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Balance of Payments: The Problem Can Export Credits Help Solve It? A tla n t a , G e o r g ia January • 1963 Also in this issue: T E N N E S S E E 'S C LO SE M ATCH S IX T H B U S IN E S S : TO N A T IO N D IS T R IC T S T A T IS T IC S D IS T R IC T B U S IN E S S C O N D IT IO N S S t t fe r a J fy s e m iB a n lt c f f F o r sev era l years, th e U n ite d S tates h a s b e e n fa c e d w ith la rg e b a la n ce o f p a y m e n ts d eficits. T h e se d eficits o ccu rred b e c a u se w e h a v e b een b u y in g fr o m fo reig n ers an d len d in g an d g iv in g th em m o re th an th ey h a v e b o u g h t fro m u s or len t or g iv en us. O n e c o n se q u e n c e o f th ese d eficits is th at w e h a v e h a d to settle th em p artially w ith g o ld ; an d th is h as ca u se d us to lo s e a b o u t $ 6 ^ b illio n o f g o ld in th e la st five years. N a tu ra lly , A m er ica n s are w o rried a b o u t th e situ a tio n . O n tak in g o ffice, P resid en t K en n e d y a n n o u n c e d th at o n e o f h is p rim ary g o a ls w as the elim in a tio n o f th e b a la n ce o f p a y m e n ts d eficit; an d o n e o f th e m ost e ffectiv e w a y s h e saw o f a ch iev in g this o b jec tiv e w a s th e stim u la tio n o f ou r civ ilia n ex p o rts. T h ere w ere o th er step s th at co u ld b e ta k en , to b e su re. O u r a llies h a v e b e e n p ersu a d ed to b u y m o re o f th eir m ilita ry e q u ip m en t fro m u s. C o sts o f m a in ta in in g o u r tro o p s a b ro a d h a v e b e e n cut. T h e S ecretary o f th e T rea su ry h a s u rged E u r o p e a n g o v er n m en ts to relax th eir co n tr o ls o v er their ca p ita l m ark ets, so th at fo reig n b u sin e sse s can b o rro w at h o m e rather th an in N e w Y o rk . N e v e r th e le ss, an in crea se in e x p o rts h a s h igh priority in th e ca m p a ig n to e lim in a te th e b a la n c e o f p a y m en ts d eficit. V a rio u s m ea su res are b ein g e m p lo y e d o n th is p articu lar fron t. C urrent efforts to h o ld d o w n p rice an d c o st in crea ses are p art o f th e a ttem p t to im p ro v e ou r b a la n ce o f trade. T h e r ev isio n o f th e g u id elin es fo r d ep re c ia tio n o f b u sin ess c a p ita l a ssets, i.e ., p la n ts, m a ch in ery , e tc ., is e x p e c te d to e n c o u ra g e m o d e rn iz a tio n o f th is eq u ip m en t, th u s lo w erin g c o sts a n d e n a b lin g ou r m a n u fa ctu rers to c o m p e te m o re e ffectiv ely a b ro a d . T h e C o m m e rc e D e p a r tm e n t h a s strea m lin ed its o r g a n iza tio n in o rd er to p r o v id e q u ick er a n d m o re effectiv e in fo rm a tio n to A m e r ica n b u sin e ssm e n a b o u t e x p o rt o p p o rtu n ities. M a n y fo reig n g o v ern m en ts h a v e p ro v id e d sp e cia l h elp to th eir e x p o rt ers fo r years. O n e su ch aid w a s th e p r o v isio n o f e x p o rt cred it in su ra n ce. A b u sin e ss firm sellin g ab ro a d n atu rally runs so m e w h a t greater risks than w h en it sells at h o m e . T h e cred it risk is greater b e c a u se cred it in fo r m a tio n is freq u en tly n o t so relia b le or rea d ily a v a ila b le a n d b ec a u se the ex p o rter is at so m e d isa d v a n ta g e in p ressin g h is cla im in a fo reig n cou rt if th e fo re ig n b u y er d efa u lts. In a d d itio n , h e runs a risk th at th e fo reig n g o v ern m en t w ill p rev en t its citizen s fro m p a y in g their b ills th rou gh the im p o sitio n o f e x ch a n g e c o n tro ls or th rou gh ex p ro p ria tio n o f their p ro p erty or w ill d e v a lu e th e cu rren cy. T o reliev e their ex p o rters o f th ese b u rd en s, so m e fo reig n g o v ern m en ts g u a ra n tee th em (fo r a f e e ) ag a in st lo s se s fro m th ese ca u se s. Export Credits in the U nited States In th e U n ite d S ta tes, th e E x p o r t-Im p o r t B a n k (fr e q u e n tly c a lle d E x im b a n k ) h a s fo r so m e tim e offered g u a ra n tees o n letters o f cred it issu ed b y b a n k s an d o n so m e lo a n s b y A m er ica n b a n k s to fo reig n ers. It h as a lso a ssisted A m e r ic a n ex p o rters b y m a k in g lo a n s to fo reig n ers fo r th e co m p le tio n o f p ro jects th at req u ire th e p u rch ase o f A m e r ic a n eq u ip m e n t an d su p p lies. In 1 9 6 1 , E x im b a n k in itia ted th ree n ew p ro g ra m s d esig n e d to p u t A m e r ic a n ex p o rters o n a p a r w ith th eir fo r e ig n c o m p etito rs, in so fa r as c r ed it in su ra n ce is co n c e r n e d . T h e first o f th ese is a p ro g ra m o f p o litic a l an d cred it risk g u aran tees to b a n k s th at is a d m in istered b y E x im b a n k . T h e o th er tw o p ro v id e in su ra n ce fo r ex p o rters, rather than fo r b a n k s, an d are a d m in istered b y th e F o reig n C red it In su ra n ce A sso c ia tio n , w h ic h is a grou p o f sev en ty tw o in su ran ce co m p a n ie s p lu s th e E x p o r t-Im p o rt B a n k . Eximbank Credit G uarantees T h is p ro g ra m is d esig n ed fo r m ed iu m -term tra n sa ctio n s, i.e ., th o se in w h ich cred it is e x te n d e d to th e fo reig n b u y er fo r a p erio d o f b etw een six m o n th s an d five yea rs. F o r th e tra n sa ctio n to b e a c c e p te d b y E x im b a n k , th e fo re ig n b u y er m u st p a y 2 0 p er c en t o f th e p u rch a se p rice in ca sh , a lth o u g h , if th e b u yer an d th e co u n try are b o th c o n sid e re d to b e g o o d risk s, the d o w n p a y m en t m a y b e r e d u ced to ten p ercen t. T h e e x p orter w ill tak e the p ro m isso ry n o te s o f th e fo reig n b u y er for th e rest o f the a m o u n t a n d w ill carry 15 p e rcen t o f e a c h n o te fo r h is o w n a c c o u n t a n d risk. T h e e x p o rter ’s b a n k m u st b e w illin g to a c c ep t th e cred it risk o n the earlier m atu rities o f th e rem a in in g 8 5 p e r c en t o f e a ch n o te (th e tim e p erio d co v e r e d b y th e first h a lf o f th e in sta lm en ts or the first eig h teen m o n th s, w h ic h e v er is sh o r te r ). E x im b a n k w ill th en gu aran tee th e b a n k ag a in st lo ss d u e to p o litic a l ev en ts fo r th e ea rly m a tu rities a n d ag a in st b o th cred it an d p o litic a l risk s fo r th e la ter o n e s. T h e b a n k m u st fin an ce w ith o u t reco u rse, h o w e v er . T h is is to say, it m u st a gree that, if the fo reig n b u y er d efa u lts, th e b a n k ca n n o t d em a n d p a y m en t fro m th e ex p o rter. T h is h o ld s true b o th o n th e earlier m atu rities, w h ere th e b a n k h a s n o E x im b a n k cred it g u aran tee, an d o n the la ter o n e s, w h ere it d o es. T o illu strate, su p p o se th at an ex p o rter sells so m e farm m a ch in ery to a co m p a n y in V e n e z u e la , p ro v id in g fo r sem i a n n u a l in sta lm en t p a y m e n ts (th e in sta lm en ts m u st b e sem i a n n u a l or m ore freq u en t to q u a lify ) o v e r a p erio d o f three years. I f the co n tra ct p rice (in c lu d in g in terest o n the fin a n ced p o rtio n , in su ra n ce, freig h t c o sts, an d so fo r th ) c o m e s to $ 6 0 ,0 0 0 , th e b u y er w ill p a y $ 1 2 ,0 0 0 in ca sh and w ill g iv e