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In this issue: S teel P r o d u c tio n and Im p ort T rends in t h e S o u t h e a s t D istr ic t B a n k in g N otes: M u n ic ip a l B o a rd o f D ir e c to r s D istrict B u s in e s s C o n d it io n s O b lig a tio n s S t e e l P r o d u c t io n A n d In Im th e p o rt T re n d s S o u th e a s t b y F r e d e r ic k R. S t r o b e l Imports, construction, and mini-mills are the key words which best characterize recent trends in Southeastern steel. First, the six-state area is a net importer of steel products from both domestic and foreign sources. Second, the steel-consuming industries' mix and import patterns point strongly toward the construction sector as the major consumer of steel products. Finally, since the Southeast's demand for steel products should grow (given present economic trends), a substantial portion of that demand will likely be met by the smaller mini-mills and by foreign imports.1 Steel-Consuming Industries A major boost in regional steel demand has come from expansion of the Southeast's construction industry. As Chart I shows, total construction more than doubled its 1967 base level during 1972. The U.S., in contrast, showed a two-thirds increase over the same period. W hile a major portion of this expansion has been residential construction, nonresidential construction— consisting primarily of industrial and office buildings— has also increased at a more rapid pace than the nation's. Similarly, nonbuilding construction, such as streets and highways, dams and reservoirs, and communications, has shown a markedly stronger-than-national gain over this period. The region's type of residential construction and heating and air-conditioning requirements lends itself especially to high steel consumption. For example, much of Florida's recent condominium building boom requires steel-reinforced 1The “ Southeast" in this article refers to the Sixth District states of Alabam a, Florida, Georgia, Louisiana, Mississippi, and Tennessee. Monthly Review, Vol. LVIII, No. 2. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. FEBRUARY 1973, MONTHLY REVIEW concrete for high-rise construction because of that state's vulnerability to hurricanes. These require ments have stimulated both local production of concrete-reinforcing bars and imports of these bars through Florida ports. CHART I In the Southeast, construction, a leading steel user, outdistances the nation. The area's climatic conditions, with a higher mean temperature than the nation's norm, have encouraged central air conditioning not only in commercial and industrial buildings but in resi dential structures as well. This has created a large demand for coated sheet steel for duct work in air-conditioning systems. Along with rapid expansion in construction has been a rapid growth in the Southeast's metal-fabri cating and machinery industries. While the nation's fabricated metals industry showed a 15-percent gain in output between 1967 and September 1972, metal fabricating in this region increased 32 percent. Similarly, both electrical and nonelectrical machinery production in the same period in creased by over 60 percent in the Southeast but in the nation by only 10 percent and 7 percent, respectively. Industry Form and Structure Eight major companies, which account for about three-fourths of all domestic steel production, dominate the national steel industry. These large producers are vertically integrated from raw materials to finished mill products. They operate iron ore, coal and limestone mines, often large transportation facilities, coke ovens, iron and steel making furnaces, rolling mills for processing raw steel into varied intermediate products, and, some times, fabricating them into end products. ’67 S o u rce: ’68 ’6 9 ’7 0 ’71 ’72 F. W. D odge Div., M cGraw-Hill Info. S y s te m s Co. The largest steel consumer in the United States is construction, accounting for approximately 25 percent of all domestic steel shipments. About 20 percent is consumed by the second major market, automobiles and trucks. The other major steel users are machinery and equipment manufacturers, the railroads, and the container and gas industries. The Birmingham, Alabama, area is the South east's major steel-producing center. Alabama con tains branch plants of two of the eight major national companies, a United States Steel plant in Fairfield near Birmingham and a Republic Steel plant in Gadsden. The third major steel-producing area in the Southeast is Atlanta, where a mediumsize steel mill, Atlantic Steel Company, operates to serve markets principally in Georgia and several nearby states. Atlantic Steel, an older mill, operates with a capacity of over 400,000 tons. Like United States Steel and Republic Steel, Atlantic carries a more complete line of steel products than the mini-mill. Mini-mills produce the balance of District steel production. Table 1 shows the location and FEDERAL RESERVE BANK OF ATLANTA 19 TABLE 1 “Mini” Steel Plants in the Southeast L ocation A labam a B irm in g h a m B irm in g h a m N am e C ap acity N et T o n s P e r Y ear C o n n o rs S te e l, D ivision H. K. P o rte r Co. S o u th e rn E lec tric a l S te e l (CECO STEEL) Florida In d ia n to w n T am pa F lo rid a S te e l F lo rid a S teel T en n essee H arrim an K noxville T e n n e s s e e F o rg in g S te e l K noxville Iron C o m p an y M ississip p i Ja c k s o n M ississip p i S te e l C o m p an y L o u isian a A m ite R oss S te e l W orks 200,000 85,000 9 0,000 90 ,0 0 0 120,000 100,000 80,000 100,000 S o u rce: The M ag azin e of M etals P ro d u c in g , M arch 1971 capacity of these mills. The major criteria for such a plant are that the products are not specialty steels, flat-rolled, or forgings exclusively and that the raw steel-making capacity is not more,than 400,000 net tons per year. The mini-mill serves a local market and generally operates with a limited product line. Steel-Making Technology and Economics Blast furnace reduction of iron ore to molten iron is the first step in the conventional steel-making process. If the molten iron is cast at this point, the product is then called pig iron, which may be further reduced to steel ingots. The latter process is done in the open-hearth