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The International Monetary
System: As It Is
Very recently, the United States monetary authorities devised an in
genious plan— operations in foreign currencies— to help cope with a
pressing practical problem— financing our balance of payments deficit.
It is quite likely, however, that this “new” device owes a good deal to a
proposal made more than forty years ago but considered visionary at the
time. This is frequently the case in economic affairs. What was visionary
yesterday has become standard operating procedure today. What is
thought to be impractical today may be a pillar of the established order
some years hence. Innovations in the economic environment are ac
cepted slowly, and monetary institutions develop through a gradual
process of evolution. This is certainly the case with our present inter
national monetary system.
In 1922, Sir Ralph Hawtrey proposed that the central banks of the
major countries hold one another’s currencies and use them to settle
deficits among themselves. The purpose was to economize on the use
of gold. Hawtrey was Chairman of the Financial Commission of the
Genoa Conference, and that Commission believed that if central banks
would accept other countries’ currencies instead of gold in settlement of
claims, the worldwide demand for gold might be regulated to conform
to the supply. In this way, the price of gold could be controlled to
prevent worldwide inflation or deflation.
The U. S. Treasury since 1961 and the Federal Reserve System since
1962 have been engaged in acquiring foreign currencies by borrowing
(in the case of the Treasury) and by swap agreements (in the case of
the Federal Reserve). In each case, the foreign country is given a
dollar claim on us, guaranteed against devaluation. Among other pur
poses, we use the foreign currencies thus acquired to buy up ordinary
dollar claims, which foreign countries would otherwise use to buy gold
from us. In effect, we are offering foreign countries special inducements
to allow us to finance our balance of payments deficits with dollars
rather than gold.
Other countries have long held dollars and pounds sterling, along
with gold, as part of their international reserves because these curren
cies are widely used in international trade and have been generally as
acceptable as gold in making international payments. There had not
been until recently, however, any understanding that other countries
would deliberately use these special dollar claims as a partial substitute
for gold. When the U. S. eliminates its deficit, it is anticipated that we
will begin to acquire substantial amounts of certain foreign currencies,
so that the system envisioned by Hawtrey forty years ago might then be
generalized among the nations with convertible currencies.
In the unsettled conditions of the 1920’s, international cooperation
was not outstandingly successful, although there were many attempts.
The Great Depression brought an end to nearly all efforts to achieve

agreement on international monetary affairs, and it was
not until 1944 that any attempt was made to establish a
new system of formal international monetary cooperation.
It was at that time that the agreement establishing the
International Monetary Fund was signed at Bretton
Woods, New Hampshire. For many years after World
War II, however, the system of free exchange and pay
ments envisioned by the Bretton Woods founders con
tinued to be frustrated by the exchange controls that
most countries believed were essential to protect their
precarious balances of payments. Only gradually were
these controls removed. Thus, postwar international mone
tary history is a story of evolution; and the reciprocal
currency arrangements of the U. S. Treasury and Federal
Reserve System represent only the latest step in this
evolution.

The Need for a " System "
Before we describe the process by which we have reached
our present situation, we ought, perhaps, to understand
clearly why the world has felt so strongly the need for
some sort of international monetary “system”. And, by
“system”, we mean a consciously planned set of arrange
ments designed to deal with those problems that arise
from the international flow of goods, services, and capital.
Money is essential to operating a modern economy. It
makes possible the exchange of goods and services that
could not take place through barter. The difficulties of ex
changing, for example, a haircut for a bus ride without
the use of money are so obvious that all countries, once
past the most primitive stage of economic development,
have established some sort of monetary system. Several
centuries of experience have shown that businessmen and
consumers can get along quite well with less than ideal
arrangements. They may be inconvenienced if, for ex
ample, there is more than one kind of money in circula
tion, as was the case after the Civil War when greenbacks
and gold coins circulated together in the U. S. Since the
gold dollar commanded a premium over the paper dollar,
everything had two prices— a greenback price and a gold
price. Trade may be burdened, too, if merchants have to
examine each piece of money they receive to see if it is
comparable to the others they hold.
Nevertheless, these are minor inconveniences, and the
business community can put up with them readily enough.
What it cannot easily cope with are sudden and unpre
dictable changes in the conditions under which it can use
money in its daily transactions. Sudden, violent inflation
or deflation, or changes in the rate of inflation, or govern
mental actions blocking the use of money for certain pur
poses can be very disruptive to business, for the essence of
successful business is the ability to plan for the future. This
is particularly true of modern economies, where nearly all
production is for future use.
In other words, to operate efficiently, businessmen need
a set of monetary ground rules that will provide reasonable
stability in their environment. The defenders of the present
international monetary system claim that it now provides
these ground rules with the maximum certainty possible.
Its detractors claim that it does not. In any case, a great
deal of effort has been devoted in the postwar period to
establishing a more satisfactory set of rules.