th e ex p o rter six n o te s o f $ 8 ,0 0 0 ea ch . T h e e x p o rter’s b a n k w ill im m e d ia te ly p a y th e ex p o rter 85 p er c e n t o f th e $ 4 8 ,0 0 0 , or $ 4 0 ,8 0 0 . U p o n r eceip t o f e a ch o f th e b u y e r ’s in sta lm en ts, th e b a n k w ill p a y th e ex p o rter $ 1 ,2 0 0 , so th at o v er th e six in sta lm en ts th e ex p o rter w ill g et b a c k h is $ 7 ,2 0 0 or, in o th er w o rd s, h is 1 5 -p e r c en t stak e in the tra n sa ctio n . T h e b a n k ta k es th e cred it risks on the first th ree in sta lm e n ts, b u t after th at it is fu lly g u aran teed b y E x im b a n k . T h e 1 5 -p e rc e n t stip u la tio n is in clu d ed to assu re th e co n tin u in g in terest o f the ex p o rter in th e tra n sa ctio n u n til fin al p a y m e n t is receiv ed . Foreign Credit Insurance E x im b a n k w a s g iv en the p o w er in 1 9 5 4 to p ro v id e in su ra n ce d irectly to ex p o rters o n c o m m o d itie s h eld ab ro a d o n co n sig n m e n t a w a itin g sale. In 1 9 6 0 , E x im b a n k p ro v id e d p o litic a l risk in su ra n ce o n e x p o rt sa les, an d in F eb ru a ry 1 9 6 1 th e P r esid en t d irected E x im b a n k to p ro v id e c o m p r e h e n siv e e x p o r t cred it in su r a n ce c o v e r in g c o m m e r c ia l as w e ll as p o litic a l risk s. D u rin g 1 9 6 1 E x im b a n k w o r k e d o u t a p ro g ra m w ith p riv a te in su r a n ce c o m p a n ie s to fo r m th e F o r e ig n C red it In su ra n ce A s so c ia tio n ( F C I A ) , w h ic h b e g a n b u sin e ss in F eb ru ary 1 9 6 2 . F C I A n o w p r o v id e s tw o ty p e s o f in su ra n ce fo r e x p orters, sh o rt term an d m e d iu m term . ( a ) S h o rt-term tra n sa ctio n s are th o se th at p ro v id e for p a y m e n t b y th e fo r e ig n b u y er w ith in a p e r io d u su a lly n o lo n g er th an 1 8 0 d a y s. A n ex p o rter m a y in su re h is sales to an y rep u ta b le fo re ig n b u y er up to a lim it o f $ 1 5 ,0 0 0 per b u y er if h e m e e ts c erta in c o n d itio n s. In th e first p la c e , h e m u st in su re a ll h is fo r eig n cred it sa les a n d rep ort m o n th ly o n th em (e x c e p t in th e c a se o f sa le s to C a n a d a an d sales in w h ic h th e b u y er p r o v id es secu rity fo r p a y m e n t). T h e r ea so n fo r th is req u irem en t is th a t F C I A m u st b e ab le to sp read its risk s o v e r a la rg e n u m b er o f tra n sa ctio n s. I f it w ere n o t fo r th is p ro v isio n , a n e x p o rter w o u ld b e free to in su re (a n d p a y p rem iu m s o n ) o n ly h is risk ier sa les. S e c o n d , th e ex p o r te r m u st m a in ta in a t le a s t tw o cred it rep orts o n h is cu sto m er. T h ird , th e g o o d s so ld a b ro a d m u st b e so ld fo r d o lla rs a n d m u st b e “m a d e in th e U n ite d S ta tes”— m ea n in g sp ec ifica lly th at at le a st 5 0 p er c e n t o f th e p ro d u c t’s v a lu e m u st h a v e b e e n a d d e d b y U . S. la b o r or m ateria ls. I f th e ex p o r te r m e e ts th e se c o n d itio n s, h e is in su red a g a in st 9 5 p e r ce n t o f lo s s d u e to p o litic a l risk an d 85 p e rcen t o f lo s s fro m cred it risk. E x im b a n k a ssu m es all o f th e p o litic a l risk , an d it a n d th e in su ra n ce c o m p a n ie s sp lit the cred it risk eq u a lly . P o lic ie s are w ritten fo r o n e y ea r a n d m a y b e re n e w e d . T h e a m o u n t o f p rem iu m th e ex p o rter m u st p a y d e p e n d s u p o n th e risk in ess o f th e c o u n tries in w h ic h h is b u y ers are lo c a te d a n d th e len gth o f th e cred it term s h e offers. C o u n tries are rated , an d th e p rem iu m rises a s th e ratin g d e c lin e s. L ik e w ise , th e lo n g er th e term s o f c red it, th e g reater th e risk o f lo s s an d, so , the h ig h er th e p rem iu m . O n “ a v era g e risk ” c o u n tr ie s, th e p re m iu m is cu rren tly a v era g in g a b o u t o n e p ercen t. ( b ) M e d iu m -ter m tra n sa ctio n s are th o se in w h ich the ex p o rter e x te n d s c red it to h is fo r e ig n b u y e r fo r p erio d s b e tw e e n six m o n th s an d five y ears. U n lik e th e sh ort-term p lan , th e ex p o r te r d o e s n o t h a v e to in su re a ll h is m e d iu m term sa les, a lth o u g h h e m a y d o so if h e lik e s. In oth er w o rd s, th e ex p o r te r m a y in su re an in d iv id u a l tra n sa ctio n , a series o f sa les to o n e b u y er, o r a ll o f h is e x p o rt sales. T h e la st c a te g o r y (c a lle d th e “w h o le tu r n o v er ” ) c o sts the le a st b e c a u se th e sp rea d o f risk is g rea test. T h e c o n d itio n s are m o stly th e sa m e as fo r an E x im b a n k g u a ra n tee to a b an k , i. e ., th e b u y e r m u st p u t u p 2 0 p er c e n t o f th e p u r c h a se p rice, th e d eb t m u st b e p a id off in in sta lm e n ts n o less fre q u en t th a n e v e r y six m o n th s, th e n o te s m u st be p a y a b le in d o lla rs a t a U . S. c o m m e r c ia l b a n k , a n d th e exp orter reta in s 15 p e rcen t o f th e cred it a n d p o litic a l risks, sp read o v er all o f th e n o te s. A g a in , p re m iu m s vary w ith th e c o u n try c o n c e r n e d a n d w ith th e term o f credit. L ik e th e sh o rt-term p la n , E x im b a n k a ssu m es th e p o litica l risk, a n d th e in su ra n ce c o m p a n ie s sp lit th e cred it risk eq u a lly w ith E x im b a n k . T h e p r o c e e d s o f b o th sh o rt- a n d m ed iu m -term in su r a n ce c a n b e a ssig n e d . T h is sh o u ld m a k e it e a sier fo r e x p orters to g et b a n k fin a n cin g , fo r th e y ca n a ssign th e p r o c e e d s o f th e in su ra n ce to th e b a n k th a t ta k es th e fo reig n . 2 • b u y er’s n o tes. U n lik e th e E x im b a n k g u a ra n tees, th e b an k d o e s n o t h a v e to fin an ce th e e x p o rter w ith o u t reco u rse, a lth ou gh , n atu rally, th e e x p o rter w o u ld p refer n o n re co u rse fin an cin g. Export Credits a n d the S ix th Federal R eserve District In the N o v e m b e r 1 9 6 2 issu e o f th is Review, w e e x a m in ed so m e o f th e actu a l p r a ctices o f D istr ic t b a n k s in fin a n cin g fo reig n trade. T h is stu d y le d to th e c o n c lu sio n s th at D istrict b an k s w ere rather le ss in c lin e d to co m m it th eir o w n fu n d s in th is b u sin e ss th an w ere th eir N e w Y o r k cou n terp arts an d th a t e x p o r t fin a n cin g w a s le ss im p o rtan t than im p ort. T h e e x p la n a tio n fo r th ese o b se rv a tio n s is rela tiv ely sim p le. T h e D istr ic t fo r m a n y y ea rs w a s prim arily agricu ltural, a n d its ex p o rts w ere p r ed o m in a n t ly a gricu ltu ral sta p les, su ch as c o tto n an d to b a c c o , and th e p ro d u cts o f fo rests a n d m in e s, su ch as n a v a l stores, lu m b er, an d p h o sp h a te . T h e se c o m m o d itie s w ere (a n d still a r e ) freq u en tly ex p o r te d b y n a tio n a l c o n c e rn s, h e a d q u artered p erh ap s in N e w Y o r k , th a t b u y fro m lo c a l p ro d u cers an d c o n so lid a te th eir p u rch a ses in to en tire sh ip lo a d s. It w a s o fte n m o re c o n v e n ie n t fo r th e m to fin an ce their o p era tio n s in N e w Y o