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Atlanta, Georgia February • 1960 Income in the South: The Last Ten Years and the Next Ten S o u t h e r n e r s , as well as other Americans, found that they could Also in this issue: SM ALL BUSINESS INVESTM ENT CO M PAN IES DISTRICT BUSINESS H IGHLIGHTS SIXTH DISTRICT STATISTICS SIXTH DISTRICT INDEXES buy just about as much with their dollars last year as they could the year before. In terms of 1959 prices, a dollar lost only nine-tenths of a cent in purchasing power during the year, compared with 3.5 cents in 1957 and 2.8 cents in 1958. Thus, the 7.2-percent increase in personal income in District states in 1959 measures fairly closely the actual increase in real income, or additional purchasing power. Personal income was higher in 1959 than in 1958 in each District state, expanding most rapidly in Florida and Mississippi. Rates of growth in Tennessee and Georgia exceeded the national average, but in Alabama and Louisiana income probably rose a little more slowly. These com parisons are based upon preliminary estimates by the Research De partment of this Bank, however, and they may be revised when final data become available. The District’s farm income rose, whereas the nation’s declined, and its manufacturing was affected less by the steel strike than the nation’s. About two-thirds of the increase in wage and salary income came from manufacturing and government payrolls, although wage income of other types increased without exception. Since income in the District increased more in 1959 than popula tion, per capita income grew. Moreover, the District’s per capita income came a little closer to the national figure, averaging about 74 percent of it; in 1930 per capita income in this area amounted to only 50 percent of the national figure. If, as many persons believe, the South’s major economic problem is to raise its per capita income to the national level, the year 1959 saw this problem a little nearer solution. Changes in income were so strongly influenced by recovery from the depression of the 1930’s and World War II, it seems reasonable to use the 1950’s as a pattern for assessing future prospects rather than the entire 1930-59 period. The following discussion, therefore, explores some of the economic developments of the last ten years that have helped the South “catch up” with the nation. The 1950's: A Decade of Change ffeerw B a tifa f jS fa t/ta Economic growth requires change, for if people are to become more productive and earn higher incomes they must do different things in different ways. By reviewing the economic changes that occurred in the Sixth District during the 1950’s, we can acquire a better understanding of the forces that raised income in the area. Migration and Population Shift One major change in the Sixth Dis trict was the 18-percent increase in population. Considering the high rate of natural increase in the South, this gain seems modest, when com pared with one of 17 percent for the nation. In each District state except Florida, more people left than came in. As a result, population in the five states with net out-migration increased only 8 percent, and the growth in the labor force was much smaller than it would have been otherwise. Population changed in another way. There was a great shifting about of people from place to place within the District, especially from rural to urban areas. Estimates made by this Bank show that between 1950 and 1955 in 80 percent of the 448 counties in the District, more people left than came in; there is no reason to believe this trend has changed since then. Migration from rural areas in central and southern Georgia, Alabama, and Mississippi was especially heavy. So far as the District is concerned, the “population explosion” during the 1950’s was in its metropolitan areas. Farm Employment Declined The shift in population was symptomatic of the change in the way people earned their living. At the beginning of the decade 22 percent of the District’s workers were working on the farm; the move to the cities and to other parts of the nation left only 11 percent of them making their living from farm work. With the total number of jobs increasing and the number of farm workers declining, it is obvious that nonfarm employ ment in District states expanded even more than the total labor force increased. Since nonfarm employment generally yielded higher income, the average income per worker was raised. This change helped raise total income. Industrialization, of course, pro vided some of the new jobs. Between 1950 and 1959, man ufacturing plants, many of them new ones, added 242,000 manufacturing workers to their payrolls. Because manufac turing jobs averaged higher incomes than other types of work, moreover, income grew more than is indicated by the in crease in employment. By 1959, manufacturing payrolls were providing 25 percent of total income. We can be misled by concluding that higher incomes came solely from increased industrialization. Manufacturing employment in 1959 made up only 26 percent of total nonfarm employment, and more new nonfarm job opportunities were made available in construction, transportation, communica tion and public utilities, finance, trade, service, and govern ment occupations than in manufacturing. In District states, wage and salary income from governments was about as important as that from manufacturing. Growth in the former in the 1950’s came more from the growing payrolls of state and local governments than of the Federal Government. More Productive Work Consumer Demands Changed During the 1950’s, consum ers changed their demands both for the things they bought directly and for the things they bought indirectly