago. The increase
is remarkable in view of the fact that the boll weevil has al­
most completely infested the state. A rise in value is noted
in all classes of farm property, but is especially marked in
that having good improvements.”
Consumers Organize Resistance
(April 1920)
‘Overall Clubs’ have been organized in various cities to com­
bat the high and increasing price of clothing, and while the
idea back of the movement is commendable, it is not prob­
able there will be any appreciable decrease in prices of cloth­
ing or of food until the public generally become determined
to wear the clothes they already have, and to buy only what
is necessary for the table____In some quarters there is a
tendency to look for a lowering of prices in the coming
months, but there is no evidence up to this time of any de­
crease in those lines which enter into daily consumption,
either in wearing apparel or food.”

(Dec. & Jan. 1921)
“The final estimate by the United States Department of Agri­
culture, of the 1920 cotton crop shows the production to be
larger than that of any year since 1914, when the country’s
record crop was grown. . . . Practically all of the crop has
been harvested, but reports show that little is being sold, the
farmers in a large number of instances declining to sell at the
low prices prevailing, which have been around 14.25 to 15.25
during the month. A considerable amount is being held on
the farms, while the warehouses are said to be full of cotton.
“While .. . the total production for the United States {was}
1,566,237 bales more than the crop of 1919,... it will be
noted that the States comprising the Sixth Federal Reserve
District produced 304,298 bales less in 1920 than in 1919,
and 1,258,707 bales less than the five year average for those
States.”

Farm-Land Values Continue to Increase

(May 1920)
“Credit has expanded to the limit, and the time has come
when there must be a reversal and every effort made toward
curtailment in all lines termed during the war as non-essen­
tial. . . . Much unrest still prevails over the high prices.
“Figures recently compiled show instances where manufac­
turers’ net profits have increased as much as five times the
increase of their sales. This condition has been reflected to
the middleman, the retailer and even to labor. There has ap­
parently been a disposition on the part of every one to make
increased profits on a relatively smaller increase in sales or
production.”
Deflation Setting In
(June 1920)
“There is on the whole no uneasiness concerning the future
of business and industry. It is becoming more and more ap­
parent, however, that the process of deflation has begun. . ..
While the volume of retail trade is large, there has been quite
a subsiding of the rush caused by the announcement of “sales”
by large stores at price reductions of from ten to twenty and
thirty per cent. Prices are so high that even with these reduc­
tions they are far above normal, and there is a firm determi­
nation on the part of many to wait until further declines take
place, and until prices reach a permanently lower level.”
Some Building Halted
(June and August 1920)
“During the past two or three months. . . . there has been
a number of instances reported where buildings have been
halted in course of construction because of the great and in­
creasing expense. Apartment houses and residences in nu­
merous cases had been begun, excavations made and founda­
tions laid, and in some instances the basements practically
finished, when it was found the expense was to be from
twenty-five to fifty per cent, or even more, in excess of pre­
vious estimates.
Credit Expanded to the Limit




Cotton Crop Largest Since 1914; Price Low

Sales Decline, Collections Slow, Factories Closing

(January 1921)
“While the volume of business done during the holiday sea­
son was large . . . measured in terms of dollars, a decrease is
shown in retail sales.. . . All reporting retail stores show
stocks lower on December 31 than on November 3 0 .... This
figure emphasizes the fact that retailers have been buying in
a very limited way and only to meet immediate needs.
“Decreases are shown in net average sales during Decem­
ber reported by wholesale firms,. .. both as compared to the
sales during the previous month (November), and to sales
during December 1919. December collections are almost uni­
versally reported slow and in some cases very unsatisfactory.
“The closing down of various manufactories, mines and
mills has added considerably to the number of workers now
unemployed.. . . A large number of the blast furnaces, and
some mines have closed down entirely and others are operat­
ing only two to four days a week. Fertilizer factories and
cotton and peanut oil mills are also practically closed down
or operating on greatly curtailed bases. The greatest number
of unemployed are unskilled.
“Imports at New Orleans for the month of November were
about 60% less than for November 1919, which was the rec­
ord month, and about $1,600,000 less than for November
1918. . . . Demand deposits are reported declining in many
places and stationary at other points. . . .”
Sixty Per Cent of Cotton Unsold; Loans Being Renewed

(April 1921)
“Approximately 60% of the cotton produced in the Sixth
Federal District is still held, and a large proportion of it is
pledged as collateral for loans on a basis considerably above
the present low market price of staple. .. . Very few farmers
have been able to liquidate all of the debts contracted in con­
nection with last year’s crops. (March 1921) Most of the re­
ports state that 90% of agricultural paper is being renewed,
and 60 to 75 per cent of other classes of loans.”
Cotton Price Advances; Business Improves (Sept. & Oct.

1921)
“The outstanding feature of the business situation . . . is the

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improvement in the South’s economic position resulting for
the most part from the advance of approximately forty dol­
lars a bale, from $60 to $100, in the price of cotton, the prin­
cipal agricultural product of the District.
“The business public does not expect any sudden revival
of prosperity, nor a revival of the excessive profits which
were made in 1919 and the early part of 1920, but those en­
terprises which are willing to conduct their business as eco­
nomically as possible, and who are satisfied with fair profits,
do most toward effecting a return to normalcy.
“All reporting wholesale lines of trade show sales during
September greater than in August, and one line. . . shows
September sales greater than those for September 1920. Tex­
tile manufacturing in this District is on a full time basis.. . .
Additional furnaces are being put in operation in the iron and
steel district.
“The shortage of houses is being relieved to some extent by
active building programs.. . . The labor situation has shown
some improvement.”
Some Adverse Factors Continue ... (Dec. 1921 and Jan. 1922)
Jan. 1922)
“It cannot be said that adverse factors in the business situa­
tion have disappeared. The small production of cotton this
year, it is true, has caused a substantial increase in the price
of this staple, and this increase has resulted in much benefit
not only to producers, but to business generally.. . . In some
sections, however,. . . the almost complete failure of the cot­
ton crop has brought a condition contrasted with that of a
year ago, in that last year farmers had a fair crop on which
they could hardly realize the cost of production, while this
year the crop, while produced at a greatly reduced cost, is
the smallest in many years.
“The increased price has had a psychological effect for
good in the cities and the larger towns, but producers in many
sections have not enough cotton to reap much benefit from
the increased returns. More foodstuffs have been produced
this year, probably, than in many years. But for this fact,
however, many farmers would be obliged to ask for extension
for another year of much more of the indebtedness incurred
in raising the crops of this year and last, than will now be
necessary.. . . There are still a great many farmers laboring
under the burden of a large part of their 1920 debts, as well
as their 1921 obligations.
“According to statistics compiled and published by R. G.
Dun & Co., the number of commercial failures, both in the
Sixth District and in the United States, was larger in Novem­
ber than in any previous month during the current year, and
also larger than the number of failures in November during
recent years. The total of liabilities in the Sixth District were
$3,711,252, being smaller, by 29.6 per cent than liabilities
for October, but larger by 94.1 per cent than those for No­
vember last year.. . . ”

(April 1921)
“Unmistakeable evidences of continued improvement in bus­
iness conditions in the Sixth Federal Reserve District are con­
tained in a large majority of the reports received from banks
and business firms in various lines of trade throughout the
District. Since the middle of March there have been more ex­
pressions of optimism than at any time in the past year and
a half, and the mental attitude of business men have under­
gone a change for the better which in itself is indicative of
progress.”
Continued Improvement




In d u s tr ia l In fo rm a tio n

7 9

S e rv ic e

A l l over the South new industries are springing up and the
the old established industries are expanding. Many of the
firms, both new and old, are encountering troublesome prob­
lems in getting needed materials and supplies, overcoming lo­
cal disadvantages, and controlling the quality of their pro­
ducts. Frequently, especially in the case of the small busi­
nessman or manufacturer, the firm lacks the technical re­
sources, the time, or the money necessary to evolve its own so­
lutions. Often the individual businessman does not know
where to seek the answers and is too busy with every-day
problems to spend much time making inquiries. The First Na­
tional Bank of Atlanta now offers such firms a research serv­
ice through which they can obtain the answers to many of their
questions and help in answering others. The aim of this serv­
ice is to bring the findings of hundreds of research agencies
to bear on the problems of the individual business.
The idea originated with B. H. White, vice president of the
Liberty Bank of Buffalo, New York. During the course of his
relations with bank customers, he encountered numerous re­
quests for information to which no answers were readily
available. Tours through commercial, industrial, and insti­
tutional research laboratories, as well as personal contacts
with research workers in various fields, convinced Mr. White
that the solution of such problems was more often than not
already available but that there should be a medium for
bringing the solution to the attention of the man with the
problem. For that reason he organized the Research Advisory
Service, in 1937, to serve as a clearing house between the
sources of technical information and those persons and busi­
ness firms in need of it. From a modest beginning, its scope
has been widened until the service now has available the fa­
cilities and findings of some 1,200 research laboratories, in­
cluding those in industrial, commercial, educational, and gov­
ernmental organizations. The name of the organization was
changed to Industrial Information Service in 1946, a name
that is more in keeping with the services rendered.
Because of the strategic place the commercial banks occupy
in industrial society, a plan was worked out to utilize the fa­
cilities of certain banks in extending the service. The First
National Bank of Atlanta, realizing the need for such a serv­
ice in this District, joined the plan in August 1944. Through
a section of its New Business Department, it now makes the
service available to businesses in Alabama, Florida, Georgia,
and East Tennessee.
There are several ways in which prospective users may util­
ize the service. The primary purpose is to furnish answers to
technical problems for business concerns, including those
firms that have research laboratories of their own but have
particular problems that may be outside the scope of their
facilities. In this period of many critical shortages, a particu­
larly valuable part of the service is the help it can give in lo­
cating suitable substitutes for scarce materials, in discovering
needed machines and parts, and in finding markets for sur­
plus materials, by-products, and salvageable waste. To facili­
tate this part of the work and to stimulate thought about new
products and processes a monthly bulletin is widely dis­
tributed within the area. Additional, but less tangible, benefits
accruing from the use of this service are the encouragement
to the development of new business enterprises, the stimula­
tion of new processes and products, and the counteraction of