r k or L o n d o n . C o n se q u e n tly , fe w D istr ic t b a n k s a cq u ired a tra d itio n o f d e a lin g in fo reig n trad e or a great d e a l o f ex p e r ie n c e in it. In m a n u factu rin g, w h ich is g ro w in g in im p o rta n ce, th e sam e ten d en cy is at w o rk . L o c a l p la n ts are o fte n d iv isio n s or su b sid iaries o f n a tio n a l co n c er n s. E x p o r t sh ip m en ts are freq u en tly h a n d led b y th e h e a d o ffice or a sp e c ia l in ter n a tio n a l su b sid iary lo c a te d , u su a lly , in N e w Y o r k . T h en , to o , th e really b ig sh ip m en ts m a y req u ire fin a n cin g th at is b e y o n d th e ca p a c ity o f a n y b u t th e la rg e N e w Y o r k b a n k s. In oth er w o rd s, D istrict b a n k s fin a n ce a r ela tiv ely sm all p ro p o rtio n o f D istrict ex p o rts, an d b a n k m a n a g e m e n t h as tra d ition ally preferred to c o m m it its fu n d s in d o m estic lo a n s, w h ere th e risk s are m o re c lea r ly u n d e r sto o d and th e co sts are lo w er. D istrict b a n k s ap p a ren tly are in terested in in crea sin g th eir share o f ex p o rt fin an cin g , h o w e v e r , an d b e lie v e that the n ew p rogram s m a y h elp in th is d irectio n . F o r ex a m p le , th e b a n k s in terv iew ed in ou r r ecen t su rv ey in d ic a te d that in 1 9 6 1 a b o u t 6 0 p ercen t o f th e ex p o r ts fin a n ced b y th em w ere stap le co m m o d itie s, su ch as p h o sp h a te , lu m b er, grain, n a v a l stores, c o tto n , an d to b a c c o , a n d th a t 2 5 p ercen t w ere co n su m er g o o d s, su ch a s citru s p ro d u cts, se a fo o d , p ou ltry, h o u se h o ld a p p lia n ce s, a n d so o n . T h u s cap ital g o o d s, su ch as in d u strial an d b u sin e ss m a ch in ery , c o n stitu ted o n ly 15 p ercen t o f th e ex p o r ts th e y fin a n ced . T h e largest grow th in ex p o rts, h o w ev e r, is lik e ly to c o m e in the la st ca teg o ry , as m a n u fa ctu rin g g ro w s in th is area. T h en , to o , th e m ed iu m -term g u a ra n tee a n d in su ra n ce p ro gram s are sp ecifica lly a im ed at th e se ty p es o f m a n u fa ctu res, w h ich are rela tiv ely e x p e n siv e an d y ie ld th eir returns o n ly o v er a co n sid e r a b le p e r io d o f tim e. S ev era l b a n k s p o in ted o u t, h o w ev er , th at th ere are still c o m p a r a tiv ely fe w m an u factu rers o f th ese ty p es o f g o o d s in this area an d c a u tio n ed again st a cc e p tin g th e n e w p rogram s as m ira cle w ork ers. The Future o f Export Credits T h e g u a ra n tee a n d in su ran ce p rogram s are still q u ite n ew , a n d b a n k ers an d ex p o rters are still fe e lin g th eir w a y in th eir u se. O n ly tim e a n d e x p er ie n c e w ill re so lv e so m e o f th e q u e stio n s th a t n o w e x is t in p e o p le ’s m in d s a b o u t th em . F o r ex a m p le , th e n e w p rogram s o b v io u s ly c a n n o t e lim in a te a ll risk. B a n k s, it w ill b e rem em b ered , are req u ired to a c c ep t th e cred it risk o n th e ea rly m a tu rities u n d er the E x im b a n k g u a ra n tee p rogram , a n d th ey m u st g iv e up their right o f reco u rse a g a in st th e e x p o rter in c a se o f d efau lt b y th e fo r e ig n b u y er. S ev era l o f th e b a n k ers in terv iew ed in o u r su rv ey w ere ap p a ren tly n o t w illin g to a c ce p t e v en this d egree o f risk; an d sev era l in d ica te d th at th e y w ere reta in in g th e right o f reco u rse e v e n w h e n th e ex p o rter a ssig n ed F C I A in su ra n ce to th em . U n d e r ly in g th is a t titu d e m a y b e u n certa in ty a b o u t in terp reta tio n o f so m e o f th e fine p rint in th e gu a ra n tee a n d in su ra n ce co n tracts. F o r in sta n c e , th e F C I A p o lic y sp ecifies u n d er “E x c lu sio n s” th at th e p o lic y d o e s n o t a p p ly (a m o n g o th er th in g s) t o any lo ss ( a ) d u e to th e fa u lt o f th e in su red ex p o rter; ( b ) w h ere a d isp u te e x ists, u n til th e lo s s sh a ll h a v e b een fin ally d eterm in ed to b e a v a lid an d le g a lly en fo rcea b le in d eb te d n ess o f th e b u yer; a n d ( c ) arisin g fro m u n w illin g n e ss o f th e b u y er to a c c e p t th e p ro d u cts. R ep re se n ta tiv e s o f F C I A p o in t o u t th a t it is p o ssib le fo r a b a n k to retain its righ t o f re c o u rse in th e c a se o f failu re o f th e e x p o rter to c o n fo r m to term s o f th e in su ran ce c o n tra ct, b u t n o t o th erw ise. A t le a st o n e D istrict b a n k is p rep a red to fin an ce in su red m ed iu m -term ex p o rts if th e ex p o rter w ill e x e c u te an a g reem en t to ( a ) m e e t all th e req u irem en ts o f th e in su ra n ce co n tr a c t a n d ( b ) reim bu rse th e b a n k if F C I A , b e c a u se o f th e ex p o r ter ’s failu re to m e e t th e req u irem en ts, d o es n o t p a y th e in su ra n ce b e n e fits w ith in se v e n m o n th s. T h e b a n k is th u s fu lly p ro tected , h a v in g reco u rse ag a in st eith er F C I A or th e ex p o rter. It m u st d ep en d o n F C I A fo r reim b u rsem en t so lo n g as the ex p o rter m e e ts a ll h is o b lig a tio n s an d ca n n o t lo o k alw a y s to th e e x p o rter if a n y d e la y in p a y m en t o cc u rs, as it co u ld if it h a d reta in ed fu ll right o f reco u rse a g a in st th e ex p orter. F C I A a lso argu es th at to elim in a te th e req u irem en t that the b u y er a c c e p t th e g o o d s w o u ld o p e n th e d o o r to fraud b y u n scru p u lo u s b u sin e ssm e n . In a n y c a se , th e y say, the b an k ca n p r o tec t itse lf b y n o t m a k in g a lo a n to th e e x p orter u n til it h a s th e p ro m isso ry n o te o f th e foreign bu yer. T h is n o te w o u ld p resu m a b ly b e d e liv ered to the fo reig n b a n k th a t a cts as th e ex p o r te r ’s a g en t at th e tim e the d o c u m en ts c o v e r in g th e sh ip m en t are d eliv ered to the fo reig n b u y er. F u rth er p ro te c tio n c a n b e p ro v id ed b y in sistin g th a t th e ex p o r ter w rite in to h is sales co n tra ct a p ro v isio n th at d eliv ery o f g o o d s in a cco rd a n c e w ith th e term s o f th e co n tra ct co n stitu te s a c c e p ta n c e o f th e g o o d s. A s k n o w le d g e o f th e gu a ra n tee an d in su ra n ce p rogram s b e c o m e s m o re w id esp rea d , b a n k s an d ex p o rters w ill c o m e to u n d ersta n d m o re clea r ly th eir p o ssib ilities a n d their lim ita tio n s. C erta in ly , w h a te v e r th eir lim ita tio n s, th ey red u ce to so m e e x te n t th e risk s o f fo r e ig n trad e. T h ey sh o u ld n o t b e e x p e c te d to p r o v id e b y th e m se lv es the so lu tio n to o u r b a la n c e o f p a y m e n ts p ro b lem . T h ey sh o u ld , h o w e v e r , co n trib u te m ea su ra b ly to w a rd this goal. L a w re n c e F. M a n sfie ld • 3 • Tennessee’s Business: Close Match to Nation R e c e n t ch a n g es in e c o n o m ic c o n d itio n s in T e n n e sse e h a v e c lo s e ly r esem b led th o se th at h a v e o ccu rred th ro u g h o u t the co u n try as a w h o le . P e r so n a l in c o m e , w h ich is th e m o st c o m p reh en siv e m o n th ly sta tistic a v a ila b le b y sta tes, h as in crea sed 6 p ercen t in T e n n e sse e d u rin g th e first ten m o n th s o f 1 9 6 2 from th e y e a r -a g o to ta l. T h is m a tch es the n a tio n ’s p ercen ta g e gain fo r th e sa m e p erio d . 