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Monthly F E D E R A Volume XXXII L R E S E R R eview V E B A N K O F Atlanta, Georgia, August 31,1947 A T L A N T A Number 8 Sixth District War Plants PART I the location of an industry is determined by a com actively aware of the contributions that manufacturing could character of labor supply, financial resources, transportation facilities, the community environment, and other things which vary in importance with the industry. Civic and industrial groups have long recognized these factors. Much of the recent Southern industrialization has come about through their ef forts to analyze the potentialities of Southern locations, to cor rect deficiencies, to point out opportunities to the alert busi nessmen who establish new industries, and to help these busi nessmen in the process of launching actual operations. However important these economic factors are in influenc ing the industrialization of an area, events that cannot be con veniently classified as such traditional economic factors may be just as important or even more so. One event is a major war, A war creates conditions that make it necessary for the location of an industry to be determined often on other than economic grounds. From the years 1940 through 1945 an in vestment in industrial plants and equipment in the Sixth Dis trict states was made in an amount that at the 1939 rate would have been so invested only over a period of 20 years. These plants were not erected and equipped for the purpose of in dustrializing the South. Often they were not economically located. Their purpose was simply to help win the war. When the war ceased their task ended. With them, together with older plants, the Sixth DistrictV industry had secured almost five billion dollars in war contracts. If no more than the production of that amount of war sup plies had been accomplished, it would still be enough to jus tify the cost, a small one compared with other war expendi tures. The estimated amount spent in the Six States to enlarge industrial facilities for war production equaled only the aver age that the United States spent for war purposes during a single week in 1945, or 1.8 billion dollars. Even the money spent to erect and equip the most expensive aircraft plant in the District amounted to little more than half the cost of a battleship, and only three of the District’s war plants exceeded that cost. Despite the emergency character of this development, many people interested in the South’s industrial development be lieved that the wartime industrial expansion might give the natural but slow development of the region’s industries the impetus it needed. The war would bequeath the South a greatly enlarged force of trained labor, manufacturing facilities that could be converted, and a more experienced industrial man agement. Last but not least, it would leave the region more the traditional factors. And there was evidence to bolster such opinions. Manufac turing employment in the Sixth District states during the war rose to a peak almost twice as high as the 1939 total. Evidently 375,000 of the additional 555,000 employees were placed on the pay rolls of plants that were either enlarged or built with the aid of an estimated 1.3 billion dollars of public funds. Approximately 500 million dollars in private funds was also invested. Communities which had had no‘industrialization be fore were prospering under the expanded pay rolls, despite the headaches of rapid industrialization. Almost overnight farm workers, clerks, and housewives became carpenters, welders, and crane operators. The horizon of progress seemed unlimited. A new era for the South had dawned. During the height of war-manufacturing activity, however, some of the analysts were less optimistic. When District em ployment was at its highest point in September 1943 a study of the postwar prospects of Sixth District war-manufacturing plants published in the Monthly Review concluded: “The war time additions to manufacturing capacity in the Southeast have been planned for a war economy. While some of the new capacity, undoubtedly, will fit readily into the postwar eco nomic structure of the region, most of it will not. It would seem . . . that a soundly based regional economy should be related to the region’s own great resources and to a peace time market structure rather than be tied . . . to capacity de signed for a totally different economic situation.” A War Production Board study made in early 1944 sup ported this conclusion. Postwar prospects for the successful reconversion of industry depended greatly, it was believed, upon the postwar markets for wartime products. With the coming of peace it was predicted that the market for ships and aircraft would be but 5 percent of the peak war output and the market for munitions, at its best, less than one percent. The study indicated that the value of those District-state war plants that were readily convertible and whose products would probably have a good postwar market made up only 19 per cent of the total investment value. Those representing 21 per cent of the value, it was predicted, would be found to have a good market but poor convertibility to other manufacture. But the value of those plants for whose products a poor post war market was expected, including a mere 10 percent rep resented by the plants with good conversion possibilities, con stituted 60 percent of the plants’ total value. fte n plex of economic factors, such as the nearness to mar make to its progress. Some people even believed that the ef Okets, fects of the wartime expansion could overcome the power of the availability of raw materials, the amount and the 94 M o n t h ly R e v ie w o f t h e F e d e r a l R e s e r v e B a n k o f A t l a n t a f o r A u g u s t 1 9 4 7 Other analysts were aware that much of the wartime eco defense zone. The final structure of the District’s war-created industries nomic expansion in the District states was based not on manu facturing operations but on the comparative advantages, in reflected these factors. First, additions to existing plants were cluding climate, that the District states had as military train a relatively small part of the total industrial expansion. Ex ing sites. Actually, in the District the cost of military instal cluding the atomic-energy developments, which are also ex lations exceeded the cost of the new industrial facilities, cluded from other tabulations here, estimates based on War though the reverse was true for the United States as a whole. Production Board authorizations show that those structural With the war’s end, these analysts predicted, this source of additions and installations of equipment costing $25,000 income would almost dry up. and more made at prewar plants constituted only about 27 Approximately two years after V-J Day events have con percent of total expenditures in the Six States. Furthermore, firmed the predictions made by the more careful analysts. Of the expansion was concentrated in a few areas. the 185 plants that were enlarged or built either entirely or Plant Expansions Within the District partially with public funds, 143 are still in operation. In 1947 they were employing approximately 125,000 persons, a small This concentration followed naturally on the prewar spotted number compared with the 464,000 at work in them during concentration within the District of that type of manufactur the peak of wartime employment. The plants that were to be ing being expanded throughout the nation. Before the war the enlarged during the war had on their pay rolls about 87,000 District’s metal industries were placed chiefly in the Birming persons before the war program was begun, making a net gain ham area, and therefore much of the total expenditure made over prewar manufacturing employment of approximately to enlarge plants in the region was spent there. A substantial 38,000. During the same period, from 1939 through May increase, financed chiefly by private funds, in the capacity of 1947, the District states’ total manufacturing employment, the Tennessee Coal, Iron, and Railroad Company at Birming however, increased 304,000. It constituted 7.1 percent of the ham was the principal wartime expansion in the District’s nation’s manufacturing employment in 1939 and 6.7 percent heavy-metal industries. The Defense Plant Corporation also in May 1947. From these figures it is apparent that the ex built a plant there, for operation by the Republic Steel Com pansion in District manufacturing employment has not come pany. Investments in these plants and in additions to smaller primarily in the wap-created industries and that a greater ex ones amounted to approximately 48 million dollars. Thus the pansion in manufacturing activity took place throughout the total expenditures to enlarge the facilities of the District’s iron and steel industry, one which presented good opportu nation. Despite their relatively small contribution to the District’s nities for postwar continuance, constituted but 12 percent of immediate postwar manufacturing development, the war plants the total expenditures to enlarge the facilities of existing do offer potentialities for permanent manufacturing growth. plants. Equally concentrated in location were the District’s petro The type of industrial-expansion program that occurred in the leum refineries. Petroleum-refinery additions erected with pri District during the war and the events which have taken place since that time explain the immediate postwar developments vate funds and by the Defense