furnace or, more recently, in the Basic Oxygen Furnace (BOF). The BOF is newer and more efficient, combining higher steel output per furnace with lower labor costs. Another process is the electric furnace which produces steel directly from steel scrap. Its major advantage is flexibility and efficiency at a wide range of sizes. But, in comparison, the larger the BOF, the more efficient it is. The electric furnace makes all types of steel and all stainless steel and more sophisticated alloys. The electric furnace is widely used in the scrap reduction process of steel making and is the only type of furnace capable of operating on a 100-percent scrap charge.2 -------------------------2Charge is defined as the content of the steel-producing m aterial loaded into the furnace, i.e ., ingots, scrap, pellets, etc. 20 The proximity of the necessary iron ore, coal, and limestone resources or the steel-consuming industries or both tends to determine the location of major integrated steel producers. Such is the case in Alabama. After most of Alabama's iron- and steel-making capacity was destroyed during the Civil War, the 1870's witnessed a rapid rebuilding of the industry. Fundamental to this was the proximity of low-grade iron ore to coal and flux (limestone). In 1871, the City of Birmingham was founded in an area close to both coal and iron ore deposits. This same nearness to natural resources was primary in establishing the iron- and steelproducing area in Gadsden.3 Hence, in Alabama, the major steel-producing industries were initially located near raw materials and subsequently attracted metal and steelfabricating industries. Distinguishing the South from the major steel-producing U.S. areas, however, is a lack of steel fabrication for automobiles and trucks. One steel expert has described the Southern steel industry's development, until 1955, as one of concentration into large plants.4 Thereafter, steel-making capacity diffused, but blast furnace capacity for pig iron production remains concen trated. In other words, large Southern steel mills which produce pig iron may have reached a natural limit on size, given the nature of the area's steel-consuming industries. Thus, absence of a large consumer of sophisticated steel products, such as automobile manufacturing, may have slowed down expansion of the major mills. This region has generally followed a pattern of decentralization in steel production mainly for the construction market. Construction requires a wider variety of steel products. Many of these are relatively lighter than those needed to make autos and trucks. Accordingly, two directions for Southeastern steel seem likely. First, steel production for local markets by smaller mills will probably increase. This is especially true with the advent of the electric furnace and the increased supply of available scrap steel. Because steel is expensive to ship, it may be more feasible to produce steel locally with a less sophisticated product line and in smaller lot sizes for construction. Second, again considering transportation costs plus the South east's several major ports, foreign imports should remain prominent in this region's steel markets. :iToday, how ever, local iron ore has been largely dep leted , so that it must be im p orted . 4Hogan, W illia m J., Econom ic History of the Iro n and Steel Industry in the U n ited States, Vo l. 4, (Lexington, D .C . Heath and Company, 1971), p. 1473. FEBRUARY 1973, MONTHLY REVIEW Technology also figures in the import picture. In many cases, relatively simple products can be imported which do not require a close customerseller relationship. Thus, transportation costs and relatively small individual orders for less sophisticated steel products have combined to pro duce an expansion of both imports and local steel production by smaller mills. Therefore, it is no accident that Southeastern mini-mills have expanded greatly in recent years in view of their ability to serve local markets. Except the major mills in Fairfield and Gadsden, Alabama, all have electric furnaces. A strong demand for steel- reinforced concrete, commonly used for construc tion and often a major mini-mill product, has enhanced their profitability. Production Patterns and Imports Steel production has lately kept pace with national output. Table 2 indicates recent trends in steel shipments. Production spurted in 1971 in response both to booming construction activity and a threatened steel strike during that summer. These same conditions also prompted a sharp rise in imports through Savannah, Miami, Tampa, Mobile, and New Orleans. The data in Table 3 underscore the importance of these steel imports. During 1971, three Customs Districts increased their national share. New Orleans increased its steel tonnage by over 65 percent, and Savannah and Mobile by 45 percent each. Tampa and Miami were below the U.S. rise of 34 percent in 1971. TABLE 2 Shipments of Steel Products (M illions of N et Tons) Year United States Southeastern States * Southeast % of U.S. 1968 9 1 .9 6.2 6.7 1969 93.9 5.0 5.3 1970 90.1 4.7 5.1 1971 87.0 5.7 6.5 * A labam a, F lorida, G eorgia, T en n essee Import Trends in the Southeast Table 4 illustrates the pattern of steel imports and how it compares with domestic production. Regional and national steel mills in recent years have reduced their production of wire products. Supporting evidence is the large (relative to domes tic production) importation of wire products in general and wire rods in particular. Several fac tors explain these large imports of wire rods for domestic wire production. First, many wire con sumers have recently found it more economical to L o u isia n a , M ississip p i, a n d TABLE 3 Domestic Shipments and Imports of Steel Products Year United States Shipments Imports (Net Tons, Mil.) U.S. Imports Percent of U.S. Shipments Southeast Shipments Imports (Net Tons, Mil.) S.E. Imports Percent of S.E. Shipments 1968 91 .9 18.5 20.1 6.2 2.7 43.5 1969 93 .9 14.6 15.5 5.0 2.1 42.0 1970 90.1 14.0 15.5 4.7 1.9 40.4 1971 87 .0 18.9 21.7 5.7 2.8 49.1 FEDERAL RESERVE BANK OF ATLANTA 21 TABLE 4 IMPORTS AND DOMESTIC PRODUCTION OF STEEL PRODUCTS 1971 Percent of Total Domestic Production Percent of Total Steel Imports District District1 Ports Less Ports