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H o it h l v | $ | R ev iew F E D E R A L R E Volume XXXIV S E R V E B A N K O F A T L Atlanta, Georgia, August 31, 1949 A N T A Number 8 District Long-Term Personal Savings A S o u rce o f I n v e s tm e n t F u n d s? its income up to the national level is generally Sixth District have been discussed from time to time in this recognized as the South’s major long-term economic Review. Generally, despite the diversity of subject, these dis problem. Southerners, as well as others who are interested incussions have concluded that more investments, of one kind the general welfare of the nation, therefore, have derived or another, were needed in order to bring the policies to much satisfaction from the statistical record of progress that fruition. An improved livestock-raising industry requires not has been made in that direction during the last two decades. only better skills but also investments in improved pastures They have seen per capita income in the Southeast rise and equipment. Full development of the tourist industry re from $344 in 1929 to $957 in 1948, or from 51 percent of quires tangible capital improvements in the form of roads the national average to 68 percent. They have seen the and highways, and facilities necessary to feed and house the Southeast’s share of total national income payments increase traveler. If the region’s water transportation facilities are to from 10.5 percent to 13.8 percent. More important, they have be utilized fully, terminals must be built. Better education seen the improvements brought about by this growth. Such results, not only from more pay to teachers, but also from things as better diets, improved housing, wider educational new school buildings. Laboratories for industrial research opportunities, and many other things that go with a higher cost money. New factories necessary for greater industrial standard of living are now more easily accessible to the ization obviously can come only from long-term capital investment. average southerner. These examples merely emphasize what is perfectly axiom . But to those who have taken an active role in programs to improve the South’s income position, the record means some atic to those who are seriously studying the problem of in thing more. The educator may feel that it is the result of a creasing the region’s income. They all see many opportuni modest improvement in educational standards; the agricul ties for profitably utilizing additional capital investment in tural expert probably explains it as the fruit of better farm the region. The difficulty lies in finding this capital. ing practices; the industrialist would likely say that ex The Source of Capital Investment panded manufacturing is largely responsible. Perhaps the banker finds that the improvement stems from wise granting Disregarding the mechanics of money, credit, and investment of credit; and the forestry expert believes that the income institutions, it can be said that real capital investment is has come from more efficient forestry operations. Still others made out of real savings. Savings occur when less is current ly consumed than is currently produced. may see it as an effect of industrial research. In one respect, all those who actively promote policies A large part of American capital investment, of course, is that look toward the raising of southern incomes have one not made from individual savings. Corporations save when purpose in common. To give southerners better jobs. They do they pay out in dividends less than they earn. Estimates for not necessarily want to put more southerners to work. They 1948 indicate, for example, that American corporations with do want to put them at more productive work, either the profits after taxes of 20 billion dollars retained over half, a same type they are now doing or perhaps something alto re-investment of 12.2 billion dollars. That year, personal sav gether different. They are united in trying to raise the pro ings, as defined by the Department of Commerce, was only ductivity of the South. slightly greater, 14.9 billion dollars. Governments also save, in a real sense, when they use taxpayers’ money to make Increasing Productivity long-term capital improvements. Some increased productivity can come from improving the The same people or organizations who do the saving do ability of the workers themselves or by adopting better meth not necessarily do the investing in capital improvements. In ods of doing the same things. Our national economic history, dividuals may entrust their savings to institutions who make however, shows that the relatively high productivity of the investments for them. Institutions, in turn, may seek profit American worker was attained by an increase in the capital able capital investments in another region. Generally speak investment per worker. It is quite likely that greater produc ing, investments flow from those areas where economic tivity in the South will also come when increased capital opportunities are less than savings to places where economic investment provides more and better tools, machinery, and opportunities exceed savings. In the past, the South has found itself in the latter cate equipment. Various policies that might lead to increased income in the gory. It was a region where the amount of funds needed for r in g in g B 7 4 M o n t h ly 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 f o r A u g u s t 1 9 4 9 capital investment in its agriculture and other industry far outstripped the amount of local savings. Such a position, of course, has distinct disadvantages. Especially, as has been the case in the South, when the investment funds from other regions have been insufficient to satisfy all the needs for the area’s economic development. Many investors are reluctant to entrust their savings to persons or organizations beyond their immediate sight. Fi nancial institutions often follow the accustomed pattern which leads to investment close to home. Small business finds it especially difficult to