Full text of Economic Review (Federal Reserve Bank of Atlanta) : February 28, 1949, Volume 34, Number 2

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doubts that specialization is one of the founda­
tions of the country’s economic progress. Because of the
nation’s wide free-trade area, specialized production can
concentrated in those areas where the required resources are
most abundant and where costs are the lowest. But it is often
forgotten that this specialized production is only possible
when an efficient transportation system makes the profitable
exchange of the products of one region with another feasible.
Like most other phases of American economic life, the
country’s transportation system has been characterized by
rapid change. Many of these changes are recent enough that
only a short backward look to the immediate prewar years
evidences striking advances, an example of which is the ad­
vent of air transportation. But changes are not confined to
recent years. The small frail ships by which the early col­
onists came to America were soon supplanted by the clipper
ships and later, by the steamships. Pack trains surrendered
to the stage coach and freight wagon as highways were de­
veloped, only to be superseded by the railroads for long
hauls. Improved motive power and roadbeds make the mod­
ern railroad a much different carrier from the railroad of the
mid-nineteenth century. Equally significant, but often over­
looked, have been changes in inland water transportation.
Besides forwarding eco­
nomic progress of the coun­
try generally, each of these
transportation improvements
had marked influences on the
economic development of in­
dividual communities. More­
over, further changes in
methods and modes of trans­
portation and in adaptations
can be expected. An exam­
ple, in fact, is being por­
trayed in the northern part
of the Sixth Federal Reserve
District today* A vastly im­
proved transportation sys­
tem, if not an entirely new
one, is now available in that
region through the comple­
tion of the Tennessee River
improvements. The region
has yet to feel the full eco­
nomic effects of the new sys­

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tem, but some of its potential influence is apparent already.
The course of the Tennessee River on a map curves like a
begiant bent arm into the heart of the Southeast. Beginning
with the confluence of the Holston and French Broad Rivers
in the valley of East Tennessee, it flows past Knoxville,
southwest across the eastern part of Tennessee, and on past
Chattanooga. Below Chattanooga it turns westward and then
southwest into Alabama for a distance of about 60 miles. It
then turns northwest to the extreme northwest corner of Ala­
bama where it forms the boundary for the peculiar jag that
is characteristic of the northwest corner of the map of Ala­
bama. The river then turns north through Tennessee provid­
ing most of the boundary between the Sixth and Eighth Fed­
eral Reserve Districts. Continuing northward into Kentucky,
it empties into the Ohio at Paducah. The Tennessee travels
652 miles and drains a total area of 40,875 square miles.
The territory of the Tennessee Valley was originally heav­
ily wooded and the eastern half is mountainous and rugged.
It was natural, therefore, that in the early history of the re­
gion, water transportation provided the best way to penetrate
the country. The route was difficult, not only because of un­
known hazards of the river, but also because of hostile In­
dian tribes and disputing foreign governments. The Louisi­
ana Purchase settled the question of the free use of the Mis­
sissippi in 1803, however,
and difficulties with the
Indians were overcome by
treaties and expeditions. As
a result, the settlers going
westward used the river in­
creasingly and in the early
nineteenth century Knoxville,
at the headwaters of the
Tennessee, became an im­
portant trans-shipment point
for the South and West.
As the region became more
fully settled, and particular­
ly as cotton became the pre­
dominant crop in eastern
Tennessee and northern Ala­
bama, trade grew up along
the river between the cottonraising slave communities
and the general farming com­
munities. Such settlements
as Kingsport, the head of

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flatboat and keelboat navigation on the Holston; Newport on
the Pigeon; Clinton on the Clinch; and Chattanooga on the
Tennessee were typical. In what is now Alabama, two settle­
ments became important trading centers on the lower Tennes­
see; Decatur, which is on the south shore of the river, and
Huntsville which is 11 miles inland and which was connected
with the river by a canal.
Before the introduction of, and even during the height
of, steamboat transportation, flatboats for downstream and
hand-propelled keelboats for upstream traffic were used for
freight hauling. Steamboats, however, emphasized the im­
perfections of the stream as a transportation artery. Natural
obstacles abounded in the form of reefs, sand bars, snags,
and shoals over which steamboats could not pass except at
periods of high water. On the lower river were the Big Bend
Shoals and Colbert Shoals. Muscle Shoals, the greatest ob­
stacle, was only 258 miles from the mouth. Further up the
stream, the relatively steep slopes of the river created swift
currents that also made navigation difficult.
The advantages of water transportation over land trans­
portation were so great, however, that most of the commerce
of the valley moved by river. A steamboat came up the Ten­
nessee as far as Florence, Alabama, as early as 1821, and in
1828 the first boat negotiated Muscle Shoals and reached
Knoxville. A canal built around Muscle Shoals by the state
of Alabama with Federal aid and opened for use in 1836
was not entirely successful. A Huntsville newspaper, how­
ever, reported in 1840 that 58 boats passed through the canal
during one month. Several steamboat companies were organ­
ized and regular schedules were maintained whenever possi­
ble. Solne of the boats successfully crossed the shoals. On
the upper river, trade increased rapidly, but the natural ob­
stacles of the river always prevented its full utilization. The
advent of the railroads in the mid-nineteenth century naturally
took much of the traffic away from the river.
After the War Between the States, the river provided a
means of transportation for the cotton and other commodi­
ties which could not be shipped during the war and which
the damaged railroads could not handle. This postwar re­
vival of river trade reached its peak by 1880. Bulk products
such as coal, lumber, iron ore, hay, and grain continued to
be transported in sizable quantities during the early 1900’s
and there was also a substantial passenger traffic.
The relative decline in river transportation during the first
part of this century can be explained partly, of course, by
the entrance of new transportation means which were more
readily adapted to certain types of freight and passenger
service. In addition, the character of the unimproved river
itself probably helps explain the loss in traffic.
An Im proved River

Public recognition of the river’s limitations led to continual
agitation for improvement during the entire history of the
Tennessee Valley. Some early improvements were made by
the states and the Federal Government, but even by 1926 the
condition of the river was such that the average haul was
only 20 miles. By 1927 the hazards of Muscle Shoals had
been largely eliminated by the completion of Wilson Dam
and an auxiliary dam, together with the necessary canals and
locks. Many of the improvements, however, had been local­
ized and done in piecemeal fashion. In 1930 the minimum
depth of the river at low water varied from one foot for the
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in the Wilson Dam pool, just above which the minimum
depth for a considerable distance was only three feet.
Because the power activities of the Tennessee Valley Au­
thority have received most attention in the public mind, the
provisions of the act creating the TVA that apply to naviga­
tion are sometimes overlooked. In Section 4 (j) of the Act,
it is stated that the TVA has power to “. . . construct such
dams and reservoirs in the Tennessee River and its tributar­
ies as . . . will provide a nine-foot channel in the said river
and maintain a water supply for the same from Knoxville to
its mouth and will best serve to promote the navigation in
the Tennessee River and its tributaries and control destruc­
tive flood waters in the Tennessee and Mississippi River
drainage basins. . . .”
Each dam added during the 16 years of TVA’s existence
to those already built brought the nine-foot channel closer to
completion. Kentucky and Pickwick Dams below Muscle
Shoals; Wilson at the Shoals; Wheeler, Guntersville, Hales
Bar, Chickamauga, Watts Bar, and Fort Loudoun Dams, in
that order above Muscle Shoals, have created a series of long
inland lakes, each connected by locks.
By 1939 the head of navigation had been shifted up river
to Chattanooga with a minimum channel of six feet avail­
able at all times. The opening of the Kentucky Lock in 1945,
near the mouth, provided a channel of the nine-foot project
depth all the way to Knoxville. Completion of further im­
provements in 1947 now make the Tennessee River navigable
its entire 650-mile length to Knoxville by vessels drawing
nine feet at any time of the year. Not only have the hazards
of the river been removed, but because of the lakes, the rela­
tive freedom from current makes the stream ideal for navi­
gation. According to the Authority’s financial statement as
of June 30, 1948, its investment in navigation improvements
has a book value of 138 million dollars. Flood-control im­
provements are valued at slightly more. These values do not
include the investments allocated to the power program.
The Tennessee River system is but a part of approximately
27,300 miles of improved inland waterways in the United
States that have been developed and are now commercially
navigable. By its link with the Ohio River, the Tennessee is
a part of the Mississippi River system, which has waterways
with a nine-foot minimum depth as far north as Minneapo­
lis. By connection with the Illinois waterway, shipments can
be made to Chicago where further water transportation is
available over the Great Lakes. Up the Ohio from Paducah
a nine-foot channel is provided to the northeast all the way
to Pittsburgh. Down the Mississippi from Cairo, Illinois,
where the Ohio enters the Mississippi, lies New Orleans 870
miles away. At New Orleans the Intracoastal Waterway
makes navigation possible for a distance of almost 700 miles
west to Brownsville, Texas, and 430 miles east to St. Marks,
Florida. The Warrior Tombigbee Waterway connects with
the Intracoastal Waterway at Mobile and extends northward
through Alabama for about 450 miles. Thus, any city on the
Tennessee River is directly connected by a waterway having
a minimum nine-foot depth with cities in at least 16 other
states and by waterways of lesser depths to many more states.
Improvements of the inland waterways system by the Fed­
eral Government began when Congress took the first steps to
improve the Ohio and Mississippi Rivers in 1824. Two years
later it passed the first general river and harbor act. Al­
though practically every session of Congress saw some action
toward improving the inland waterways, the modern system
is largely the result of a program begun with the appoint­