1962 P e rfo rm a n ce W h en w e p ro b e m ore d e e p ly in to T e n n e s s e e ’s in c o m e d e v e lo p m en ts d uring th e co u r se o f th e y ea r, w e still find co n sid era b le r e sem b la n c e to n a tio n a l d e v e lo p m en ts. S e a so n a lly ad ju sted p e rso n a l in c o m e in th e state fa ile d to rise fro m M arch th rou gh Ju ly o f th is y ear, b u t it ag a in clim b ed d uring A u g u st, S ep tem b er, an d O c to b e r . O n th e w h o le , the trend, n a tio n a lly , h a s b e e n p retty m u ch th e sam e. T h is sim ilarity b e tw e e n c o n d itio n s in T e n n e sse e and th o se in the n a tio n is n o t n e w . T e n n e s s e e ’s in co m e grow th sin ce 1 9 5 0 h a s b e e n a lm o st p r e cise ly th e sam e as th a t o f the n a tio n . A 1 0 -p ercen t in c o m e g a in fro m th e first quarter 1 9 6 1 -b u sin ess lo w th ro u g h O c to b e r o f th is y ea r in T e n n e sse e a lso m a tch es a lm o st e x a c tly th e o v e ra ll g ain in the n a tio n . W e m ig h t fu rth er n o te , u sin g p e r so n a l in co m e figures as the b a sis fo r c o m p a r iso n , th at th e la st three b u sin ess re c e ssio n s in T e n n e sse e h a v e c o m e at ju st ab ou t the sam e tim e as in th e U . S ., h a v e la ste d ju st a b o u t as lo n g , an d h a v e b e e n ro u g h ly as sev ere. C o m p a red w ith th e n a tio n a l e c o n o m y , h o w e v er , T e n n e ss e e ’s em p lo y m e n t g a in s sin ce th e e n d o f th e 1 9 6 0 -6 1 r ecessio n h a v e b een slig h tly sm a ller. T h is h a s b e e n e q u a lly true fo r m an u fa ctu rin g an d n o n m a n u fa ctu rin g . T h a t T e n n e s s e e ’s in su red u n e m p lo y m e n t sta y ed at a h igh er rate th an in th e n a tio n fu rth er su g g ests th at the im p ro v em en t in em p lo y m e n t c o n d itio n s h a s n o t q u ite m a tch ed the n a tio n ’s. F a c to r y p a y ro lls, n o t a d ju sted fo r se a so n a l fo rces, a lso a d v a n ce d le s s v ig o r o u sly . V ie w in g the sm aller gain in this in d ica to r o f m a n u fa ctu rin g activ ity d u rin g th e reco v ery p h a se fr o m e a rly 1 9 6 1 a lo n g w ith the em p lo y m e n t an d u n e m p lo y m e n t sta tistics r ein fo rces the c o n c lu s io n th at so m e p arts o f T e n n e s s e e ’s e c o n o m y m o v e d u p a little m o r e h e sita n tly th a n th eir n a tio n a l cou n terp arts. S till, b u sin ess a ctiv ity in th e state is w e ll a h ea d o f 1 9 6 1 . A n d w h ile g ain s in rec e n t m o n th s h a v e n o t c o m e ea sily , the tren d h a s co n tin u ed u p w ard in th e sa m e irregular p a t tern as in th e co u n try as a w h o le . A lth o u g h n o t a p erfect m atch to th e n a tio n , T e n n e s s e e ’s b u sin e ss w a s certa in ly a c lo s e o n e. E conom ic Structure R e se m b le s U. S. F o r b u sin ess trends in T e n n e sse e to h a v e p a ra lleled so c lo s e ly n a tio n a l trends fo r su ch a lo n g tim e is rather a m a z in g. E c o n o m ic c o n d itio n s v ary a great d ea l fro m state to state, a lth o u g h a ctiv ity o n th e state le v e l is rela ted to the n a tio n a l e c o n o m y . T h e in d u strial g ro w th in v a rio u s parts o f th e co u n try is n o t u n ifo rm , an d th e e c o n o m ic b a se o f d ifferen t sta tes an d c o m m u n itie s varies. T h e d iverse b u si n ess tem p o th at e x ists is o ften th e resu lt o f su ch d istin c tio n s in g ro w th an d e c o n o m ic stru ctu re. In T e n n e s s e e ’s c a se , th e e c o n o m ic stru ctu re resem b les that o f th e e c o n o m y o f th e n a tio n . T h e sta te’s m ajor so u rces o f in c o m e are o f e q u a l im p o r ta n c e as th o se n a tio n a lly . T h e e x a c t p r o p o r tio n — 6 7 p e r c e n t— o f T e n n e ss e e ’s in c o m e c o m e s fr o m w a g e s a n d sala ries. T h e im p o rta n ce o f th e o th er c a te g o r ie s o f in c o m e c o rresp o n d s very c lo s e ly w ith th e U . S. T h e o n ly e x c e p tio n is p ro p rie to r s’ in c o m e fro m fa rm in g , w h ich p r o v id e s a so m ew h a t g reater sh are o f in c o m e to T e n n e sse e a n s th a n it d o e s in the n a tio n . (W a g e a n d salary in c o m e fr o m farm in g is the sa m e .) T h e sta te ’s e m p lo y m e n t stru ctu re a lso co r re sp o n d s quite c lo s e ly to th e n a tio n a l p attern . T h e p e r c en t o f its total p o p u la tio n w o r k in g in m in e s, c o n stru ctio n , trad e, g o v ern m en t, serv ices, a n d th e fin a n ce an d rea l e sta te field s is th e sa m e or n ea rly th e sa m e as in th e U . S. A b o u t 3 2 5 ,0 0 0 T e n n e sse e a n s w o r k in fa c to rie s. T h is rep resen ts a b o u t 3 4 p er c e n t o f th e n ea rly o n e -m illio n to ta l o f n o n farm jo b s, th u s p la c in g T e n n e sse e o n p ar w ith th e n a tio n a l a v era g e in term s o f th e im p o r ta n c e o f m a n u fa ctu rin g e m p lo y m e n t. B y th is sa m e m ea su re, T e n n e sse e ran k s w ell a h ea d o f e a ch o f th e o th er S ix th D istr ic t sta tes (A la b a m a , F lo rid a , G e o rg ia , L o u isia n a , an d M is s is s ip p i). T h e sim ila rity b e tw e e n th e V o lu n te e r state an d th e n a tio n d o e s n o t e x te n d , h o w e v e r , to th e m o st im p o rta n t m a n u fa ctu rin g in d u stries. T e n n e sse e , fo r e x a m p le , h as less in th e w a y o f h e a v y in d u stry th an th e n a tio n , o n the a verage. O n th e o th er h a n d , it sh a res th e ch a ra cteristic o f h a v in g a tr em en d o u s v a riety o f m a n u fa ctu rin g firm s. A p p a re l c o n c er n s are th e la rg est e m p lo y e r s o f facto ry w o rk ers in th e state. T h e y e m p lo y a b o u t 5 0 ,0 0 0 w ork ers or 15 p e rcen t o f the m a n u fa ctu rin g e m p lo y m e n t to ta l. M o re th an o n e o u t o f e ig h t p er so n s w o rk fo r sy n th etic fiber, fertilizer, a n d o th er c h e m ic a l c o m p a n ie s. T h e fo o d in d u stry a n d a lso yarn , k n it g o o d s, a n d o th er ty p e s o f te x tile fa cto r ies e m p lo y ten p e rcen t ea c h . L u m b er, fu rn i ture, a lu m in u m , an d p rin tin g are o th er le a d in g em p lo y ers. W h e re Do W e G o From H e r e ? F u rth er in c o m e g ro w th in T e n n e sse e in th e m o n th s a h ead m a y b e h ard er to c o m e b y if e m p lo y m e n t d ata are any in d ica tio n . T h e n u m b er o f p e rso n s e m p lo y e d in th e state w a s n o h igh er, a fter se a s o n a l a d ju stm en t, d u ring th is N o v e m b e r th an in M a y . M a n u fa ctu rin g e m p lo y m e n t, w h ich h a d in cr e a se d d u rin g m o st o f 1 9 6 1 a n d ea rly 1 9 6 2 , h a s tren d ed d o w n w a rd slig h tly sin c e ea r ly su m m er. F a c tory p a y r o lls w o u ld h a v e d ec lin e d fo r th is sam e rea so n , bu t m a n a g e d to h o ld th eir o w n b e c a u se w o rk ers p u t in lo n g er h o u rs. A n a d d itio n a l rem