Full text of Economic Review (Federal Reserve Bank of Atlanta) : February 28, 1950, Volume 35, Number 2

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M o n t h l yA
FEDERAL RESERVE
V o lu m e X X X V

evieR
w
BANK

A tlan ta, G eorgia, F ebruary 28, 1 9 5 0

OF

ATLANTA
N um ber 2

Frozen Concentrates in the Florida Citrus Industry
f t e r o n ly three years o f com m ercial p rod u ction , frozen
.citru s concentrate has b ecom e th e m ost sen sa tio n a l d ev el­
op m en t in fo o d p rocessin g . It is p ro v id in g con su m ers w ith a
new and u sefu l product and p ro m ises fa r-reach in g ch an ges in
the F lo rid a citrus industry. L ike m ost new p rod u cts, it is not
the resu lt o f a p articular event or circum stan ce, but is an
outgrow th o f forces outsid e as w e ll as w ith in the citru s in d u s­
try. T h is product, w h ich m akes it p o ssib le fo r the h o u sew ife
to prepare, in a m atter o f secon d s, on e and a h a lf p in ts or
m ore o f citrus ju ice com p arab le to fresh ju ice, is p art o f a
nation al ten dency tow ard m ore co n v en ien ces in day-to-day
liv in g .
L ast year U n ited States consum ers sp en t 3 5 .5 b illio n d o l­
lars fo r farm fo o d products, o f w h ich n ea rly 18 b illio n w as
fo r m arketin g charges. T hat the p ro p o rtio n is so large is
m a in ly attrib utab le to the a p p a ren tly in sa tia b le dem and by
con sum ers fo r the m ore ela b o ra tely p rocessed and packaged
fo o d products and fo r ou t-of-season fo o d . F ood s that used to
be a ccessib le o n ly in certain season s are n ow a v a ila b le the
year around b ecause o f the d evelop m en t o f p rod u ction in
w arm er areas and advancem ents in refrig era tio n and tran s­
p ortation . A s the p o p u la tio n h as becom e m ore urbanized, less
fo o d p rocessin g and prep aration is b ein g d one in the hom e.
O ne o f the m ost strikin g e x a m p les o f th is trend tow ard less
fo o d p rocessin g in the hom e is the grow th o f the can n in g
in d u stry. R ecent d evelop m en t o f su ccessfu l co m m ercial p ro c­
esses fo r frozen fo o d s has g iven furth er im p etu s to the tran s­
fer o f fo o d p rocessin g from the h om e to the factory.

A

T h ese changes h ave a lso had a m arked im p act u p on the
citrus industry, p articu la rly d u rin g the p ast fifteen years.
B efo re the 1934-35 season, n ot m ore than 10 p ercen t o f the
citru s crop w as ever processed . S in ce then the p ro p o rtio n o f
th e total crop so ld in p rocessed form h as in creased stea d ily
u n til in the 1947-48 season 4 2 percent o f the cou n try’s citrus
crop w as so ld in cans.
T ech n o lo g ica l im provem ents in other fo o d p ro cessin g in ­
du stries have stim ulated the p ro cessin g o f citrus. F la sh p a s­
teu rization, fo r exam p le, p rovid es the rap id d estruction o f
bacteria that is required to p rod u ce a h ig h -q u a lity canned
citru s ju ice. H igh-vacuum concen tration , a p ro cess w id e ly
u sed in other industries, has becom e a v ita l part o f the citrus
p ro cessin g industry.
P ro cessin g has expanded so m uch m ore r a p id ly in F lo rid a
than in the oth er citrus p rod u cin g reg io n s that to d ay that
state d om in ates the p rocessin g field . T h is e x p a n sio n is p a rtly
attribu table to the rap id in crease in p rod u ction . W hen p r o c ­
essin g first began, it w as o n ly a m eans o f u sin g fru it that



co u ld n ot b e so ld at a profit on the fresh m arket or that w as
o f u n su ita b le q u a lity fo r that m arket. A s p rod u ction in ­
creased and it becam e m ore d ifficult to se ll a ll o f an u n u su a lly
la rg e citrus crop as fresh fru it, p ro cessin g becam e a fa ir ly
effective m eans o f rem ovin g ex cess su p p lies from the fresh
m arket and th ereb y o f sta b iliz in g p rices. S in ce p roduction
has com e to exceed the average an n u al requirem ents o f the
fresh m arket, how ever, p ro cessin g h as becom e one o f the
p rim ary m arkets, but the p rice o f fru it has tended to fluctu­
ate w id e ly . T he m ere ex isten ce o f a la rg e p ro cessin g industry
w as n o gu aran tee a g ain st w id e ly fluctuating p rices.
E a rly in the postw ar p eriod it becam e ap p arent that, if
effective p rice sta b iliza tio n w as to b e ach ieved , the F lorid a
citrus in d u stry m ust eith er find a new o u tlet fo r citrus or
undertake to con trol the su p p ly en terin g both the p ro cessin g
and the fresh m arket. It w as under these circum stances that
the frozen concentrate in d u stry d ev elo p ed and it, th erefore,
has p o ssib ilitie s o f b ecom in g m ore than a m ere ad d ition to
the presen t p ro cessin g in d u stry. It m ay p ro v id e an o p p o r­
tu n ity, a lo n g w ith som e other m easures, fo r citrus grow in g to
b ecom e m ore p rofitab le.
P r o c e s s i n g o f S i n g l e - S t r e n g t h J u ic e s
T h e p o ten tia lities o f the frozen concentrate in d u stry can best
be realized b y co n sid erin g som e o f the reason s fo r the fa ilu re
o f the sin gle-stren gth ju ice in d u stry to p rovid e a p rofitab le
m arket fo r the grow er. From 1931 to 1947, F lo rid a orange
p rod u ction in creased fro m 12 m illio n b oxes to 58 m illio n .
In 1931-32 v ir tu a lly a ll oran ges w ere so ld fresh , but in the
1 9 4 7 -4 8 season over h a lf w ere so ld in p rocessed form . G rape­
fru it p rod u ction in creased from 12 m illio n b o x es in 1932-33
to 2 9 m illio n in 1 9 4 7-48 w ith e ssen tia lly a ll o f the increase
g o in g in to the p ro cessin g m arket. In order to m arket this
stea d ily in crea sin g v o lu m e o f p rocessed citrus at p rices p rofit­
a b le to the grow er, the sin gle-stren gth ju ice in d u stry needed
to u se m odern m erch an d isin g m ethods, in clu d in g effective
a d v ertisin g and sa le s p rom otion , and to p rod u ce a u n ifo r m ly
h ig h -q u a lity ju ic e that co u ld b e so ld at fa ir ly sta b le p rices.
T hat th ese requirem ents w ere not fu lly m et is p ro b a b ly
m ore b ecau se o f the b u sin ess structure o f the sin gle-stren gth
ju ice in d u stry rather than the lack o f effort up on the part o f
in d iv id u a ls w ith in the industry. Com pared to m ost fo o d
p ro cessin g op eration s, sm a ll am ounts o f cap ital are req uired
fo r p ack in g sin gle-stren gth ju ice. A s a result, m any firm s and
in d iv id u a ls entered th e field and excess p rod u ctive ca p a city
w as soon created. In the stru g g le to earn a profit, som e firm s
packed ju ice o f such p o o r q u a lity that it hin d ered an ex p a n ­

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sio n o f the m arket. In a recent su rvey, w h o le sa le distrib u tors
p la ced im p roved q u a lity at th e top o f the list o f m easures
that w ou ld exp an d the m arket fo r p rocessed citrus.
V io len t p rice fluctuation s h ave been ch aracteristic o f the
p rocessed citrus m arket. In d ep en d en t p ro cesso rs, in attem pt­
in g to su stain th eir in d iv id u a l p la n t vo lu m e, o ften p a id
h ig h er p rices fo r fru it than seem ed ju stifia b le in th e lig h t o f
p rob ab le futu re m arket c o n d itio n s. T h e resu lt w as an a c­
cu m u lation o f ju ic e in ven to ries and a la rg e carry-over in to
the su cceed in g season . In O ctober o f 1 9 4 7 , fo r ex a m p le,
about 10 m illio n cases o f F lo rid a citrus p rod u cts w ere le ft
over from the p reviou s season . In order to m ove th ese in v en ­
tories, la rg e p rice red u ction s w ere n ecessary. T h is erratic
p rice structure m akes w h o lesa lers relu ctan t to carry sufficient
stocks to su p p ly th e m arket at a ll tim es. R ap id rises in reta il
p rices a lso cause consum ers to turn to other p rod u cts. L arge
redu ctions in retail p rices are then n ecessary to reg a in th ese
custom ers.
C oop eratively-ow ned and grow er-ow ned p r o cessin g com ­
p a n ies look ed u p o n the p rocessed m arket p rim a rily as a
m eans o f s e llin g their fru it and n ot fro m the stan d p oin t o f
ea rn in g returns u p on the in vestm en t in p la n t fa c ilitie s . F ru it
that co u ld n ot b e so ld at a p rofit in the fresh m arket w as
u su a lly canned regard less o f th e o u tlo o k fo r the p rice o f
p rocessed citrus. A s a resu lt th e q u an tity p rocessed d ep en d ed
a lm ost en tirely on the size o f th e crop and o n th e am ount
required fo r the fresh m arket.
E ffective sa les p rom otion and a d v ertisin g h a v e b een diffi­
cu lt in th e sin gle-stren gth ju ic e in d u stry. T he F lo rid a C itrus
C om m ission u ses the p roceed s fro m a ta x on each b o x o f
citrus to cond uct nation -w id e a d v ertisin g and sa le s p ro m o ­
tio n p rogram s fo r fresh as w e ll as p rocessed fru it. T h ese
p rogram s have b een h an d icap p ed , how ever, b y the p resen ce
o f lo w -q u a lity ju ices on th e m arket, b y m ajor ch an ges in
retail prices o f canned citru s, and b y fa ilu r e to keep ad equate
q u antities a v a ila b le to con su m ers at a ll tim es. M ost p ro c­
essors are too sm a ll to m ain tain th eir ow n sa les orga n iza tio n s
and m ust, th erefore, dep en d u p o n reg u la r fo o d d istrib u tors
and h an d lers to s e ll their p rod u ct. In 1 9 4 7 , fo r ex a m p le,
about h a lf o f the canned citrus ju ice w as so ld under b u y ers’
la b els.
D u rin g th e w ar th e w eak n esses in the p r o cessin g in d u stry
w ere m ore than offset b y the u n u su al dem and fo r citru s fru it
created b y sh ortages o f co m p etin g fru its and b y G overnm ent
p u rchases. F or the 1 9 4 5 -4 6 season , F lo rid a g row ers received
a p rice eq u iv a len t to $ 2 .3 6 a b o x on the tree fo r the oran ges
u sed b y p rocessors. T h e p rice d rop p ed to 4 5 cents in the
1 9 46-47 season and in creased to o n ly 51 cents d u rin g the
19 47-48 season . O n-the-tree p rices fo r g ra p efru it u sed fo r
p rocessin g averaged o n ly 13 cents a b o x in the 1 9 4 7 -4 8 sea ­
son. T h ese p rices are not h ig h en o u g h to cover p rod u ction
costs fo r m ost groves. T h e F lo rid a A g ricu ltu ra l E x ten sio n
S ervice condu cted a stud y o f costs and returns on 2 5 2 g roves
fo r a seventeen-year p eriod and the 1 9 4 7 -4 8 season w as fo u n d
to be the first in w hich average costs exceed ed returns on a ll
ty p es o f groves stu d ied . In that sea so n tw o-thirds o f the
groves fa ile d to p a y op era tin g costs.
T h e d issa tisfa ctio n o f grow ers w ith p ostw ar p rices fo r
p rocessed as w e ll as fo r fresh fru it led to the o rgan ization
o f the F lo rid a C itrus M utual, a grow ers’ co o p era tiv e m arket­
in g organ ization , w hose m em bers grow p r a c tic a lly a ll com ­
m ercia l citrus. O ne o f M u tu al’s first step s d u rin g the current
season w as to estab lish m in im u m p rices at w h ich its m em bers