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ment of an Inland Waterways Commission by Theodore
Roosevelt in 1907.
Additional development of inland water transportation
was stimulated during, and after, World War I. During that
war the waterways were used to relieve transportation pres­
sure on railroads; but they were found inadequate for mod­
ern transportation. New types of vessels were needed as well
as new methods. River transportation along the Mississippi
had been carried on, during the war, by an agency of the
War Department. In 1924 this agency became the Inland Wa­
terways Corporation, a Government corporation, under the
direction of the War Department until 1937, and since 1939
under the direction of the Department of Commerce. This
corporation was charged with the responsibility of operating
a Government barge line until such time as the operation
could be successfully carried on by private enterprise.
Although the Federal Barge Lines, operated by that cor­
poration, have been important pioneers in inland waterway
transportation since World War I, private carriers have also
played an important role. The river-packet boat has been
largely replaced by the Diesel powered towboat, which nor­
mally has a tow of several steel barges. Although the di­
mensions of the barges vary according to the requirements
of local conditions, the most common size of 175 feet long
by 26 feet wide carries up to one thousand tons. Some new
barges are 195 feet long and have a normal carrying capacity
of about 1,400 tons. A typical large tow consists of several of
these barges, and can carry as much freight as three or four
hundred loaded 50-ton railroad cars.
As a result of these improvements and developments, traf­
fic on the Mississippi River system reached 5.9 billion ton
miles in 1934, and it has increased practically every year
since then. In 1946, it was over three times the 1934 traffic,
or 18.4 billion ton miles. The most important product car­
ried in 1946 was coal, which, together with petroleum, sand
and gravel, logs and lumber, and grain and its products ac­
counted for about 85 percent of the total traffic of the Mis­
sissippi River system that year.
River, Rail, and Highway

In a system of free enterprise where transportation facilities
are largely in the hands of private business, it is inevitable
that controversy should frequently arise over the relative
merits of each type of transportation. In most businesses,
competition is the chief means of securing relatively cheap
and efficient services. For transportation, however, this means
was found ineffective, and the American people turned to
Government regulation many years ago. Decisions of the
regulatory authorities may bring advantages or penalties to
certain types of carriers. Because the public determines gen­
eral policy in a democratic government, publicized attacks
and counterattacks among the various types of carriers have
been frequent. In the 1880’s, for example, many complaints
came from the steamboat companies on the Tennessee when
the railroads were awarded mail contracts. Which carrier is
best from the standpoint of the public interest depends, how­
ever, on which one can provide transportation at the lowest
cost in terms of material and manpower.
Advocates of inland water transportation believe that it
provides a means of more efficiently utilizing the nation’s
resources. Its advantages, they say, include lower rates to the
shipper, particularly on bulky commodities of comparatively
low unit value, because of lower operating costs. It is
claimed, therefore, that inland water transportation facili­




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tates the exchange of products which could not be profitably
transported otherwise and makes many commodities avail­
able at a cheaper cost to a wider market. More economical,
large-scale production is encouraged. Widened markets, low­
er costs, and greater competition, the advocates of inland
water transportation insist, increase the nation’s productivity
and eventually result in lower real costs to the public.
Critics of inland water transportation do not deny that wa­
ter freight rates are lower. They maintain, however, that low
rates are only possible because the public bears the costs of
waterway improvements and maintenance. Inland waterways,
they claim, result in private benefits at public expense. Some
critics contend that in order to make legitimate comparisons
between the economic costs of shipping by water and those
of shipping by rail, for example, charges covering the cap­
ital costs of the waterways and the cost of maintaining them
should be included. Savings to the public, they believe, must
be greater than these total costs in order to justify public in­
vestment in inland waterways. The controversy is not settled
even when these general principles are agreed upon. Differ­
ences of opinion as to what costs should be included, how
long the period of amortization should be, and what measure
of use should be employed lead to different conclusions about
the economic soundness of particular waterways.
American policy since 1824, when a Supreme Court deci­
sion invalidated the attempt of on# state to give exclusive
rights of transportation on one of its rivers, has been that
waterways are public highways. In 1882 an act of Congress
prohibited the collection of tolls or operating charges on
“. . . any canal or other improvement of navigation belong­
ing to the United States.” As provided for in the transporta­
tion act of 1940, public policy has been centered upon cre­
ating an adequate system in which the inherent advantages
of rail, highway, and water transportation will all be pre­
served. The inland waterways have an important role to play
in the system. Many persons believe that after the public has
made a capital investment of over a billion dollars in inland
waterways, its interest lies in their full utilization.
Savings in transportation charges, however, do not repre­
sent all the benefits of an improved transportation system.
Other benefits flow from the fuller utilization of resources
that is often made possible by the investment of public funds,
even in a free enterprise economy. The improved Tennessee
River, many believe, provides an example of this principle.
Decatur and Guntersville

Although the effect of improved waterways upon the general
public welfare is difficult to measure, it is easier to discern
in individual communities. Decatur and Guntersville, Ala­
bama, because of their location, have enjoyed the use of the
improved river longer than most other ports. Moreover, be­
cause of their relatively small size, the tangible economic
benefits are more apparent than in larger communities.
In 1820 President Monroe reserved a site for the town of
Decatur about 304 miles from the mouth of the Tennessee
River near Muscle Shoals; and in 1826 the Alabama General
Assembly chartered the city. Transfer of freight overland
around the Shoals constituted an important business during
the city’s early history, especially after a railroad was built,
in 1834, around the Shoals. Growth was stimulated by the
organization of the Decatur Land Improvement Company in
1887, but it was not until 1900 that the population exceeded
3,000 and 20 years later the census showed that only 4,750
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Improved river transportation certainly cannot be given as
the principal reason for the growth in the city’s population
to over 15,000 in 1930, although certain navigation improve­
ments had been made. The city was developing as a manu­
facturing center, and as a marketing center for the agricul­
tural area surrounding it. It is served by two railroads, the
Louisville and Nashville, and the Southern.
Wheeler Dam, below Decatur, was completed for naviga­
tion by 1937 and completely eliminated the remaining haz­
ards of Muscle Shoals. The city was then on the shores of a
lake. By 1938 the navigation improvements on the lower riv­
er were sufficiently advanced so that the Gulf Refining Com­
pany began to transfer petroleum products by barge to its
terminal at Decatur, as well as to those at Sheffield, Ala­
bama, 50 miles downstream; Guntersville, 54 miles up the
river; and Perryville, Tennessee, below Muscle Shoals. The
Texas Company built a terminal at Decatur two years later.
The possibility of shipping grain from the Middle West by
barge at a saving of from three to four dollars a ton led the
Alabama Flour Mills to build a mill and terminal on the
river in 1941. Although the mill was originally established
to take advantage of river navigation, it has in practice
bought more locally produced grain than it has imported.
Thus, even before the beginning of World War II, there was
a noticeable development arising from the improved trans­
portation on the river. %
GROWTH OF TRAFFIC ON THE TENNESSEE
M IL L IO N S

O F T O N - M IL E S .

M IL L IO N S O F TO N "M IL E S

S O U R C E . — D a ta fo r 1926-46 fr o m D e p a r tm e n t o f th e A r m y , C h ief o f E n g in eers;
f o r 1947-48, T V A estim a te s .

The improvements on the river demonstrated their value
during the recent war. Decatur became a manufacturing cen­
ter for ocean-going vessels. Because of the wartime policy of
industrial dispersion, Decatur’s location was especially fa­
vorable because it was connected with the ocean even though
it was inland. The Ingalls Shipbuilding Company manufac­
tured certain types of inland waterway craft before the war.
A large new capital investment was made to increase the
capacity of Ingalls, and to establish a facility for the Deca­
tur Iron and Steel Company. The total expansion of war fa­
cilities between 1940 and 1944, including that undertaken at
the Decatur Goodyear Mills, was in the neighborhood of five
million dollars. The Ingalls Company built cargo vessels and
small boats for the Maritime Commission. These vessels were
floated down the Tennessee, Ohio, and Mississippi Rivers to
New Orleans. The Decatur Iron and Steel Works manufac­
tured tugs and a number of steel shapes for use in shipbuild­



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ing, as well as other types of war equipment. All together,
manufacturing plants in Morgan County, where Decatur is
located, employed about 3,000 persons during 1939, but at
the peak of war activity that figure was almost doubled.
Decatur has kept many of its wartime gains. After the
close of the war, the Decatur Iron and Steel Company went
out of the shipbuilding business although it continues to fab­
ricate steel. The Ingalls Company, however, added the Gov­
ernment war-created facilities to its own and is now concen­
trating operations in manufacturing inland waterway craft.
In 1947 total manufacturing employment in the county was
over one thousand more than it was in 1939 and about twothirds of what it was during the peak war period.
The high postwar employment is probably explained by
the establishment of other industries in the area since the
war. In 1947 the Indiana Grain Company, Incorporated built
a new grain terminal. Perhaps the availability of grain and
feed accounts for the growing chicken-raising industry and
for the establishment of processing plants in Decatur. The
chicken industry, in turn, led to commercial hatcheries and
to a new feed mill built by the Tennessee Valley Coopera­
tives, Incorporated. The Alabama Flour Mills also added to
its plant after the war.
How much of this activity can be traced to the initial im­
petus given by the river improvements cannot, of course, be
exactly determined. It is interesting, however, that for 1947
the population of Decatur was locally estimated at 24,000.
Business and personal bank deposits at the end of that year
for Morgan County amounted to 17.7 million dollars, an in­
crease of 250 percent since the end of 1941. For the entire
state of Alabama the increase was 190 percent.
Guntersville, in Marshall County, Alabama, 358 miles
from the mouth of the Tennessee, is the port farthest south
on the Tennessee River. The river also played the leading
role in the early history of this city which grew out of the
location in 1813 of Fort Deposit, eight miles from the pres­
ent site of Guntersville. Even in those early days, the city
was an important trading point on the Tennessee. Since 1893
the river has been used for the 22 miles between Gunters­
ville and Hobbs Island by the Nashville, Chattanooga, and
St. Louis Railway whose car ferries transport loaded freight
cars between the south and north shores of the Tennessee.
By 1920, however, the city’s population was only a little
over two thousand and most of the 33,000 persons in the en­
tire county were living on farms. There was some manufac­
turing in the county but the total manufacturing employees
numbered only 753.
When Guntersville Dam was finished in 1939, the city
found itself located on a large inland lake connected to a
waterway system having a channel with a minimum depth of
6% feet, but which was later deepened to nine feet. Even be­
fore the completion of the dam, however, river improve­
ments below Guntersville had made possible river transpor­
tation that was not feasible with the old three-foot channel.
In May 1939 the city became a distribution point for petro­
leum products which the Gulf Refining Company brought in
by barge to its terminal. The Texas Company later estab­
lished a similar terminal.
A local farmer, Oliver J. Walls, recognized that adequate
handling facilities were required before advantage could be
taken of the opportunities for shipping grain by river. After
he had constructed a grain elevator and terminal in 1940,
successful shipments of grain from the Midwest were begun
and local distribution was undertaken. He sold the terminal