Plant Corporation in the Baton Rouge and Lake Charles, Louisiana, areas cost in the neigh and the possibilities of future development. borhood of 174 million dollars and increased the facilities Wartime Expansion for the Standard Oil Company of New Jersey, the Cities Serv Although the war machine consumed such peacetime products ice Company, and others. ^ as food and clothing in greater amounts than people consume Established shipbuilding concerns had increased their pro them in normal times, its greatest demands were for munitions duction even before the United States’ entry into the war and for the products of heavy industry. At the midpoint of brought additions to their yards. In this industry also the ex the war period, in 1943, 88 percent of the value of the prime isting plants were concentrated at a few locations. Shipyards contracts awarded had, for example, been for metal products. in New Orleans, Pascagoula, and Mobile were enlarged at a The District states were especially deficient in this type of in cost of approximately 60 million dollars. In addition other dustry before the war. District ports were expanded. From the beginning of the defense program through the Iron and steel, petroleum, and shipyard expansion thus ac early stages of the war the need for speed and efficiency led counted for 75 percent of all the enlargements of manufac to the placing of orders for such materials at plants where turing plants taking place in the Sixth District states, with the productive capacity was already sufficient and at others where plants concentrated in relatively few areas. There were, of it might be most easily expanded. To a large extent this pro course, such other plants as the chemical factories where the ductive capacity was outside the District, and consequently expanded manufacturing facilities were meant to increase the relatively few plant additions were made in the area. output of peacetime products, but new facilities at many of Some time after the attack on Pearl Harbor, however, it the smaller firms took the form of specialized equipment for became evident that the existing industrial plants and addi manufacturing products very different from those of peace tions to them could not possibly supply all the military needs. time. This equipment was most often entirely, or almost en Moreover, at the time that many new specialized ordnance tirely, financed by a Government agency. Most of it was in and aircraft facilities became necessary the manpower short stalled so that the plants could manufacture munitions, in age in the established industrial areas became acute. It was cluding shells, bombs, guns, and other similar articles, and decided that many of the new plants should be placed where they could not use it in normal 9perations. there seemed to be unused manpower rather than in the older War production meant a radical change in those plants. A industrial areas of the Northeast. Another point in favor of small hosiery mill in Tennessee, for example, changed its op thus placing the new plants was that it carried out the plan erations to the manufacture of aircraft parts. Elsewhere in of locating as many new plants as possible within the inland the state guns replaced sawmill machinery as the principal M o n t h ly R e v ie w S I X T H o f t h e F e d e r a l R e s e r v e D I S T R I C T B a n k o f W A R A t l a n ta f o r A u g u s t P L A N T 95 1 9 4 7 E X P A N S I O N Those war-manufacturing facilities in the Sixth District states that were financed wholly or partly with public funds from 1940-45 cost more than 1.4 billion dollars. IN ALABAMA THE TOTAL WAS 468 MILLION Expenditures for munitions plants exceeded those for other facilities. MILLIONS OFDOLLARS — 0 IOO 200 300 400 500 Employment at these plants numbered 464,000 at the peak of operations. THOUSANDS OFEMPLOYEES - The growth in employment at these plants was paralleled from 1939 through 1943, the year of peak manufacturing, by that at other manufacturing plants in the District. ALABAMA FLORIDA GEORGIA LOUISIANA MISSISSIPPI TENNESSEE 96 M o n t h ly R e v ie w o f t h e products. Bombs for bathtubs, shells for gas stoves, ordnance parts for machine tools, ammunition boxes for soft-drink coolers, and gas-mask components for buttons were some of the other substitutions made at small- and medium-sized plants in Tennessee. In Georgia a metal-bed manufacturer began producing machine-gun parts and a refrigerator producer chemical bombs. The employees of another firm were put to work making bombs instead of caskets, and those of still another shells in stead of underwear. Louisiana companies whose peacetime products included dehydrators, oil-field equipment, pails, and structural steel switched to the output of shells and bombs. A Florida company suspended the manufacture of fishing tackle for the production of aircraft hydraulic shock struts. The already established plants at which public funds were invested for structure or equipment were employing 86,750 people before 1940. In the process of turning to specialized war production, these plants increased their employment 102,300. New W a r Plants Most of the public funds, 78 percent, were spent, however, to build entirely new war plants. Three categories — munitions, ships, and aircraft — were predominant as the products of these new plants. The Army built numerous arsenals and ordnance works in the District. The War Department built the Huntsville Arse nal and Redstone Ordnance Plant at Huntsville and the A la bama and the Coosa River ordnance plants in the SylacaugaChildersburg area, representing altogether a cost of more than a quarter of a billion dollars in Alabama. Another quar ter of a billion was spent in Tennessee for the Wolf Creek Ordnance Plant at Milan, the Volunteer Ordnance Works at Chattanooga, the Chickasaw Ordnance Works at Millington, and the Holston Ordnance Works at Kingsport. Two plants were built in Mississippi — one at Aberdeen and another, which never operated, at Flora — and one plant was con structed at Minden, Louisiana. In Georgia the Navy built two ordnance plants, one at Milledgeville and the other at Macon. Altogether the 22 new plants for the production of ammuni tion and explosives cost more than 575 million dollars, 56 percent of the total amount spent on new war plants. Several things that were later to complicate reconversion difficulties characterized the large new munitions plants. For the most part these establishments were located in cities which had had comparatively small prewar populations. None of them except the Volunteer Ordnance Works at Chattanooga was in or near a city with a population greater than 100,000. ^ Only one of them was in a city in the 50,000 class, and only two were located in cities— Huntsville and Kingsport— hav ing 1940-census populations of between 10 and 15 thousand. Otherwise they were placed in cities whose 1940 populations varied from less than 1,000 to about 7,000. The munitions plants were, however, able to draw upon the labor supply of the surrounding areas, which, of course, are not included in the city censuses. One common characteristic of most of these plants, their large size, created many housing and kindred problems. In six of the 10 cities peak employment at them during the war exceeded the 1940 populations. Manufacturing was intro duced on a large scale in many cities where before the war it had either been on a very limited scale or not at all. All together these plants employed 67,000 persons. The smallest F e d e r a l R e s e r v e B a n k o f A t l a n t a f o r A u g u s t 1 9 4 7 number employed at any one of them during peak production was 3,800, and the greatest was 9,000. Another characteristic feature of many of these plants was the type of management. The Coca-Cola Company, Procter and Gamble, General Tire, E. I. du Pont de Nemours, and the Hercules Powder Company all managed plants for the War Department. Seven plants were operated by large corpora tions which normally turned out products that are very dif ferent from ammunition. Ships and Planes Prior to the war the repair of ships, if not their construc tion, had been a typical industrial activity of most Sixth Dis trict ports. The expansion of the yards, however, was so great that they might well be termed new plants. At New Orleans the Todd-Johnson Dry Docks Company, a subsidiary of the Todd Shipyards Corporation, was doing ship-repair work. The Higgins industry, also of New Orleans, had been incor porated in 1930 to build small boats. At Avondale, Louisiana, was the Avondale Marine Ways. Before the war was over 16 million dollars worth of construction to increase the capacity of these Louisiana plants was authorized. In addition to these expansions, entirely new shipbuilding facilities costing more than 14 million dollars were built at plants operated by the Delta Shipbuilding Company and the Pendleton Shipyard Company. A ll together these Louisiana yards at their peak periods employed 41,600 persons. The workers were about equally divided between the new and the old companies. A ll but 4,100 represented additional employment under the war program. In Mississippi, the Ingalls Shipbuilding Company’s plant at Pascagoula had been established before the war, but its wartime operations multiplied its prewar employment four and a half times. Although more than six million dollars was spent to enlarge the facilities of shipyards in Florida, the greater part of the investment of more than 53 million dol lars in Florida shipyards was put into entirely new facilities. Among