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IN THIS ISSUE: • Central Bank Swaps— A Bulwark nf Internatinnal Monetary REVIEW Cooperation • Index for the Year 1967 • District Business Conditions F E D E R A L R E S E R V E B A N K OF A T L A N T A Decem ber 1967 C e n t r a l B a n k S I n t e r n a t i o n a l M w a p s o n e t a r y Actions taken by central banks to minimize the shock to the international financial system in the wake of the recent devaluation of the British pound have forcefully demonstrated the strength and amplitude of world monetary cooperation. Close coordination among central banks has taken various forms, one of which has been the creation of a formal network of reciprocal currency swap arrangements between the Federal Reserve Sys tem and major foreign central banks. This swap network emerged when the Federal Reserve Bank of New York (acting first as agent of the United States Treasury in early 1961 and later for the Federal Reserve System in 1962) began opera tions in the foreign exchange markets in coopera tion with other central banks. Their purpose was to defend the value of the dollar and to moderate some of the pressures that had developed in the markets following the revaluation of the German mark and the Dutch guilder. Monthly Review, Vol. LII, No. 12 . Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. 162for FRASER Digitized — A C B u l w a r k o f o o p e r a t i o n The success of the swap network in combating destabilizing forces has gained it an indispensable role in the present world monetary system. Yet because this form of international cooperation has had only a relatively short history, many people are still not very familiar with its framework and operations. Consequently, we shall attem pt to out line the nature of the swap network, describe its functioning, illustrate some of its operations, and summarize its major accomplishments. T h e N a tu re o f th e S w a p N e tw o rk At present, the Federal Reserve swap network consists of separate swap arrangements with 14 central banks and the Bank for International Settlements (B IS). Each swap arrangement is a bilateral agreement creating a standby facility un der which a central bank will exchange on request its own currency for that of a central bank partner up to a maximum amount for a stipulated period. A drawing on a swap facility, which functions as a reciprocal line of credit between two central banks, may often be arranged by a single tele phone call, resulting in foreign currency balances within a few hours. MONTHLY REVIEW Illustrative Swap Transaction (In Millions) Bundesbank Federal Reserve Assets Liabilities Assets Liabilities Foreign Deposit to Foreign Deposit to Currency Bundesbank Currency F. R. S. + 400 + 100 + 100 + 400 Marks Dollars Dollars Marks $1 = 4 Marks (DM) If the German Bundesbank, for instance, were to draw from the Federal Reserve $100 million, the System would credit the deposit account of the Bundesbank with $100 million and would receive in return a credit to its account at the Bundesbank of an equivalent amount of the partner’s currency at the current rate of exchange, say DM400 million at four marks to the dollar. (In other words, each party receives a short-term asset denominated in its partner’s currency in ex change for a short-term liability in its own cur rency.) The foreign central bank may disburse the dollar balances obtained through the swap ex change operations, while the System typically places its foreign currency balances in short-term investments. Under the Federal Reserve Act, the Federal Reserve may invest idle amounts of foreign currencies held on account with a foreign bank in bills of exchange and acceptances arising out of actual commercial transactions and having maturities of not more than 90 days or place them in an interest-bearing time account with the same or some other foreign bank. Under law, the Federal Reserve does not have authorization to invest these amounts in obligations of foreign governments; e.g., foreign Treasury bills. A cur rent bill before Congress proposes to provide a broader choice in selecting suitable instruments for investment. If the Federal Reserve made a swap drawing instead, its central bank partner would invest its dollar balances created by the transaction in nontransferable U.S. Treasury certificates of indebt edness due on the maturity date of the swap but redeemable in whole or in part on two days’ notice. (The BIS and the Swiss National Bank balances accruing through swaps may be in vested in U.S. Treasury bills.) In either case, the invested balances bear interest at equal rates agreed upon in advance. Both parties agree to reverse the swap transaction at a specified date (usually three months) at which time all dis DECEMBER 1967 bursed swap balances must have been replenished. Alternatively, on mutual consent of both partners, the swap credits may be renewed for additional three-month periods up to a maximum of one year. The two partners always reverse the trans action at the original rate of exchange, thus pro viding an exchange guarantee protecting each party against movements of the market rate of exchange or the risk of devaluation of either currency. Unlike a swap drawing, the swap arrangement is concluded for a definite period of a year or less and also may be renewed by mutual consent. No