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Atlanta, Georgia July • 1960 Also in this issue: INSTALMENT CREDIT: N EW STYLE BUSINESS IM PRO VES IN LO U ISIA N A W H O FINANCES SOUTHERN CO N SU M ERS? Banking’s Role in Southern Economic Expansion Previous articles in this Review described and analyzed the changes in industrial and agricultural production and other economic activities that have marked this area’s income growth in the 1950’s. Structural changes and improvements in the use of the region’s resources and capital investment were found to have played leading roles in the economic growth of the area. Depending upon how well they respond to the changing circumstances that accompany growth, a region’s financial institutions can either facilitate or hinder such economic development. Among financial in stitutions, commercial banks are in a position to perform two important functions: First, they can provide for the convenient and efficient trans fer of funds and for services related to this function. Everyone who owns bank deposits and draws checks upon them to make local or distant payments knows that banks perform these functions well. Such con veniences as suburban branch offices, drive-in windows, and new bank ing services provide further concrete evidence that bankers are continu ously striving to satisfy this need. DISTRICT BUSINESS H IGHLIGHTS SIXTH DISTRICT STATISTICS Deposits, All Commercial Banks Sixth District and U. S. Selected Years Billions of Dollars Billions of Dollars SIXTH DISTRICT INDEXES % sem B < a n lt o f jS fa n ta As deposits a t banks in the nation increased, those at District banks grew even more rap idly. By 1959 the District's share of the total was one-fourth g reater than in 1949 and alm ost twice that in 1939. Secondly, as a source of credit, banks can help put funds to productive use. How well have Southern bankers per formed the function of allocating funds to their most pro ductive uses? Have bankers been able and willing to make loans in adequate amounts and on terms appropriate to the needs of borrowers? The answers are not obvious, but a review of the credit granting function of banks in this Federal Reserve District during the last ten years should provide some basis for answering these questions. The Sixth Federal Reserve District includes Alabama, Florida, Georgia, southern Louisi ana and Mississippi, and the eastern two-thirds of Tennessee. Banking Resources Double During the Fifties lent are retained in the area or more funds come in from outside. How, then, did Sixth District banks get these de posits from outside the area? First, because the District shared in the nation’s real eco nomic expansion, its banks also shared in the growth of deposits that took place during the period throughout the nation. Deposits found their way into District banks as payments for locally produced goods and services sold to outsiders and as a result of expenditures made here by the United States Treasury. Second, we know that as industry expanded southward much of the capital investment came from other areas. This was naturally accompanied by inflows of deposits. At the same time, of course, individuals and businesses within the District were drawing on their de posits to make payments in other parts of the country, and the Federal Government was collecting taxes here. Payments to the District from other areas, however, exceeded pay ments from the District, with the result that there was a net addition to the District’s banking resources. Advertising, providing new and improved services, and other devices all help an individual bank to attract and re tain deposits. However, regardless of what Sixth District banks did individually to retain and increase deposits at their own banks, for the banks as a group, deposit growth resulted largely from factors beyond their control but which were implicit in the economic growth of the District. The policies followed by Southern bankers, in turn, were ex tremely important to that very economic growth. Bankers decided how much of their resources they would make avail able to the private sector of the economy, what kinds of borrowers would be provided with credit, and the terms under which the credit would be granted. Paralleling the expansion in the District’s income and produc tion, commercial bank assets rose from less than $8 billion to over $15 billion between mid-1949 and mid-1959. One hundred and forty-four new banks shared in this growth and a 32-percent increase in the number of bank and branch offices served to spread banking facilities within the District. That growth in banking resources is closely related to growth in income is shown by comparisons of changes in banking resources and income within the District and between the District and the nation. In Florida, for example, where income and population advanced spectacularly, bank assets were about 2.8 times as great in 1959 as in 1949. For other District states, where incomes also grew, but at lesser rates, the comparable ratio for 1959 was 1.7. For the United States as a whole, commercial bank assets were 1.6 times as great in 1959 as in 1949. In the Sixth District, where the ratio of income growth was higher than in the United States, bank assets were almost twice as great in 1959 as in 1949. How did Sixth District banks obtain and retain these additional resources? New paid-in capital was a source of some of the new funds. By far the largest amount, however, was obtained through new deposits. Our question, therefore, becomes: Where did the deposits come from and how were banks able to retain them? When a bank consents to hold new deposits it simultane ously acquires cash reserves, of which only small amounts must by law be held as reserves against those deposits. With the remainder of these funds the bank can extend new loans or buy investments, and together banks can “create” in deposits several times the initial amount of reserves received. At the level of the Sixth District, or any other District, however, this process is limited to the extent that the funds Banks can increase their loans in two main ways: by acquiring additional resources and by liquidating existing assets. Dur ing the 1950’s the nation’s banks, as a group, used both. The greatest source of additional lending power was the reserves that the Federal Reserve System made available to the bank ing system for credit expansion and which made possible growth in aggregate deposits. In addition, however, banks— particularly those in larger cities—drew funds from the liquidation of U. S. Government securities to make loans and also added to their non-Government security holdings. Personal Income and Bank Deposits Assets, Sixth District Commercial Banks Loans to Public Absorb the Greater Share of Bank Resources 1949 and 1959 Sixth District andl U. S. 1949-59 B illio n s of Dollors B illio n s of D o llo rs 16 Percent Increase 16 14 14 :0ther AssetsI 12 12 Govt.:-:-:-:-: Securities:':':':-: 10 8 8 6 6 4 4 2 2 1949 In are a s such as Florida, w here incomes deposits also showed the greatest gains. grew rap id ly, 10 1959 Loans accounted for over one-half the increase assets from 1949 to 1959. . 