the most important were the St. Johns Shipbuilding Company at Jacksonville, the Tampa Shipbuilding Company, the McCloskey and Company shipyards at Tampa, and the J. A. Jones Shipbuilding Company at Panama City. Of the six new facilities only one employed fewer than 5,000 people. Three of them employed about 15,000 each, bringing the total to more than 56,000 persons at the peak of employment. A l most half of Florida’s manufacturing workers, or 66,000, were working in shipyards at the time Florida’s manufactur ing employment was at its height in 1943. Georgia’s shipbuilding was concentrated in its two ports, Savannah and Brunswick. Although additions were made to the facilities of two companies, one in each of the two cities, about four fifths the estimated total investment of more than 32 million dollars in Georgia’s shipyards was made in new companies. These firms included the J. A. Jones Shipbuilding Company, of Brunswick, and the McEvoy and the Southeast ern Shipbuilding Companies, of Savannah. At its greatest, shipyard employment in Georgia amounted to about 28,000, almost 85 percent of which was in the new plants. The Ingalls Shipbuilding Company operated a yard also at Decatur, Alabama. Although the Alabama Dry Docks Ship building Company and the Gulf Shipbuilding Company at Mobile were operating before the war, their degree of war time expansion was so great that they too might be classified as entirely new developments. These three yards cost about M o n t h ly R e v ie w o f t h e F e d e r a l R e s e r v e B a n k o f A t l a n ta 33 million dollars and employed 44,000 persons. Like the munitions plants, most of the shipbuilding estab lishments were large units. Unlike the munitions plants, how ever, they were located at larger cities as well as at small ones. As would be expected for any such large-scale develop ments, however, housing and transportation problems fol lowed their openings. The smallest cities in which shipyards were built were Pascagoula, Brunswick, and Panama City. At the yards in each of them employment was greater than the prewar population. In most of the cities selected as locations, however, there had been some manufacturing before the war. Another difference was that a large number of the yards were managed by newly organized companies, whereas in the case of the munitions plants existing corporate management had been utilized. Prior to the war there was almost no manufacture of air craft in the District states. Therefore, the 65,000 persons working in the aircraft plants during the war represented practically a net addition to Sixth District employment. Those facilities for the production of aircraft and their parts cost 13 4 million dollars. The War Department’s plant at Marietta, Georgia, operated by the Bell Aircraft Company, was the largest single installation. The Consolidated Vultee Aircraft Corporation operated a plant at New Orleans, one at Nash ville, and a third at Miami. The Nashville plant was financed to a considerable extent by private funds. The Bechtel-McComb Aircraft Modification Center at Birmingham and Hig gins Aircraft, Inc., at New Orleans were other large installa tions. Wing sections were manufactured at Memphis by the Fisher Body Division of General Motors Corporation. Large size was characteristic of aircraft plants also. The Bell Aircraft factory at Marietta employed 28,000 persons f o r A u g u s t 1 9 4 7 9 7 during its period of peak operations. Employment at the other plants was from a fifth to little more than a fourth as great. Another common feature was that, for the most part, the Dis trict’s aircraft plants were final-assembly plants for modifica tion centers instead of plants that manufactured engines or the parts themselves and thus had better reconversion possibili ties. Although the companies operated plants before the war, they were outside the District. Chem icals, Aluminum, Rubber, and Petroleum Although, compared with the investment in munitions plants, aircraft factories, and shipyards, the investment in new plants for the manufacture of other war supplies in the District was small, it would have been considered large in any period other than one of accelerated wartime investment. Moreover, a great part of the investment was placed in fields of manu facture that gave a greater promise of postwar continuance. In any other period an investment of 13 0 million dollars in new chemical plants would have attracted much more atten tion than it did. Tennessee and Louisiana locations were the chief sites for these new chemical plants. Two of the main developments from the point of cost were the plants built by the Defense Plant Corporation and the War Production Board at Lockport and Lake Charles, Lou isiana, for the manufacture of such chemicals as ammonia and chlorine as well as for the production of magnesium and magnesium alloys. Also in Louisiana was the plant at Monroe operated by Commercial Solvents Corporation for the manu facture of anhydrous ammonia. A ll together these Louisiana plants, employing about 8,200 persons during their period of peak operation, represented an investment of approximately 8 6 million dollars. An additional plant was that operated by W A R OPERATIONS W a r M a n u fa c tu rin g F a c ilitie s F in a n c e d w ith P u b lic F u n d s* S ix th D istrict S ta te s 1940 - 45 COST*** (M illions o l D ollars) NUMBER O F PLANTS WAR PRODUCT** Aircraft and parts. . . . . . . Ships and ship-repair work.............................. Guns, ammunition, and explosives.................... Iron and steel.................. Nonferrous metals and products........................ Machine tools, machin ery and electric equipment.................... Chemicals........................ Synthetic rubber, coal, and petroleum prod ucts............................... Others............................... ALL TYPES...................... NUMBER O F EMPLOYEES P e rc e n t A d d ed ol D u rin g W ar All T ypes (T h o u sa n d s) N ew Total S tru c tu re E q u ip m ent Total P e rc e n t P u b licly F in a n c e d 2 10 12 93.8 39.9 133.7 94 9.4 64.8 17.1 64.9 13 12 25 102.1 58.3 160.4 85 11.4 174.7 46.1 189.8 22 66 4 406.7 12.9 201.1 35.1 607.8 48.0 98 47 42.9 3.3 94.4 5.6 24.9 1.5 113.2 28.5 Expanded 44 4 — P e rc e n t A dded A t W artim e Peak (T h o u san d s) 5 3 8 27.8 51.7 79.5 83 5.6 6.7 1.8 8.2 4 9 10 4 19 1.1 58.7 2.1 70.8 3.2 129.5 22 99 0.2 9.2 1.5 8.5 0.4 2.3 3.8 9.2 5 22 3 17 8 39 21.0 16.4 181.9 34.9 202.9 51.3 82 57 14.3 3.7 4.2 18.3 1.1 4.8 23.1 23.7 108 77 185 740.5 675.8 1,416.3 90 100.0 378.7 100.0 464.4 * T h e ta b u la t io n e x c lu d e s p la n ts w h e r e a u t h o r iz e d e x p e n d itu r e s w e r e l e s s t h a n $ 2 5 ,0 0 0 , a t o m ic - e n e r g y d e v e lo p m e n ts , a n d p la n ts f in a n c e d e n t ir e l y w ith p r iv a te f u n d s . * * P r e w a r a n d p o s tw a r p r o d u c t s of s o m e c o m p a n ie s m a y d iffe r fro m th e s e . * * * C o s t f ig u r e s b a s e d o n W a r P r o d u c tio n B o a rd A u th o riz a tio n s . D a ta w e r e a d j u s t e d w h e n a c tu a l e x p e n d itu r e s w e r e k n o w n to d iffe r, a n d p la n ts th a t w e r e n o t c o m p le te d a r e e x c l u d e d M o n t h ly 98 R e v ie w o f t h e the Gulf Distilling Corporation at Gretna in Jefferson Parish manufacturing ethyl alcohol from molasses. A number of plants in Tennessee were built and equipped at costs in amounts of seven figures each. They included the Southern Acid and Sulphur Company built at Memphis to manufacture chlorine soda and phenol but never operated; the plant of the Tennessee Products Corporation in Chatta nooga, producing benzoate and hydrochloric acid; the East Tennessee Ordnance Works at which the Tennessee Copper Company, of Copperhill, produced sulphuric acid; the plant operated by the Rhom and Haas Company at Knoxville to produce methyl methacrylate sheeting; the Buckeye Cotton Oil Company plant at Memphis, producing chemical cotton pulp ; and the National Carbon Company plant at Columbia, producing anphorous carbon electrodes. The total cost of these and other Tennessee chemical plants was 25 million dollars, and the maximum number of employees was about 5,000. Also among the chemical plants in Tennessee was the plant built by the Defense Plant Corporation and the Rubber Re serve Corporation at Memphis that was operated by the Qua ker Oats Chemical Corporation for the manufacture of fur fural. The production of furfural, obtained from waste farm products, had been developed in commercial proportions by the Quaker Oats Company in order to utilize the hulls re maining from the manufacture of oatmeal. During the war this material gained importance as a raw product for the manufacture of synthetic rubber, for which purpose this plant was erected. Recently E. I. du Pont de Nemours & Company announced a new process by which a large part of the raw material for nylon can be obtained from this product. The chief sources of synthetic rubber in the District, how ever, were the petroleum products from Louisiana. Syntheticrubber plants costing about 23 million dollars were erected at Lake Charles for operation by the Firestone Tire and Rub ber Company and at Baton Rouge for the Copolymer Corpo ration and the Standard Oil Company of New Jersey. The expansion of the petroleum-products plants themselves, of course, increased the supply of the raw material used in syn thetic rubber. A common characteristic of these chemical, petroleum, and synthetic-rubber plants was the large investment required in