w ere perm itted to s e ll fr u it to p ro cesso rs. T h at p rices p aid
b y p rocessors h ave stayed a b ove th e m in im u m esta b lish ed by
M utual is p a rtly b ecau se o f the effect o f th e fro zen con cen ­
trate in d u stry u p o n the dem and fo r citru s.
H isto r y o f t h e P r o c e s s
A lth o u g h sin g le-stren g th citrus ju ic es h a v e lo n g b een a w id ely
a ccep ta b le fo o d p rod u ct, th ey h ave so m e d isa d v a n ta g es w h ich
h ave been under con stan t stu d y b y p erso n s w ith in the in ­
dustry and b y F ed eral and state research a g en cies. T h e frozen
concentrate p ro cess is p a rtly the resu lt o f efforts to overcom e
these d isad van tages.
C itrus ju ic e th at is preserved b y th e o rd in a ry can n in g
p ro cess m ust b e p asteu rized to p reven t the grow th o f un d e­
sira b le bacteria. T h e heat used in th e p asteu rization process
cau ses canned ju ic e to h ave a flavor c h a ra cteristica lly d iffer­
ent from fresh ju ice. T h e sam e th in g is true, to a greater or
lesser d egree, fo r n e a r ly a ll can n ed fru its an d v egetab les,
but it a p p a ren tly h a s had a m ore ad verse effect u p on con ­
sum er accep tan ce o f citru s ju ic es th an it h a s h ad u p o n other
canned ju ices.
A n oth er d isa d v a n ta g e is th e ch a n g e in flavor and ap p ear­
an ce that o ccu rs w h en citru s, p reserved b y th e c o n ven tion al
ca n n in g p rocess, is stored to o lo n g or at h ig h tem peratures.
E ven th o u g h p a steu riza tio n k ills n e a r ly a ll o f th e bacteria,
c o lo r and flavor ch an ges co n tin u e b ecau se o f the action o f
en zym es n a tu r a lly p resen t in the fru it. I f canned ju ice is h eld
lo n g er than a year, the ch a n g es in flavor and c o lo r are o ften
so p ron ou n ced as to affect con su m er a ccep tan ce. In recent
y ears, w h en la rg e carry-overs o f ju ic e w ere com m on , th is
ch aracteristic u n d o u b ted ly w as th e cau se o f m a n y o f the
co m p la in ts ab ou t p o o r-q u a lity ju ice.
S in g le-stren g th ju ice a lso la ck s u n ifo r m ity o f c o lo r and
taste. T h is is the resu lt o f u sin g d ifferen t v a rieties or o f
d ifferen ces in q u a lity w ith in a v a riety a risin g fro m degree
o f m aturity, lo ca tio n o f the grove, or the w eather. S om e o f
th ese d ifferen ces a p p ea r in the can n ed p rod u ct d esp ite the
m ost c a refu l p ro cessin g and sk illfu l b le n d in g . O ne im portant
v a ria b le is the so lid s con ten t. T h is m a y va ry fro m 7 to 15
p ercen t in the case o f o ra n g e ju ice. A n oth er is th e ratio o f
n atu ral fru it su gar con ten t to acid . M arked d ep artu res from
th e average fo r eith er o f th ese m easu res m a y cau se the ju ice
to taste w atery, sour, or in sip id .
Q uick freezin g o f sin g le-stren g th ju ic e and fr u it w as one
o f th e first m eth od s u sed in an attem p t to o v erco m e th ese d is­
ad van tages. F or sev era l y ea rs b efo re th e w ar sm a ll quantities
o f th is p rod u ct w ere m ad e in C a lifo r n ia . H ow ever, it w as
n ever en tire ly sa tisfa cto ry fro m a co m m ercia l stand point.
A cco rd in g to som e sou rces, the first test run o f frozen con ­
centrate w as m ade in O rlan d o, F lo rid a , b y M arvin S. K n igh t
and h is a sso cia tes in 1 9 4 4 . T h eir m eth od , w h ich in volved
freezin g th e ju ic e and ex tra ctin g th e w ater b y cen trifu gal
fo rce, produced an ex c e lle n t p rod u ct, but w as n ot p ractical as
a com m ercial p rocess. W orkers at the U n iv e rsity o f F lorid a
a lso p rod u ced an e x c e lle n t con cen trate b y th is p rocess, but
th e batch m ethod o f o p era tio n w as n o t e co n o m ica l en ough
fo r com m ercial ad a p ta tio n .
In the sam e y ea r, K n ig h t jo in e d fo r c e s w ith C lyd e D .
M id d leto n and th ey b egan ex p erim en tin g w ith th e highvacuum p ro cess that is u sed to d a y . T h ey p ersu ad ed B. C.
S kinner, P resid en t o f C itrus C oncentrate, to try th eir process
at D u n ed in in the f a ll o f 1 9 4 4 . In Jan u ary 1 9 4 5 th e first com ­
m ercial run o f fro zen con cen trate w as m ad e b y the high-

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1 5

vacuum p rocess. F ire destroyed S k in n er’s p la n t in A ugust
and he did not b egin o p eration s ag a in u n til the sp rin g o f
1948. Snow Crop M arketers, In corp orated , b ou gh t a co n ­
tr o llin g interest in Juice Industries, In corp orated , in O ctober
1948 and is now u sin g the D u n ed in p la n t to p roduce Snow
Crop concentrate.
A lth ou gh frozen concentrate w as first m ade co m m ercia lly
at Dunedin,, volu m e p rod u ction w as first undertaken at P ly ­
m outh by the V acuum F ood s C orporation. T h e N a tio n a l
R esearch C orporation o f M assachusetts organ ized V acuum
F ood s to ex p lo it in the citrus field the h igh-vacuum d eh yd ra­
tion processes. T hese p rocesses w ere o r ig in a lly d ev elo p ed by
N a tio n a l R esearch to m ake p e n ic illin in large q u an tities. The
fa c ilitie s at P lym ou th w ere b u ilt to m ake p ow dered orange
ju ice under a 1945 contract w ith the U n ited States A rm y.
W hen the w ar ended, th is contract w as can celed and the p la n t
w as converted to frozen concentrate p rod u ction in A p ril 1946.
V acuum F oods, w ith its M inute M aid brand o f frozen orange
juice, w as soon lead in g the field in the p rod u ction o f co n ­
centrate.
A third p ion eer w ith frozen concentrate has been the
C itrus C anners C ooperative at Lake W a les. T h e p la n t b egan
p rod uction in F ebruary 1 948 and the cap acity has sin ce been
exp an d ed to take care o f the increased dem and fo r its p ro d ­
uct w h ich is m arketed b y G eneral F ood s C orporation under
its B irds E ye la b el.
R ecen tly P asco P ack in g C om pany at D ad e C ity has en ­
tered the frozen concentrate field on a large sca le. T h is com ­
pan y, w hich in 1948-49 p rocessed 23 p ercen t o f a ll the citrus
processed in F lorid a, has, accord in g to som e reports, about
one-fourth o f the frozen concentrate p la n t cap acity.
T he F lo rid a Citrus C om m ission, th rou gh its R esearch D i­
v isio n , has a lso p la y ed an im p ortan t part in d ev elo p in g the
frozen citrus industry. Its m ain co n trib u tion w as the p er fe c ­
tion o f a techn ique fo r stan d ard izin g the concentrate w ith
fresh ju ice. T he techniq u e is covered b y p u b lic service patents
and is a v a ila b le to an yon e w ho w ish es to u se it.

tio n in order to p roduce h ig h -q u a lity ju ice. T he standardiza­
tion b y m eans o f fresh ju ice adds natural arom a to the p rod ­
uct and rep la ces part o f the p u lp that is rem oved in the ju ic ­
in g p rocess. I f kept at sub-zero tem perature, ju ice p rocessed
in th is m anner can be stored in d efin itely w ith no deteriora­
tion in q u a lity .
T he p rocess y ie ld s a product that is m ore u n iform than
either sin gle-stren gth or fresh ju ice. V a riation s in the so lid s
content o f fresh fru it can be co m p letely co n tro lled w ith the
frozen concentrate p rocess. B y p roper b len d in g , m ost o f the
natural v ariation in the sugar-acid ratio can a lso be co n ­
tro lled . One p ro m isin g d evelop m en t in th is con n ection is the
b len d in g o f concentrate from oran ges processed late in the
season w ith oran ges p rocessed early in the su cceeding season.
U su a lly the ratio o f sugar to acid increases as the season
advances. Frozen V a len cia orange concentrate m ade at the
end o f one season, fo r exam p le, can be h eld over and m ixed
w ith concentrates m ade from ea rly and m id-season oranges
to standardize the product.
Frozen concentrates also have an advantage in that they
are less b u lk y than either fresh fru it or sin gle-strength ju ices.
On an average, a 90-p ou n d b ox o f citrus fru it y ie ld s about
40 p ou n d s o f sin gle-stren gth ju ice or about 10 pou nds o f
frozen concentrate. In m ost areas w here frozen concentrate is
sold , the cost o f tran sp ortin g fresh fru it is greater than the
com bined cost o f p rocessin g and tran sp ortin g an eq u ivalen t
am ount o f frozen concentrate.
Consum er accep tan ce o f the product is best show n by the
rapid in crease in sales, but resu lts o f co n tro lled experim ents
in d icate that the frozen product is com p arab le w ith fresh
ju ice. In one such test, conducted b y the M assachusetts In ­
stitute o f T ech n o lo g y , the p referen ces o f fifty p e o p le for
canned, frozen , or fresh early-season F lo rid a V a len cia orange
ju ice w ere determ ined. From these tests the in vestigators co n ­
clu d ed that h ig h -q u a lity canned ju ice w as less p referab le than
either fresh or frozen ju ice. T here w as no sign ifican t d iffer­
en ce in p referen ces fo r fresh ju ice or frozen ju ice.

The P rocess

E c o n o m ic O r g a n i z a t i o n

E xcep t for m inor variation s from p la n t to p lan t, the m an u ­
facture o f frozen concentrates is fa ir ly w e ll standardized.
F ruit is trucked to the p lan t, transferred by m ech an ical h a n ­
d lin g eq uipm en t to the fru it bin s, and an alyzed b y rep re­
sen tatives o f the In sp ection S ervice o f the F lo rid a D ep a rt­
m ent o f A gricu ltu re as to so lid s content and ratio o f sugar to
acid. T he fru it is then graded and b len d ed in order to m a in ­
tain as far as p o ssib le a con sisten t q u a lity . F rom the b in s, the
fru it m oves on conveyors to the ju ice extractors th rou gh baths
w h ich w ash and sterilize the su rface o f the fru it. A t the ju ice
extractors the p eel, p u lp , and seeds are rem oved fo r storage
and subsequent conversion into by-products.
F rom the extractors the ju ice is p ip ed to evap orators
w here enough water is rem oved to b rin g the ju ice up to
about 65 percent o f so lid s. A fter concentration, en ou gh fresh
ju ice is added to bring the m ixture dow n to about 4 2 p ercen t
o f so lid s. A t th is stage, concentrate h eld in storage is so m e­
tim es added to standardize the natural sugar ratio. T he prodduct is q u ick ly cooled to 15° to 20° F ahrenheit, packed in
cans, frozen so lid , and stored at about m inus 10° F ahrenheit.
T em peratu res durin g the con centrating p ro cess are kept
b elo w 70° Fahrenheit w ith the result that the fresh fru it flavor
is not im p aired by heat or ox id a tio n . S in ce heat cannot be
used to destroy the organ ism s that cause deterioration , h o w ­
ever, extrem e clea n lin ess is required th roughout the o p era­

T he frozen concentrate in d u stry differs from the sin g le ­
strength ju ice industry w ith resp ect to econ om ic organization
fu lly as m uch as the concentrate itse lf differs from ju ice
processed b y the o ld er m ethods. One im portant d ifference is
the size o f the in d iv id u a l p la n t and the cap ital investm ent
required fo r efficient op eration . A t m id -1949, fo r exam p le,
M inute M aid ’s p lan t and eq u ip m en t w as valu ed at a p p ro x i­
m ately three and a h a lf m illio n d o lla rs. D u rin g the 1948-49
season M inute M aid and three o f its com petitors accounted
fo r about 9 0 percent o f a ll the frozen citrus concentrate sold
in th is country. T he p la n t investm ents o f the other com p an ies
are sim ila r in size to that o f M inute M aid. In 1 948-49 there
were about six ty can n in g p lan ts in F lorid a, but current re­
ports to the F lo rid a Canners A sso cia tio n show o n ly ten firm s
now op eratin g orange concentrate fa c ilitie s. B ecause o f the
large cap ital investm ent required, the frozen concentrate in ­
dustry w ill lik e ly con tin u e to be dom inated b y a few firm s.
T he m ost sig n ifica n t featu re o f the frozen concentrate in ­
dustry, how ever, is that the lea d in g ro le is p la y ed by large
n a tio n a lly know n com p an ies. T hese com p an ies, such as G en­
eral F ood s and C linton F ood s, are b rin g in g new view p oin ts
and op eratin g m ethods into the citrus industry. S in ce they
have a lread y estab lish ed a reputation fo r q u a lity, th ey w ill
un d ou b ted ly m ain tain a co n sisten tly h ig h q u a lity in their
citrus products.