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any tendency for industry to move outside the area owing to
local processing or material difficulties.
When the First National Bank of Atlanta first decided to
provide this service for the area, it communicated with about
300 persons and business firms, primarily manufacturers. As
interest grew and the value of the service became more ap­
parent this number grew to 500. Recently the addition of the
names of many professional men, other persons interested in
research, institutions, and other establishments brought it to
more than 1,200. The recipients are a cross section of business
and research interests in the four-state area.
Every month the bank sends out to each of the names on
this list a copy of the monthly bulletin, entitled Results from
Research and published by the Industrial Information Serv­
ice. Usually each issue consists of four parts. First is a list
of some 25 or 30 products, processes, and improvements de­
signed for the office, shop, home, or plant together with a
brief description of each. This section is followed by a short
summary of reports prepared previously in answer to specific
requests for help on special problems that have been encoun­
tered by users of the service. Each of these reports bears a
code number that may be copied on a return card enclosed
in each issue for mailing to the bank if the full report is
desired. The report is received in an average of ten days
or less. Products listed over the past two years included
among other things heating units and lamps; a number of
small tools, holders, and fixtures; precision instruments and
safety appliances; electronic devices for various purposes;
small motors and pumps; insect and weed killers; lubricants
and abrasives; and chemicals for hardening, coating, clean­
ing, disinfecting, and cementing various surfaces.
Each issue carries also a summary of available reprints
of magazine articles, Government bulletins, and business
brochures on topics of timely interest. This part is usually
broader in scope than the first two sections. Random titles
from those made available in the past two years are “Lano­
lin”, “Post-War Employment and Liquidation of War Pro­
duction”, “Are the United States United”, “Post-War Textile
Horizons”, “New Magic in Wood”, “Industrial Electronics”.
Usually the final section is made up of a list of new patents
for sale or lease and a list of wanted materials and markets
or other information. In each case only a request to the bank
giving the code number or the title of the listing is necessary
to bring the inquirer all available infprmation on the item.
In addition to these previously prepared reports the re­
quests for aid in solving original problems of the particular
business that the prepared reports do not cover are welcomed
by the bank. All the bank requires is a brief written sum­
mary of the problem. Upon receipt of the request the bank
forwards it to the Research Information Service. The length
of time required to prepare reports in answer to these re­
quests varies, of course, with the nature of the problem and
the availability of the needed information or product. A pre­
liminary report, however, is usually completed in about two
weeks’ time. Often supplemental reports giving further infor­
mation are sent later as more facts or sources are discovered.
Usually one to three such requests are received each month
as compared to about 60 for the regularly prepared reports
or materials listed in the bulletin. The requests cover a wide
range of problems. A bank housed in a concrete and steel
building sought advice on means of preventing the walls from
sweating and the floor covering from rotting due to moisture.
A railroad wanted to find a preservative for its crossties.
A manufacturer wanted to find makers of fiber or metal pre­



cision gears. A shoe company wanted to know how to prevent
lime burns among its employees in the tannery beam house.
A laundry sought suggestions on how to prevent clothes from
catching on fire while in the tumblers of its cleaning plant.
An oil mill wanted information about the use of peanut hulls
in the manufacture of plastics. A large paper company wished
to locate a substitute available in ton lots for the wheat flour
it was using in manufacturing kraft grocery bags. A metal
manufacturer wanted information on making and using mold
castings and an estimate of the comparative costs of using two
different kinds of castings.
To the First National Bank the cost of providing this serv­
ice is partly compensated for by the value the service has as
a contribution to customer relations. It is also an investment
in the industrial development of the Deep South, secured by a
far sighted appraisal of the area’s economic potentialities.
The bank does not guarantee the sources or solutions recom­
mended; it simply acts as a clearing house for technical in­
formation in providing this service. The value of the service
to those receiving it is attested by the increasing number of
requests received each month and their wide geographical
distribution.
An accurate appraisal of the value of this information
service to its users is difficult. The fact that the number of re­
sponses to each month’s listings is increasing plus the fact
that many of the same businessmen send in requests month
after month for further information about the various sub­
jects listed are evidence of its usefulness. Apparently the
larger corporations are the ones utilizing this part of the
service, possibly because they have greater appreciation of
the value of research. In time more of the smaller business
units that are unable to maintain extensive research facilities
of their own will probably come to realize that they too may
profit through a use of this free service.
C. H. D onovan
INSTALMENT CASH LOANS
Number
Percent Change
of
June 1946 to July 1946
Lender
Lenders
Reporting Volume Outstanding
Federal credit unions.................
38
— 22
+ 3
State credit unions.....................
19
— 40
4- 2
Industrial-banking companies......
9
— 6
+ 4
Industrial-loan companies............
18
+ 13
+ 1
Small-loan, companies.......... ......
52
+ 15
+ 2
Commercial banks..................... ! 34
+ 11
+ 7

R e c o n n a is s a n c e

Sixth District Statistics for July 1946compared with July 1945
PERCENT DECREASE ^ PERCENT INCREASE
Department
Department
Furnitur^|jj^ji|^|lj[[!|]]l!!!S![S!il!j!i!!iSill|ISIii!S|!iii^llii]
Cotton Co|||j|tinption
Member B|(j^|j|||)iHjj)^l|j;j^li!l|||||!|||||{|!|[|||j|j||J|j)j|||
Member Ba||: Investments
Demand
40

SO

20

10

0

10

20

30

40

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A

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L u m b e r, th e

S ix th

S o u th 's

D is tric t

S e c o n d

trends toward a more industrialized South have had
the effect of obscuring somewhat the basic importance of
lumber production. During the war interest was concentrated
in munitions production, aircraft manufacture, and ship­
building. Since its ending industrial planning for the South
has been focused on the light-manufacturing industries, such
as garment and food processing. The severe shortage of
building materials for the national housing program, how­
ever, has accentuated the fact that lumber production is one
of the District’s major industries.
In reality it ranks in many Southern states second only to
the processing of cotton and the manufacturing of textiles. In
those six states that lie wholly or partly within the Sixth
Federal Reserve District the Forest Service in 1942 counted
10,813 sawmills. The total value of lumber products manu­
factured in 1939 by 2,169 of these mills and basic-processing
plants amounted to $151,022,502. This figure included the
products of sawmills, veneer mills, and cooperage-stock
plants, and also of logging camps and planing mills, but not
the output of such establishments as furniture factories and
other plants producing finished wooden products, paper, or
other pulp products.
The lumber industry is now entering the postwar transitionary period, with no certainty of what its future will be.
Despite some downward trends, however, present indications
are that the production of lumber is still an important part
of the District economy. Estimates made in the first half of
1946 showed more than 150,000 workers cutting and proces­
sing saw timber in the region. As an industrial employer in
the District lumber ranks second, with 16 percent of total
manufacturing employment; textile production is first, with
20 percent, and food and food products is third, with 13
percent.
Though the lumber industry composes the largest manufac­
turing activity in one of the states, its part in the economic
activity of some of the others is a relatively minor one. In
Mississippi, according to estimates, 35 percent of all manu­
facturing workers are employed in lumber and basic-timberproducts industries. Twenty-two percent of manufacturing
employment in Alabama is in the industry, which in that state
ranks second only to cotton and textile manufacturing. In
Louisiana 19 percent is in lumber, and in Florida 14 percent.
Employment in the industry constituted 13 percent of total
manufacturing in Georgia and 6 percent in Tennessee.
Because of the lumber industry’s importance to the Sixth
Federal Reserve District, an index of production has been
constructed to measure the activity in the Six States. Generally
an index is of more value in economic analysis than is a
computation of percentage changes from one period to an­
other. It allows a comparison of any individual month or
year with the 1935-39 average, or with any other period. An
index, moreover, may be plotted to show a trend, or a change
in trend, of the series being measured, and it may be adjusted
for expected seasonal variations caused by the weather, buy­
ers’ habits, or changes in the labor force.
Data furnished by the Forest Service, some of them pre­
viously unpublished, have been used for the construction of

R

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In d u s try

the lumber index. In some cases these data agree with figures
compiled by the Bureau of the Census, but in others they
differ because adjustments have been made in recent years to
take into account the underreporting of small sawmills. Cur­
rent figures are derived from the monthly estimates made by
the regional forest experiment stations. According to the
Forest Service, its sampling technique has been so developed
that the chances of the estimated totals’, by regions, being
within 5 percent of the true figures are two to one. In general
these regional estimates are likely to be slightly more accurate
than state estimates.
The daily average lumber production in each state is used
to compute the index. This method prevents monthly varia­
tions in the number of working days from affecting it.
The period 1935-39 has been selected as the base period, in
terms of which all other periods are compared. Therefore,
the daily average production for that period is said to equal
100, and the production in other periods is stated in terms of
a percentage of the base. Back figures for each state and for
the Six-State total have been compiled in the forms of an
annual index from 1919 to date and a monthly index from
October 1942 to the present. These figures, which are avail­
able on request, show the past trends and present condition
of the lumber industry in the District states.
The index of lumber production in Sixth District states
furnishes a useful indicator for one of the main producing
regions of the country. In the year 1945 the Sixth District
states produced 22 percent of the nation’s total saw timber.
Alabama and Georgia together accounted for half of this
production, with 6 and 5 percent of the national total. Missis­
sippi followed with 4 percent, while Louisiana accounted for
3 percent and Florida and Tennessee for 2 percent each.
In general the activity of an industry may be measured by
its output. In other words, the short-run changes in employ­
ment, pay rolls, and sales of a specific industry are reflected
in its monthly production figures. The production index for
the lumber industry not only will furnish a clue to conditions
in the industry itself, but will give some indication, because
of its importance in the District economy, of changes in all
District business activity and, hence, District employment.
In periods of normal economic activity lumber-production
and manufacturing-employment statistics in the Six States
tend to follow similar courses. During the war, however,
when there occurred a shift of the district labor force out of
the basic industries into war manufacturing, lumber-produc­
tion statistics were a less reliable indicator of the degree of
employment. As the industries of the South return to the pre­
war pattern, the course of employment figures may again
show a close similarity to activity in the lumber industry
measured by the index of production.
Like many other business activities, the production of lum­
ber varies from month to month according to the influence of
weather, the habits of producers, and variations in the supply
of labor. These expected monthly changes in the pattern of
production may be determined mathematically. An index of
production may therefore be adjusted so as to minimize
seasonal variations. In this way it is possible to determine