Bretton W oods
The conference at Bretton Woods in 1944 did much more
than establish the International Monetary Fund and the
World Bank. It also decided what sort of monetary sys
tem these institutions would operate in. In the first place,
the conferees agreed that close cooperation should replace
the competitive, “beggar-my-neighbor” policies of the pe
riod between the two World Wars. In that period, a coun
try experiencing balance of payments difficulties would,
all too often, devalue its currency to stimulate its exports,
not merely enough to bring its balance of payments back
into equilibrium, but by so much that it would run a sur
plus and begin to accumulate gold. Other countries, af
fected adversely by this action, would feel compelled to
retaliate. Some countries, notably Nazi Germany, estab
lished exchange controls and conducted trade on a barter
basis for the purpose of building a war machine.
In order that members should not feel compelled to
behave in this way, the International Monetary Fund was
established and given the power to lend to members in
temporary difficulties. The Fund, as it finally emerged,
represented a compromise among different viewpoints,
however. The British plan called for an International
Clearing Union, which would have the power, within
limits, to create an international money, “bancor”, which
the members would agree to accept in settlement of deficits
among themselves. Access to the Union’s resources would
be practically automatic, within a member’s quota; and
these quotas would be, in the aggregate, quite large. The
U. S. was in a very strong position, however, being the
principal creditor nation. The American negotiators
wanted to minimize the extent to which we would sub
sidize other countries’ deficits and insisted that each mem
ber’s borrowing rights be limited to what it had con
tributed to the Fund. Although the borrowing terms and
total Fund resources were made somewhat more generous
than they were in the original U. S. draft, the basic struc
ture of the Fund was shaped according to the more con
servative American plans.
As part of the mechanism of cooperation set up at
Bretton Woods, the Fund members agreed not to change
the par values of their currencies by more than ten per
cent from their initial parities without prior consultation
with the Fund. The idea was to prevent the competitive
exchange depreciation of the period between the two
World Wars— to keep all exchange rates constant until,
by mutual agreement, a change was thought to be desirable.
All the members agreed that they would freely permit pay
ment for goods and services after a “transition” period,
which actually turned out to be about fifteen years long.
Members were permitted and even required, however, to
maintain controls over capital movements. There had been
so much trouble in the Thirties with “hot money”, that
is, the flow of funds from banks in one country to those in
another to escape depreciation or confiscation, that it was
believed controls over this sort of international payments
would have to be retained.
The members also agreed that domestic full employment
should be the primary goal of economic policy (the Great
Depression was vividly in the minds of the conferees) and
that balance of payments equilibrium should not be
•2 •

sought at the expense of a stable domestic economy. The
hope was that access to the Fund’s resources would enable
a country to put its domestic house in order, while at the
same time running a deficit that it could not otherwise
have permitted.

The Problem of Adjustment
The Bretton Woods agreement, as is true of most com
promises, left several unsettled problems. The most im
portant was the question of how the system was to react
to disturbances. Suppose, for example, that U. S. receipts
decline, while Germany’s increase. This would tend to
cause the U. S. to lose international reserves and Germany
to gain them. This could not go on indefinitely, and some
thing must occur to reverse the process. When most coun
tries were on the old gold standard, the process of adjust
ment would be roughly as follows: The U. S. loss of gold
would reduce commercial banks’ reserves and, perhaps,
also induce the Federal Reserve System to try to stop
the gold loss by making it more expensive for them to
replenish those reserves. Either way, bank loans would
tend to contract, thus putting a damper on national income.
Because of this, U. S. imports would decline and would
eventually reduce U. S. international payments to a level
that equaled receipts. The opposite development would
occur in Germany.
This sort of adjustment, however, was just what the
framers of the Fund did not want to happen because it
might entail depression and unemployment in the deficit
countries and inflation in the surplus countries. But how,
then, was adjustment to occur? One possibility would be
to let exchange rates change. Then, to take our former
example, the dollar would become cheaper to obtain and
the German mark would become more expensive. This
would encourage foreigners to buy more U. S. goods and
services and discourage the purchase of German goods
and services. The Bretton Woods conferees agreed, how
ever, that they did not want exchange rates to fluctuate
freely outside very narrow limits because of the uncer
tainty this would introduce into international trade.
If neither exchange rates nor national incomes were
free to change, what was left? Apparently the Fund’s
founders hoped that most disturbances would be self-reversing. This would be true of seasonal movements. The
U. S. balance of trade, for example, tends to be least
favorable in the third quarter, when American tourists
flock to Europe and when the crops that will be sold
abroad have not yet been harvested; but it improves con
siderably in the fourth quarter, when the tourists come
home and the crops are sold. Another self-reversing dis
turbance might be a crop failure one year in a particular
country that might be counterbalanced in later years. But,
obviously, not all disturbances are self-reversing. If a
country’s situation did not improve in a reasonably short
time, some positive action would have to be taken. The
Fund’s founders seem to have believed that the best
answer to this problem was for individual countries to
develop ad hoc solutions as the occasion demanded. Ex
ports might be encouraged by some tax incentive scheme
or lending abroad might be discouraged until the deficit
had disappeared.