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in 1944 to the Cargill Company of Minneapolis. About the
same time, the Norris Grain Company built a terminal, which
was doubled in capacity in 1946.
Grain comes by water to these terminals from great dis­
tances and at a considerable saving in costs, such as the
1,250-mile haul from Minneapolis at an estimated saving of
$3.41 a ton in 1947. These terminals serve not only the local
areas but interior points as well. For example, total savings
were estimated in 1947 at $5.35 a ton on grain shipped from
Minneapolis to Gadsden with shipment made by water to
Guntersville and by rail from Guntersville to Gadsden. Sim­
ilar savings to Atlanta, Georgia, were estimated at $3.45 and
to Newnan, Georgia, at $3.65.
The incoming grain movement led to the establishment of
a feed mill in 1945 which became a part of the McMillan
Feed Mills of Fort Wayne, Indiana. Besides manufacturing
nationally advertised formula feeds, the company has en­
couraged farmers in the area to raise broilers. Shipping
grain, however, is tending to become a two-way activity.
Grain raised in at least 50 counties in Alabama and Tennes­
see is now brought into a local market by truck. Also, in
1947, two barge loads of Marshall County white corn were
shipped by water from Guntersville to the Chicago area.
Shipments of steel railroad car sills were received for the
first time at Guntersville in 1948. The shipments originated
at Pittsburgh, came down the Ohio, and up the Tennessee to
Guntersville. From Guntersville they were taken overland to
Bessemer, Alabama, to be used by the Pullman Company.
In 1940 the Commercial Barge Lines began the transpor­
tation of automobiles, chiefly from Evansville, Indiana, and
Cincinnati, Ohio, on the Ohio River to Guntersville. Stand­
ard equipment was used at first and the cars were loaded and
unloaded by use of cranes. By 1942 approximately five thou­
sand vehicles had been transported. From Guntersville, the
cars were taken to.points all over the Southeast.
During the war years the use of the river for this type of
transportation increased. Approximately 20,000 jeeps, trucks,
weapon carriers, and other military vehicles came from midwestern points up the Tennessee to Guntersville and to other
river points. After the end of the war, an improved service
was inaugurated. The Commercial Barge Lines recently put
into service new articulated vessels with specially designed
hulls and capable of speeds up to 17 miles an hour. As many
as 600 cars may be carried on one barge and by the use of
floating docks, all four decks of the tow can be loaded or un­
loaded within four hours. The retail value of such a load is
approximately a million dollars.
The influence of these changes upon the economic life of
the community is readily measurable. In 1930 the popula­
tion of Guntersville was 2,800; by 1948, according to local
estimates, it had more than doubled. Throughout Marshall
County, manufacturing employment had increased from 1,300
in 1939 to 1,559 in 1946. Bank deposits in the county rose
277 percent from 1941 to 1947.
Up fhe River

Because improvements in the upper river came later and be­
cause the communities on the upper river were larger, the
economic impacts upon the ports above Decatur and Gun­
tersville are at present less striking. Nevertheless, as soon as
the river improvements were completed, transportation on the
river increased. For 1945 it was reported that only 40,000
tons of freight, excluding sand and gravel, were handled
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Official data for later years will not be available for some
time, but it is estimated that in 1948 Chattanooga handled
about 150,000 tons and Knoxville, over 250,000.
Completion of improvements on the upper river can be
dated approximately by the establishment of petroleum ter­
minals. In 1941 the Gulf Refining Company built its termi­
nal at Chattanooga, and after river improvements had made
transportation further up the river feasible, it built another
terminal at Knoxville in 1947. The Texas Company, in ad­
dition to its terminals at Decatur and Guntersville, built a
terminal at Chattanooga in 1940 and one at Knoxville in
1946. The latest company to enter the field is the Pure Oil
Company, which received its first shipment by barge from
Texas in June 1948. All together, on the basis of the first
six-months experience of the year, about 400,000 tons of pe­
troleum products were handled on the river in 1948, a trans­
portation job equivalent to over 200 million ton miles.
DISTRIBUTION OF TRAFFIC BY COMMODITIES

Percent distribution of
total ton-mile traffic.

Percent distribution of
ton miles of Other traffic.

Petroleum products, coal, and grain accounted for 91 percent of
the total estimated ton-mile traffic on the Tennessee in 1947.
Other products, however, were also shipped in considerable
quantities.

This movement of petroleum on the river offers an exam­
ple of integration in the use of water, rail, pipe line, and
truck transportation. One oil company, for example, which is
served by a pipe line in Chattanooga uses barges to trans­
port its products from there to Knoxville, 170 miles up the
river. At Knoxville the products are distributed further by
truck and rail. Other companies serve the Tennessee River
ports entirely by barge, but the petroleum is frequently
brought from various oil fields to the point of embarkation
by pipe lines or by rail. In recent years petroleum products
have been shipped on the Tennessee from as far west as Port
Arthur, Texas; from Helena, Arkansas; Mt. Vernon, Indi­
ana; Lockport and Hartford, Illinois; New Orleans, Norco,
and Baton Rouge, Louisiana; Cincinnati, Ohio; Belle, West
Virginia; and Louisville, Kentucky.
Besides handling bulk petroleum shipments in tank barges,
some of the companies have recently started to handle socalled package freight. At least two of the 13 petroleum ter­
minals on the Tennessee are equipped for handling this type
of freight. Cardboard cartons containing oil in cans and oil
in drums are being transported in increasing quantities. Mod­
ern developments in handling materials are admirably adapt­
ed to, and promise to reduce further the cost of, water trans­
portation.
Over 360,000 tons of coal were carried on the Tennessee
River during 1947, whereas the total handled during 1948

M o n t h ly

18

R e v ie w

o f

t h e

probably reached 500,000 tons. Some of this coal comes
from a privately owned terminal at South Pittsburg, Tennes­
see, near Chattanooga. The TVA has built a public-use coal
terminal at Harriman, Tennessee, which is located near the
heart of the Southern Appalachian coal fields on a tributary
of the Clinch River. Coal from this area is shipped to the up­
per Mississippi Valley region where it commands a premium
for domestic use. A study made in 1944, when the first barge
load of this coal was shipped, showed that a rail-barge route
for shipping coal by the Tennessee River to the Midwest ef­
fected savings ranging up to two dollars a ton.
Other ports on the Tennessee, in addition to Decatur and
Guntersville, have handled grain. In 1939, the Mountain City
Mill, Incorporated, of Chattanooga built a terminal to which
it brought grain from the Midwest by its own barges. At
Knoxville, the J. Allen Smith Company and the Security
Mills have received grain by river transportation. In 1947, a
total of 78,000 tons of grain were shipped on the Tennessee,
the equivalent of 29 million ton miles. Almost the same
amount was shipped in 1948, if traffic continued at the same
rate in the last half of the year as it was in the first half.
In 1946 it was estimated that manufactured iron and steel
from Illinois, Missouri, West Virginia, and Pennsylvania
could be shipped by the Tennessee to points in the Southeast
at savings averaging about $2.45 a ton. Pig iron could be
shipped from the South to midwestern river ports at savings
averaging over $1.50 a ton. Cast-iron pipe, whose manufac­
ture in the Sixth District constitutes almost one-half of total
United States production, could be shipped to points on the
Mississippi, Illinois, and Ohio Rivers at savings averaging
$1.37 a ton. The river has consequently been increasingly
used for such shipments with the total tonnage handled in
1947 estimated at 7,800 and approximately the same in 1948.
The Sm all Shipper

So far on the Tennessee River, it is the shippers transport­
ing coal, petroleum, and grain, for the most part by their
own facilities, that have accounted for all but less than 10
percent of the total ton miles of traffic. However, other in­
land waterways have been used to a much greater extent by
small shippers of diversified commodities. Also, a survey
made by the TVA in 1940 indicated that coal, petroleum, and
grain shipments were expected to amount to less than 50
percent of the prospective commerce. Among the wide va­
riety of commodities which businessmen expected to ship
were such diverse items as whiskey, baking powder, matches,
syrup, bicycles, road-building equipment, stoves, and refrig­
erators, as well as the heavy bulky commodities. Many of
them, however, expected to ship only in comparatively small
quantities. Were this type of traffic developed, the benefits of
the improved Tennessee would not be confined to large ship­
pers as at present. Before these benefits can be spread, at
least three obstacles to greater use of the Tennessee must be
overcome: lack of adequate public-use terminals, absence of
frequent and regular common carrier barge-line service for
less-than-barge-load shipments, and the nonexistence of jointbarge-truck and joint-barge-rail rates.
Adequate public-use terminals, whether privately or pub­
licly owned, are essential for developing diversified traffic.
At a well-run terminal, the small shipper’s freight is handled
by the terminal upon the payment of specified tariff charges.
He is also able, in some cases, to take advantage of forward­
ing and limited storage services. Some terminals, of course,
have been built on the Tennessee. At Sheffield, Alabama, for