16

M

o n t h l y

R e v ie w

o f th e F ederal R eserve B a n k o f A tla n ta fo r F eb ru a ry 1950

T h eir su ccess is based u p on the h a n d lin g o f la rg e q u an ti­
ties o f fo o d produ cts at re la tiv e ly sm a ll p rofit m argin s. T hey
are not p a rticu la rly interested , th erefore, in w in d fa ll profits
on in ven tories that accrue as a resu lt o f fluctuations in fru it
p rices. S ta b le p rices p rovid e the id e a l situ ation fo r th is ty p e
o f enterp rise. U n less co m p etitio n fo rces them to do so, they
are not lik e ly to en gage in p rice w ars. B ecause o f their large
size, th ey can not afford to un d ergo the risk o f b ein g charged
w ith m o n o p o ly or u n fa ir trade p ractices in attem pts to freeze
out com p etitors.
A nother im portant differen ce betw een the m ethods o f the
present lead ers in th e frozen concentrate in d u stry and those
o f m any p rocessors o f sin g le-stren g th ju ice is the em p h asis
p la ced u p on d istrib u tion . M any sm a ller canners con fin e their
op eration s sim p ly to p rocessin g citrus fr u it and r ely upon
the best a v a ila b le m eans to get their p roduct to the consum er.
M ost large concentrators, on the other hand, op erate on the
p r in cip le that su ccess depen d s u p o n a g ood p roduct and also
up on an exten sive sa le and m ark etin g o rgan ization .
M ost o f the frozen concentrate is so ld under w ell-k n ow n
brand nam es that are kept b efo re the consum er b y in ten siv e
ad vertising program s. A lth o u g h m uch o f the concentrate is
so ld th rou gh w h o lesa le fro zen -fo o d d istrib u tors, other m eth­
ods are com in g into use. A t lea st on e com p an y is ex p erim en t­
in g w ith fran ch ises as a m eans o f gettin g m ore w id esp read
d istrib u tion . S om e com p a n ies su p p ly the retailers w ith the
n ecessary eq uip m en t fo r h a n d lin g the concentrate. Such
eq uipm ent in clu d es refrigerated cab in ets in retail fo o d stores,
disp en sers fo r in sta lla tio n in d rug stores and restaurants,
and coin-operated ven d in g m ach in es.
In the sh ort tim e that frozen concen trate h as been in com ­
m ercial prod u ction m ore than th irty brand n am es have been
p ut on the m arket. In the sin g le-stren g th ju ice in d u stry, a
sim ila r situation m ade the jo b o f sa les p rom otion extrem ely
difficult. C onsum ers w ere con fron ted w ith so m an y different
brands that th ey n ever learn ed to b u y ju ice b y brand nam e.
T here is stron g evid en ce, h ow ever, that m ost frozen co n cen ­
trate w ill con tin u e to be so ld under a very fe w brand nam es.
T he com p an ies that are d om in an t in the field are a lread y
estab lish ed in m ost o f the d istrib u tion ch a n n els fo r frozen
fo o d s. M ost o f the large retail fo o d chains,, fo r e x a m p le, p re­
fer to h a n d le o n ly tw o or three lin es o f frozen fo o d s. Sin ce
retail fo o d ch ain s b u y over h a lf o f a ll the p rocessed citrus,
their attitude is o f p articu la r im p ortan ce.
H a n d lin g o f frozen fo o d h as b een r e la tiv e ly exp en sive.
One reason has b een that w h o lesa lers h ave had to h a n d le
sm a ll q u an tities o f a large num ber o f item s in order to su p ­
p ly a com p lete lin e o f frozen fo o d s. Frozen oran ge ju ice
sa les, how ever, have reached such large p ro p o rtio n s that
su b stantial sa v in g s h ave been p o ssib le in h a n d lin g costs. It
w ou ld not be to the advan tage o f a w h o le sa le distrib u tor to
reverse th is p rocess b y h a n d lin g m an y different brands o f
frozen citrus concentrate. T he su ccessfu l estab lish m en t o f a
new brand on the m arket, th erefore, is lik e ly to be a difficult
procedure u n less the com p an y is la rg e en ou gh and has suffi­
cient fin an cial resources to m ain tain an ex ten siv e d istrib u tin g
organ ization .
T he rapid in crease in p rod u ction and sa les o f frozen co n ­
centrate, the exp a n sio n o f p ro cessin g fa c ilitie s, and the earn ­
in g s record o f the larger con centrators p ro v id e a m p le e v i­
dence that this prod uct is b ein g su c c e ssfu lly ex p lo ite d . In
1 9 45-46 o n ly 1 8 8 ,0 0 0 b ox es o f F lo rid a oran ges w ere used in
its m an ufacture. T h is num ber h as in creased stea d ily from
4 6 6 ,0 0 0 b oxes in 1946-47 to 1 ,6 0 0 ,0 0 0 b o x es in 19 4 7 -4 8 and



to 8 ,3 2 0 ,0 0 0 b oxes in 19 4 8 -4 9 . A cco rd in g to a recent survey
b y the D epartm ent o f C om m erce and to estim ates o f person s
con n ected w ith the in d u stry, over 2 0 m illio n b o x es w ill be
used d u rin g the current sea so n . T h e estim ated 1 9 4 9-50 p ro­
du ction is eq u iv a len t to 3 0 m illio n cases o f sin gle-stren gth
oran ge ju ice. L ast season the p ro d u ctio n o f sin gle-stren gth
oran ge ju ice w as ab ou t 19 m illio n cases. G rap efru it ju ice and
b len d ed ju ices are a lso b ein g pack ed b y the fro zen concentrate
m ethod, but the sh ortage o f g ra p efru it w ill preven t large
q u an tities from g o in g in to a n y p ro cessed fo rm d u rin g the
current season . D esp ite the late m atu rity o f the F lo rid a crop
th is year, m ore frozen oran ge con cen trate had been p roduced
up to th e m id d le o f F eb ru ary than w as p rod u ced up to the
com p arab le date la st season .
A t the first o f the year, th e a g g reg a te rated ca p a city o f the
F lo rid a in d u stry w as estim ated at b etw een 33 m illio n and 36
m illio n g a llo n s, or m ore than d o u b le the ca p a city at the b e­
g in n in g o f 194 9 . T h e ea rn in g s record o f on e la rg e com pany
that p rod u ces o n ly frozen con cen trates and citrus by-products
show s lo sses o f 7 9 ,0 0 0 d o lla r s and 3 7 1 ,0 0 0 d o lla r s in 1946
and 1 9 4 7 , resp ectiv ely , and in co m es b e fo re taxes o f 1 5 0,000
and 1 ,3 0 0 ,0 0 0 d o lla r s fo r 1 9 4 8 and 1 9 4 9 , resp ectiv ely .
E ffe c ts U p o n t h e G r o w e r
A t the b e g in n in g o f the 1 9 4 8 -4 9 season , th e first in w h ich the
q u an tity o f fr u it u sed fo r fro zen con cen trates w as large
en o u g h to h ave m uch effect u p on the m arket, the o u tlo o k w as
fo r another d isastrou s year. E x cep t fo r a sh ort p eriod o f
fa ir ly h ig h p rices at the very b e g in n in g o f the season, prices,
d u rin g the first part o f the season , stayed at ab ou t the sam e
le v e ls as a year ea rlier. E a rly and m id -season oran ge p rices
averaged 71 cents a b ox on an on-tree b a sis, com p ared to 66
cents fo r the 1 9 4 7 -4 8 season . F rom Jan u ary 1 u n til the end
o f the season the gen era l p rice trend w as ste a d ily upw ard.
P rices fo r V a len cia s averaged $ 2 .1 4 on th e tree, com pared
to 60 cen ts in the p reced in g season .
P r ic e s

R e c e iv e d

P e r

B o x

fo r

O r a n g e s

For Processing
A t Packing House On Tree

1948
October...
November.
December.
January...
February..

For Fresh Fruit
A t Packing House On Tree

$ .08
.24
.18
.67
.87
1.54
1.71
2.96
2.91
2.91

$ 1.38
.91
1.12
1.21
1.39
1.87
2.43
3.39
3.57
3.58

$ 1.13

July.............

.38
.53
.49
.97
1.16
1.80
2.00
3.25
3.20
3.20

1949
October. . .
November.
December..
January...

1.45
1.05
1.32
2.18

1.15
.75
1.05
1.88

2.74
1.57
1.71
2.29

2.49
1.30
1.42
2.01

$

.63
.83
.94
1.13
1.60
2.17
3.14
3.32
3.33

T h is in crease in p rice w as a p p a ren tly caused by several
th in gs: n am ely, severe freezes in C a lifo rn ia and T exas w hich
destroyed m illio n s o f b o x es o f fru it, a v o lu n ta ry v o lu m e p ro­
rate on fresh fru it sp on sored b y the F lo rid a Citrus C om m is­
sion , the sa le o f tw o m illio n b o x es o f o ra n g es b y the F lorid a
Citrus E xch an ge to S n ow C rop, and the unp recen ted dem and
fo r fro zen oran ge con cen trate. T h e Jan u ary freezes in C ali­

M

o n t h l y

R e v ie w

o f th e F ederal R eserve B a n k o f A tla n ta fo r F ebruary 1950

fo rn ia and T exas le ft F lo rid a p ra c tica lly a lo n e in the citrus
field w ith a h igh -q u ality crop. B y m eans o f the v o lu m e p ro ­
rate, fresh fru it sh ipm en ts w ere kept at a fa ir ly steady v o l­
um e from w eek to w eek w hich, in turn, perm itted grow ers to
obtain m axim um returns from the fresh fru it m arket. T he
term s o f the sa le to Snow Crop a lso h elp e d to sta b ilize the
m arket. A ccord in g to G overnm ent figures, on N ovem b er 15
grow ers w ere receivin g an average o f 53 cents a b ox for
oranges delivered to p ro cessin g p la n ts. T he contract w ith
S now Crop, signed on N ovem b er 2 0 , p rovid ed fo r a m inim um
p rice o f one d o lla r a box or the current w eek ly m arket p rice,
w h ich ever w as h igh er. T he brisk b id d in g by concentrators,
even at stea d ily risin g p rices, a lso h elp ed to b olster p rices
received fo r both fresh and canned fru it.
P r o d u c t io n

C o s t s

Per Acre

fo r

M

ix e d

1946-47

G r o v e s

1947-48

1948-49

Labor, power,, and equipment . . . . ., $ 76.42 $ 75.50 $ 67.86
38.28
57.33
56.63
Fertilizer m ateria ls......................................
11.03
10.06
12.47
Spray and dust m aterials...........................
9.33
6.03
8.86
State and county ta x e s.................................
11.86
7.64
7.33
M iscellaneous.....................................................
138.36
159.89
158.38
Total operating c o s t s ...........................
39.79
39.13
Interest on investment at 6 percent . . . . 39.12
177.49
198.17
Total cost without owner supervision . . 199.01
Per Box

n.a.
.50
.55
Total operating c o s t s ................................
n.a.
.62
.68
Total cost without owner supervision .
Average of 2.20 groves over 10 years of age compiled by the Florida
Agricultural Extension Service.
D u rin g the ea rly part o f the current season , p rices paid
by p rocessors fe ll alm ost to the m in im u m p rice set by M utual.
One reason for the ea rly season w eakness in p rices w as that
the im p o sitio n o f the new m aturity law h ap p en ed to co in cid e
w ith a citrus crop o f u n u su a lly late m aturity. F ruit that co u ld
not p ass the requirem ents fo r the fresh fru it m arket had to be
p rocessed . S in ce little fru it w as su itab le fo r p ro cessin g into
frozen concentrate b efo re the first o f D ecem ber, the on ly
m arket w as the single-stren gth ju ice in d u stry.
A b ou t the first o f January w hen fru it w as p a ssin g the
m aturity standards m ore e a sily and w hen concentrators w ere
starting to operate, C a lifo rn ia had another severe freeze
w h ich destroyed several m illio n b oxes o f fru it. P rices rose
ra p id ly and by the end o f January concentrators w ere p a y in g
as m uch as $ 2 .7 5 a box for oran ges. P resen t in d ica tio n s are
that fru it w ill se ll at r ela tiv ely h ig h p rices u n til the end o f
the season as concentrators, canners, and the fresh fru it trade
com pete for the rem ainder o f the crop.
A s a result o f the m isfortu n es in other citrus p ro d u cin g
areas and the new ou tlet p rovid ed by frozen concentrates,
citrus grow in g in F lorid a has again b ecom e a very attractive
p ro p o sitio n . Grove prices h ave m ore than d o u b led in a twoyear p eriod . T hese events do not n ecessa rily m ean that the
develop m en t o f the frozen concentrate in d u stry has au tom ati­
c a lly insured continued p rosp erity fo r the grow ers. S in ce
M utual now con trols v irtu a lly a ll the citrus grow n in the
state, how ever, grow ers are in a better p o sitio n to sta b ilize
the ind ustry at profitab le le v e ls than ever b efore. M utual is
organized under the coop erative law s w hich m eans that it can
operate as a m o n o p o ly . It can use th is m o n o p o ly pow er to
preven t extrem e fluctuations in fru it p rices and in th is w ay
p reven t the typ e o f price w ars betw een concentrators w h ich
co u ld a gain drive p rices to distress lev els.



