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IN THIS ISSUE: •T he Money Supply Controversy •Southern Banks' Changing Role REVIEW FEDERAL RESERVE BANK in Farm Credit •D istrict Business Conditions OF A T L A N T A JUNE 1969 T h e M on ey S u p p ly The present controversy over the importance of money and monetary policy is by no means un precedented—economists have pondered and ar gued about money for decades. There is never theless a new element in the current controversy over the money supply: The debate has heated up substantially enough to move from the pro fessional economic journals into the popular press. Fundamentally at issue is the influence of money on spending, prices, employment, and eco nomic growth—matters that certainly concern us all. This article cannot pretend to describe the money supply debate comprehensively, since the arguments involved are numerous, extensive, and in some cases quite technical. Fortunately, how ever, the basic positions in the debate are straight forward enough to permit a simplified description that captures the flavor of the controversy be tween the “Keynesians” and the “Monetarists.” The following synopsis presents an idea of what the money supply controversy is all about. Monthly Review, Vol. LIV, No. 6. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. 70 C o n tro v e rs y Historical Perspective Some notion of history will help us place the cur rent money dispute in perspective, and the period just before the Depression is a good place to be gin. At that time, many economists thought the quantity of money (currency plus private demand deposits) had a strong impact on prices, but had little or no influence on jobs or business activity. In its crudest form, the pre-Depression theory was simple: The amount of money, in relation to the supply of goods and services produced, deter mined prices. An increase in the money supply encouraged spending and raised prices; a decrease in the money supply lowered prices. A crude form of the quantity-of-money theory predicted that a 50-percent increase in the money supply would raise prices by 50 percent as long as there were no changes in the physical quantity of goods available. The amount of goods produced and number of jobs available, on the other hand, were expected to be untouched by changes in the quantity of money since the economy’s productive resources—labor and nonlabor alike—were as sumed to be fully employed, guided by the un seen hand of market forces. In the more refined versions of pre-Depres sion quantity-of-money theory, the velocity, or MONTHLY REVIEW turnover of money (the speed at which money circulates through the economy), was also recog nized as an important determinant of the price level. But velocity, like the physical amount of goods produced, was thought to be relatively stable, so these more refined theories also con cluded that changes in the quantity of money were primarily a cause of price changes, and of little else. This is not to say that every economist writing before the Depression looked at the world in quite this way. But our generalizations still form a reasonably accurate description of pre-Depression economic views: automatic full employment to gether with a price level set by the quantity of money. Not too surprisingly, this approach pro duced few debates about what the Federal Re serve System should do to stabilize spending and production, for the economy was expected to take care of itself automatically. The Keynesian View Then came the Depression, bringing serious ques tions about the prevailing economic doctrines and shaking the pre-Depression assumption of auto matic full employment. Controversy flared as millions of people remained out of work and out put fell far below the economy’s capacity to pro duce. Something obviously was wrong, but preDepression economic theory was unable to ex plain what it was. Keynesian Economics. The basic difficulty of the Depression was obvious: Why were people eager to work and spend but unable to find jobs when businessmen were eager to produce but unable to find customers? The English economist John M aynard Keynes offered both an explanation and a remedy. The problem, he said, was that the amount of goods and services demanded by con sumers, investors, and the Government was not sufficient to keep the economy producing at full capacity. Businessmen could not be expected to produce what they could not sell. If private de mand was not strong enough to pull the economy out of depression, then the Government should step in and stimulate spending enough to provide buyers for the nation’s full-capacity output. This " Pre-Depression economic views produced few debates about w hat the Federal Reserve should do to stabilize th e econom y." JUNE 1969 If private dem and was not strong enough to pull the economy out of depression, then the Government should step in. This was th e es sence of th e 'Keynesian' prescription." was the essence of the “Keynesian” prescription, and the beginning of the broad concept of Gov ernment responsibility for economic stabilization which was eventually written into the Employ ment Act of 1946. Fiscal Policy. Most Keynesians believed that fis cal policy—the use of the Government’s power to spend and tax—offered the best way to bridge the gap between insufficient spending and full-capac ity output. The Government, by increasing its own spending, could contribute directly to the total demand for goods and services. Alterna