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CHANGES IN WEATHER AND
LABOR SUPPLY
INFLUENCE MONTH-TO-MONTH VARIATIONS
IN DISTRICT
LUMBER PRODUCTION
SEASONAL ADJUSTMENT FACTORS 1942-46
(MONTHLY AVERAGE = 100)

120
100

1
six--STA1'E TOTAL

80
60
J

F

J

F

M

A

M

J

J

A

S

O

N

D

A

S

O

N

D

120

100
80
60

120

100
80
60

120

100
80
60

120

100
80
60

M

A

M

J

J

140

120

100
80

COMPARISON OF 1945 LUMBER PRODUCTION AND 1946-47 GOALS
(Production in Thousands of Board Feet)
Percent Increased Needed
Production
Goals
to Meet Goals
Place
1945
1946
1947
1946 1947
,16
1,593
1,850 2,100
32
Alabama...............
33
431
575
650
51
Florida.................
1,950
22
38
1,409
1,725
Georgia...............
1,095 1,220
37
52
801
Louisiana..............
1,630 ,1,830
55
38
1,180
Mississippi.............
750
14
2
659
675
Tennessee.............
40
6,074
7,550 8,500
24
Sixth District States..
28
32,000 36,000
14
27,951
United States.........



whether lumber production is actually increasing or decreas­
ing, apart from the relative changes from month to month
that are caused by recurring changes in weather, in producers’
habits, or in the labor supply. The December index of lumber
production is always expected to be lower than the November
index, for example, since inclement winter weather usually
causes a curtailment of logging operations. In addition De­
cember and January lumber production is low because of a
customary long vacation period, during which the mills per­
form maintenance work and take inventories. The December
index, however, when corrected for these seasonal variations
may actually show an increase over the November index if the
December production did not decline as much as would
normally have been expected.
Seasonal-adjustment factors have been computed for each
state as well as for the Six States as a whole. These factors
reveal certain characteristics of the lumber industry in the
South. They show, for example, that in the states of Alabama,
Georgia, and Mississippi particularly, production may be ex­
pected to decline in the late spring and again in the fall.
These declines coincide with the increases in requirements for
labor in the cotton fields during the planting and chopping
seasons in the spring and the picking season in the fall. Varia­
tion in labor supply at these times appears to be the control­
ling factor since many workers in this industry are only parttime employees who supplement their agricultural income by
working in the woods and mills during slack farming seasons.
For Tennessee, the index of lumber production shows a great
deal more variation between the winter and summer months,
because the severity of the winters there is a hindrance to
logging operations. In Florida, on the other hand, production
remains at a relatively high level all spring but declines dur­
ing the summer months, when the rainy season sets in.
In this District lumbering is often a part-time farm opera­
tion. The difference between the price of the dominant farm
crop and the price of lumber may determine somewhat the
extent to which farmers and other farm workers find it more
profitable to use equipment, in the form of idle sawmills, for
the cutting of farm-owned timber than to engage in their
normal farming activity. At any time when the return on
lumbering is higher than the return on farming, in other
words, the number of low-cost sawmills will tend to increase.
Prices and profits of the larger operators in the District are
peculiarly sensitive in downward swings of the business cycle
because the number of low-cost competing firms increases.
At these times farmers tend to supplement their reduced in­
come by cutting farm woodlots. The small mill operators,
having an advantage over the larger mills in overhead costs,
may sell lumber for a price below that the larger mills must
ask in order to obtain their required margins of profit. There­
fore there is a relative increase in the number of competing
low-cost operators and a consequent depression of prices.
Even in periods when the prices of farm products are high,
as they are at present, if the demand for lumber is extra­
ordinarily great, many small sawmills may operate on farmowned timber tracts and agricultural labor may be diverted
into the manufacture of lumber. Thus there may be in pros­
perous times also an increase in the number of competing
low-cost producers, and increases in prices may be moderated.
One characteristic common to most durable-goods industries
is that production during booms tends to go beyond the level
of normal consumption. Stocks are thus built up to a point
beyond that required for normal trade. When a break in con-

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SIXTH DISTRICT LUMBER PRODUCTION
(1935-39=100) SEASONALLY ADJUSTED

200

. -IJ i I J I I I I I I i i I II I I I I I II ■

'»9I9

1925

1930

1935

1943

.

1944

■„

>945

200

100

aW-1,1 1

11 UjA11




,■

1946

11, 11— m s — rpr— r a w i m

8 3

struction activity occurs lumber producers, therefore, fre­
quently find the market oversupplied. As a result of this over­
supply, the depression of prices and production is then
greater than it might have been if production had been more
closely related to demand.
During the war, however, the reverse was true. Wartime
control measures, including an allocation of manpower and
equipment, prevented the normal expansion of the lumber in­
dustry in proportion to the expansion of construction activity.
Therefore, stocks were depleted in attempts to satisfy the de­
mand for lumber. This depletion necessitated an increase of
production facilities, not only to meet the current demand
for lumber but increase inventories to the point normally re­
quired by the building trade. Government agencies estimate
that four billion board feet of lumber are needed to bring
stocks up to a normal working level. This figure represents
about one seventh of the 1945 production.
In addition to reflecting seasonal variations and cyclical
movements, the data on lumber show certain long-term di­
rections, or “secular” trends. This secular trend in the Sixth
District has been downward since 1919. In some of the states
it has been more so than in others. Florida and Louisiana
have suffered particularly severe secular declines. In Georgia,
however, lumber production has climbed, and during the war
it reached an all-time peak for the state.
There are a number of reasons for the decline in Florida
and Louisiana. Both these states have past histories of heavy
lumber production. In the course of time a number of large
mills in Louisiana exhausted their immediate timber resources
and, faced by rising costs, began curtailing operations or
transferring their plants to other regions, particularly to the
Pacific Northwest. Lumber production in Florida, on the other
hand, has declined because of a combination of circumstances.
Although forests cover almost 67 percent of the total land
area of that state, an abnormally high percentage of the com­
mercial forest land has been either poor- or non-restocking in
character. In other words, Florida forests in general have had
slow replacement growth after the first growth was cut.
Furthermore, despite a high outlay for fire protection, Florida
annually has large losses of both mature timber and seedlings.
Contrary to the general picture of declining timber opera­
tions in the South as a whole, in Georgia, where operators cut
more lumber at the peak of war production in 1942 than ever
before, the secular trend appears to be rising. The degree of
past utilization of timber resources in Georgia contrasted
with that in the other states of the District may partly ex­
plain this trend.
The degree of such utilization has been largely responsible
for the present relative scarcity or abundance of timber land
in the various states. Seemingly a significant indicator of this
degree of utilization is the type of forest-land ownership.
Logging operations prior to the 1920’s were usually carried
on by permanent sawmills that represented great capital in­
vestments. To insure an adequate source of supply and justify
their original investment many operators purchased large
holdings of timber land. In Florida 80 percent of the forest
land, and in Louisiana 75 percent, is in industrial ownership.
Formerly large operators in general maximized their produc­
tion by intensive cutting, though recently they have taken the
lead in advocating conservation methods. Overcutting by
industrial owners in the past, however, has constituted a
factor in the decline of forest resources in those states.

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On the other hand, in Georgia 56 percent of the forest land
is farm owned and only 41 percent industrially owned. Large
operators were hesitant to build mills in some areas, and, as a
result, only in relatively recent years have these sections of
the state had adequate sawmilling facilities. With the advent
of the small portable mill, however, the cutting of small
farm-owned timber tracts has been more profitable, and the
present increase in Georgia lumber production may be par­
tially accounted for by that development.
In addition to the above factors, the geographical develop­
ment of the lumber industry in the South has been a con­
tributory cause to the differences in the present rates of pro­
duction in the various states. Georgia was the earliest state of
the District to undergo extensive lumber operations. In the
1880’s the industry was centered there, later migrating west­
ward as well as south into Florida. Since Georgia was the
first state in the District to be a base of operations, cutting
was not as intensive as it was in the states that were cut over
later and restocking followed more quickly. Second-growth
timber, moreover, has had a longer time to mature in Georgia.
The South’s forest resources are a permanent part of its
natural wealth, and there is little danger of any real ex­
haustion of its timber. Forests cover more than half of the
land area of the Six States. In addition, the growth of soft­
wood trees is extremely rapid in most of the states. There has
been, however, a depletion of the old-growth trees that furnish
prime-quality lumber, and second-growth tree stands lack the
quality of the old growth stands. In a recent estimate of
timber resources in the South published by the Southern
Forest Experiment Station it was revealed that though timber
of a size suitable for lumber had declined about 14 percent
since the middle of the 1930’s when the initial surveys were
made, the total growing stock of the region had declined only
a negligible amount.
Along with this decline in saw-log growing stock, a shift
of production into less accessible areas has taken place.
Timber is now being cut in swamps and on hillsides that were
formerly considered inaccessible areas. New logging methods
and equipment have been developed so that these areas can be
profitably cut, but these innovations have also increased the
costs of production. The cost increases have partially ac­
counted for the decline in lumber production.
The secular decline in lumber production alone does not
mean that timber resources are diminishing in importance.
Though less lumber may be produced from second-growth
timber, as it is compared with first growth, other uses have
been developed for these stands. In a great many cases the
growth of industries that utilize wood pulp has offset the
decline of forest resources available for saw-timber produc­
tion and the consequent abandonment of sawmill operations
in certain communities. Many plants in recent years have
gone into fields of cellulose extraction, kraft-paper making,
and pulp and pulp-board manufacturing. These industries are
able to use the young second-growth timber that is available
in areas where sawmilling is no longer an important industry.
Thus both in Florida and in Louisiana pulp and paper pro­
duction has increased. At least one sawmill operator in
Florida, foreseeing the end of saw-log production because of
a lack of suitable timber resources in his area, is now mak­
ing plans to convert his operation to pulp processing for
which he will utilize the young pulpwood-sized trees that have
grown up on formerly cut-over land.
The downward secular trend, moreover, should not be in­