1 7

M ost o f the larger frozen concentrate com p an ies p rob ab ly
w ou ld p refer not to u se p rice com p etition as a m eans o f
cap tu rin g a larger share o f the m arket, but w o u ld rather rely
p rim a rily u p on ou tstrip p in g their com p etitors by m ore effi­
cient p rod u ction and d istrib u tion . In a period o f inten se
price com p etition , o f course, concentrators w ho d irectly co n ­
trol a large p rop ortion o f their raw m aterial su p p ly w ou ld
have a decid ed ad van tage over concentrators w ho m ust buy
a ll o f their fru it in the m arket. T he recent large p urchases o f
groves b y som e o f the la rg e concentrators m ay be an in d ica ­
tion that th ey are sk ep tical o f the grow ers’ a b ility , through
M utual, to sta b ilize p rices effectiv ely . A s som e concentrators
ap p roach direct con trol o f the fru it needed fo r their op era­
tions, the m ore lik e ly ex ten siv e p rice com p etition becom es
and the m ore p o w erless M utual b ecom es as a p o lic in g fo rce
on fru it p rices.
A cco rd in g to the cost studies conducted b y the F lorid a
A g ricu ltu ra l E xten sion Service, it is p o ssib le to p roduce fru it
on a large sca le at a cost o f less than a d o lla r a b ox, in clu d ­
in g 6 p ercent interest on the investm ent in the grove. C on­
centrators w hose m ain concern is p ro cessin g and distrib ution
p rofits co u ld afford to op erate groves on a cost-of-production
basis if in that w ay th ey co u ld m eet p rice com p etition and
p rotect their investm ent in p ro cessin g and d istrib u tion fa ­
c ilities.
It seem s p ro b a b le that the d evelop m en t o f the frozen con ­
centrate in d u stry w ill hasten the sta b iliza tio n o f p rices fo r
F lorid a citrus regard less o f w hat the grow ers do. From the
grow ers’ stan d p oin t the im portant qu estion is, W ho w ill reap
the benefits o f stab le citrus p rices? I f the grow ers th em ­
selv es are a b le to sta b ilize p rices, concentrators can continue
to devote their atten tion to exp a n d in g the m arket fo r their
p roduct through im provem ents in p rod u ction and d istrib u ­
tion. T he frozen concentrate in d u stry, th erefore, offers an
o p p ortu n ity fo r m ore p rofitab le citrus g row in g, but it is one
that grow ers m ust e x p lo it q u ick ly and w ise ly if it is to b e­
com e a rea lity .
B rown R. R awlings

B a n k

A n n o u n c e m e n ts

During February two banks began remitting at par.
One of these was the Bank of Waynesboro, Waynes­
boroG eorgia, a nonmember bank which began re­
mitting at par on February 1 . This bank has capital of
$75,000, surplus and undivided profits of $126,000,
and deposits of $2,485,000. The bank’s officers are M.
K. Tucker, President; F. M . Skinner , M . R. Oliver,
and J. W . Collins, Vice Presidents; E . E. Stephens,
Cashier; and Mrs. Naomi 0 . Scott and Mrs. Myrtis L .
Lovett, Assistant Cashiers.
The second addition to the Par List was The Citi­
zens Bank in Sarasota, Sarasota, Florida. This is a
newly organized nonmember bank located in Jackson­
ville Branch territory . It began remitting at par on
February 8. This bank’s capital stock amounts to
$200,000 and its surplus and undivided profits, to
$60,000. The following officers have been elected • / . C.
*
Cardwell, Chairman of the Board; T. J. Bell, Presi­
dent; Kenneth Steffens, Executive Vice President;
John R. Peacock, Vice President; Hampton Moore,
Vice President and Cashier; and Roege Peacock,
Assistant Cashier.

1 8

M

o n t h l y

R e v ie w

o f th e F ederal R eserve B a n k o f A tla n ta fo r F e b ru a ry 1950

Deposit Growth A t A labam a Member Banks
d ep osits rep resent the m ajor p o rtio n o f the p u rch as­
in g p ow er im m ed ia tely a v a ila b le to b u sin esses and in d i­
v id u als in any area. B ecau se p u rch a sin g p ow er is derived
from incom e, the ch an ges in the am ount o f total d ep o sits at
m em ber banks in A lab am a thus reflect th e rela tiv e in com e
grow th in the state.

how ever, reflected a net flow o f fu n d s in to the state. M are
m on ey w as sp en t in A la b a m a b y th e G overnm ent fo r m ilita ry
train in g, erection o f w ar p la n ts, and p u rch ases o f su p p lies
than w as raised there eith er b y ta x a tio n or b y b orrow in g.

T h at grow th is im p ressiv e. D ep o sits o f a ll A la b a m a m em ­
ber banks at the end o f 1 9 4 9 w ere 3.5 tim es as great as at
the end o f 1 9 39. E stim ates on 1 9 4 9 in co m e p aym en ts are not
yet a v a ila b le ; how ever, 19 4 8 in com e p aym en ts, acco rd in g to
the D epartm ent p f C om m erce data, w ere 3.8 tim es as great
as in 1939.

S om e a n a ly sts b elie v e d that o n ce the w ar w as over G overn­
m ent sp en d in g w o u ld cease and the trend o f d ep o sits w ou ld
be reversed. S o fa r as to ta l d e p o sit figu res are concerned,
how ever, p red ictio n s fo r a m ajor p ostw ar d ec lin e in A lab am a
d ep osits h a v e n ot b een confirm ed.

B

an k

D eta iled data fo r a lo n g p erio d o f tim e are n ot rea d ily
a v a ila b le fo r a ll banks in A la b a m a . A n y c o n clu sio n s regard­
in g the trends o f d ep osits at m em ber banks, how ever, p ro b ­
a b ly a p p ly to th ose at a ll banks b ecau se m em ber bank
d ep osits constitu te 82 percent o f the state total o f over a
b illio n d o lla rs. T h e a n a ly sis that fo llo w s is confined to d e­
p o sits at m em ber banks.
W a r t i m e G r o w th
Just after the clo se o f the w ar, at the end o f 1 9 45 , th e total
fo r a ll typ es o f d ep osits in A la b a m a m em ber banks exceed ed
the b illio n d o lla r m ark fo r the first tim e. T he 1 ,0 7 8 m illio n
d o lla r total represented a 28 2 -p ercen t grow th from the p re­
w ar year 1 9 3 9 . T otal d ep o sits at a ll m em ber banks th ro u g h ­
out the country in creased at about th ree-fifth s the A lab am a
rate o f grow th.
P u rch asin g p ow er at th e end o f th e w ar w as m ore w id e ly
d istributed to areas ou tsid e the m ajor cities o f B irm ingham
and M ob ile. T he p rop ortio n o f d ep o sits h eld in th ese tw o
cities f e ll from alm o st 6 0 percen t o f the state to ta l at the end
o f 1939 to about 5 0 percent at the end o f 1 945.
C hanges in d ep o sits throu gh ou t th e en tire b an k in g system
result ch iefly from ch an ges in bank loan s and investm ents.
T hus a la rg e part o f th e rap id grow th in A la b a m a bank
d ep osits can be traced to th e b anks’ fin an cin g part o f the
war’s cost. T hat A la b a m a b anks shared m ore than banks in
other sectio n s o f the cou n try in the w artim e d ep o sit grow th,

T h e P o s t w a r P e r io d

Percent C h a n g e

in Total D e p o s it s

A l a b a m a M e m b e r B a n k s , C lassified b y A r e a

Area*

1 3 -4
99 5

End o Year
f
14 -4
95 6
14 -4
96 8

Alabama :
Anniston-Gadsden A re a. .
Birmingham Area.............
City of Birmingham ...
Outside Birmingham ..
Dothan Area......................
Mobile Area........................
City of Mobile................
Outside Mobile.............
Montgomery Area.............

+
+
+
+
+
+
+
+
+

416
271
239
350
352
247
243
306
252

S t a t e T o t a l ..............................

+

282

United States......................

— 8

+ 163

— 9

— 4

— 9
— 14
+ 2

— 20

—
—
+
—

8
9
5
7

— 4
+ 4
+ 6
+ 2
+ 16
+ 1
+ 1
+ 3
+ 3
+

3

+ 2

14 -4
98 9
+ 5

— 4
— 1

— 8
— 12
— 3
— 3
+ 3
— 4

—

3

+ lp

* Areas include several counties surrounding each city,
p Preliminary.
B oth in A la b a m a and in th e U n ited States, to ta l d ep osits
d eclin ed su b sta n tia lly in 1 9 4 6 as the T reasu ry m ade h eavy
w ith d raw als fro m its w ar-loan accou n ts. M ore v a lid c o n clu ­
sio n s reg a rd in g postw ar trends in d ep o sits can b e m ade,
th erefore, b y a n a ly z in g th e tren d s sin ce th e en d o f 1 9 46.
B y the end o f 1 9 4 9 , to ta l d ep o sits at th e A la b a m a banks
w ere a p p ro x im a tely th e sam e as th ey h ad been at the end o f
1 946. D em an d d ep o sits in the a ccou n ts o f b oth th e U n ited
S tates G overnm ent and corresp on d en t b anks w ere lo w er, but
tim e d ep o sits w ere 7 m illio n d o lla r s greater and dem and
d ep o sits o f in d iv id u a ls, p artn ersh ip s, and co rp o ra tion s w ere

INDEX O F TOTAL MEMBER BANK DEPOSITS
PERCENT




1 9 35-39= 100

PERCENT
500

400

300

200

100

M

o n t h l y

R e v ie w

o f th e F ederal R eserve B a n k o f A tla n ta fo r F ebruary 1950

o n ly 3 m illio n d o lla rs low er. T here w as an in crease in total
d ep osits betw een 1946 and 194 8 o f 32 m illio n d o lla rs. T he
e x p an sion o f A lab am a’s in com e-p rod u cin g cap acity sin ce
1939 offers one ex p la n a tio n fo r the reten tion o f m ost o f the
w artim e grow th in d eposits.
I n c o m e a n d D e p o s it C h a n g e s in 1 9 4 9
C ontrary to the n ation al trend, A la b a m a ’s to ta l d ep o sits d e­
c lin ed 3 percent betw een the end o f 1 9 4 8 and the end o f
1949, w hereas m em ber bank d ep o sits th rou gh ou t the country
increased one percent. E con om ic changes in 194 9 w ere r e la ­
tiv ely less fa v o ra b le to A lab am a m a n u factu rin g and a g r icu l­
tural incom e sources than th ey w ere to m an u factu rin g and
agricu ltu re in general.
A b ou t 2 0 p ercent o f A la b a m a ’s in com e now com es from
m an u factu rin g and 16 p ercen t fro m agricu ltu re. E m p lo y ­
m ent during 1949 in each o f the p r in c ip a l m an u factu rin g
ind ustries w as dow n from that o f 194 8 . E m p loym en t in the
m etals in d u stries averaged 11 percent le s s; in tex tile s, 9
p ercen t; and in lum ber, 10 percent. T h ese three in d u stries
account fo r ap p ro x im a tely 7 0 p ercent o f to ta l m an u factu rin g
in com e in the state and have greater rela tiv e im p ortan ce than
in m an y other region s. A lso , la r g e ly b ecau se o f low er returns
from cotton and peanuts, w h ich in a recent year accounted
fo r over h a lf o f A lab am a ’s ag ricu ltu ra l in com e, total a g r icu l­
tural in com e w as dow n a p p ro x im a tely 15 p ercen t from 1948.

Percent Change in Total Deposits, December 31, 1948 - 49
Alabama Member Banks, Classified by Size of City and by City's
Chief Manufacturing Activity
City's Chief
Manufacturing
Activity

Population of City in Thousands*
No.
of
50 and All Sizes
15-50
Banks Below 2.5 2.5 - 15
Over

T
L
M
T

**

—

e x t i l e . . . . . . . . . . . . . . . .2. . 8
u m b e r . . . . . . . . . . . . . . .1. 7
e t a l s ..................9
r a n s p o r ta tio n
E q u i p m e .. t .
n
5
N o P r e d o m in a n t
I n d u s t .r. .y. . . . . . . . 3 3

—

10

A l l T y p .e . .s. . . . . . . . .
.

—

7

9 2

—

9

**

—

—
— i

—

1

—

4

8

—

12

—

8

—

—8

—

5

3
2
—

4
—

—2

3

* 1940 Census.
** Withheld to prevent disclosure of data from individual banks.
T h ese econ om ic changes affected d ep o sits m ore in the
sm a ller com m unities o f the state than in the larger ones, as
the accom p an yin g ta b le show s. In gen eral, th e la rg er cities
h ave a m ore diversified source o f in com e. A lth o u g h tex tile
m an u factu rin g m ay be the c h ie f sin g le sou rce o f in com e in
cities o f m ore than 50 thousand p o p u la tio n , fo r ex a m p le, it
m ay not be o f such overw h elm in g im p ortan ce as in a sm aller
city w h ich has few other in d u stries. T h e lo w er ag ricu ltu ra l
in co m e la st year a lso grea tly affected banks in th e sm a ller
n on m an u factu rin g com m u n ities.
T h at th ese chan ges can be traced so d irectly to m in or
v ariation s in agricu ltu re and m an u factu rin g in d icates how
c lo s e ly th e lev el o f A la b a m a ’s bank d ep o sits is tied to the
le v e l o f her econ om ic activity. A t the sam e tim e, becau se the
eco n o m ic b ase o f the state has been so strengthened d u rin g
the last decade, it is very d ou b tfu l that th e m in o r ch an ges
in d ep o sits w h ich occurred in 1 9 4 9 h era ld a return to p re­
w ar con d ition s.
C harles T . T aylor

This is the first of a series of six articles in which deposit
trends in the individual Sixth District states will be discussed.