secure capital from a distance. It is obvious then that a local source of funds is advantageous. An appraisal of how adequate personal savings within the District are as a source of investment funds should, therefore, be worthwhile. A Decade of Saving Savers in the Sixth District states made a good record in the last decade. At the end of 1938 the value of their life insur ance equities, repurchasable capital in savings and loan asso ciations, together with personal time deposits in commercial banks, postal savings, and savings bonds amounted to 2.1 billion dollars or $140 per capita. By the end of 1948 their total holdings had grown to 8.7 billion dollars or $532 per capita. Part of this increase in long-term savings, of course, can be explained by the inflationary developments in the war and postwar periods. However, even in terms of 1935-39 dollars the gain was striking—from $139 per capita to $311. There were other savings accumulated during this period which are excluded from the figures just cited. For example, some persons invested their savings in their own business or put them to other productive uses; others used their savings to buy stocks and corporate bonds. Yet the greater part of long-term accumulated savings for the majority of persons is represented by the types of savings which made up the 8.7 billion dollar total at the end of 1948. The “1948 Survey of Consumer Finances” discovered, for example, that only 9 percent of all consumer units owned stocks and corporate bonds, whereas 78 percent of them owned life insurance policies; 48 percent, United States Government bonds; and 46 percent, savings accounts. P er C ap ita L on g - T erm S av ing s (Amounts in Dollars) End of Year Ala. Fla. Ga. La. Miss. Tenn. District States 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947p 1948p Ill 121 132 152 202 269 363 429 428 450 464 173 194 229 249 307 407 525 628 693 720 719 143 156 171 189 237 323 411 490 503 541 561 174 183 189 200 264 337 441 522 502 536 547 81 88 98 98 123 171 237 284 303 320 332 163 175 189 207 260 335 429 507 512 537 551 140 152 166 182 232 308 403 473 492 520 532 United States 408 425 447 480 561 702 880 1 ,0 3 1 1 ,0 3 9 1 ,0 8 6 1 ,1 1 1 p Preliminary Sources: Long-term savings include private repurchasable capital in savings and loan associations, life insurance equities, deposits in mutual savings banks, per sonal time deposits in insured banks, postal savings deposits, and U. S. savings bonds at current redemption values. U. S. data are converted to per capita figures from those of the Federal Savings and Loan Insurance Corporation. State data for all years and U. S. data for 1948 were prepared by the Research Depart ment of this Bank, from which detailed data and methods may be obtained upon request. The record growth of long-term savings in the Sixth Dist rict was also impressive when measured against the rate of growth for the United States. From the end of 1938 to the end of 1948, total holdings of Sixth District savers increased 311 percent and per capita savings 280 percent. Throughout the country, the rates of growth for that period were 208 percent and 172 percent, respectively. Types of Savings Since only a complete personal census would give exact data on personal holdings of long-term savings, the figures cited are necessarily estimates. But these estimates are based upon state, national, or regional data adjusted by standard statisti cal procedures. Although, like all estimates, they are subject LONG-TERM SAVINGS OF INDIVIDUALS SIXTH DISTRICT STATES to a margin of error, they provide a basis for analysis and BILLIONS OF DOLLARS BILLIONS OF DOLLARS comparison. life insurance. By far, the most popular form of long-term savings owned by individuals in the Sixth District states is life insurance. At the end of 1948, policy holders in these states owned life insurance equities to the amount of $201 per capita. Their equities had increased 154 percent since the end of 1938. Per capita figures ranged from $104 in Missis sippi to $259 in Florida at the end of 1948. In Louisiana and Mississippi, per capita life insurance equities were slightly below per capita holdings of savings bonds. Of course, life insurance equities do not represent imme diately available cash and for that reason are sometimes called nonliquid assets. Cash surrender values of the poli cies are considerably less than the equities. However, the equities are the result of consumers having spent less on cur rent living than they earned. Moreover, they measure the share that these southerners have in the resources of life in surance companies, which have now become some of the most important trustees for savings and, in turn, a source of in vestment funds. From 1938 through 1948, individuals in the District states increased their SAVINGS BONDS. Second in importance to the Sixth District holdings of all forms of long-term savings by record amounts. At the end of 1948 the estimated total holdings of 8.7 billion dollars were saver are his holdings of United States savings bonds. These 312 percent greater than total holdings had been at the end of 1938, amounted to 32 percent of total per capita savings in 1948, compared with 30 percent for American savers as a whole. whereas in the United States they were only 208 percent greater. M o n t h ly 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 f o r A u g u s t 1 9 4 9 7 5 The $170 per capita in current redemption value was strik total of almost 200 million dollars annually or about $14 ingly higher than the $6 per capita estimated for 1938. In per capita. For these reasons alone, the savings growth has fact, the growth in this type of saving accounted for 42 per made a definite contribution toward raising the income of cent of the total increase in per capita savings during the individuals throughout the District. 