If nothing worked and some countries continued to run
deficits while others piled up surpluses, the Fund agreement
provided that the Fund might officially declare a currency
to be scarce when it was about to run out of stocks of it.
At this point, that currency would be rationed among the
other members who wished to borrow it. They, in turn,
would have to ration it to their own citizens— in other
words, impose exchange controls. Finally, and as a last
resort, members might change exchange rates after con
sultation with the Fund “to correct a fundamental dis
equilibrium”.
The hopes placed in this adjustment procedure were
perhaps a little naive from the beginning. Certainly, it has
never worked as planned. There have been numerous
changes in par values with little or no consultation with
the Fund; and the scarce currency clause was never used,
primarily because most members retained their exchange
controls until very recently. Under the pressure of events,
the Bretton Woods system was modified, little by little, until
it is now quite different from the intended design of 1944.

After Bretton Woods
The Fund’s resources proved quite inadequate to meet the
enormous deficits that European countries ran in the im
mediate postwar years. U. S. foreign aid filled the breach,
and the Fund remained relatively inactive until 1952. In
that year, Fund policy was changed to give members
practically automatic borrowing rights up to the point at
which the Fund held 100 percent of the member’s quota
in the member’s currency. Since each country originally
contributed 75 percent of its quota in its own currency
and 25 percent in gold, this was roughly equivalent to
allowing a country to borrow an amount equivalent to its
gold contribution with practically no questions asked. Sub
sequently, the Fund has gradually relaxed its terms for
borrowing even beyond this level. In the same year, the
Fund agreed to make “stand-by arrangements”, that is,
to promise to lend up to a certain amount to a given mem
ber for a certain period of time. These decisions consid
erably increased the Fund’s effectiveness, and use of its
facilities increased so much that before long its resources
were felt to be inadequate. In 1959, by general agreement,
members’ quotas were increased about 50 percent in the
aggregate.
In 1958, the U. S., no longer the only major surplus
country, began to run huge deficits. By 1961, if the
U. S. had ever wanted to borrow from the Fund, it might
well have happened that the Fund would not have had
enough of the currencies (those of the principal European
countries) the U. S. would want to borrow. So Canada,
the United States, Japan, and seven European countries
agreed that they would lend their currencies to the Fund
if they were needed.
Within the last three years, other developments have
occurred outside the Fund. In the spring of 1961, Great
Britain experienced a severe crisis. Her balance of pay
ments situation deteriorated, and there was a “flight from
the pound”, as investors with liquid funds began to fear
that sterling would be devalued. In this critical juncture,
Great Britain received short-term loans from several
(Continued on Page 6)
•3 •

A Cure for the Blues: Louisiana
The sight of Christmas trees denuded of lights and of tinsel
lying along city streets, not to mention backyard trash
cans filled to overflowing with discarded Christmas wrap
pings and New Year’s party decorations, may give many
persons that post-holiday blues feeling. This letdown may
be further accentuated if well-intended resolutions have
already been forgotten by this early date.. One possible
cure for the post-holiday blues, especially if you are a
Louisianian, is to look at some of the recent economic
developments in the state of Louisiana.

Economic Indicators — Louisiana
ii

1 1 1 1 1 1 1 1 11 i 1 1 1 j 1 1 1 1 1 1 1

19 5 7 -5 9 = 1 0 0

Before and After
In late 1962, reports available from the Louisiana Depart
ment of Employment Security had shown virtually no
improvement through the fall of that year in both nonfarm
employment and manufacturing employment. However,
later data for that same period, which were based on
more complete information that became available during
1963, indicated the job situation in manufacturing was
much better than earlier figures had revealed. The boost
in the 1962 level of manufacturing employment resulted
primarily from revisions in the employment data for the
mushrooming Michoud space facility. These changes had
not been reflected in earlier official figures.
The revised figures for 1962 manufacturing employment,
together with subsequent figures for 1963, show that after
stumbling downhill for eight years, manufacturing em

11 i m

i ii

P e r s o n a l In c o m e

W hy Louisiana?
Why should a look at developments in Louisiana be a
blues chaser? The upward tilt of the indicators shown in
the accompanying chart gives the answer: Louisiana's
economy continues to expand from the 1960-61 recession
level. Not only has business expansion climbed pro
gressively upward during 1963, but new figures on income
and employment for the previous year, 1962, show that
the improvement in business during that year was actually
stronger than data had indicated at this time last year.
The economic picture in Louisiana, thus, might be re
garded as doubly good when these earlier improvements
are noted.
The most comprehensive evidence of the sustained im
provement in the business expansion is the trend of per
sonal income. Following the sharp jumps in the summer
and winter of 1962, personal income rose further during
the first ten months of 1963, outstripping the year-ago
gain by over 8 percent, according to estimates made at
this Bank. Although nearly all income components for
Louisiana registered increases during 1963 on a year-todate basis, the largest percentage gains stemmed from the
manufacturing, contract construction, and Federal Govern
ment sectors and, to a lesser degree, from mining and
services. Only farm income has lagged behind last year’s
level.
A considerable share of the credit for the improved
income situation may be attributed to employment gains
in the manufacturing sector.