comparison with the number of workers employed. In the District as a whole, the total investment for every worker added at such plants up to the time of peak production was approximately $26,000, compared with the ratio at other types of plants of $3,000. Another common characteristic was that their location was evidently determined by accessibility to large quantities of electric power. An entirely new manufacturing development was begun with the construction of facilities to take care of the various processes for the production of aluminum. The Aluminum Ore Company operated a plant constructed by the Defense Plant Corporation in Mobile for the production of alumina; the Reynolds A lloy Company produced aluminum-alloy sheets, rods, and bars at Listerhill, Alabam a; and the Reyn olds Metals Company was scheduled to operate a plant being erected at Memphis for the manufacture of aluminum extru sions. At Baton Rouge the plant operated by the Aluminum Corporation of America also was producing alumina. Alto gether these plants employed about 5,500 people. F e d e r a l R e s e r v e B a n k o f A t l a n t a f o r A u g u s t 1 9 4 7 tered the District states to operate plants constructed by the Defense Plant Corporation. The Firestone Tire and Rubber Company at Memphis manufactured rubber boats, life rafts, Navy raincoats, and other rubber products. In Alabama the plant erected for the B. F. Goodrich Company’s operation at Tuscaloosa was not completed in time for operation during the war. The Goodyear Tire and Rubber Company operated a plant at Gadsden. These plants together cost about 27 mil lion dollars and employed more than 10,000 people. Methods of Financing Since all the public funds used to finance the construction and equipment of the war plants came ultimately out of the United States Treasury, the particular Government agency through which the funds passed might seem unimportant. Just which agency it was that provided the funds, however, has influenced the problems of surplus-property disposals since the end of the war and, certainly, complicated them. Moreover, the proportion in which public funds were used gives evidence, though not always conclusive, of the confi dence that the plant operators had in their postwar prospects. For the District states as a whole public funds provided for 90 percent of the cost of both structures and equipment at the plants studied. The difference between the degree to which the total cost of construction was financed by public funds and the degree to which the total cost of equipment was financed by them may have no great significance, but it is interesting that public funds financed 94 percent of the cost of structures and 87 percent of the equipment cost. In Ten nessee private funds provided for all but 52 percent of the total cost. In Mississippi more than 96 percent of the funds came out of the United States Treasury. In the other states the proportion varied from 83 to 95 percent. To secure the necessary equipment to convert to war manu facturing some businesses borrowed funds from the Recon struction Finance Corporation. These were more often small firms. The transactions resembled borrowing from any other source. Although frequently secured by Government contracts, the title to the equipment purchased was vested in the bor rower. In such cases no surplus-disposal problems would be involved. The method was used b y eight of the companies making plant extensions and by three of the entirely new or ganizations. One case as typical as any was that of a furni ture-manufacturing company that employed approximately 100 people before the war. After securing a contract to make ammunition boxes the manufacturer borrowed approximately $50,000 from the R FC to purchase the necessary equipment. Later the loan was repaid out of funds received from fulfill ing the contract. More frequently, however, the equipment for small firms converting to the production of such articles as shells and bomb components was financed directly by the War Depart ment, which kept the titles. Very often no erection of struc tures was involved. In Alabama, for example, where 13 com panies converted to the production of ammunition shells and bombs, six of them added no structures to their plants and only one of the seven other companies built its addition with public help. At least 54 established businesses in the Six States were thus assisted by the War Department. In other instances the equipment was provided through the Defense Plant Corporation. The structures and equipment specified in the contracts remained the property of the De Several of the nation’s large rubber-tire manufacturers en fense Plant Corporation, and the manufacturing companies M o n t h ly R e v ie w o f t h e F e d e r a l R e s e r v e B a n k o f rented them. Generally the agreement between the Defense Plant Corporation and the business provided that the manu facturing company would receive preference in the sale of the plant or equipment after the close of the war and that the rents it had paid would be applied on the purchase price. A negotiated price also could be agreed upon which would take into consideration any excessive wartime depreciation and obsolescence. Plants or their equipment ranging in cost all the way from $30,000 to 90 million dollars were financed in this manner. Additional manufacturing facilities were thus provided for at least 26 existing plants. These facilities rep resented 70 percent of the total public financing for such plants. Since the end of the war several purchases have been made directly from the DPC, without the intervention of the War Assets Administration. RFC loans were used relatively infrequently to finance new war plants. The most important source of new-plant financ ing, measured by cost, was the War Department. It con structed not only the Government arsenals but small plants as well. Navy and Maritime Commission funds paid for ship yard construction. The number of new plants financed through the Defense Plant Corporation exceeded the number financed by the other agencies, though the total amount of the financ ing was smaller. Consequently, the titles to many of the new war plants, in fact to most of the very large ones, were lodged with the War Department, the Maritime Commission, the Navy Department, or the Defense Plant Corporation. At most of the war plants the period of peak employment was reached in late 1943, although at a large number it was delayed until 1944 and at a few until 1945. As the winning of the war drew nearer the attention of local communities turned increasingly to their postwar prospects. The conclu sion of hostilities in Europe and, soon afterward, those in Japan marked the end of one period of unprecedented indus trial change for many communities and the beginning of another. Charles T. Taylor This is the first of two articles on industrial war plants in the Sixth District states. The second on reconversion ex perience will appear in the September issue of the Review. A t l a n ta f o r A u g u s t DEPARTM ENT S T O R E SALES* A d ju s te d * 1lr P ER C EN T D E C R E A S E 4+ J u ly 1 9 47 Ju n e 1947 J u ly 1946 J u ly 1 9 47 Ju n e 1 9 47 Ju ly 1946 D IS T R IC T .................. 336 3 94 368 *303 302 302 405 291 278 363 326 ■387 305 441 665 398 384 353 336 335 41 3 324 315 366 377 395 ,329 441 343 380 378 313 376 330 426 333 020 335 333 419 286 427 269 315 30 9 260 2 51 241 336 242 217 257 264 310 244 366 307 326r 338 304 303 282 364 265 268 292 317 363 290 397 275 004 318 269 312 264 354 276 250 238 270 335 229 354 B a to n R o u g e . . . B irm in g h a m . . . . C h a t ta n o o g a . , . J a c k s o n .................. J a c k s o n v ille . . . . K n o x v ille ............. M a c o n .................... M ia m i.................... M o n tg o m e r y . . . N a s h v ille ............. N ew O rle a n s . . DEPARTM ENT S T O R E S T O C K S Ju ly 19 4 7 Ju n e 1947 J u ly 1946 Ju ly 19 47 June 19 4 7 Ju ly 1946 D IS T R IC T .................. 270 369 234 383 496 ,288 280 393 225 334 4 45 294 267 4 30 23 1 290 508 222 278 357 212 306 429 264 283 360 211 304 415 276 275 416 209 232 439 ,203 B irm in g h a m . . . . M o n tg o m e ry . . . N a s h v ill e ............. N e w O r le a n s . . LUMBER P R O D U C T IO N * Department |>tore Stocks Furni^jd'e S a le s Gasoline T a | | | | | iiiU o n s CcffllililnBumpUon B a n k iil mmm* mmm June 1 9 47 M ay 1 9 47 Ju n e 1946 June 1947 M ay 1 9 47 June 1946 S IX STATES . .. A la b a m a ............... n .a . n .a . n .a . n .a . n .a . n .a . n .a . 1106 ,102 73 124 92 98 166 .130 '129 108 145 90 135 197 n .a . n .a . n .a . n .a . n .a . n .a . n .a . 104 102 75 >123 92 94 166 132 136 103 154 91 128 224 G e o r g i a .................. L o u i s i a n a ............. M is s is s ip p i.......... T e n n e s s e e .......... C O T T O N C O N S U M P T IO N * — 40 30 20 10 0 10 20 C O N S T R U C T IO N C O N T R A C T S P la c e Ju ly 1947 June 1947 J u ly 1946 T O T A L .............. A la b a m a . . . G e o r g ia ... T en n essee. ,126 137 120 117 141 148 139 /12 2 143 145 ,145 118 30 40 D I S T R I C T .... n .a . 332 423 R e s id e n tia l O t h e r ............ n .a . n .a . 414 293 542 365 J u ly 1946 G A S O L IN E TAX C O L L E C T IO N S *** M ay 1947 Ju n e 1946 J u ly 1947 June 1947 J u ly 1946 1142 156 113 130 J. 40 <152 ,152 14 lr 154r 112 1 3 1r ,138 15 l r 152r 135 140 1112 129 134 ]141 145 170 174 154 1 60 154 183 204 ,172 185 165 168 162 <178 ,182 152 157 134 1145 139 144 193 M ay 1947 E L EC TR IC P O W E R P R O D U C T IO N * June 19 46 Ju n e 1947 ALL IT E M S .. F o o d ............. C lo th in g ... R e n t ............... F u e l, e l e c ., an d ic e .. H o m e fu r n is h in g s . M is c ............... P u r c h a s in g p o w e r of d o l l a r ___ 162 199 182 n .a . 