10-year period. Rate of Saving Savings bond owners added most to their holdings during the war, when their incomes expanded rapidly, when they Not only are these estimates a matter of interest as a means could not buy many consumer goods, and when they were of increased security; they are of some significance to the urged to buy bonds as a patriotic duty. The predictions made South’s future economic development through expansion of by many persons that when the war was over, the public capital investment. If these trends are generally representa would liquidate its holdings on a wide scale have not been tive of the South, some persons may ask, do they not show verified. On the contrary, the per capita District holdings of that investment opportunities can now be met out of personal all types of savings bonds at the end of 1948 were but savings to the same degree as is being done in other parts of slightly less than they were at the end of 1945. Accrued dis the country? count earned, as well as the continued purchase of E bonds Of course the accumulated savings are not composed of offset redemptions to some extent. A net increase in the pur idle funds seeking opportunities for capital investment. They chase of F and G bonds by individuals offset the decline of are already in use. Neither do they measure the amount of $8 in per capita E bond holdings from 1945 to 1948. business savings. They do give some indication, however, of the extent to which southerners have in the past been able to savings deposits. About one-fifth of the District’s personal savings — $104 per capita at the end of 1948 — is entrusted lay aside some of their current earnings. to the commercial banks in the form of time deposits. The DOLLAR INCREASES LESS striking. Despite the greater-than167-percent increase in these deposits since 1938 was to a national rate of increase in savings, the actual per capita great extent accomplished during the war. Growth continued dollar savings growth in the Sixth District states from 1938 at a slower rate during 1946 and 1947 with a slight decline to the end of 1948 was only 56 percent of the per capita dollar increase for the nation. On a per capita basis, Sixth in deposits registered for 1948. OTHER savings. Next to the increase in holdings of savings District savers added $392 to their long-term savings; savers bonds, per capita holdings of shares in savings and loan as throughout the country, $703. The reason for the greater sociations increased at a rate greater than that for any of the percentage rate of increase in the Sixth District states was other types of long-term savings between 1938 and 1948. that savings were lower there to start with. If this difference These holdings of $43 per capita account for but 8 percent in the actual dollar growth in savings can be explained, it of total savings but their postwar growth has exceeded that may be possible to have a better understanding of potential of the war years. Finally, although not of major importance, capital investment. per capita postal savings tripled during the decade—from $5 Factors Influencing Rate of Saving to $15 per capita. The most obvious explanation for the smaller growth in RELATIVE IMPORTANCE OF TYPES OF LONG-TERM SAVINGS District savings is that District savers had smaller incomes PERCENT PERCENT out of which to save. Even if they had saved the same pro portion of their incomes as others did, they would have saved fewer dollars. The rate of growth in District income during the period was higher than that for the nation but it brought the per capita figure for the District states in 1947 up to only 67 percent of the national one. But did not the greater-than-national rate of growth in in come put District savers in a better position to add to their savings out of the additions to their incomes than savers elsewhere? Here, too, percentage rates of increase may be misleading. The dollar total of the year-to-year increases in per capita incomes for the nation was something like $814 for the period 1938-47. For the District states the total was $605. Even if the average Sixth District saver had saved every cent of the yearly increases in income, his dollar sav ings would not have expanded as much as those of the average saver in the whole country. DISTRICT savings rate lower. Correlations between the yearly increases in per capita incomes and the yearly increases in In the Sixth District states, life insurance equities are the most im per capita savings show that, as a matter of fact, a smaller portant type of long-term savings, followed closely by U. S. savings bonds. proportion of the added income in the District states was For the United States, savings deposits exceed all other types in saved than throughout the country. For the 1938-47 period importance. as a whole, when the average Sixth District individual re These savings, in addition to providing their owners with ceived a dollar of additional income during the year, he in a certain amount of security, are earning for them a sub creased his savings 46 cents. On the other hand when the stantial sum each year. Despite the comparatively low rates average individual throughout the country got the extra Digitizedof forinterest FRASER now prevailing, it is estimated that they earn a dollar, the increase in long-term savings was 60 cents. The M 7 6 o n t h ly 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 f o r A u g u s t 1 9 4 9 years 1 9 4 4 and 1945 w ere ex clu d ed from the com p u tation s b ecause the w ar savin gs cam p aign s and the n o n a v a ila b ility o f m an y good s m ade the sa v in g s rates u n u su a lly h ig h in those years. rate of spending higher. It seem s rea so n a b ly sa fe to assum e that sin ce a sm a ller p ro p o rtio n o f the a d d ition s to in com e w as saved in th e D istrict states than th rou gh ou t the country, a larger p rop ortion w as spent. F igu res co v erin g a ll ty p es o f consum er exp en d itu res are n ot a v a ila b le b y w h ich th is a s su m p tion can be tested, but scattered data p o in t tow ards its v a lid ity . T he latest a v a ila b le cen su s data sh ow that per cap ita retail sa les in the S ix th D istrict states in 1 9 3 9 w ere eq u a l to 71 percent o f the p er capita in com e, w hereas the