tively, it could reduce taxes, giving the private sector more disposable income to spend. Although Keynesians disagreed on the dosage of fiscal pol icy and on the details of how it should be oper ated, their confidence in fiscal action was virtually universal. Many Keynesians, recommending the use of fiscal policy, doubted whether monetary policy could do much by itself to stimulate spending and economic activity. Still, monetary action did occupy a prominent place in the Keynesian theo retical scheme, which described how an increase in the money supply might lower interest rates and thereby induce businessmen to spend more for plant and equipment. Unlike the pre-Depres sion economists, then, the Keynesians did think monetary action might affect employment and production as well as prices. But in practice they were afraid that bank reserves pumped into the economy by the Federal Reserve System would pile up unused instead of generating new spending. A favorite homily of the forties and early fifties, “You can’t push on a string,” succintly captured the prevalent scepticism about the effectiveness of monetary policy. By the late 1950’s, the Keynesian fiscal policy prescription had won the acceptance of most economists, and of many policymakers as well. Congress enacted a tax cut in 1964 for the spe cific purpose of stimulating the economy, and subsequently passed the tax increase of 1968 with a restrictive objective in mind. Although the effec tiveness of these fiscal actions is still in dispute, 71 their existence illustrates how much the Keyne sian view has been accepted. Monetary Policy Becomes More Appealing. But even as fiscal policy came to be deliberately ad ministered in the sixties, fresh controversy arose about its superiority over monetary policy as a tool of economic stabilization. Monetary policy began to look increasingly appealing. One reason is that enactment of fiscal legislation takes time —it took 18 months to pass the 1968 tax sur charge. Monetary policy decisions can be imple mented much more quickly. A changed economic environment also helped to bring monetary policy back into favor. Mone tary economics is a pragmatic business, one where researchers are prone to concentrate on current policy problems. In the thirties and forties, when the main problem of unemployment clearly called for stimulative action, theorists focused on the problem of economic stimulation. But the 1950’s brought an additional headache—inflation—and the 1960’s brought unprecedented difficulties in our balance of payments. These new problems both called for policy measures that were restric tive, not expansionary. Consequently, many Key nesians who had said “you can’t push on a string” began to take the position that monetary policy could indeed pull on the string—could pull down total spending. Monetary policy offered a method of restricting spending that was easy to imple ment, even if it could not stimulate spending. Policy Mix. For these and other reasons, most Keynesians today believe stabilization of the eco nomy requires an appropriate “mix” of both fiscal and monetary actions. The recommended policy mix is likely to be one in which flexible monetary actions by the Federal Reserve are combined with occasional but more massive shifts in fiscal policy. Keynesian economists still disagree on exactly how the Federal Reserve exerts its influence on aggregate spending. Generally speaking, they say changes in bank reserves initiated by the Federal Reserve affect the prices (interest rates) of di verse financial assets such as money market in struments and bonds. These price changes then produce adjustments in financial portfolios and "M ost Keynesians believe stabilization re quires an appropriate 'mix' of fiscal and m onetary actions." 72 " M onetarists believe changes in th e money supply are the crucial d eterm inants of prices, spending, production, and em ploym ent. They downgrade the im portance of Keynesian fiscal policy." changes in spending. Elaborate statistical models are now being used to trace responses to mone tary actions through specific financial markets. The basic thesis underlying these studies is that Federal Reserve actions operate through the cost and availability of credit. The M onetarist View While Keynesians stress the importance of both fiscal and monetary policy, other modem econ omists take a quite different position. These socalled Monetarists believe that changes in the money supply are the crucial determinants not only of prices, but also of spending, production, and employment. They downgrade the importance of Keynesian fiscal policy and are decidedly un sympathetic to the notion of “fine-tuning” the economy. Just as Keynesian economics is associated with Keynes, Monetarist economics is often linked to Professor Milton Friedman of the University of Chicago. The contemporary money supply con troversy now raging in the popular press is es sentially a debate between the Keynesians and the Monetarists. Though the Monetarists are not of one mind, they agree that money exercises a dominant in fluence on business activity, and they go on to draw definite policy recommendations from this thesis. Monetarists feel the economy is inher ently stable, tending toward full employment and sustainable growth. In these circumstances, the best thing the Government can do to help the economy realize its full-employment potential is to allow the money supply to grow at the same rate as the economy’s capacity to