swap arrangements have ever terminated without renewal, but most have had their terms lengthened and their original amounts increased. A major expansion occurred on September 13, 1966, when the overall amount of the System’s swap network rose from $2.8 billion to $4.5 billion involving increases with every swap partner except the Bank of France. Subsequently, the Federal Re serve has augmented the total further by conclud ing new agreements with the central banks of Mexico, Denmark, and Norway, and expanding existing arrangements with the Bank for Inter national Settlements and the Swiss National Bank. Following the devaluation of the pound, another major expansion of the network of $1.75 billion brought the total to $6.78 billion. Although it has periodically added new central bank partners to the network, the System has nevertheless restricted swap arrangements to major convertible currencies; i.e., technically Swap Arrangements Between the System and Foreign Central Banks Institution Austrian National Bank National Bank of Belgium Bank of Canada National Bank of Denmark Bank of England Bank of France German Federal Bank Bank of Italy Bank of Japan Bank of Mexico Netherlands Bank Bank of Norway Bank of Sweden Swiss National Bank BIS ' Date of Original Agreement Oct. June June May May Mar. Aug. Oct. Oct. May June May Jan. July July 25, 20, 26, 17, 31, 1, 2, 18, 29, 17, 13, 17, 17, 16, 16, ’62 ’62 ’62 ’67 ’62 ’62 ’62 ’62 ’63 ’67 ’62 ’67 ’63 ’62 ’62 Original Amount (Millions of Dollars) 50 50 250 100 50 50 50 50 150 130 50 100 50 100 1001 Total Amount Nov. 30,1967 (Millions of Dollars) 100 225 750 100 1,500 100 750 750 750 130 225 100 200 250 8502 ^Against Swiss francs. 2$250 million available against Sw iss francs; $600 million against European currencies other than Swiss francs. 163 “convertible” in that the government issuing the currency has accepted Article V III of the Articles of Agreement of the IM F. (Although Switzerland does not belong to the IM F, Swiss francs are con sidered convertible by that institution. However, francs cannot be used for repayments to the IM F because of Swiss nonmembership.) For the United States, convertibility implies that a central bank will redeem in gold or dollars (at its option) or in other convertible currencies balances of its own currency held by the Federal Reserve or U. S. Treasury. Furthermore, convertible currencies, in contrast to nonconvertible currencies, are counted as official reserves and can be used to repay draw ings from the IMF. The convertibility of swap currencies assures that a swap drawing has no net effect on the U. S. balance of payments since the addition to official reserves in the form of swap balances exactly offsets the short-term li ability incurred to a central bank swap partner. A few swaps possess special characteristics which separate them from the general pattern. Of the System’s 15 swap partners, only the BIS does not function as a central bank for a specific coun try. Nevertheless, its role as a bank for central banks and its large dealings in foreign exchange and Euro-dollars make it useful in the swap net work. Only the BIS has entered into swap arrange ments with the System involving more than one foreign currency. Under one swap facility, the Federal Reserve can only draw Swiss francs, while under the other it can draw authorized European currencies other than Swiss francs. Swap arrangements are usually made on a standby basis so that a partner only draws on a swap facility when it desires to obtain balances of that currency. Only the amounts needed are drawn, and drawings are repaid within a rela tively short period. However, in the System’s swap arrangement with the National Bank of Belgium, the first $50 million of the swap facility remains fully drawn at all times. Consequently, this portion of the swap is considered activated only when disbursements from the fully drawn balances are actually made. On an ad hoc basis, the System has also engaged in third currency swaps whereby balances of one foreign currency were used to acquire balances of another. Third currency swaps differ from or dinary swaps because the System uses a foreign currency asset instead of dollars to acquire other foreign currency balances and sometimes allows them to remain outstanding for longer periods than the usual swaps. These swaps are not part of the regular swap network. 164 H o w th e S w a p N e tw o rk F u n c tio n s Swaps have been tailored to fit a special need created by the structure of the present world monetary system centered on the IMF. Under the IM F Articles of Agreement, all member n a tions agree to establish their currencies at a fixed, or par, rate with the U. S. dollar of the weight and fineness of gold in effect on July 1, 1944. Furthermore, they are obligated to prevent the market rates for their currencies from fluctuat ing more than one percent above or below the par rate. They meet this obligation primarily by buy ing or selling dollars against their respective cur rencies. In practice, most System swap partners maintain upper and lower limits at approximately .75 percent of par. At times disturbances caused by speculation, seasonal flows of funds between countries, or other circumstances can often place severe upward or downward pressures on the market rate of a currency. Swaps act as a first line of