2 • in total Government securities declined by 7 percent during the 1950’s. District banks, on the other hand, did not reduce their U. S. Government securities over the decade. Holdings of these securities were 43 percent greater at the end of the period than at the beginning. Additional credit to private borrowers, therefore, came almost entirely from increased resources. Were District bankers less alert than American bankers as a whole and ultra-conservative in supplying credit to private borrowers because they failed to use this second source? Prob ably not. Bankers do not ordinarily like to reduce the safety cushion provided by Government securities below what they consider prudent levels. The growth in total assets, therefore, required a growth in this cushion. More important, perhaps, was the influence of the demand for credit. The greatest rates of growth in banking resources did not always occur where the demands for private credit, as measured by loans outstanding, were greatest. In some states, where deposit growth was less than in others, the rates of loan expansion were higher, as can be observed from the accompanying table. Also, although deposits at banks in the larger District cities increased less than in the District as a whole, loans increased at a higher rate. Whether or not the credit needs of the area would have been better met had the increases in banking resources corresponded more closely to the increases in loan demands is a question that cannot be answered on the basis of figures. Nevertheless, for every $100 increase in deposits, there was an increase of $61 in loans. By 1959, loans made up 40 percent of assets compared with 26 percent ten years earlier. Indeed, at times during the 1950’s, when demands for loans were especially strong and deposits did not rise correspond ingly, many banks did, of course, reduce their Government security holdings. This occurred during the economic ex pansion of 1955-57 and in the one beginning in mid-1958. Business Loans, Production, and Sales Sixth District Percent Increase ! Increases measured 1946-57 for loans: 1947-57 for values added and construction contract awards; and 1948-58 for sales. in general, business loans expanded most in those types w here output expanded most, indicating the response of banks to the changing needs of the are a's economy. farmers. Thus, as the dollar volume of production grew (reflecting both more physical units of output and rising prices), businessmen sought more funds from banks to carry inventories, to purchase plant and equipment, and to extend credit further to other business borrowers and to consumers. Farmers needed funds to finance crops and to make the many adjustments required in a rapidly changing agriculture. If the banks followed lending policies adequate to meet these demands, we not only might expect to find that loans increased, but also that the greatest increases were in those sectors where output or sales expanded the most. Although precise data are not available, on the basis of 1946 and 1957 business loan data collected by the Federal Reserve System and Census data on production and sales, we do observe such a relationship. The four industry groups ob taining the greatest increases in loans—metal-using trades, petroleum and chemical producers, service establishments, and construction firms—were precisely those whose output or sales increased the most. Factors other than output, however, such as size of firms, Loan Expansion Reflects Shifting Demands for Funds Commercial banks have been the traditional suppliers of short- and intermediate-term credit to businessmen and Commercial Banks in Sixth District and United States June 1949 and 1959 (Millions of Dollars) Percent 1959 Change 1949 Alabama . Florida . . Georgia . . Louisiana1 . Mississippi1 . Tennessee1 . Sixth District2 United States . . . . . . . . 1,930 1,142 . 4,598 1,690 . 1,500 2,627 . 1,633 2,738 . 721 1,188 . 1,806 2,910 . 7,222 . 13,973 . . 135,416 206,706 Alabama 1949 1959 Percent of Total Loans: Commercial & Industrial . . ., . 33 Consumer . . ., . 21 Real Estate (Non-farm) . . .. . 19 16 F a rm ................... Loans Investments Deposits + + + + + + + + 69 546 172 1,004 618 75 68 864 65 398 848 61 93 3,677 53 71,243 Florida 1949 1959 Percent 1959 Change 1949 806 2,067 934 1,216 542 1,064 5,852 81,858 Georgia 1949 1959 + + + + + + + + Assets Percent 1959 Change 1949 48 373 869 106 328 1,844 580 51 1,351 380 41 1,110 36 188 482 582 25 1,437 59 2,032 6,147 15 40,535 103,282 Louisiana 1949 1959 Mississippi 1949 1959 Percent 1959 Change 1949 1,234 2,130 + 133 +462 5,056 1,808 + 133 1,632 2,953 + 192 1,735 3,014 + 156 772 1,300 + 147 1,937 3,202 +203 7,764 15,440 + 155 147,216 232,487 Tennessee 1949 1959 + + + + + + + + Six States 1949 1959 30 18 36 22 24 30 26 28 41 36 46 37 37 45 40 44 United States 1949 1959 35 33 40 26 39 32 24 14 38 30 42 20 44 21 27 21 35 25 37 27 39 33 34 22 39 30 40 18 40 22 18 10 21 5 21 3 19 10 18 8 18 7 21 5 18 23 17 18 15 12 15 9 18 11 18 7 25 8 24 6 1 Includes all insured banks in state. Includes all commercial banks in District; other data for insured banks. 2 73 180 81 74 68 65 99 58 Loans as Percent of Assets ’49 ’59 • 3 • asset positions, and alternative sources of funds, can also in fluence the demand for bank loans. Borrowing by District businesses, moreover, sometimes shifts to sources outside the District’s boundaries. Food processors, for example, often shifted their borrowing outside the District when plants were nationally consolidated. The lack of a one-to-one relationship between loan expansion and sales or output increases for particular industries does not necessarily mean that banks failed to channel credit to industries where it was needed most. Like business, farming was also going through changes involving new demands for credit. In spite of declining farm incomes, these changes—in particular, the larger size of farms and the greater amount of equipment per worker and per acre—resulted in increased loan demands. The sizes and number of loans were actually larger in 1959 than in 1949. The decline from 11 to 7 percent in the percent of total bank loans granted to farmers reflects, however, the growth of the nonfarm economy and, therefore, the decline in relative importance of farming. Bankers Extend Loans for Longer Periods As a rule, bankers prefer to make loans for relatively short periods, generally for less than a year. This kind of short term credit meets the needs of many farmers and business men because they can generally realize a return on the funds borrowed before the time comes to repay. The economic development of the South, however, in creased the need for longer-term credit. Adjustments in the District’s farming, for example, discussed in the March issue of this R eview , created demands for credit to improve pastures, to buy farm machinery, and to make long-term improvements. Returns on these investments would be real ized over only a relatively long period. A farmer, therefore, would not want to embark on such enterprises unless he could borrow the money on terms that would allow him to repay the loan out of income over a relatively long period. A greater need for longer term credit, too, arose out of other changes in the structure of the Southern economy. For example, changes in Southern manufacturing, discussed in the June issue of the R ev iew , involved shifts toward types of manufacturing that use more durable equipment in relation to labor and materials. Returns from such investment would also be realized only over a long period. To small businesses, whose growth has been important in the District’s economic development, the availability of long-term bank credit is especially important since many of them are dependent on banks for their financing. In 1957-58, for example, according to a survey conducted by this Bank, firms with fewer than 25 employees and which expanded their plants used bank credit in three out of four cases. With a sizable “cushion” of government securities that could be liquidated to meet possible sudden withdrawals of deposits, District banks made more and more loans for periods longer than a year, commonly called term loans. The proportion of term loans to total business loans has increased steadily. In 1957, they constituted 24 percent of business loans, compared with 14 percent in 1946. In the boom period of 1955-57 alone, the amount of term loans outstanding increased by 49 percent. Surveys of farm lending by commercial banks conducted by this Bank also indicate that bankers are granting more intermediate-term credit to farmers than before. Most long-term lending is done by the larger banks, how ever, and the principal business of banks in this District still consists of short-term credit. District borrowers, moreover, have also been able to get large funds from banks located outside the South. Various agencies other than banks also supply large amounts of long-term credit, especially to farmers. Consumers Get a Larger Share of Bank Loans Rising production not only generated greater demands for credit in business and agriculture, but produced higher in comes that greatly stimulated consumers’ willingness and ability to incur debts. This is reflected in the increased amount of long-term mortgage credit outstanding in recent decades, but more dramatically in the large additions to short- and intermediate-term consumer credit. District