terpreted to indicate the eventual extinction of the lumber in­
dustry in the South. Such is not the case. At some time in the
future the downward direction of the trend, it may be ex­
pected, will cease and a period of relatively constant produc­
tion may well set in. If advanced forestry techniques that
would assure a more nearly constant source of supply of
timber resources are applied, the production of lumber may
take on the nature of a timber-crop-harvesting operation
rather than that of an operation tending to deplete natural
resources.
Depending upon the degree of accuracy with which it meas­
ures past performance, an index may be used to make cau­
tious predictions of future behavior. The District, with the
country as a whole, is now entering a period of expanding
residential construction that will probably outdistance any­
thing seen since the housing boom in the 1920’s. A recent
survey by the Bureau of Agricultural Economics estimates
that 3.1 million spending units have indicated intentions of
probably or definitely buying houses. To satisfy this demand,
in view of the current short supply of housing, a large vol­
ume of new residential construction is anticipated. Despite
the development of new building materials a fairly safe as­
sumption is that no radical change may occur in the housing
styles most in demand and lumber therefore will still be one
of the principal building materials.
A study of the 1920 boom as depicted in the District index
of lumber production permits some tentative conclusions re­
garding the probable reaction of the Southern lumber in­
dustry in the years immediately ahead. Present schedules call
for beginning the construction of 2.4 million permanent hous­
ing units in the United States in the two-year period 1946-47.
At the peak of the building boom in the 1920’s only slightly
more than 900,000 housing units were produced in any
single year. The present housing goal represents a large po­
tential demand for Southern lumber, since housing booms in
the United States are characterized by the erection of
numerous frame dwellings constructed from softwood lumber,
of which the South furnishes a high percentage.
In a recent estimate of the cost of building an average
$12,000 home in New York City, it was calculated that 31.8
percent of the total represented the cost of lumber and lumber
products. The percentage of total cost represented by lumber
tends to be even higher in less expensive homes. Although a
large percentage of District lumber is consumed in the South,
much of it is sold in the East and Midwest, to which the
Southern industry has a distance advantage over some of the
other major producing regions. On the basis of past per­
formances, the lumber industry in the District should benefit
more than the industry in the nation as a whole from such an
increased demand for building materials.
Lumber production in the South appears better able to re­
spond to increased demand than does the industry in other
regions, because of the large number of small mills that
characterize the industry in the South. These small mills have
an advantage over the larger mills in that their fixed costs
make up a relatively smaller proportion of their total costs
and they are therefore better able to adjust production to
market demands and price trends. Of the 10,813 sawmills
counted by the Forest Service in the Six States in 1942, 1,414
were idle or out of business. These idle mills represent a po­
tential addition to operating facilities when, and if, a resump­
tion of production becomes profitable.
A comparison of the index of lumber production in the

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District with that of lumber production in the nation shows
that Sixth District production increased more than national
production during the residential building boom of the 1920’s
and again during the flurry of military building in the early
part of World War II. Further, it is fairly conclusively shown
that during a housing boom the percentage of total lumber
production accounted for by the Sixth District's higher than
it is in other periods. The rise is particularly striking in the
first half of such a boom period. For instance, in 1915 the Six
States accounted for 24 percent of the nation’s total lumber
output, but in the years from 1921 through 1925 they ac­
counted for 30 percent or more of the total. When residential
construction activity began to decline in 1926 the District’s
share of total lumber production also declined until, in 1931,
the South was again producing only 24 percent of the national
total. Whether a similar reaction occurs during the current
residential building boom remains to be seen, although such
an occurrence appears probable.
The anticipated increase in production activity does not
necessarily mean that any large expansion in the physical
equipment of the lumber industry is taking place. For the
most part this expansion of production may be made possible
by the return of idle sawmills to production. Although some
capital is being expended for the purpose of providing addi­
tional production facilities, the greater part of investment is
for the mechanization and modernization of operations as
well as for the replacement of worn equipment.
In setting its 1946 and 1947 goals for lumber production,
the Civilian Production Administration has recognized that
the Southern lumber industry has greater ability to expand
production than has the industry in some of the other regions.
An accompanying table shows the state goals set by the CPA
and the percentage increases over the 1945 production neces­
sary to attain these goals. The quota for the District as a
whole agrees fairly closely with estimates of the area’s ability,
based on past performance, to expand its lumber production.
Though the activity of the lumber industry will un­
doubtedly expand in the postwar building boom, this antici­
pated expansion is less than that of most of other fields. Fore­
casts of the 1947 national lumber market compiled by the
Committee for Economic Development in August 1945 antici­
pate an increase of 25.9 percent over the 1939 level. Though
this figure may seem large in itself, compared to other in­
dustry groups, it is relatively small. Of 20 groups surveyed,
the lumber and timber-basic-products industry ranked eigh­
teenth according to the degree of market expansion antici­
pated.
At present the lumber industry in the South appears to be
entering a period of transition, during which significant
changes may develop. Since it is so vital an economic activity
of the District, a regular reporting of measurements of that
activity seems imperative. The index of lumber production
that makes its initial appearance on this page will satisfy that
need and, at the same time, aid in measuring general business
activity in the section.
T h o m a s R. A t k i n s o n




8 5

S ix t h D i s t r i c t In d e x e s

DISTRICT.........
Baton Rouge...
Birmingham—
Chattanooga...
Jackson.........
Jacksonville-Knoxville......
Miami............
Montgomery...
Nashville......
New Orleans...
Tampa..........

DEPARTMENT STORE SALES*
Unadjusted
Adjusted**
June
June
,1946
1946
fiS
300
275
306
366
365
394
345
304
341
429
388
320
333
318
409
324
277
269
289
346
326
364
312
348
442
378
318
320
264
296
440
376
364
389
443
273
276
335
386
373
294
336
250
303
35*1
393
326
238
268
422
287
332
312
270
378
341
335
389
475
433
303
248
274
301
229
437
378
354
381
485

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

DISTRICT
Birmingham__
Montgomery...
Nashville........
New Orleans..

DEPARTMENT STORE STOCKS
Unadjusted
Adjusted**
June
June
1946
1946
IsiS
267
252
198
275
255
394
430
430
295
416
231
209
185
209
196
343
298
232
313
290
414
508
377
439
386
198
134
203
185
222

I m!
204
286
>168
236
326
123

TOTAL.............
Alabama........
Georgia.........
Tennessee.....

COTTON CONSUMPTION*
June
July
July
1946
4946
1945
143
16.1
.137
•145
.168
137
145
161
138
118
130
121

COAL PRODUCTION*
June
i&
1946
&
.163
164
174
177
173
il85
i33
142
i49

SIX STATES
Alabama........
Florida..........
Georgia.........
Louisiana......
Mississippi.....
Tennessee.....

LUMBER PRODUCTION*
Adjusted**
Unadjusted
June
June
May
June
May
1946
1946
1946
1945
1946
124
130
107
132
122
129
133
132
136
133
123
108
63
.103
126
145
139
1S1
154
138
90
78
71
91
78
135
112
87
128
108
197
.194
.125
224
194

SIX STATES
Alabama........
Florida..........
Georgia.........
Louisiana......
Mississippi.....
Tennessee......

MANUFACTURING
EMPLOYMENT***
June
May
June
1946
1946
1945
134r
135
137
138r
138
166
114
127
111
l?,9r
131
131
135
134r
142
141
138r
125
144
143r
125

CONSUMERS' PRICE INDEX
June Mav June
1946 1946 1945
ALL ITEMS.. 137 135
133
Food........ 150 147
146
Clothing... 153 151
142
Rent........ 115 115
114
Fuel, elec.,
and ice.. 112 111
110
Home fur­
nishings. 153 154r 143
Misc....... 133 132
129
Purchasing
power of
dollar__ .73
.74
.75
CRUDE PETROLEUM PRODUCTION
IN COASTAL LOUISIANA AND
MISSISSIPPI*
June
1946
tt
Unadjusted.. 218 213 208
Adjusted**... 218 215 208

June*
1945
108
139
60
160
72
83
142

GASOLINE TAX
COLLECTIONS
June
1946
\t&
152
155
110
157
166
115
134
149
97
145
151
108
139
147
104
.144
158
114
193
163
,132

ELECTRIC POWER PRODUCTION*
June Mav June
1946 1946 1945
SIX STATES. 251 246
272
Hydro­
generated. 278 295
241
Fuel­
generated. . 216 181r 313
ANNUAL RATE OF TURNOVER OF
DEMAND DEPOSITS
June
1946
Itt
Unadjusted.. 16.3 16.1 14.7
Adjusted**... 17.3 16.6 15.6
Inaex**...... 66.8 64.1 60.3
*Daily average basis
**Adjusted for seasonal variation
***1939 monthly average*100; other
indexes, 1935-39=100
r=Revised

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B u s in e s s

J uly and August have on the whole been profitable months

for business and industry in the Sixth Federal Reserve
District. Trade and industrial activity made further advances,
and employment increased. There were some declines of
course, a favorable one in unemployment and unfavorable
ones in some phases of agriculture. Tobacco and cotton
prices, however, were high.