figu re fo r the U nited States w as 63 p ercent. M oreover, on the b asis o f co r rela tin g y ea rly in creases in p er cap ita in com e betw een 1938 and 1947 w ith y e a rly in creases in per cap ita departm ent store sales, it can be con clu d ed that consum ers in the D istrict states used a greater part o f their in creased in com es to in crease their b u y in g at departm ent stores than did consum ers throughout the country. CUMULATIVE YEARLY GROWTH IN INCOMES AND LONG-TERM SAVINGS PER CAPITA DOLLARS DOLLARS 900 900 700 700 500 - 500 300 - 300 100 ioo 1938 1940 1942 1944 1946 1938 1940 1942 1944 1946 Striking growth in incomes made the gains in savings possible. Al though the rate of increase in Sixth District per capita incomes for 1938 to 1947 has been greater than that of the United States, the cumulative dollar increase for the District was only $380, compared with $678 for the nation. The cumulative dollar increase in savings, therefore, was less in District states than in the country as a whole. G eneral exp erien ce d u rin g the en tire p erio d (e x c lu d in g 1946 as e x c e p tio n a l) in d ica tes that every $ 1 0 y e a r ly in crease in p er cap ita in com e th rou gh ou t the cou n try w as a cco m p an ied b y an in crease o f 14 cents in p er cap ita departm ent store sa les. In the D istrict states the $ 1 0 y e a r ly in crea se in incom e w as accom p an ied b y an in crease o f 19 cents in per cap ita sales, over a third m ore. T h is w as d esp ite th e influence o f other factors on departm ent store sa les d u rin g th e p eriod . I f th e rela tio n sh ip betw een in co m e in creases and in creases in departm ent store sa les w as ch aracteristic o f other ty p es o f retail trade as w e ll, there is thus an ex p la n a tio n fo r p art o f the extraord in ary grow th in reta il sa les in the D istrict d u rin g recent y ears. PROPENSITY TO consume. In term s o f “ eco n o m ic ja rg o n ,” the m argin al p ro p en sity to con su m e in th e D istrict h as been Digitized for er FRASER h igh than th rou gh ou t the cou n try d u rin g th e la st decad e and the m a rg in a l p ro p en sity to save h a s b een low er. In sim p le term s, it w as m ore lik e ly that ad d itio n s to in co m es in the D istrict w o u ld b e sp en t in stead o f saved than it w as th rou gh ou t the cou n try. In the lig h t o f certain g e n era lly a c cepted p r in c ip le s o f con su m p tio n , it is n o t su rp risin g that such a con d itio n ex ists. In d iv id u a lly , som e con su m ers w ill save n o m atter how sm a ll their in co m es and w ill co n tin u e to save even w hen their in co m es d ecrease. In g en era l, how ever, a p eriod d u rin g w h ich there has been an in crease in in co m e is m ost fa v o ra b le to sa v in g s ex p a n sio n , and w hat the in d iv id u a l w ill do w ith the ad d itio n a l in co m e d o lla r s h e gets va ries w ith the am ount o f in com e h e has been receiv in g in the past. T he ty p ic a l fa m ily in the low in com e group h as little diffi cu lty in d ecid in g h ow to sp en d a d d itio n a l in c o m e; better fo o d , h o u sin g , clo th es fo r the ch ild ren , and so on, are p ro b a b ly u rg en tly w anted. S ecu rity fo r th e fu tu re m ay be fa r dow n on the list o f th e p o ssib le u ses o f the in creased in com e. C on seq u en tly, m ost o f the in creased in com e is sp en t. C on sum ers w ith v ery h ig h in co m es resp on d d ifferen tly and a h igh er p ro p o rtio n o f th eir in co m es m ay be saved . V a ria tio n s occur a ll th e w a y b etw een th e tw o extrem es, but as a ru le, the h ig h er the in com e, the greater p ro p o rtio n o f that in com e is saved. In v iew o f the r e la tiv e in co m e sta n d in g o f the S ix th D ist rict states, it is n ot su rp risin g , th erefo re, that the evid en ce sh ow s a lo w er sa v in g s rate or a h ig h er p r o p en sity to consum e than ex ists elsew h ere. B ut there are a lso certain other ch ar acteristics o f the D istric t’s p o p u la tio n w h ich are cu stom arily associated w ith lo w er rates o f sa v in g . G en erally, low er rates o f sa v in g fro m eq u al in com es can be exp ected from a p o p u la tio n w h ich is y o u n g er than from on e w h ich is old er. T h e D istr ic t’s p o p u la tio n is com p ara tiv e ly y o u n g . In 1 9 4 0 , fo r ex a m p le, 43 p ercen t o f the p eo p le in the six states w ere less than 21 yea rs o f age, com pared w ith 3 6 p ercen t fo r th e cou n try as a w h o le. A m ore h ig h ly ed u cated p o p u la tio n seem s to b e a ccom p a n ied b y a h ig h er rate o f sa v in g s. In 1 9 4 0 o n ly 33 p ercen t o f the p erson s o f 2 5 or over in the D istrict h ad g o n e to h igh sch o o l, com p ared w ith 3 9 p ercen t th rou gh ou t the country. F arm ers, as a ru le, sa v e m ore ou t o f a g iv en m on ey in com e than do c ity d w ellers, a lth o u g h th ey do n o t n ecessa rily do it in the fo rm s m easured h ere. R ather, th ey o ften p refer to u se th eir sa v in g s fo r p ro p erty im p rovem en ts, to increase their lan d h o ld in g s, or to p a y off debts. T h e p ro p ortion o f farm p o p u la tio n is greater in th e D istr ic t th an th rou gh ou t the cou n try. W ere other th in g s eq u a l, it is p o ssib le that this co n d itio n m igh t ra ise the area’s rate o f sa v in g s. B ecause the m a jo rity o f th ese farm ers receiv e lo w in co m es, how ever, such a p o ss ib ility seem s u n lik ely . S ix th D istrict savers co n seq u en tly m ade a v ery cred itab le p erform an ce in sp ite o f th eir h a n d ica p s. B y the end o f 1947 th eir long-term sa v in g s w ere ab ou t seven tim es the average p er cap ita m o n th ly in com e fo r that year. In 1 9 3 8, savin gs had eq u a led o n ly ab ou t six m o n th s’ in co m e. N everth eless, there are nu m erou s o b sta cles to b e overcom e b efo re the D istrict long-term sa v in g s w ill be eq u a l to th e n a tio n a l ratio o f 10 m onth’s p er ca p ita in com e. Can the South