111111111

N o n fa r m E m p lo y m e n t

M fg . E m p lo y m e n t

M fg . P a y r o lls

C o n s t r u c t io n E m p lo y m e n t

M em ber B an k Lo an s

I I M I I I I II I I I i i I i I
______ 1961
1S
♦For Sixth District area only.

ployment made a dramatic reversal in early 1962. De
spite a moderate relapse in mid-1963, manufacturing
employment has definitely recovered and remains con
siderably above year-earlier levels.
The continued strength of the advance, as in the case
of the earlier bench mark revisions, stems largely from
gains in the heavy goods sector of manufacturing, pri
marily the other durables category containing most of the
new jobs associated with the space effort. For instance,
of the more than 4,000 manufacturing jobs added since
late 1962, virtually all of the increase in employment has
been in the other durables category. In contrast, despite
recent employment gains in food and kindred products,
offsetting declines in other industries have caused total
employment in the soft goods industries to remain un
changed since early 1962.
. 4 .

As expected, the effect of the revitalized manufacturing
sector on income has been electric: Factory payrolls have
spiraled upward during the past two years in the strongest
upsurge in recent times.

Booming Construction
Although the comeback of the manufacturing sector has
played a leading part in the brighter economic picture,
the income data noted earlier showed other sectors have
also earned a nod of approval. Construction, in particular,
should be singled out.
Construction contracts awarded during the first eleven
months of 1963 are 36 percent above the year-ago vol
ume for the same period. Construction spending awards
for both residential and nonresidential building, such as
hospitals, dormitories, and manufacturing plants, have
registered higher volume. The gain in dollar value of resi
dential contracts this year has been particularly sharp in
New Orleans and in the smaller areas located outside the
state’s major metropolitan centers.
The impact of the improved building situation, not
only of 1963 but of 1962 as well, is reflected in substantial
increases in the mortgage loan portfolios of the state’s
savings and loan associations and banks. The building
industry’s brighter environment has also contributed to
the sharp reversal in construction employment — a re
versal only slightly less dramatic than that occurring in
manufacturing at about the same time. After declining since
1957, construction employment turned around in early
1962, and the number of construction jobs rose rapidly
during 1962 and early 1963. During the summer, employ
ment sagged a bit, but recent figures show the number of
construction jobs headed upward once again.
Along with manufacturing and construction, other sec
tors have also contributed to the recent growth in income.
Gains in state and local government and service employ
ment have also added impetus to the upward march of
total nonfarm employment and personal income.
Fewer Jobless
The net result of all these bits and pieces of improvement,
especially those in employment, is perhaps best mirrored
by the unemployment situation. Here the impact is clearly
brought into focus by the rate of insured unemployment.
This rate, which measures the number of jobless workers
drawing unemployment benefits relative to the total num
ber of workers covered by unemployment insurance, has
steadily plunged downward. At the end of November, the
rate of insured unemployment was at its lowest level since
early 1958.
This rosier picture with respect to joblessness at the
local level was reflected in Louisiana’s major labor market
areas. During the spring of 1962, Baton Rouge was re
classified from an area of substantial unemployment to one
of moderate unemployment, and New Orleans followed
by earning a similar reclassification in the spring of 1963.
The reasons listed by the U. S. labor officials for the
reclassification of New Orleans included the staffing of the
NASA space facilities, gains in fabricated metals and ship
building, and job increases in transportation and public
utilities.

In this climate of higher income, thriving construction
activity, more jobs, and fewer jobless, the recent gains in
retail spending and heightened banking activity probably
surprise no one. On the retail side, auto buying during the
first ten months of 1963, reflected by the latest registra
tion figures available, topped year-ago volume for the
same period by 11 percent. Among the broader measures
of consumer spending, sales tax collections, with only
brief interruptions, have steadily mounted since the end
of the 1961 recession. Although dipping slightly during
recent months, the overall trend of bank debits has shown
an upward direction during the past two years.
Customer activity at the state’s deposit windows and
loan departments also reflects the vigor of Louisiana’s
business expansion. Loans at member banks located within
the District portion of the state have steadily risen since
early 1961. Deposits have also increased, though at a
slower pace.