Employment and Industry
Though neither employment nor industrial activity in the
Sixth District quite regained its wartime peak in July, in
some centers, notably Atlanta, each of them was not far short
of that point. Over the area as a whole, excluding Mississippi
for which no data was available, the number of employed
was increasing. The trend was, however, far from uniform.
Chief among the factors accounting for this spottiness were
uncertainty over Government price policies following the
temporary ending of the OPA; additional restrictive regula­
tions affecting construction activity; seasonal factors in some
industries, such as food processing, and in some areas, such
as Florida; and a few scattered but persistent labor disputes,
which were remnants of the nation-wide drive by the unions
for higher wages earlier this year.
Contrary to the paradoxical situation reported in June, un­
employment was reported on the decline. Labor-market areas
in the upper part of the District, in Georgia, northern Ala­
bama, and Tennessee, accounted for this favorable trend
by offsetting the heavy concentration of unemployed in those
farther south, mainly along the Gulf coast. Seasonal influ­
ences in the Florida cities and continued declines in the ship­
building industry largely accounted for the adverse situation
in the southern part of the section. Some factors affecting the
unemployment decline reported in the more northern centers
were a certain amount of outmigration, consisting of partly
migratory agricultural labor, and the withdrawal from the
labor market of an increasing number of women and, to a
lesser extent, school students.
Although data on agricultural employment are not yet
available for the greater part of the District, apparently the
beginning of the harvesting season, especially in tobacco, has
started the expected seasonal upturn. Industries linked di­
rectly to agriculture, like fertilizer and oil processing, have
not yet felt the seasonal upturn. In the food processing in­
dustry seasonal influences brought further declines in em­
ployment in the Florida citrus areas and in the Mobile area.
Elsewhere, especially at Columbus and Montgomery, employ­
ment in this industry gained slightly.
Construction in almost every area showed gains despite the
fact that builders continued to be plagued by critical short­
ages. Lumber, nails, and plumbing fixtures, were still in short
supply. In some centers bricklayers and plasterers were not
readily available. Continued expansion in the building indus­
try was retarded somewhat by the confusion that accompa­
nied the Federal Government’s efforts to divert materials and
labor from public and industrial projects to the more urg­
ently needed residential housing. The temporary lapse of
price control brought about no marked increase of lumber
production in July, although weather conditions were favor­
able, especially in Florida. Shortages of sawmill and haul­



C o n d itio n s

ing equipment eased slightly, but the difficulty of securing
enough labor at the prevailing low wages prevented any
greatly increased output. The pulp and paper industry con­
tinued to operate at high levels throughout the month.
Mining employment had recovered in July from the spring
strikes. This improvement coupled with sharp increases in
pig-iron and steel-ingot production made the Birmingham
area one of the brightest spots in the District’s employment and
output picture. Iron and steel products were leading the way
in Chattanooga and Montgomery also, in spite of a protracted
labor dispute in one of the larger plants at Knoxville. The
light-metals industry and machinery manufacture contributed
to improved employment in the north Alabama-Tennessee
area.
Activity in the cotton-textile industry, where the consump­
tion of cotton and spindle hours had both declined slightly
in June, continued to decline in July. Employment gains
were registered in Knoxville and Montgomery mills, but in
the Chattanooga and Columbus areas slight declines were re­
corded. Some textile mills reported they could use more
workers if housing was available for them. Slight gains were
also reported in the garment industry. In the trade, transpor­
tation, and service fields, including Government, there were no
marked changes in employment during the past month. Flor­
ida areas, of course, reflected the midsummer lows in the
tourist industry, but other areas, like Knoxville and Mont­
gomery, showed slight gains in these nonmanufacturing
industries.
C. H. D.

Trade
In spite of July price increases, the expansion in retail buy­
ing continued in the Sixth Federal Reserve District. The in­
dex of department store sales adjusted for seasonal variation
was 366 percent of the 1935-39 average in July, compared
with 365 in June and 300 in July of last year. If conditions
have continued during the latter part of August as they were
the first part, the seasonally adjusted index for the month
will be in the neighborhood of 380. The July figure has set
a new record for sales in any single month since the index
was begun, January 1919. Also at other types of retail stores
reporting their operations to this bank the total value of July
sales was greater this year than last. Sales in July were up
58 percent at furniture stores and 28 percent at jewelry stores.
These increases in sales occurred between the date OPA
controls were removed and the time new types of controls
were instituted. According to the United States Bureau of
Labor Statistics, the Consumers Price Index for the United
States rose an estimated 5.5 percent between June 15 and
July 15. Complete data are not available on all items for
every city ordinarily surveyed in the District. In Birmingham,
where all items have been surveyed, however, the estimated
increase was an even 5 percent. The rise of 12.8 percent in
food prices was the greatest reported. Prices covered by the
index for clothing and fuel changed little, but prices for
house furnishings increased approximately 1.9 percent.
Food prices for July 15 have been surveyed for most Dis­
trict cities. These prices had jumped an average of 13.2 per­
cent. For some foods prices increased much more than for
others. In Jacksonville, for example, prices of all foods in­
creased 13.1 percent but meats were reported to cost 26.2
percent more and dairy products 23.8 percent more. Fruits

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and vegetables on the other hand were reported to be only
1.4 percent higher. In the list of those selected foods on which
prices were reported, the 31 percent rise in the price of pork
chops was exceeded only by the one of 44.3 percent in the
price of round steak.
The comparatively small increases in prices of items other
than foods indicate that retailers to a large extent fulfilled
their pledges to hold prices as long as possible at the OPA
levels or lower. Under the requirements of the new OPA law,
however, the revived agency has now authorized various in­
creases in prices at the wholesale level. Among the most im­
portant increases authorized were those of ceiling prices for
textile products, based upon the higher price of cotton. If
there are no counteracting factors, these and other increases
in wholesale prices will be reflected in higher prices of retail
commodities. By August 3 the index of wholesale commodity
prices in primary markets had advanced 0.7 percent in one
week’s time. This index was 10.9 percent higher than it was
at the end of June, when price controls were suspended, and
18.5 percent higher than it was at the end of the war.
That the high level of retail sales has continued during the
past several months surprised many persons, including some
of the retailers themselves. So much has been made of scar­
cities and of the expected postwar decline in buying power
that people find it difficult to understand how the high level
of retail sales can continue as it does. Both the consumer and
the retailer see day-to-day evidence of scarcities. Consumers
cannot obtain all the kinds of goods they want, and in many
cases retailers cannot secure sufficient quantities of many
types of merchandise their customers call for.
Retail sales commodities, however, are scarce only in pro­
portion to the demand for them. An increase in demand can
exert equally as great an influence upon making items scarce
as can an actual decline in the quantity of goods put on the
market. Both these factors have been active during recent
months, but in many lines the high level of demand has made
goods seem scarce when, as a matter of fact, the total amount
produced and marketed has been greater than it was in pre­
war years. Even if allowance is made for price increases, the
quantity of goods on department store shelves is probably
greater today than it was in 1941. The seasonally adjusted
index of Sixth District department store stocks in July was
267 of the 1935-39 base, or an increase of 93 percent com­
pared with 138 in the same month of 1941. During a com­
parable period the Department of Commerce’s index of retail
prices for all commodities rose 46 percent. There are, of
course, many scarcities in actual quantities of such items as
household appliances that are in short supply because of re­
conversion and other difficulties.
Current supplies of most types of goods would be more
than adequate for supplying the demand at a time when in­
comes were low, in 1931 for instance. In this District the
value of department store stocks in June 1945 was more than
two and a half times the 1931 value. The high level of con­
sumer income and, in turn, the high level of consumer de­
mand partly explain why there is an appearance of general
scarcity in 1946 when the levels of production and invento­
ries are themselves relatively high.
Postwar unemployment did not occur on the scale generally
expected. Although the rate of income payments to individ­
uals was less in the last half of 1945 and the first three months
of 1946 than it was during the two quarters immediately pre­
ceding V-J Day, in the second quarter of 1946 it almost



8 7

S ix t h D i s t r i c t S t a t is t ic s
RETAIL FURNITURE STORE OPERATIONS
Number
Percent Change
oi
July 1946 irom
Item
Stores
Reporting June 1946
July 1945
— 3
Total sales...............................
103
+ 58
— 5
Cash sales...............................
95
,+ 73
Instalment and other credit sales..
95
— 3
+ 56
Accounts receivable, end of month.
102
■
+■28
i+ 1
102
Collections during month............
rf 3
+>39
81
+ 10
Inventories, end of month............
+ 35
RETAIL JEWELRY STORE OPERATIONS
Number
Percent Change
oi
July 1946 irom
Item
Stores
Reporting June 1946 July 1945
— 17
.+ 28
24
— 18
i+>23
22
22
— 15
.+ 28
Credit sales..............................
24
— 5
+ 33
Accounts receivable, end of month.
— 6
24
Collections during month...........
+ 21

Place

DEPARTMENT STORE SALES AND STOCKS
INVENTORIES
SALES
Change No. oi Percent Change
No. oi Percent
Stores July .1946 irom Stores July 31, 1946, irom
Report­ June
30, July 31,
July Report­
ing June
ing
1945
1945
1946
1946