Now Finance Itself? B ecau se the o p p o rtu n ities fo r th e in vestm en t o f sa v in g s are p r a c tic a lly im m easu rab le, there is n o w a y o f e x a c tly d e term in in g w h ether p erso n a l sa v in g s are n ow adeq uate to m eet th e in vestm en t o p p o rtu n ities a v a ila b le in th e S ixth M o n t h ly 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 f o r A u g u s t 1 9 4 9 R e v ie w District. At least it can be said, however, that the amount of personal savings that could be used for capital investment is lower in the Sixth District in relation to present economic activity than in many other areas of the country. If past per formance is any measure, moreover, it seems unlikely that the condition will be corrected in the near future. SIXTH DISTRICT PER CAPITA INCOME AND SAVINGS AS PERCENT OF U. S. PER CAPITA INCOME, 1947 PERCENT PERCENT S ix t h 7 7 D is t r ic t S t a t is t ic s CONDITION OF 28 MEMBER BANKS IN LEADING CITIES (In Thousands of Dollars) Percent Change Aug. 17, July 20, Aug. 18, Aug. 17,1949, from Item 1949 1949 1948 July 20, Aug. 18, 1949 1948 Loans and investm ents— 2,355,387 2,282,101 2,308,100 +. 3 + 2 Loans—N et........... 794,612 — 3 765,325 786,684 —t 4 Loans—Gross 801,989/ — 3. 776,428 797,711 — 3 Commercial, industrial, and agricultural loans. 452,234 489,330 — 3 439,315 — 10 Loans to brokers and dealers in secu rities... 8,669 7,239 — 25 6,537 — 10 O ther loans for pu r chasing and carrying securities........ 55,414 — 1 37,881 37,341 — 33 Real estate lo an s............. 63,385 68,959 69,396 + 1 + 9 Loans to b a n k s, 5,816 4,963 — 24 4,420 — 11 O ther lo a n s. 181,658 — 2 224,152 219,419 + 21 Investm ents—total 1,590,062, 1,495,417 1,513,488 +■ 6 + 5 Bills, certificates, and n o te s............... 391,751, 445,855 492,223 + 26, + 10 U. S. b o n d s....... 900,832 876,707 — 1 892,455 + 2 Other securities 202,834 190,926 205,384 + 1 + 8 Reserve with F. R. Bank... 423,003 433,060 — 3 408,455 — 6 Cash in vault........ 39,927 41,883 — 4 38,386 — 8 Balances with dom estic b an k s................. 192,283 186,825 192,429 — 0 -b 3 Demand deposits adjusted 1,751,303 1,758,438 1,765,582 —• 0: — 1 lim e d ep o sits___ 541,106 538,538; 535,078 + 1 + O' U. b. Gov t d ep o sits........... 37,008 18,082, + 105 — 12 41,852 Deposits of domestic bank. 480,758 426,117 455,422 + 6 + 13 Borrowings......... 7,450 DEBITS TO INDIVIDUAL BANK ACCOUNTS (In Thousands of Dollars) U.S. FLA . TENN. LA. GA. ALA. MISS. As a rule, the smaller the income the smaller is the proportion ot that income saved. Consequently, in the Sixth District states, where per capita incomes are low, long-term savings are lower in relation to per capita in come than they are throughout the United States. One of the encouraging things, of course, about the expe rience of the last decade is the progress that has been made despite handicaps. Given ample time and given a continued advance in income, it is possible that the area’s investment needs can be satisfied eventually from its own savings. More over, the job could become progressively easier as incomes become larger. If the figures mean anything, however, the answer to the question, Can the South now finance itself out of its own savings? must be No, insofar as personal savings are con cerned. Capital expansion that relies entirely upon local in vestment out of savings will, of necessity, be considerably less than one which is helped by the investment of personal savings of other areas where incomes are higher. C B a n k h a r l e s T . T On August 18, a newly organized nonmember bank, the Citizens Bank of DeKalb, Avondale Estates, Geor gia ., opened for business and began remitting at par. This bank has a capital stock of $50,000, paid-in surplus of $10,000, and paid-in undivided profits of $5,000. The officers of the bank are Walter H. Scott, President; J. Vernie Hall, Vice President; Frank B. Graham, Jr., Vice President; and Ned E. Porter, Cashier. Percent Change July 1949, from June July 1949 1948 June 1949 July 1948 3 6 2 3 5 3 17,607 298,602 11,080 15,753 113,252 66,939 17,839 310,412 11,317 16,156 126,124 66,979 19,349 320,672 10,688 17,484 153,890 64,963 — — — — — — 1 4 2 3 10 0 — — + — — + 9 7 4 10 26 3 4 7 13 3 3 3 6 251,122 208,108 287,351 45,454 34,090 49,431 108,752 261,704 226,280 319,071 50,868 32,620 51,112 120,716 269,143 231,467 315,249 47,780 34,256 48,673 109,802 — — — — + — — 4 8 10 11 5 3 10 — — — — — + — 7 10 9 5 0 2 1 S avannah......... V aldosta........... 3 4 a 2 4 2 3 2 3 2 3 4 2 20,331 741,488 54,894 8,350 47,394 3,312 12,517 10,012 50,679 7,916 17,157 83,530 12,694 20,787 790,966 51,021 8,446 47,684 3,442 13,204 9,881 52,506 7,807 17,193 82,010 10,707 19,814 780,417 53,997 9,491 53,690 3,558 14,362 10,639 58,575 8,566 20,404 105,113 17,737 — — + — — — — + — + — + + 2 6 8 1 1 4 5 1 3 1 0 2 19 + — + — — — — — — — — — — 3 5 2 12 12 7 13 6 13 8 16 21 28 LOUISIANA Alexandria*---Baton R ouge.. . Lake C harles.. New O rle a n s... 3 3 3 8 29,147 105,247 36,420 609,614 28,255 105,527 37,223 686,141 28,212 94,407 34,674 655,582 + — — — 3 0 2 11 + + + — 3 11 5 7 MISSISSIPPI H attiesburg---Jackson............. M eridian........... V icksburg........ 2 3 3 2 15,553 109,811 23,092 21,940 15,999 120,669 22,216 21,765 16,288 125,410 27,527 22,634 — — + + 3 9 4 1 — — — — 5 12 16 3 TENNESSEE C h attan o o g a... Knoxville......... N ashville......... 3 4 6 126,362 99,991 275,869 130,825 110,916 309,913 146,782 113,003 300,731 — 3 — 10 — 11 — 14 — 12 — 8 SIXTH DISTRICT 32 C ities........... 114 3,674,677 3,928,697 3,976,163 — 6 — 8 UNITED STATES 333 C ities........ 98,484,000 109,068,000 102,940,000 *Not included in Sixth District total.