197 181 n .a . 137 ■150 >153 115 122 122 H12 177 143 17 4r 1 4 4r ,153 133 .62 .6 2 .7 3 U n a d ju s te d . . A d ju s te d * * . . Ju n e 1947 Ju n e 1947 P la c e + Ju ly 1947 M A N U FA C T U R IN G EM PLO YM EN T*** 162r C R U D E PETR O LE U M P R O D U C T IO N IN C O A STA L L O U ISIA N A AND M IS S IS S IP P I* Demand Depfpts-Adj,usted U n a d ju s te d A d ju s te d * * P la c e C O N S U M E R S ' P R IC E IN D EX Departm ent Store S ales U n a d ju s te d A d ju s te d * * P la c e G e o r g i a .................. L o u i s i a n a ............. M is s is s ip p i.......... T e n n e s s e e .......... P ER C EN T IN C R E A SE U n a d ju s te d P la c e SIX STA TES A la b a m a ................ S ix th D is tric t S ta tis tic s fo r J u ly 1 9 4 7 c o m p a r e d w ith J u ly 1 9 4 6 9 9 S ix th D is t r ic t In d e x e s P la c e R e c o n n a is s a n c e 1 9 4 7 J u ly 1947 June 1947 Ju ly 1946 251 251 248 250 224 224 S IX STA TES. H y d ro g e n e ra te d . F u e lg e n e ra te d . June 1 9 47 M ay 1 9 47 284 292 251 226 260 278 359 333 216 June 1 9 46 ANNUAL RATE O F TU R N O V ER O F DEM AND D E P O S IT S U n a d ju s te d . A d ju s te d * * .. In d e x * * .......... J u ly 1947 June 1947 J u ly 1946 1 7 .2 ilSffi 7 0 .5 1 8 .4 1 8 .9 7 3 .2 66.8 1 6 .3 1 7 .3 *D aily, a v e r a g e b a s is **A d ju s te d fo r s e a s o n a l v a r ia tio n * * * 1939 m o n th ly a v e r a g e = 1 0 0 ; o th e r in d e x e s , 1 9 3 5 - 3 9 = 1 0 0 r R e v is e d n .a .N o t a v a ila b le M o n t h ly 100 R e v ie w o f t h e F e d e r a l R e s e r v e B a n k o< f A t l a n t a f o r A u g u s t 1 9 4 7 District Business Conditions Trade Sixth District department stores during July and the x V first part of August consumer spending failed to increase above that in the corresponding period of 1946. In July the seasonally adjusted index of daily average sales was 336 per cent of the 1935-39 average, whereas in June it was 365 per cent and last July 343. Last month was the first time in 10 years that July department-store sales in the District have failed to register a gain over those for the preceding year. The furniture stores located throughout the District reported their July sales to be 3 percent below those in 1946; jewelers showed their sales to be 16 percent less. Comparisons between conditions now and conditions as they were in the period 1935 through 1939 show that the Dis trict’s department stores lead those of the other Federal Re serve districts in the rate of sales increase. The June adjusted index represented a 265-percent increase over the 1935-39 average, much greater than the increase that took place throughout the United States. The United States index was 288, representing a 188-percent increase over the 1935-39 average. In an appraisal of the present relative economic position of the District, as measured by this index, however, a com parison with more recent figures may have greater signifi cance. During the first six months of 1947, the final figures reported show that Sixth District department stores sold goods 6 percent greater in dollar value than the goods they sold during the first half of 1946. Throughout the United States the corresponding increase was 9 percent. Furthermore, the rate of the District’s gain was exceeded by nine of the 11 other Federal Reserve districts. The three Southern districts of Dallas, Richmond, and Atlanta all had the same rate of in crease. During the corresponding time in 1946 the Atlanta district had a rate of increase exceeded only by the gains in seven other districts, and during the first half of 1945 it shared with one other district the highest rate in the nation. That Sixth District consumers in 1947 were able to exceed their heavy spending in 1946 indicates they have retained much of the gain in relative income position they obtained during the war years. The rapid rate of increase in the Dis trict during the war compared with increases in other districts is, of course, one reason why each dollar rise in sales at the present time contributes less to a percentage gain than a simi lar rise did at that time. Even so, the recent lower rates of increase in the District indicate that the wartime influences which raised Sixth District income are diminishing. They also indicate that only further increases in income can make the District retain the economic position it acquired during the war. In explanations of the high rate of business activity in 1946 inventory building has commonly been given one of the chief roles. Not only retailers but wholesalers and manufac turers increased their inventories more rapidly than their sales increased The high level of outstanding orders was be lieved to indicate a further expansion of stocks. At Sixth Dis trict department stores in July 1946, for example, stocks and outstanding orders at retail prices together were 6.3 times the July sales. As the merchants replenished their inventories and obtained at prompter deliveries, however, their outstanding orders began to fall. At the end of May this year, when they were less than half what they were a year earlier, the outstanding orders at the Sixth District department stores were at their lowest point. Since May they have increased somewhat every month, but the increase may merely reflect the stores’ tendency to place more of their orders at this time of the year. In July they were 15 percent greater than they were in June, though more than two thirds below the July 1946 level. The decrease in outstanding orders, however, overstates the decline in the merchants’ purchases and the influence of their purchases upon general business activity. Prompter deliveries and a decline in future commitments explain part of the de cline. Despite the large decline in outstanding orders, the retail value of merchandise received during the first seven months of 1947 was but 10 percent less than that of mer chandise received during the same period of 1946. Neverthe less, as a result of their inventory building, all Sixth District department stores received goods 15 percent greater in retail value than the goods they sold during the same period in 1946, whereas in 1947 sales exceeded merchandise received by 2 percent. c. T. T. Employment and Industry Six State manufacturing employment showed a slight gain during June, for the first time in seven months, over the figure of the preceding month. Although up to that time other Dis trict states had had increased employment since January 1946, the increases had not been sufficient to offset slight decreases in the number of manufacturing workers in Georgia and Florida. In Georgia these decreases were largely in nondur able-goods employment, with cotton-textile layoffs making up most of the change. Declines in the number of manufacturing workers in Florida were caused by seasonal layoffs in the canning industry during the spring. Cotton consumption in District states declined during July for the sixth consecutive month. Since May, mill consump tion has been lower than it was in the corresponding months of 1946. The July decline was brought about largely by the vacations given by a number of mills, and the steady decline in cotton consumption in the first half of 1947 was caused both by readjustment of production schedules with the elimi nation of extra shifts and by changeovers to lighter construc tions of cloth. Apparently the saturation point for cloth prices was reached during the spring, because some declines in cloth prices have taken place in spite of increased cotton prices. Mill margins, as a result, have declined from the March high of 53.37 cents a pound. The industry’s production is largely sold for the remainder of the year, and some con tracting is being done through the first half of 1948. Carloadings on Southern railroads during August have been virtually what they were a year ago. In general, how ever, loadings of grain and livestock have increased and coal shipments and other loadings of less-than-carload-lots have decreased. Despite shutdowns because of the coal dispute early in July, steel-ingot production was at a higher rate in the South ern district than it was in most of the other sections of the country. Scrap supplies are apparently greater in the Dis trict than elsewhere, and Northern mills have been buying M o n t h ly R e v ie w o f t h e F e d e r a l R e s e r v e B a n k o f scrap from the Birmingham region for use in their furnaces. The value of construction contracts during the first half of 1947 exceeded that for the first six months of 1946 in all Sixth District states except Georgia, according to figures sup plied by the F. W. Dodge Corporation. In Georgia the index was 263 of the 1935-39 average of 100 for the first half of 1947, compared with 451 for the corresponding period of 1946. The major decline in Georgia occurred in the value of building contracts other than residential. Residential-building contracts in that state for the first half of the year exceeded those for the first six months of 1946 by 8 percent. The in crease for the Six States as a whole was 26 percent. T.R.A. Finance The earning assets of member banks, represented by their total loans and investments, continued to decline in July as they did during the preceding months of 1947. At all member