F e d e r a l

R e s e r v e

B a n k

o f

A t l a n t a

f o r

F e b r u a r y

1 9 4 9

instance, there is a privately operated terminal owned by the
city. The city of Chattanooga owns and operates its Broad
Street wharf which, however, has no cargo handling facili­
ties. The TVA has constructed and operates for public use,
terminals at Chattanooga, Decatur, Guntersville, and Knox­
ville, as well as a coal terminal at Harriman, Tennessee. As
soon as traffic develops further and as public bodies or pri­
vate agencies can assume operation of the terminals, how­
ever, the TVA expects to get out of the terminal business.
LENGTH OF TENNESSEE RIVER HAULS IN 1947
AVERAGE

PRO D U CT:

0

*00

LEN GTH

200

OF HAUL (M ILES)

300

400 500

PETROLEUM
ASPHALT, LIQUID
GRAIN
AUTOMOBILES
STEEL
COAL
COKE
FERTILIZER
ALUMINUM
FOREST PRODUCTS
CHEMICALS
CONSTRUCTION EQUIP.
MUSSEL SHELLS
ASPHALTIC LIMESTONE
CLAY
LIMESTONE

100 200 300 400 500
But the lack of frequent and regular barge-line service,
even where public-use terminals exist, has hampered the use
of the river by the small shippers. Among the various types
of carriers operating on the Tennessee, none of them have a
regularly scheduled service of this kind. Some shippers, such
as oil and grain companies that are called private carriers,
have sufficient freight to justify their owning towboats and
barges. Other shippers on the Tennessee use the services of
two types of “for hire” barge lines—contract carriers and
common carriers. Contract carriers generally confine their
operations to barge-load shipments and the matter of rates is
adjusted directly with the shipper through bargaining. Com­
mon carriers, on the other hand, are required to accept ship­
ments of any size at published rates.
The small shippers, however, have been unable to utilize
the services of the common carriers except for a short period
before World War II, which was the only time when a reg­
ularly scheduled service was in operation. The Commercial
Barge Lines was forced to discontinue this service because
of war conditions, and, since the war, a shortage of equip­
ment has prevented resumption of any similar service. Barge
and boat builders have been unable to obtain sufficient quan­
tities of steel. Although the situation has improved since
August 1948, when the Steel Industrial Advisory Committee
allotted 20,000 tons of steel a month to barge builders, the
shortage has not been completely overcome.
If these two services, public-use terminals and regularly
scheduled common carrier services, were available, traffic
from small shippers located directly on the river would un­
doubtedly increase. The river will not fully serve the region,
however, until waterway transportation can be utilized con­
veniently by shippers from inland points as well.

M

o n t h l y

R e v ie w

o f

t h e

F e d e r a l

R e s e r v e

B a n k

o f

A t l a n ta

For example, in order to make a shipment from Atlanta by
way of the Tennessee to Indianapolis conveniently, an At­
lanta shipper should be able to turn his freight over to an
inland shipper without further arrangements being necessary.
The shipment could be sent by rail or truck to Guntersville
where it would be transferred to an inland waterway carrier
for shipment down the Tennessee to Paducah and up the
Ohio to Evansville or Louisville. At either place it might be
transferred to an inland carrier for further transportation to
Indianapolis. Shipping by water is neither convenient nor ef­
ficient unless the shipper can confine his dealings to the car­
rier at the point of origin.
Because neither joint-barge-truck rates nor joint-barge-rail
rates have been established on the Tennessee, inland ship­
pers cannot make shipments in this simple manner. Such
rates exist on part of the Mississippi River system and ship­
pers in that area can benefit from lower water transportation
rates even when only part of the shipments are made by
barge. Shippers save from 10 to 20 percent in freight charges
for that portion of the route between barge-line ports.
In a decision made in July 1948, the Interstate Commerce
Commission directed the railroads to establish through jointbarge-rail rates, lower by certain differentials than all-rail
rates, on a large number of commodities moving on inland
waterways other than the Tennessee. In view of this decision,
similar rates applying to the Tennessee may be forthcoming.
Prospects

The history of most inland waterways shows that the end of
a rapid rate of traffic growth does not come until about 15
years after improvements are completed. In the interval, fa­
cilities are expanded, capital is invested, shippers become
better acquainted with the most profitable uses of water
transportation, and the necessary services are developed.
Although substantial navigation improvements were com­
pleted on the lower Tennessee by 1938, the river was not
open to through navigation until 1945. Traffic volume on the
upper river has, therefore, just begun. Despite the limitations
that have, until now, confined most of the navigation to the
lower river, traffic for the entire river has increased in terms
of both tons and ton miles. The 353 million ton-mile traffic
for 1947 was over five times that for 1935 and nine times
that of 1926; the 1948 traffic exceeded 400 million ton miles.
If the estimates made in 1940 of future traffic on the Tennes­
see are correct, the tonnage in 1960 will amount to over sev­
en million tons. In terms of the average length of haul for
1947, this 1960 traffic will amount to almost three-quarters
of a billion ton miles.
If this development meant only a several million dollar
annual saving to certain shippers, it would have important
effects on the economic life of the region. The extent to
which these freight savings are passed on to the general pub­
lic will, of course, depend upon general competitive condi­
tions. Many persons interested in the economic development
of the area believe an appraisal of the improved river only
in terms of the dollar savings to shippers is too limited. The
improved river, they believe, adds another economic resource
to those with which nature has endowed the region. The
proper use of this resource should result in economic bene­
fits through increased productivity, greater capital invest­
ment, more profitable employment, and higher incomes. The
way the people of the region use the river will determine its
ultimate economic benefits to the area.



C harles T. T aylor

f o r

F e b r u a r y

19

1 9 4 9

S ix t h D is tr ic t S ta tistic s
IN STALM ENT C A SH L O A N S
N o . of
L e n d ers
R e p o r t­
in g

L e n d ers

F e d e ra l c re d it u n i o n s ...
S ta te c r e d i t u n i o n s ..................
I n d u s tr ia l b a n k i n g
c o m p a n ie s .................................
I n d u s tr ia l lo a n c o m p a n ie s .
S m a ll lo a n c o m p a n ie s . .
C o m m e rc ia l b a n k s ..................

V o lu m e

O u ts ta n d i n g s

P e rc e n t C h a n g e
J a n u a r y 1 9 4 9 fro m

P e rc e n t C h an g e
J a n u a r y 1 9 49 fro m

D ec e m b e r J a n u a ry D e c e m b e r Ja n u ary
1 9 48
1948
1948
1948

41
24

— 27
- 14

4 . 22

4- 18

4-

3
3

4- 4 3
,4* 3 7

11

— 3
— 24
- 28
— 7

— 0
— 34
— 20
4- 0

—
—
—
—

1
1
1
0

4- 7
4- 13
— 10
4- 2 8

16
54
32

RETAIL FU R N ITU R E S T O R E O PE R A T IO N S
P e rc e n t C h a n g e
N u m b e r of
J a n u a r y 1 9 4 9 fro m
I te m
S to r e s
R e p o r tin g
D ec. 1948
Jan., 1 9 48
T o ta l s a l e s ..........................................................
C a s h s a l e s ........................................................
I n s ta lm e n t a n d o th e r c r e d it s a l e s . .
A c c o u n ts r e c e iv a b l e , e n d of m o n th
C o lle c tio n s d u r in g m o n t h .....................
In v e n to r ie s , e n d of m o n t h ....................

97
87
87
96
96
70

— 21
— 20
4- 2 3
+ 6
— 8

• 50
• 52
• 50
• 7
■ 3
• 4

— 25

W H O L E S A L E SA L ES A ND IN V E N T O R IE S*

I te m

SALES

IN V E N T O R IE S

P ercen t C h a n g e
N o . of
F irm s J a n u a r y 1 9 49 fro m
R e p o r t­
Jan.
D ec.
in g
1 9 48
1 9 48

P e rc e n t C h a n g e
N o . of
J a n . 3 1 ,1 9 4 9 , iro m
F irm s
R e p o r t­ D e c . 31
J a n . 31
in g
1948
1948

A u to m o tiv e s u p p l i e s .
E le c tric a l g r o u p .............
W ir in g s u p p l i e s ___
A p p lia n c e s ..................
G e n e ra l h a rd w a re . . .
I n d u s tr ia l h a r d w a r e . .
J e w e lr y .................................
P lu m b in g a n d h e a t ­
in g s u p p l i e s ...............
C o n f e c tio n e r y ...............
D ru g s a n d s u n d r ie s ..
D ry g o o d s ..........................
F a rm s u p p l i e s ...............

6

—

3
5

4- 8
— 30
+
8
— 12
— 46

10
4
4
4
4

8

14
3

F u ll l i n e s .......................
S p e c ia lty l i n e s ..........
S h o e s a n d o th e r
f o o tw e a r ..........................
T o b a c c o p r o d u c t s ___
M is c e l la n e o u s ................