through their governments. Higher incomes, of course, meant that District consumers could buy more. But as their incomes in creased, their demands changed because they could afford different things and because more of them lived in cities. The growing population and urbanization directed demands to state and local governments for more and better educa tional services, better roads and streets, and other services required in urban communities. Capital Investment Greater The changes discussed so far suggest another major change—an increase in capital invest ment by private businesses, by consumers, and by govern ments. Expenditures for manufacturing plants and equipment in District states in 1950-57 totaling $5.6 billion, the $1.0 billion spent by state and local governments for schools in the same period, and the nearly one million new housing units started in urban areas between 1950 and 1958 are typical. Shifting toward more productive manufacturing jobs yield ing higher income required, moreover, that capital invest ment per worker be increased. Average capital investment per worker in the chemicals and allied products industry, one of the District’s growth industries and one that yields high income per worker, amounts to $17,000, according to the National Industrial Conference Board. On the other hand, capital investment per worker in the textile industry re quires $8,000. In the District, value added per worker for the former industry averaged $14,000 in 1957; for the latter, $4,500. Greater capital investment not only made it possible to provide more workers with more productive and better pay ing jobs, it also created jobs; it was one reason why con struction activity contributed so much to total income. Forces Behind the Changes Knowing the major economic changes that went along with economic growth in this part of the South in the 1950’s, we now ask, Why did these changes occur? First, we note that the 1950’s was a decade of general economic expansion. Gross National Product, that useful figure summarizing total output of the nation’s goods and services, was about 45 percent greater at the end of the decade than it was at the beginning even after allowances for rising prices. Personal income, the measure we have been using for economic growth in the South, grew correspondingly. The close resemblance of the trend in growth of personal income in the nation to that in the District, shown in the accompanying chart, suggests that conditions that encourage income growth in the nation also encourage income growth in the South. The rise in District income, however, has been just a little steeper than that in the nation. This leads to another observation: When the nation’s income expands, the South’s share of it increases. This relationship was demonstrated in the 1950’s, when a generally prosperous United States created job opportunities outside the South, which many Southerners took advantage of. Whatever we may think about the loss of production potential to the South because of the loss of some of its workers, the result was that the South itself had to provide fewer jobs for its expanding labor force. Per capita income for those remaining, therefore, was probably higher than it otherwise would have been. During the 1950’s, the nation’s agriculture, because of technological and scientific developments, was going through what has been termed an “agricultural revolution.” As a result, more could be produced with fewer workers. Some workers were pushed off the farm because they were not needed; others were pulled away by job opportunities else where. Economic expansion in the 1950’s also stimulated the shift within the South to more productive types of nonfarm employment. National economic growth provided markets for Southern products; it created demands for the physical and human resources the South had available, and it made possible the capital investment needed to set them to work. This part of the South had the abundant water supplies, rapidly growing trees, petroleum resources, and an under employed labor force that were needed to produce the chemi cals, paper, and petroleum products for the nation’s economic expansion. As these were put to work, Southerners found more productive and better paying jobs, and incomes rose. Southerners in District states made some of the required capital investments themselves. In the ten years between 1947 and 1957, for example, they had increased the assets of com mercial banks, savings and loan associations, legal reserve life insurance companies, and credit unions from $11 billion to $24 billion. Deposits at commercial banks in 1950 amounted to $8.9 billion; in 1959 to $16 billion. Yet, financ ing all of the South’s capital investment needs was a task be yond their financial resources. Since the 1950’s was a period of heavy capital investment for the United States, some funds from other areas spilled over into the District. Many manufacturers with nationwide operations found they could not meet the demands of the expanding economy with their existing productive facilities. They had to expand. Some of them chose this part of the South in which to build their new plants both because . 