ALABAMA
Birmingham-— 3 i+ 30
4
+ 7 i4- 25
5
Mobile..........
— 3 + 21
5
—
26 — 3
Montgomery...
— 2 <+, 26
3
3
FLORIDA
Jacksonville-— 5 + 23
3
+ 10 '4- 27
4
_ 7 4- 35
3
.4- 18 4- 37
4
— 9 ,4- 40
Orlando.........
3
+*'0
— 3 /+ 31
-f 8
3
5
GEORGIA
5
—
7
rf
2
9
4
- 46
Atlanta..........
6
•4* 6
— 6 + 38
3
Augusta........
H- 23 4- 45
4
+ 9 4- 19
Columbus......
3
— 14 4- 24
'4
+ ’i3 + 44
4
LOUISIANA
— 1
4
4- 33
4- 4 *+ J
Baton Rouge...
4
— 13 ,4- 26
4
,4- 10 + 67
New Orleans...
5
MISSISSIPPI
— 7 4- 23
4
Jackson.........
+ 5 + 16
4
TENNESSEE
Bristol..........
— 12 i+ 19
3
3
,+ 34 + 12
Chattanooga...
— 7 rf 41
4
3
4
- 2 + 65
.....
Knoxville......
4
— 14 <+ 8
Nashville........
— 10 ,4- 45
6
'5
4-, 14 ,+‘35
— 4 4- 20
22
OTHER CITIES*
18
•+ 8 + 28
DISTRICT
94
— 8 ,4- 28
73
4- 8 + 36
*When fewer than 3 stores report in a given city, the sales or stocks are
grouped together under "other cities/*____________________________
WHOLESALE SALES AND INVENTORIES*
SALES
INVENTORIES
Change
Percent
Change
No. oi July 1946 irom No. oi Percent
July 1946 irom
Items
Firms
Firms
July
Report­ June
Report­ June
1945
1946
ing
1946
ing
Automotive supplies.
5 — 3 + 89
+ 34
4
+ 1
Clothing...............
3 — 2 + 9
Shoes..................
3 — 48 — 22
Drugs and sundries.
9 +- 11
+ 16
3
i+ *2
+ 20
Dry goods.............
9 + 5 rf. 28
5 )+ 4 ,+122
Electrical goods.....
5 + 8 + 81
3
+ 25 + 84
Fresh fruits and
vegetables..........
5 — 24 — 11
Confectionery........
6 + 11 + 69
Full lines........... 38 + 14 + 30
18 l+ 9 rf 52
Specialty lines.....
9 rf 9 + 30
4
!+ 9 + 5
Beer....................
3 —<21
— 45
3
+ 20 ,+ 51
General hardware... 12
+ 2 + 17
5
+ 12 + 56
Industrial supplies...
5 + 29 + 24
4 ,+ 10 <+ 14
Lumber andbuilding
materials............
Machinery, equip.
3 + 7 + 30
and supplies......
8 + 13 + 37
4
— 5 rf 51
Tobacco products...
16 + 32 + 56
17 ,+ 22 .+ 3.1
Miscellaneous........
6
6
143 + 13 + 34
+ 9 .+ 46
* B a s e d o n U . S . D e p a rt m e n t of C o m m e r c e f ig u r e s .

8 8

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reached that level again. The seasonally adjusted annual total
was 156.9 billion dollars in the first quarter of 1946, only
4.2 percent lower than it was during the first three months
of 1945. In the second quarter of this year income payments
on an annual basis had increased to 161 billion dollars, al­
most as much as they were during the record first quarter of
1945. Taxes, however, had been reduced, with the result that
the 142-billion-dollar disposable income of individuals was,
on a seasonally adjusted annual basis, higher than it was dur­
ing the first quarter of 1945.
Not only did consumers have more money to spend during
the second quarter of 1946 than they had in the correspond­
ing quarter of 1945, but they were spending a greater pro­
portion of what they had. Net savings of individuals were 20
billion dollars at an annual rate during the more recent pe­
riod, whereas they were 41.6 billion dollars in the corres­
ponding period of 1945. Consumers spent about 86 percent
of their disposable incomes during the later period, against
71 percent a year previously and 84 percent in 1941. Thus,
the proportion of disposable income used for consumption
expenditures exceeded the prewar level. Consumers would
probably have spent even more if such types of goods as au­
tomobiles and household appliances had been available. De­
mands for these goods are great not only because of the high
level of purchasing power but because of the accumulated
needs.

Finance
A decline in total resources of member banks, the first in sev­
eral years, took place in the Sixth District between December
31, 1945, and June 29, 1946. During each previous six-month
period in the past several years, total resources had increased,
and in the latter six months of 1945, the increase amounted
to 896 million dollars, or 16.2 percent. Despite the growth
of member banks in the Sixth Federal Reserve District from
325 to 329 during the period ended June 30, 1946, total re­
sources declined 313 million dollars, or 4.8 percent. At the
same time total deposits declined 333 million dollars, or 5.4
percent.
The reversal of the previous years’ trend was caused pri­
marily by the ending of the war and a change in the Govern­
ment’s financing program. In the war period an expansion of
the Government debt through direct purchasing of Govern­
ment securities by the banks or through financing by the
banks of such purchases for other types of investors, was the
chief factor accounting for the increase in deposits. During
each war-loan campaign, Government deposits in the banks
increased, partly as a consequence of subscriptions by the
banks themselves to the Government securities and partly as
a result of corresponding decreases in the deposits of indi­
viduals, partnerships, and corporations purchasing these se­
curities. As the Government later spent the proceeds of the
loan and lowered its deposits in the banks, the deposits of
individuals, partnerships, and corporations in turn increased.
Since a large part of the Government deposits resulted from
bank-credit expansion, the outcome was an increase in nonGovernment type of deposits.
Through this process, total deposits in the Sixth District
member banks expanded 4.4 billion dollars from December
1939 through December 1945. Government security holdings
increased 2.3 billion dollars during the same period. Part of
the expansion in deposits was accounted for by an expansion
of loans. There was, in addition, an inflow of funds to the



District, since the Government spent more in the area than it
raised through taxes or borrowing.
The wartime conditions that led to an expansion of credit
have now changed. With the reduction of some war expendi­
tures and the high rate of tax collections during the first half
of 1946 the Treasury was able to retire 10 billion dollars in
marketable Government securities during that period. The se­
curities retired have to a great extent been those owned by
banks. In the six months’ period ended in June 1946 the
amount of Government securities held by Sixth District mem­
ber banks decreased 121 million dollars. An expansion in
loans and other types of security holdings was insufficient to
offset this decrease, with the net result that total loans and
investments declined 80 million dollars. There was also a de­
crease in reserves and cash balances of 313 million dollars.
To the extent that bank holdings of securities were re­
deemed by reducing Treasury deposits in member banks, there
was no corresponding increase in resources. The net effect of
such transactions was merely to decrease both the asset, Gov­
ernment securities, and the liability, Government deposits.
Not all of the decline of 425 million dollars taking place
in Government deposits during the first six months of 1946
occurred, however, because of the retirement of Government
securities. Part of the amount was used for other purposes,
with the result that demand deposits of individuals, partner­
ships, and corporations increased 173 million dollars and
time deposits 83 million dollars.
Similar changes have been taking place in banks through­
out the United States. They may continue as long as the
Treasury carries out its immediate program of debt retire­
ment. According to the President’s revised budget message,
the total amount of marketable securities to be retired dur­
ing the latter six months of 1946 will equal or exceed the re­
tirement during the first half of the year.
Although figures for June 29 are the latest available on
all member banks in the District, the reports from those
member banks reporting weekly indicate that total deposits
have continued to decline. Demand deposits for individuals,
partnerships, and corporations, however, are somewhat larger
now than they were at the end of June. Between July 17 and
August 14, demand deposits adjusted increased 2 percent,
time deposits maintained their former level, and United
States Government deposits declined 11 percent. On the asset
side, total loans and investments were 1 percent less on the
August date than on the corresponding date in July. Though
there were increases in commercial, agricultural, and indus­
trial loans, real estate loans, and other loans of 2, 8, and 4
percent, respectively, they were insufficient to offset the de­
cline in the holdings of Government securities and security
loans. From an earnings standpoint, however, the banks had
gained an improved position, since loans yield higher returns
than do Government securities.
Partly because of a decline in earning assets, net profits
before taxes of 20 weekly reporting member banks in the
Sixth District were 4.4 percent less during the first six months
of this year than they were in the last six months of 1945.
They were, however, 7 percent higher than they were during
the first six months of last year. Net profits after provision
for taxes were up 3 percent above those for the first six
months of 1945 and 7.2 percent higher than in the latter six
months. Of greater importance than the decrease in earning
assets in accounting for the decrease in net profits was the
failure of these banks to earn as large profits from the sale

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of securities as they did in 1945. Prices of Government bonds,
which had been rising rapidly during the latter part of 1945,
actually declined during the second quarter of the year. Prof­
its were also held down by a 6 percent increase in expenses.
c . T. T.

Agriculture
World cotton production, still considerably below the 193539 average, has to all appearances barely begun its climb back
to much higher levels. The demand for cotton, which grew
steadily stronger against a background of falling production,
continues to outrun the supply. This condition has created a
situation that means high, and possibly higher, prices for the
American cotton farmers, whose production for the year end­
ing July 31, 1946, was their lowest for any year since 1921.
The International Cotton Advisory Committee estimates the
world 1945-46 cotton production to be about 20.5 million
bales, of which total the United States contributed slightly
more than nine million. The total, though 2.5 million above
the annual production figure for July 31, 1945, falls far short
of the 1935-39 average, which was 29.7 million. Adverse
weather conditions have added to the difficulties caused by a
shortage of farm workers and a diversion of land and man­
power to the planting and growing of food crops. These two
factors continue to hold cotton production down at present.
Of the 24 million bales consumed over the world in the
cotton year ending July 31, the United States, it is estimated,
used 9.2 million. The estimate of world consumption, though
2.2 million bales above that for the 1944-45 season, fell be­
low the base-period average by somewhere between four and
five million bales. Power shortages, spindle and loom scar­
cities, and economic disruption of the war-ravaged nations,
as well as low production, will prevent any immediate return
to prewar levels of consumption. As foreign mills begin to
reopen, however, total world consumption should grow stead­
ily—production permitting.
Since the world carryover was drawn on to supply the 3.5million-bale difference between consumption and production,
the world stock as it was on August 1 , 1945, had dropped to
23.5 million bales by August 1 of this year. Of the present
carryover, 7.6 million bales is in the United States and will
supplement the 1945-46 production in meeting the domestic
demand of more than 10 million bales and the export orders
of four million bales that are expected for the present cotton
year.
During the season just past there were about eight million
bales of cotton moving in international trade channels. This
movement represented 3.1 million bales more than the quan­
tity moving the preceding cotton year but 5.2 million less
than the 1935-39 average. Increasing international cotton
movements are in prospect as a result of a continuation of
the export subsidy on American cotton, the enactment of the
British loan, and the facilitation of purchases by the ExportImport Bank. Arrangements by which Japan and Germany
will pay the United States for raw cotton with the processed
goods are considered mutually helpful. They solve the ex­
change problem for these two foreign countries, and their
use of a low quality cotton for which there formerly has been
little demand in foreign trade solves a problem for the United
States.
The situation as it is at present adds up to a favorable out­
look for the American cotton farmer in the immediate future.
New York Exchange quotations on July 19 for the near fu­
tures month on fifteen-sixteenths middling closed at 35.80