32

6
3
9

12

127

7

0

— 17

5

—

3

rf

44—
4+

4+
—
—

4
7

1

4
9

3
4
4
3

3

— 1
4- 18
4- 2 2
— 0

-

1

+ 51

7
1

1

1

25

3

+

+
3
+ 17
4- 20
+
3

4- 3
— 26
- 30

9

+

‘4

— io

— 4
4- 2 4

—
,4-

18
4

-

4*

16
7

— 1
— 17

4- 3 4
4- 3
- 12
— 1

—
+
—
—

4
13
70

4- *7
4- 6
4- 5

+ ii
— 23
-* 0

4- 6
11
22
11
1
3
7

* B a s e d o n U . S . D e p a r tm e n t of C o m m e rc e f ig u r e s .
D EPARTM ENT S T O R E SA L ES A ND IN V E N T O R IE S
S A L ES
P la c e

ALABAMA
B ir m in g h a m .. . .
M o b ile ....................
M o n tg o m e r y .. .
F L O R ID A
J a c k s o n v il le ___
M ia m i.......................
O r l a n d o ..................
T a m p a .....................
G E O R G IA
A tla n ta ....................
A u g u s t a ...............
C o lu m b u s .............
M a c o n .....................
R o m e .......................
S a v a n n a h .............
L O U ISIA N A
B a to n R o u g e . . .
N ew O r le a n s ...
M IS S IS S IP P I
J a c k s o n ..................
M e r id i a n ................
TE N N ESSEE
B r is to l.....................
C h a t t a n o o g a .. .
K n o x v ille ...............
N a s h v ill e ...............
O T H E R C I T I E S * ..
D IS T R IC T ..................

N o . of
S to r e s
R e p o r t­
in g

D ec.
1948
- 54
- 62
- 58
■57
• 50
46
56

4
3
4
4
4

57
62
■ 60

■66
64
62

4
5

59
51

4
3

■54
63

3
4
4

65
• 60
57
61
40
55

6
22

108

IN V E N T O R IE S

P e rc e n t C h a n g e
J a n . 1 9 4 9 fro m
Jan .
1 9 48

N o . of
S to r e s
R e p o r t­
in g

D ec. 31
1948
+

+ 13
— 26

—2
— 12
— 12

19

(-f 2 4

— 2
■+ 7

— 2

3
3

— 11

22

4

—

3

4- W

+: 6
+ 2
+ 1

+

— io

3

— 8
+ 1

3

+ , 24
H- 3

4- 10

+ 6

± 1!
—

J a n . 31
1948

— 23
+ 18

— 5
— 14
— 4

+

P e rc e n t C h a n g e
J a n . 3 1 , 1 9 4 9 fro m

'5

72

—
—

4
9

— *7

—, 6
+ I

—
+

4
9

4-

9

— 0
— 12
rf

*4

+

4

+ 7

* W h e n f e w e r th a n th r e e s to r e s r e p o r t in a g iv e n c ity , th e s a le s o r s to c k s
a r e g r o u p e d t o g e t h e r u n d e r “ o th e r c itie s . _______________________________ _

20

M o n t h ly

R e v ie w

D is tr ic t

o f

t h e

F e d e r a l

B u s in e s s

R e s e r v e

B a n k

o f

A t l a n t a

f o r

F e b r u a r y

1 9 4 9

C o n d itio n s

As the acreage of cash crops is reduced, farmers probably
will
try to keep their total production up by increasing the
a r m e r s in the Sixth District states spent about 170 million
dollars last year for commercial fertilizers. This expendi­ per acre yields and by expanding their production of other
ture amounted to approximately one-fifth of their total operat­crops. To do this successfully, they will require greater
ing expenses, and except for hired labor, was the largest single amounts of fertilizer than they have used in the past. In the
expense item. Farm costs have increased steadily since the last 30 years, changes in District fertilizer consumption have
beginning of the war. But farmers realize that costs must be been closely associated with changes in farm prices. When
held down as much as possible in the next few years, be­ farm prices fell and it became necessary for farmers to re­
cause they are faced with acreage restrictions of their most duce costs, they bought less fertilizer. In the future, however,
widely grown cash crops. How they use fertilizer in this ad­ reductions in fertilizer usage as a means of reducing costs
justment period may have an important bearing on their in­ may prove to be false economy. The transition to farming
systems that are less dependent upon cash crops cannot be
come prospects.
During the past decade, farmers in the Sixth District accomplished without heavy mineral applications. Unless
states have reduced their cropland acreage and have in­ District farmers can make this transition, their incomes are
creased the rates of fertilization on nearly all crops. Their almost certain to go down.
pyrchases of commercial fertilizer increased from 2.4 million
tons in 1939 to 4.2 million tons in 1948. This increase in
fertilizer consumption has been the most important single
aid in keeping farm production up and, thereby, has en­
abled farmers to take advantage of rising farm product
prices. Much of the increase in fertilizer usage is attributable,
of course, to the incentive provided by high farm prices. A
large part of the increase, however, is the result of new con­
cepts in the use of fertilizer.
Fertilizer Requirements A re Changing

F

FERTILIZER PURCHASES AND FARM COMMODITY PRICES
TH O USANDS O F TONS

15.000

/"E
f E R T IL IIZ E R BOUC 3H T— — U N IT E D ST A T ES-)

; io.ooo
; 7,ooo

■
v\ ^

5 .0 0 0
4 .0 0 0

\

V

*

F E R T IL I2 :e r BOUGH T SIXTH DIST R IC T STA1

res /

3.0 0 0

2.000

r

\

-----

—A

> 1,500

/

/
.

200

— 150
100

; 1,000
700
500

d i i r r t k i L in n iT v d c IC E S —
— U N IT E D S T A T E S ^

1910*14*100
. . . j .........

(R IG H T S C A L E )

70
50

—» w \ <

?Until the past few years, nearly all pf the commercial fer­
tilizer was applied to cash crops such as cotton and peanuts.:
As the new techniques of crop and pasture production be-1
come more widely adopted, however, more and more ferti­
lizer is being used on feed crops and on pasture. This trend
toward larger amounts of fertilizer per acre on all crops isj
pjart of an over-all trend toward larger applications of all;
production materials on each acre of land. The farmer’s to­
tal production, therefore, depends more upon what he puts
ihto each acre in the form of labor and materials than it
does upon the inherent chemical composition of the soil.'
Most District farmers are in an excellent position to take ad­
vantage of this development in American agriculture. The(
District contains large areas of soil with good texture and:
low natural fertility. These soils have a large capacity to use
fertilizers to an advantage.




The immediate concern of District farmers is fertilizer
supplies for the current crop year. According to tax tag sales
for the past three seasons, over half of the fertilizer for the
crop year is bought during the first four months of the calen­
dar year. Although the fertilizer industry has expanded since
the war, it has not been able to meet farmers’ demands at cur­
rent prices. Fertilizer prices have increased less since the end
of the war than the prices of any other major item of farm
expense. This may account for part of the apparent shortage
of fertilizer. Exports of all fertilizer, particularly nitrogenous
materials, have increased rapidly since the end of the war.
Imports, on the other hand, have been smaller in each of the
last three years than they were in 1945.
For the current crop year, the Department of Agriculture
estimates that fertilizer supplies will exceed those of last sea­
son by 7.5 percent for nitrogen, 10.9 percent for potash, and
5 percent for phosphate. It warns, however, that the increase
in fertilizer supplies will not be distributed uniformly over
the whole country and that nitrogen, particularly, will again
be scarce in the South.
The contribution of fertilizers to District agriculture this
year will be determined largely by how much is available.
Its contribution over a longer period, however, will depend
upon whether farmers use it extensively to increase their
production of pasture and feed crops.
B.R.R.

M o n t h ly

R e v ie w

o f

t h e

F e d e r a l

R e s e r v e

B a n k

o f

A t l a n ta

f o r

F e b r u a r y

Bank Lending and Interest Rates

S ix th D is tr ic t I n d e x e s

Lending activity at Sixth District banks so far this year
shows a changed trend. Total loans of all member banks
declined 16 million dollars during January. Further de­
clines were reported in February at the member banks in
leading cities where practically all types of loans were lower
in that month than they had been at the end of 1948. Lower
commercial, industrial, and agricultural loans accounted for
about half the decline, but one-third of it was because of
lower consumer and all other loans.
A decline in loans has been characteristic of member batik
operations during the first quarter of each year since the
close of World War II. This year, however, the drop at the
banks in leading cities was almost three times as great by
the middle of February as it was during the comparable pe­
riod of 1948. Moreover, total loans at those banks are barely
above those reported at this time last year. In February last
year, they were 18 percent greater than they had been in
February 1947.
Banks in the leading cities of Alabama, Florida, and Geor­
gia reported that total loans were lower in the middle of
February this year than they were in mid-February last year;
but those of Louisiana and Tennessee reported that loans
were greater. In each of the 10 leading cities of the District,
however, loans were less in mid-February than at the end of
1948. Because the loans of the banks in leading cities con­
stitute about 40 percent of all bank loans in the District and
55 percent of all member bank loans, it is unlikely that
there is a marked difference in the trend of total District
member bank loans.
Evidence of slackened lending activity was apparent in
the last months of 1948. The increase in total member bank
loans in December amounted to only three million dollars.
The slackening may account, in part, for the slightly lower
average interest rate that was charged by reporting banks at
Atlanta and New Orleans in December 1948. Business loans
of $1,000 or more made during December and maturing in
less than a year bore an average interest rate of 2.8 percent;
in September, the rates averaged 2.94. The average interest
rates on business loans made during the first half of Sep­
tember and December in these two cities are shown in the
table. A similar decline was not experienced in other cities
of the United States.
Size of Loan

Under $10,000
$10,000-$99,000
$100,000-1199,000
$200,000 and over
All sizes

Average Interest R ate
Dec.
Sept.

1948

1948

4.29
3.53
3.15
2.76
2.94

4.34
3.33
3.09
2.60
2.80

Although these reporting banks loaned less to businesses
in December than they had in September, their smaller
loans—those of less than $10,000—were greater in the lat­
ter period. The average interest rate on these loans, which
ordinarily is higher than on larger loans, advanced from
4.29 to 4.34 percent. On the other hand, the total amount of
business loans which amounted to $100,000 or more de­
clined from September to December, and the average inter­
est rate declined from 2.76 to 2.60. There were, of course,
wide variations in interest rates on loans in each size cate­
gory, depending upon the degree of risk and other factors.