produce (roughly 3 to 5 percent annually). This is the “money supply rule.” The Federal reserve has the power to stabilize the economy, or at least to let the economy stabilize itself, through its ability to control bank reserves and the money supply. Unfortunately, say the Monetarists, this power has been misused. They feel Keynesians have intensified rather MONTHLY REVIEW " M onetarists base their argum ents on theory as well as history than mitigated business fluctuations with their well-meaning attempts to manage the economy. Money supply growth, as a consequence of discre tionary efforts to stabilize the economy, has fluctuated. A boom has followed whenever the Federal Reserve System has quickened the rate of money growth. Recessions, they allege, have resulted when money growth has slowed. Empirical Support. Considerable empirical work has been presented to support the Monetarist opinion. Most prominent is a study by Milton Friedman and Anna Schwartz, in which they ana lyzed data on the behavior of money in the Unit ed States all the way back to the Civil W ar.1 Changes in money supply growth have been very closely associated with changes in income, eco nomic activity, and prices, they found. From their analysis, they and other Monetarists con clude that changes in the money supply cause swings in the business cycle. Monetarist Theory. Monetarists base their argu ments on theory as well as history, describing the way in which they think changes in the money supply produce adjustments affecting output, em ployment, and prices. The amount of money people wish to have is tied closely to the level of income, they say. If the supply of money expands faster than the amount people wish to have, they will try to spend away the unwanted portion of their money balances. Inflation results. If the money supply expands more slowly than income, rising less rapidly than the amount of money people want to have, people will try to build up their money balances by cutting back their spend ing. In this case, the result is unemployment, according to the Monetarist theory. We should point out that the Monetarists do not regard the cause-and-effect relationship be tween money and income as absolutely tight. Monetarists recognize, just as Keynesians do, that the economy will always be subject to un expected shocks from changes in expectations and from adjustments to imperfections and struc tural changes in our economy. They also realize XA Monetary History of the United States—18671960. National Bureau of Economic Research, Prince that the Federal Reserve’s control over the money supply is not perfect. Monetarists do not argue that adherence to the money supply rule would produce perfect economic stablization; they simply say that it would yield much better results than the flexible policy mix approach now in vogue. Monetarists, incidentally, take a non-Keynesian view of interest rates, doubting that they exert much influence on total spending and business activity. Monetarists are inclined to feel instead that interest rate changes result from the allocation of funds by market forces. Changes in both spending and interest rates, they feel, are mutual responses to changes in the money supply. Shortcomings The Monetarists offer a persuasive case for their prescription, and efforts to promote their view have won varying degrees of support. The money supply controversy received extensive hearings before the Joint Economic Committee of Con gress last year. The hearings culminated in a recommendation by the JE C that the Monetarist prescription of steady money supply growth be followed—with qualifications. Yet, a great many economists still have re servations about the Monetarist scheme. These reservations involve fundamental disagreements about monetary theory. Whereas Monetarists think the influence of money supply on economic activity is important enough to neglect virtually everything else, other economists feel such neglect would be unwarranted and dangerous. Is Money All That Matters? The issue is whether money is nearly all that matters, or merely one of many things that matter, as far as stabilization policy is concerned. Spending, and hence produc tion and incomes, may change when businessmen alter their expenditures for plant and equipment because of inflationary expectations. Consumers may decide to cut back their spending and increase their saving for reasons unrelated to the money supply—such as in anticipation of higher taxes. Shifts in Government spending may affect total spending. Strikes may interrupt the course " M any economists still have reservations about the M onetarist schem e. These involve fundam ental disagreem ents about m onetary theory." ton, N.J.: Princeton University Press, 1963. JUNE 1969 73 " The issue is w hether money is nearly all th a t m atte rs, or merely one of many things th a t m a tte r." of business activity. Such things may be equally important as changes in the money supply, or even more important. Do changes in money cause changes in income and production? Probably. But the causal in fluence may run the other way too. An increase in spending and business activity may itself stimulate additional demands for money which, if accommodated by the Federal Reserve, result in an increased money supply. An increase in spending calls for greater amounts of money for use in the channels of trade. When this happens, a change in the money supply is a response to, rather than a cause of, a change in