Questions
Turning from the past and looking into the future, many
ask if the present expansion in Louisiana will continue?
And, will the construction and manufacturing sectors, in
particular, the space industry, continue to be the spark plug
of the advance? Officials of the National Aeronautics and
Space Administration expect employment expansion at the
Michoud facility to continue through mid-1964 and then
level out. At peak employment, annual payrolls of about
$71 million are anticipated by the New Orleans Chamber
of Commerce. The impact of this development on demand
at the local retail and service level cannot help but buoy
economic activity in general. Also, the recent high volume
of construction awards may probably be considered a
harbinger of added strength in Louisiana’s economy. Thus,
while some may suffer from the post-holiday blues, Louis
ianians should be enjoying their second look at the recent
past.
Jack L . C o o per

This is one of a series in which economic developments in
each of the Sixth District states are discussed. Develop
ments in Mississippi’s economy were analyzed in the
August 1963 R e v i e w , and a discussion of Tennessee’s
economy is scheduled for a forthcoming issue.

A REVIEW OF LOUISIANA'S ECONOMY,

1959-63
A compilation of articles devoted to Louisiana's economy that
ap p e are d in this Bank's Monthly Review during 1959-64, to
gether with revised monthly figures of major business indicators
for Louisiana. The articles em phasize various aspects of Louisi
an a's economic scene and often consider longer-run develop
ments. Copies of this booklet, a s w ell as copies of A Review
of G e o rg ia 's Econom y, 1960-63 and A Review of Mississippi's
Econom y, 1960-63, the first two publications in this series, a re
a v a ila b le upon request to the Research Department, Federal
Reserve Bank of A tlan ta, A tlan ta, G e o rg ia 30303.

•5 •

The International Monetary System
The tab le on Debits to In d ivid u al Dem and Deposit Accounts, w hich
has been omitted this month, is scheduled to re ap p e a r in the
Feb ru ary R eview . C opies of the current tab le a re a v a ila b le upon
request to the Research D epartm ent o f this Bank.

(Continued, from Page 3)
European countries that are members of the Bank for
International Settlements. She repaid these loans by draw
ing from the Fund; but this assistance had established a
precedent for much closer international monetary co
operation. In 1961, much the same group of countries
plus the United States established the “gold pool”, which
is an arrangement whereby the members agree to buy and
sell gold on the London market, acting through the Bank
of England, in such a way as to prevent wide fluctuations
in the price of gold. This arrangement also prevents them
from competing with one another for gold at times when
it might be scarce. If the gold price were to rise very much
very suddenly, the suspicion might arise that one or more
currencies were going to be devalued, and this might lead
to panic selling of those currencies. The purpose of the
“gold pool” is to prevent this sort of hysteria.
Finally, in 1961 and 1962, the U. S. Treasury and
Federal Reserve System initiated the foreign currency op
erations mentioned at the beginning of this article. They
have been described in a previous Monthly Review article
(June 1963) and so will not be discussed here.
To summarize, the principal features of the international
monetary system as it exists today are: Fixed exchange
rates that may be altered only rarely and with prior con
sultation; a central fund of currencies that may be bor
rowed by member countries to supplement their own inter
national reserves; a firm commitment by the U. S. to
sell gold to foreign monetary authorities at a fixed price;
an undertaking by major member countries that their cur
rencies may be freely bought and sold, at least by non
residents, to finance current transactions; a general under
standing that restoration of equilibrium in a country's bal
ance of payments should not involve that country in
serious deflation or inflation; and a well established, though
informal, process of consultation and cooperation among
the principal trading nations. This process of cooperation
has led to the establishment of the “gold pool”, the re
ciprocal currency arrangements, and the Fund’s supple
mental lending agreement.
Certainly, we are closer today to Hawtrey’s goal of an
international monetary system managed through central
bank cooperation than ever before. But is this sufficient?
The present system is clearly not perfect, and many people
believe that further changes are necessary. For one thing,
the system we have been describing really applies only to
the principal trading nations of North America and
Europe, and Japan. In the rest of the world, exchange
depreciation, multiple exchange rates, and exchange con
trol are more the rule than the exception. For another,
U. S. deficits have provided a flow of dollars that has
supplemented other nations' reserves. But what will
happen when the U. S. deficit is finally eliminated? Will
new gold production be sufficient to provide for an ex
panding international economy or should we begin now to
overhaul the system? These and other problems will be
discussed in a future issue of this Review.