21

1 9 4 9

C .T .T .

DEPA RTM EN T S T O E E SALES*
A d ju s te d *

U n a d ju s te d

P la c e

Jan.
1 9 49

D ec.
19 48

Jan.
1 9 48

Jan.
19 49

D IST R IC T
A tla n ta .............
B a to n R o u g e .
B ir m in g h a m .
C h a tta n o o g a .
J a c k s o n .............
J a c k s o n v ille .
K n o x v ille ___
M a c o n ...............
M ia m i...............
M o n tg o m e r y .
N a s h v i l l e .. . .
N e w O r le a n s
T a m p a ...............

359
382
468
389
305
388
380
338
279
351
377
360
363
461

405
470
475
413
381
409
445
420
310
421
419
484
378
523

355
381
419
334
306
322
414
262
313
362
369
335
340
516

287
298
309
303
244
287
312
284
190
365
287
288
290
373

D ec.
19 4 8

Jan.
1 948

635

284
297
277
26 1
245
238
340

668
727
636
586
597
695
638
543
699
662
716
575
816

220

213
376
281
268
272
418

D EPARTM ENT S T O R E S T O C K S
U n a d ju s te d

A d ju s te d * *
P la c e
D IS T R IC T ............
A tla n ta .............
B ir m in g h a m .
M o n tg o m e r y .
N a s h v i l l e .. . .
N e w O r le a n s

Jan.
1 9 49

D ec.
1 9 48

Jan.
1 9 48

Jan.
1 9 49

D ec.
1 9 48

Jan.
1 9 48

360
417
344
420
555
352

381
450
285
355
572
347

345
409
314
353
534
323

324
367
297
374
452
306

320
366
249
300
486
304

31 1
359
272
314
435
281

G A S O L IN E TAX C O L L E C T IO N S ***
A d ju s te d * ’
P la c e
SIX STA T E S .
A l a b a m a ..,
F l o r i d a ___
G e o rg ia . . .
L o u i s i a n a ..
M is s is s ip p i
T en n essee.

D ec.
19 48

Jan .
1 9 48

Jan.
19 49

D ec.
19 48

Jan.
19 48

207
214

194
192
186
180

189
199
189
169
189
191

207
209
208
184
234
196
213

198
196
185
179
223
188

189
194
196
17 2
1 87
180

200

180
236
209
224

220

184
204

TO T A L ...............
A la b a m a . . .
G e o r g ia .. . .
M is s is s ip p i.
T en n essee.

Jan.
1 9 49

D ec.
19 48

Jan.
1948

134
141
134
86
111

128
140
127
92
99

166
173
169
99
139

SIX STA TES.
A la b a m a . . .
F lo rid a . . . .
G e o r g ia .. .
L o u is ia n a . .
M is s is s ip p i.
T en n essee.

D ec.
19 48

N ov.
1 9 48

D ec.
1947

149
155
146
143
152
147
151

152
158
1 42
146
154
1 4 8r
155

154
159
143
147
152
163
157

C O N S U M E R S P R IC E IN D EX
Ite m
ALL I T E M S ...
F o o d ....................
C lo t h in g . . .
F u e l, e l e c .,
a n d r e f r ig
H o m e f u r­
n is h in g s ..
M is c ................
P u r c h a s in g
p o w e r of
d o lla r . . . .

lO J in

Jan.

D ec.
19 4 8

Jan.
1948

174
208
203

175
210
204

174
219
201

139

138

137

195
153

196
153

190
149

.5 7

.5 7

220

201

N ov.
19 48

D ec.
1 9 47

366

347

315

346

26 1

252

392

461

397

D ec.
1 9 48
S IX S T A T E S ..
H y d ro ­
g e n e r a te d
F u e l­
g e n e ra te d .

C O N S T R U C T IO N C O N T R A C T S
N ov.
D ec.
D ec.
P la c e
1 9 48
1 948
1947

M A N U FA C T U R IN G
EM PLO YM EN T***
P la c e

211

E L EC TR IC P O W E R P R O D U C T IO N *

C O T T O N C O N S U M P T IO N *
P la c e

U n a d ju s te d

Jan.
19 49

.5 7

*D aily a v e r a g e b a s is
**A d ju s te d fo r s e a s o n a l v a r ia tio n
***1939 M o n th ly a v e r a g e = 1 0 0
O th e r in d e x e s , 1 9 3 5 - 3 9 = 1 0 0

D I S T R I C T ....
R e s id e n tia l.
O t h e r .............
A la b a m a . . .
F lo r id a . . . .
G e o r g ia .
L o u is ia n a . .
M is s is s ip p i.
T en n essee.

337
386
314
175
543
196
280
248
339

326
431r
274r
312
447
225
249
126
399

468
45 1
476
217
462
507
854
228
220

ANNUAL RATE O F TU R N O V ER O F
D EM AND D E P O S IT S
Jan.
D ec.
Jan.
1 9 49
1 9 48
1948
U n a d ju s te d .
2 1 .5
2 0 .0
2 0 .1
1 8 .9
A d j u s t e d * * ..
1 9 .0
1 9 .0
7 7 .1
7 6 .5
I n d e x * * ..........
7 7 .0
C R U D E PETRO LEU M P R O D U C T IO N
IN C O A STA L LO U ISIA N A
AND M IS S IS S IP P I*

U n a d j u s t e d ..
A d j u s t e d * * ...

r Revised

Jan.
19 49
299
293

D ec.
1948
302
312

Jan .
1 9 48
279
274

22

M o n t h ly

R e v ie w

o f

t h e

Industry and Employment

January was the fourth consecutive month in which construc­
tion contract awards were less than they were in the corre­
sponding month a year earlier. According to F. W. Dodge
Corporation statistics, the Sixth District total for January of
a little more than 60 million dollars was down 12 percent
from December and slightly more than 12 percent below
that of January 1948.
In view of the present high level of construction costs,
however, the actual volume of construction represented by
the January total was probably about 18 percent less than
a year ago. The January index of the American Appraisal
Company for 30 American cities indicates that construction
costs were less than one-half of one percent below the Au­
gust peak, but 6.4 percent above the January 1948 level.
The wholesale price index of the Bureau of Labor Statistics
shows a decrease of one percent since August in building
material prices, and a decline of 4.5 percent in the whole­
sale price of lumber.
Residential construction contracts accounted for 38 per­
cent of the District’s total in January; and they were 21 per­
cent less than they were a year ago when they accounted for
42 percent of the total. In January, 40 percent of the Dis­
trict’s total awards and about 61 percent of the District’s
residential contracts were let in Florida, which percentages
were larger than those in any of the other five District states.
Steel mill activity continued in January and the first half
of February at slightly above rated capacity. Coal produc­
tion, however, as indicated in weekly statements of the Bu­
reau of Mines, averaged about 3 percent less than in De­
cember and 20 percent less than a year ago. The decline in
Tennessee was proportionately much greater than in Ala­
bama, although Tennessee mining employment was 11 per­
cent greater in December than a year earlier, whereas in
Alabama it was down 5 percent.
Textile mill activity was slightly higher in January than
it was in December, but it was about 20 percent below the
January 1948 level. District textile mills used only a few
more bales of cotton in January than in December, but on a
daily average basis, the increase was 4.3 percent. Tennessee
mills used 12 percent more cotton; those in Georgia, 6 per­
cent more; Alabama mills used seven-tenths of one percent
more; and Mississippi mills used 7 percent less. The Jan­
uary increase this year is only about a fourth as large as
the gains that have occurred in that month of the past two
years, and the decrease of nearly 20 percent over January
1948 is about twice as large as the decrease shown in a cor­
responding comparison for December. Exports of cotton
cloth declined in eight of the first nine months of 1948, but
there was an increase in October. Mill margins declined in
nine of the first 11 months of 1948; and in November they
were 45 percent below the December 1947 peak.
There was a month-to-month decline in manufacturing em­
ployment in the District in December and, as in November,
it was less than it had been a year earlier. The District em­
ployment index, published in round figures, had stood at
152 percent of the 1935-1939 average for three months, Sep­
tember, October, and November. The December index was
149, and reflects a decline of about 2 percent from Novem­
ber and a decrease of about 3 percent from December 1947.
The index of 149 for December is the lowest since last April.
Only in Florida did the manufacturing employment index
show a monthly increase in December, and Florida also had