banks are contributing substantially to this kind of credit, both in direct loans to consumers and indirectly by lending to other financial institutions. Banks were not, how ever, until recently important consumer instalment lenders. During the 1950’s, their movement into the consumer instal ment field was evidenced by a rise in the ratio of con sumer to total loans. In 1949, less than one dollar in four of total loans went to the consumer. By 1959, nearly one dollar in three went to him. Banks found consumer lending advantageous because it yielded higher rates of return than other types of loans and because losses have been very low. Consumers likewise found such loans advantageous in helping to spread the cost of dura ble commodities over the duration of their use. But what of the relationship of consumer loans to economic development? Did they help or hinder growth? To the extent that rising consumer credit contributed to the inflationary forces of the 1950’s, it probably did not contribute to and possibly hindered growth. This was particu larly the case in 1955 and 1959, when consumer credit caused consumer demand to press hard against limited resources. On the other hand, District banks increased consumer lending even in periods of recession, and this probably buoyed up demand more than would otherwise have been the case. Economic Growth and Banking in the Sixties These, then, have been some of the major changes in Sixth District banking accompanying the South’s economic growth in the 1950’s: a doubling of banking resources, a tripling of loans, a shift in the pattern of lending toward the more rapidly expanding sectors of the economy and toward the consumer, and a tendency to grant credit for longer periods. These banking changes have apparently been made in re sponse to economic changes resulting in growth of income. Further changes in District banking during the 1960’s, as in the past, will be determined largely by economic expansion in the nation, the extent to which this region shares in that growth, and the pattern of accompanying economic changes. More specifically, what can we say of potential growth in banking resources in the current decade? If the South’s past record of more rapid income growth than in the nation persists, there should again be a greater rise in deposits here than in the U. S. The average annual rate of growth of deposits in the District will, therefore, depend considerably on how rapidly deposits grow in the nation. In past decades of this century, the national rate of deposit growth has fluctuated widely—between 20 and 170 percent. Thus, a prediction for the 1960’s would be hazardous, indeed. In any case, banks will undoubtedly remain the foremost suppliers of short-term credit and will in this capacity be indispensable to further economic development. „ 4 „ A lbert A. H ir s c h D e ta ile d tables listing the prin cip a l asset a n d liability item s fo r banks in the Sixth D istric t an d in the in dividu al Sixth D istric t sta tes fo r the p e rio d 1 9 4 0 -5 9 are available on requ est to the R esearch D ep a rtm en t, F ederal R e serve B ank o f A t lanta, A tla n ta 3, G eorgia. • 4 • Instalment Credit: New Style Recently a respected businessman in a medium-size South ern city walked into a local marine supply store and ordered a new family-size runabout complete with outboard motor. He paid for it with a check, although he knew his bank balance was not large enough to cover it. On the other side of town, one of his friends had just selected an Early American coffee grinder for his wife’s birthday at a small antique shop. The friend asked the clerk to charge it, although he did not have an account with the store— indeed, the store was too small to offer a charge account service to its customers. Had these men taken leave of their senses? Not at all. They were merely taking advantage of two new services offered by their local banks. The businessman paid for his pleasure craft with a special check from his revolving check credit account at the First National Bank. His friend handed the clerk in the antique shop a charge card issued by the First State Bank. In both cases, the men were borrowing from their banks without the red tape involved in making an ordinary consumer loan. How the Plans Operate The man with the check credit plan probably went to his bank office and requested an application, or he may have received one in the mail. He filled it out, listing his salary and outstanding debts and the amount he felt he could repay each month without straining his budget beyond the breaking point. Everything was in order, so the bank set up a line of credit equal to 20 times the amount he wanted to pay each month. (It could have been 12, 18, or 24 times, if the policy of the bank had so established it.) He was then all set to borrow any amount up to the maximum, merely by writing a check similar to a personal check. When his checks started arriving at the bank, a loan was automatically set up. He began paying it back in the predetermined monthly amount; or, if his bank was one of a small minority, his payment was a fraction of the outstanding balance. Interest was charged on the amount due at the end of each month— usually one per cent, including life insurance, and a small charge was made for each check written. The man who remembered his wife’s birthday probably received a credit card in the mail from his bank. The card is good at any of an extensive list of stores and service establishments. The customer can charge up to $25 (in most cases) without question, and larger amounts after the clerk checks with the bank on his credit standing. He receives a monthly bill, just like the one from his gasoline company or department store. If he pays it all within thirty days, there is no charge. He may pay as little as 15 percent, in which case there is a one-percent service charge tacked on to the unpaid balance. The bank makes its profit from the merchant, who pays a discount up to 6 percent (often depending on the average size sale or the total volume of his credit business) in return for the service. The bank relieves the store of the job of book keeping and assumes responsibility for all bad debts. How W idespread Is Charge Account and Check Credit Banking? Both plans are relatively new to Sixth District banks. The revolving check credit plan was introduced by a small bank in the Miami area in 1956, shortly after its national debut in Boston. Charge account banking in the deep South, which dates back to 1953, also had its beginnings in Miami, although it had been in existence in a number of Eastern areas for some time. The revolving credit idea remained in the back of most bankers’ minds until early Spring of 1959 when 13 banks in the deep South adopted the plan in March and April alone. As the weather be came warmer, the fever rose, and by Autumn at least 41 District banks had adopted the plan. The first frost, however, cooled things off. As far as can be determined, only one bank has been added to the list since that time. The tide of bank charge account plans rose more slowly, beginning in the fall of 1957. Five District banks adopted the plan during 1958 and nine introduced it in 1959, but only one has joined the roster so far in 1960. A complete census of banks offering these plans has not been made. A survey conducted by this Bank covered all of the geographical areas of the District, including all cities with over 25,000 population and a number of smaller trade centers. That survey revealed that at least 32 District banks offered revolving check credit plans; 19 banks had charge account plans; and 10 banks offered both plans in early 1960. Of the 42 banks offering check credit services, 21 were in Florida, 9 in Georgia, 5 in Alabama, 4 in Tennessee and 3 in Louisiana. Thirteen of the 29 banks with charge account plans were in Florida, 11 were in Georgia (including 8 units of a state-wide sys tem), 4 were in Alabama, and one was located in the Sixth District portion of Louisiana. No bank in Tennessee offered charge account plans, and neither plan was avail able in the southern half of Mississippi. These plans are concentrated mainly in the District’s larger towns. Of the 30 cities served by one or both plans, 17 are in metropolitan areas. The others