business ac tivity. To the extent that this happens, the Mone tarists have the tail wagging the dog. Velocity. Another unresolved aspect of the con troversy is the question of velocity. Velocity, the ratio of income to money, describes the speed with which money changes hands as it flows through the economy. Increases in velocity may affect spending decisions, because spenders then have more money available than they want to hold—not because there is more of it, but be cause it is circulating faster. Although Monetar ists think velocity is relatively stable, this re mains an unsettled question. If velocity is not stable, then a reduction in the money supply would not reduce spending, since the money al ready in the economy would change hands more quickly. The decrease in money might be offset substantially by an increase in velocity. Whether this happens or not is an open question. What Is Money? Generally rising interest rates in the postwar period have made interest-bearing financial assets, such as certificates of deposit, more attractive than they used to be relative to money. Corporations in particular have econo mized on their money balances, substituting interest-bearing assets for demand deposits. As these kinds of substitutes for conventionally de fined money have become more and more appeal ing, considerable controversy has developed about the proper definition of “money.” 74 Professor Friedman, for instance, prefers to include time deposits at commercial banks in his definition, along with currency and private demand deposits. His historical investigation mentioned earlier suggested to him that changes in time deposits have much the same influence on income as do changes in demand deposits and currency. Yet the period Friedman examined in his study preceded the evolution of the large denomination certificate of deposit, a unique fi nancial instrument that now comprises an impor tant part of time deposit balances. Today’s time deposits, in other words, are different from the time deposits Friedman studied. For this and other reasons, Friedman himself agrees that this is not an ideal measure of money since there is actually a spectrum of financial assets possessing varying degrees of “moneyness.” The basic problem is that the significance of changes in any particular group of financial as sets can be deceptive. Movements may simply represent investor substitution between, say, time deposits and marketable securities such as Trea sury bills. Many other financial assets, such as accounts at savings and loan associations, may be close substitutes for demand deposits. Is it proper to include one kind of financial asset in the allimportant definition of money while excluding other close substitutes? This definitional question has not been satisfactorily resolved. Problems of Aggregation. One further important shortcoming of the Monetarist view deserves our attention. Monetarists are prone to take an ag gregated view of the economy, and to leave the distribution of money and income to competitive forces. Such an aggregated approach seems un satisfactory, partly because it neglects the dis proportionate impact of monetary actions. A case in point is the homebuilding industry where market imperfections have at times impeded the flow of funds through savings institutions into home mortgages. Monetary policy must recognize and adapt to situations like this. Concluding Comments It would be nice if we could project ourselves 20 years into the future and look back to see how "Is a simple m onetary rule th e answer? We have to be prepared to adm it th a t a simple answer does not e x ist." MONTHLY REVIEW the money supply controversy had been resolved. Perhaps we could also see what new controversies had moved into the spotlight by that time. But since this is impossible, we shall conclude in stead with several comments on the present sta tus of the money supply debate. The arguments are heated, but the fervor of the parties involved should not obscure the sub stantial amount of agreement that exists. Almost all economists today share the goals of high em ployment, orderly economic growth, stable price levels, and long-run balance in our international payments. They generally agree, too, that the Government should do what it can to influence total spending in such a way as to achieve these goals. The basic question is not if, but how, these things can best be accomplished. At first glance, the Monetarists argue per suasively that money is the crucial determinant of economic activity. But as we have examined the Monetarist scheme more closely, we have noted a number of serious shortcomings. Even aside from these, the M onetarist theme, by attaching so much importance to the behavior of a single economic variable, tends to downgrade the complexity of our economy. Monetarists are less inclined to appreciate the consequences of this complexity, partly because they have as sumed them away in their theorizing. But accept ance of the Monetarist arguments, in the sense of basing policy on them, requires a reasonable acceptance of the assumptions on which their ar guments are based. This is a strong requirement. Our economy’s wages, prices, and interest rates, for instance, do not allocate labor services, prod ucts, and credit nearly as neatly as the M onetar ists hope they do and, therefore, may be incap able of acceptably providing “automatic” econom ic stability. Whether balance of payments prob lems might be solved by allowing