F e d e r a l

R e s e r v e

B a n k

o f

A t l a n t a

f o r

F e b r u a r y

1 9 4 9

the only increase over December 1947; the index for Louisi­
ana was the same as for December 1947; and the indexes
for the other four states were lower.
Citrus canning and related activities were largely respon­
sible for the December increase in Florida manufacturing
employment. In the food and kindred products industries,
employment increased 9.7 percent in December over the pre­
ceding month, and canning activities increased 21 percent.
Employment in the manufacture of wooden containers in­
creased 2.2 percent; and in fabricated metal products, which
includes tin cans used in canning citrus fruits and juices, em­
ployment was up more than 6 percent. Orders for ship re­
pair were responsible for a large monthly percentage gain
in the transportation equipment group in December, but em­
ployment in this group of industries was still 42 percent less
than it was a year earlier. A decrease of 9.7 percent in the
number of workers in tobacco manufacture partially reflects
the semi-annual lay-offs by cigar factories in the Tampa
area.
Alabama manufacturing employment reached the low
point for the year in December. It was 1.7 percent below
that of November, and was 2.6 percent less than in Decem­
ber 1947. There were small increases over November in the
number of workers in textiles, in machinery, and in printing
and publishing; but these gains were more than offset by
losses of 4 percent in lumber and wood products, 11.8 per­
cent in shipbuilding, 4.2 percent in fabricated metal prod­
ucts, and 6.2 percent in food. There were also decreases in
chemicals and allied products, paper and paper products,
and in rubber products. December employment in food in­
dustries was 6.9 percent less than a year ago, in lumber and
wood products it was 8 percent less than in December 1947,
and in shipbuilding establishments it was 43.2 percent less
than it was a year earlier.
Seasonal contraction in the food industry was the major
factor contributing to the decrease of 2.1 percent in manu­
facturing employment in Georgia in December. Food and
kindred products employment declined 17.1 percent, and
there were decreases in most of the other industry groups.
In lumber and wood products, however, employment in­
creased slightly; there was an increase of 3.3 percent in
transportation equipment; and employment in leather and
leather products increased 7.3 percent.
In Louisiana December increases in employment in print­
ing and publishing, in petroleum and industrial organic
chemicals, in paper and paper products, and in metals and
metal products were more than offset by decreases in food
industries, and in lumber and wood products. The latter de­
crease was attributed to reduced logging and sawmill oper­
ations because of weather conditions.
Declines in December employment in most Tennessee in­
dustries contributed to the over-all 2.2 percent loss for the
month, and employment was 3.8 percent less than in De­
cember a year ago. There were, however, gains over Novem­
ber in tobacco manufacture, in leather, and in stone, clay,
and glass plants. Compared with December 1947, there were
increases of 9.8 percent in employment in chemicals, 6.4
percent in paper, 6 percent in machinery, 12.5 percent in
professional and scientific instruments, and 30 percent in
electrical machinery. These gains were more than offset by
losses of 18.8 percent in textiles, 16.7 percent in petroleum,
11 percent in lumber, 16.8 percent in furniture, and smaller
decreases in some other industries.

M o n t h ly

R e v ie w

o f

t h e

F e d e r a l

R e s e r v e

B a n k

o f

A t l a n ta

In most areas, employment in construction work declined
but there were increases in trade, particularly in retail
stores, and in Florida the hotels and service industries ca­
tering to the winter tourist trade increased their forces. In
Georgia, Tennessee, and Louisiana, and possibly in other
areas, the December increases in employment in trade, in
government, and in some other non-manufacturing lines more
than offset the decreases in manufacturing.
d .e .m .
Sales, Outstanding O rd ers, and Inventories

In January this year, consumers throughout the District spent
less at retail stores that report their sales to this bank than
they spent in January 1948. Department store sales were down
3 percent from those for January 1948; furniture store sales
were down 21 per cent; jewelry store sales, 10 percent; and
household appliance store sales, 13 percent. On a seasonally
adjusted basis, the January index of District department store
sales was 11 percent below that of December 1948. During
the first three weeks of February, sales of weekly reporting
department stores were one percent below those of the cor­
responding period in 1948.
The sales experience of recent months has influenced de­
partment store inventory policies. November sales were down
from those of a year ago and although December 1948 sales
exceeded those of December 1947 by 3 percent, Sixth Dis­
trict department stores found their year-end inventories 14
percent greater than at the end of 1947.
A decline in forward commitments reflected these condi­
tions. The value of orders outstanding at leading department
stores in the District at the end of 1948 was 47 percent less
than at the end of 1947. January sales reduced inventories
so that they were only 6 percent greater than they were at
the end of January 1948. Outstanding orders at the end of
January, however, were still 28 percent below those of a
year ago. As a group, the department stores received 16 per­
cent less merchandise this January than they did in January
last year.
Furniture stores, whose sales declines were evident before
those of the department stores were, began to reduce their
inventories earlier. At the end of October last year, inventories
were 16 percent greater than on the corresponding date in
1947, and sales were down 20 percent for the same period. In­
ventories at the end of November had been reduced to a fig­
ure only 8 percent greater than 12 months earlier, and at the
end of December inventories were smaller than they were on
the corresponding date of the previous year for the first time
since January 1948. January 1949 inventories were down 8
percent.
Sales cannot be made out of inventories indefinitely, of
course, but during a period of readjustment in sales trends,
the existence of substantial inventories may mean a greater
reduction in demands by the retailers upon their suppliers
than the reduction in demand by the customers upon the re­
tailers. It is even possible that a reduction in demand of re­
tailers may occur even when sales trends level off rather than
decline. A prolonged policy of inventory reduction is in­
evitably reflected by declining employment and income in
the industries affected. Fortunately, a number of retailers
have exhibited cautious inventory policies even during the
period of rapidly expanding sales and any necessary read­
justments may, consequently, be minimized. Moreover, a re­
vival in sales trends may halt inventory liquidation just as
it has at other periods since the close of the war.



C .T .T .

f o r

F e b r u a r y

23

1 9 4 9

S ix t h D is tr ic t S ta tistic s
C O N D IT IO N O F 2 8 M EM BER BA NK S IN L E A D IN G C IT IE S
(I n T h o u s a n d s of D o lla r s )
F eb . 23
19 4 9

Ite m

L o a n s a n d in v e s tm e n ts —
T o ta l..........................
2 ,2 8 9 ,5 0 7
L o a n s — N e t .............
8 4 1 ,5 3 6
L o an s— G r o s s . . . .
8 5 0 ,8 9 1
C o m m e rc ia l, in d u s tr i a l,
a n d a g r i c u lt u r a l l o a n s .
5 4 1 ,1 9 6
L o a n s to b r o k e r s a n d
d e a le r s in s e c u r i t i e s . . .
5 ,0 4 4
O th e r lo a n s fo r p u r ­
c h a sin g a n d c a rry in g
s e c u r i tie s . . . .
4 7 ,9 8 3
n e a l e s ta te l o a n s ..................
6 5 ,5 2 7
L o a n s to b a n k s
4 ,5 8 3
O th e r l o a n s , , ,
1 8 6 ,5 5 8
I n v e s tm e n ts —t o t a l ..................... 1 ,4 4 7 ,9 7 1
B ills, c e rtif ic a te s a n d
n o t e s ....................
3 8 3 ,6 9 6
U. S. b o n d s. . , ,
8 8 1 ,2 3 1
O th e r s e c u r i tie s
1 8 3 ,0 4 4
R e s e r v e w ith F . R . B a n k . . .
5 1 2 ,6 9 2
C a s h in v a u l t ...........
4 5 ,7 6 3
B a la n c e s w ith d o m e s tic
b a n k s ..................
1 7 0 ,9 3 4
D e m a n d d e p o s its a d j u s t e d . 1 ,7 6 4 ,7 5 4
lim e d e p o s it s ,
5 2 6 ,8 9 8
U . S. G o v t d e p o s i t s ...............
4 9 ,1 1 6
D e p o s its of d o m e s tic b a n k s
4 9 5 ,7 0 6
B o r r o w in g s ...............
5 ,0 0 0

P e rc e n t C h an g e
F e b . 2 3 ,1 9 4 9 , iro m

Jan. 26
1 9 49

F e b . 25
1948

2 ,2 8 9 ,2 2 6
8 5 1 ,3 0 7
8 6 0 ,1 4 1

2 ,3 4 1 ,9 5 6
8 3 3 ,9 4 1

5 4 1 ,9 0 3

5 1 9 ,5 6 9

—

5 ,2 0 2

8 ,6 9 5

—

5 0 ,8 3 3
6 5 ,4 3 0
4 ,5 6 1
1 9 2 ,2 1 2
1 ,4 3 7 ,9 1 9

5 8 ,6 8 4
7 0 ,8 8 8
4 ,5 1 6
1 7 1 ,5 8 9
1 ,5 0 8 ,0 1 5

—
+
+
—
+

6
o
o
3
1

— 18
_
8
+
1
+
9
— 4

3 9 2 ,4 3 1
8 6 2 ,7 5 2
1 8 2 ,7 3 6
4 9 9 ,5 6 0
4 3 ,6 2 6

3 7 6 ,0 6 7
9 4 8 ,6 2 9
1 8 3 ,3 1 9
4 5 1 ,6 5 0
4 4 ,4 2 5

—
+
+
+
+

2
2
0
3
5

+
2
— 7
— 0
+ 14
+
3

1 7 9 ,8 2 8
1 ,7 5 6 ,6 2 5
5 3 1 ,1 5 9
3 1 ,8 8 2
5 1 6 ,8 9 7

1 7 5 ,7 4 2
1 ,7 6 0 ,4 8 2
5 4 6 ,5 4 4
2 6 ,6 4 6
4 9 2 ,4 0 8
1 6 ,5 0 0

— 5
+
o
— 1
+ 54
— 4

— 3
+
o
— 4
+ 84
+
1
— 70

Jan. 26
1949

F eb . 25
1948
—
+

2
1

0

+

4

3

— 42

+
0
—* 1
—. 1

D EB ITS T O IN D IV ID U A L BANK A C C O U N T S
(I n T h o u s a n d s o i D o lla r s )

P la c e

ALABAM A
A n n is to n ...............
B ir m in g h a m .. .
D o th a n ..................
G a d s d e n .............