in d er th a t th e em p lo y m e n t p ictu re h a s rec e n tly sh o w n little or n o stren gth is in d ica ted b y w h a t h a p p e n e d to in su red u n e m p lo y m e n t. A s a p ercen t o f th e la b o r fo rc e c o v e r e d b y u n e m p lo y m e n t in su ra n ce, this rate h a s in cr ea se d slig h tly in recen t m o n th s, th u s re v ersin g a d o w n w a rd m o v e m e n t. W h a t little in c r ea se th ere w a s in th e to ta l n u m b er o f p erso n s h o ld in g jo b s in 1 9 6 2 th e sta te o w e s in large part to the ap p a rel, c h e m ic a l, a n d tr a n sp o rta tio n eq u ip m en t • 4 • TENNESSEE'S BUSINESS INDICATORS have matched those lo r the nation quite closely. Income developments in 1962 showed a striking resem blance to national conditions, as did spending, which is m easured by bank debits and other indicators. Employment, how ever, has expanded even more slo w ly in Tennessee than it has n ationally. BMIort* of Dollars Billion* of Dollars ,500 ----------- 1----1957 - 59 = 100 Seas. Adj. P P f ---------1------------- 1-------------r~ M a n u f a c t u r in g E m p lo y m e n t A ctivity T hrough out the State ------------i-----1957 - 59 = 100 Seas. Adj 56 1958 I9 60 1962 N ote: The shaded portions o f the chart represent the recessions of 1957-58 and 1960-61. in d u stries. T h e se th ree a c c o u n ted for 2 ,3 0 0 o u t o f a to ta l gain o f 1 0 ,6 0 0 du rin g th e tw e lv e -m o n th p erio d en d in g in N o v e m b e r . N e w firm s th at m o v e d in to T e n n e sse e an d th e e x p a n sio n o f e x istin g o n e s p ro v id e d th ese a d d ition al jo b s. A ls o , m o re p e o p le fo u n d jo b s in trad e, state a n d lo c a l g o v ern m en t, th e fin an ce field , so m e ty p es o f m an u fa ctu rin g , an d in co n str u c tio n . O n th e o th er h an d , fo o d , m in in g , lu m b erin g , a n d te x tile s e m p lo y e d few er p erso n s this N o v e m b e r th an last. O n th e b righ ter sid e, w e find th at th e h ig h er c o n stru c tio n jo b to ta l is a n in d ic a tio n o f th e v ig o r o u s b u ild in g a ctiv ity th at h a s ta k en p la c e . S p en d in g fo r ro a d b u ild in g an d u tilities co n stru c tio n an d fo r n o n -r e sid e n tia l b u ild in g ex p a n d e d sh arp ly. T o ta l co n str u c tio n a ctiv ity , as m ea su red by th e d o lla r v a lu e o f co n tra cts, is w e ll a h ea d o f 1 9 6 2 , d esp ite so m e h esita n cy in resid en tia l h o u sin g . T e n n e sse e a n s h a v e b e e n rather se le c tiv e in th eir sp en d in g h a b its, in g en era l. T h e n e w 1 9 6 3 a u to m o b ile m o d els m et w ith en th u sia stic re cep tio n , ju d g in g fr o m th e 4 3 -p e r cen t in crea se in a u to m o b ile registration s th is O c to b er fro m a y ea r a g o . T h is rep resen ts th e c o n tin u a tio n o f a very stron g d em a n d fo r cars du rin g m o st o f 1 9 6 2 . R e g istra tio n s d u rin g th e first ten m o n th s h a v e b e e n ru n n in g a h ead o f th o se in th e n a tio n . T e n n e sse e ’s se a so n a lly a d ju sted d e p a rtm en t sto re sa les h a v e tren d ed u p w a rd in recen t m o n th s, w h ile fu rn itu re store sa les h a v e , o n b a la n ce, c h a n g ed little. I f th ere w ere m o re c o m p r eh en siv e sp en d in g in fo rm a tio n a v a ila b le, w e w o u ld u n d o u b te d ly find that T e n n e sse e a n s step p ed up th eir sp en d in g . Y o u can see so m e in d ic a tio n o f th is b y th e in crea se in b a n k d eb its, w h ich are a m ea su re o f ch e c k sp en d in g b y in d ivid u als, b u sin esses, an d g o v ern m en ts. S a les ta x r e ceip ts a lso ten d to con firm th is stren gth in sp en d in g. S o m e p arts o f th e state are en jo y in g a stron ger b u sin ess clim a te th an o th ers, reflectin g d ifferen ces in th e e c o n o m ic b a se an d gro w th o f v a rio u s co m m u n itie s. T h e b e h a v io r o f so m e o f C h a tta n o o g a ’s sta tistics ca n b e rela ted p artly to the c lo sin g o f a te x tile m ill in th at area. O n e o f its resu lts w a s to h o ld d o w n e m p lo y m e n t in N o v e m b e r b e lo w the y e a r-a g o figures, a lth o u g h w e sh o u ld p o in t o u t th at, asid e fro m tex tile s, th ere w ere a lso so m e o th er in d u stries in C h a tta n o o g a th at rep o rted d e c lin e s in th is p erio d . In K n o x v ille , T r i-C ities, a n d N a sh v ille , as w e ll as in M em p h is, w h ich lie s o u tsid e th e S ixth F ed e r a l R e se r v e D istrict, e m p lo y m e n t e x p a n d ed . In term s o f sp en d in g , a s m easu red b y b a n k d eb its, J o h n so n C ity e n jo y e d th e la rg est gain o f a n y c ity w ith in th e S ixth D istr ict p o rtio n o f T e n n essee (th a t is, th e ea stern tw o -th ird s o f th e s t a te ). In gen eral, the sm a ller c itie s sh o w e d g reater d eb its in crea ses th an the larger o n e s. C o m m e r c ia l b a n k s h a v e fe lt th is u n e v e n im p a ct o f e c o n o m ic ch a n g e w ith in th e state. W ith in th e Sixth D istr ic t’s p o rtio n , K n o x v ille ’s m em b er b a n k s sh o w ed the largest d e p o sit g row th — so m e 1 0 p ercen t— b e tw e e n N o v em b er 1 9 6 1 an d N o v e m b e r 1 9 6 2 , w h erea s C h a tta n o o g a h a d th e sm a llest in crea se. L e n d in g a ctiv ity a lso w a s d i verse, ran gin g fro m a 6 -p e r c en t rise fo r C h a tta n o o g a to a 1 4 -p e r ce n t in crea se fo r N a sh v ille fo r th is sa m e p eriod . I f e c o n o m ic a ctiv ity c o n tin u es to e x p a n d , lo a n s ca n be • 5 • e x p e c te d to in crea se fu rth er, w h ile th e o p p o site w o u ld be true in a rec e ssio n . W ith th is in m in d , T e n n e sse e b a n k ers w o u ld d o w e ll to c o n sid e r th e c o u rse o f n a tio n a l e c o n o m ic d e v e lo p m e n ts w ith w h ich th e sta te’s e c o n o m ic h e a lth is so h e a v ily in tertw in ed . H arry B ra nd t This is one of a series in which economic developments in each of the Sixth District states are discussed. Develop ments in Louisiana’s economy were analyzed in the N o vember R e v i e w , and a discussion of Florida’s economy is scheduled for a forthcoming issue. Bank Announcements On December 4, three newly organized nonmember banks opened for business and began to remit at par for checks drawn on them when received from the Federal Reserve Bank. The First State Bank of Lantana, Lantana, Florida. Of ficers are William E. Benjamin, Chairman and Vice Presi dent; John W. Roberts, President; and Victor F. Bay less, Cashier. Capital totals $400,000, and surplus and undivided profits, $250,000. The Jensen Beach Bank, Jensen Beach, Florida. Officers include E. C. Wareheim, Chairman; D. J. Palmer, Presi dent; Charles A. Porter, Vice President; and Robert B. Smith, Cashier. Capital totals $250,000, and surplus and undivided profits, $100,000. The Manasota Bank, Bradenton, Florida. Officers are A. L. Ellis, Chairman; H. C. Eberts, President; W. W. Hallenbeck, Vice President; and William O. Blades, Cash ier. Capital totals $300,000, and surplus and undivided profits, $200,000. On December 18, the Gulf-to-Bay Bank, Clearwater, Florida, a newly organized nonmember bank, opened for business and