S ix t h D is t r ic t S t a t is t ic s
CONDITION OF 28 M BER BANKS IN LEADING CITIES
EM
(In Thousands of Dollars)
Percent Change
Feb. 15 Jan. 18 Feb. 16 Feb. 15, 1950, from
Item
1949
1950
1950
Jan. 18 Feb. 16
1949'
1950
Loans and investments!—
Total...............
+ 8
2,475,715 2,449,518 2,290,992 + 1
Loans—Net........
+ 5
885,545 883,767 842,290 + o
Loans—Gross ..
+ 6
898,634 895,681 851,629 4- 0
Commercial, industrial,
and agricultural loans.. 535.857 533,586 541,436 + o
— 1
Loans to brokers and
dealers in securities...
+ 116
4,115 + 17
8.896
7,607
Other loans for pur­
chasing and carrying
securities
— 32
48,404 — 2
32,784
33,525
Real estate loans.............
65,425 — 3
76,711
+ 17
79,067
Loans to banks
— 6
4,477
4,785 + 2
4,405
Other loans
+ 28
239,909 237,491 187,464 + 1
Investments—Total............. 1,590,170 1,565,751 1,448,702 + 2
+ 10
Bills, certificates, and
notes............
588,185 565,228 384,555 + 4
.+ 53
U. S. bonds__
— 9
799,659 798,743 882,416 + o
Other securities............... 202,326 201,780 181,731 + o
+ 11
Reserve with F. R. Bank__ 414,958 420,196 497,658 — 1
— 16
Cash in vault....
— 3
39.291
40,657
40,399 — 3
Balances with domestic
198,947 187,145 186,013 + 6
>+ 7
Demand deposits adjusted. 1,785,866 1,757,752 1,744,436 + 2
+ 2
1ime deposits. . .
533,082 532,666 526,754 + o
+ 1
U. S. Gov't deposits..........
66,070
46,803
45,178 + 41
+ 46
Deposits of domestic banks. 552,340 571,599 523,000 — 3
+ 6
Borrowings........
1,000
DEBITS TO INDIVIDUAL BANK ACCOUNTS
(In Thousands of Dollars)
Percent Change
No. of
Jan. 1950, from
Banks
Jan.
Jan.
Dec.
Report­
1950
1949
1949
Dec.
Jan.
ing
1949
1949

Place

ALABAMA
Anniston........
Birmingham...
Dothan............
Gadsden........
Mobile............
Montgomery...
—

2

**
—

4

—

—

6

1 9

FLORIDA
Jacksonville...
Miami.............
Greater Miami*
Orlando..........
Pensacola......
6 St. Petersburg.
Tampa............
GEORGIA
Albany............
Atlanta............
Augusta..........
Brunswick.......
Columbus.......
Elberton..........
Gainesville*...
Griffin*...........
Newnan..........
Rome*............
Savannah.......
Valdosta........

3
5
3

22,265
342,154
14,305
19,084
118,327
80,304

22,654
378,294
14,011
21,724r
138,187
81,985

23,840
334,159
14,633
19,821
136,638
76,876

— 2
— 10
+ 2
— 12
— 14
— 2

— 7
+ 2
— 2
— 4
— 13
+ 4

4
7
13
3
3
3
7

301,816
275,713
406,653
68,631
34,451
70,024
154,043

310,501
273,178
381,639r
65,156
44,102
65,918
158,491

270,562
268,963
390,852
54,887
34,316
62,585
129,438

— 3
■ 1
+
■
+ 7
+ 5
— 22
+ 6
— 3

+
+
+
+
+
+
+

3
4
3

25,327
836,366
57,832
8,818
53,973
3,432
13,434
11,037
61,491
10,837
22,023
83,232
11,782

26,798
928,862
60,630
9,968
61,309
4,357
14,167
13,631
67,491
8,903
24,707
96,667
12,572

27,663
790,286
61,410
■ 8,819
49,861
3,742
13,232
11,850
58,043
9,662
20,502
89,703
11,911

— 5
— 10
— 5
— 12
— 12
— 21
— 5
— 19
— 9
+ 22
— 11
— 14
— 6

— 8
+ 6
— 6
— 0
+ 8
— 8
+ 2
— 7
+ 6
+ 12
+ 7
— 7
— 1

3

6
2
8

2
2
3
2
3
2
4

3
4

2

12

3
4
25
o

12

19

LOUISIANA
Alexandria*...
Baton Rouge..
Lake Charles..
New Orleans..

3
3
3

33,460
112,589
36,725
721,207

35,856
110,233
40,718
773,920

30,881
109,530
37,430
675,633

— 7
+ 2
— 10
— 7

+ 8
+ 3
— 2
+ 7

MISSISSIPPI
Hattiesburg...
Jackson..........
Meridian........
Vicksburg.......

3
3

2

17,549
160,212
25,442
24,355

18,052
140,561
26,429
26,836

16,281
165,516
27,043
26,388

—
+
—
—

3
14
4
9

+ 8
— 3
— 6
— 8

3
4

6

168,056
129,844
316,514

159,946
133,106
357,891

160,860 +
120,900 —
293,194 -

5
2
12

+ 4
+ 7
+ 8

SIXTH DISTRICT
33 Cities.......... 115

4,366,700

4,639,450

4,170,593 —

6

+ 5

106,636,000 118,197,000 105,204,000 —

10

4- 1

TENNESSEE
Chattanooga..
Knoxville........
Nashville........

UNITED STATES
333 Cities........

8

2

* Not included in Sixth District total.

M

2 0

o n t h l y

R e v ie w

o f th e F ederal R e se rv e B a n k o f A tla n ta fo r F e b ru a ry 1950

District Business Conditions
F a rm P r ic e S u p p o r t s
N

A g ricu ltu ra l A ct o f 1 9 4 9 the G overnm ent p rom ised
I
farm ers continu ed p rice su p p orts fo r m an y o f their p ro d ­
ucts as an in surance again st p recip ito u s d eclin es b elo w the
p rice le v e ls in other segm ents o f the n a tio n a l econ om y. T h e
C om m odity Credit C orporation, th rou gh w hich the program
is adm inistered, now finds, h ow ever, that there is n ot en ou gh
m on ey p resen tly a v a ila b le to in su re p rom p t fu lfilm en t o f that
p rom ise. It has, th erefore, asked C ongress fo r an a d d itio n a l
2 b illio n d o lla rs b orrow in g au th ority from the T reasury.
T he am ount required to keep the p rices o f som e farm p ro d ­
ucts from d eclin in g m uch b elo w a p a rity rela tio n sh ip is
large. On D ecem b er 31, fo r e x a m p le, the CCC had com ­
m itted 3 ,3 4 3 m illio n d o lla r s in an attem pt to keep the p rices
o f fo o d , fiber, and feed crop s from d r o p p in g b elo w su p p ort
lev els. S in ce the C orporation cannot exceed its 4 ,7 5 0 m illio n
d o lla r lim itation , th is le ft o n ly 1 ,4 0 7 m illio n d o lla r s fo r the
p rice su p p ort o f com m od ities th rou gh June 30. A n oth er 5 5 3
m illio n m ust be subtracted fo r current o p era tin g o b lig a tio n s.
A c tu a lly , therefore, at the b eg in n in g o f the year the CCC had
o n ly 8 5 4 m illio n d o lla rs a v a ila b le. A lth o u g h , at first g la n ce,
that am ount seem s large, it is r e la tiv e ly sm a ll fo r th e w ork
it has to do, inasm u ch as th e CCC is charged w ith the resp o n ­
s ib ility o f p la c in g floors u n der m ost o f a 2 0 b illio n d o lla r
farm b u sin ess.
G overnm ent su p p ort o f potato p rices h as dram atized th e
ro le o f the CCC. W hat to do w ith the p o ta to es acq u ired in
the su p p ortin g o f p rices, as w e ll as w hat to do w ith other
p erish a b les such as ch eese and eg g s, p resen ts a p e r p lex in g
p rob lem . L ess baffling, but e q u a lly serio u s, is w hat to do
w ith the storab le com m od ities. T h e CCC can n ot se ll th ese
p rod u cts in the d om estic m arket at le ss than the su p p ort
p rice p lu s carrying ch arges p lu s 5 percent. W ith a d eclin in g
m arket price, th is m eans that the CCC cannot se ll at a ll in
n orm al h om e m arkets.
A r e c o llectio n o f th e p u rp o se fo r w h ich the CCC w as
created w ill p erh ap s m ake it easier to ap p recia te the n eed fo r
a d d ition al fu n d s. It w as organ ized in 1 9 3 3 as a D ela w a re
corp oration to sta b ilize p rices a g a in st flu ctu ation s in p ro d u c­
tio n and dem and and to raise p rices over a lo n g p erio d . T he
effect o f its p rice-raisin g p o lic y w as evid en t b y the in itia l
lo an rate fo r cotton in 1 9 3 3 , w h ich w as a lm o st tw ice the
p reviou s op en m arket p rice. A t that tim e the CCC had a v a il­
ab le the A g ricu ltu ra l A d ju stm en t A d m in istra tio n to reduce
p rod u ction and th ereb y preven t ru in ou s stock s from a ccu m u ­
la tin g . Its p red ecessor, the F ed eral Farm Board, d id n ot h ave
the advantage o f such an agen cy.
In v iew o f the presen t dow nw ard trend in th e p rices o f
m ost farm p rod u cts and in view o f the g ro w in g in v en to ries in
the hands o f th e CCC, a statem ent in the la st an n u al report
o f the F ed eral Farm B oard, co v erin g o p era tio n s fo r 1 93 2 , is
pertinent. T h e rep ort reads, “T h e ex p erien c e o f the p ast tw o
years sh ow s that it is fu tile to e n g a g e in sta b iliza tio n p u r­
ch ases fo r an y prod u ct over a p erio d o f years in the fa c e o f
co n stan tly a ccu m u la tin g su rp lu ses o f that p rod u ct.”
T h e Farm B oard’s co n clu sio n , o f course, m ay n ot b e v a lid
i f risin g p rices or p rod u ctio n co n tro ls succeed in k eep in g
in ven tories from r isin g to an u n m a n a g ea b le le v el, or if ta x ­
p ayers are w illin g to p ay the prem iu m s on such sta b iliza tio n