L aw rence

B a n k A n n o u n c e m e n ts
On D ecem ber 2, the Bank o f H untsville, H untsville, A labam a,
a new ly organ ized n on m em ber bank, opened fo r business and
began to re m it at par fo r checks drawn on it when received
from the F ederal R eserve Bank. Officers include Jam es D.
Thornton, C hairm an o f the Board; John E. H atch, Jr., Chair
man o f the E xecu tive C o m m ittee; D o c F ow lkes, President;
and W alter V. L inde, Vice P residen t and Cashier. C apital is
$4-50,000, and surplus and un divided profits, $225,000.
The consolidation o f the Birm ingham Trust N ation al Bank,
Birm ingham , A labam a, and Bank fo r Savings and Trusts, B ir
m ingham , A labam a, becam e effective as o f the close o f business
on D ecem ber 6. The consolidation was effected under the
charter and title of B irm ingham Trust N ation al Bank.
O n D e cem b er 9, the O cean N ation al Bank o f F ort L auder
dale, F ort Lauderdale, Florida, a new ly organ ized m em ber
bank, open ed fo r business and began to rem it at par. Officers
are L. C. Judd, C hairm an o f the Board; W. H o w a rd A llen ,
President; J. C. M onaghan, E xecu tive Vice P resident; and
T. C. Snellgrove, Vice P resident and Cashier. C apital is
$250,000, and surplus and o th er capital funds, $125,000, as
reported by the C o m p tro ller o f Currency at the tim e the
charter was granted.
The R ossville Bank, R ossville, G eorgia, a new ly organ ized
n on m em ber bank, open ed fo r business and began to rem it at
par on D ecem b er 13. Officers include J. J. A tkin s, P resident;
R. B. H ow ard, V ice P resident; and G ordon L. N ichols, Cashier.
C apital is $250,000, and surplus and un divided profits,

$100,000.
On D ecem ber 16, the Southgate N ation al Bank o f R ich m on d
C oun ty, A ugusta, G eorgia, a n ew ly organ ized m em b er bank,
open ed fo r business and began to rem it at par. Officers are
Jack L. M addox, P resident; and H o w a rd M . H obson, Vice
P resident and Cashier. C apital is $150,000, and surplus and
other capital funds, $150,000, as rep o rted by the C om ptroller
of C urrency at the tim e the charter w as granted.
The D ixie N ation al Bank o f D a d e C oun ty, M iam i, Florida,
a new ly organ ized m em b er bank, open ed fo r business and
began to rem it at p a r on D ecem b er 19. Officers include Thom as
F. C arney, President; R o g er M . Spring, E xecu tive Vice P resi
dent; and John J. L oughlin, Cashier. C apital is $300,000, and
surplus and other capital funds, $200,000, as reported by the
C o m p tro ller o f Currency at the tim e the charter was granted.
On D ecem b er 20, the Peninsula State Bank, D ayton a Beach
Shores, Florida, a new ly organ ized n on m em ber bank, opened
fo r business and began to rem it at par. Officers are H en ry C.
C olem an, C hairm an o f the Board; R. F. L ivingston, President;
C harles C. Foster, E xecu tive Vice P resident and Cashier; and
R o b ert L. C olem an, Vice P resident. C apital is $250,000, and
surplus and un divided profits, $75,000.

STATISTICS O N THE DEVELOPING SOUTH
The an nu al revision of Statistics on the D eveloping South is
now a v a ila b le for distribution. This study classifies selected
statistical d a ta for the District by state and also includes d ata
for the District as a w hole, the eleven southeastern states,
and the United States. Copies of the study may be obtained
on request to the Research D epartm ent, Federal Reserve Bank
of A tlan ta, A tlan ta, G e o rg ia 30303.

a n sfield

•6 •

Sixth District Statistics
Seasonally Adjusted
( A ll d a t a a r e in d e x e s , 1 9 5 7 - 5 9 =

Latest Month
(1963)
S IX T H

One
Month
Ago

Two
Months
Ago

Oct. 43,356
42,694r
Nov.
137
138
Oct.
150
138
Oct.
148
178
Oct.
119
114
Dec.
131
140p
Nov.
130p
129r
Nov.
Nov.

163
162

157
150

41,750r
135
125
131
120
120
125
163r
173r

39,408
128
103
94
126
122
122
160r
142r

PRODUCTION AND EMPLOYMENT
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Oct.
Nov.
Nov.

112
111
130
107
117
105
94
107
99
95
117
113
99
80
3.4
41.3
256
149
347
121
96
165

112
111
130
107
117
108
93
106
99
94
117
112
99r
81
3.6
41.0
156
165
149
119
97r
160r

112
110
130
106
116
105
94
107
99
94
116
112
99
83
3.5
41.2
145
145
144
116
103
163r

110
108
127
104
108
104
92
107
95
96
109
110
97
83
4.4
41.0
128
119
136
114
97
156r

Member Bank Loans*
All B a n k s .......................................................
Leading C i t i e s ............................................

Nov.
Dec.

164
153

161
155

158
154

143
137

Member Bank Deposits*
All B a n k s .......................................................
Leading Cities
............................................
Bank D e b i t s * / * * ............................................

Nov.
Dec.
Nov.

136
129
144

135
127
144

135
125
148

125
120
132

FINANCE AND BANKING

Two
Months
Ago

One
Year
Ago

8,056
140
117
121

B,037r
137
135
115

114
110
116
Ill
72
2.6
41.2

114
109r
116
llO r
76

169
142
148

7,956r
135
127
123

7,414
126
99
116

PRODUCTION AND EMPLOYMENT
Nonfarm Employm ent.......................................Nov.
M a n u fa ctu rin g ............................................ Nov.
Nonmanufacturing.......................................Nov.
C o n stru ctio n ............................................ Nov.
Farm Em ploym ent............................................ Nov.
Insured Unemployment, (Percentof Cov. Emp.) Nov.
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .
Nov.