- — 10 — 4 ALABAMA Anniston........... Birmingham.. . G adsden.......... M ontgom ery.. . FLORIDA Jacksonville. .. . Miami............... G reater Miami* O rlando ........... P ensacola....... St. P etersburg. GEORGIA A tlanta............. A ugusta........... Brunsw ick....... C olum bus....... E lberton........... G ainesville*... N ew nan........... a y l o r A n n o u n c e m e n ts No. of Banks Report ing July 1949 Place 7 8 M o n t h l y 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 f o r A u g u s t 1 9 4 9 District Business Conditions Banking and Trade sales may have been somewhat different. Moreover, figures for the entire District conceal rather marked variations from a n k i n g and trade statistics for July and the first half of August indicated little change in the trend of business city to city. activity in the Sixth District. Debits, which consist of checks Exactly how much price declines are reflected in the lower and other withdrawals from banks, in the principal cities of dollar sales is, of course, difficult to measure. According to the District declined from June to July and were 8 percent the index of consumer prices for the District which is based less this July than they were last July. In June they were on the Bureau of Labor Statistics indexes for the larger cities, down 3 percent from the corresponding month of the pre clothing prices were 2.7 percent lower in June this year than ceding year. For the three weeks ended August 17, debits to in June last year and home furnishings prices were down 1.4 demand deposit accounts at the weekly reporting member percent. Weighting these changes by the importance of the banks in leading cities were one percent below those reported two types of goods to total department store sales indicates a decline of 2.6 percent in prices at District department stores. for the comparable period last year. Loans of all member banks were 8 million dollars less on The Consumers Price Index, however, does not include the the last Wednesday in July than they were at the end of the prices of many goods sold at department stores nor the whole preceding month. During the corresponding period last year, effect of price reductions made in special sales or promotions. For the first seven months of the year, department stores loans declined 3 million dollars and a further decline was reported in August but a rather sharp increase took place throughout the District sold about 3 percent less on a dollar each month thereafter. basis than they did during that period last year. However, the At the weekly reporting banks, commercial and industrial seasonally adjusted indexes for the first six months of this loans in July averaged 461 million dollars, 68 million dollars year averaged 4 percent less than during the last half of 1948 less than in June and the lowest amount reported for any when there was an expansion in sales. Consequently, unless month this year. By August 17 they were down to 439 million there is a growth in sales during the remainder of the year, dollars. Last year these loans declined 5 million dollars from the rate of decline for the entire year will be greater than that experienced thus far. June to July and increased one million in August. Not for more than a decade have annual sales fallen below The seasonally adjusted index of department store sales in July was 377 percent of the 1935-39 average, compared with those of the preceding year. In 1938, the most recent period 368 for June and 402 for July last year. If sales at the weekly of decline, department store sales in the District fell approx reporting stores during the first three weeks of the month are imately 2 percent for the year. On the other hand, from any indication, the seasonally adjusted index for August for 1920 to 1921 they declined 14 percent and 5.6 percent further the District as a whole will be approximately 378, compared in 1922. In 1924 the District stores sold 3 percent less than in 1923. Sales were smaller each year following 1928 until with 393 in August 1948. Declines from last year were also reported for July by the 1933. In 1932 they were 40 percent lower than in 1928. Long furniture stores, where sales were down 2 percent, and by the term comparisons with the United States can be made from jewelry and household appliance stores, whose sales dropped the accompanying chart which shows the behavior of depart 17 and 33 percent, respectively. These reports, of course, ment store sales in the District and throughout the country c .t . t . do not cover all types of retail trade where the changes in for the last 30 years. B DEPARTMENT STORE SALES, 1919-49 ADJU STED FOR SE A SO N A L VARIAT IO N. 1935 - 3 9 A V E R A G E = IO O 400 400 200 100 100 1924 1920 1922 1926 1928 1930 1932 1934 1936 1938 1940 1942 1944 1946 M o n t h ly 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 f o r A u g u s t 1 9 4 9 Industry and Employment awarded in the Sixth District in July, according to F. W. Dodge Corporation statistics, was down 30 percent from June and was nearly 8 percent less than the total for July last year. For the first seven months of 1949, however, total awards were only 4.6 percent less than in that part of 1948, a comparison not unfavorable because of a decline in construction costs since last fall. Residential contracts awarded in July were 2.5 percent larger than a year ago. For the seven months, how ever, they were down 7.1 percent, and contracts for “all other” construction were off 2.7 percent. Residential con struction has accounted for 41.4 percent of the total so far this year, about the same proportion as in the comparable period of 1948. TEXTILE MILL ACTIVITY in Alabama, Georgia, Tennessee, and Mississippi declined in July, the last month of the cotton year and the time when many mills shut down for a vacation. The daily average rate of cotton consumption by the mills in these states in July was down 20 percent from June; it was 25 percent lower than in July last year; and it was the lowest rate for any month since July 1938. ELECTRIC POWER PRODUCTION by public utilities in the Sixth District states increased at a daily average rate of a little more than one percent in June, following a three-month decline of 9 percent from the record February rate. The June rate was 5.9 percent higher than that for June 1948. A 20percent increase over June 1948 in hydro-generated current, largely because of gains in Alabama and