defense against temporary, reversible pressures and provide time for calm, orderly policy decisions to make the necessary correc tions. Thus, a foreign central bank facing a rapid decline in its currency’s exchange rate will usually defend the rate by purchasing its own currency in the market with dollars. Its swap facility with the Federal Reserve gives it ready access to dollars. Otherwise, the central bank would have to acquire the dollars through such methods as a sale of gold or a drawing from the IM F which it may deem less suitable for short-run situations. After the temporary disturbances inducing official inter vention in the market have moderated or ceased, the central bank will then repurchase dollars in the market or from other official monetary au thorities and liquidate the swap. If the forces causing a decline in the exchange rate thereby inducing official support and use of swap prove of longer duration, the central bank still has gained the extra time provided by the swap to make other arrangements for correcting the situa tion and will then repay the swap. Because of the special role of the dollar in the present world monetary structure, Federal Re serve swap operations ordinarily differ somewhat from those initiated by other central banks. In contrast to all other IM F members, the United States maintains the value of the dollar by buy ing and selling gold at a fixed rate of $35 per ounce. When a foreign currency rate rises because of pressures against the dollar, knowing that any undesired dollar accumulations can be exchanged MONTHLY REVIEW for U. S. gold at the established rate, a central bank will prevent the rate from exceeding the upper limit by buying dollars with its own cur rency. The Federal Reserve can avert a U. S. gold loss from temporary pressures against the dollar by making a swap drawing from the foreign central bank concerned and using the foreign currency so obtained to buy back, or absorb, its dollar ac cumulations. The foreign central bank partner benefits from the swap because it substitutes holdings of swap dollars with an exchange guar antee (through the provision of forward cover) for uncovered dollars subject to the risk of loss through changes in the exchange rate. When the adverse pressures against the dollar slacken, the swap currency’s exchange rate generally eases, thereby allowing the System to repurchase suffi cient amounts to reconstitute the swap balances and liquidate the swap. Suppose the forces unfavorable to the dollar last longer than expected. In these situations, the System may purchase the necessary amounts of currency to liquidate the swap from the U. S. Treasury. The Treasury procures the currency through the issuance of a medium-term bond de nominated in the required currency (commonly called Roosa bonds) or from a drawing on the IMF, or by selling gold. Thus, the Federal Re serve restricts swap transactions to short-term operations. S o m e U s e s o f th e S w a p N e tw o rk On many occasions, the swap network has helped to mitigate disturbances that could have produced disastrous effects in the international financial markets with widespread repercussions. One very dramatic illustration occurred in No vember 1963, immediately following the assassi nation of President Kennedy. When the news of the events in Dallas began to spread, European markets had already closed for the day. In New York, the Federal Reserve made sizable offers to buy dollars at rates prevailing just prior to the shooting with currencies avail able under swap arrangements. Simultaneously, the Bank of Canada took similar steps on its own initiative. As the market became aware of the firm stand of the Federal Reserve, speculative pressures receded and the market ended the day on a steady note. Through contacts with major European central banks, the Federal Reserve made further arrange ments for undercutting speculative forces in Eu rope on the Saturday and Monday following the Friday assassination during which time the New DECEMBER 1967 York market remained closed. When the markets recognized the extent of coordinated central bank intervention, speculative fears subsided. Though only moderate intervention in the market was necessary, the prior existence of rapid lines of communication between central banks and the ready availability of financial resources through the swap network certainly proved decisive fac tors in offsetting adverse reactions to that terrible tragedy. Swaps have also proved very valuable in con straining disturbing temporary seasonal pressures caused by year-end “window-dressing” operations of certain European commercial banks. These banks, mainly in Germany and Switzerland, often withdraw temporarily short-term investments made abroad so that a high proportion of their liquid assets will be denominated in their do mestic currencies at the end of the year. They usually withdraw most of these funds from the Euro-dollar market, an international market in short-term funds denominated primarily in U. S. dollars. In late 1966, for example, by temporarily selling their dollar investments and converting the funds into their own currencies, these banks provoked rapid rises in the exchange rate for German marks and Swiss francs. To moderate the rises in their respective currency rates, the German Bundesbank and the Swiss National Bank bought