are found in counties with populations ranging from just under 50,000 to almost 330,000. Four of the District’s larger population centers (Knoxville, Mobile, Baton Rouge and Jackson) are not currently served by either plan. On the other hand, some smaller cities, such as Dothan and Anniston in Alabama, and Rome and Gainesville in Georgia, have both revolving check credit and charge account banking services available. The total amount outstanding in both plans in the Sixth District at the end of March 1960 was approximately $22.5 million, or less than 2 percent of the estimated consumer instalment credit outstanding at District com mercial banks. They constituted over 6 percent of con sumer instalment credit at the banks offering the plans, however, and they accounted for almost half the 15-per cent increase in instalment credit at these banks during the past year. About 47,000 applications for lines of credit had been • 5 • received by the end of March at District banks offering the check credit plan. Twenty-eight thousand had been approved and 23,000 had actually been put to use. The typical check credit customer had borrowed about $550, or over three-fourths of his total line of credit of $730. Chances are he was a white collar worker, since about two-thirds of his fellow customers fell into this class. About one-fifth were doctors, lawyers, and other professionals, while the remainder were skilled or unskilled laborers. He probably already had an account at the bank offering the plan, although almost 30 percent of the revolving check customers represent new business to the average bank. If his bank is typical, $3,000 is the maximum line of credit he could have obtained. Half the banks set this limit, while at least five banks lend up to a maximum of $2,000, and an additional four lend up to $6,000. Most Florida banks charge their customers five-sixths of one percent interest, while an even one percent is favored else where in the District. This includes life insurance, but does not include a small charge made for each check, usually 25 cents. Almost 350,000 District residents were holders of bank charge account cards at the end of March, although only about 200,000 had actually used them. They charged a little more than $2 million worth of goods and services from 7,500 merchants in March; and their total debt to the banks amounted to almost $10 million. What Is the Outlook for These Plans? It is still too early to determine the value of these plans either to the banks or to the customers. Most District banks report excellent collection experience, with a minimum of delinquencies. Fewer than 1,000 check credit accounts have been terminated— not much more than would be expected from normal turnover. High initial advertising and operating costs still obscure the profit picture, but most banks expect to make money from the plans after they have taken hold. To the customer, both plans offer a perpetual source of credit which is never likely to be completely paid up. This adds to the already considerable burden of consumer instalment debt that averages about $300 for every man, woman, and child in the United States, and it increases the banker’s dependence on the good judgment of his cus tomers. Growth of these plans in the near future in the Sixth District will apparently be limited to the banks that have already established them. None of the banks questioned that do not currently operate a charge account or check credit plan expect to do so within the next year. Some were quite emphatic in their intention to abstain. Others are playing a waiting game. If the long-run experience of the pioneers is successful, other banks will undoubtedly add one or both of the plans to their lists of consumer services. R o b e r t M. Y o u n g Business Improves in Louisiana When we reviewed economic conditions in Louisiana at the end of last year the business trends were mixed, al though the indicators moving downward more than offset those moving upward. Current data measuring Louisiana's economy appear each month on next to the last page of this Review. Nevertheless, as six months have passed since our last discussion, it seems appropriate now to take a more extended look at Louisiana business trends. Business conditions in Louisiana have improved some what since the end of 1959, largely because gains in mining, trade, and government outweigh weaknesses still present in manufacturing, construction, and farming. that began in July 1959, severance taxes were 21 percent above the high level of the preceding fiscal year. Larger revenue from the petroleum industry has en abled officials in Louisiana to add workers to state and local government payrolls. All told there are now over 119,000 people working for state and local governments in Louisiana, 4 percent more than were employed in May last year. The additional funds from taxes have encouraged acceleration of projects that might otherwise have been delayed, hence oil production has indirectly boosted business throughout the state. Oil Production Rises Further Gains in petroleum production have been carried over in to chemical and petro-chemical manufacturing industries. Both are heavily dependent on petroleum for their raw materials. New capital expenditures, for example, in those industries are well above last year’s level. In 1959, chemical and petro-chemical manufacturers spent about $70 million on new plant and equipment. Based on tax exemption approvals, which allow a ten-year exemption on new industrial expenditures, an estimated $78 million more was invested during the first four months of 1960. Like the chemical manufacturing industry, others have also increased their capital investment. Paradoxically, however, although investments are relatively high and manufacturing output is high and rising- manufacturing employment, as the chart shows, has not improved. The reason for this paradox may be traced in part to tech Crude oil production in Louisiana has been rising since late 1957 and has, no doubt, played a major role in recent economic growth patterns. Yet, despite the gains in out put, employment in oil fields has not improved. Com pared to this time last year, there are, in fact, approxi mately 4,400 fewer workers employed in crude oil and natural gas production. Although the gains in oil produc tion have not been apparent in employment in oil fields, the influence has been widespread throughout the state’s economy. As a source of state revenue, crude oil bulks large. The severance tax, a tax collected on the production of natural resources, totaled $111.4 million during the 195859 fiscal year, 63 percent of which came from crude oil production. For the first nine months of the fiscal year Increased Mechanization in Manufacturing • 6 • nological changes in Louisiana’s manufacturing industries. There, as elsewhere, machines are replacing men. A closer look at new capital expenditures may furnish evidence of this mechanization. When capital funds are invested in an industry, new jobs are often created. According to figures released by Louisiana’s Department of Commerce and Industry, however, in many businesses fewer new jobs are now being created for each $100,000 invested than in previous years. The $78 million expenditures this year by the chemical industry created one new job for every $90,000 invested. In 1956, a new job was created for every $64,000 spent. The case of food manufacturing plants, another important manufacturing group in Louisiana, is even more startling. Tax exemptions for the first four months of this year re veal that almost $30,000 in new capital was spent for each new job created, compared to only $9,000 per new job in 1956. These larger expenditures per job suggest that much of the new capital investment in manufacturing is for labor-saving equipment rather than expansion. Louisiana’s sugar industry provides an excellent example of capital spending for mechanization. Until recently the raw sugar extracted from the cane at the mill was trans ported to the refinery in 200-pound bags. This involved a considerable amount of labor in loading and unloading. A technique for moving raw sugar in bulk lots was there fore developed. Although the new method requires con siderably more capital, the saving in labor is large enough to justify the