Georgia, was par tially offset by a 4-percent decrease in fuel-generated power which took place for the most part in Alabama and Ten nessee. Fifty-five percent of total power production was from the use of fuel. COAL PRODUCTION in Alabama and Tennessee, already much below that of last year, declined further in July as a result of a three-day work week following the one-week vacation. July production in these two states was not quite half as large as it was in July last year. STEEL MILL ACTIVITY in the Birmingham-Gadsden area has been reported at more than 100 percent of rated capacity each week since April with the exception of the second week in July, when it was 92 percent, and the last two weeks in August, when it was 97 percent. MANUFACTURING EMPLOYMENT in the District registered the seventh consecutive monthly decline in June, when it was 9.7 percent below last November. The June index was 1.2 percent below that for May and 9 percent below that for June 1948. There were small over-all gains in June in employment in lumber and wood products and in transportation equipment but these were not enough to offset declines in the other manu facturing groups. In lumber and wood products industries, gains in Louisiana and Tennessee slightly more than offset losses in Alabama and Florida. A substantial increase in transportation equipment employment in Tennessee more than offset decreases in the number of workers at shipbuilding and repair establishments in Florida and Louisiana. A 2.6percent decline in chemicals and allied products employment was largely due to seasonal reductions at plants manufactur ing cottonseed oil products and fertilizers. Textile employment was down 2.3 percent in June, and was 15.5 percent less than in June last year. Employment in Digitizedtransportation for FRASER equipment was down 13.9 percent from a year 7 9 S ix t h D is tr ic t I n d e x e s THE VALUE OF CONSTRUCTION CONTRACTS DEPARTMENT STORE SALES* Adjusted* Unadjusted July June June July July 1949 1948 1949 1949 1949 402r 323 377 368 294 418r 340 389 420 303 427r! 358 403 412 334 415r 291 356 350 314 332 389r 289 357 299 353r 297 369 349 273 382 435r 338 310 389 433r 416 330 337 355 324r 257 220 185\ 262 416r 307 404 384 283 397r 286 346 336 274 433r 353 393 303 384 371r 359 328 368 277 500r 406 508 488 430 Place DISTRICT........... A tlanta........... Baton R ouge.. Birmingham .. Chattanooga^. Jackson........... Jacksonville.. Knoxville........ M acon............. Miami............. M ontgomery.. Nashville........ New O rleans. Tam pa......... .. DEPARTMENT STORE STOCKS Unadjusted Adjusted** June July June July 1949 1949 1949 1949 1948 300 319 325 364r 312 379 385 412 423 454r 286 245 263 266 301r 332 317 338 39 lr 341 456 485 436 450 545r 271 296 351r 290 282 Place DISTRICT........... A tlanta........... Birmingham.. M ontgom ery.. N ashville........ New Orleans. GASOLINE TAX COLLECTIONS* Unadjusted Adjusted* June July June July 1949 1949 1949 1948 ft 209 212 213 210 193 214 208 213 201 204 188 182 195 188 185 196 196 190 191 184 228 252 246 223 209 215 204 210 209 186 244 233 231 241 206 Place SIX STATES. A labam a.., F lorida___ G e o rg ia ... Louisiana.. Mississippi T ennessee. July 1948 314; 326 354 344 315 261 352 351 233 291 314 334 285 400 July 1948 343 418 277 364 529 337 July 1948 189 196 172 179 205 181 COTTON CONSUMPTION* June July July 1949 1948 1949 TOTAL........... 119 111 89 A labam a... 125 120t 96 121 G eorgia.. . 107 88 60 54 M ississippi. 41 97 Tennessee. 114 79 ELECTRIC POWER PRODUCTION* May June June 1948 1949 1949 332 348 SIX STATES.. 352 Hydro 233 297 280i generated Fuel 462 414 445 generated MANUFACTURING EMPLOYMENT*** CONSTRUCTION CONTRACTS May June June Place 1949 1948 1949 DISTRICT.... 595 508 518 R esidential. 702 724 715 403 543 422 A labam a... 565 508 453 F lorida. . . . 455 646 633 G e o rg ia ... 748 463 482 L ouisiana.. 213 517 350 Mississippi. 668 212 182 T ennessee. 968 471 630 Place Place SIX STATES.. A labam a... F lorida....... G e o rg ia ... L ouisiana.. M ississippi. Tennessee. June 1949 May 1949 June 1948 137 140 130 131 149 128 140 139( 143 133 133 149 128r 141 15 lr 157 132 145 150 152 159r CONSUMERS PRICE INDEX ANNUAL RATE OF TURNOVER OF DEMAND DEPOSITS July 1949 July June July 1949 1949 1948 U n ad ju sted .. 19.0 18.7 18.9 A djusted**... 20.2 18.9 20.1 Index**......... 81.9 76.6 81.5 CRUDE PETROLEUM PRODUCTION IN COASTAL LOUISIANA AND MISSISSIPPI* June July July 1949 1949 1948 U n ad ju sted .. 277 290 290 A djusted**... 277 Item June 1949 173 207 196, July 1948 178 222 201 ALL ITEMS... 172 F ood........... 204 C lothing---194 Fuel, elec., and refrig. 135 137 135 Home fur^ nish in g s.. 186 190 187, Misc............. 1541 154 149 Purchasing pow er ot dollar---.58 .58 .56 * Daily average basis ** Adjusted for seasonal variation *** 1939 monthly average = 100; other indexes, 1935-39 = 100 r Revised 8 0 M o n t h l y 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 f o r A u g u s t 1 9 4 9 ago, in lumber and wood products 10.4 percent, and in fab ricated metal products 10.1 percent. On the other hand, June employment in food and food products was up 4.6 percent from June 1948, largely because of an 1.8-percent increase in Louisiana. D .E .M . Cotton and Peanut Production Last year, two-fifths of the total cash receipts of farmers in the District states was from cotton, cottonseed, and peanut sales. These crops were particularly important sources of in come in Mississippi and Alabama, where they accounted for about two-thirds of the total. According to the most recent Government estimates, the District states’ cotton crop will be 23 percent smaller than last year’s crop and the peanut crop will be 27 percent smaller. The estimates have been fairly accurate in past years. They are based on crop conditions on August 1, how ever, and will be revised as growing conditions change. Al though the acreage of cotton in cultivation on July 1 was 9 percent greater than at the same time last year, the yield per acre will be lower in most areas because of unfavorable weather