2 • & ____J Personal Income, 1929-59 I District States and United States B illio n s of D o llars B illio n s of D o llars 1930 1935 1940 1950 1945 1955 1959 Personal Income in District states is grow ing faster than it is in the nation. Thus, per capita income in the South is a little closer to the national av erag e . At 67 percent of the national fig ure in 1950, it reached 74 percent in 1959. markets for their products were growing here and the South had the physical and human resources needed to operate the new plants. The nation’s large financial institutions also found their assets growing as many individuals entrusted to them the savings they accumulated out of their rising incomes. Some of these funds were attracted to the South to finance the building of homes and schools, roads, and other public facili ties and to help finance business ventures. It required the com bined efforts of Southerners and other investors to supply the capital funds needed for growth. Economic growth cannot be explained solely in terms of capital investment and productivity. There must be men who are able to recognize economic opportunities, apply technological and scientific developments, assume leadership, and risk their funds in what they hope will be productive enterprises. There must be a labor force that can acquire industrial skills and adapt to changes. Some of the workers must be able to learn not only the highly technical produc tive processes needed in modern industry but also the pro fessional skills required by present day society. Economic growth also requires a society that encourages rather than resists changes. Thus, one key to economic growth is the ability of people to change. The record of the 1950’s shows that Southerners have been able to accept and adapt them selves to change. The 1960's: Another Decade of Change? Employment, District States, 1920-59 To achieve the income grow th m eant providing jobs not only for w orkers add ed to the labor force but for those w ho left the farm a s w e ll. Sources of Income, District States 1950 and 1959 Percent of Total X v 'f f i 1959 1950 Trade S Service Finance, Ins., & Reol Estate Government P _ _ Y Construction Other A s income grew during the 1950’s, the relative im portance of different sources changed. Not only did personal income from m anufacturing become more im portant, but that from trade, service, governm ent, fin an ce, and construction a s w e ll. If we look back to 1950 and remember how little we knew about what would happen in the next ten years, we are impressed with our limitations in foretelling what will happen in the 1960’s. How wrong we would have been had we as sumed the 1950’s would be like the 1940’s! Projecting economic changes in the 1960’s on the basis of what happened in the 1950’s, therefore, may lead us to erroneous conclusions unless the same kinds of changes occur in the next ten years. On the basis of past trends, however, it is relatively easy to project personal income in the Sixth District for 1970. By that time, if the District’s per capita income continues to increase in proportion to the nation’s as it has in the last ten years, it should reach 77.4 percent of the national average. If the nation’s per capita income increases as implied by the National Planning Association’s “judgment” projection, therefore, per capita income in the District in 1970 should be $2,250 in 1959 prices. An increase in the District’s per capita income measured in dollars of constant purchasing power of approximately $650 between 1959 and 1970 would indeed be a good record for economic growth. But can we rely at all on any such pro jection derived by such a mechanistic method? We begin to have serious doubts when we recall the major changes dur ing the 1950’s that established the pattern we used in mak ing the projection. Will the rest of the nation continue to absorb part of the South’s expanding population or will jobs have to be found here for all who will enter the labor force in the 1960’s? Is there no limit to the move away from the farm to nonfarm jobs? Can we keep attracting such a large part of the nation’s capital investment to this area? Will the South’s labor force be ready to meet the challenge of an increasingly technologi cal and scientific productive process? Partial answers to these and other questions must be found before we can make even a tentative projection of the future. Future issues of this Review will go into these matters more thoroughly than has been possible here. C h a r les T. T aylo r Small Business Investment Companies The public and Congress have been concerned for many years with the problems that plague small business. As one response to this concern, Congress passed the Small Business Investment Act of 1958. The Act was designed to fill an apparent gap in our financial structure, namely a lack of institutions specializing in long-term loans and the provision of equity capital to small concerns. Is this gap real? As we look at the financial system, we see the following picture. Except as waived by the Act, banks are legally prohibited from owning stock in other corporations. Furthermore, accepted banking prac tices tend to restrict lending to short- and intermediateterm loans. Institutional investors such as insurance com panies select only well-established firms when making loans to small businesses. Other private investors have been deterred from satisfying the long-term financial re quirements of small businessmen by the great risks and high costs associated with such financing. Finally, most small concerns find it difficult or impractical to tap the organized bond or stock market as a source of long-term funds. As a result small businessmen have generally had to supply their own capital or turn to other individuals or remain content with shorter-term financing. Thus the gap appears real enough. An intensive study by the Federal Reserve Board further documents its existence. Earlier efforts to finance small concerns include the loan programs of the Small Business Administration and of state and local development corporations. These programs are generally restricted to intermediate-term lending for working capital or other designated purposes. The authors of the 1958 