expenditure. Other examples could be found in most of the state’s manufacturing industries. It has thus been possible to increase manufacturing output without a corresponding increase in employment. Trade Boosts the Economy Losses in manufacturing employment, however, have been offset in part by gains in employment in trade. Louisiana’s trade firms are now employing 3,700 more workers than they were at this time last year. One reason trade employment has gained at a time when manufacturing employment is merely holding steady is the difference in the rate of increase in their mech anization. Some trade routines, notably in retailing, do not lend themselves readily to mechanization. Another reason is the increased activity in some specific areas. Foreign trade through Louisiana’s ports, for example, is currently over a fifth above last year’s, an increase attribut able to the relatively high level of agricultural exports and to labor disputes in the St. Lawrence Seaway shipping area. An important side effect of this foreign trade de velopment is the stimulation it has given to activities asso ciated with the shipping industry. In the New Orleans area, for example, employment in shipbuilding and repairing increased 11 percent in April over March and was 7 percent above the April 1959 level. Economic Indicators Louisiana, 1956-60 1111111111111111111II111111III | 111II111111111111111111111111 1947-49=100 Seasonally Adjusted 131 — 124- Nonfarm Employment l6 lV Mfg. Payrolls 102-=— Mfg. Employment 95 153 Member Bank Deposits __ (Unadjusted) . Farm Cash Receipts Construction and Farming Dampen Growth Lagging construction activity has been a damper on Louisi ana’s recent economic growth. Employment in construc tion, one measure of activity, is some 9 percent below last year’s level at this time of year. Among the reasons Continued on Page 10 Crude Oil Production (Unadjusted) III11111II111 11111 III 111 In 111 ! I ii li li 11111 n 11111 11 11 1111 1956 1957 1958 1959 I960 Who Finances Southern Consumers? “I’m a success,” proclaimed a prosperous looking gentle man to his friend. “Since when?” asked his friend queru lously. “I’m a success,” insisted the first gentleman. “I now owe $20,000 on my home, $2,000 on my car, $900 on furniture, $200 on a television set, and I’ve consoli dated all my small bothersome debts into one impossible big one.” This old joke undoubtedly contributed to the demise of vaudeville, but it does contain this element of truth: The incurrence of debt is associated with finan cial success of some degree much more often than it is linked with abject poverty. In recent decades, and particularly since the end of World War II, the general rise in income in the nation and throughout the South has vastly increased the num ber of middle-income families. With larger incomes, these families have a money surplus over and above expendi tures required to meet basic necessities. This surplus has enabled them to make instalment payments and to enter confidently into agreements to buy now—pay later. Lend ers, on the other hand, have found consumer lending to be relatively riskless and quite profitable. As a result, they have actively wooed the consumer by developing new lend ing techniques such as check credit, and by broadening the scope of items that may be purchased on credit. Debt, It's Wonderful! Not too long ago, instalment buying was a device for ob taining not “luxuries” or “semi-luxuries” but certain “es sential” items for the household. Today, however, it is a different story. Durable goods of many types have become “conventional necessities” rather than “luxuries.” The class stigma of buying on instalments— to the extent that it existed—has vanished altogether. And as a British newspaper has put it: “To most classes instalment buying seems a common sense way of ‘saving,’ and of coming into an inheritance of contemporary boons the moment the deposit is made.” Southerners have joined consumers throughout our nation— and for that matter throughout many parts of the world— in the rush to obtain credit. As a result, con sumers residing in states lying wholly or partly in the Sixth Federal Reserve District— Alabama, Florida, Geor gia, Louisiana, Mississippi, and Tennessee— now owe about $4,200 million of short- and intermediate-term instalment debt to financial institutions and retail outlets. This amount represents an increase of about 16 percent over the $3,570 million outstanding at the end of 1958, the only date for which detailed debt data are available for individual District states. Throughout this discussion consumer debt will refer to instalment debt, excluding such things as charge account credit, medical debt, public utilities bills, and the like. The state data—presented here for the first time— reveal wide variations in outstanding instalment debt, ranging from $230 million in Mississippi to $960 million in Florida. These variations reflect differences among states in the level and distribution of income and liquid assets, age, marital status, size of population, and other factors. The average income of $1,067 in Mississippi, for Consumer Instalm ent Credit Outstanding By Type of Lender within Sixth District States December, 1958* M illio n s of D o lla r s IOOO|------------- Ala. La. Tenn. Ga. Fla. *Data for all insured commercial banks based on reports of Deposit Insurance Corporation. D ata for all operating State & credit unions obtained from State Credit Union League and U.S. of Federal Credit Unions. Debt held by consumer and sales companies and retail outlets partially estimated. Federal Federal Bureau finance example, suggests that a relatively large proportion of the families in that state have low incomes, and are neither in the market for consumer credit nor eligible to obtain it. The higher average income of Florida residents— $1,846, however, indicates that the distribution of families by income offers considerable potential for consumer credit. Despite having the highest consumer debt total, con sumers in Florida owed less relative to income at the end of 1958 than did consumers in several other District states. In Florida, for example, per capita consumer debt repre sented 11.5 percent of per capita income, a smaller pro portion than in Alabama, Tennessee, and Georgia. In all District states, however, the ratio of debt to income was higher, according to our estimates, than in the nation. This reflected the lower average incomes prevailing in District states compared with the nation, rather than higher average debts. Income and Debt Sixth District States and U. S., 1958 Per Capita Instalment Debt As a Percent ot Per Capita Income I2 h U.S. Miss. La. Fla. Ala. Tenn. Sources of Consumer Funds How did consumers residing in the South, an area which has traditionally been unable to generate sufficient savings to finance business and capital expansion, manage to get . 8 • several billion dollars of credit? Where did they obtain the funds which enabled them to spend for everything from autos to Northern vacations? The answer is that a major share of consumer debt was financed by domestic establishments— banks and other institutions domiciled in Sixth District states— but a large share of the total, prob ably as much as 4 0 percent, came from foreign establish ments— those with headquarters outside the South. Commercial banks play a particularly strategic role in financing the consumer, since they are important both as direct lenders to consumers and suppliers of funds to in stitutions that extend consumer credit. At the end of 1958, consumer instalment debt held by commercial banks located in District states amounted to $ 1 ,1 4 0 million or 32 per cent of the total for the District. Much of the non-automotive credit on the books of commercial banks was ex tended directly to consumers. Of the $ 5 8 0 million of out standing auto debt, however, about three-fifths repre sented purchases of paper originated by auto dealers. The ability of commercial banks to finance consumer credit, either directly or indirectly, depends on the volume of their excess reserves, and how they distribute total loans among the consumer, business, and real estate categories in order to maximize earnings and minimize risk. Sales finance companies, unlike banks, are not active as direct lenders but