110

114
109
116

106
113

2.8

40.7

83
3.0
40.4

75
3.5
40.8

168
138
151

164
137
160

149
130
137

111

110

FINANCE AND BANKING
Member Bank L o a n s .......................................Nov.
Member Bank D e p o s i t s ................................. Nov.
Bank D e b i t s * * ..................................................Nov.

LOUISIANA
INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate)
Manufacturing P a y r o l l s ......................
Farm Cash R e c e i p t s ............................
Department Store S a le s*/**
. . .

5,709
120
122
108

Oct.
Nov.
Oct.
Nov.

6,328
126
163
111

6,277r
128r
156
99

6,156r
128
119
111

Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.

103
100
104
96
93
3.5
42.3

103
101
103
93
88
3.6
41.9r

103
99
103
92
86
3.8
42.9

102
98
102
86
83
4.7
42.8

Nov.
Nov.
Nov.

151
126
134

146
123
128

145
122
127

134
116
120

Oct.
Nov.
Oct.
Nov.

3,369
140
146
102

3,360r
140r
190
88

3,122r
141
137
102

Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.

114
118
113
108
70
4.4
40.2

114
118
112
105
72
4.6
40 .2r

114
117
113
109
67
4.5
40.8

112
115
111
109
88
4.8
40.4

Nov.
Nov.
Nov.

186
146
156

181
150
158

177
147
154

161
138
141

Oct.
Nov.
Oct.
Nov.

6,998
134
144
114

6,787r
135
139
105

6,689r
133
106
114

Nov.
Nov.
Nov.
Nov.
Niw.
Nov.
Nov.

112
113
112
122
84
3.8
41.2

112
112
111
125
83
3.9
41.7

111
112
110
122
93
4.0
41.3

109
110
109
121
82
5.5
41.0

Nov.
Nov.
Nov.

164
134
145

163
135
145

161
135
160

143
125
130

PRODUCTION AND EMPLOYMENT

FINANCE AND BANKING

Bank Debits*/"

INCOME AND SPENDING

Personal Income, (Mil. $, Annual Rate) . .
Manufacturing P a y r o l l s .................................
Farm Cash R e c e i p t s .......................................
Department Store S a l e s * * ............................

Oct.
Nov.
Oct.
Nov.

6,002
126
124
115

5,912r
123
149
97

5,747r
122
144
102

PRODUCTION AND EMPLOYMENT
Nonfarm Employm ent.......................................
M a n u fa ctu rin g ............................................
Nonmanufacturing.......................................
C o n stru ctio n ............................................
Farm Em p loym ent............................................
Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .

Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.

107
102
109
95
73
4.0
41.4

107
103
109
95r
82
4.2
40.5

107
101
109
95
81
4.1
40.8

105
101
107
92
76
5.1
40.6

FINANCE AND BANKING
Member Bank L o a n s .......................................
Member Bank D e p o s i t s .................................
Bank D e b i t s * * ..................................................

Nov.
Nov.
Nov.

162
133
139

159
134
141

157
134
143

142
124
127

5,371
117
94
113

Personal Income, (Mil. $, Annual Rate)
Manufacturing P a y r o l l s ......................
Farm Cash R e c e i p t s ............................
Department Store S a le s*/**
. . .

2,857
131
97
107

PRODUCTION AND EMPLOYMENT

Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .
FINANCE AND BANKING

FLORIDA

TENNESSEE
Oct. 12,603
Nov.
169
Oct.
143
Nov.
166

12,321r
168r
142
155r

12,080r
163
117
165

11,762
155
121
153

PRODUCTION AND EMPLOYMENT

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate)

6,295
126
105
115

PRODUCTION AND EMPLOYMENT
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.

119
125
118
89
97
3.3
41.4

119
126r
118
91 r
91
2.9
41 .l r

119
124
118
91
100
2.8
41.7

116
121
115
89
92
3.8
40.9

Nov.
Nov.
Nov.

165
139
145

161
138
146

157
138
147

140
127
136

One
Month
Ago

MISSISSIPPI

INCOME AND SPENDING

Nonfarm Em ploym ent.......................................
M a n u fa c tu rin g ............................................
Nonmanufacturing.......................................
C o n stru c tio n ............................................
Farm Em ploym ent............................................
Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate) . .
Oct.
Manufacturing P a y r o l l s ................................. Nov.
Farm Cash R e c e i p t s .......................................Oct.
Department Store S a l e s * * ............................Nov.

Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .

ALABAMA

Latest Month
(1963)

GEORGIA

D IS T R IC T

Nonfarm Em ploym ent.......................................
M a n u fa ctu rin g ............................................
A p p a re l.......................................................
C h e m ic a ls ..................................................
Fabricated M e t a l s .................................
F o o d .............................................................
Lbr., Wood Prod., Furn. & Fix. . . .
Paper
.......................................................
Primary M e t a l s .......................................
T e x tile s.......................................................
Transportation Equipment
. . . .
Nonmanufacturing.......................................
C o nstru ctio n ............................................
Farm Em p loym ent............................................
Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .
Construction Contracts* .................................
Residential
..................................................
All O t h e r .......................................................
Industrial Use of Electric Power
. . . .
Cotton Consumption**
.................................
Petrol. Prod, in Coastal La. and M iss.* * / * * * *

o t h e r w is e .)

One
Year
Ago

INCOME AND SPENDING
Personal Income, (Mil. $, Annual Rate) . .
Manufacturing P a y r o l l s .................................
Farm Cash R e c e i p t s .......................................
C r o p s ............................................................
L iv e s t o c k .......................................................
Department Store S a l e s * / * * ......................
Department Store S t o c k s * ............................
Instalment Credit at Banks, • / • • • ( M il. S)
New Lo a n s.......................................................
R e p a y m e n ts..................................................

1 0 0 , u n le s s in d ic a t e d

Insured Unemployment, (Percentof Cov. Emp.)
Avg. Weekly Hrs. in Mfg., (Hrs.) . . . .
FINANCE AND BANKING

Bank Debits*/"

•For Sixth District area only. Other totals for entire six states.
**Daily average basis.
p Preliminary.
r Revised.
‘ ‘ ♦Estimates of consumer instalment credit have been revised for the period July 1962 through September 1963.
•♦♦♦Figures reflect revision of seasonal adjustment factors.
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 •

I S

I C

I N

I T

I O

r redom inantly good reports received at the start of 1964 indicate
that the District's economy moved ahead during the last months of
the old y e a r. Sm all gains characterize nonagricultural em ploym ent,
w hile large fall and e a rly w inter sales are buoying farm income.
Construction contract aw ards rem ain at a high level. Christmas shop
pers accelerated the pace of departm ent store sales to a new high for
the season, and banks continue to meet the credit needs of borrowers.

B illio n s o f D o lla rs
“ A n n u a l R ate
S e a s . Adj.

IS
Nonagricultural em ploym ent in the District advanced m oderately
in Novem ber, despite sm all decreases in A labam a and Florida. Manu

facturing employment registered no change from October, as advances in
Georgia, Mississippi, and Tennessee were offset by declines in other District
states. Food processing dropped from the high October level, but gains in
paper, apparel, and primary metals acted as a counterbalance. Manufacturing
payrolls rose as a result of longer average weekly hours, with the gain extend
ing to all District states except Louisiana and Tennessee. Nonmanufacturing
employment was up slightly, while construction employment edged down
again. The November rate of insured unemployment for the District was the
lowest since September 1953.
The outlook for the farm economy is good, although a few w eak
spots w ere apparent at the end of 1963. In some local areas, drought and

cold weather slowed farm activities and shrank some farmers’ incomes. A
highly successful crop harvest, however, generally boosted total farm income.
Most farm debts were being repaid on schedule, and sales to farmers were
brisk. Farmers’ costs, though rising, were not increasing precipitously.

Construction contracts aw arded continue to show strength for the
y e a r through Novem ber. Residential construction contracts have been

booming all year and reached a new, all-time monthly high in October. Nonresidential construction contracts also reveal sustained vigor, far surpassing the
year-ago level. The supply of mortgage funds is ample.

Holiday shopping in December led to a handsome gain in depart
ment store sales, according to prelim inary reports. Final figures reveal

that sales in November also outstripped those of the preceding month. Follow
ing the moderate increase in October, consumer credit outstanding at District
banks remained virtually unchanged during November. Auto debt outstanding
also showed no change in November, as increased repayments of old loans
offset an increase in the volume of new auto loans. Personal income continued
to expand through October, and indications point to a further expansion in
November. On a year-to-date basis, the first ten months of 1963 show income
gains for all states in the District.
)S
District banks provided am ple credit in Novem ber to facilitate
economic advances. Banks in major cities have taken advantage of increased

reserves to reduce their indebtedness to the Federal Reserve Bank and to
make additional funds available for continued business expansion. Loans for
commercial and industrial purposes continued to lead the way at these banks,
as strong loan demand from non-durable manufacturers persisted.

Excess Reserves
,

Borrowings from F. R. Bank

1961

1962

"Seas. adj. figure; not an index.

-o-

1963

4.0
7

1964

N o t e : D a t a o n w h ic h sta te m e n ts a re b a s e d
s e a s o n a l in flu e n ce s.

h a v e b e e n a d ju s t e d w h e n e v e r p o s s ib le

t o e lim in a t e

Full text of Economic Review (Federal Reserve Bank of Atlanta) : January 1964

FRASER