Act, however, hoped to stimulate the forma tion of privately controlled small business investment companies (SBIC’s) to serve the long-term needs of small business. Under the provisions of the Act, certain tax benefits accrue to both SBIC’s and small businessmen and Fed eral funds are made available to help finance investment companies. The Small Business Administration will sup ply up to $150,000 of the minimum paid-in capital of the $300,000 an SBIC must have, and will lend to the investment company up to 50 percent of its paid-in capital and surplus. The Act also permits banks to own and operate such companies. Does the program fill the gap we have seen to exist? After only 17 months this question is difficult to answer. A survey of several investment companies licensed thus far in the Sixth District reveals diverse policies, limited experience, and expectations ranging from uncertain hopefulness to buoyant optimism. Any answer to this question must, therefore, be highly tentative. Organization and Capitalization of Small Business Investment Companies Getting a license to operate a small business investment company is not a small undertaking. First, the prospec tive organizers, numbering at least ten, must file a “Pro posal,” a form which would appear formidable to all but the most capable and enthusiastic. Questions cover details of the proposed organization, its capitalization, and its financial policy, so as to assure that the company will attempt to fulfill the purposes of the Act. If the proposal is reviewed favorably by the Small Business Administration’s investment division, the proponents are issued a “Notice to Proceed” with incorporating, raising capital, and other actions necessary to complete a formal license application. By January 1960, 62 companies in the United States had obtained licenses. In addition, there were 45 outstanding notices to proceed and numer ous proposals under review. Ten of the licenses issued went to companies located in four Sixth District states— Florida, Georgia, Tennes see, and Louisiana. One of the country’s first two licenses was issued to a company owned entirely by a large Atlanta bank. Two companies are headquartered in Nashville, one of which was organized by 42 banks and 20 in dividuals in Tennessee, and the other by one bank. Six are in Florida (four in Miami, one in Palm Beach, and one in Tam pa). All the Florida companies were originally organized by individuals, but partial ownership of one Miami firm has now been transferred to several banks. Individuals also recently organized one in New Orleans. In all cases studied the companies were initially capi talized at values close to the legal minimum of $300,000. Only half of them, however, acquired paid-in capital from the Small Business Administration, and one is now offering close to $6 million in stocks. One company has used its privilege of borrowing $150,000 from the SBA to supple ment its paid-in capital. At least three intend to borrow SBA funds as they are needed and permitted. Financial Policies Suppose that you are operating a firm in need of capital in this District. Under what conditions could you borrow from an SBIC? First, your company would have to be “small” as defined by SBA regulations. The definition of smallness varies, depending upon the type of firm. Most re tail and service trade firms are small if their gross annual sales are $1 million or less; wholesale firms may have sales up to $5 million and some types of manufacturing concerns may have up to 1,000 employees. These defini tions are liberal enough to include most businesses. Secondly, if you are to receive equity capital, that is, funds giving ownership title in your concern to the in vestment company, your firm must be incorporated. Equity capital is acquired by first issuing to the SBIC debentures (bonds with a specified rate of interest and maturity date) which are convertible before maturity into stock at a predetermined rate and at the option of the investment company. Incorporation is not necessary, how ever, in order to receive loans. These may be obtained for terms of five to twenty years, and the SBIC may extend the term for another ten years. The most you could legally borrow from an SBIC is 20 percent of its paid-in capital. Thus if yours is a milliondollar firm, it is unlikely that the amount of long-term financing you might need is small enough to be provided . 4 . by an SBIC in view of the current capitalizations of these companies. As the program progresses, however, in dividual loans and debentures should become larger. So much for the legal possibilities for financing small firms. The impact of this program on small business financing depends, among other things, on actual SBIC policies, including the degree of diversity in the kinds of firms financed, the sizes of firms which the SBIC’s are willing to finance, the amount, kind, and terms of financ ing which an SBIC will offer to an individual firm, and the extent of the geographic area which an investment company is willing to serve. As a practical matter, the companies in this District are tending to concentrate their interests in relatively new and growing manufacturing firms that have demonstrated capacity for successful operation. Several loans, however, have been made to wholesale distributors and retail establishments. One Florida investment company plans to specialize in financing land development companies be cause its management is specialized in this field and be cause of opportunities existing in the state. Most of the companies do not have explicit policies as to the size range of firms they will finance, but as we have already suggested, the size of firm is closely related to the size of a