and heavy weevil damage. Estimated peanut yields are slightly lower than they were last year but the decline is largely because of the 22-percent reduction in acreage under the Government production control program. Since the prices of these crops are almost certain to be at or near support levels throughout the marketing season, the effect of decreased production on income can be estimated fairly accurately. Income in Florida and Tennessee will be affected only by negligible amounts; the acreage of cotton and peanuts grown in Florida is comparatively small, and an increase in Tennessee cotton acreage will offset the decline in yield per acre. The 1949 crops of cotton and peanuts in Georgia and Alabama apparently will be about 25 percent less valuable than the 1948 crops. Even if income from all other sources is as large this year as it was last year, the estimated reduction in the value of these two crops would re duce Georgia and Alabama farmers’ cash receipts 10 to 15 percent. Because of Louisiana’s diversified agriculture, the estimated 24-percent decline in cotton income would reduce total income only about 9 percent. Unless the Mississippi cotton crop greatly exceeds the estimate of August 1, it will be worth about 35 percent less than last year’s crop. If income from all other sources in 1949 is as large as it was last year, this reduction in the cotton crop would reduce cash receipts in Mississippi about 30 percent. The need for expanding enterprises other than cotton and peanuts has been apparent since the end of the war. At the beginning of the current crop season, however, it appeared that District farmers would have at least one more year with a total income about as large as that of 1948. The prospec tive reductions in cotton and peanut production mean that farmers who depend upon these crops for a major portion of their income will have a large reduction in total income about a year earlier than they expected it. Next year the peanut acreage probably will be reduced still further and acreage allotments for cotton are almost a certainty. On many farms, therefore, the expansion of other enterprises, such as livestock, will have to be done while farm income is falling rather rapidly. Considerably more bank credit may be required under these conditions than if other enterprises had expanded while the income from cot Digitized for and FRASER ton peanuts was at the recent high levels. B . R . R . S ix t h D is tr ic t S ta tis tic s L en d er INSTALMENT CASH LOANS V olum e N o. of P e rc e n t C h an g e L e n d e rs July 1949, from R ep o rt July June in g 1948 1949 Federal credit un io n s.......... State credit u n io n s............... Industrial banking com panies .................................. Industrial loan co m p an ies.. Small loan com panies.......... Commercial b an k s............... 41 O u ts ta n d in g s P e rc e n t C h a n g e J uly 1949, from Ju n e July 1948 1949 17 — 5 — 33 + 30» + 8 4+ 4 4 + 33 + 31 11 15 36 33 — 14, — 6 — 15 — — + + + + + + o 1 o 3 + 9 + 10 + 8 + 39 —. 7 11 4 o 31 RETAIL FURNITURE STORE OPERATIONS N um ber P e rc e n t C h a n g e oi July 1949, from Item S to re s R ep o rtin g Ju n e 1949 July 1948 Total sa le s.......................................... Cash sa le s.......................................... Instalment and other credit sa le s.. Accounts receivable, end of month Collections during m onth............... Inventories, end of m onth............... Item 108 92 92 105 105 74 — 2 — 22 + 0 — 4 — 15 — 3 + 2 — 1 i 1! — 3 — 14 WHOLESALE SALES AND INVENTORIES* INVENTORIES SALES P e rc e n t C h a n g e N o. of P e rc e n t C h a n g e No. of July 1949, from July 31, 1949, from Firm s Firm s July R ep o rt R eport June Ju n e 30 July 31 in g 1948 1949 1948 in g ^ 1949 Automotive supplies. Electrical group W iring supplies. . . A ppliances............. General h ard w are. . . Industrial h ard w are. Jew elry....................... Lumber and builds ing m aterials.......... Plumbing and heat ing su p p lies........... Confectionery........... Drugs and sundries,. Dry g o o d s................. Groceriesi Full lin e s............... Specialty lin e s___ Tobacco p ro d u cts. . . Shoes and other footw ear---- ........... M iscellaneous........... Total............................ 3 — 34 — 37 + 1 — 17 — 42 — 49 — 30 — 14 — 16 — 5 — 36 3 14 — 5 — 12 20' — 12 — 14 — 16 15 82 — 24 6 11 + 8 — 3 — 8 4 3 — 1 — 6 — 1 3 3 3 11 21' 35 10* 12 3 15 146 — 43 — 41 — 27 — — 11 + 3. + 3 — 10 — 8 — 4 + 4 2 — 12 — 10 + 6 3 + 13 3 + 5 9 5 + 3 — 35 — 6 + 2 — 7 — 19 — 9 — 7 1 — 2 — 16 — 15 — r Based on U. S. Department of Commerce figures. DEPARTMENT STORE SALES AND INVENTORIES SALES INVENTORIES P e rc e n t C h an g e P e rc e n t C h an g e No. of No. of July 1949, from P lace S to res S to res July 31,1949, from R ep o rt Ju n e R ep o rt Ju n e 30 July 31 July in g 1949 1948 in g 1948 1949 ALABAMA Birmingham............ M ontgomery............ FLORIDA Jacksonville............ M iam i...................... O rlando ................... GEORGIA A tlanta..................... A ugusta................... Colum bus............... M acon....................... Rome......................... Savannah................. LOUISIANA Baton R ouge........... New O rleans......... MISSISSIPPI Jackson..................... M eridian................. TENNESSEE C hattanooga........... Knoxville................. N ashville................. OTHER CITIES* DISTRICT................... 4 5 3 — 11 — 16 — 8 — 13' — 13 — 16 3 — 7 — 12 3 — *4 — 13 4 4 3 5 — — — — 12 11 11 9 — —— -H 15 6> 4 2 3 3 — 0 *+ 6 — 5 — 15 3 — ‘6 — 'i a 4 3 5 4 6 — — — — — — 14 14 8 15 10 6 — — — — — + 11 4 5 22 18 4 5 3 — 2 — 7 — 9 — 10 4 — *3 — is 4 — *9 — i3 4 6 — 10 — 19 — 9 — 7 4 4 —. 5 — 8 — 11 — 19 4 3 — 12 — 12 + o — 26 4 + 1 — 9 3 4 4 6 22 1121 — 18 7 — 2 — 18 — 8 — 13 — 12 — 12 3 3 — 10 + 2 — 13 — 10 — 13 — 11 — 10 5 22 76 —. i — 5 — 4 — is — 10 — 12 — 8 * W hen fewer than three stores report in a given city, the sales or stocks are grouped together under "other cities." _________________ ___
@FedFRASER