the exchange "W e can expect a synthesis (in this contro versy) to em erge. Indeed, there are already some signs of th is." rates between currencies to move freely, as the Monetarists suggest, is debatable. Is a simple monetary rule the final answer? Economists have long sought to find such a simple answer. Some, for example, thought fiscal policy was a panacea, but disillusion followed. We have to be prepared to admit that a simple answer does not exist. But even if a simple rule could be found, discretionary policy would still offer an important advantage that could not be matched by rigid adherence to a rule. Flexible policy permits learning from mistakes, offering a built-in capability for improving the efficiency of policy actions. Policy performance can con tinue to adapt and improve by preserving its flexibility. Judging from the way in which other economic controversies have been resolved in the past, we can expect a synthesis to emerge. Indeed, there are already some signs of this. M onetarist at tacks have caused Keynesians to pay much more attention than they previously did to the behavior of money. Monetarists, on the other side, are increasingly recognizing that the economy devi ates from their theoretical assumptions, and are consequently qualifying the rigidity of their money supply rule. When we look back on the money supply controversy 20 years from now, we shall probably find that these synthesizing ten dencies have produced considerably more agree ment than now exists in the controversy over the money supply. W i l l i a m N. Cox, III R ep rin ts of this article are available on request to the R esearch D epartm en t, Federal R eserve B ank of A tla n ta , A tla n ta, Georgia 30303. JUNE 1969 75 S o u th e rn R o le in B a n k s ' C h a n g in g F a rm C r e d it In the last decade, agriculture in both the South and the U. S. has undergone great changes. The period has seen major developments in agricul tural engineering, including new tillage equip ment, the 100-plus horsepower tractor, and the mechanization of some vegetable harvests. Con tinued research in genetics has developed highlysine corn and vegetables that ripen uniformly for mechanized harvesting, while changing con sumer preference patterns are reflected in new standards of selecting and producing livestock. In addition, new marketing and business techniques have created automated farm record-keeping sys tems, and have contributed to the development of soybeans as a major new crop alternative for southern farm lands. These and other changes in agricultural pro duction and marketing have created large de mands for capital. Since 1958, total U. S. farm credit outstanding, including merchant and dealer credit, grew from $20.4 to $50.4 billion in 1968. Will the future demand for agricultural credit in the years ahead grow as rapidly? Which insti tutions will be the major lenders? The answers to these questions depend, in part, on the future de mand for farm products and changes in American agriculture. 76 Future Demand A study completed by the USD A1 showed that by 1980, the U. S. population is expected to reach 245 million people, up from 202 million in 1968. Gross National Product was projected to reach $1.15 trillion by 1980, so per capita disposable incomes will reach new highs. Effective demand for farm products in the years ahead will be strong, because consumer in comes will be sufficient to purchase adequate amounts of food and clothing. Per capita con sumption levels of all meat products will prob ably exceed 220 pounds annually, compared with 181 pounds in 1968. The demand for food items like starchy foods will probably decline, while the demand for fresh fruits, some fresh vegetables, and other more preferred food items will certainly experience more rapid growth rates as personal income rises. While a strong and increasing demand for farm products is indicated, the productive capacity of American agriculture will also cause the supply of farm products to advance rapidly. A tendency for 'Rex K. Daley, “Agriculture in the Years Ahead.”A speech presented at the Southern Agricultural Workers Conference, Atlanta, Georgia, February 3, 1964. MONTHLY REVIEW these supplies to increase more rapidly than de mand would create general downward pressures on prices of farm products. This pattern, when combined with further price inflation for equip ment and supplies purchased by farmers, would represent a continuation of the cost-price pres sures that have characterized American agricul ture for the last two decades. In looking ahead, projections of farm capital requirements by 1980 vary, but a continuation of past trends in mechanization and farm equip ment almost guarantees that future loan de mand will be very large. This raises some ques tion whether the future supply of loanable funds will be adequate to meet this demand -without changes in institutional arrangements. A review of existing financial institutions’ records in the last decade may indicate their ability in the future to finance agriculture’s rising credit needs. Surces if Fari Credit (u. s.) Sources of Farm Credit Life insurance companies are a major supplier of farm real estate credit. Their basic source of funds is insurance premiums and earnings from invest ment portfolios. The local farm borrower com petes for the available funds with other loan and investment activities of these companies. Histori cally, farmers have been very successful in mar keting mortgage loans to