loan or a convertible debenture. Most of the investment companies have supplied or plan to supply funds up to the 20-percent limit to a few firms, but the average amount is likely to be considerably less. There is also usually a lower limit varying between $5,000 and $10,000. Clerical and counseling costs for handling smaller amounts are simply too prohibitive. Policies vary considerably among investment companies with respect to the kinds and terms of financing provided to small firms. Three of the investment companies studied restrict themselves to buying convertible debentures. Two of these view an equity position, to which buying deben tures may lead, as the only means of earning profits, while the other, a bank-owned company, has the bank supplement its purchases of debentures with regular loans. In contrast, another investment company supplies only term loans because it finds that small business firms generally are reluctant to have their ownership diluted, as would occur when debentures are converted into stock. Two others will provide both loans and equity capital. The disposition on the part of small firms against dilu tion of their ownership has led most of the SBIC’s to avoid a controlling equity position in any firm. Maturities on loans generally tend to be closer to the minimum five-year limit than to 20 years, indicating cautiousness on the part of the investment companies. The cost of borrowing to small firms is rather high, as one would expect because of the high risk and cost to the lender. Quoted interest rates vary considerably, especially among states because of differing legal interest-rate ceil ings; total borrowing costs vary less than interest rates. Investment companies are advancing most of their available capital to firms in their own states and more often in their immediate locality. There are good reasons for this geographically restricted mobility of funds. It is essential for the investment companies to know the eco nomic characteristics of the areas in which prospective borrowers are located, and the borrowing firms themselves generally operate in a limited area. It is impractical, moreover, for the SBIC to provide supervision and coun seling services at very long distances. Status and Prospects Expansion in both the number of SBIC’s and in the amount of funds extended to small businesses has acceler ated recently, but the program has moved more slowly than its architects had hoped. To understand this, we must know why the present companies were organized, how profitable this venture is to potential organizers, and what problems are encountered in financing small firms. The change in law, which had previously prohibited banks from owning stock in other corporations, now en couraged them to organize investment companies to pro vide small business with long-term funds. Government support and tax benefits induced other types of businesses to establish such companies. No one can say yet with any assurance how profitable the SBIC’s will be to their owners. Those that are only buying debentures do not expect loans to be profitable. While gross yields on loans are high, the associated risks and costs are probably sufficiently high to eliminate virtu ally any net profit. Holding convertible debentures, on the other hand, permits an investment company to experi ment in lending to firms until these debentures prove to be profitable. Then the SBIC can convert them into stock and share in the capital appreciation. Where banks have organized the companies, the motive to help small firms to grow may go beyond the expecta tion of immediate or delayed profits that might accrue to the company. A small firm nurtured to substantial size with SBIC assistance may, it is hoped, become a future de pendable customer of the bank. One bank-owned invest ment company, in fact, plans that its customers shall re purchase the portion of ownership held temporarily by the investment company when financial support is no longer needed. The company’s funds thus become a pool of re volving credit for small growing firms. Individual organ izers, however, are more likely to expect the company to yield them profits. For them the risks are great, even with governmental support and tax exemptions. The National Association of Small Business Investment Companies and individual SBIC officers have supported amendments to the 1958 Act which would, in their opinion, give more encouragement to potential organizers. Important among these are: (1) exemptions from the re strictive provisions of the Investment Company Act of 1940 and from supervision by the Securities and Exchange Commission, (2) permission to acquire equity interests in unincorporated businesses, (3) further liberalization of tax exemptions, (4) elimination of the requirement that small firms issuing convertible debentures must buy stock in the SBIC from 2 to 5 percent of the debentures. The amount of loans and debentures outstanding as of early December at companies in the District was small relative to total paid-in capital. The fact that seven companies have been licensed only in the last few months explains much of this slow progress. Yet there is a fundamental reason why even the older investment com • 5 • panies have extended funds at a slow pace. Although there has been no dearth of loan applicants, the same considerations which discouraged long-term financing of small concerns before the Small Business Investment Act was passed— its riskiness and costliness— continue to ra tion funds only to the qualified few. It is still too early to assess adequately the role of the small business investment companies. The program is still in an experimental stage. The provisions of the Small Business Investment