banks these earning assets on July 30 amounted to 4,201 million dollars, a decrease of six million dollars since June 25 and a decrease of 76 million dollars since the first of the year. Smaller holdings of U. S. Government obligations, which decreased 36 million dollars during July and have declined 124 million dollars since the first of the year, ac counted for the decrease in total loans and investments. Loans and discounts expanded 22 million dollars in July and have increased 41 million dollars since the first of the year. There has also been an increase in the holdings of other-than-Government securities. During the first two weeks of August the weekly reporting member banks in the larger District cities reported increases in their total loans and investments. The greater total resulted from increases of two million dollars in total loans and of 14 million in security holdings. Commercial, industrial, and agricultural loans increased nine million dollars, but this gain was offset by declines in other types of loans. These banking changes, which were continuations of trends begun in 1946, have been reflected in the earnings statements of the member banks. During the first half of 1947 at 20 of the larger District banks which report weekly, net profits after income taxes were 23 percent less than they were during the first half of 1946. Decreases in the earnings from Govern ment securities and in the profits from the sale of securities, as well as increases in expenses, explained the decline. The greater amount of loans made by the banks in recent months was responsible, of course, for their greater earnings from loans. These earnings provided 38.7 percent of the total earnings at the 20 banks from January through June 1947, compared with 30.3 percent during the corresponding six months of 1946. There was a decrease in the proportion of earnings provided by interest on Government securities, from 50.3 to 34.3 percent of total earnings. Earnings from loans increased 35 percent. Increases in other types of earnings with the exception of service charges and loan fees were suffi cient to offset a 16-percent decline in the earnings from in terest on securities, so that the total current earnings were up 5 percent. Despite the increase in total earnings, expenses grew to such an extent that net current earnings were down 9 percent. Except for the interest paid on borrowed money, whicjj was smaller during the first half of 1947 than it was during the first half of 1946, other types of expenses increased, so that total expenses were 15 percent higher. The greater part of the A t l a n ta f o r A u g u s t 101 1 9 4 7 S ix t h D is t r ic t S t a t is t ic s CONDITION O F 28 MEMBER BANKS IN SELECTED CITIES (In T h o u sa n d s of D ollars) A u g . 20 Item 1947 L o a n s a n d in v e s tm e n ts — T o ta l................................................... L o a n s —t o t a l .................................... C o m m e rc ia l, in d u s tr i a l, a n d a g r i c u lt u r a l lo a n s . L o a n s to b r o k e r s a n d d e a l e r s in s e c u r i t i e s . .. O th e r lo a n s fo r p u r c h a s i n g a n d c a r r y in g s e c u r i t i e s ................................. R e a l esta te: l o a n s .................. L o a n s to b a n k s ....................... O th e r l o a n s ................................. I n v e s tm e n ts —t o t a l .................... U . S . d ir e c t o b l i g a t i o n s . . O b lig a tio n s g u a r a n t e e d b y U . S ...................................... O th e r s e c u r i t i e s ..................... R e s e r v e w ith F . R. B a n k . . . C ash , in v a u l t ................................. B a la n c e s w ith d o m e s tic b a n k s .............................................. D e m a n d d e p o s its a d j u s t e d . T im e d e p o s i t s .............•................ U. S . G o v 't d e p o s i t s ............... D e p o s its o f d o m e s tic b a n k s . B o r r o w in g s ...................................... Ju ly 23 1947 (P ercentC hange A ug. 21 A ug. 20# 1947, from 1946 A u g . 21 1946 2 ,3 1 9 .7 1 2 2 ,2 9 1 ,1 1 1 2 ,5 2 5 ,2 8 0 7 2 3 ,6 8 6 7 0 3 ,8 8 8 6 1 9 ,7 1 3 + i+ i 3 — 8 + 17 4 1 1 ,9 8 1 3 9 7 ,2 3 5 3 2 2 ,6 8 4 /+ 4 .+ 2 8 7 ,3 3 4 6 ,8 3 6 1 4 ,1 2 5 + 7 — 48 1 1 19 + 4 H- 1 3 — 34 )+ . 31 4 - 61 \+ 41 — 16 — 45 8 0 ,4 8 2 3 1 ,0 5 0 1121,998 5 5 ,6 5 7 5 6 ,3 0 0 4 2 ,8 3 6 5 ,1 2 1 6 ,3 3 1 3 ,1 7 2 .15 6 ,77 9 1 6 2 ,4 6 8 1 1 4 ,8 9 8 1 ,5 9 6 ,0 2 6 1 ,5 8 7 ,2 2 3 ■ 1,905,567 3 6 9 ,4 0 5 3 8 0 ,7 1 9 6 6 9 ,9 9 3 H- 1 ,0 3 5 ,0 3 4 1 ,0 2 0 ,4 8 4 il,0 4 0 ,6 2 1 1 9 1 ,5 8 7 ,18 6 ,02 0 1 9 4 ,9 5 3 4 3 8 ,7 1 6 4 3 3 ,5 1 6 4 4 3 ,3 8 8 3 9 ,8 8 1 i41,537 ,38,041 + /+ !+ 1 8 3 ,0 2 0 1 ,7 6 7 ,0 3 2 5 4 7 ,1 6 1 3 2 ,2 4 1 4 6 8 ,8 0 3 5 ,0 0 0 8 0 0 r+-112 4" 6 17 1 7 0 ,2 3 4 1 ,7 6 1 ,5 5 1 5 4 7 ,8 3 7 1 5 ,2 4 2 4 4 3 ,9 6 3 6 ,0 0 0 2 0 0 ,8 3 8 1 ,7 3 0 ,1 1 8 5 3 4 ,4 1 5 2 3 9 ,3 7 1 5 3 7 ,4 1 7 5 ,8 0 0 1 3 -1 4 — — — :+ 1 2 1 5 9 /-f- 2 ;+ 2 — 87 — 13 — 14 + + DEBITS TO INDIVIDUAL BANK ACCOUNTS __________ (In T h o u sa n d s of D ollars)__________ N o. of B anks R ep o rt in g P e rc e n t C h an g e July 1947 from July 1947 June 1947 July 1946 3 6 2 3 4 13 1 7 ,2 7 3 2 6 9 ,7 2 2 8 ,8 4 0 1 5 ,2 1 6 1 2 5 ,2 1 3 6 1 ,7 5 0 1 8 ,8 9 4 2 7 4 ,3 9 4 9 ,2 8 8 1 4 ,8 4 7 1 2 3 ,0 5 2 6.2,537 1 9 ,3 8 6 2 4 2 ,1 8 5 8 ,5 6 2 1 4 ,2 2 4 9 6 ,3 2 6 5 3 ,3 8 5 — — — •f + — 9 2 5 2 2 1 — 11 + 11 + 3 + 7 30' + , 16 <3 7 12 , 3 1 3 3 3 2 3 3 ,0 2 0 1 9 5 ,4 6 4 2 6 3 ,1 8 8 3 8 ,5 2 3 3 0 ,1 2 1 4 2 ,4 9 6 9 3 ,6 8 9 2 3 5 ,5 7 3 1 9 5 ,9 1 4 2 6 8 ,3 1 0 4 1 ,6 7 7 3 0 ,0 6 9 4 3 ,4 4 3 9 4 ,5 0 1 2 0 0 ,8 5 9 1 7 8 ,5 5 1 ' 2 4 6 ,2 2 5 4 1 ,6 8 5 2 8 ,4 3 5 4 0 ,8 7 9 8 7 ,1 2 6 — — — — + — — 5 0 2 8 o 2 1 + 11 + 9 + 7 — 8 +. 6 'N e w n a n ............... R o m e * .................. S a v a n n a h .......... V a ld o s ta ............. 2 4 3 12 4 2 13 12 3 2 3 4 2 1 3 ,4 2 6 7 0 3 ,5 6 5 4 8 ,0 9 2 8 ,3 0 8 5 3 ,2 3 6 3 ,1 3 6 1 1 ,9 5 5 9 ,1 3 8 5 6 ,8 9 4 8 ,9 3 5 1 7 ,3 9 8 8 2 ,0 0 5 1 2 ,5 2 7 1 2 ,6 8 5 6 7 6 ,1 4 6 4 5 ,8 3 1 7 ,8 1 8 5 1 ,0 2 1 3 ,2 6 5 1 0 ,6 9 4 9 ,9 5 1 5 1 ,1 9 8 6 ,4 4 6 1 6 ,9 9 2 8 1 ,1 9 8 9 ,4 7 2 1 1 ,8 8 2 6 3 3 ,8 9 8 5 5 ,0 1 1 8 ,5 8 4 4 6 ,6 1 5 2 ,7 5 2 1 0 ,6 7 9 8 ,2 1 2 5 1 ,3 8 1 8 ,9 8 1 1 6 ,8 3 5 7 4 ,2 7 5 1 4 ,0 2 7 + + + + + — + — +. + + + + LO U ISIA N A B a to n R o u g e . . Lake C h a rle s .. N ew O r le a n s .. 3 3 7 7 9 ,3 8 1 2 5 ,9 1 2 5 6 9 ,8 9 1 7 1 ,8 8 4 2 5 ,1 4 8 5 5 5 ,2 1 9 5 8 ,3 6 1 2 1 ,9 2 7 6 0 5 ,8 7 0 2 4 S3 1 4 ,4 9 1 1 0 3 ,2 5 9 2 2 ,8 8 3 2 0 ,9 5 0 1 4 ,1 8 5 8 7 ,6 1 8 2 6 ,0 1 4 2 2 ,2 5 2 P lace ALABAMA A n n is to n ............. B ir m in g h a m .... D o th a n .................. G a d s d e n ............. M o b ile .................. M o n tg o m e r y .. . FLO R ID A J a c k s o n v i l l e .. . G r e a te r M iam i* O r la n d o ............... P e n s a c o l a .......... S t. P e te r s b u r g . T a m p a .................. Ju n e 1947 July 1946 + 4 + 8 6 4 6 6 4 4 12 8 11 39 2 1 32 + +i — — +• ;+ + + + — +. +, — 13 11 13 3 14 14 12 11 11 1 3 10 11 + + + io 3 3 — + — + — 0 3 1 i+ 2 + 15 — 11 — 13 — ! G E O R G IA A tla n ta .................. B r u n s w ic k .......... C o lu m b u s .......... E l b e r to n ............... G a in e s v i lle * . . . M IS S IS S IP P I H a ttie s b u r g .. . J a c k s o n ............... M e r id i a n ............. V i c k s b u r g .......... a 1 4 ,5 2 4 1 0 0 ,3 3 5 2 3 ,1 8 1 1 9 ,4 5 8 TEN N ESSEE C h a t ta n o o g a . . K n o x v ille ............. N a s h v ille ............. 4 4 6 1 2 6 ,1 7 9 1 0 1 ,2 1 9 2 6 5 ,7 8 9 1 2 7 ,8 7 9 9 9 ,8 1 3 2 6 1 ,9 1 2 1 1 2 ,8 1 0 9 8 ,1 0 2 2 4 9 ,5 0 7 SIXTH D IST R IC T 3 2 C i t i e s ............... 109 3 ,4 3 7 ,3 2 0 3 ,3 9 2 ,7 0 7 9 3 ,7 3 3 ,0 0 0 9 4 ,4 7 4 ,0 0 0 UNITED STA TES 3 3 4 C i t i e s ............. *Not included in Sixth District total 7 + 36 + 18 6 + + 1 1 rf- 12 + 3 + 7 3 ,2 1 5 ,6 5 5 + 1 :+ 7 9 1 ,3 5 8 ,0 0 0 — 1 + 3 102 M o n t h ly R e v ie w o f t h e F e d e r a l R e s e r v e B a n k o f A t l a n t a f o r A u g u s t 1 9 4 7 increase was accounted for by a bigger wage-and-salary bill. cent lower. Farmers in each of the Six States had larger live Both the number of officers and employees and the size of stock receipts. Only in Georgia and Alabama, however, did individual salaries and wages increased so that the total crop receipts exceed those of the first four months of last year. The lower crop receipts so far this year reflect a smaller expense for wages and salaries was up 19 percent. Substantial declines in the amounts of profits received from income from fruits and vegetables. Last year these two groups the sale of Government securities and recoveries together of crops accounted for about one third of District farmers’ with an increase in losses and charge-offs on loans combined crop income. This year prices were lower for citrus, the most to bring net profits before income taxes to an amount 18 important fruit crop, and the truck-crop output in most Dis percent lower than it was during the first half of 1946 and 3 trict producing areas was smaller. Because strong demands for most livestock products are percent lower than it was during the second half of last year. Net profits after taxes were down 23 percent below those of expected to continue, the District farmers’ income from this the first half of 1946 and up 1 percent above those of the source during the rest of the year will probably be well above second half. On an annual basis the ratio of net profits after that of last year. Their income from crops, however, is un taxes to total capital accounts was 9.4 percent in the first half certain. The returns from cotton, of course, provide the key to the of 1947, compared with 12.8 percent during the first half of Six State farmers’ income position during the coming months. 