began to remit at par. Officers include H. E. Long, President; D. Guy McMullen, Vice President; and G. W. Hammock, Vice President and Cashier. Capital totals $600,000, and surplus and undivided profits, $150,000. The American National Bank of South Pasadena, South Pasadena, Florida, a newly organized member bank, opened for business on December 20 and began to remit at par. Mr. Guy S. Alvarez is President. Department Store Sales and Inventories* _______________________ Percent Change____________ __________ Sales_____________ Inventories Nov. 1962 from u Months Nov. 30,1962 from Oct. Nov. 1962 from Oct. 31, Nov. 30, Place 1962 1961 1961 1962 1961 ALABAMA......................... + 1 9 +4 +0 +2 +0 Birmingham.................... + 1 9 —3 —2 +1 +0 M obile.............................. + 2 7 +11 +5 Montgomery.................... + 1 3 +4 +2 FLORIDA.............................. + 1 6 +18 +13 +4 +23 Daytona Beach . . . . +28 +8 +1 Jacksonville.................... + 9 +15 +7 +3 +32 Miami A r e a .................... + 8 +11 +7 M ia m i......................... + 1 4 —1 +2 O r la n d o ......................... n.a. n.a. n.a. St. Ptrsbg-Tampa Area . + 3 0 +21 +19 +3 +6 GEORGIA.............................. + 1 9 +11 +8 +5 +7 Atlanta** .................... + 2 0 +12 +10 +4 +5 A u g u s ta ......................... + 1 5 +10 +5 M acon.............................. + 2 1 +8 +4 +11 +17 R o m e * * ......................... + 2 4 +12 +7 Savannah......................... + 1 6 +6 +3 LOUISIANA......................... + 2 1 +9 +4 —1 +4 Baton R ouge.................... + 2 3 +2 +8 +1 +1 New Orleans.................... + 2 2 +11 +3 —3 +5 M ISSISSIPPI.................... + 2 5 +8 +4 +1 +13 J a c k s o n ......................... + 2 8 +8 +5 +2 +19 T E N N E SSE E .................... + 1 8 +11 +3 +3 +15 Bristol-KinasportJohnson City** . . . + 1 6 +9 +4 +2 +3 Bristol (Tenn. & Va.)** + 2 6 +9 +2 Chattanooga.................... + 1 7 +11 4.5 Knoxville......................... + 1 7 +8 +2 D ISTR IC T ......................... + 1 4 + 1 1 _________ + 7 _________ + 3 _______ + 1 2 ♦Reporting stores account for over 90 percent oftotal District department store sales. **In order to permit publication of figures forthis city, a special sample has been constructed that is not confined exclusively todepartment stores. Figures for non department stores, however, are not used in computing the District percent changes, n.a. Not available. Debits to Individual Demand Deposit Accounts _____ ______ ____________ (In Thousands of Dollars) Percent Change Year-to-date 11 Months Nov. 1962 from 1962 from Oct. Nov. 1962 1961 1961 Nov. Oct. Nov. 1962 1962 1961 ALABAMA Anniston . . . . 47,624 52,281 44,909 —9 +6 +8 Birmingham . . . 920,653 992,505 920,556 —7 +7 +0 Dothan ............... 41,920 45,432 +7 39,995 —8 +5 Gadsden . . . . 41,637 42,206 —1 37,731 +5 +10 Huntsville* . . . 97,327 108,052 90,800 — 10 +7 + 18 Mobile . . . . 362,367 329,769 305,998 + 10 +18 +4 Montgomery . . . 208,580 228,938 184,269 —9 +13 +11 Selma* . . . . 30,036 34,043 30,669 — 12 —2 +8 Tuscaloosa* . . . 68,218 81,128 65,543 — 16 +4 +12 Total Reporting Cities 1,818,362 1,914,354 1,720,470 +8 —5 +6 Other Citiesf . . . 810,179 859,780 805,042 —6 +1 +1 FLORIDA Bartow* . . . . 22,630 20,779 n.a. n.a. n.a. +9 Bradenton* . . . 46,703 46,864 n.a. n.a. —0 n.a. Brevard County* . 112,359 n.a. n.a. n.a. n.a. n.a. Clearwater* . . 65,563 71,230 n.a. n.a. —8 n.a. Daytona Beach* 62,370 61,352 55,003 + 8 +2 +13 Delray Beach* . . 20,540 n.a. n.a. n.a. n.a. n.a. Fort Lauderdale* . 219,481 217,774 + 7 204,608 +7 +1 Ft.Myers-N.Ft.Myers* 51,120 50,476 n.a. n.a. n.a. +1 Gainesville* . . . 54,073 54,954 43,724 —2 +24 +15 Jacksonville . . . 885,237 900,693 840,536 —2 +6 +5 Key West* . . . 16,956 17,814 17,283 —2 —5 +5 Lakeland* . . . 86,562 83,178 77,545 +12 +4 +5 Miami . . . . 1,030,059 1,004,562 930,970 +10 +3 +11 Greater Miami* 1,476,074 1,472,840 1,360,648 +8 +0 +8 Ocala* . . . . 54,136 41,226 n.a. n.a. +31 n.a. Orlando . . . . 270,417 287,053 257,802 —6 +7 +5 Pensacola . . . 89,063 91,455 —3 83,239 +7 +3 St. Augustine* . . 15,314 n.a. n.a. n.a. n.a. n.a. St. Petersburg . . 207,520 229,991 225,201 — 10 —8 +5 Sarasota* . . . 74,661 81,446 n.a. n.a. n.a. —8 Tallahassee* . . 83,529 76,055 +10 71,029 +26 +18 Tampa . . . . 469,048 460,732 447,201 +5 +2 +6 W. Palm-Palm Bch.* 158,491 158,891 148,474 —0 +7 +15 Winter Haven* . . 41,740f 34,713 n.a. n.a. n.a. +20 ** ** ** Total Reporting Cities** 4,583,587 4,459,516 3,832,293 ** ** ** Other Citiesf** . . 1,606,604 1,519,281 1,761,714 GEORGIA Albany . . . . 64,049 66,360 60,354 —3 +6 + 11 Athens* . . . . 46,587 47,723 42,671 —2 +9 +8 Atlanta . . . . 2,614,667 2,764,784 2,319,972 —5 +15 +13 Augusta . . . . 131,297 134,738 123,189 +7 +12 —3 Brunswick . . . 34,887 33,244 28,822 +23 +5 +21 Columbus . . . 122,063 129,523 115,895 —6 +5 +9 Dalton* . . . . 60,728 61,514 n.a. —1 n.a. n.a. Elberton . . . . 10,351 9,220 9,084 +7 +12 +14 Gainesville* . . 54,619 58,027 +18 46,465 —6 +11 Griffin* . . . . 22,648 25,420 22,039 — 11 +11 +3 LaGrange* . . . 16,258 17,246 16.588 —2 —1 —6 IVIacon . . . . 141,991 157,480 128,860 — 10 +10 +10 Marietta* . . . 40,138 38,084 +12 34,119 +5 +18 Newnan . . . . 22,385 26,337 22,915 — 15 —2 +8 Rome* . . . . 53,127 56,910 —7 52,139 +2 +4 Savannah . . . 183,909 191,206 179,289 —4 +7 +3 Valdosta . . . . 37,370 37,019 35j293 +6 +1 +3 ** ** Total Reporting Cities** 3,657,074 3,854,835 3,237,694 —5 ** ** Other Citiesf** . . l,120,128r 1,120,119 +0r 1,053,943 LOUISIANA*** Alexandria* . . 81,384 84,324 —3 76,269 +7 +15 Baton Rouge . . 306,256 309,878 —1 271,573 +13 +13 Bunkie* . . . . 5,841 n.a. n.a. n.a. n.a. n.a. Lafayette* . . . 71,400 74,894 +10 66,973 —5 +7 Lake Charles . . 84,352 89,893 83,358 —6 +1 +8 New Orleans . . 1,457,256 1,544,681 1,316,851 —6 +9 +11 Plaquemine* . . 6,178 n.a. n.a. n.a. n.a. n.a. ** *• Total Reporting Cities** 2,012,667 2,103,670 1,815,024 ** ** ** Other Citiesf** . . 725,662 753,512 636,528 MISSISSIPPI*** Biloxi-Gulfport* . 61,738 65,818 56,191 +14 —6 +10 Hattiesburg . . . 38,558 42,033 37,759 —8 +2 +5 Jackson . . . . 394.622 428,474 373,134 —8 +12 +6 Laurel* . . . . 29,437 30,520 28,899 —4 +2 +2 Meridian . . . . 50,538 53,340 47,294 —5 +7 + 10 Natchez* . . . . 17,305 25,832 24,342 — 33 — 29 +5 Pascagoula-Moss Pt.* 42,091 n.a. 36,653 +15 n.a. n.a. Vicksburg . . . 26,401 27,137 23,537 —3 +10 +12 Yazoo City* . . . 19,930 23,420 n.a. — 15 n.a. n.a. *• ** Total Reporting Cities** 680,620 733,227 591.156 —7 ** ** Other Citiesf** . . 251,231 246,704 266^213 +2 TENNESSEE*** Bristol* . . . . 51,906 55,088 50,824 —6 +7 +2 Chattanooqa . . 381,571 370,125 345,450 +3 +10 +5 Johnson City* . . 48,672 49,201 —1 44,188 +10 +12 Kingsport* . . . 94,562 92,621 94,957 +6 +2 +0 Knoxville . . . 273,769 279,525 257,163 —2 +3 +6 Nashville . . . 901,520 872,441 864,117 +7 +3 +4 Total Reporting Cities 1,752,000 1,719,001 1,656,699 +6 +6 +2 Other Citiesf . . . 736,321 770,235 665,136 —4 +12 + 11 SIXTH DISTRICT . 19,754,435r 20,054,234 18,041,912 —1 +10 +9 ** ** ** Reporting Cities** 14,504,310 14,784,603 12.853,336 ** ** ** Other Citiesf** 5,250,125r 5,269,631 5,188,576 Total, 32 Cities . . 11,851,937 12,233,055 10,962,316 —3 +9 +8 UNITED STATES 344 Cities . . . 