th e

in surance. T h e CCC is a p p a ren tly r e ly in g u p o n th ese factors
to en a b le it to w eather a situ a tio n sim ila r to the on e the
F ed eral Farm B oard fo u n d u n ten ab le.
D u rin g the 1 9 3 0 ’s, a fter the CCC w as created, th e trend o f
farm p rices turned g e n e r a lly up w ard , b u t th is w as la rg ely
b ecau se o f an ov er-a ll im p rovem en t in b u sin ess con d ition s
and several sea so n s o f p o o r crop y ie ld s w h ich reduced p ro­
d u ction . T h e w ar and p ostw ar dem an d s o f the 1 9 4 0 ’s pushed
p rices even h ig h er. T h u s, th e CCC h as n ot been r e a lly tested
fo r its a b ility to sta b ilize p rices a g a in st w id e flu ctuations in
dem and or su p p ly .
In M ay 1 9 4 1 , C ongress took fro m th e CCC th e p ow er to
fix the lim its w ith in w h ich p rices w o u ld b e su p p orted . In
resp on se to n on -eco n o m ic as w e ll as to eco n o m ic m otives,
C ongress d irected the CCC to m ake lo a n s on 1941 b asic
com m od ities (co tto n , corn, w heat, rice, and to b a cco ) at a
sin g le figure— 8 5 percen t o f p a rity . T h at figu re w as ap p re­
c ia b ly h ig h er than the p rev io u s y ea r’s lo a n rates— 5 6 p er­
cent fo r cotton , 5 7 p ercen t fo r w heat, and 75 p ercen t fo r corn.
A sid e fro m d esig n a tin g the n a tio n ’s m a jo r crop s as “b a sic”
and a p p ly in g the sam e su p p o rt figure, the d irective also
tended to u n ite farm ers in to a g ro u p . T h e resu lt w as that the
su p p ort o f farm p rod u ct p rices b ecam e a gen eral p rogram .
In resp on se to dem ands o f p rod u cers o f b a sic crop s, C ongress
p rojected the 8 5 -p ercen t rate in to th e fu tu re and m ade it
m andatory. P rod u cers o f th o se cro p s co u ld th en know b efore
p la n tin g tim e the a p p ro x im a te le v e ls at w h ich the p rices o f
th eir crop s w o u ld b e su p p orted . In O ctober 1 9 4 2 , the rate
w as raised to 9 0 percen t.
E xp en d itu res fo r farm p rice-su p p o rt p rogram s in th e past
are g iv en in the reports o f the CCC. T h e C o rp oration ’s request
em b od ied in the F ed eral b u d get fo r 195 1 g iv es an estim ate of
w hat p rice-su p p ort o p era tio n s m ay req u ire in that year. Last
year the su p p ort o f b a sic crop s in v o lv e d a net ex p en d itu re o f
1 ,1 8 0 m illio n d o lla r s. S u p p o rts on n o n b a sic co m m od ities o f
6 2 6 m illio n d o lla rs raised the to ta l n et ex p en d itu re to 1,806
m illio n . T he estim ates fo r th o se ex p en d itu res in 195 0 are
1,063 m illio n d o lla r s fo r b a sics and 3 2 3 m illio n fo r n on ­
b asics. In 1951 the estim ates are 7 6 5 m illio n d o lla rs for
b a sics and 123 m illio n fo r n o n b a sics.
T h e in v en to ries o f p rice-su p p o rt co m m o d ities w h ich the
CCC is p resen tly ca rry in g and w h ich it m ay be required to
finance are the m ain reason w h y it h a s asked fo r ad d ition al
op era tin g ca p ita l. T h e d o lla r v o lu m e o f th ese in v en tories is
in crea sin g a n n u a lly as fo llo w s : fro m 1 4 9 ,7 1 9 ,0 0 0 in 1948
(Ju n e 3 0 ) to 1 ,0 8 1 ,7 6 4 ,0 0 0 in 1 9 4 9 , to an estim ated
2 ,1 9 3 ,6 9 1 ,0 0 0 in 1 9 5 0 and 3 ,0 6 4 ,1 7 8 ,0 0 0 in 1 9 5 1 .
T h ese in v en to ry v a lu es are o b v io u s ly n o t costs but, in
the fa c e o f a d e c lin in g ex p o rt m arket and sin ce the com ­
m o d ities can n ot b e so ld d o m e stic a lly at le ss than cost p lu s
ca rry in g ch arges, it w o u ld b e d ifficu lt to p red ict th eir m arket
v a lu e at the tim e o f sa le.
In crea sin g costs o f p rice-su p p o rt p rogram s raises th e p o s­
sib ility or d e sir a b ility o f cu ttin g d ow n on exp en ditures.
There are b a sic a lly o n ly tw o w ays to cut the costs o f the
farm p rice-su p p o rt p rogram . E ith er p ro d u ctio n m ust be re­
duced to the p o in t w here in v en to ries w ill n o t accum ulate,
or p rice su p p o rts m ust b e lo w ered to th e p o in t w here com ­
m o d ities w ill m ove in to n o rm a l trade ch a n n els. T h e prosp ects

M

o n t h l y

R e v ie w

o f th e F ederal R eserve B a n k o f A tla n ta fo r F eb ru a ry 1950

o f either m ethod b ecom in g a rea lity seem rem ote. A s lo n g
as acres are the basis o f the con trol program , farm ers w ill
in ten sify their efforts and, w eather p erm ittin g, w ill com e up
w ith a y ield w hich w ill still require the p u rchase o f su rp lu ses.
Cuts in production , severe en ou gh to reduce the su p p ly to the
p o in t w here there w ould be no su rp lu ses, m igh t be rejected
b y farm ers in a referendum .
T hat the p rice-supp ort p rogram has m eant m uch to farm ers
is beyon d question and it m ay be that the costs o f the
p rogram have been m ore than rep aid in benefits to the ec o n ­
om y as a w h ole. It sh ou ld not be in ferred , how ever, that the
farm ers have prospered so le ly becau se o f G overnm ent pricesu pport activities. M any farm p rod u cts en jo y no su p p ort and
the prices o f other farm products are ab ove su p p ort lev els
and have required no exp en d itu re o f p u b lic fu n d s. Farm ers
have im proved their incom e p o sitio n m a in ly becau se other
segm ents o f the econom y have prosp ered . T hen, too, farm ers
h ave becom e m ore efficient through the a p p lic a tio n o f m ore
m achinery and scien tific in fo rm a tio n in their p rod u ction p ro ­
gram s.
J.L.L.
M e m b e r B a n k P r o fit s
S ixth D istrict m em ber banks as a grou p fou n d 1 9 4 9 m ore
p rofitab le than 1948 accord in g to p relim in a ry ta b u la tio n s
o f reports for last year. N et current earn in gs b efo re in com e
taxes w ere 6 percent greater. N et profits in creased 2 8 .5 p er­
cent. P rofits in 1948 w ou ld have been h igh er, h ow ever, if it
had not been fo r the fa ct that m an y banks set u p , fo r the
first tim e, reserves fo r bad-debt lo sses on loan s.
T he ex p erience o f the m em ber banks as a group du rin g
1 949 c lo se ly p a ra lleled that o f a ll banks th rou gh ou t the
cou ntry so far as net current earn in gs are con cerned. A ll
m em ber banks reported the sam e p ercen tage in crease from
1 94 8 to 1949 as th ose in the D istrict. N et profits after taxes,
how ever, w ere up o n ly 10.6 p ercent at a ll m em ber banks.
P ercen tage rates o f ch an ge in net profits ranged from a
d eclin e o f 2 1 .6 percent at the D istrict banks w ith d ep osits
o f less than one m illio n d o lla r s to an in crease o f 4 7 .1 p er­
cent at the banks w ith d ep osits o f over 2 5 m illio n . T h is d is­
crep an cy results la rg ely from the d ifferent m ethods used by
the banks to p rovid e fo r bad-debt lo sse s on loan s. A greater
p rop ortion o f the large banks set up such reserves in 1948
than did the sm aller ones.
P e r c e n t
S ix t h

DEPOSIT SIZE
OF BANKS

C h a n g e

in

D is t r ic t

N e t

M e m

P r o f it s ,

b e r

1 9 4 8 -4 9

B a n k s

Ala.

Fla.

Ga.

La.

Miss.

Tenn.

+ 9.7
+ 18.9
+ 18.9
+ .4
+ 7.5

— .2
+ 28.4
+ 9.5
+ 58.8
+ 44.9

—13.7
+ 2.4
+ 11.4
+ 53.0
+ 35.3

+ 20.2
+ 6.6
+ 16.6
+ 43.5
+ 37.1

—53.3
— 2.9
— 1.4
—31.4
—19.3

+ 9.2
+ 24.7
— 5.9
+ 25.6
+ 21.4

(In M
illions)
Less than $3.5
$3.5 to $7
$7 to $15
Over $15
All Sizes

T he accom p an yin g tab le o f ch an ges in net p rofits b y size
o f bank and by state show s, how ever, that the profit ex p e r i­
ence o f banks differed co n sid era b ly from state to state. T he
d eclin es in net profits from 1948, o f course, do not n eces­
sa r ily ind icate that the banks had an u n p rofitab le year. A l­
m ost w ithout excep tion a ll m em ber banks earned net profits
d u rin g 19 4 9 . N ot o n ly w ere they a b le to p a y the custom ary
d ivid en d s but th ey w ere also a b le to add su b sta n tia lly to
c ap ital.
C.t .t .



2 1

S ix t h D is t r ic t In d e x e s
DEPARTMENT STORE SALES*
Unadjusted
Adjusted*
Jan.
Dec.
Tan.
Dec.
Jan.
Jan.
1949
1949
1950
1949
1950
1949
378r
642
376
382
285
287
420r
700
313
298
441
443
442r
728
309
291
415
449
422r
539
303
335
265
369
398
326r
253
338
641
244
287
394r
286
392
416
633
312
692
414
280
400r
359
640
393
260
284
364r
333
615
342
225
224
339r
340
669
365
370
365
376r
376
355
382r
611
287
359
26
6
430r
407
731
288
438
272
368r
592
362
370
290
286
817
482
455r
373
395
498

Place
DISTRICT........
Atlanta........
Baton Rouge.
Birmingham..
Chattanooga.
Jackson........
Jacksonville..
Knoxville__
Macon..........
Miami..........
Montgomery.
Nashville....
New Orleans.
Tampa..........

DEPARTMENT STORE STOCKS
Adjusted**
Unadjusted
Jan.
Dec.
Jan.
Jan.
Jan.
Dec.
1950
1949
1950
1949
1949
1949
357
360r
£24
352
321
306
464
432r
424
395
352
367
252
282
313r
240
297
240
326
351
411r
297
374
281
523
539r
452
496
439
441
344
322
344r
306
290
306

Place
DISTRICT........
Atlanta........
Birmingham.
Montgomery.
Nashville....
New Orleans,

Place
SIX STATES...
Alabama....
Florida........
Georgia.......
Louisiana...,
Mississippi..
Tennessee...

GASOLINE TAX COLLECTIONS***
Adjusted*
Unadjusted
Jan.
Jan.
Jan.
Dec.
Jan.
Dec.
1950
1949
1950
1949
1949
1949
233
233
207
207
224
228
228
223
217
221
209
214
219
227
202
200
200
208
231
235
233
180
234
184
276
238
236
273
240
234
205
225
196
220
209
193
247
224
235
213
237
256

COTTON CONSUMPTION*
ELECTRIC POWER PRODUCTION*
Jan.
Dec.
Jan.
Dec. Nov. Dec.
1950
1949
1948
1949
1949
1949
TOTAL.......... 150
143
134 SIX STATES.. 371
363
366
Alabama... 158
155
141
Hydro­
Georgia...
151
141
134
generated 322
330
346
Mississippi.
98
8
6
8
6 FuelTennessee. 123
111
117
406
generated 435
393
Place

MANUFACTURING
EMPLOYMENT***
Dec. Nov.
Place
1949
1949
SIX STATES.. ' 141
138
Alabama...
144
133
136
129
Georgia---- 141
142r
Louisiana... 140
142
Mississippi. 134
134r
Tennessee.. 143
141

CONSTRUCTION CONTRACTS
Dec. Nov. Dec.
Place
1949
1948
Dec. DISTRICT.... 1949
501
337
614
1948
Residential. 596
676
386
Other......... 455
150
580
314
Alabama__ 478
153
175
964
Florida....... 534
145
415
543
144
Georgia.... 442
633
196
156
Louisiana... 369
280
866
147
Mississippi. 717
531
248
152
Tennessee.. 619
445r
339

CONSUMERS PRICE INDEX
Item
ALL ITEMS..
Food..........
Clothing...
Fuel, elec.,
and refrig.
Home fur­
nishings. .
Misc..........
Purchasing
power oi
dollar......

Jan.
1950
169
197
192

Dec.
1949
171
198
192

Jan.
1949
174
208
203

140

138

139

183
155

184
155

195
153

.59

.58

.57

**Adjusted for seasonal variation
***1939 monthly average = 100;
other indexes, 1935-39 — 100

ANNUAL RATE OF TURNOVER OF
DEMAND DEPOSITS
Jan.
Dec.
Jan.
1950
1949
1949
Unadjusted.. 21.1
21.7
20.1
Adjusted**... 20.0
19.2
19.0
Index**........ 80.9
77.7
77.0
CRUDE PETROLEUM PRODUCTION
IN COASTAL LOUISIANA
AND MISSISSIPPI*
Jan.
Jan.
Dec.
1950
1949
1949
Unadjusted.. 318
316
305
Adjusted**... 312
327
300
r Revised

22

M

o n t h l y

R e v ie w

o f th e F ederal R e se rv e B a n k o f A tla n ta fo r F e b ru a ry 1950

M em b er B ank L oans
One th in g p reven tin g a d ec lin e in to ta l lo a n s at m em ber
banks, w h ich u su a lly occu rs at th is tim e o f the year, h a s been
the continued grow th in con su m er b orrow in g. A t the end o f
January, total lo a n s at a ll D istrict m em ber banks w ere 7 m il­
lio n d o lla rs greater than at the end o f D ecem b er. O rd in arily
th ey d eclin e about 2 p ercen t betw een these tw o dates.
T h e com bined lo a n s o f a ll m em ber banks in creased du rin g
January in A lab am a, F lo rid a , L ou isia n a , M ississip p i, and
T ennessee. A t G eorgia m em ber b anks the slig h t d eclin e w as
less than w ou ld o rd in a r ily be ex p ected at this tim e o f the
year. T he grow th w as greater at banks ou tsid e the D istrict
lea d in g cities than at the banks located in these cities.
I n d u s t r y a n d E m p lo y m e n t