dollars. The Federal Reserve in re turn drew on the swap lines with the Bundesbank and Swiss National Bank and used the swap bal ances to repurchase the dollar accumulations of these two institutions. Meanwhile, the shortage of funds in the Euro dollar market caused by these operations and other forces drove up interest rates there and threatened to pull funds out of the United King dom. The resulting sale of sterling caused the British pound rate to suffer intense downward pressures and required some support by the Bank of England. As a further conseqence, the Bank of England was prevented from repaying earlier swap drawings. This led the BIS to draw dollars from its swap facility with the System and place them in the Euro-dollar market to ease pressures there. Following these cooperative actions, the foreign exchanges calmed considerably. This whole process reversed itself in January, when German and Swiss commercial banks began to reinvest in the Euro-dollar market. Then the rates for the Swiss franc and the German mark fell off and the System purchased enough of these currencies to repay its swap drawings from the Bundesbank and the Swiss National 165 Bank. The increased flow of funds back into sterling and Euro-dollars following the unwind ing of window-dressing operations and the return of confidence in sterling enabled the Bank of England and the BIS to recover dollars to repay their swaps to the System. Other unsettling periods during which the swap network has played an impressive role include the outbreak of the Arab-Israeli War, the Berlin crisis, the Cuban missile confrontation, and the sterling crises of 1964 and 1966, as well as many more routine occasions. S ix m e m b e rs of the s w a p n e tw o rk d re w a total of $5.1 b illio n fro m the F e d e ra l R e se rv e t h ro u g h J u n e 30, 1967. Millionsof Dollars T h e C o n tr ib u tio n s o f th e S w a p N e tw o rk Despite a relatively short time in existence, the swap network can claim a number of worthy accomplishments. Although constituting no cure for balance-of-payments deficits, the swap net work has provided a cushion of foreign credits that has protected the value of the dollar in vul nerable situations. Through August 1967, the System has drawn approximately $3.6 billion from 10 of its swap partners in the dollar’s defense. The swap network has similarly redounded to the benefit of foreign currencies. The System has supplied an even greater amount of dollar swap credits to the six swap partners that have made drawings from it. However, the major portion of these drawings have been made by the Bank of England, reflecting the weakness in the balanceof-payments position of the United Kingdom throughout the period. The drawings of the BIS probably should be distinguished from the others since these draw ings were made to channel dollars into the Euro dollar market to reduce incentives for moving T h r o u g h A u g u s t 31, 1967, th e Fed e ral R e se rv e h a s d ra w n a total of $3.6 b illio n fro m ten of its sw a p p artners. Millions of Dollars Austrian Nat. Bk. Bk. of Bankof Bankof German Nat. Bk. of Canada England France Fed. Bk. Belgium Digitized166 for FRASER Bk. of Italy Netherlands Bank Swiss Nat. Bank BIS Nat. Bank of Belgium Bankof Canada Bankof England Bankof Italy Bankof Japan BIS funds from the U.S. and Britain into that market. Thus, these drawings benefited the U.S. balanceof-payments to the extent that they reduced U.S. short-term capital outflows. Swaps have enhanced the flexibility and effici ency of central bank operations by supplementing more traditional methods of obtaining foreign currencies and by providing time for more effec tive uses of conventional policy tools. Thus, the addition of the swap network has broadened the range of policy choices available to central banks. The very close coordination between swap net work members has inevitably advanced monetary cooperation and fostered better understanding of the problems which the monetary authorities of individual countries face. Accordingly, the swap network has also promoted a better mutual assess ment of how the world monetary system functions and may have thereby influenced the outcome of the discussions which recently resulted in the creation of a framework for issuing a new inter national reserve asset. Swaps have proved very successful in offsetting disturbing shocks to international financial flows arising from political crises, speculative crises, sharp seasonal movements, and other temporary disturbances. Often the mere existence of the swap network or a minimum show of central bank cooperation working through the network has sufficed to offset cumulative movements of funds that do not accurately reflect underlying economic conditions. Swaps have supplemented traditional central bank reserves and IM F credits as a source of international liquidity. The additional balances of central bank holdings of convertible currencies MONTHLY REVIEW created by swaps constitute real, though tempo rary, increases in world reserves, thereby allowing central banks to economize on the use of other reserves, especially gold. Despite the achievements of recent years, the swap network certainly is no panacea for correct ing difficulties caused by fundamental balance-ofpayments disequilibrium and other chronic mal adjustments in international