288,200,000 308,700,000 272,600,000 —7 +6 +10 ♦Not included in total for 32 cities that are part of the national debit series maintained by the Board of Governors. fEstimated. n.a. Not available. r Revised. ♦♦Addition of new reporting centers affects comparison of current figures with those of previous months. ♦♦♦Includes only banks in the Sixth District portion of state. • 6 • S ix th D is tr ic t S ta tis tic s Seasonally Adjusted (All data are indexes, 1957-59 = 100, unless indicated otherwise.) Latest Month (1962) One Month Ago Two Months Ago One Year Ago One Month Ago Two Months Ago One Year Ago 7,226 107 116 7,077r 103 108 7,167r 121 113 6,747 122 105 108 104 110 111 75 3.6 40.9 126 108 105 109 113 75 3.1 40.6 125 107 104 108 111 75 3.2 40.4 125 104 101 105 98 88 4.1 40.4 118 147 131 134 143 128 135 132 120 125 Latest Month (1962) GEORGIA SIXTH DISTRICT INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Oct. 38,640 I ll Farm Cash R e c e ip t s ...................................Oct. C r o p s .......................................................Oct. 108 Livestock..................................................Oct. 120 Department Store S a le s * /* * .................... Dec. 120p Department Store S to ck s* ......................... Nov. 123 Instalment Credit at Banks,* (Mil. $) New L o a n s .............................................Nov. 144 Repayments.............................................Nov. 132 PRODUCTION AND EMPLOYMENT Nonfarm Employment................................... Nov. Manufacturing........................................ Nov. Apparel..................................................Nov. Chemicals.............................................Nov. Fabricated M e ta ls ..............................Nov. Food....................................................... Nov. Lbr., Wood Prod., Furn. & Fix. . . . Nov. P a p e r .................................................. Nov. Primary M e ta ls...................................Nov. Textiles ............................................. Nov. Transportation Equipment . . . . Nov. Nonmanufacturing................................... Nov. Construction........................................ Nov. Farm Employment........................................ Nov. Insured Unemployment, (Percent of Cov. Emp.) Nov. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Nov. Manufacturing P a y ro lls.............................. Nov. Construction Contracts*.............................. Oct. R e sid en tia l............................................. Oct. All O th er.................................................. Oct. Electric Power Production**....................Oct. Cotton Consumption**..............................Nov. Petrol. Prod, in Coastal La. and Miss.** . Nov. FINANCE AND BANKING Member Bank Loans* All Banks.................................................. Nov. Leading C i t i e s ........................................ Dec. Member Bank Deposits* All Banks..................................................Nov. Leading C i t i e s ........................................ Dec. Bank D e b its * /* * ........................................ Nov. 38,625r37,946r 36,533 141 123 116 161 129 120 115 117 108 125 112 114 125 119 110 151 130 133 137 130 127 107 106 118 102 106 105 97 104 91 94 110 107 95 85 4.6 40.9 126 108 128 92 130 99 152 107 106 119 102 104 103 96r 105 94 94 117 107 96 81 4.3 40.8r 126r 109 120 100 133 96 154 107 106 119 102 104 103 96 105 93 95 111 107 96 86 4.3 40.6 125 112 115 109 138 100 155 104 103 112 100 104 103 97 102 94 96 94 105 91 92 5.1 40.8 120 107 120 95 117 105 134 143 142 141 140 139 140 127 128 125 124 133 127 122 128 124 125 130 116 117 120 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Oct. Farm Cash R e c e ip t s ................................... Oct. Department Store S a l e s * * ......................... Nov. PRODUCTION AND EMPLOYMENT Nonfarm Employment................................... Manufacturing........................................ Nonmanufacturing................................... Construction........................................ Farm Employment........................................ Insured Unemployment, (Percent of Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y ro lls.............................. Nov. Nov. Nov. Nov. Nov. Nov. Nov. Nov. FINANCE AND BANKING Member Bank L o a n s................................... Member Bank D ep o sits.............................. Bank D eb its* * ............................................. Nov. Nov. Nov. 149 130 139r LOUISIANA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e ip t s ......................... Department Store Sales*/** . . . Oct. Oct. Nov. 5,724 107 107 5,812r 161 95 5,680r 156 102 5,466 106 99 Nov. Nov. Nov. Nov. Nov. Insured Unemployment, (Percent of Cov. Emp.) Nov. Nov. Nov. 98 96 98 74 85 5.0 42.7 115 98 95 98 74 82 4.5 41.8r 112r 98 94 98 71 91 4.5 43.2 114 98 93 99 75 99 5.7 41.5 106 Nov. Nov. Nov. 134 116 120 133 117 117 132 114 117 119 110 107 Oct. Oct. Nov. 2,938 120 108 3,287r 233 89 2,879r 128 102 PRODUCTION AND EMPLOYMENT Nonfarm Employment................................... Nov, Nov. Manufacturing........................................ Nov. Nov, Nonmanufacturing...................................Nov, Nov. Construction........................................Nov, Nov. Farm Employment........................................Nov, Nov. Insured Unemployment, (Percent of Cov. Emp.) Nov. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Nov. Manufacturing P a y ro lls..............................Nov, Nov. 110 114 108 106 88 5.0 40.4 129 110 113 108 103 83 4.8 39.9r 127r 110 114 108 101 85 4.7 40.5 128 107 108 106 99 91 6.0 40.2 119 FINANCE AND BANKING Member Bank Loans*................................... Nov. Member Bank Deposits*..............................Nov. Nov. Bank D e b its * /* * .............................. Nov. 161 138 139 165 141 138 158 133 139 142 121 128 PRODUCTION AND EMPLOYMENT Nonfarm Employment......................... FINANCE AND BANKING Member Bank Loans*......................... Member Bank Deposits*.................... Bank D e b its * /* * .................................. MISSISSIPPI ALABAMA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e ip t s ......................... Department Store Sales** . . . . INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Oct. Oct. Nov. 5,221 110 113 5,190r 130 98 5,150r 121 110 5,015 103 108 Nov. Nov. Nov. Nov. Farm Employment........................................ Nov. Insured Unemployment, (Percent of Cov. Emp.) Nov. Nov. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y ro lls.............................. Nov. 103 98 105 87 88 5.2 40.6 116 102 98 104 87 75 5.0 40.3 115 102 99 104 87 87 4.9 40.6 115 103 97 105 90 91 5.1 40.6 113 142 124 127 141 125 125 137 124 130 130 113 122 PRODUCTION AND EMPLOYMENT FINANCE AND BANKING Nov. Nov. Nov. 2,874 130 101 TENNESSEE FLORIDA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Oct. Farm Cash R e c e ip t s ................................... Oct. Department Store S ales**......................... Nov. 11,295 123 153 ll,051r 117 137 PRODUCTION AND EMPLOYMENT Nonfarm Employment................................... Nov. M anufacturing........................................ Nov. Nonmanufacturing...................................Nov. Construction........................................Nov. Farm Employment........................................Nov. Insured Unemployment, (Percent of Cov. Emp.) Nov. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Nov. Manufacturing P a y ro lls..............................Nov. 115 122 114 95 104 3.9 41.0 154 115r 120r 115 98 105 3.8 41.2r 154r 115 120 114 100 93 4.0 41.8 153 111 117 109 89 100 4.4 41.7 147 FINANCE AND BANKING Member Bank L o a n s................................... Nov. Member Bank D ep o sits.............................. Nov. Bank D eb its* * .............................................Nov. 140 127 136 138 128 130 136 126 130 123 116 121 10,966r 10,487 119 119 146 128 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e ip t s ......................... Department Store Sales*/** . . . Oct. Oct. Nov. 6,236 104 114 6,208r 132 99 6,104r 111 113 5,944 109 103 Nov. Nov. Nov. Nov. Farm Employment........................................ Nov. Insured Unemployment, (Percent of Cov. Emp.) Nov. Nov. Nov. 105 106 104 111 81 5.7 41.0 124 105 107 104 114r 79 5.3 41.4r 124r 105 107 104 113 91 5.5 40.9 123 103 105 102 111 91 5.9 40.9 120 143 125 130 142 126 127 141 125 138 129 116 121 PRODUCTION AND EMPLOYMENT FINANCE AND BANKING *For Sixth District area only. Other totals for entire six states. **Daily average basis. Nov. Nov. Nov. p Preliminary. r Revised. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U.S. Bureau of Mines; elec. power prod., Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. • 7 • DISTRICT BUSINESS CO N D ITIO N S II I I I I I I I I I I I I I I I | I I I I I I I I I I I J « I I ! I Billion s of D ollars D e sp ite a high volume of holiday buying, no real impetus has come along to spark the District's trudging economic advance of recent months. Lethargy persisted in the employment indicators in November, and production in some key industries declined. Manufacturing pay rolls rose as the result of a longer work week. A blast of cold air sharply curtailed farm activity in many places, although strengthening prices for some farm products lifted cash receipts somewhat. Sustained spending by consumers and a continued uptrend in loans at all mem ber banks suggest that the region's economy persisted in its slow rise. ]S Average Weekly Hours* ]S Total nonfarm employment was unchanged in November, marking it the sixth consecutive month of virtual stability. M a n u fa ctu rin g e m Mfg. Payro lls Construction Contracts 3* mo moving avg. ^ E le c tric Power Production Cotton Consumption p lo y m e n t a lso rem a in ed u n ch a n g ed at a le v e l b e lo w th e p e a k rea ch ed in Ju ly. G a in s in m a n u fa ctu rin g e m p lo y m e n t in F lo r id a , L o u isia n a , a n d M is sis sip p i d u rin g N o v e m b e r w ere o ffset b y d e c lin e s in G eo r g ia a n d T e n n e sse e , w h ere th e la rg est part o f th e r e g io n ’s m a n u fa ctu rin g w o rk fo r c e is lo c a te d . M a n u fa ctu rin g p a y ro lls ro se to a n e w r e co rd in N o v e m b e r b e c a u se o f an in crea se in the a v era g e n u m b er o f h o u rs w o r k e d p er w e e k . In su red u n e m p lo y m en t, h o w ev e r, in crea sed to th e h ig h e st le v e l sin ce J an u ary 1 9 6 2 . T e x tile an d ap p a rel e m p lo y m e n t c o n tin u e d th e d e c lin e th at h a s p e rsisted sin ce July. C o tto n co n su m p tio n , h o w e v er , rev ersed its d o w n w a rd tren d . C o n stru ctio n e m p lo y m e n t in N o v e m b e r fe ll w e ll b e lo w th e fa irly c o n sta n t le v e l o f th e p a st fo u r m o n th s. T h e th re e-m o n th m o v in g a v era g e o f c o n str u c tio n c o n tra cts, re flectin g N o v e m b e r data in part, d e c lin e d fo r th e six th c o n se c u tiv e m o n th in O cto b er. P etro leu m p ro d u c tio n d e c lin e d in N o v e m b e r , a n d ste e l p ro d u ctio n seem s to b e b e lo w n o rm a l fo r th is tim e o f y ear. E m p lo y m e n t in th e fo o d p r o c e ssin g in d u stries sh o w e d c o n sid e r a b le stren gth , h o w e v e r . ]S Dept. Store Sale s Bank Debits ]S ]S A cold wave stalled the farm economy in December. C o ld air p e n e trated d e e p ly in to F lo rid a , w h ere th e lo w e st tem p era tu res in th is c e n tu ry sharply red u ced a v a ila b le su p p lies o f v e g e ta b le s an d se v er e ly d a m a g ed th e citru s crop . P a stu res th ro u g h o u t the reg io n w ere reta rd ed , an d field a ctiv itie s g ro u n d to a h a lt. R e fle c tin g sh orter su p p lie s o f v e g e ta b le s, citru s, an d so m e liv e sto c k p ro d u cts, p rices rec e iv e d b y farm ers r o se in D e c e m b e r . W ith m a rk etin g s o f citru s a n d so m e liv e sto c k p r o d u cts risin g m o re th a n se a so n a lly , farm cash receip ts w ere su sta in ed . ^ ^ r Farm Cash Receipts Member Bank Loans Member Bank Deposits P E R C E N T O F R E Q U IR E D R E S E R V E S Excess Reserves V^^Borrowings from F. R Bank 11 i it t i i«* r. r.« 1961 ♦ S e a s . a d j . f ig u r e ; n o t a n in d e x . Retail spending continued to be relatively brisk. D e p a r tm e n t store sa les d ip p ed slig h tly d u rin g D e c e m b e r b u t e x c e e d e d th e y e a r -a g o v o lu m e . F in a l data fo r N o v e m b e r in d ica te th a t a ll D istr ic t sta tes reg istered stro n g gain s d u rin g th a t m o n th . S a le s a t fu rn itu re sto res a d v a n c e d m o d e r a te ly d u ring N o v e m b e r , as a ll sta tes e x c e p t M ississip p i a n d L o u isia n a sc o r e d g a in s. M o re c o m p re h e n siv e figu res, a v a ila b le after a grea ter tim e la g , in d ic a te th at D istr ic t sa les ta x c o lle c tio n s d u rin g O c to b e r rem a in ed u n c h a n g e d a t S e p te m b er’s record le v e l. S a les at sto res o p er a tin g o n e to ten o u tle ts in c r e a sed sh a rp ly d uring O cto b er. C o n su m er cred it o u tsta n d in g at D istr ict c o m m e r c ia l b a n k s ex p a n d e d m o d er a te ly d u rin g N o v e m b e r , a lth o u g h th e n e t in cr e a se in o u tsta n d in g s w a s sm a ller th an th e record g a in in O c to b e r . N e w b o r r o w in g fo r a u to p u rch a ses su sta in ed to ta l c o n su m er lo a n s, a s o th er ty p e s w ere o n ly slig h tly c h a n g ed . A further expansion in loans at member banks in the District's smaller cities and towns provided the boost needed to push total loans to a higher level in November. L o a n s, h o w e v e r , rem a in ed u n ch a n g ed a t b a n k s in th e D istr ic t’s le a d in g c itie s. A t b a n k s in su ch c itie s, b u sin e ss lo a n s ro se le ss th an u su a l, w h ile c o n su m e r a n d rea l esta te lo a n s a d v a n ced sligh tly m o re th an se a so n a lly . D u r in g D e c e m b e r , lo a n s a t w e e k ly rep o rtin g b a n k s in th e D istr ic t ro se le ss th an u su a l fo r th at tim e o f y ea r. T o ta l m e m b er b a n k lo a n s m a y still register a g a in in D e c e m b e r , h o w e v e r , if th e tren d in lo a n s at b a n k s in sm a ller c itie s c o n tin u e d u p w ard , as it h a s sin c e m id -1 9 6 2 . N o te : D a ta o n w h ich sta tem en ts are based h ave b een adjusted to e lim in ate se a so n a l in flu en ces.
@FedFRASER