New Orleans Wire Rods 12.6 All U .S. Ports United States 17.5 8.4 1.8 Production of Wire* Major Use 6.2 8.4 5.2 3.3 Construction* Structural Shapes 11.2 13.5 8.1 6.0 Construction* Plates 11.6 6.9 8.6 9.1 Heavy Machinery*-Shipbuilding*-Construction' Concrete Reinforcing Bars 2.6 3.7 2.8 5.2 Construction* Bar Shapes Under 3" 4.2 6.4 3.0 ^ Wire Products Bars— Hot Rolled 4.6 5.1 4.4 j Automotive-Machinery*-Construction* 9.4 Automotive-Machinery*-Const ruction* Construction* and Furniture* 11.3 11.4 10.1 8.6 Sheets— Hot Rolled 8.8 4.5 14.6 13.5 Automotive Sheets— Cold Rolled 15.0 5.6 20.2 17.1 Automotive-Equipment*-Appliances* Sheets— Coated 8.3 11.7 7.7 7.2 Other 3.4 5.3 6.9 18.8 Pipe and Tubing 100.00 ‘Total 100.00 100.00 Construction* 100.00 *Major use in Southeast 'Custom s Districts of Savannah, Miami, Tampa, Mobile, and New Orleans Source: American Iron and Steel Institute **Totals may not agree because of rounding. buy wire-drawing machines and make their own wire from rods. This development has encouraged purchases from foreign rather than domestic sources. W ire and wire rods are low technology items without the critical specifications which might give a domestic mill an advantage. This trend to import wire rods shows up in total imports of wire products. The latter make up 8.4 percent of total dollar value of steel mill products for District ports (less New Orleans) but only 5.2 percent nationally. U.S. production of wire products has dropped, making up only 3.3 percent of total domestic steel output. Structural steel shapes, used mainly in heavy construction, have also shown in recent years a substantial increase in imports. They now command a larger percentage of U.S. imports than of domestic production. In the Southeast, the import of structural shapes as a percent of the total 22 import mix is even more prominent. Structurals have increased at all District ports but especially in New Orleans. Some of these shipments go further inland via the Mississippi River and are not neces sarily for the Southeast. However, even if we dis regard New Orleans, District imports of structural steel are significant. Concrete-reinforcing bars is one market in which Southeastern steel producers have competed effectively with imports. As mentioned, much regional construction, particularly in Florida, requires reinforced concrete. Local steel producers have become increasingly competitive, both on a price and service basis. Some producers also fabri cate bars, cutting and bending them to specific orders. Florida mills have been particularly aggres sive in seeking out the construction market on a special order basis. Consequently, the imports of these bars have fallen dramatically in the F E B R U A R Y 1973, M O N T H L Y R E V IE W Southeast. In 1967, 133,000 tons were imported, falling to 108,000 tons in 1969 and to 68,000 tons in 1971 despite the region's construction boom. Pipe and tubing is another construction-related import. The main variety of pipe imported into Southeastern ports is structural (i.e., used for supports and columns but not necessarily made to pressure specifications such as pipe which handles liquid or gas). Metal tubing is commonly used for metal furniture production. Sheet metal imports again point to the con struction industry. As Table 4 indicates, hot and cold rolled sheets make up over 23 percent of total steel imports when considering all District ports. If imports through New Orleans are sub tracted, they fall to just over 10 percent. This figure implies that hot and cold rolled sheets, like structural shapes, are shipped further inland for automotive uses. Turning to the category of coated sheets such as galvanized steel, District ports allot an 8.3-per cent share of all steel imports to it. If New Orleans is left out, this share rises to 11.7 percent— a pattern consistent with greater-than-national emphasis on duct-type central heating and air-conditioning systems in residential construction. From the foregoing, one can see that the South east's import mix, when compared with the nation's import and production mix, reinforces the conclusion that construction is the major market for Southeastern steel. Southeastern construction directly consumes about 43 percent of the regional steel market; nationally, construction consumes about 16 percent. Adding the portion of shipments which go first to steel service centers (intermediate distribution firms), the figure would probably approach 50 percent. The total national construction market would be about 25 percent, including steel shipped from service centers. Assuming a favorable outlook for construction, further expansion both of regional imports and production via smaller mills for local markets is likely. Industrial Use of Steel In addition to construction's growing steel demand, the Southeast has witnessed, as already noted, above-average growth rates in fabricated metals and electrical and nonelectrical machinery. Florida's metal-fabricating sector has shown large output gains since 1967, and so has Mississippi's smaller industry/’ Tennessee and Alabama, with well established metal-fabricating facilities, have also expanded solidly in recent years. Already leading the District states in 1967, Tennessee's production of nonelectrical machinery has almost doubled since then. In nonelectrical ‘ As measured by kilo w att hour consumption TABLE 5 Imports of Iron and Steel Into Southeastern Ports and U. S. S avannah 1960 1965 41.3 100.0 T am p a 235.7 000 T ons 1968 1970 1971 207.1 193.0 280.5 3 66.9 578.4 ( 415.3 337.0 208.4 245.4 I 240.7 154.3 3 9 0 .2 1 > 188.3 J 515.5 M iam i % C hange ’60-71 ’60-70 81.1 311.3 477.5 258.3 376.4 218.6 364.2 New O rlean s 317.5 843.6 1,539.6 1,019.8 1,658.9 221.2 422.5 ♦ D istrict Total 675.7 1,770.5 2,880.3 1,962.4 2,894.4 190.4 328.4 U nited S ta te s 4 ,087.6 11,963.7 19,563.2 14,609.4 19,611.3 257.4 379.8 16.5 14.8 14.7 13.4 14.8 M obile D istric t— % of U.S. S o u rce: A m erican Iron & S teel In s titu te * T o tals m ay n o t a g re e b e c a u s e of ro u n d in g . FEDERAL RESERVE BANK OF ATLANTA 23 machinery, Tennessee has maintained its numberone ranking, while all District states have shown marked advances. Florida, whose output has grown from about one-third of Tennessee's