payments. These problems still require discipline, patience, and continued monetary cooperation for their ulti mate solution. T T J ohn E. Leimone A technical appendix using T-accounts to illus trate the various steps of a Federal Reserve initiated swap transaction and a foreign central hank initiated transaction is available upon re quest to the Research Department, Federal R e serve Bank of Atlanta, Atlanta, Georgia 30303. B a n k A n n o u n c e m e n ts The First Citizens Bank, Covington, Georgia, a non member bank, began to remit at par on November 1 for checks drawn on it when received from the Federal Reserve Bank. Another nonmember bank, the Bank of Hartwell, Hartwell, Georgia, began to remit at par on November 9. DECEMBER 1967 The Per Jacobsson Foundation Lectures A lecture on “Economic Development— the Banking Aspects” was delivered in Rio de Janeiro on September 22, 1967, by Mr. David Rocke feller, president of the Chase Manhattan Bank. Commentaries were made by Mr. Felipe Herrera, president of the Inter-American Development Bank, and Mr. Shigeo Horie, former chairman of the Board of Directors of The Bank of Tokyo, Ltd. The proceedings will be published, as hereto fore, in English, Spanish, and French for free distribution. Requests for copies (indicating the language desired) should be addressed to: THE PER JACOBSSON FOUNDATION International Monetary Fund Building Washington, D.C. 20431 U.S.A. Economies of Scale in Banking by Frederick W. Bell and Neil B. Murphy uses Functional Cost data to measure the relation between costs and output in commercial banking and considers other factors in fluencing costs such as wage levels and organizational structure. This 33-page free booklet is now available upon request to the Federal Reserve Bank of Boston, 30 Pearl Street, Boston, Massachusetts 02106. 167 INDEX F o r t h Digitized168 for FRASER e Y 1 M onth e a r 9 6 7 Pages January February March April M ay June July August September October November December 1-16 17-28 29-44 45-56 57-72 73-88 89-104 105-116 117-128 129-140 141-160 161-172 A G R IC U L T U R A L C R E D IT Farm Loans at Southern Banks by Robert E. Sweeney, 106. The Southern Agricultural Bank by Robert E. Sweeney, 30. The Southern Farm Borrower by Robert E. Sweeney, 63. A G R IC U L T U R E Agriculture Shows Divergent Trends by Robert E. Sweeney, 10. BALANCE OF PAYMENTS The U.S. Balance of Payments: Policies and Results by John E. Leimone, 46. BANK ANNOUNCEM ENTS 13, 22, 35, 53, 69, 78, 94, 113, 125, 135, 146, 167. BANK LO ANS Bank Credit Expansion Slows by Paul A. Crowe, 5. Large Banks— Important Suppliers of LongTerm Business Credit by W. M. Davis, 40. B A N K IN G See Agricultural Credit Bank Loans Check Collection Consumer Credit Discount Window Interest Rates Mobile Home Financing Trust Departments BOARD OF D IR E C T O R S Bank’s Board Changes, 24. C A P IT A L FLO W S See Mortgage Financing MONTHLY REVIEW CENTRAL BANK SW APS Central Bank Swaps— A Bulwark of Interna tional Monetary Cooperation by John E. Leimone, 162. F IN A N C IA L IN S T IT U T IO N S Financial Institutions Pressured by Hiram J. Honea, 12. H O U S IN G CHECK C O L L E C T IO N Another Milestone in Magnetic Ink Encoding, 111. CO N SU M ER IN C O M E C R E D IT Consumer Borrowing Slackens by Joe W. McLeary, 23. The Mobile Story of Consumer Instalment Lending by Robert E. Sweeney and Joe W. McLeary, 51. CORPORATE See Financial Institutions Mortgage Financing F IN A N C IN G Regional Corporate Financing: Regaining Its Importance? by C. William Schleicher, Jr., 39. See Economic Conditions IN T E R E S T IN T E R N A T IO N A L W IN D O W When Banks Borrow by Paul A. Crowe, 96. D IS T R IC T B U S IN E S S C O N D IT IO N S Georgia’s Climb Runs Into Air Pockets by Carole E. Scott, 36. Louisiana: An Independent Economic Path1? by John E. Leimone, 123. A Perspective on Florida’s Income by Paul A. Crowe, 136. Tennessee Comes Out Ahead by Carole E. Scott, 67. Things Have Changed, 18. Toward Full Employment W ith a Southern Twist by Charles T. Taylor, 2. What Kind of Economy Can the South Expect? by Charles T. Taylor, 118. Also see Employment Mortgage Financing Diversification of District Employment by C. Richard Long, 79. Gains in Industry Continue by C. Richard Long, 8 . Job Growth: Population Centers vs. Hinterland by C. Richard Long, 147. RESERVE MONETARY F IN A N C IN G SYSTEM See Central Bank Swaps Discount Window DECEMBER 1967 P O L IC Y See Balance of Payments Economic Conditions, 18. MORTGAGE F IN A N C IN G Southern Mortgage Bankers Eye Housing Pros pects by Hiram J. Honea, 90. Southern Mortgage Banking Matures— Part I, Essential Role in a Growing Region by Hiram J. Honea, 130. Southern Mortgage Banking Matures— Part II, Growth and Structural Change by Hiram J. Honea, 151. Also see Financial Institutions P R IC E S W hat’s Happening to Prices? by Lawrence F. Mansfield, 142. S IX T H EMPLOYMENT FEDERAL HOME The Changing Emphasis on Mobile Home Fi nancing by Joe W. McLeary, 58. C O N D IT IO N S 16, 28, 44, 56, 72, 88,104, 116,128,140,160,172. E C O N O M IC F IN A N C E See Balance of Payments Central Bank Swaps M O B IL E D IS C O U N T RATES Interest Rates Dip as Business Lending Slows by W. M. Davis, 100. D IS T R IC T S T A T IS T IC S 14, 26, 42, 54, 70, 86 , 102, 114, 126, 138, 158, 170. SO YBEANS Soybeans: America’s Cinderella Crop by Rob ert E. Sweeney, 74. TRU ST DEPARTM ENTS A Little Known Side of Banking by W. M. Davis, 95. 