purchase instalment paper from others, usually retail dealers. Since financing automobiles accounts for about three-fourths of their business, the average amount lent is relatively large. Consumer finance companies, on the other hand, specialize in the direct lending of small cash loans, often on an unsecured or signature basis. These loans are used for a variety of purposes, but consolidation of existing debts, purchases of durable goods, and payment of medical bills are among the most important. Consumers in District states owed $ 1 ,4 8 0 million to sales and consumer finance companies at the end of 1958, 29 percent more than they owed to banks. Of the debt owed to both types of finance com panies, about three-fourths was on the books of companies with headquarters outside the District, while the balance was owed to domestic companies. Finance companies obtain most of the funds they need to “carry” consumer debt from the capital market, from banks, and by selling commercial paper. The source of funds that are tapped at any time depends on such things as the relative availability of credit, the pattern of interest rates, and the size of the company. While there are differ ences between the borrowing patterns of sales and con sumer finance companies, it is possible to generalize by saying that the smaller the size of the company the more likely it is dependent upon banks as a source of funds. Data from a survey conducted in October 1955 indicated that sales finance companies owed District banks $119 million. Since the average-size loan at that time was rela tively small, ranging from $29 thousand in Alabama to $ 1 8 9 thousand in Georgia, it would appear likely that Southern banks provide funds primarily to the smaller domestic companies. Consumers in District states owed credit unions— all domestic establishments— $ 2 7 0 million. While this amount represented only 8 percent of the total at the end of 1958, credit unions have been accounting for an increasing proportion of debt over the years. Credit unions are in dependent in that they have little need for external funds to finance their lending operations. Instead, the major source of their financing stems from additions to savings or share account holdings by members. Although most of the debt owed by consumers in Dis trict states was held by financial institutions, retail out lets— department, furniture, household appliance stores, and the like— held a significant amount. Consumers in District states owed retail outlets, excluding charge ac count debt, $ 6 8 0 million or 19 percent of total debt out standing at the end of 1958. A portion of this amount was owed to Southern branches of national firms, but precise information on this point is not available. It is probable that they obtain funds to finance receivables from banks outside District states as well as institutions located here. Consumer Credit Markets It is likely that the total amount owed by residents in District states reflects purposes of borrowing similar to those of consumers throughout the nation. If this is so, auto purchases accounted for about two-fifths of the total debt owed by consumers in District states. Purchases of furniture, refrigerators, television sets, and other durable goods accounted for about one-fourth of total debt, the same share as instalment cash borrowing; the balance rep resents money owed for home repair and modernization. Consumer Credit M arkets, United States In sta lm e n t D ebt O u tsta n d in g b y P u rp ose of Loan a n d b y Le n d e r (Millions of Dollars) Dec., 1939 Percent DistriAmount bution Dec., 1959 Percent DistriAmount bution . Commercial Banks . . . Sales Finance Companies . Other Financial Institutions Retail Outlets................... Auto D ea lers................... 4,503 100 1,079 1,197 789 1,315 123 24 27 17 29 3 39,482 100 14,922 10,145 8,771 5,056 588 38 26 22 13 1 AUTOM OBILES............................... 1,497 100 Sales Finance Companies . Commercial Banks . . . Other Financial Institutions Auto D ea lers................... OTHER CONSUMER GOODS . . Retail O utlets................... Commercial Banks . . . Sales Finance Companies . Other Financial Institutions 16,590 878 415 81 123 59 28 5 8 100 7,328 7,309 1,365 588 44 44 8 4 TOTAL DEBT-ALL PURPOSES 1,620 100 10,243 100 1,315 166 115 24 81 10 7 2 5,056 2,553 1,883 751 50 25 18 7 REPAIR AND MODERNIZATION 298 100 2,704 100 Commercial Banks . . . Other Financial Institutions Sales Finance Companies . PERSONAL LOANS . . . . Other Financial Institutions Commercial Banks . . . Sales Finance Companies . 135 15 148 45 5 50 1,941 728 35 72 27 1 1,088 100 9,945 100 669 363 56 62 33 5 5,927 3,119 899 60 31 9 Classifying debt by purpose provides some insight into the differentiation of national consumer markets. It also enables one to assess the relative importance of various types of lenders in each market. As may be seen in the table, commercial banks and sales finance companies Continued on Page 10 . 9 . Bank Announcement O n J u n e 1, th e F lo rid a N a tio n a l B a n k a t P o r t S t. J o e , P o r t S t. J o e , F lo rid a , th ro u g h a c o n v e rs io n o f th e s ta te , n o n p a r, n o n m e m b e r F lo rid a B a n k a t P o r t S t. J o e , b e c a m e a m e m b e r o f th e F e d e ra l R e s e r v e S y s te m a n d b eg a n to r e m it a t p a r fo r c h e c k s d ra w n o n it w h e n r e c e iv e d fr o m th e F e d e ra l R e s e r v e B a n k . O fficers a re J. L . S h a rit, P re sid e n t; H a r r y H . S a u n d e rs, V ic e P r e s i d e n t; W a lte r C . D o d s o n , V ic e P r e s id e n t a n d C a sh ie r; a n d R u d o lp h H a r d e e , A s s is ta n t C a sh ier. C a p ita l s to c k to ta ls $ 1 0 0 ,0 0 0 a n d su r p lu s a n d o th e r c a p ita l fu n d s N. C a rso n B ra n a n Debits to Individual Demand Deposit Accounts Percent Change Year-to-date 5 Months May 1960 from May April May from 1960 1959 1959 1959 WHO FINANCES SOUTHERN CONSUMERS? Continued from Page 9 dominate the market for automobile credit, together ac counting for 88 percent of outstanding auto debt. Banks, which are the most diversified of the lenders to consumers, are also the main figure in the area of repair and modern ization credit, and contribute significantly to the financing of durable goods other than autos, and instalment cash lending. In these latter two categories of consumer lend ing, however, retail outlets and consumer finance com panies, respectively, dominate the market. A lf r e d P . Jo h n so n BUSINESS IMPROVES IN LOUISIANA Continued from Page 7 for the lull in construction is the shift in capital spending from new plant to spending for labor-saving equipment. There also appears to be a general “catching up” in resiDepartment Store Sales and Inventories* Percent Change Sales_____________ _______ Inventories May 1960 from 5 Months May 31, 1960 from Apr. May 1960 from Apr. 30 May 31 Place______________________________ 1960 1959 1959 1960 1959 —2 —1 —4 —9 +5 — 11 +14 +9 —7 —5 +5 +1 +4 —4 —6 —5 —7 —7 —4 —10 —0 — 11 — 13 —8 —5 — 14 — 18 —6 +2 —1 +1 —1 +2 —2 —2+ 9 —4+ 3 +8 —4+ 9 —3 + 19 —8+12 +8 +1 —1 +9 +3 +5 +3 —1 —1 +3 —4 —2 —5 +1 —5 —7 —2 —2 —6 —9 —4 +2 +2 —2 +18 — 3+17 —2+25 — 3— 2 — 1+ 2 —2+17 + 0 +12 —2+ 19 — 1+ 5 — 5+ 2 — 1+ 5 —0 +3 +2 —4 + 2 +20 —3+12 ♦Reporting stores account for over 90 percent of total District department store sales. **In order to permit publication of figures for this city, a special sample has been constructed that is not confined exclusively to department stores. Figures for non department stores, however, are not used in computing the District percent changes. year< (In Thousands of Dollars) $250,000 ALABAM A........................................ —11 B irm in g h am .............................—9 M o b ile ........................................ —12 M ontgom ery.............................—11 F L O R ID A ........................................ —12 Daytona Beach.............................—14 Ja c k s o n v ille .............................— 2 Miami A rea .................................. —12 M i a m i ...................................—15 Orlando........................................ —9 St. Petersburg-Tampa Area . —13 G E O R G IA ........................................ —13 A t la n t a * * .................................. —13 Augusta........................................ —6 Co lu m bu s.................................. —14 M a c o n ........................................ —13 R om e**........................................—21 S a v a n n a h ...................................—12 L O U IS IA N A ...................................—7 Baton Rouge . . . . . . —1 New O r le a n s .............................—8 M IS S IS S IP P I.................................. —12 Ja ckso n ........................................ —10 Meridian**...................................—14 T E N N E S S E E .................................. —10 Bristol-KingsportJohnson City** . . . . —17 Bristol (Tenn. & Va.)** . —22 Chattanooga............................. —6 K n o x v ille ...................................—13 D IS T R IC T ........................................ —11 dential building, which may have been augmented by a scarcity of mortgage funds. Mechanization on farms continues to take its toll of the farm population. For the first five months in 1960, there were 5 percent fewer farm workers than for the same period in 1959. Despite lower employment, however, farm production remains high, but a further decline in farm prices has resulted in a drop in farm income this April May 1960 1960 ALABAM'' Anniston . . . . 39,718 37,832 40,303 Birmingham . . . 829,991 784,772 771,730 Dothan . . . . 35,110 35,655 32,373 Gadsden . . . . 38,872 35,845 37,949 Huntsville* . . . 62,032 61,561 64,653 Mobile . . . . 301,948 284,477 292,533 Montgomery . . . 176,993 157,274 167,596 Selma* . . . . 24,968 24,111 24,556 Tuscaloosa* . . . 55,333 55,111 50,869 Total Reporting Cities 1,564,965 1,476,638 1,482,562 793,603 726,663r Other Citiesf ■ • . 742,163r FLORIDA Daytona Beach* 57,760 59,993 59,929 Fort Lauderdale* . 208,077 215,956 201,010 Gainesville* . . . 40,891 42,956 36,826 834,042 Jacksonville . . . 794,924 827,699 Key West* . . . 15,571 16,319 16,322 80,642 80,492 Lakeland* . . . 76,319 Miami . . . . 881,596 895,300 845,919 Greater Miami* 1,310,424 1,343,458 1,268,992 Orlando . . . . 267,740 243,643 254,419 89,952 Pensacola . . . 86,830 86,144 St. Petersburg . . 214,622 218,767 215,356 Tampa . . . . 439,993 430,993 418,598 West Palm Beach* 130,650 146,731 138,916 Total Reporting Cities 3,690,364 3,681,062 3,600,530 1,655,136 l,686,630r l,596,647r Other Citiesf . . . GEORGIA Albany . . . . 55,857 49,041 48,200 41,227 Athens* . . . . 39,417 36,822 Atlanta . . . . 2,103,734 2,026,117 1,927,974 Augusta . . . . 108,468 108,827 99,593 Brunswick . . . 24,111 22,427 22,487 108,814 Columbus . . . . 100,280 101,433 Elberton . . . . 10,203 9,805 9,356 Gainesville* . . . 48,697 46,074 51,067 Griffin* . . . . 19,972 17,919 18,522 21,545 LaGrange* . . . 21,183 20,164 Macon . . . . 127,647 117,555 115,105 Marietta* . . . 32,698 32,423 32,572 Newnan . . . . 18,546 17,942 16,612 53,921 Rome* . . . . 45,970 42,351 Savannah . . . . 204,998 192,923 202,376 31,534 Valdosta . . . . 33,363 33,923 3,011,972 Total Reporting Cities 2,881,266 2,778,557 994,315 945,625r Other Citiesf . • . 898,228r LOUISIANA 72,155 Alexandria* . . . 70,347 65,813 Baton Rouge . . 287,360 277,332 279,706 Lafayette* . . . 58,345 63,220 63,715 Lake Charles . . 78,562 79,600 88,111 New Orleans . . . 1,406,834 1,325,631 1,288,361 Total Reporting Cities 1,903,256 1,816,130 1,785,706 Other Citiesf . . . 624,419 615,358r 607,626r MISSISSIPPI Biloxi-Gulfport* . 49,817 47,438 47,580 Hattiesburg . . . 36,190 38,058 35,045 Jackson . . . . 281,403 284,612 280,485 Laurel* . . . . 28,393 27,461 26,744 Meridian . . . . 47,765 40,594 43,370 Natchez* . . . . 23,135 24,407 23,468 Vicksburg . . . 20,740 19,673 18,525 Total Reporting Cities 487,443 482,243 475,217 Other Citiesf . . . 275,425 271,079r 258,250r TENNESSEE Bristol* . . . . 46,473 46,375 44,494 Chattanooga . . 316,996 311,585 319,583 Johnson City* . . 41,223 43,740 39,247 Kingsport* . . . 82,194 85,797 79,692 Knoxville . . . 247,073 230,546 219,784 Nashville . . . 763,647 686,158 680,911 Total Reporting Cities 1,497,606 1,404,201 1,383,711 Other Citiesf . . . 591,931 574,614r 566,605r SIXTH DISTRICT . 17,090,435 16,561,509r 16,175,802r Reporting Cities 12,155,606 11,741,540 11,506,283 Other Citiesf . . 4,934,829 4,819,969r 4,669,519r Total, 32 Cities . . 10,431,059 9,978,381 9,821,559 UNITED STATES 344 Cities . . . 232,953,000 225,984,000 215,964,000 +5 +6 —2 +8 +1 +6 + 13 +4 +0 +6 +9 —1 +8 +8 +2 —4 +3 +6 +2 +9 +6 +7 +3 +4 +8 +0 —2 +6 +1 +7 +8 +4 +5 —4 —4 —5 +5 —5 +0 —2 —2 + 10 +4 —2 +2 — 11 +0 —2 +4 + 11 +1 —5 +6 +4 +3 +5 +4 —0 +5 —6 +2 +4 —0 +6 + 13 +5 —1 +9 +5 +3 +9 +4 +3 +5 —2 +4 +7 + 14 +5 +4 —0 +8 +9 +4 +6 + 11 +2 +9 +1 +3 + 17 +6 —5 +5 +5 + 16 + 12 +9 +9 +7 +7 +9 —5 +8 +7 + 11 +0 + 12 +27 +1 —7 +8 + 11 + 13 +8 +7 +10 +4 +5 +6 —5 +4 —5 +4 +4 +15 +16 +1 +4 +7 + 10 +3 +4 —8 —1 +6 +5 +1 + 10 +3 —8 —11 +9 +7 +3 +2 +2 —2 —8 +4 +3 +1 +5 —5 —1 +3 + 18 —5 +5 +1 +2 +5 +3 +0 +6 +10 —1 + 12 +3 +7 +5 +7 +5 +10 +2 +5 +5 +5 +9 +0 +2 —6 +7 +11 +7 +3 +3 +4 +2 +5 +4 —1 +5 +3 +12 + 12 +8 +4 +6 +6 +6 +6 +4 +4 +5 +8 +5 +1 +3 +5 +5 +4 +6 +5 +3 +8 +7 —a, *Not included in total for 32 cities that are part of the National Bank Debit Series. fEstimated. r Revised. • 10 • Sixth District Indexes Seasonally Adjusted (1947-49 = 100) 1959 SIXTH DISTRICT A p p arel....................................... C h em icals.................................. Fabricated Metals . . . F o o d ............................................. Lbr., Wood Prod., Fur. & Fix. Paper & Allied Products . , Primary Metals . . . . T e x tile s .................................. ..... Transportation Equipment . Electric Power Production** Petrol. Prod, in Coastal Louisiana & Mississippi** Construction Contracts* Residential....................... Crops Baton Rouge Birmingham Chattanooga Jackson . . Jacksonville Knoxville Macon . . Miami . . New Orleans Member Bank Deposits* . . Member Bank Loans* . . . Bank D e b its*............................. Turnover of Demand Deposits* In Leading Cities . . . . Outside Leading Cities . . ALABAMA Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales . . Member Bank Deposits . . Member Bank Loans . . . Farm Cash Receipts . . . Bank D e b i t s ....................... FLORIDA Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales . . Member Bank Deposits . . Member Bank Loans . . . Farm Cash Receipts . . . Bank D e b i t s ....................... GEORGIA Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales . . Member Bank Deposits . . Member Bank Loans . . . Farm Cash Receipts . . . Bank D e b i t s ....................... LOUISIANA Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales* . . MISSISSIPPI Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales* . . TENNESSEE Nonfarm Employment . . Manufacturing Employment Manufacturing Payrolls . . Furniture Store Sales* . . Member Bank Deposits* Member Bank Loans* . . 140 124 182 133 185 114 81 165 102 88 217 218 93 r 346 JUNE 141 124 185 134 186 114 81 164 105 89 207 221 89 357 JULY 141 125 189 134 185 113 81 166 104 89 213 227 110 359 AUG. 141 122 187 134 178 113 80 164 79 88 212 218 94 359 135 . 116 188 177 171 . 195 . 136 , 154 . 119 . 143 150 168 . 269 142 223 203 159 . 178 311 273 . 145 164 112 206 397 429 370 136 119 183 178 165 193 129 154r 122 137r 150 161 266 143 240 200 152r 182 316 261 158 174 126 200 411 433 393 137 114 186 180 166 190 126 163 120 137 152 161 262 144 240 205 148 183 321 279 152 174 117 195 416 425 410 142 123 186 185 173 185 134 158 121 136 157 165 272 153 244 212 158 181 329 283r 162 179 124 . 123 . 109 197 . 126 156 254 126 . 234 125 110 194 137r 157 259 122 226 125 109 200 134 160 266 125 248r . 192 . 197 347 . 183 233 511 243 382 194 199 357 176 241 526 231 391 . 134 . 121 212 . 