in 1967 to over half its level in 1971, headed gains in electrical machinery. Additionally, the packaging industry is using a sizable amount of steel. There fore, even though construction is still king in steel consumption, the growth of these other industries has served to diversify regional steel demand. While further growth in construction will tend to benefit the smaller mills and imports, expansion in industrial uses will help the larger mills. Port Activity Notable shifts have taken place in District steel imports, which generally have grown slower than nationally. Despite Florida's construction boom, steel imports through Miami and Tampa have trended downward, suggesting increased reliance of construction on local domestic steel sources (see Table 5). Part of Savannah's increased overall tonnage in recent years has resulted from a marked rise in steel imports. Hence, the threat of foreign competition is definitely present— especially when one considers the jump in total District steel imports during 1971— although Southeastern producers have been, to some 24 extent, successful in competing with imports. A Look at the Future Recent trends in regional steel consumption have favored imports and the smaller producer, but there is no evidence that major producers are giving up on the Southeastern market. Its largest producer, U.S. Steel, has announced plans for in stalling two Q-BOP steel-making furnaces. The Q -BOP is a more technologically advanced version of the Basic Oxygen Furnace. These will replace 12 existing open-hearth furnaces, enlarge capacity, and meet existing and anticipated air and water pollution regulations. Regionally and nationally, steel producers face common problems of import competition and costly pollution control requirements. Larger Southeastern mills may have an edge over smaller ones in that the larger the mill, the smaller the per centage pollution control equipment is of total investment. Both large and small producers should benefit from increased industrial activity which should serve to diversify steel demands. Some re gional producers have succeeded in meeting foreign competition. Should this success spread, it would bode well for the Southeastern steel industry. A continuance of this region's faster-thannational economic growth would also be a plus for steel.® FEBRUARY 1973, MONTHLY REVIEW Ban k A n n o u n c e m e n ts January 2, 1973 CITIZENS CENTRAL BANK January 9, 1973 PAN AMERICAN BANK OF WEST DADE Miami, Florida Opened for business as a par-remitting nonmem ber. Officers: Stanley H. Wolff, chairman; Ignatius J. Fazio, president; Al Jaffe, senior vice president. Capital, $500,000; surplus and other funds, $250,000. Murfreesboro, Tennessee Opened for business as a par-remitting nonmem ber. Officers: Donald E. Moser, president; Eugene Roberts, vice president; Vester Waldron, chairman. Capital, $650,000; surplus and other funds, $861,250. January 2, 1973 COMMUNITY STATE BANK Independence, Louisiana Began to remit at par. January 3, 1973 NORTHEAST BANK OF CLEARWATER Clearwater, Florida Opened for business as a par-remitting nonmem ber. Officers: John R. Sanders, president; Clinton E. Branch, vice-president. Capital, $600,000; sur plus and other funds, $400,000. January 5, 1973 SECURITY BANK Pinellas Park, Florida January 9, 1973 SOUTHPORT AMERICAN NATIONAL BANK OF FORT LAUDERDALE Fort Lauderdale, Florida Opened for business. Officers: J. Hugh Funk, president; Daniel R. Bralski, vice president; Richard E. Campbell, vice president; O. E. Hutchison, Jr., vice president; Lee A. Ringeman, vice president and controller. Capital, $800,000; surplus and other funds, $1,200,000. January 16, 1973 BANK OF MADISON Madison, Florida Opened for business as a par-remitting nonmem ber. Officers: J. W. Grant, president; Griffin Bishop, vice president and cashier. Capital, $325,000; sur plus and other funds, $325,000. January 19, 1973 ATLANTIC BANK OF CASSELBERRY Casselberry, Florida Opened for business as a par-remitting nonmem ber. Officers: John A. Jenkins, chairman of the board and president; Henry B. Glover, vice chair man of the board; David E. Kern, executive vice president. Capital, $625,000; surplus and other funds, $375,000. FEDERAL RESERVE BANK OF ATLANTA Opened for business as a par-remitting nonmem ber. Officers: William E. Edmands, director and president; William B. Gossett, director and vice president. Capital, $400,000; surplus and other funds, $400,000. 25 BANKING STATISTICS B illion $ -3 2 CREDIT* - 34 -2 8 - 30 - 24 ✓t-1 8 — 26 DEPOSITS** - 14 -a- 8 - 14 - 10 - 8 Other Securities U.S. Govt. Securities I It J -4 - 4 I I I I I I I I I i I I I I I I 1 I I I I I II J DJ J D J A 1971 1972 J J D J D J J 1971 1973 A 1973 1972 LATEST MONTH PLOTTED: DECEMBER Figures are for the last W ednesday of each m onth. D aily average figures S I X T H D I S T R I C T U s e o f B A N K I N G N O T E S M u n ic ip a ls In c r e a s e s SECURITIES Billion $ Billion $ H o ld in g s of m u n ic ip a ls, by m a tu rity (J u n e 1972) 1.2 U.S. G ov’t .8 .4 M u n icip al H I <1 yr. N o te : 26 1-3 yr. 3-5 yr. 5-10 yr. 10-15 15-20 20-30 yr. yr. yr. >30 yr. ’60 ’62 ’6 4 ’6 6 ’68 ’70 ’7 2 F ig u r e s c o v e r D is t r ic t m e m b e r b a n k s FEBRUARY 1973, MONTHLY REVIEW District bankers c on tin u e to add increasing amounts of state and local govern m en t securities to their investm ent portfolios, the result of a fundamental change in bank portfolio m anagem ent. Many bank ers realize that, to a large extent, municipal o b liga tions can provide investment in com e, adequate liquidity, and satisfactory collateral for pledging against public deposits as well as if not better than U.S. G overn m ent securities. As a result, District m em b er bank holdings of municipal obligations in creased nearly 19 percent in the year ending June 1972 and have con tin ued to grow at nearly that pace since then. Perhaps the best ev id e n c e that municipals are replacing Treasury issues is the change in bank portfolios. In 1960, municipals com prised 21 percent o f m em b er banks' securities and G overnm ents, 76 percent; in mid-1972, municipals w ere 52 percent and Governm ents, 33. Alternatively, of the $6.4billion increase in total securities during this period, municipals a