8 9

S ix t h D i s t r i c t S t a t i s t i c s
CONDITION OK 20 MEMBER BANKS IN SELECTED CITIES
(In Thousands of Dollars)
Percent Change
August21 July 24 August22Aug. 21, 1946, from
Item
1945 July 24 August22
1946
1946
1945
1946
Loans and investments—
Total....................... 2,073,645 2,088,420 1,992,272 — 1 ,+ 4
Loans—total............... 507,593 509,220 335,982 — 0 4- 5,1
Commercial, industrial,
and agricultural loans 259,431 258,292 174,389 4- 0 ,+ 49
Loans to brokers and
dealers in securities. 10,383 ,12,514
9,406 - 17 .+ 10
Other loans for pur­
chasing and carrying
securities.............. 106,265 111,027 59,143 — 4 5+ 80
Real estate loans.....
36,124 33,285 23,653 4- 9 ,4- 53
Loans to banks.........
3,17,2 3,964
1,776 — 20 + 79
Other loans.............. 92,218 90,138 67,615 4- 2 /+ 36
Investments—total........ ,1,566,052 1,579,200 1,656,290 — 1 — 5
U. S. direct obligations. 1,404,339 1,417,257 1,510,816 — 1 — 7
Obligations guaranteed
by U.S................
1,659
1,661
3,710 — 0 — 55
Other securities........ 160,054 160,282 141,764 — 0 + 13
Reserve with F. R. Bank... 372,527 367,198 361,905 .+ 1 .4- 3
Cash in vault................. 30,249 30,654 29,932 — 1 :+ 1
Balances with domestic
banks........................ il49,068 ,134,461 165,741
11 — 10
Demand deposits adjusted. 1,394,539 1,379,744 1,264,108 .+
4- 1 i+ 10
Time deposits............... 453,573 451,645 392,429 «+ o
4- 16
U. S. Gov't deposits........ 19,1,656 207,097 253,683 — 7 — 24
Deposits of domestic banks 458,200 457,418 534,964 4- 0 — 14
Borrowings...................
3,800
3,500
■+ 9

Place

DEBITS TO INDIVIDUAL BANK ACCOUNTS
________(In Thousands of Dollars)________
Percent Change
No. of
July 1946 from
Banks
July
June
July
Report­ 1946
1946
1945
June July
ing
1946 1945

ALABAMA
Anniston......
Birmingham...
Dothan.........
Gadsden......
Mobile.........
Montgomery...
FLORIDA
lacksonville...
Miami..........
Greater Miami*
Orlando........
Pensacola.....
St. Petersburg.

3
6
2
3
4
3

19,386
242,185
8,562
14,224
96,326
53,385

,19,434
224,942
7,802
13,022
98,222
51,498

17,756
190,021
7,080
10,102
98,721
35,471

— 0
+ 8
+ 10
+ 9
— 2
+ 4

4* 9
4- 27
4- 21
rf .41
— 2
+ 51

3
7
11
2
3
3
3

200,859
178,551
246,225
41,685
28,435
40,879
87,126

204,092
173,105
247,730
46,685
27,317
42,722
93,397

162,422
133,165
174,523
28,294
25,477
26,049
69,268

— 2
4- 3
— 1
— 1.1
+ 4
__
4
— 7

4- 24
+ 34
4- 41
4- 47
4- 12
4- 57
4- 26

11,882
8,293
2
10,991
4
633,898 592,540 476,725
Augusta.......
55,011
43,151
33,451
3
Brunswick.....
8,584
11,460
2
7,865
Columbus.....
46,8il5
4
44,620 32,699
Elberton.......
1*,87
2,752
2,861
2
*0
Gainesville*...
10,679
12,615
3
**
Griffin*........
7,793
8,212
2
51,381
46,175
40,979
3
Newnan........
8,981
6,839
5,9
2
*2
*4
Rome*.........
16,835
16,698
3
74,275
82,853
66,034
Savannah.....
4
14,027
10,138
10,257
Valdosta......
2
LOUISIANA
Baton Rouge..
58,361
54,406
43,686
3
Lake Charles..
21,927
20,667
17,031
3
New Orleans. .
605,870 523,703 417,912
7
MISSISSIPPI
Hattiesburg...
13,493
10,938
14,185
2
Jackson........
87,618
80,093
65,844
4
Meridian......
2
6
,0
1
4
2
3
,1
3
7
1
6,520
3
Vicksburg.....
2,252
20,769
17,748
2
TENNESSEE
87,542
Chattanooga..
11,2,810 110,960
4
91,821 110,396
Knoxville......
98,102
4
Nashville......
249,507 228,366 198,925
6
SIXTH DISTRICT
32 Cities......
108 3,215,655 3,017,656 2,478,060
UNITED STATES
334 Cities.....
91,416,000: 86,663,000,79,163,000
*Not included ini Sixth District total
**Not available

4- 8
4- 7
+ 27
,+ 9
4- 4
— 4
— 15
,+ 5
4- 11
.+ 31
.4~ '1
— 10
4- 38

,4- 43
4- 33
t+ 64
— 25
.+ 43
,4-♦*47
**
,4- 25
4-♦*52
4- 12
4- 37

GEORGIA

+ 7 ,4- 34
4- 6 .4- 29
4- 16 i+ 45
,44+
+

5 4- 30
9 4- 33
7 + 25

12 4- 57

4- 2 4- 29
J+ 7 — 11
.+ 9 rf 25
4- 7 4* 30
4- 5 4- 15

9 0

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cents. This was a rise of six and a half cents, or about 23
percent, in one month’s time. The factors contributing most
importantly to this sharp increase were the removal of pricecontrol measures, the release of a report on July 1 showing
an unexpectedly low acreage, increasing speculation, an in­
crease in domestic demand, and the prevalence of unfavor­
able weather in the cotton belt. A slump following the July
19 high, bringing near futures month down to 31.70 cents at
closing on July 30, was largely attributable to the revival of
price control. Speculators augmented this decline by liqui­
dating some of their holdings. The trend changed shortly,
however, as reports of bad weather, insect activity, and
higher price ceilings on textiles and other processed cotton
goods continued and as the position of the market proved
basically sound. With the publishing on August 8 of a crop
report lower than that expected, the market passed its high
of the previous month and that day closed at 35.86.
A base was furnished the market recently when the 1946
loan program was published. The average loan rate for fif­
teen-sixteenths middling was established at 24.38 cents, which
is 92.5 percent of the July parity price.
A domestic crop estimate of 9.29 million bales for the
1946-47 season further emphasizes the scarcity of supply.
The present relationship of a strong demand and a short sup­
ply insures the farmer continued good prices on his cotton
for a short while at any rate.
According to the August 1 crop report, the Sixth District,
in contrast to the nation, did not appear to have any pros­
pects of setting a new record for aggregate crop production
in 1946. For the entire crop year, from the time of preparing
the land on through the planting and cultivation periods, its
farms have been beset by unseasonable rains, heavy insect
infestations, and wet weather resulting in deteriorated prod­
ucts and, in some cases, complete loss.
The August 1 estimate of 1946 cotton production in the
Sixth District places the crop at 2,006,000 bales, a quantity
that is approximately 74 percent of the 1935-44 average. For
the individual Sixth District states, the percentages indica­
tive of cotton conditions, based on the long-time average, are
79 in Tennessee, 75 in Georgia, 74 in Alabama, 69 in Florida,
64 in Mississippi, and 58 in Louisiana. As rains slackened in
the second week of August reports of generally improved
crop conditions began to come in. Much-needed cultivation
was again possible. Furthermore, boll weevils could be pois­
oned under the more favorable weather conditions, though
heavy infestation continued in many areas. Picking began in
cotton fields of the southern parts of Louisiana, Alabama,
and Georgia during the first week of August.
With the exception of citrus fruits, tobacco is the only ma­
jor cash crop that promises to set a new record in the Sixth
District during 1946. The August 1 estimate placed the crop
at 274,010,000 pounds, 2 percent above last year’s record
crop and 41 percent above the 1935-44 average. Marketing
of the flue-cured types was virtually completed in Georgia
and Florida by August 17, with 13 of their 19 markets closed
by that date. When final reports are made, the flue-cured to­
bacco crop of Georgia will possibly have set a record, in
total sales, of 123 million pounds. The average price in the
Georgia-Florida market through the August 14 sales was
$45.27 a hundred. In Tennessee, growers of the burley, dark
air-cured and dark fired types are expecting excellent yields.
The announcement by the United States Department of Ag­
riculture on July 30 of the 1946 purchase-and-loan program