153 157 244 140 247r 1960 NOV. 141 122 187 130 179 114 80 166 79 89 211 215 93 351 OCT. 141 122 187 129 176 115 80 164 79 88 217 213 93 350 JAN. FEB. MAY 142 124 190 132 185 117 79 166 101 87 205 221 95 358 142 124 188 132 187 117 79 165 100 87 204 217 95 375 MAR. 141 123 189 132 183 115 79 164 95 88 202 212 94 387 APR, 141 122 187 129 176 116 80 161 97 87 192 214 91 346 DEC. 141 122 189 131 179 113 80 160 103 87 195 219 91 345 143r 124 191 134 182r 116 79 166 98r 87 206 222 95 363 143 125 193 134 186 116 79 167 99 87 208 226 94 n.a. 203 440 444 436 123 96 179 184 175 184 136 157 118 205 158 161 270 150 245 219 161 183 330 259 154 174 115 207 380 440 331 151 134 194 186 174 178 133 156 113 171 162 167 275 153 241 222 149 183 331 281r 150 164 118 215 350 441 276 141 124 181 188 176 189 131 167 117 156 166 165 279 152 236 225 158 182 331 271 147 153 109 214 302 373 245 143 123 176 189 175 187 134 161 120 179 166 165 297 157 252 223 163 184 333 270r 150 160 109 231 302 367 249 132 106 154 185 176 189 132 160 116 171 167 164 282 149 244 225 151 181 335 286r 154 166 121 227 328 351 309 132 104 166 180 175 187 133 154 115 169 170 166 274 144 243 225 166 182 337 275r 154 166 119 226 345 366 327 131 108 173 175 173 178 128 148 112 161 156 151 270 140 245 223 143 180 340 294r 156 168 120 228r 333 360 311 121 96 179 162 157 190 122 131 107 160 148 150 269 134 229 225 129 180 342 288r 153 167 119 226 333 356 315 126 100 188 192 180 176 137 161 115 178 167 163 300 150 285 223 149 178 347 278r 148 167 114 225 n.a. n a. n.a. n.a. n.a. n.a. 176p 171 173 128 145 107 157 153 152 289 142 252 224p 147 180 351 277 163 181 126 126 111 204 139 160 275 129 248 122 103 179 143 160 269 125 221r 122 102 172 139 160 270 141 243r 122 100 173 138 159 272 114 236r 125 107 188 134 159 273 136 224r 125 108 194 128 158 272 142 247r 126 108 198 148 159 279 124 236r 125 107 192 133 158 283 124 245r 124 106 190 112 159 284 128 244r 125 108 195 127 158 296 122 240r 126 109 198 135 159 300 n.a. 240 196 202 358 175 243 534 241 426 200 206 372 178 238 544 240 429r 200 206 378 212 246 548 203 395r 200 206 377 177 247 550 210 437r 200 206 377 180 245 547 194 422r 199 203 371 203 245 547 177 414r 197 201 374 195 241 549 206 424r 197 204 366 189 242 546 229 391 r 197 204 364 174 237 549 205 423r 197 202 352 157 234 545 170 410r 199 205 372r 181 230 553 217 387r 201 209 391 175 234 554 n.a 404 134 122 217 146r 160 246 137 235r 134 122 220 139 159 250 127 252r 136 124 225 159 157 256 172 261 135 122 221 163 162 260 133 239 136 123 213 144 160 260 142 258r 136 123 216 159 160 261 136 249 136 120 208 157 163 266 164 244 136 121 210 150 158 266 121 261r 137 122 216 149 161 269 137 254 136 122 211 127 160 271 147 265 135 122 205 120 158 267 146 254 138r 122 215r 142 157 271 153 254 137 122 222 132 161 276 n.a. 257 . 129 . 95 176 184 160 293 111 231 131 96 177 186r 165 295 141 220 130 96 174 177 165 295 109 244 130 95 175 193 160 302 105 236r 129 94 175 178 160 299 97 227 130 94 175 193 160 304 127 252 130 95 167 171 157 307 136 229 130 94 168 195 160 309 104 216 130 93 168 184 158 311 111 238r 131 94 173 188 162 313 98 207r 131 95 173 192 159 316 101 224 130 95 176 172 161 335 100 244 131 95 179r 176r 162 331 89 233r 131 95 178 181 161 338 n.a. 233 132 . 131 248 114 195 , 383 110 230 134 133 245 120 191 391 106 214 133 132 246 132 195 398 111 246 134 133 250 115 197 403 112 240 133 133 250 129 194 400 106 230r 135 134 251 95 195 411 140 242r 135 134 239 83 202 392 127 234r 136 134 242 117 204 392 136 237r 135 135 244 133 208 403 130 252r 138 135 253 106 200 414 111 226r 137 134 247 99 201 424 115 244r 136 133 254 94 206 418 111 246r 137 134 249r 100 199 422 n.a. 236r 137 134 244 113 198 433 n.a. 222 123 . 119 208 114 . 162 272 106 233 122 119 206 117r 166 276 97 230 123 120 206 116 164 283 103 241 122 121 211 105 165 287 81 244r 122 119 214 122 165 287 108 226r 122 120 211 109 166 288 135 233r 122 119 206 108 167 293 117 228r 122 120 206 102 167 291 122 237r 121 119 209 109 164 296 109 232r 122 120 213 104 166 296 95 235r 122 120 214 95 161 301 92 252r 121 120 203 98 161 303 87 242r 124 121 220 103 163 304 100 236r 123 122 220 111 165 310 n a. 247 APR. MAY . ] 39 123 . 180 . 133 184 . 115 . 80 . 163 . 99 88 . 218 . 216 94 . 340 . 198 . 453 . 398 SEPT. *For Sixth District area only. Other totals for entire six states. n.a. Not Available. p Preliminary. r Revised. **D aily average basis. Sources: Nonfarm and mfg. emp. and payrolls, state depts. of labor; cotton consumption, U. S. Bureau Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; elec. power prod., Fed. Power Comm. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. • 11 * S IX T H .................... , ......................... I 1 9 4 7 -4 9 = 100 - Seasonally Adjusted 136 D IS T R IC T 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 \ H IG H L IG H T S M. o s t e c o n o m i c i n d i c a t o r s in M a y w ere a t h igh levels. N o n - y 226 — B U S IN E S S Nonfarm Employment fa rm e m p lo y m e n t w as a t a record. M a n u fa c tu rin g pa yro lls in creased, alo n g w ith jo b s a n d th e w o r k w e e k . L o a n s a t b a n k s a d v a n c ed fu r th e r , a n d d ep o sits increased slig h tly. S o m e m ea su res o f retail sales, h o w ever, d e c lin ed fr o m A p r il’s highs. F a rm p rices fell slig h tly, a n d crops d e v e lo p e d slo w ly fo r la ck o f rain. Nonfarm em ploym ent, seasonally adjusted, rose slightly in May, but not enough to change the index, which remained at a record level. M anufacturing em ploym ent increased, while nonfarm employment other than manufacturing held steady as the termination of Census employment offset increases in many other types of jobs. Florida experienced the largest percent increase in both manufacturing and nonmanufacturing jobs. District manufacturing employ ment gains were concentrated in apparel and fabricated metals. Reflecting increased employment, as well as a longer work week, m anufacturing p ay rolls increased further in May to a near-record level. The rate of insured unemployment dropped more than seasonally. Some types of production activity, however, declined, after seasonal adjust ment. Cotton textile activity, measured by cotton consumption, eased slightly, as did crude oil production in Coastal Louisiana and Mississippi. Steel mill operations, concentrated mainly in Alabama, also declined further in May and early June. Construction activity increased, as indicated by employment. Member bank loans moved strongly upward in May, but loans during the four weeks ended June 22 increased less than usually at banks in major District cities. All states shared in the loan gain during May, with Louisiana and Tennessee showing the greatest increases. Following a moderately declin ing trend this year, mem ber bank deposits, seasonally adjusted, increased somewhat in May, but more banks showed deposit losses from a year ago than in April. Liquidation of investments in May continued as an important source of funds for private lending. Borrowings from the Federal Reserve Bank of Atlanta dropped slightly in the first three weeks of June from the average level in May. Department store sales, seasonally adjusted, rebounded to a record level in June, on the basis of preliminary estimates. This followed a sharp drop in May, when sales declined in every state and major metropolitan area. Depart ment store stocks, seasonally adjusted, rose slightly in May, thus increasing the stock-to-sales ratio. Furniture store sales also dropped in May, after seasonal adjustment, as declines in Florida and Georgia more than offset in creases in Alabama, Louisiana, Mississippi, and Tennessee. Registrations of new autom obiles this year through April were significantly above last year in every District state. Consumer instalm ent credit outstanding at commercial banks, sea sonally adjusted, receded in May, as declines occurred for all types of paper. Consumer saving increased strongly in May in the form of time deposits at commercial banks, savings and loan shares, and ordinary life insurance sales. Excess R e se rv e s . I I I I I I l 1^7*1 i f*i I l I i I I l I I I I l i I i i I I i I l I I 1957 1958 1959 I960 Crops grew slowly as dry weather persisted in many sections, especially in Louisiana and Mississippi. Rains in Georgia and Tennessee, however, im proved crops in those states. Farm em ploym ent, seasonally adjusted, de clined from April to May in all states except Alabama. Employment was well below year earlier levels except in Louisiana. Prices received by farm ers declined slightly in May in all states, except Florida and Tennessee, as de clines in livestock and products more than offset gains for crops. Demand deposits, seasonally adjusted, at member banks in predominantly agricul tural areas declined slightly in May and were below a year ago.
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