ccou n ted for 70 percent of the gain and Governm ents only 9 percent. The remaining increase was in Federal agen cy and corporate issues. Yields on municipals have risen in recent years and generally provide higher returns to banks than Treasury issues w h en accoun t is taken of their tax-exempt feature. In late 1972, c o u p o n rates on prime municipal obligations ranged from 3.2 per cent for one-year maturities to 4.9 percent for tw enty-year maturities. During 1969 and 1970 w h en peak rates w ere reached, one-year maturities re turned 6.25 percent and twenty-year m aturities,6.8 percent. These contrast with average returns of around 2 percent in the early Fifties and 3.5 percent in the early Sixties. Just as the smaller banks hold most Treasury securities, they also hold m ost of the District's m u nicipal obligations. Country banks have 83 percent of the $5.2-billion total. Florida m em b er banks lead District states with $2.1 billion, or 41 percent of the total. Banks in the District portion of the other states hold $600 to $800 million, exce p t for Louisiana banks which have only $200 million. Many bankers apparently took advantage of the record-high co u p o n s offered in 1969 and 1970 to obtain high current in com e and, w herever p o s sible, to "lock up" so m e eventual capital gains for municipal bond portfolios. Those securities held in June 1972 and maturing in over ten years carry, on average, a higher redemption value than their b oo k value. For bond s with over twenty years maturity, this premium averages over 6 percent. But for th ose maturing in less than ten, bankers w ere apparently willing to pay about o n e percent over the eventual redemption value. FEDERAL RESERVE BANK OF ATLANTA District banks evidently view their purchases as permanent investments to be held to maturity. Municipals, how ever, d o provide considerable liquidity, though so m e may be less marketable than U.S. Governments. Nearly o ne-half of total District bank holdings mature in less than five years. These are less subject to price fluctuations induced by ch anging interest rates than are longer maturities. A bout 22.5 percent of total holdings mature in less than o n e year, and about one-third of these are bills, notes, and warrants with an original maturity of under o n e year. Only 7.6 percent of total holdings mature in over ten years, and only 0.6 percent in over twenty. The larger reserve city banks hold shorter matur ity municipals than d o the smaller country banks. Average maturity at these banks is 6.1 years, with 29 percent maturing in under o n e year. Larger banks appear to make a concerted effort to buy municipals with original maturities of under o n e year. At country banks, only 20 percent mature in under o n e year, and average maturity is 6.5 years. The average maturity of municipal obligations'at District m em b er banks seem s to be increasing slightly. In 1961, 47 percent matured in five years or more; in 1965, 50 percent fell in this range. By mid1972, this proportion had risen to 52 percent. However, com pared to either 1961 or 1965, a larger proportion of the mid-1972 total matured in under o n e year. In addition to providing a higher rate of return and considerable liquidity, many "home-state" m u nicipals are also eligible for pledging by banks against their rapidly increasing public deposits. And because nearly all this increase has been interest-bearing, there is more pressure on banks to expand earning assets. State and local g overnm ent deposits at District m em ber banks totaled $3.6 billion in June 1972, up over 19 percent from the previous year. Time deposits a ccou n ted for all of 1972's advance, increasing $659 million. D emand deposits dropped $75 million. In 1960, public deposits totaled only $980 million and time deposits just $133 million. From 1960 to 1972, then, public deposits rose $2.6 billion and interest-bearing deposits accou n ted for over 80 percent of the gain. Therefore, the structure of d ep osit increases a lon e has exerted considerable pressure to acquire higher-yielding earning assets. Judging by the trem en do u s growth in bank pur chases of municipals, these issues must be meeting banking need s for higher-yielding investm ent port folios, adeq u ate liquidity, and sufficient pledging against public deposits. And in meeting these invest m ent needs, municipals appear to be supplanting Treasury securities in their formerly dom inant role. JOHN M. G OD FREY 27 B o a r d D o f ir e c t o r s Fed eral R e se rv e B a n k o f A tla n ta a n d B ra n ch e s E ffectiv e J a n u a ry 1 ,1 9 7 3 BIRMINGHAM BRANCH Class C1 John C. Wilson (Chairman)— 1973 President, Horne-Wilson, Inc. Atlanta, Georgia H. G. Pattillo (Deputy Chairman)— 1974 President, Pattillo Construction Company, Inc. Decatur, Georgia *F. Evans Farwell— 1975 President, Milliken and Farwell, Inc. New Orleans, Louisiana JACKSONVILLE BRANCH Appointed by Board of Governors Appointed by Board of Governors David Mathews (Chairman)— 1973 President, University of Alabama University, Alabama Henry Cragg (Chairman)—1973 Vice President, The Coca-Cola Company Foods Division Winter Park, Florida William C. Bauer— 1974 President, South Central Bell Telephone Company Birmingham, Alabama + Frederick G. Koenig, Jr.— 1975 President, Alabama By-Products Corporation Birmingham, Alabama Gert H. W. Schmidt— 1974 President, TeLeVision 12 of Jacksonville Jacksonville, Florida + James E. Lyons—1975 President, Lyons Industrial Corporation Winter Haven, Florida Appointed by Federal Reserve Bank Appointed by Federal Reserve Bank W. D. Malone, Jr.—1973 President and Chairman, The First National Bank Dothan, Alabama Malcolm C. Brown— 1973 President and Chairman, Florida First National Bank at Brent Pensacola, Florida C. Logan Taylor—1973 Chairman of the Board, The First State Bank Oxford, Alabama A. Clewis Howell— 1973 Chairman, Marine Bank & Trust Company Tampa, Florida W. Eugene Morgan—1974 President, The First National Bank Huntsville, Alabama Guy W. Botts— 1974 Vice Chairman, Barnett Bank of Jacksonville, N. A. Jacksonville, Florida + John T. Oliver, Jr.