N o. oi
B anks
R e p o r t­
in g

Jan u ary
1 9 49

D ecem ber
1948

T
joa un unaa*r vj
1948

P e rc e n t C h a n g e
J a n . 1 9 4 9 iro m
D ec.
1 9 48

Jan.
1948

3
6
2
3
4
3

2 3 ,8 4 0
3 3 4 ,1 5 9
1 4 ,6 3 3
1 9 ,8 2 1
1 3 6 ,6 3 8
7 6 ,8 7 6

2 5 ,2 4 3
3 7 4 ,1 2 7
1 4 ,9 3 9
2 0 ,7 8 4
1 5 3 ,0 1 2
8 3 ,5 8 4

2 1 ,4 1 1
3 4 0 ,1 4 8
1 3 ,8 1 2
1 7 ,5 8 7
1 4 5 ,6 0 7
7 9 ,4 6 3

— 6
— 11
— 2
— 5
— 11
— 8

+ 11
— 2
+
6
+ 13
— 6
— 3

4
7
13
3
3
3
6

2 7 0 ,5 6 2
2 6 8 ,9 6 3
3 9 0 ,8 5 2
5 4 ,8 8 7
3 4 ,3 1 6
6 2 ,5 8 5
1 2 7 ,5 6 4

2 9 3 ,7 2 6
2 8 1 ,6 1 8
3 9 7 ,8 0 7 r
5 7 ,0 0 7
3 7 ,9 6 0
5 9 ,5 2 7
1 3 7 ,6 8 7

2 7 7 ,5 9 9
2 7 3 ,5 3 4
3 9 0 ,9 2 8
5 4 ,1 1 2
3 4 ,2 0 9
5 8 ,9 4 6
1 3 7 ,2 0 0

— 8
— 4
— 2
— 4
— 10
4- 5
7

—
—
—
+
i+
:+
—

N e w n a n ................
R o m e * .....................
S a v a n n a h .............
V a l d o s t a ................

3
4
3
2
4
2
3
2
3
2
3
4
2

2 7 ,6 6 3
7 9 0 ,2 8 6
6 1 ,4 1 0
8 ,8 1 9
4 9 ,8 6 1
3 ,7 4 2
1 3 ,2 3 2
1 1 ,8 5 0
5 8 ,0 4 3
9 ,6 6 2
2 0 ,5 0 2
8 9 ,7 0 3
1 1 ,9 1 1

2 4 ,1 6 3
9 7 6 ,0 3 4
6 1 ,0 9 9
1 0 ,2 7 3
5 9 ,7 0 6
4 ,3 4 4
1 4 ,9 9 5
1 2 ,1 9 5
6 6 ,3 9 6
9 ,7 2 6
2 4 ,0 7 3
1 0 0 ,0 0 1
1 3 ,4 0 6

2 4 ,0 2 0
7 7 9 ,5 1 7
6 1 ,1 5 4
8 ,7 9 9
5 9 ,7 0 4
3 ,8 8 7
1 5 ,1 7 5
1 1 ,8 5 1
6 1 ,1 8 4
9 ,5 8 4
2 1 ,9 4 4
9 6 ,5 0 4
1 1 ,9 7 1

i+
—
+
—
—
—
—
—
—
—
—
—
—

14
19
0
14
16
14
12
3
13
1
15
10
11

+ 15
+
1
1+ o
+
0
— 16
— 4
— 13
— 0
— 5
+
1
— 7
— 7
— 1

L O U ISIA N A
A le x a n d r i a * . . .
B a to n R o u g e . . .
L ake C h a rle s ..
N e w O r l e a n s . ..

3
3
3
8

3 0 ,8 8 1
1 0 9 ,5 3 0
3 7 ,4 3 0
6 7 5 ,6 3 3

3 4 ,0 7 1
1 1 2 ,6 5 2
3 8 ,9 1 0
7 7 4 ,3 9 9

3 0 ,7 2 0
8 5 ,1 9 7
3 1 ,7 0 7
6 4 7 ,7 9 7

— 9
3
— 4
— 13

+
1
+ 29
■f 18
+
4

M IS S IS S IP P I
H a t t i e s b u r g ___
J a c k s o n ..................
M e r id ia n ............. ..
V ic k s b u r g ..........

2
4
3
2

1 6 ,2 8 1
1 6 5 ,5 1 6
2 7 ,0 4 3
2 6 ,3 8 8

1 7 ,4 1 9
1 3 3 ,7 8 9
2 7 ,3 7 1
3 0 ,4 9 8

1 6 ,4 5 0
1 5 2 ,7 7 4
2 8 ,0 2 2
2 4 ,2 2 7

— 7
+ 24
— 1
— 13

—
+
—
+

1
8
3
9

T E N N ESSEE
C h a t t a n o o g a .. .
K n o x v ille .............
N a s h v ill e .............

3
4
6

1 6 0 ,8 6 0
1 2 0 ,9 0 0
2 9 3 ,1 9 4

1 6 0 ,3 3 5
1 4 8 ,4 4 2
3 2 6 ,5 5 4

1 7 1 ,1 4 9 +
o
1 2 7 ,5 2 1 — 19
3 0 1 ,6 0 9 - 10

—
—
—

6
5
3

SIXTH D IST R IC T
3 2 C i t i e s ...............

115

4 ,1 6 8 ,7 1 9

4 ,6 3 4 ,7 3 1

10

+

3

1 0 5 ,1 9 3 ,0 0 0 — 14

4-

0

M o n tg o m e r y .. .
F L O R ID A
J a c k s o n v ille ___
M ia m i.....................
G r e a te r M iam i*
O r l a n d o ................
P e n s a c o l a ..........
S t. P e te r s b u r g .
G E O R G IA
A lb a n y ..................
A tla n ta ..................
A u g u s t a ................
B r u n s w ic k ..........
C o lu m b u s ...........
E l b e r to n ................
G a in e s v i lle * . . .
G riffin * ..................

U N ITED STA TES
333 C itie s . . . . . .

1 0 5 ,2 0 4 ,0 0 0 1 2 2 ,2 7 7 ,0 0 0

* N o t in c lu d e d in S ix th D is tric t to ta l

4 ,1 5 6 ,4 0 5

-

3
2
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6
7

24

M o n t h ly

R e v ie w

N a tio n a l

o f

t h e

F e d e r a l

B u s in e s s

R e s e r v e

B a n k

o f

A t l a n t a

f o r

F e b r u a r y

1 9 4 9

C o n d itio n s

production showed little change in January, con­
Construction
tinuing somewhat below the peak of last October and
November. Employment in manufacturing showed a marked Value of construction contract awards, according to reports
decline. The value of department store sales showed a larger of the F. W. Dodge Corporation* dropped sharply in January,
decline than usual in January and the first three weeks of with marked declines in most classes of construction. The
February. Prices of agricultural commodities decreased fur­ number of new dwelling units started in January, as estimated
ther but recovered part of their declines in mid-February. by the Bureau of Labor Statistics, was 50,000 units as com­
Prices of some industrial products were reduced further.
pared with 56,000 in December and 53,000 in January 1948.
N D U S T R IA L

I

Industrial Production

Distribution

The Board’s seasonally adjusted index of industrial produc­
tion was 191 percent of the 1935-39 average in January, as
compared with 192 in December, 195 in November, and 193
in January 1948. Activity in durable manufacturing industries
decreased slightly in January, while nondurable goods pro­
duction was somewhat above the December rate. Output of
minerals declined 3 percent.
Steel production rose 2 percent in January to capacity
levels and was at the highest rate on record. Activity in the
automobile industry also expanded, reflecting mainly in­
creased production of trucks and of parts for new model
passenger cars. Output in the steel and automobile industries
has been maintained at the advanced January rate in February.
Activity in machinery industries decreased about 4 percent in
January, reflecting reductions in industrial equipment as well
as household appliance lines. Lumber production showed a
substantial decline, in part because of unfavorable weather
conditions in the northwest, and activity in the furniture in­
dustry declined 6 percent. Output of most other durable goods
was maintained at about the December level.
According to preliminary indications, output of nondurable
goods showed a slight increase in January. Activity at cotton
textile, paper, and paperboard mills was above the reduced
December rate. Newsprint consumption showed less than the
usual seasonal decline. Activity in the petroleum refining,
chemicals, and rubber products industries, on the other hand,
was reduced somewhat. Output of manufactured food products
showed the usual large seasonal decline.
Crude petroleum production declined 3^ percent in Jan­
uary and was curtailed further in the early part of February,
as stocks of crude and refined products continued to rise.
Anthracite production was curtailed sharply in the latter part
of January and early February, mainly because of unusually
mild winter weather in the east. Output of bituminous coal
and of metals was maintained in January at the reduced level
of the preceding month.

Value of merchandise sold at department stores, despite a
large number of special sales, showed more than the usual
seasonal decline in January. The Board’s adjusted index was
290 percent of the 1935-39 average, as compared with 309 in
December and 286 in January 1948. Sales during the first
three weeks of February were 4 percent smaller than in the
corresponding period last year.
Carloadings of railroad freight generally declined further
in January and the early part of February and were about 10
percent below a year ago. Declines in rail freight from the
levels of a year ago have resulted in part from diversion of
shipments to other forms of transportation.

Employment

Employment in nonagricultural establishments showed more
than the usual large seasonal decline in January and was
250,000 less than in January 1948, reflecting mainly reduced
employment in most manufacturing industries. The number
of persons unemployed increased by 700,000 in January and
was substantially above the level of a year ago.




Commodity Prices

Following marked declines in January, prices of farm prod­
ucts and foods dropped further in the early part of February
but in mid-February returned to the levels prevailing at the
beginning of the month. Prices of some industrial commodi­
ties including scrap metals, alcohol, and rayon and petroleum
products, were reduced further in February, while prices of
most other industrial items continued to show little change.
Retail food prices continued to decline from mid-January
to mid-February, reflecting mainly further sharp decreases in
meat prices. In the latter part of February wholesale prices of
meats showed some advance from the earlier low points which
were one-fourth below the record levels prevailing last sum­
mer.
Bank Credit

Seasonally large Treasury tax receipts increased Treasury
deposits at the Reserve banks in the latter part of January
and the first half of February. This reduced deposits and
reserves of commercial banks, and banks sold short-term
Government securities and drew down their excess reserves.
Reserve Bank holdings of Government securities increased as
purchases of short-term securities exceeded further sales of
bonds.
Business loans at banks in leading cities declined somewhat
during the last half of January and the first half of February.
Holdings of Government securities were reduced, reflecting
sales of short-term securities. Banks outside New York City
increased considerably their portfolios of Treasury bonds.
T h e B oard

of

Governors