for peanuts stabilized a market that had been subject to much
price uncertainty. The support price was fixed at 90 percent
of parity as of July 15, 1946, Parity on that date was 9.55
cents a pound, compared to 8.30 cents for July 15, 1945. In
amount, premiums and discounts are similar to those applic­
able to last year’s crop. The 1946 crop in the Sixth District
is, according to estimates, 1,127,585,000 pounds. This is ap­
proximately one percent below last year’s, whereas a national
production slightly greater than the one in 1945 is expected.
Rains have hindered harvesting and curing of the crop in the
District and have worked particular harm where a scarcity
of nails for erecting stack poles has necessitated the use of
windrowing in the curing process. Root rot and leaf worms
have caused additional damage. Pecan harvesting in the Sixth
District in 1946 will bring 57,160,000 pounds, it is estimated.
Though this is 14 percent under the large crop of last year,
it is somewhat higher than the 1935-44 average.
Good corn yields, it is expected, will partially offset the
reduction that was made in the acreage planted to this crop
in the District. Estimates set production at a figure about 2
percent less than the 1935-44 average and 8 percent less than
the 1945 total. Corn planting suffered earlier in the year be­
cause of Avet weather, and a smaller later crop resulted. July
was favorable for corn in all the Six States except Louisiana,
where moisture continued excessive.
For sweet potatoes generally improved crop conditions
prevailed in the District during July. The August 1 estimate
of 34,446,000 bushels amounts to 95 percent of the 1945 crop
and 3 percent more than the 1935-44 average.
Prospects for the sugarcane crop for sugar in Louisiana
and Florida are fairly good. The production indicated on
August 1 for 1946 was 6,394,000 tons, 5 percent under that
for 1945. Growth conditions in Florida, where the water sup­
ply is controlled, have been satisfactory, but the growth of
cane in Louisiana has been hampered by rains and a lack of
cultivation.
With the commercial marketing of peaches in the District
almost over for the season, the crop is estimated to have been
10,135,000 bushels, about 10 percent short of the 1945 rec­
ord crop but 23 percent greater than the 1935-44 average.
The 1946 crop encountered more-than-average trouble from
heavy insect damage and from rot that was induced by ex­
cessive rains. For the 1946-47 citrus fruit crop, the growing
season in Florida continues excellent. The condition of early
and midseason varieties of oranges was reported at 82 per­
cent of the long-time average on August 1, compared with 62
percent on August 1 , 1945, and the 1935-44 average of 69
percent.
The estimated tame-hay crop is 5,648,000 tons for the Dis­
trict, 18 percent above the 1935-44 average. Pasture condi­
tions are generally excellent, ranging from 81 percent of av­
erage in Georgia to 92 in Mississippi, compared to 76 and 75
percent for 1935-44. Sixth District pastures are well above
the national average, which has been lowered by dry-weather
damage to pastures in the Southwest, the major Northern
dairying states, and New England.
The number of farm milk cows has decreased mainly as a
result of the feed shortage. The Sixth District, as well as the
national, estimate of milk cows showed the number to be a
little more than 3 percent less in June 1946 than it was one
year earlier. The number of pounds of milk produced per
cow rose in the District, as a result of the culling process and
improved pastures, to 10.6 in August 1946 in comparison

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 tla n ta f o r A u g u s t 1946

with a yield of 10.4 for August 1945 and the 1935-44 average
of 10.0 pounds. Egg production in the Sixth District in 1946,
through July, was 96.5 percent of the 1945 production for the
corresponding period. The number of layers during the
month of July showed an accompanying decline to 96.1 per­
cent of the previous year’s inventory. Through July other
parts of the country managed to keep the national egg pro­
duction for this year at 99 percent of last year’s. Apparently
the pinch of shortened poultry feed supplies was felt to a
slightly greater degree in the remainder of the United States,
since laying flocks over the country were reduced to 95.7
percent of the previous year’s number.
Cash farm receipts in the Sixth District were 2.2 percent
lower in 1946 up to June 1 than they were in the correspond­
ing period of 1945. Sales in these five-month periods totaled
$664,196,000 in 1946 and $678,855,000 in 1945. Of the Six
States, Florida was the only one to have increased sales, of
6.4 percent, largely as a result of the record citrus crop. The
percentage decreases in the other states were: 0.3 in Missis­
sippi, 3.4 in Tennessee, 7.2 in Georgia, 9.4 in Alabama, and
16.3 in Louisiana. Sales of crops increased in all the states
except Georgia and Louisiana. Reduced livestock sales, how­
ever, in every state in the District effected an over-all decline
in cash receipts. Shortened feed supplies and the uncertain

IN D U ST RIAL PRODUCTION

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price and marketing situations that prevailed during this
period hampered the animal and poultry enterprises. During
the harvesting of early truck and potatoes, especially, heavy
rains damaged some of the crops, particularly in Louisiana.
According to receipts, sales of livestock exceeded those of
crops in two of the states, Georgia and Alabama, indicating
the relative importance to gross sales of livestock and crops
during this period. Later in the year this relationship will be
reversed for these two states as the most important cash
crops, like cotton, tobacco, and peanuts, go to market. For the
entire district, total receipts up through May 31 were com­
posed of 68.2 percent crop sales and 31.8 percent livestock
and livestock products.
Total farm employment on August 1 , 1946, in the geo­
graphic divisions containing the Sixth District was 7.4 per­
cent higher than it was one year earlier. In the South At­
lantic, the East South Central, and the West South Central
areas, the total number of family and hired workers on
farms, it was estimated, was 5,426,000 on August 1, 1946,
and 5,053,000 on August 1 , 1945. Increases in the numbers
of both hired and family workers have occurred, the larger
part of the total increase being made up of family laborers.
In spite of these increases, however, the number of farm
workers is still about 7 percent below the 1935-39 average.
C. F. R., J r .

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INERALS 1'
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Federal Reserve index for the United
States. Groups are expressed in terms of
points in the total index. Monthly figures, latest shown are for June.



Federal Reserve indexes for the United
States. Monthly figures, latest shown are
for June,

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

S itu a tio n

I ndustrial production increased somewhat further in July,

Distribution

after a sharp advance in June. Prices of commodities rose
rapidly in July and continued to advance, although at a more
moderate rate, in the first three weeks of August.

Value of department store sales declined less than season­
ally from June to July and the Board’s adjusted index rose
to 278 percent of the 1935-39 average, as compared with an
average of 254 for the first six months of the year. In the
first three weeks of August sales continued at a high level.
As a result of large receipts of merchandise, value of depart­
ment store stocks continued to increase in July but relative
to sales was still lower than before the war. Unfilled orders
were at an exceptionally high level.
Loadings of railroad freight increased further in July as
shipments of livestock and grains and of ore and coke rose
sharply, and shipments of other classes of freight showed
little change.

Industrial Production
Industrial production advanced from 171 percent of the 193539 average in June to 174 in July, according to the Board’s
seasonally adjusted index. Output of durable goods and of
minerals generally increased while output of nondurable
manufactures as a group showed little change, with increases
in some lines offset by declines in others.
Production at steel mills in July rose about one sixth and
in August has increased somewhat further, with output of in­
gots increasing to about 90 percent of capacity. Activity in
the machinery and transportation-equipment industries con­
tinued to advance in July. Production in the nonferrous-metal
industries rose again but was still about 7 per cent below the
January level. Output of stone, clay, and glass products con­
tinued to increase and the July index, at 197, was well above
the previous high in March, with an increase in production
of glass containers accounting for most of the July advance.
Lumber production showed a decline, owing in large part to
vacations for lumber workers on the Pacific Coast in the
early part of July. Activity in the furniture industry re­
mained at about the June rate.
In the nondurable industries, production at textile mills
declined, owing to worker vacations during the first week in
July, while output of manufactured food products increased
considerably. Meatpacking rose sharply to the highest level
since February and there were increases also in the output of
flour, bakery goods, and dairy products. Sugar meltings de­
clined. Output of paperboard and paper boxes declined from
recent high levels while newsprint consumption showed a fur­
ther advance. Activity in the chemical and rubber industries
showed little change.
Mineral production rose to a new high, 46 percent above
the 1935-39 average. Increases in the output of anthracite,
copper ore, and iron ore accounted for most of the July rise
in production of minerals.

Construction
Value of construction contracts awarded, as reported by the
F. W. Dodge Corporation, declined further in July but was
still more than twice the prewar average. The drop reflected
a continued decline in residential awards to a level about two
fifths below the May peak. Nonresidential building awards
increased slightly in July, after a small decline in June.

Employment
Nonagricultural employment continued to rise in July, with
major gains in the construction and manufacturing industries
and some decrease in Government employment. Total unem­
ployment decreased to about 2.3 million in July, the lowest
of the year.




Commodity Prices
Commodity prices, which had advanced sharply in July, rose
somewhat further in the first three weeks of August. There
were increases in prices of textiles, housefurnishings, and
fuels as well as in some farm products and foods. Grains,
however, declined and corn future contracts were still sub­
stantially below cash quotations, reflecting the continued pros­
pect of a large harvest. With the renewal of price control at
the end of July, ceiling prices were re-established but in many
cases at higher levels than prevailed on June 30. Announce­
ment was made that ceilings would not be re-established at
this time on most grains or on dairy products but would be
on livestock and meats and on cottonseed and soybeans and
their products.

Bank Credit
The Treasury retired for cash 3.3 billion dollars of Govern­
ment securities during July and early August. War-loan bal­
ances at commercial banks were reduced by approximately
the same amount. As most of the securities were held by
banks, retirement operations had little effect on deposits of
businesses and individuals. Drains on bank reserves resulting
from redemption of securities held by the Reserve Banks were
met by system purchases of Government securities and by re­
ductions in Treasury deposits. Need for reserve funds re­
sulted also from an increase in nonmember balances at the
reserve banks, reflecting the deposit of the first instalment of
the British loan, and from some outflow of currency into cir­
culation. Changes in required and excess reserves, on the av­
erage, were negligible.
As a result of the Treasury debt-retirement operations as
well as security sales to the Reserve Banks in connection with
reserve adjustment, Government security holdings at banks
in 101 leading cities were reduced by an additional two bil­
lion dollars during the seven weeks ended August 14. Total
loans for purchasing or carrying Government securities de­
clined further to a leval comparable to that which prevailed
prior to the Victory-Loan drive. Commercial loans, both in
New York City and outside, increased substantially over the
period.
T h e

B o a r d

o f

G o v er n o r s