— 1975 President, First National Bank Jasper, Alabama N O TE : Expiration dates of terms occur on Decem ber 31 of the year beside each name. 28 ATLANTA + Michael J. Franco—-1975 Chairman, City National Bank of Miami Miami, Florida 'N onbankers appointed by Board o f Governors, federal Reserve System ‘ Reappointed fo r three-year term FEBRUARY 1973, MONTHLY REVIEW C la s s B 2 C la s s A 3 Hoskins A. Shadow—1973 President, Tennessee Valley Nursery, Inc. Winchester, Tennessee A. L. Ellis—1973 Chairman, First National Bank Tarpon Springs, Florida Owen Cooper—1974 President, Mississippi Chemical Corporation and Coastal Chemical Corporation Yazoo City, Mississippi Jack P. Keith— 1974 President, First National Bank West Point, Georgia + George W. Jenkins—1975 Chairman, Publix Super Markets, Inc. Lakeland, Florida NASHVILLE BRANCH + Sam I. Yarnell—1975 Chairman, American National Bank and Trust Company Chattanooga, Tennessee NEW ORLEANS BRANCH Appointed by Board of Governors Appointed by Board of Governors James W. Long (Chairman)— 1973 Farmer Springfield, Tennessee Broadus N. Butler—1973 President, Dillard University New Orleans, Louisiana Edward J. Boling—1974 President, The University of Tennessee Knoxville, Tennessee Fred Adams, Jr. (Chairman)—1974 President, Cal-Maine Foods, Inc. Jackson, Mississippi *John C. Tune—1975 Partner; Butler, McHugh, Butler, Tune and Watts Nashville, Tennessee + Edwin J. Caplan— 1975 President, Caplan's Men's Shops, Inc. Alexandria, Louisiana Appointed by Federal Reserve Bank Appointed by Federal Reserve Bank Dan B. Andrews—1973 President, First National Bank Dickson, Tennessee Tom A. Flanagan, Jr.—1973 President, Lakeside National Bank Lake Charles, Louisiana Edward G. Nelson—1973 President, Commerce Union Bank Nashville, Tennessee Lawrence A. Merrigan—1973 President, The Bank of New Orleans and Trust Company New Orleans, Louisiana + W. Bryan Woodard— 1974 President, Kingsport National Bank Kingsport, Tennessee + Robert E. Curry—1975 President, First National Bank Pulaski, Tennessee Archie R. McDonnell—1974 President, The Citizens National Bank Meridian, Mississippi + Ernest F. Ladd, Jr.—1975 Chairman, Merchants National Bank Mobile, Alabama MEMBER, FEDERAL ADVISORY COUNCIL Harry Hood Bassett—1973 Chairman of the Board, The First National Bank Miami, Florida 2Nonbankers elected by m em ber banks + N e w m em ber FEDERAL RESERVE BANK OF ATLANTA 3M em b er bank representatives elected by m em ber banks 29 S ix t h D is t r ic t S t a t is t ic s S e a s o n a lly A djusted (All d a t a a r e i n d e x e s , u n l e s s i n d i c a t e d o t h e r w i s e . ) Latest Month One Two Month Months Ago Ago One Year Ago SIXTH DISTRICT Unemployment Rate (Percent of Work Force) . . . . Avg. Weekly Hrs. in Mfg. (Hrs.) INCOME AND SPENDING Instalment Credit at Banks* (Mil. $) . Dec. Nov. . Nov. . Nov. 155 148 164 164 152 141 125 149 151 122 94 154 135 98 105 112 . Dec. . Dec. 461 370 487 415 505 424 414 342 EMPLOYMENT AND PRODUCTION Food............................ T e x t i le s .................... Apparel .................... Paper ........................ Printing and Publishing Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 118 111 110 103 107 108 112 117 105 112 106 114 110 121 133 103 121 115 119 119 128 126 100 129 87 118 110 109 103 106 108 111 117 105 111 105 114 110 120 132 103 121 113 118 120 128 126 100 128 84 118 110 109 103 106 107 111 117 105 111 105 113 110 119 130 103 120 113 117 120 127 125 99 128 85 114 107 108 102 103 108 109 113 105 105 100 109 102 114 120 104 116 111 114 115 123 122 101 120 92 Dec. 4.1 3.9 4.1 4.5 1.9 41.2 247 331 165 186 77 116 280.6 234.3 185.4 275.0 274.8 219.0 159.1 298.2 336.3 198.9 187.8 187.6 218.8 273.7 445.7 750.9 437.9 1.8 41.0 297 324 270 179 80 123 278.7 234.6 185.1 274.2 275.8 221.1 160.9 296.9 331.2 198.4 187.4 183.3 214.4 268.4 442.4 745.6 427.9 2.0 41.1 310 358 263 174 79 122 275.2 234.9 185.2 271.1 281.9 219.7 161.0 295.3 323.1 198.3 187.7 182.1 213.1 267.1 448.7 712.8 404.8 2.8 40.7 195 236 155 167 86 120 255.1 218.6 174.8 251.1 266.2 201.4 160.8 247.4 298.4 189.9 177.4 165.9 196.9 249.8 410.9 642.2 378.7 . Dec. Dec. 207 191 202 188 196 180 165 151 . Dec. . Dec. . Dec. 179 157 209 176 153 204 178 157 202 152 135 174 . . , . . . . . . Stone, Clay, and Glass Transportation Equipment . . . . . , . . State and Local Government Unemployment Rate (Percent of Work Fore Insured Unemployment Construction Contracts* Electric Power Production* Cotton Consumption** . . Petroleum Production** Manufacturing Production . Nondurable Goods . . . Food .................... Printing and Publishing Furniture and Fixtures Stone, Clay, and Glass . Nonelectrical Machinery Electrical Machinery . . . Transportation Equipment Dec. Dec. Dec. Dec. Dec. July Nov. Jan. Sept. Sept. Sept. Sept. Sept. . Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. FINANCE AND BANKING Loans* Bank Debits*/**.................... Latest Month 4.4 40.9 4.4 41.2 4.4 40.8 5.5 41.1 FINANCE AND BANKING Member Bank L o a n s.................... , . Dec. Member Bank Deposits................ . . Dec. Bank Debits**................................ . . Dec. 197 174 179 194 172 183 187 171 179 162 146 158 154 177 154 197 154 169 131 129 . . Dec. . . Dec. . . Dec. . Dec. . Dec. 130 114 133 144 95 130 114 133 140 94 129 114 132 139 99 123 108 126 131 97 Dec. . . Dec. 3.4 41.2 3.1 41.3 3.3 41.6 3.5 40.6 FINANCE AND BANKING Member Bank L o a n s.................... . . Dec. Member Bank Deposits . . . . . . Dec. Dec. Bank D eb its* * ............................ 233 203 240 224 200 238 220 202 235 181 170 196 152 130 147 166 145 105 138 84 , Dec. Dec. . Dec. Dec. . Dec. 116 106 121 110 94 117 106 122 112 84 116 106 121 112 84 114 104 118 110 99 Dec. . Dec. 3.8 41.3 3.8 40.6 4.2 40.6 3.9 40.6 FINANCE AND BANKING Member Bank L oan s.................... . Dec. Member Bank Deposits................ . . Dec. , Dec. Bank D eb its* * ............................ 197 163 230 198 156 218 187 160 209 155 136 182 144 160 139 128* 141 95 118 105 . . Dec. . . Dec. . . Dec. . Dec. . . Dec. 108 102 109 90 82 108 101 109 87 80 108 101 109 86 80 106 IOO 107 89 85 . . Dec. . . Dec. 6.6 43.7 6.7 41.7 6.5 42.4 6.9 41.6 FINANCE AND BANKING Member Bank L o a n s* ................ Dec. Member Bank Deposits* . . . . . Dec. Bank Debits*/**............................ . . Dec. 180 160 171 176 160 161 170 161 165 149 145 150 . Dec. . Nov. 173 127 168 108 168 99 151 92 Dec. Dec. . Dec. Dec. . Dec. 117 123 114 95 78 116 122 114 92 81 116 121 113 94 86 113 116 112 95 83 FLORIDA INCOME Manufacturing Payrolls................ . . Dec. Farm Cash R eceip ts.................... . . Nov. EMPLOYMENT Nonfarm Em ploym ent................ Manufacturing ........................ Nonmanufacturing.................... C onstruction........................ Farm Employment........................ Unemployment Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . GEORGIA INCOME Manufacturing Payrolls................ . . Dec. Farm Cash R eceip ts.................... . . Nov. EMPLOYMENT Nonfarm Em ploym ent................ Manufacturing ........................ Nonmanufacturing.................... C onstruction........................ Farm Employment........................ Unemployment Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . LOUISIANA INCOME Manufacturing Payrolls................ . . Dec. Farm Cash R eceip ts.................... . . Nov. EMPLOYMENT Nonfarm E m ploym ent................ Manufacturing ........................ Nonmanufacturing.................... C onstruction........................ Farm Employment ......................... Unemployment Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . MISSISSIPPI INCOME Manufacturing Payrolls........................Dec. Farm Cash R eceip ts............................Nov. INCOME Manufacturing Payrolls................ Farm Cash R eceip ts.................... . EMPLOYMENT Nonfarm Em ploym ent................ Manufacturing ........................ Nonmanufacturing.................... . C onstruction........................ Farm Employment........................ . EMPLOYMENT Nonfarm Employment........................Dec. Manufacturing ................................Dec. Nonmanufacturing............................Dec. C onstruction................................Dec. Farm Employment ............................Dec. 30 147 128 145 131 136 110 110 110 100 110 109 111 102 110 109 110 107 106 108 103 101 100 One Year Ago . . Dec. . . Dec. ALABAMA 150 145 One Two Month Months Ago Ago FEBRUARY 1973, MONTHLY REVIEW One Two Month Months Ago Ago One Year Ago 4.2 40.7 4.0 40.7 3.9 40.9 4.5 40.6 206 176 191 201 173 193 197 172 196 168 149 158 Latest Month Unemployment Rate (Percent of Work F o r c e )................Dec. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Dec. FINANCE AND BANKING Member Bank L oan s*........................Dec. Member Bank D ep osits*....................Dec. Bank Debits*/**....................................Dec. Latest Month One Year Ago EMPLOYMENT Unemployment Rate Avg. Weekly Hrs. in Mfg. (Hrs.) Manufacturing Payrolls........................Dec. Farm Cash R eceip ts............................Nov. One Two Month Months Ago Ago 162 206 159 164 159 126 138 107 Dec. Dec. Dec. Dec. Dec. 118 113 121 119 86 117 111 120 118 86 117 112 120 117 85 113 107 117 118 92 Dec. Dec. 3.5 40.7 3.4 40.9 3.3 41.1 4.0 40.3 201 198 171 171 193 172 177 162 146 154 FINANCE AND BANKING Member Bank L o a n s* ........................Dec. Member Bank D ep osits*....................Dec. Bank Debits*/**....................................Dec. 171 175 fPreliminary data other totals for entire six states *For Sixth District area only; N.A. Not available “ Daily average basis Note: Indexes for bank debits, construction contracts, cotton consumption, employment, farm cash receipts, loans, petroleum production, and payrolls: 1967 = 100. All other indexes: 1957-59=100. Sources: Manufacturing production 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 Div., McGraw-Hill Information Systems Co.; 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 it s to D e m a n d D e p o s it A c c o u n t s I n s u r e d C o m m e r c i a l B a n k s in t h e S ix t h D is t r ic t (In T h o u s a n d s o f D o lla r s ) Dec. 1972 Nov. 1972 Dec. 1971 Percent Change Year to Dec. date 1972 12 mos. From 1972 Nov. Dec. from 1972 1971 1971 124,647 69,282 + 12 +25 + 5 + 5 - 1 + 8 + 4 + 16 + 3 + 9 + 6 +10 Bradenton . . . 151,712 Monroe County . . . 64,959 O c a la ............... 148,752 St. Augustine . . 30,526 St. Petersburg . 854,651 Tampa . . . . 1,559,183 163,490 58,991 145,347 25,022 792,481 1,443,782 Athens . . . . Brunswick . . . Dalton . . . . Elberton . . . Gainesville . . Griffin . . . . LaGrange . . . Newnan . . . . R o m e ............... Valdosta . . . . . 166,787 84,279 161,183 20,974 115,483 63,945 36,927 57,871 129,306 95,236 146,658 76,391 168,637 17,890 114,697 57,975 32,940 48,828 129,355 93,506 Abbeville . . Bunkie . . . . Hammond . . New Iberia . Plaquemine . Thibodaux . . . . . . . . 17,444 11,671 61,824 59,442 21,839 37,399 15,001 13,159 59,144 55,824 23,130 34,763 . . . . . 105,776 67,902 111,539 52,248 . . . . . . Bristol . . . . Johnson City . . Kingsport . . . 2,957,432 90,500 284,712 903,794 552,763 169,375 2,942,239 98,264 266,141 887,200 549,299 166,860 704,472 310,088 631,373 298,111 594,036 272,308 +12 + 4 + 19 +23 + 14 +29 + 8 + 18 - 1 + 2 + 7 + 9 + 4 + 18 Bartow-LakelandWinter Haven Daytona Beach Ft. LauderdaleHollywood . . . Ft. Myers . . . . Gainesville . . . Jacksonville . . . MelbourneTitusvilleCocoa . . . . Miami ................ O rlan do............... Pensacola . . . . Sarasota . . . . Tallahassee . . . Tampa-St. Pete w. Palm Beach . 1,674,233 277,104 214,895 . 3,275,363 1,557,095 235,650 217,245 3,212,638 1,564,506 254,063 207,106 2,786,278 408,358 . 6,496,434 . 1,370,059 374,764 431,794 557,437 . 3,437,938 . 1,025,086 410,035 5,726,406 1,235,508 378,791 402,089 626,657 3,140,511 935,655 368,068 - 0 + 11 + 16 5,407,192 + 13 +20 + 15 1,224,925 + 11 + 12 +23 393,675 - 1 - 5 + 12 332,976 + 7 +30 +30 502,742 -11 + 11 +69 3,116,269 + 9 + 10 + 19 876,009 + 10 + 17 + 17 A lb a n y ................ Atlanta ............... A u gu sta............... Columbus . . . . Macon ................ Savannah . . . . 183,321 12,837,098 406,916 384,386 473,799 578,650 170,215 11,592,317 426,164 399,515 450,480 443,883 160,246 10,704,780 440,484 391,972 447,549 463,550 + 8 + 11 - 5 - 4 + 5 +30 + 14 +20 - 8 - 2 + 6 +25 + 16 +20 + 12 + 9 + 12 + 13 Alexandria . . . . 204,312 Baton Rouge . . . . 1,028,586 Lafayette . . . . 250,590 Lake Charles . . . 205,172 New Orleans . . . . 