Act were intended to be flexible and are almost certain to be amended in the near future. Organizational structures and policies vary widely and in time will give a broad base of experience for others to follow. As in other enterprises, pioneers must demon strate their success before others will consent to join them. A l b e r t A . H irsch Debits to Individual Demand Deposit Accounts (In Thousands of Dollars) Bank Announcements On January 8, the newly organized First Bank of Lake Placid, Lake Placid, Florida, opened for business as a nonmember bank, and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Officers are C. I. Babcock, Chairman of the Board; L. C. Crews, President; and W. C. Dorminey, Executive Vice President and Cashier. Capital totals $275,000 and surplus and undivided profits $68,750. On January 9, the Commercial Bank of Dade City, Dade City, Florida, a newly organized nonmember bank, opened for business and began to remit at par. Officers are Ray Clements, President; J. L. McDonald, Executive Vice President; and W. H. Green, III, Cash ier. It has capital of $250,000 and surplus and un divided profits of $100,000. The First Bank of Indiantown, Indiantown, Florida, a newly organized nonmember bank, opened for busi ness on January 23 and began to remit at par. Officers are Mrs. Y. R. Famel, Chairman of the Board; John S. Fox, President; Robert M. Post, Vice President; James J. Fleming, Cashier; and Charles L. Erwin, Assistant Cashier. Capital is $125,000 and surplus and undivided profits $62,500. On January 12, the newly organized First National Bank of Wauchula, Wauchula, Florida, opened for business as a member of the Federal Reserve System and began to remit at par. Steuart P. Hicks is President and Clyde C. Wheeler is Vice President and Cashier. The bank’s capital stock is $250,000 and surplus and other funds $200,000. The Bank of Gulf Breeze, Gulf Breeze, Florida, a newly organized nonmember bank, opened for business January 19 and began to remit at par. Millard G. Gil more is President; M. P. Crandall is Vice President and Cashier, and Dr. O. Gorden Nix is Vice President. Capital totals $112,500; and surplus and undivided profits amount to $112,500. On January 15, the newly organized South Orlando National Bank, Orlando, Florida, opened for business as a member of the Federal Reserve System and began to remit at par. W. J. Capehart is President; C. E. LeGette, Executive Vice President; George E. Sullins, Cashier; and Donald L. Estes, Comptroller. Capital stock totals $300,000 and surplus and other capital resources $300,000. Dec. 1959 Nov. 1959 44,515 858,255 35,440 37,587 73,920 321,214 178,023 27,943 54,814 1,631,711 825,548 40,159 709,483 30,982 33,493 67,487 281,726 162,291 25,426 50,337 1,401,384 752,508 40,820 798,797 32,676 37,710 64,133 290,644 176,959 24,708 51,818 1,518,265 749,086 +11 +21 +14 +12 +10 + 14 +10 +10 +9 +16 +10 +9 +7 +8 —O +15 + 11 +1 +13 +6 +7 +10 +15 + 10 +9 +10 + 18 +12 + 13 +12 +13 + 11 + 14 61,632 233,462 44,236 891,730 18,806 93,671 972,013 1,440,503 286,695 96,061 251,849 474,924 142,885 4,036,454 1,949,584 56,701 199,581 40,139 761,621 16,939 73,221 877,631 1,267,291 232,110 81,698 222,582 400,326 132,418 3,484,627 1,684,193 61,525 236,292 38,658 835,357 16,985 79,621 921,010 1,374,300 253,245 89,903 241,517 463,817 151,499 3,842,719 1,657,673 +9 + 17 +10 +17 + 11 +28 +11 +14 +24 +18 + 13 +19 +8 +16 + 16 +0 —1 + 14 +7 + 11 +18 +6 +5 + 13 +7 +4 +2 —6 +5 + 18 +7 +9 +14 + 12 +11 +15 +15 +13 +26 +10 + 18 +16 +11 +14 + 17 54,959 42,127 2,267,326 126,291 31,177 115,540 10,112 45,613 22,777 21,496 131,571 35,999 21,582 53,233 224,963 37,398 3,242,164 961,626 52,332 38,372 1,899,634 102,479 24,498 102,526 9,078 40,383 18,906 18,271 118,771 29,754 17,142 50,655 182,484 31,419 2,736,704 959,971 49,770 40,528 2,079,350 112,601 25,853 113,050 8,960 50,347 21,050 20,862 140,415 29,924 18,201 49,322 211,642 31,957 3,003,832 949,084 +5 +10 + 19 +23 +27 +13 + 11 +13 + 20 +18 +11 +21 +26 +5 +23 + 19 + 18 +0 +10 +4 +9 + 12 +21 +2 + 13 —9 +8 +3 —6 +20 + 19 +8 +6 +17 +8 +1 +16 +8 + 13 +9 + 25 +9 +7 —3 + 13 +10 + 11 +21 +13 +16 +11 +26 + 12 + 14 . . , . . . 74,621 288,176 69,840 90,224 1,444,636 1,967,497 645,711 69,159 253,994 59,304 79,029 1,223,266 1,684,752 556,497 75,016 281,501 65,541 101,230 1,368,809 1,892,097 662,085 +8 +13 +18 +14 +18 +17 +16 —1 +2 +7 —11 +6 +4 —2 +6 +9 +13 +2 +7 +8 +10 . 52,650 37,186 321,625 29,386 45,966 27,273 22,498 536,584 294,243 48,316 33 538 284,764 27,335 44,729 22 660 20,896 482.238 251,302 48,568 35,045 297,888 26,608 49,055 23,526 20,743 501,433 276,199 +9 +11 +13 +8 +3 +20 +8 + 11 +17 +8 +6 +8 +10 —6 +16 +8 +7 +7 +16 +13 +18 +16 +14 +12 +8 +16 + 13 48,516 353,038 44,816 82,139 268,468 752,913 1,549.890 553,394 18,194,406 12,964.300 5,230,106 11,093,955 41,944 308,660 38 592 80)596 232,623 753,619 1,456,034 543 511 15,993,721 11,245,739 4,747,982 9,609,583 46,078 338,557 45,353 79,682 276,785 779,943 1,566,398 582,721 17,201,592 12,324,744 4,876,848 10,523,810 +16 +14 +16 +2 +15 —0 +6 +2 +14 +15 +10 +15 +5 +4 —1 +3 —3 —3 —1 —5 +6 +5 +7 +5 +11 +16 +7 +14 + 10 +12 +12 + 12 +13 +12 + 14 + 12 . 