C’ T‘ T*

aw arded in the S ixth
D istrict reached a record h ig h in January. A lth o u g h the Jan u ­
ary 1950 total is off about 9 p ercen t from D ecem b er, it is tw ice
as large as that fo r January 194 9 . A record w as a lso set in
the v a lu e o f resid en tial contracts aw arded, as January aw ards
increased 13 percent over the D ecem b er total and w ere 97
percent larger than in January last year,, R esid en tia l aw ards
accounted fo r 50 p ercen t o f the total, as ag a in st 3 8 p ercent
fo r last January and an average o f 4 3 percen t fo r the year
1949. F lo rid a again led the other five D istrict states in both
total and resid en tial aw ards, c la im in g about 4 1 percen t o f
to tal aw ards and 52 percent o f resid en tia l aw ards. In each o f
the six states resid en tial aw ards w ere greater than th ey w ere
a year ago. T he sam e w as true fo r total aw ards ex cep t in
L ouisiana.
A ccord in g to the in d ex o f the A m erican A p p ra isa l C om ­
pan y, construction costs w ere about 3 .6 percen t low er b y the
end o f 1949 than th ey had been at the end o f 1 9 4 8 . N ea rly
a ll o f th is d eclin e occurred in the first eig h t m onths o f the
year. T he Bureau o f L abor S ta tistics in d ex o f w h o le sa le
p rices o f b u ild in g m aterials d rop p ed off m o n th ly fro m the
Septem ber 1948 h ig h p o in t th rou gh A u gu st 1949, but sin ce
that tim e it has risen slig h tly each m onth.
THE v a l u e O F CO N STRU CTION CO NTRACTS

on the b asis o f the d a ily average rate o f
cotton consum ed b y the m ills in A lab am a, G eo rg ia , M issis­
sip p i, and T en n essee, in creased 5 percen t in January, and
w as 12 p ercen t greater than in January 1949. In each o f the
p ast three years cotton con su m p tion has d eclin ed su b sta n tia lly
betw een January and J u ly , the latter m onth b ein g the tim e
w hen the m ills u su a lly clo se fo r a v acation p eriod . In J u ly
1 949, how ever, the m arket fo r cotton go o d s and p roducts
im p roved, and m ill a ctiv ity in creased co n sid era b ly in the
en su in g m onths.
T here w as a lso an in crease in the returns fro m op eration s.
M ill m argin s— the differen ce betw een the p rice o f a p ou n d o f
raw cotton and the p rice o f the prod u ct m ade from it— had
d eclin ed from 6 4 .7 0 cents per p ou n d in D ecem b er 194 7 to
2 7 .7 5 cents in June 1 9 49. H ow ever, betw een June and N o v em ­
ber 1 9 4 9 th ese m argin s rose to 3 8 .1 7 cents, an in crease o f
m ore than ten cents a p o u n d , or 3 7 .5 percent ab ove the June
low . In the six-m on th p erio d , A u gu st th rou gh January, D is ­
trict m ills used 1 ,5 4 8 ,9 7 8 b a les o f cotton, an in crease o f 5
percent over the corresp o n d in g p eriod a year ea rlier.
TEXTILE MILL a c t i v i t y ,

STEEL MILL A C T IV IT Y in the B irm in gh am - G adsden area w as
reported at from 101 to 103 p ercent o f rated ca p a city in
D ecem ber and January, but in February,, op era tio n s d eclin ed
b ecause o f the co a l sh o rta g e; in th e w eek o f F eb ru ary 12
the reported rate w as 82 p ercen t. C oal p rod u ction in A la b a m a



and T en n essee, o n th e b a sis o f a th ree-d ay w ork w eek in
D ecem b er, w as dow n ab ou t 7 p ercen t in January. It w as about
30 p ercen t le ss than in Jan u ary 1 9 4 9 and th ere w ere further
red u ction s in F eb ru ary.
in the D istrict states w as up a
little m ore than 2 p ercen t in D ecem b er, to the h ig h est lev el
sin ce la st F eb ru ary. F or th e first tim e sin ce June, h yd ro­
generated current a ccou n ted fo r slig h tly le ss than h a lf the
total. F or the year 1 9 4 9 , to ta l p ro d u ctio n w as 7 p ercent
greater than in 1 9 4 8 ; h yd ro-gen erated p ow er w as up 2 3 p er­
c en t; and fu el-g en era ted p ow er w as off 6 percen t.
ELECTRIC PO W ER PRO D UCTIO N

M A N UFA CTURIN G EM PLOYM EN T in the D istrict w as 2 percent
h igh er on the average at th e m id d le o f D ecem b er than it w as
a m onth ea rlier, and 3.1 p ercen t ab o v e the O ctober le v el. It
w as, how ever, n ea r ly 6 p ercen t lo w er than a year earlier. In
o n ly three o f the m ore im p ortan t in d u stries— fo o d and k in ­
dred p roducts, a p p a rel, and p a p er and a llie d p roducts— w as
D ecem b er em p lo y m en t greater than in D ecem b er 1948. T he
in d ex o f m a n u fa ctu rin g em p lo y m en t com p u ted b y th is B ank
h ad d eclin ed each m on th fro m O ctober 1 9 4 8 th rough Ju ly
1 949, but had recovered som ew h at in A u g u st and Septem ber.
In O ctober, how ever, la r g e ly as th e resu lt o f the steel strike,
the in d ex d eclin ed to ab ou t the J u ly le v e l. S om e w orkers had
returned to th eir jo b s b y m id -N ovem b er, and b y m id -D ecem ­
ber m an y m ore w ere back at w ork.
In the p rim ary m eta ls in d u stries in A la b a m a , T ennessee,
and G eorgia, em p lo y m en t d ro p p ed 2 3 ,4 0 0 betw een m id-Septem ber and m id-O ctober, but in D ecem b er n e a r ly 2 2 ,0 0 0 o f
th ese w ork ers returned to w ork. A la rg e p ro p o rtio n o f that
num ber w as, o f cou rse, in A la b a m a , w here the m ajority o f
the D istrict iron and steel p la n ts are located . In D ecem ber
the term in ation o f la b o r d isp u tes in sev era l fa b ricated m etals
p la n ts con trib u ted to a g a in o f 8 0 0 w orkers in that group.
T here w ere a lso e m p lo y m en t g a in s d u rin g D ecem ber in A la ­
bam a ch em ica l in d u stries, in tran sp ortation eq u ipm en t, and
in tex tile s. A sm a ll lo ss occurred in the fo o d p rocessin g
p la n ts as a resu lt o f sea so n a l con traction .
D ecem b er m an u fa ctu rin g em p lo y m en t in F lo r id a increased
5.8 percen t fro m N ovem b er, b ut w as 6.1 p ercen t b elow the
lev e l recorded fo r a year ea rlier. T h ere w as a g a in o f 22.1
percen t in e m p lo y m en t in th e fo o d and k in d red p roducts in ­
dustries, as the citrus season p ro g ressed . In the ca n n in g and
preservin g part o f th is grou p , D ecem b er em p loym en t in
F lo rid a w as up 6 8 .3 p ercen t. In fa b rica ted m etal products
also there w as an in crease o f 6 .7 p ercen t in D ecem b er, and
there w ere g a in s in n ea r ly a ll other g ro u p s on w h ich reports
are a v a ila b le ex cep t to b a cco m a n u fa ctu rin g , w here em p lo y ­
ment d eclin ed 5.1 percen t.
In G eorgia, m a n u fa ctu rin g em p lo y m en t w as off seventenths o f on e p ercen t fro m N o v em b er to D ecem b er. T he la rg ­
est g a in fo r the m onth in the state w as in the p rim ary m etals
in d u stries, w here em p lo y m en t in crea sed fo llo w in g settlem ent
o f the steel strike. T h e la rg est decrease w as a sea so n al declin e
in the fo o d and k indred p rod u cts in d u stries, p a rticu la rly in
the ca n n in g and p reserv in g o f fru its and v eg eta b les. T here
w ere g a in s in lum b er and w o o d p rod u cts and in tex tile m ill
p roducts, and lo sse s in the tra n sp o rta tio n eq u ip m en t, apparel,
and ch em ica ls in d u stries.
M an u factu rin g em p lo y m en t in L o u isia n a w as off 1.1 per­
cent from N o v em b er to D ecem b er and 9 .9 percen t below
D ecem b er 1 9 4 8 . In crea ses fo r th e m on th in transportation
eq u ip m en t; stone, c la y , and g la s s; p rin tin g and p u b lish in g ;
and p ap er and a llie d p rod u cts wT
ere offset b y decreases in
lum ber and w o od p rod u cts, m etals, m etal p roducts, and m a­

M

o n t h l y

R e v ie w

o f th e F ederal R eserve B a n k o f A tla n ta fo r F eb ru a ry 1950

ch in ery . A reduction o f 4 .5 p ercent in the fo o d p ro cessin g
ind ustries resulted from a sharp recessio n in sea fo o d item s
a n d from season al redu ction s in beverages, ice cream , and ice.
T en n essee m anufactu rin g em p lo y m en t w as up 1.8 percent
from N ovem ber. T h is increase can be attributed to the return
o f w orkers in prim ary m etals in d u stries, a sea so n a l in crease
in tobacco m anufacture, and sm a ll g a in s in som e other
g rou p s. D ecreases in fo o d , a p p a rel, and p a p er brou gh t the
total in crease dow n som ew hat.
D Ei M
>
#
S a l e s o f C o n s u m e r D u r a b le G o o d s H ig h
C urrent reports show a co n tin u in g sh ift tow ard the b u y ­
in g o f durable good s b y consum ers. January sa les o f h o u se­
h o ld a p p lia n ces at the larger departm ent stores in the S ixth
D istrict this year w ere 31 p ercent greater than January
s a le s last year. Furniture sa les at th ose stores w ere up 13
percent and p ian o, radio, and telev isio n sa les w ere up 7 p er­
cent. On the other hand, w om en ’s dress sa les w ere dow n 17
p ercent and m en’s clo th in g sa les, 13 percent. S a le s d eclin es
in other n on d u rab le goo d s departm ents b rou gh t total sa les
d o w n 2 percent from last year at a ll rep o rtin g departm ent
stores.
A better sh ow in g, com pared w ith last year, w as m ade b y
the D istrict departm ent stores d u rin g the first three w eeks o f
F ebruary. T otal sales at the w eek ly rep ortin g stores exceeded
th ose o f the corresp on d in g p eriod last year b y 7 percent.
C onsum ers th roughou t the U n ited S tates sp en t 2 percent
m ore in January this year at la rg e in d ep en d en t retail stores
rep ortin g to the D epartm ent o f C om m erce than th ey did in
Janu ary 1949. T he reason fo r the increase, h ow ever, w as the
exp an d ed sa les at the du rab le g o o d s stores. M otor v eh icle
d ea lers’ sa les w ere up 31 percent and sa les by fu rn itu re stores
and by lum ber and b u ild in g m aterials d ealers w ere up 6 p er­
cent each. S a les d eclin ed at the stores sp e cia liz in g in n o n ­
d u rab le good s.
Y ear b y year, A m erican consum ers h ave been m ak in g a
greater p rop ortion o f their p u rch ases at the d u rab le good s
stores. In 1946 they spen t about 2 3 cents at the d u rab le g ood s
stores out o f every d o lla r ’s trade at retail stores; in 1947, 27
cen ts; in 1948, 2 9 cents. In 1949, w ith the sa les o f durable
g o o d s ex p an d in g and sa les o f n on d u rab les con tractin g, co n ­
sum ers spent about 31 cents out o f every d o lla r at the durable
g o o d s s to r e s ; 18 cents o f w hich w ent to the au tom otive stores.
S even cents w ent to the lum ber and b u ild in g m aterials d ealers
and 5 cents to hom e fu rn ish in g s stores.
In the past, durable go o d s stores h ave received a larger
p art o f the consum er’s d o lla r d u rin g p erio d s w hen total sa les
w ere at a peak than during p eriod s o f lo w sa les, but in 19 49
that p rop ortion w as larger than ever b efo re— 31 percent. In
p ro sp erou s 1929 their sa les m ade up 2 9 percent o f total sa les.
B y the d ep ression year 1933, on the other hand, durab le
g o o d s store sa les constituted o n ly 2 0 p ercent o f the total.
U se o f in stalm ent credit has m ade p o ssib le a great part o f
this h ig h pu rch asin g o f d u rab le consum er go o d s. C onse­
q u en tly, as w ou ld be exp ected , in stalm en t credit con tin u es to
exp an d in the current p eriod . In stalm en t accounts receivab le
at D istrict departm ent stores at the end o f January w ere 5 9
p ercen t greater than on the co rresp o n d in g date last year. A t
furnitu re stores accounts receiv ab le w ere up 16 percent and
at h o u seh o ld a p p lia n ce stores, 4 7 p ercent. On the sam e date
com m ercial banks in the D istrict had an estim ated 3 8 m illio n
d o lla rs m ore in au tom o b ile in stalm en t p ap er ou tstan d in g
than a year ago.
C. T> T>



2 3

S ix t h D is t r ic t S t a t is t ic s
INSTALMENT CASH LOANS
Volume
No. oi
Lenders Percent Change
Lender
Jan. 1950, irom
Report­
iDec.
Jan.
ing
1949
1949
Federal credit unions.
41
— 15
+ 35
State credit unions...
20
+ 78
+ 11
Industrial banking com­
panies ............. .
10
+ 48
+ 16
Industrial loan companies..
17
— 36
— 4
Small loan companies
40
— 38
4 7
*
Commercial banks...
33
— 2
+ 24