4,049,729 200,679 1,070,896 234,664 192,027 3,419,266 187,292 975,801 212,692 206,580 3,688,732 + 2 - 4 + 7 + 7 + 18 + 9 + 5 + 18 - 1 + 10 + 15 + 11 + 16 + 6 + 8 Biloxi-Gulfport . . 216,117 Jackson ............... . 1,302,266 214,311 1,258,590 190,013 1,093,226 + 1 + 14 + 16 + 3 + 19 + 15 Chattanooga . . . . 1,054,164 806,185 Knoxville . . . . Nashville . . . . 3,055,542 964,787 801,052 2,808,189 1,101,485 779,798 2,575,624 + 9 - 4 + 1 + 3 + 9 + 9 - 0 + 8 +20 97,124 95,391 + 2 + 4 + 9 OTHER CENTERS Anniston . . . . 99,140 Dec. 1971 131,979 73,541 - 4 + 2 + 8 +15 +13 +15 142,781 54,261 139,085 33,079 732,346 1,656,174 - 7 +10 + 2 +22 + 8 + 8 + 6 +20 +11 - 8 + 17 - 6 +20 +18 +37 + 4 +20 - 0 146,543 86,628 162,092 18,788 102,017 55,351 32,616 47,505 123,832 85,722 + 14 + 10 - 4 + 17 + 1 +10 +12 +19 - 0 + 2 +14 - 3 - 1 +12 +13 +16 +13 +22 + 4 +11 -1 1 +17 +14 +21 + 8 +11 + 1 +33 +14 +15 19,291 +16 10,487 -11 61,180 + 5 55,123 + 6 15,859 - 6 36,346 + 8 -1 0 + 11 + 1 + 8 +38 + 3 + 3 + 9 + 10 + 8 +19 + 5 104,126 67,944 109,124 50,764 98,435 58,594 98,391 52,037 + 7 +16 +16 +18 + 13 +21 + 0 + 9 136,781 68,268 40,410 150,712 66,628 40,138 120,470 60,248 36,982 - 9 + 14 +34 + 2 +13 + 3 + 1 + 9 + 4 128,314 147,933 209,673 114,264 132,888 218,714 127,017 138,967 206,276 + 12 + 1 + 1 + 11 + 6 +16 - 4 + 2 + 13 . . . . 65,574,129 60,710,183 57,674,421 + 8 +14 +17 7,050,633 20,969,156 16,820,862 6,209,634 2,734,497 6,925,401 6,603,507 + 1 19,882,883 + 9 15,587,731 + 10 6,333,226 +11 2,405,834 + 2 6,861,240 + 7 + 8 +15 + 19 + 9 + 16 + 8 +18 + 19 +18 + 9 + 17 +11 Dothan . . . . S e lm a ............... 2,647,599 + 1 86,511 - 8 287,991 + 7 866,841 + 2 536,428 + 1 159,548 + 2 Nov. 1972 127,009 79,785 STANDARD METROPOLITAN STATISTICAL AREAS Birmingham . . . . Gadsden ............... Huntsville . . . M o b ile ................ Montgomery . . . Tuscaloosa . . . Dec. 1972 +23 + 9 + 16 +25 Hattiesburg . Laurel . . . . Meridian . . Natchez . . PascagoulaMoss Point Vicksburg . . Yazoo City . District Total Percent Shange Year to Dec. date 1972 12 mos. From 1972 Nov. Dec. from 1972 1971 1971 Alabama . . Florida . . . . Georgia . . . . Louisiana' . . Mississippi1 . Tennessee1 . . . . . . . . . . . . . . . . 7,108,893 22,821,149 . 18,576,063 6,889,536 . 2,779,873 . 7,398,615 + + + 2 0 2 3 1 District portion only r-Revised Figures for some areas differ slightly from preliminary figures published in “Bank Debits and Deposit Turnover” by Board of Governors of the Federal Reserve System. FEDERAL RESERVE BANK OF ATLANTA 31 D is t r ic t B u s in e s s C o n d it io n s _ 1957-59=100 Sot. Adj. 247 1987=100 Seat Adj Mfg. Production ^ 281 „ . c Nonfarm Employment 209 .118 112 247 Unemployment Rate* Avg. J Farm Cash Receipts t\ __ /\ ... ^-148 I II II It I I III I I I I I III I I I I II I I IIII I I 1972 1973 1971 1972 1973 *S eas. a d j. fig u re; n o t a n in d ex L a te s t p lo ttin g : D e ce m b e r, e x c e p t m fg. p ro d u c tio n , S e p te m b e r, a n d fa rm re c e ip ts , N o v em b er. Signs point to a strong and sustained economic performance in the region. A growing labor market was evidenced, despite a slight rise in the unemployment rate. Consumer borrowing and spending were vigorous at year-end. Construction activity was off slightly from its peak. Prices received by farmers continue to advance. Bank deposits rose at a more moderate pace in early January. Nonfarm employment continued its steady rise, marking the eighth straight month of uninterrupted gains in this important sector. The District unem ployment rate, however, inched up to 4.1 percent in December. Manufacturing employment, payrolls, and weekly work hours expanded. Georgia's, Louisi ana's, and Mississippi's transportation equipment in dustries were largely responsible for the gains in hours and payrolls. Construction employment, par ticularly in Florida, posted a strong increase. Consumer instalment credit at commercial banks grew vigorously again in December and showed a record gain for the year. The largest relative gain in December was in nonautomotive consumer goods, while all other categories grew less than during re cent months. Department store sales in major met ropolitan areas were exceptionally strong at the close of the year. Auto sales also closed out the year on a strong note. December sales were substantially above year-ago levels, even though dealers con tinued to complain of inventory shortages of the most popular and heavily advertised models. Prices received by farmers increased in December, as soybeans, feed grains, eggs, and hogs all regis tered sharp price increases. Declines were, however, registered in orange, tobacco, and vegetable prices, Up to one-fourth of the Mississippi and Tennessee soybean crop remained in the field in late January, and prospects for completing the harvest appeared grim. Despite lagging harvests, cash receipts through November were greater than during the comparable months of 1971. For 1973, District farmers plan a 6-percent increase in corn acreage and a 7-percent increase in soybean acreage, while cotton acreage will decline by 6 percent. The value of total construction contract awards fell in December for the second month in a row but remained relatively high. Nonresidential awards dropped by one-third after two near-record months, and residential awards remained near November's boom level. Inflows at thrift institutions were some what below record levels established in the first half of 1972, while lending by thrift institutions con tinued to climb. Following exceptionally strong deposit growth during December, time deposit increases in January (according to preliminary data) continued large, but demand deposit gains were considerably smaller. During early January, bank lending has exhibited greater strength than is usually noted in the first month of the year. This Bank raised the discount rate from 4V 2 to 5 percent on January 15, 1973, in order to bring the rate into better alignment with a substantial rise in short-term market interest rates. N o te : D a ta on w h ic h s ta te m e n ts a re bas ed hav e b e e n a d ju s te d w h e n e v e r p o s s ib le to e lim in a t e s e a s o n a l in flu e n c e s . 32 FEBRUARY 1973, MONTHLY REVIEW
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