169 S i x t h D is t r ic t S t a t is t ic s Seasonally Adjusted (A ll d a ta a re in d e x e s, 1 9 5 7 - 5 9 = Latest Month (1967) One Two Month Months Ago Ago IO O , u n le s s in d ic a t e d o th e r w is e .) One Year Ago Latest Month (1967) One Two Month Months Ago Ago One Year Ago SIXTH D ISTRICT Oct. Oct. Oct. Oct. 158 148 106 82 159 149 108 88 157 150 108 77 154 143 109 84 Oct. Oct. 2.9 42.5 2.9 42.4 3.0 42.0 2.5 42.4 Member Bank L o a n s ....................... Oct. Member Bank D e p o s it s.................... Oct Bank D e b it s * * ................................. Oct. 270 205 223 271 200 222 270 201 223 246 180 193 IN CO M E A N D SP EN D IN G Personal Income (Mil. $, Annual Rate) Sept. 57,721 58,625r 57,702r 53,408 200 Manufacturing P a y r o lls .................... Oct. 201 192 200 Farm Cash R e c e ip t s ....................... Oct. 130 129 161 130 C r o p s ........................................Oct. 103 99 174 100 L iv e sto c k .................................... Oct. 147 161 153 152 Instalment Credit at Banks* (Mil. $) New L o a n s ................................. Oct. 312 302 287 324r Repayments ..............................Oct. 279 253 268 256 Retail Sales ................................. Sept. 175p 164 164 167 Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) FINANCE AND BA N KIN G PRODUCTION A N D E M PLO YM EN T Nonfarm E m p lo y m e n t .................... Oct. Manufacturing .......................... Oct. Apparel .................................... Oct. C h e m i c a l s ................................. Oct. Fabricated M e t a l s ....................... Oct. F o o d ........................................... Oct. Lbr., Wood Prod., Furn. & Fix. . . . Oct. p a p e r ........................................Oct. Primary M e t a l s .......................... Oct. Textiles .................................... Oct. Transportation Equipment . . . . Oct. N o nrnanufacturing...........................Oct. C o n s t r u c t i o n ..............................Oct. Farm E m p lo y m e n t.......................... Oct. Unemployment Rate (Percent of Work F o r c e ) ............. Oct. Insured Unemployment (Percent of Cov. E m p . ) .................Oct. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Oct. Construction C o n t r a c t s * .................Oct. R e s id e n t ia l................................. Oct. All O t h e r .................................... Oct. Electric Power Production** . . . . Aug. Cotton C o n s u m p t io n * * .................... Oct. Petrol. Prod, in Coastal La. and Miss.**Oct. 137 136 165 132 151 114 103 118 124 105 178 137 124 56 136 136 165 131 151 113 103 118 126 105 178 137 124 54 136 135 163 131 152 114 103 118 126 106 181 137 62 134 136 168 131 150 113 108 115 132 106 179 133 128 63 4.0 4.1 4.1 3.6 2.4 41.4 151 160 144 148 108 274 2.5 40.9 188 179 195 145 107 270 1.7 41.3 176 117 226 141 117 209 2.4 41.2 179 184 176 146 114 241 122 FINANCE AND BA N KING Loans* All Member B a n k s ....................... Oct. Large B a n k s ..............................Oct. Deposits* All Member B a n k s ....................... Oct. Large B a n k s ..............................Oct. Bank D e b it s * / * * ..............................Oct. 258 230 257 229 256 226 241 224 196 176 212 193 172 194 174 178 163 192 210 210 GEORGIA INCO M E Personal Income (Mil. $, Annual Rate) Sept.11,246 Manufacturing P a y r o lls .................... Oct. 200 Farm Cash R e c e i p t s ....................... Oct. 127 PRODUCTION A N D EM PLO YM EN T 7,565r 177 7,005 173 PRODUCTION A N D EM PLO YM EN T Oct. Oct. Oct. Oct. Oct. 124 121 126 122 54 125 121 126 121 55 125 122 126 120 66 125 125 124 131 58 Oct. Oct. 4.7 40.7 4.8 40.9 4.6 40.4 4.2 41.0 Member Bank L o a n s ....................... Oct. Member Bank D e p o s i t s ................. Oct. Bank Debits** .............................. Oct. 240 190 191 240 190 241 190 223 175 Nonfarm E m p lo y m e n t .................... Manufacturing ........................... N o n m a n u fa ctu rin g....................... C o n s t r u c t io n ........................... Farm E m p lo y m e n t........................... Unemployment Rate (Percent of Work F o r c e ) ............. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . FIN A N C E AND BA N KING Personal Income (Mil. $, Annual Rate) Sept. 17,276 Manufacturing P a y r o lls .................... Oct. 124 Farm Cash R e c e i p t s ....................... Oct. 165 PRODUCTION A N D EM PLO YM EN T 170 133 131 134 126 55 3.6 41.0 3.7 41.6 3.8 40.4 3.5 41.1 265 215 225 268 213 217 265 252 195 203 8,593 185 149 8,678r 181 143 8,603r 179 236 Oct. Oct. Oct. Oct. Oct. 128 121 129 139 60 127 121 129 132 55 127 119 128 127 62 124 116 126 143 70 Oct. Oct. 5.0 42.4 5.0 42.0 5.1 41.8 4.7 42.4 Oct. Oct. Oct. 231 164 176 231 163 172 233 163 171 223 152 169 4,434r 216 85 4,355r 212 156 FINANCE AND BA N KIN G Member Bank L o a n s ....................... Oct. Member Bank D e p o s it s .................... Oct. Bank D e b it s * * ................................. Oct. Personal Income (Mil. $, Annual Rate) Sept. Manufacturing P a y r o lls .................... Oct. Farm Cash R e c e i p t s ....................... Oct. Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) 212 225 7,915 173 154 FINANCE AND BA N KIN G Member Bank Loans* . . . . Member Bank Deposits* . . . Bank D e b it s * / * * .................... M IS S IS S IP P I Sept. Oct. Oct. 4,014 221 118 3,731 210 109 Oct. Oct. Oct. Oct. Oct. 138 145 136 133 45 138 144 135 132 38 137 143 135 131 49 138 148 134 147 55 Oct. Oct. 5.0 41.2 5.3 40.8 5.0 40.1 5.0 41.1 Member Bank Loans* . . . . Oct. Member Bank Deposits* . . . Oct. Bank D e b it s * / * * .............................. Oct. 314 232 306 231 310 231 291 216 FLORIDA 135 130 138 125 62 PRODUCTION A N D E M PLO YM EN T INCO M E Nonfarm E m p lo y m e n t .................... Oct. 135 130 138 128 50 PRODUCTION A N D E M PLO YM EN T INCO M E 7,677r 176 125 135 130 138 129 54 Nonfarm E m p lo y m e n t .................... Oct. Manufacturing ...........................Oct. No n m a n u fa ctu rin g....................... Oct. C o n s t r u c t io n ...........................Oct. Farm E m p lo y m e n t...........................Oct. Unemployment Rate (Percent of Work F o r c e ) ............. Oct. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Oct. ALABAMA Personal Income (Mil. $, Annual Rate) Sept. 7,452 175 Manufacturing P a y r o lls .................... Oct. 94 Farm Cash R e c e i p t s ....................... Oct. ll,3 44 r ll,1 96 r 10,389 203 201 192 141 158 127 150 17,261r 16,875r 15,749 247 246 233 164 160 168 Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) FINA NC E AND BA N KIN G MONTHLY REVIEW Latest Month (1967) One Month Ago Two One Months Year Ago Ago NCOM E i Sept. Oct. Oct. 9,140 198 109 9,231 r 197 107 9,108r 197 139 8,619 190 118 Latest Month (1967) N o n m a n u fa ctu rin g................. C o n s t r u c t io n .................... Farm E m p lo y m e n t.................... Unemployment Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . One Month Ago Two One Months Year Ago Ago . . Oct. . . Oct. 133 156 57 134 158 58 133 157 67 131 160 66 . . Oct. . . Oct. 4.3 40.3 4.2 40.7 4.3 40.2 3.4 40.7 . . Oct. . . Oct. . . Oct. 254 186 228 245 182 232 239 181 207 237 171 205 FINA NC E A N D BAN KING RODUCTION A N D EM PLO YM EN T Oct. Oct. Manufacturing 137 143 137 142 136 143 136 146 Member Bank L o a n s * ............. Member Bank Deposits* . . . . Bank D e b i t s * / * * .................... 'For Sixth District area only. Other totals for entire six states. **Daily average basis. r-Revised. p-Preliminary. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U. S. Dept, of Labor and cooperating state agencies; cotton consumption, U. S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. D e b its to D e m a n d D e p o s it A c c o u n ts Insured Commercial Banks in the Sixth District ( In T h o u s a n d s o f D o lla r s ) October 1967 September 1967 Percent Change Percent Change Year-to-date October 1967 10 mos. from 1967 October Sept. Oct. from 1966 1967 1966 1966 Year-to-date October 1967 10 mos. from 1967 October Sept. Oct. from 1966 1967 1966 1966 ■TANDARD M ETROPOLITAN .TATISTICAL A R EA Sf Birmingham . . . . Gadsden ................. H u n t s v i l l e ............. Mobile ................. Montgomery . . . . Tuscaloosa ............. 1,485,326 67,319 186,172 514,726 311,005 103,942 1,446,944 60,365 170,808 455,965 320,040 93,215 l,457,956r +3 66,740r +12 173,798r + 9 512,703r +13 296,560r - 3 90,369 +12 +2 +1 +7 +1 +5 +16 +7 -5 +1 +7 +3 +10 576,551 1,427,445 2,200,773 470,560 187,237 135,612 562,877 r +16 l,390,800r +6 +7 2,076,988 522,316r +19 178,212r + 6 122,574 +1 +17 +9 +13 +7 +11 +12 +8 +6 +10 +7 +9 +14 1,292,692 370,718 l,241,539r +10 362,233r + 8 +14 +11 +11 +3 Albany ............. 95,389 Atlanta ............. . 4,959,800 A u g u s t a ............. 307,844 235,784 Columbus . . . . M a c o n ................. 259,927 Savannah . . . . 267,941 89,881 4,599,060 275,339 221,362 252,432 250,426 89,020 +6 4,188,940r + 8 277,722r +12 202,901 r + 7 226,454r +3 234,115r +7 +7 +18 +11 +16 +15 +14 -3 +9 +10 +10 +12 +9 Baton Rouge Lafayette . Lake Charles New Orleans . 564,246 . 143,987 142,864 . . . 2,403,779 509,271 116,335 143,051 2,187,869 508,590r +11 116,691 +24 122,956 -0 2,199,135r + 10 +11 +23 +16 +9 +10 +6 +12 +3 654,504 611,512 580,880r +7 + 13 +9 594,557 487,539 1,748,701 574,023 451,055 1,619,786 543,017r 422,187 r l,374,790r +4 +8 +8 +9 +15 +27 +6 +7 +19 A n n is t o n ............. Dothan ............. S e l m a ................. 65,874 65,732 49,170 62,916 64,830 47,614 62,619 59,377 45,299 +5 +1 +3 +5 +11 +9 +1 +10 +13 Bartow ............. Bradenton . . . . Brevard County . . Daytona Beach . . Ft. Myers— N. Ft. Myers . . Gainesville . . . . 33,381 73,832 223,049 90,616 31,687 62,059 195,169 81,870 34,033 58,359 190,865 83,484 +5 +19 +14 + 11 -2 +27 +17 +9 -6 +22 +6 +7 66,190 82,580 +10 +1 +19 +16 +9 +8 Ft. Lauderdale— Hollywood . . . 657,205 Jacksonville . . . . 1,510,856 M i a m i ................. . 2,350,435 O r l a n d o ............. 561,105 Pensacola . . . . 198,064 Tallahassee . . . 137,386 Tam paSt. Petersburg . 1,418,658 W. Palm Beach . . 