261,121,000 217,139,000 238,975,000 +20 +9 +10 ALABAMA Anniston . . . . Birmingham . . . Gadsden . . . . Huntsville* . . . Montgomery . Tuscaloosa* . . Total Reporting Cities Other Citiesf . . . . FLORIDA Daytona Beach* Fort Lauderdale* Gainesville* . . Jacksonville . . Key West* . . . . Lakeland* . . . . Miami . . . . Greater Miami* . . . . Pensacola . . . . St. Petersburg . . West Palm Beach* . Total Reporting Cities . Other Citiesf . . . . GEORGIA Athens* . . . . A tlanta.................... Augusta . . . . Brunswick . . . . Columbus . . . . Elberton . . . . Gainesville* . . . Griffin* LaGrange* . . Marietta* . . . Newnan .................... Savannah . . . . Valdosta . . . . Total Reporting Cities Other Citiesf . . . . LOUISIANA Alexandria* . . Baton Rouge . . Lafayette* . . Lake Charles . . New Orleans . . Total Reporting Cities Other Citiesf . . . . MISSISSIPPI Biloxi-Gulfport* . Hattiesburg Meridian . . Natchez* . . . . Vicksburg . . . . Total Reporting Cities Other Citiesf . . . . TENNESSEE Bristol* . . . . Chattanooga . . Johnson City* . . Kingsport* . . . . Knoxville . . . . Nashville . . . . Total Reporting Cities Other Citiesf . . . . SIXTH DISTRICT . Reporting C ties . Other Citiesf . . Total, 32 Cities . . UNITED STATES 344 Cities . . . . Percent Change Dec. 1959 from 1959 Dec Nov Dec. from 1958 1959 1958 1958 . . . . . . . . . . . . * Not included in total for 32 cities that are part of the National Bank Debit Series, f Estimated. •6 • S ix th D is tr ic t In d e x e s Seasonally Adjusted (1947-49 = 100) 1959 1958 SIXTH DISTRICT Fabricated Metals . . . F o o d ................................... Lbr., Wood Prod., Fur. & Fix. T e x tile s ......................... Transportation Equipment Manufacturing Payrolls Petrol. Prod, in Coastal Louisiana & Mississippi** Construct'on Contracts* Residential .................... All O t h e r .................... Farm Cash Rece.pts*** Crops .............................. Livestock .................... Dept. Store Sales*/** Atlanta ......................... Jacksonville Knoxville Macon . . Miami . . New Orleans Furniture Store Sales*/* Turnover of Demand Deposits* ALABAMA Nonfarm Employment . . Manufacturing Employment Bank Debits .................... FLORIDA Nonfarm Employment . . Manufacturing Employment Member Bank Loans . . . Farm Cash Receipts . . . Bank D e b i t s .................... GEORGIA Nonfarm Employment . . Manufacturing Employment Bank D e b i t s .................... LOUISIANA Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Member Bank Loans* . . Farm Cash Receipts*** . . Bank D e b it s * .................... MISSISSIPPI Nonfarm Employment . . Manufacturing Employment Member Bank Loans* TENNESSEE Nonfarm Employment . . Manufacturing Employment Member Bank Loans* NOV. DEC. JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. 137 119 170 128 178 112 80 159 90 86 215 204 87 315r 136 118 172 129 179 112 79 160 92 86 211 205 84 330 137 119 173 132 182 113 79 160 91 86 212 204 91 351 137 120 174 132 178 114 80 161 92 87 212 206 92 346 138 121 174 133 179 115 78 161 95 88 208 209 93 341 138 121 176 135 180 115 79 161 98 87 214 214 94 340 139 122 179 135 181 113 80 163 100 88 212 215 92 346 139 123 182 135 182 114 79 163 103 88 202 219 89 357 139 123 186 135 181 112 80 165 102 89 207 224 110 359 139 120 185 136 175 112 79 163 73 88 206 216 94 359 139 120 185 131 177 113 81 165 74 88 203 213 93 351 139 120 186 130 173 115 82r 164 74 87 209 210 93 350 140 121 186 131 174 116 81 161 94 86 183 212r 91 346 140 121 187 133 177 114 81 160 100 86 188 216 91 n.a. 190 333 375 298 131r 99 216 172 161 214 129 164 126 136 155 158 232 144 213 207 152 180 291 243 139 146 102 201 309 367 262 134r 92 211 178r 163r 204 138 156 124 142 163 158 257r 148 215r 205 146r 179 292 273 150 161 121 192 336 364 314 132r 128 162 174 164 195 136 162 124 143 161 161 242 145 207 200 161 181 298 265 144 153 114 193 445 382 496 131r 113 164 168 161 180 127 154 116 141 154 155 248 139 203 198 154 178 303 271 153 162 121 189 463 394 520 129r 105 185 167 155 171 127 148 104 136 147 143 251 130 221 195 141 179 305 273 149 160 118 198 453 398 499 135r 127 183 175 169 190 135 148 111 130 151 170 263 142 230 201 157 178 311 274 145 164 112 206 397 429 370 136r 131 181 182 161 187 135 164 121 135 153 166 269 144 251 200 153 182 316 262 158 174 126 200 411 433 393 137r 112 192 186 174 192 127 161 114 139 148 168 277 151 245 202 148 183 321 280 152 174 117 195 416 425 410 142r 117 190 190 178 179 136 168 124 138 164 167 301 155 244 212 158 181 329 285 162 179 124 203 440 444 436 123r 95 182 196 188 190 145 164 131 221 165 177 312 156 263 217 159 183 330 260 154 174 115 207 380 440 331 151r 124 194 180 169 168 131 155 111 166 165 158 277 151 241 222 147 183 331 283 150 164 118 215 350 441 276 141r 94 182 178 169 185 124 160 113 151 159 158 274 149 241 225 156 182 331 273 147 153 109 218 302 373 244 143 133 169 187 178 209 129 168 130 182 168 162 269 154 260 223 161 184 333 273 150 160 109 233 n.a. n.a. n.a. n.a. n.a. n.a. 188p 176 202p 135 160 123p 172 172 164 282 153p 251p 228p 151p 181 335 288 156 169 121 120 104 186 134 158 246 101 216 120 105 179 131 155 242 111 232 121 105 182 147 155 248 126 233 120 106 185 154 154 254 123 233 121 107 189 125 154 250 147 233 120 107 193 145 156 254 148 238 121 107 190 135 157 259 132 231 121 106 195 134 160 266 162 253 122 109 198 139 160 275 164 254 117 100 173 143 160 269 127 226 117 99 167 139 160 270 134 248 117 97 168 138 159 272 84 241 121 105 184r 134 159 273 126 229 121 106 189 134p 158 272 n.a. 252 188 186 322 180 241 477 147 357 187 186 316 162r 241 477 162 403 188 188 318 176 242 485 281 372 189 190 326 184 238 492 232 382 191 193 319 163 235 500 182 391 193 195 343 183 233 511 230 389 195 195 351 176 241 526 227 400 197 198 351 175 243 534 236 437 199 202 364 178 238 544 239 441 199 202 371 212 246 548 200 408 200 202 370 177 247 550 212 450 200 202 371 180 245 547 172 436 200 201 366r 203 245 547 157 428 198 199 367 183p 241 549 n.a. 439 130 116 201 144 158 226 124 218 130 116 200 153 158 227 153 243 131 115 195 149 159 230 143 236 131 116 197 143 157 237 142 238 131 117 204 134 157 235 169 243 132 118 206 151 157 244 150 248 132 119 211 148 160 246 158 235 132 119 215 139 159 250 140 253 134 120 219 159 157 256 178 261 133 119 216 163 162 260 131 238 