Outstandings
Percent Change
Jan. 1950, irom
Jan.
Dec.
1949
1949
+ 38
0
+ 43
+ 2
+ 4
8
• 1
+ 2

+ 23
+ 1
+ 5
+ 38

RETAIL FURNITURE STORE OPERATIONS
Number
Percent Change
oi
Jan. 195iO irom
,
Item
Stores
Dec. 1949
Jan. 1949
Reporting
Total sales..........
— 49
+ 12
124
Cash sales..........
— 50
- 10
1Q
7
Instalment and other credit sales..
— 49
107
+ 13
Accounts receivable, end of month
— 4
118
+ 16
Collections during month,
— 1
- 5
118
Inventories, end of month. .
- 4
91
+ o
WHOLESALE SALES AND INVENTORIES*
INVENTORIES
SALES
No. oi Percent Change No. oi Percent Change
Item
Firms Jan. 1950, Irom Firms Jan. 31,1950, irom
Report­ Dec.
Jan. Report­ (Dec. 31 Jan. 31
1949
ing
1949
1949
ing
1949
Automotive supplies.
— 26
— 13
4
3
• 8
+ 9
Electrical group
— 22
Full lines..........
3
+ 1
— 11
Wiring supplies
— ii
— 26
3
3
• 2
— 19
— 21
Appliances.......
8
— 23
7
+ 12
— 5
7
0
General hardware
12
+ I
+ 6
+ 4
1 — 26
Industrial supplies...
3
— 74
— 14
— 23
3
4
Jewelry...............
+ *2
Plumbing and heat­
3
ing supplies....
— 16
4
4
+ 5
+ 7
+ ■
i
Confectionery....
0
3
9
• ‘i
3
Drugs and sundries..
9
+ ’6
+ 11
+ 3
15
Dry goods...........
1
+ 25
+ 7
20
+ 16
Groceries
__ j
Full lines..........
19
— 6
• 3
30
3
+ 0
7
Specialty lines.
— 19
■36
7
11
0
Shoes and other
footwear..........
— 24
3
+ 48
1 I
Tobacco products.
7
5
12
9
+ 7
+ 21
— 3
2 — 13
Miscellaneous....
+ 10
14
16
— 5
Total....................
5
93
145
+ 0
+ 4
* Based on U. S. Department of Commerce figures.
DEPARTMENT STORE SALES AND INVENTORIES
INVENTORIES
SALES
Percent Change
No. oi Percent Change
No. ol
Place
Jan. 1950, irom
Stores Jan. 31,1950, irom
Stores
Report­ Dec. 31 Jan. 31
Jan.
Report­
Dec.
ing
1949
1949
ing
1949
1949
ALABAMA
Birmingham....
— 13
- 0
3
— 19
4
— 53
Mobile.............
5
— 60
+ 1
— 7
3
— 2i
Montgomery...
3
— 58
+ '6
FLORIDA
3
Jacksonville....
— 10
+ 27
— 61
4
+ 6
3
+ 4
4
— 48
+ o
+ 10
Orlando..........
— 1
3
— 44
3
— '3
— 54
+
6
5
+ '8
GEORGIA
Atlanta.............
5
— 57
6
+ 8
+ 5
+ 12
Augusta..........
3
— 65
4
— 5
+ 15
+ 10
Columbus........
3
— 60
+ 1
Macon.............
4
6
— 60
+ ‘3
+ 12
+ 1
— 67
4
— 9
4
Savannah........
6
— 65
— 1
— '8
+ is
LOUISIANA
Baton Rouge...
— 62
4
— 6
4
4
+
5
+
New Orleans...
— 54
4
— 2
+ 6
6
+ o
MISSISSIPPI
Jackson............
— 57
4
- 0
4
— 1
+ 2
Meridian..........
— 63
3
— 8
TENNESSEE
Bristol.............
3
3
— 68
— 9
— 4
+ 5
Chattanooga...
3
— 62
4
+ 4
+ 2
+ 6
Knoxville........
— 61
— 8
4
— 5
Nashville..........
6
— 64
5
• 'o
— '3
22
— 51
22
OTHER CITIES*..
- 10
+
3
■ 3
— 57
—
1
76
DISTRICT................ 113
5
—
1
+
* When fewer than three stories report in a given city, the sales or stocks
are grouped together under “other cities."

2 4

M

o n t h l y

R e v ie w

o f th e F ederal R eserve B a n k o f A tla n ta fo r F e b ru a ry 1950

National Business Conditions
n d u s t r i a l outp u t in creased som ew h at further in January
but w as reduced b y w ork sto p p a g es in the e a r ly p art o f
F ebruary. C onstruction a ctiv ity w as m ain tain ed at v ery h ig h
le v e ls fo r th is tim e o f year. P erso n a l in co m es w ere su p p le ­
m ented b y la rg e paym ents o f in su ran ce d iv id en d s to veterans.
V a lu e o f departm ent store sa les w as c lo se to la st y ea r’s lev e l
and sa les o f a u tom ob iles w ere co n sid era b ly larger. P rices in
gen eral rem ained stab le.

I

I n d u s t r ia l P r o d u c t io n
T he B oard’s se a so n a lly ad ju sted in d ex o f in d u stria l p rod u c­
tion rose 3 p o in ts in Jan u ary to 183 percen t o f the 19 3 5 -3 9
a verage — the h igh est lev el sin ce M arch 1 9 4 9 . In February,
in d u strial ou tp u t h a s ap p a ren tly d eclin ed ab ou t 5 p o in ts,
la rg ely as a resu lt o f w ork sto p p a g es in the co a l and au tom o­
b ile ind ustries.
P rod u ction o f d u rab le g o o d s in creased 3 p ercen t in Janu­
ary reflecting a la rg e ex p a n sio n in ou tp u t o f au to m o b iles,
and sm a ller g a in s in n on ferro u s m etals and iro n and steel.
F o llo w in g m od el ch an geovers, a u to m o b ile p rod u ction b y
m id-January regain ed the record rate o f la st fa ll. B eg in n in g
January 2 5 , h ow ever, auto a ssem b ly o p eration s w ere reduced
ab ou t on e-fifth b y a la b o r d isp u te at the p la n ts o f a m ajor
produ cer. O utput at steel m ills in creased ito 9 5 p ercen t o f ca ­
p a city in m id-January but su b seq u en tly d ecreased a s a resu lt
o f co a l shortages. F or the m on th o f F ebruary in g o t p rod u c­
tion w as sch ed u led at about 8 9 p ercen t o f cap a city , but dur­
in g the w eek b eg in n in g F ebruary 2 7 it d rop p ed sh a rp ly to 7 4
p ercent. L um ber p rod u ctio n d eclin ed in January fro m th e e x ­
c e p tio n a lly h ig h D ecem ber le v e l.
O utput o f n on d u rab le g o o d s in Jan u ary w as m ain tain ed at
ea rlier h ig h lev els. T h ere w ere sm a ll in creases in cotton co n ­
su m ption , rayon d eliv eries, p ap er and p ap erb oard p ro d u c­
tion , and ch em ica ls outp u t. P ro d u ctio n o f m ost other n o n ­
d u rable g o o d s show ed sm a ll d eclin es or little ch an ge from
th e lev el o f the p reced in g m onth.
M in erals p rod u ction sh ow ed a slig h t d e c lin e in January
and in F ebruary w as sh a rp ly cu rtailed fu rther, as a resu lt o f
w ork stop p ages at co a l m in es. O utput o f p etroleu m show ed
little chan ge, but m eta ls p rod u ction in creased .
E m p lo y m e n t
E m p loym en t in n o n agricu ltu ra l estab lish m en ts, se a so n a lly
ad justed, w as little changed in January as a sharp drop in
em p loym en t at co a l m in es w as m ore than o ffset b y in creases
in con stru ction and in p la n ts m a n u factu rin g d u rab le g ood s.
E m p loym en t in m ost other lin e s sh ow ed little ch an ge. U n em ­
p loym en t rose to 4 .5 m illio n p erson s in January, up 1.8 m il­
lio n from January 19 4 9 .
C o n s tr u c tio n
V a lu e o f con stru ction contract aw ards d eclin ed se a so n a lly in
January but w as m ore than o n e-h a lf la rg er than a year
earlier. T he num ber o f new resid en tia l u n its started in Jan u ­
ary w as estim ated b y the Bureau o f L abor S ta tistics to be
8 0 .0 0 0 as com pared w ith 7 9 ,0 0 0 u n its in D ecem b er and
5 0 .0 0 0 in January 19 4 9 .



D is t r ib u t io n
V a lu e o f departm ent store sa le s sh o w ed som ew h at m ore than
the u su a l sea so n a l d e c lin e in Jan u ary and th e B oard ’s ad ­
ju sted in d ex w as at 2 8 2 p ercen t o f th e 1 9 3 5 -3 9 a verage, com ­
p ared w ith 2 9 3 in D ecem b er an d 2 7 6 in N ov em b er. S a les
d u rin g the th ree w eeks en d in g F eb ru ary 18 w ere m ain tain ed
at the sam e le v e l as in the co rresp o n d in g p erio d la st year.
S a le s o f a p p a rel at d ep artm ent stores rem ain ed b elo w yeara go le v e ls, but sa les o f m ost d u ra b le g o o d s w ere in greater
v o lu m e. S a le s o f new a u to m o b iles w ere e x c e p tio n a lly large
fo r th is season o f the year. T h e p aym en t o f in su ran ce d iv i­
dends to veteran s b e g in n in g th e m id d le o f Jan u ary is p ro ­
v id in g an im p ortan t su p p lem en t to p erso n a l in co m e at th is
tim e, ten d in g to in crea se reta il sa les.
S h ip m en ts o f ra ilro a d reven u e fr e ig h t ro se som ew hat in
January, after a llo w a n c e fo r sea so n a l ch a n g es, as increased
lo a d in g s o f m ost m an u factu red g o o d s and o re m ore than o ff­
set d eclin es in g rain and fo r est p ro d u cts. F reig h t ca rlo a d in g s
d rop p ed sh a rp ly in e a rly F eb ru ary, reflectin g m a in ly the cur­
ta ilm en t o f co a l and cok e p ro d u ctio n .
C o m m o d i t y P r ic e s
T he gen era l w h o le sa le p r ic e in d e x rose som ew h at fro m m idJanuary to the th ird w eek o f F eb ru ary, reflectin g la r g e ly in ­
creases in p rices o f cotton , h o g s, and p ork . T h ese changes
resu lted in p art fro m sea so n a l red u ction s in su p p lies. P rices
o f lum ber and som e other b u ild in g m a teria ls a lso w ere ad ­
van ced in th is p erio d . O n th e other h an d , p rices o f som e te x ­
tile and ch em ica l p rod u cts and a u to m o b iles w ere reduced.
T h e a verage le v e l o f con su m er p rices d eclin ed fu rth er by
.4 percen t fro m D ecem b er to Jan u ary o w in g to sm a ll de­
creases in reta il p rices o f fo o d s an d m ost oth er grou p s o f
go o d s and services, ex cep t fu e ls and rent w h ich con tin u ed to
in crease.
B a n k C r e d it
D u rin g Jan u ary and the first h a lf o f F eb ru ary, h o ld in g s o f
G overnm ent secu rities at m em ber b anks in le a d in g c ities and
F ed eral R eserve B anks com b in ed d eclin e d b y ab o u t 1.5 b il­
lio n d o lla r s, in d ic a tin g su b sta n tia l p u rch a ses b y nonbank
in vestors. F ed era l R eserve B anks so ld la r g e am ounts o f
T reasu ry b ills and a su b sta n tia l v o lu m e o f b o n d s in respon se
to a stron g m arket dem and, b ut p u rch ased certificates and
notes. R ep o rtin g m em ber b anks p u rch ased b on d s, w h ile re­
d u cin g th eir h o ld in g s o f shorter-term secu ritie s.
B ank h o ld in g s o f corp orate and m u n icip a l secu rities in ­
creased fu rth er in Jan u ary an d F eb ru ary, and real estate
lo a n s ex p a n d ed m o d era tely . B u sin ess lo a n s d id n ot show the
u su a l sea so n a l d eclin e. A d ju sted dem and d ep o sits at report­
in g b anks d eclin ed su b sta n tia lly , b ut T rea su ry d ep o sits in ­
creased.
M em ber bank reserves sh ow ed little n et ch a n g e from late
D ecem b er th rou gh th e first th ree w eek s o f F eb ruary. D e ­
creases in m on ey in c irc u la tio n and in T reasu ry d ep osits su p ­
p lied reserves, w h ich w ere la r g e ly a b sorb ed b y the d eclin e in
F ed era l R eserve h o ld in g s o f G overnm ent secu rities.
T h e

B o ard

o f

G o v ern o r s