life insurance companies. Another major supplier of funds is the Farm Credit Administration. Farm real estate loans are placed and serviced by approximately 670 local Federal Land Bank Associations (FLBA’s ). These notes, which are direct obligations of the 12 regional Federal Land Banks, are used as security behind bonds that are issued in the national capital markets by their fiscal agent in New York. Through this system, the farmer has direct access to national capital markets—as long as interest rates paid on farm real estate loans are competitive. The supply of loanable funds is not dependent upon the health of the local farm economy. Nonreal estate finance is available through a sister organization of the Federal Land Banks. In this system, approximately 460 local Production Credit Associations (PCA ’s) and 100 other finan cial institutions (including some commercial banks and specialized agricultural credit corpora tions) discount short- and intermediate-term loans with one of the 12 regional Federal Inter mediate Credit Banks. The latter then use these assets as security behind debentures issued in the national money market. Thus, the Farm Credit Administration gives farmers access to the naJUNE 1969 tional money market, and represents a large supply of funds available for farm loans—also assuming that farm interest rates are competitive. A third type of lending institution is the Farm ers Home Administration. The FHA is a Federal Government agency that specializes in granting or insuring loans to many farmers who are unable to secure financing from other lenders. Through the FHA, a considerable number of high-credit risk farmers are able to obtain both real estate and nonreal estate credit. Their supply of loan able funds is obtained from annual appropriations of the U. S. Congress. Merchants and dealers are the fourth source of farm credit. This credit runs the gamut from retail credit at the local hardware store through the financing of major purchases by manufacturers. Most of the merchant and dealer credit has shortor intermediate-term maturity and is offered pri marily to increase sales. For this type of financ ing, most of the loanable funds are also generated outside the local farm market area. Since the pri mary function of the merchant and dealer credit is to enhance sales, failure of other lenders to sup ply needed funds would undoubtedly cause a marked increase in this type of financing. The banking system and savings and loan as sociations constitute the final class of lending institutions. Savings and loan associations do not represent a major supplier of farm credit, how ever. 77 Commercial banks have historically been the largest single supplier of farm credit to American agriculture. Loans from the banking sector in clude all types: production, intermediate-term, and long-term real estate loans. Most banks financing agriculture are located in rural areas near their farm customers. The supply of loanable funds at these banks comes primarily from de posits of individuals, businesses, and government located within a few miles of the bank. In noting different types of lending institutions making loans to farmers, one factor—the source of loanable funds—seems critical. For life insur ance companies, the Farm Credit Administration, and most merchants and dealers, loanable funds come primarily from national sources. Compared to local credit markets, the national market is characterized by a more “elastic” supply of funds, with an individual sector of the economy being able to tap it for almost unlimited funds as long as interest rates are competitive. The amount of loanable funds provided by commercial banks de pends heavily upon the economic health of the area serviced by the bank. crease was slightly faster than for the U. S., but the distribution of farm debt was different in the region. Real estate debt accounted for ap proximately two-thirds of the total outstandings in both periods. This higher ratio of real estate debt reflects the propensity of some lenders to secure loans for production expenses, equipment, livestock, and farm improvement with farm lands. And, the security of a note determines if it is classified as a real estate or nonreal estate loan. This pattern was present in all six District states and is much more prevalent in the Southeast than in other regions of the U. S. Current estimates of merchant and dealer credit in the Southeast are not available. However, if these numbers were available, they would prob ably reveal that this type of financing is relatively more important in this region than in the U. S. Market Share Changes During the last ten years, the percent of total farm real estate held by different financial insti tutions has changed considerably. Nationally, from 1958 to 1968 the Federal Land Bank Asso ciations increased their relative market shares to 22 percent of all real estate loans. With a slight decline in market penetration of life insurance companies, the FLBA’s and life insurance com panies now hold about equal shares of the market. For insurance, this decline may mirror the period of good alternative investment made possible by high interest rates rather than a long-run trend away from farm loans. Nationally, commercial banks maintained their relative market share, while little change was recorded for the FHA and other lenders. In the Southeast, the general patterns varied Past Performance In the period from 1958 to 1968, total agricul tural credit