134 120 207 144 160 260 172 258 134 120 210 159 160 261 97 249 134 117 203r 157 163 266 142 244 134 118 204 153p 158 266 n.a. 259 128 98 172 185r 156 277 112r 199 129 97 169 189r 159 274 105r 230 129 96 173 171 163 284 104r 210 129 95 173 174 160 287 106r 216 128 96 175 203 165 293 109r 227 128 % 178 177 160 293 lllr 229 128 96 179 191 165 295 141r 217 128 96 175 177 165 295 109r 240 127 96 176 193 160 302 105r 233 126 95 176 178r 160 299 97r 223 127 95 178 193r 160 304 127r 248 126 96 170 171 r 157 307 136r 226 127 95 171r 195r 160 309 104 212 127 95 172 184 158 311 n.a. 235 131 133 248 107 198 363 120 214 130 132 245 133 195 369 125 233 132 131 247 114 197 361 100 216 131 131 246 106 190 367 103 210 131 131 251 97 198 378 110 225 130 132 250 114 195 383 110 225 132 134 247 120 191 391 106 208 131 133 247 132 195 398 111 238 131 134 252 115 197 403 112 233 131 134 253 129 194 400 106 224 133 135 253 95 195 411 140 236 133 135 241 83 202 392 127 230 134r 136 244 117 204 392 136 233 133 135 244 137p 208 403 n.a. 249 120 116 187 113 161 251 114 213 120 116 196 116r 162 256 100 235 120 117 202 111 165 262 98 230 121 118 204 114 160 267 107 242 122 119 205 109 159 268 119 229 123 119 208 114 162 272 109 229 122 119 206 116 166 276 95 225 123 120 206 116 164 283 113 235 122 121 211 105 165 287 87 239 122 119 214 122 165 287 108 221 122 120 211 109 166 288 105 229 122 119 206 108 167 293 109 225 122r 120r 206r 102r 167 291 145 234 121 120 209 lllp 164 296 n.a. 230 *For Sixth District area only. Other totals for entire six states. * * Daily average basis. ***Revisions reflect new seasonal factors. n.a. Not Available. p Preliminary. r Revised. Sources: Nonfarm and mfg. emp. and payrolls, state depts. of labor; cotton consumption, U. S. Bureau Census; construction contracts, F. W. Dodge Corp., petrol, prod., U. S . Bureau of Mines; elec. power prod., Fed. Power Comm. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. • 7 • SIXTH DISTRICT BUSINESS HIGHLIGHTS II III I| I 1947-49*100 in the District continues strong. Total em ployment was unchanged in December, as offsetting movements occurred among District states and in the various types of activity. Consumer buying held at a high level, although automobile sales declined as the supply of many models was limited because of the recent steel strike. Farm income, seasonally adjusted, increased slightly as both marketings and prices showed small gains. Loan demand at member banks continued strong, but bank deposits, after seasonal adjustments, declined. F _ a c t iv it y Nonfarm em ploym ent, seasonally adjusted, was virtually unchanged in December. Slight declines in Florida, Mississippi, and Tennessee were almost wholly offset by increases in Alabama, Georgia, and Louisiana. M anufactur ing em ploym ent for the states as a group was also unchanged; some activities showed gains, notably those affected by the steel strike, but others declined. Manufacturing p ayrolls rose further in December as average weekly hours increased, but they were still under the mid-summer record. Construction activity, measured by seasonally adjusted construction em ployment, held steady in December at a level somewnat below last summer’s record. The three-month average of contract aw ard s for residential construc tion, however, declined further in November. Cotton consumption was un changed in December, after seasonal adjustment, indicating cotton textile ac tivity continues high. Crude oil production in Coastal Louisiana and Mis sissippi set a new record, and steel mill operations advanced further. Departm ent store sales declined more than seasonally in January, accord ing to preliminary estimates. This decline followed a slight rise in December, when movements in major metropolitan areas were mixed. Furniture store sales declined in December, when only Mississippi and Tennessee showed increases. Appliance store sales increased more than seasonally. Automo bile sales dropped sharply in November and probably further in December, as the reduction in auto production caused by steel shortages resulted in the unavailability of many models. Consumer instalm ent credit outstanding at commercial banks changed little in December; only personal loans in creased more than minutely. International trade increased much more than seasonally in November. Exports showed particular strength through the Mobile and New Orleans customs districts, and imports were especially strong through Savannah. Small gains in prices received by farm ers for corn, rice, oranges, broilers, and eggs lifted average farm prices slightly. Meanwhile, m arketings of beef cattle, hogs, citrus, and vegetables increased, but marketings of most field crops fell off. Low temperatures in Florida in late January damaged much of the winter truck crop, reducing somewhat the supply of fresh vegetables avail able for shipment in February. Member Bonk ^ Member bank loans rose further during December and loans at banks in leading District cities appeared strong during the first three weeks in January. Member bank deposits, seasonally adjusted, dropped during De cember in all District states except Mississippi, following a modest increase during November and little change in previous months. Investments rose at country member banks during December, reflecting Treasury financing, but continued to decline at reserve city banks. Average member bank borrow ing from the Federal Reserve Bank of A tlanta declined during the first three weeks in January from record highs reached in December. Average interest rates on business loans at Atlanta and New Orleans banks rose only slightly during the fourth quarter of 1959, following stronger increases during the previous three months.
@FedFRASER