400,560 Jackson . . . . . . . . ............. Chattanooga . . . Knoxville . . . . Nashville . . . . . )THER CE N T ER S 78,519 87,171 71,442 86,272r 'Includes only banks in the Sixth District portion of the state. DECEMBER 1967 tPartially Lakeland . . . . Monroe County . . O c a l a ................. St. Augustine . . . St. Petersburg . . S a r a s o t a ............. Tampa ............. Winter Haven . . . October 1967 September 1967 119,591 31,726 64,605 20,037 337,992 111,082 738,633 60,385 109,980 33,988 52,887 17,777 291,031r 93,204 705,458r 53,029 108,853 29,190 57,484 17,564 293,608 97,194 659,826 48,837 +9 -7 +22 +13 +16 +19 +5 +14 +10 +9 +12 +14 +15 +14 +12 +24 +5 +5 +5 +2 +12 +3 +9 +3 Athens ............. Brunswick . . . . D a l t o n ................ E lb e r t o n ............. Gainesville . . . . G r i f f i n ................ LaGrange . . . . Newnan ............. R o m e ................ V a l d o s t a ............. 74,672 44,513 91,823 15,158 78,185 37,471 22,667 27,796 77,522 61,825 70,680 41,278 80,068 16,166 67,507 35,993 22,543 24,919 69,414 I *,099 75,768 38,595 80,165 12,427 69,124 31,778 20,828 25,351 73,087 54,096 +6 +8 +15 -6 +16 +4 +1 +12 +12 -4 -1 +15 +15 +22 +13 +18 +9 +10 +6 +14 +4 +6 -2 +12 +6 +7 -3 +2 +1 +16 Abbeville . . . . Alexandria . . . . Bunkie ............. Hammond . . . . New Iberia . . . . Plaquemine . . . Thibodaux . . . . 11,642 132,870 8,174 36,432 37,519 11,891 21,262 12,412 124,755 5,960 42,983 33,899 10,287 20,680 11,894 117,102 6,412 35,986 33,528 10,696 20,692 -6 +7 +37 -1 5 +11 +16 +3 -2 +13 +27 +1 +12 +11 +3 +2 +13 +20 +15 +1 +11 +2 Biloxi-Gulfport . . Hattiesburg . . . L a u r e l ................ M e r i d i a n ............. N a t c h e z ............. Pascagoula— M oss Point . . . Vicksburg . . . . Yazoo City . . . . 102,164 56,581 33,740 66,951 37,686 98,216 51,994 31,523 61,553 34,868 93,890 57,039 35,866 64,870 34,610 +4 +9 +7 +9 +8 +9 -1 -6 +3 +9 +9 +1 -5 +2 +7 55,600 43,946 27,324 53,668 39,543 25,402 64,190 41,453 22,612 +4 +11 +8 -1 3 +6 +21 +5 +4 +5 ............. Bristol Johnson City . . . Kingsport . . . . 83,624 79,133 159,003 75,336 72,112 141,548 70,722 68,953 139,814 +11 +10 +12 +18 +15 +14 +6 +9 +6 31,199,743 28,712,696 +8 +16 +8 4,065,800 9,260,031 8,058,421 4,094,865 1,423,863 4,296,763 3,869,491 8,519,704 7,251,038 3,756,983 1,336,346 3,979,134 3,782,293r + 5 8,299,538 +9 6,957,949r +11 3,762,838r + 9 1,320,195r + 7 3,695,605r + 8 +7 +1 2 +16 +9 +8 +16 +7 +9 +8 +4 +8 +12 SIXTH DISTRICT, Total Alabam a} . . . . F l o r i d a } ............. G e o r g ia } ............. Louisiana*! . . . M ississippi*! . . . Tennessee*! . . . ^Estimated. 27,818,418r r-Revised. 171 D is tric t B u s in e s s C o n d it io n s The District’s economy continued to tug at the remaining restraints to vigorous expansion. Unemploy ment showed a small decrease because of a minor contraction in the work force. Retarded by the spreading effects of prolonged strikes, nonfarm employment dropped slightly, however. Personal income did not improve, and consumers continued to restrict their credit financed spending. Construc tion contracting bounced back strongly in October in all categories. Subdued business lending encour aged banks to continue acquiring securities. Further price strengthening in the crop sector may still pull District farm incomes above 1966 levels. Nonfarm employment was adversely affected by national strikes and a less-than-seasonal rise in trade jobs in October. Manufacturing employment held even with September levels as a result of good gains in the chemical and food industries. Construction employment also rose further. Aver age weekly hours remained steady, but a dip in average hourly earnings shaded the growth in manufacturing payrolls. Large commercial bank lending to business firms remained quiet in November. Most of the larger banks, however, raised their rates on prime business loans from 5 ^ percent to 6 percent after the November 20 rise in the Federal Reserve dis count rate. Other types of loans expanded only modestly, and investment portfolios showed fur ther gains. Lending activity was more vigorous at smaller banks than at larger banks. Both demand and time deposits continue to contribute to a fairly rapid expansion in total deposits. New instalment loans at banks declined in Oc tober, while repayments rose. Consequently, the increase in outstandings was less rapid than in most recent months. Automobile loan extensions 172 were up slightly, while other consumer loans and personal loans dropped. Slower growth in con sumer credit paralleled a slight decline in retail sales. Personal income also retreated in Septem ber and October from its earlier levels. Through October, the farm price index was well below a year earlier, but further strength in the crop sector may pull incomes above 1966 levels. Cotton prices advanced sharply in November, re flecting very small crops and reduced inventories of high quality cotton. Additional support will come from above average production of corn, soy beans, and sugarcane. Contracting for construction projects was vig orous, producing an all-time October high in total, residential, and nonresidential projects. Dollar volume of total projects through the first ten months was only a shade below the comparable 1966 period and over 5 percent above that of 1965. Residential contracts, more heavily weighted in multi-units, were up more than 7 percent over the first ten months of 1966. Note: D ata on w h ic h s ta t e m e n ts a re b a se d h a ve been a d ju ste d w h e n e v e r p o s s ib le to e lim in a te s e a s o n a l in flu e n c e s. MONTHLY REVIEW
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