1946. The decline in the importance of Government securities as Production, on the basis of August 1 conditions, is estimated a source of earnings to the banks was also indicated by the at 4,180,000 bales for the Six States, or about 31 percent change in the relation of these assets to total assets. During larger than last year’s 3,190,000-bale crop. Although farmers the first half of this year Government securities made up 43.7 planted only slightly more cotton this year than they did last percent of total assets and loans 21.8 percent. During the year, higher yields are expected in Alabama, Mississippi, and corresponding period of 1946, when the banks still held large Louisiana. The prospective 1.6-million-bale crop in Missis amounts of the U. S. certificates of indebtedness purchased sippi is 53 percent larger than last year’s crop, and the ex during the war-loan drives, Government securities constituted pected one-half-million-bale Louisiana crop is about double that of last year. 52.3 percent of the banks’ total assets, and loans 17.5 percent. Estimates of total United States production from the 1947 For the corresponding period of 1945 the ratios were 54.5 crop were 11.8 million 500-pound-gross-weight bales, based and 13.9. on conditions as of August 1. This estimate is 3.2 million There has been a change not only in the relative import bales larger than the 1946 crop but is a half million bales ance of security holdings and loans to total assets but in the below the 1936-45 average and about 0.7 million bales be character of loans made by the banks—from those yielding low the production goal recommended for 1947. lower rates of interest to those yielding slightly higher rates. Because imports are negligible, the carryover on August 1 Loans to brokers and other security loans, which were high and the current production represent total supplies available during a great part of the first six months of 1946, have de during the season. The August 1 carryover of all cotton in clined to almost half the amount outstanding at the beginning the United States was about 2.5 million bales. This is the of 1946. At the same time there has been a substantial in lowest carryover since 1929 and is about 4.8 million bales crease in commercial, industrial, agricultural, real-estate, and less than the amount on hand at the end of the preceding consumer loans. As a consequence the average rate of return season. on loans increased between the two periods from 2.8 to 3.2 According to the August production estimates, the total percent on an annual basis. c. T. T. supplies during the 1947-48 season will be about 14.3 million bales, or about two million bales less than the quantity avail Agriculture able last season. Not since the 1922-23 and 1923-24 seasons Measured by cash receipts from marketings, the unprece have total supplies been at these extremely low levels. dented prosperity of the nation’s farmers was continued dur On the demand side, the factors affecting prices are also ing the first seven months of this year. The receipts from live favorable. Total 1946-47 utilization of 13.5 million bales is stock and livestock products, at 9.2 billion dollars, were 30 estimated on the basis of 10 million bales for domestic con percent more than they were during the same period last sumption and 3.5 million bales for export. Mill consumption year, mostly because of a 32-percent rise in livestock prices. during the 1946-47 season was higher than it was in any Crop receipts, at 5.1 billion dollars, were 22 percent greater other peacetime year. Cotton-textile output during 1946 was than those of the first seven months of last year. Higher crop 7.5 percent above the 1937-39 average, and the 1947 output is running, on the basis of first quarter figures, about 16.5 prices accounted for most of the income increase. percent above the prewar average. In contrast to all farmers, District farmers received about The exports of all types of cotton fabrics during 1946 the same income from marketings in the first half of this totaled 775 million square yards, or the greatest amount for year that they did in the corresponding period of 1946. Re any year since 1920. During the first half of this year cottonceipts during the first four months of 1947 were only 597 fabric exports totaled more than 727 million square yards, or million dollars, or about 5 percent greater than they were more than 90 percent of the total exported last year. If con in the same period last year. Livestock receipts for the four- tinued at this average rate during the remainder of the year, month period were about 35 percent greater than they were the 1947 total exports would approximate 1.5 million yards. These favorable demand factors are partially a result of for that period in 1946, but crop receipts were about 10 per M o n t h ly R e v ie w o f t h e F e d e r a l R e s e r v e B a n k o f A t l a n ta f o r A u g u s t 103 1 9 4 7 ■■■■■■ INSTALMENT CASH LOANS No. ol .Stores R ep o rt in g L ender F e d e r a l c r e d i t u n i o n s ............. S ta t e c r e d i t u n i o n s .................. I n d u s tr ia l b a n k i n g c o m p a n i I n d u s tr ia l lo a n c o m p a n ie s . S m a ll l o a n c o m p a n ie s ........... C o m m e rc ia l b a n k s ..................... 43 25 11 19 50 34 V olum e O u tstan d in g s P e rc e n t C h a n g e July 1947 Irom P e rc e n t C h a n g e July 1947 Irom June 1947 July 1946 Jun e 1947 — 10 + 13 + 4 — 6 + 5 + 4 + 102 + 26 + 4 + 1 + 9 4- 63 + + + — 4rf July 1946 6 6 1 0 1 5 rf rf rf. ,+ rf '+ 69 35 26 31 20 80 RETAIL JEWELRY STORE OPERATIONS Item N um ber ol S to res R eporting June 1947 C ash i s a l e s ........................................................ C r e d i t s a l e s ................................. .................... A c c o u n ts r e c e iv a b l e , e n d o f m o n th C o lle c tio n s d u r in g m o n t h .................. 24 23 23 23 24 —* 12 — 7 — 15 — 7 <+ 3 P e rc e n t C h a n g e July 1947 Irom July 1946 — — — .+ . vf 16 20 12 36 2 WHOLESALE SALES AND INVENTORIES* INVENTORIES SALES Item s P e rc e n t C h a n g e July 1947 Irom June 1947 A u to m o tiv e s u p p l i e s . 4 — C lo t h in g ............................... 3 + D ru g s a n d s u n d r ie s .. + 8 D ry g o o d s .......................... 9 + W ir in g , s u p p lie s , c o n s tr . m a t e r i a l s . . . 4 — E le c tric a l a p p l ia n c e s a n d s p e c i a l t i e s .......... 6 — C o n f e c tio n e r y ................ — 4 G r o c e r ie s F u ll l i n e s ....................... 26 + S p e c ia lty l i n e s ........... 6 + G e n e ra l h a r d w a r e ... + 8 I n d u s tr ia l s u p p l i e s . . . 4 — — J e w e lr y ................................. 3 L u m b e r a n d b u il d in g m a te r i a ls ....................... 3 — T o b a c c o p r o d u c t s ___ 7 + M is c e l la n e21 o u s ................ + 116 + II N o. ol Firm s R eport in g N o. ol P e rc e n t C h a n g e Firm s July 31. 1947, Irom R eport Ju n e 30 Ju ly 31 in g 1947 1946 7 13 20 15 21 3 0 + 65 — 40 8 *f - 18 4 H- *2 H- 4 8 8 + 37 4 — 19 + 61 1 2 + 36 — 7 5 — 7 + 216 12 15 1 6 2 + 13 + 36 + 22 + 7 - 31 13 3 3 — — 4 10 5 + 74 1+ 6 4 i+ 5 7 3 — i i+ i 2 21 9 8 6 + 39 + 2 + 16 + 11 16 54 <+ — 2 3 r f 48 Hr 6 6 * B a s e d o n U . S . D e p a r tm e n t o l C o m m e r c e f ig u r e s DEPARTMENT STORE SALES AND STOCKS INVENTORIES SALES P lace 5 5 3 4 P e rc e n t C h a n g e July 1 9 4 7 Irom June Ju ly 1947 1946 — 11 — 10 — 13 — 4 — 0 — 17 — 4 6 4 3 1 — 14 — 5 4 rt- 1 + 3 + i + 32 3 3 — + 5 2 — 21 — 2 — *3 + 8 3 — ’6 + 4 5 3 — — 1 2 4 *+ ’o — 16 — 5 — 7 — 13 4 5 — 5 —, 12 — + 3 8 4 4 — — 6 4 A •k V - 11 __ — Q 3 A •* — 6 - — 12 + 5 2 ++ + 3 6 2 ± 4 3 5 — )+ — P e rc e n t C h a n g e No. o l S to re s July 31# 1 9 4 7 , Irom R ep o rt June 3 0 Ju ly 3 1 in g 1947 1946 — 17 — 1 3 — 14 — 20 — 12 8 — — 2 1 rf- 29 — _ 4 5 — 1 + 3 — 2 — 2 4 8 22 73 li 18 94 — S — 11 — 10 — 8 rr CO 6 9 0)0 3 4 4 — • • ALABAM A B ir m in g h a m ___ M o b ile ..................... M o n tg o m e r y .. . F L O R ID A .................. J a c k s o n v ille ___ M ia m i....................... O r la n d o .................. T a m p a ..................... G E O R G IA A tla n ta ..................... A u g u s t a ................ C o lu m b u s ............. M a c o n ..................... LO U ISIA N A B a to n R o u g e . . . N ew O r le a n s .. M IS S IS S IP P I J a c k s o n .................. TE N N ESSEE B r is to l..................... C h a t t a n o o g a .. . K n o x v ille ............. N a s h v ille ............. O TH ER C I T I E S * .. D IS T R IC T .................. No. ol S to re s R ep o rt in g II S ix t h D is t r ic t S t a t is t ic s 'I'O) «-h<N changes in the world cotton position. Though world consump tion during the season ending in July 1947 is estimated to have been much higher than it was in the preceding year, it was still only about 95 percent of the prewar average. Dur ing the same season world production, however, was about one third less than it was in the prewar years 1935-39. Though world production is moving upward, there are no indications of an early return to prewar levels. Exports during the 1947-48 season will depend largely on the supply of dollar exchange or credits available to import ing countries. In connection with setting the cotton-production goals, the Department of Agriculture estimated that 1947-48 exports would be 3.5 million bales. This estimate assumes the most favorable of the conditions likely to prevail in re gard to the dollar exchange and credits of importing coun tries. New programs for financing the shipment of cotton to Japan and to the occupied zones of Germany are now being developed. Under the new agreements, trade will be conducted through commercial channels without direct Government par ticipation. The credit for financing the shipments will come largely from the Export-Import Bank. Although accurate esti mates of the volume of cotton which will be exported under these programs are not available, it is expected that as much as 900,000 bales may be shipped during 1947-48. Regardless of the financial arrangements which may be made, it appears likely that the export market will be rela tively small compared to that of prewar years. Favorable cot ton prices, then, will depend largely on domestic consumption. On the basis of an 11.8-million-bale crop and a 2.5-millionbale carryover, domestic consumption during 1947-48 could be considerably lower than that during the preceding season without an appreciable increase in carryover at the end of the season. In the production-goal recommendation of a 12.2million-bale crop for 1947-48, a domestic consumption of only 8.5 million bales was assumed. Under the terms of the 1947 Loan Program the cotton growers are assured a price of 27.94 cents a pound for 15/16inch middling cotton at average location. If prices were to fall to support levels, however, the District farmers’ cotton income, even with a larger production, probably would be lower than it was last year. Whether increases in the District farmers’ incomes will be as great as those expected in all farmers’ incomes, therefore, depends largely on the domestic demand for cotton in the coming months. B .R .R . State and Local Government Although often overlooked as a force in the District econ omy, one of the largest businesses in the Sixth District is the business of government. Early in 1947 the textile plants, which represent the most important of the Six States’ manufacturing industries, had 207,000 workers, but the Federal Government and the state, county, and city governments of the Six States had more than 500,000. In these states during 1947 the pay rolls of just the state- and local-government units will ap proximate 800 million dollars. The counties, cities, towns, and villages in January em ployed 47 of each 100 public employees. Thirty-six of every 100 were on Federal pay rolls, and 17 worked for the state governments. Subsequent reductions, however, have decreased the number of Federal employees. Since the fall of 1945 total public employment in the Six States has been decreasing, according to the Atlanta regional office of the Bureau of Labor Statistics. This decline has been o H- 31 — + + *2 8 1 * W h e n f e w e r th a n 3 s to r e s r e p o r t in a g iv e n c ity , t h e s a le s o r s to c k a r e g r o u p e d t o g e t h e r u n d e r • •o th e r c itie s / * ___________ M o n t h ly 104 R e v ie w o f t h e brought about largely by the Federal curtailments. Between V-J Day and June 1947 approximately 120,000 names were removed from Federal pay rolls in these states. State and local governments on the other hand have ex panded their employment. Many of their functions were sus pended during the war because of equipment and manpower shortages and could not be resumed until recently. Often regular employees who went into service were not replaced, and their return after V-J Day increased the employment figures slightly. Some functions of the Federal Government were turned over to state and local authorities after the war. In addition, some of the local-government services have been expanded recently because of increased business activity, new construction, and expanded populations. Although school-system employees make up about half of all state and local government workers, the number of public educational workers has increased very little. Since 1941 school employment in the Six States has increased only 10 percent, but the number of nonschool workers of state and local governments has increased 33 percent. The scope of education, which is one of the primary serv ices of local-government units, varies little with changes in community income. Consequently there is little variation in employment in school systems. On the other hand, as the per capita income of a community rises, additions are almost always made to government services involving public works, health, hospitals, recreation, and the like. Thus during the war the much greater additions of nonschool public employ ees were part of the normal expansion of government func tions that accompanied the increases in per capita incomes in the Six States. Despite wartime increases these states still have fewer pub lic employees among each 1,000 inhabitants than the nation does. In the District states, according to Census Bureau fig ures, 37 of each 1,000 people were government workers in January 1947, compared with the rate of 44 for the United States as a whole. Of the Six States only Florida exceeded the national average, with 52. Together the District states, how ever, have virtually the same proportion of public educa tional workers as the nation has. If the difference between the District states* and the nation’s per capita incomes continues to shrink, it is probable that the 533 counties and the almost 2,000 cities, towns, and villages, as well as the states, of the ployment even more. T. R. A. B a n k A n n o u n c e m e n ts The newly organized Bank of Leighton, Leighton , Alabama, opened for business on August 2 as a mem ber of the Federal Reserve System. This bank has a capital stock of $25,000, a surplus of $25,000, and other capital funds amounting to $12,500. The officers are Leonard Preuit, president; R. L. Layton, vice pres ident; and /. A . Milner, cashier. The Industrial Banking Company, a nonmember bank in Valdosta, Georgia, began remitting at par on August 4. James A . Parramore is cashier, and Mrs. /. B. McDonald assistant cashier. F e d e r a l R e s e r v e B a n k o f A t l a n t a f o r A u g u s t 1 9 4 7 T h e N a tio n a l B u s in e s s S itu a tio n production was at a lower level in July than in June, owing in part to influences of a temporary nature. Retail trade was generally maintained. Prices advanced during July and also the first half of August. Industrial Production Production of manufactures and minerals both declined in July, and total industrial production, according to the Board’s seasonally adjusted index, was at 178 percent of the 1935-39 average. This was six points below the June level and 12 points below the March postwar high of 190. Scattered infor mation now available indicates a somewhat higher level for August than for July. Employment Factory employment declined somewhat further in July, after allowance for seasonal changes, while employment in most other nonagricultural lines continued to show little change. Total Government employment was reduced by 120,000 to about 5.3 million persons in mid-July, reflecting a reduction in Federal employment and also a decline of a seasonal nature in other Government employment. Construction Value of construction contracts awarded, according to the F. W. Dodge Corporation, rose in July, reflecting increases in awards for most types of private construction. Awards for private residential work were one-fourth larger than in June as contracts for hotels, apartment hotels, and one-family houses for sale or rent increased substantially. Value of awards for commercial and manufacturing building increased by about one-third. Federal controls on private construction were largely eliminated as of June 30. Distribution Department-store sales showed the usual seasonal decline in July, and the Board’s adjusted index remained at the high May and June level. In the first two weeks of August, sales showed less rise than usual and were 4 percent below the corresponding period of a year ago, whereas in July sales were 5 percent higher than last year. This difference reflected in part the sharp temporary rise in sales which occurred in August a year ago and the unfavorable shopping weather in many sections this year. Commodity Prices The general level of wholesale commodity prices advanced somewhat further from July 15 to the middle of August, re flecting chiefly further increases in prices of meats, dairy products, and fuels, and a general advance of about 10 per cent in prices of iron and steel products. Prices of new auto mobiles were generally raised in this period. Steel-scrap prices declined in the middle of August, following sharp ad vances in preceding weeks. Bank Credit Further additions to monetary gold stock, an inflow of currency from circulation, and purchases of Government se curity by the Reserve banks increased member-bank reserve balances in July and the first three weeks of August. In August these additions to bank reserves were partly offset by a shift of funds to Treasury balances at Reserve banks as a result of an excess of Treasury receipts over expenditures. Required reserves increased over the period, reflecting con tinued expansion of deposits at member banks. n d u s t r ia l I T h e B oard of G overnors
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