outstanding in the U. S. (exclud ing merchant and dealer credit) expanded from $16.6 billion to $40.6 billion. The outstandings were divided about equally between real estate and nonreal estate credit, with nearly equal growth rates for each sector. Merchant and dealer credit expanded from $3.8 billion to nearly $10 billion during the same period. In the Sixth Federal Reserve District, total farm loans grew from $1.4 billion to nearly $4.0 billion during the same period. This rate of in Table Real Estate F a r m I Debt Outstanding ( Pe rc en t of M a r k e t ) Federal Land Banks United States District S t a t e s Alabama Florida Georgia Louisiana Mississippi Tennessee Life Insurance Companies Farmers Home Administration Banks Other 1958 1968 1958 1968 1958 1968 1958 1968 1958 1968 18 18 29 10 20 20 18 15 22 23 34 13 35 22 21 25 25 20 9 31 16 17 28 14 22 22 12 26 12 29 38 8 14 18 15 12 23 18 12 30 14 20 23 10 28 15 22 29 3 9 11 3 10 8 11 7 2 4 9 2 5 3 6 5 40 35 37 44 31 36 31 33 40 31 22 49 20 32 13 33 78 MONTHLY REVIEW slightly from the nation. FLBA’s in all six Dis trict states increased their market penetration and now account for nearly one-fourth of the farm real estate mortgage market. They increased their relative market share at the same time that life insurance companies were expanding their mar kets in Alabama, Mississippi, and Louisiana. In these states, this was a reversal of the national trends for insurance companies. District commercial banks moved from only 18 percent of the market to one-fifth of all oustandings by 1968. The general gains by FLBA’s, insur ance companies, and banks came at the expense of the FHA and “other” lenders. Land owners who finance the buyer when selling their farms are included in the “other” category. Generally, this practice is less prevalent in most Southern states than in other regions, particularly in the Midwest. In the nonreal estate sector of the national market (excluding merchant and dealer), the PCA’s held 26 percent of all outstandings in 1968 compared with 18 percent a decade earlier. Other financial organizations that discount notes with the Federal Intermediate Credit Banks, when combined with the FHA, held much smaller por tions of the market in both years. Commercial banks continued as the dominant lender, holding two-thirds of all nonreal estate debt. But the PCA’s increased market penetration was achieved primarily at the expense of the banks. In the region, the magnitude of adjustments in nonreal estate loan markets was considerably greater than in the U. S. By 1968, the PCA’s held 44 percent of the total nonreal estate market. The banks’ share dropped to 46 percent. In Florida, Georgia, and Tennessee, the PCA’s held 50 per cent or more of this market. Similar to national Table Nonreal Production Credit Associations United States District S t a t e s Alabama Florida Georgia Louisiana Mississippi Tennessee trends, the gain came almost entirely at the ex pense of the commercial banks. Mississippi was the only state in which the banks’ relative market share did not decline. In fact, banks there in creased their holdings from 45 to 52 percent of the total. Further insight into the type of farm borrower serviced by the various kinds of lending agencies can be revealed by the average loan size. Only U. S. figures are available, but the general pattern for these numbers applies to the Southeast. From 1958 to 1968, the FLBA’s increased the average size of their farm loans from $10,460 to $28,750. They have done this by appealing primarily to the large commercial farmer, and more and more of their loans are made to farmers who are either buying larger farms or increasing the size of their existing farming operations. The life insurance companies also have fol lowed much of the same pattern and have in creased their average loan size from $19,160 to $56,730. Life insurance companies were even more selective and have generally concentrated their loan activities in the more profitable farming areas. In the South, insurance companies are most active in areas like the citrus and sugarcane re gions in Florida; the sugarcane, rice and cotton areas in Louisiana; and Mississippi’s Delta cotton lands. Commercial banks have also increased the aver age size of their farm real estate loans, but they still have the smallest average loan size. Histori cally, long-term real estate loans have not been well suited for bank portfolios because of bank liquidity considerations. The maturities on the average bank real estate loan are often shorter than for other major lenders, and they represent production and intermediate-term loans secured II Estate F a r m Debt Outstanding ( Pe rc en t of M a r k e t ) * Other Financial Institutions 1958 1968 1958 18 31 20 44 32 32 33 28 26 44 34 52 50 37 31 51 1 2 2 2 Farmers Home Administration 1968 1 1 — - - 2 7 - 1 6 — Banks 1958 1968 1958 9 12 11 9 13 17 15 6 6 8 9 5 9 17 12 5 72 55 67 46 55 49 45 65 1968 67 46 56 42 42 44 52 44 ♦ E x c l u d i n g n o n r e p o r t i n g c r e d i t o r s , i.e., m e r c h a n t s , d e a l e r s , i n d i v i d u a l s , a n d o t h e r m i s c e l l a n e o u s l e n d e r s . JUNE 1969 79 Table III Average F a r m L oa n (Un it ed States) Size Real Estate Federal L a n d B a n k s Life I n s u r a n c e C o m p a n i e s Banks F ar m e rs H o m e Administration) Other J 1958 $10,460 19,160 5,920 1968 $28,750 56,730 14,460 7,730 18,922 Nonreal Estate Production Banks Credit Associations $ 7,419 1,400 $15,500* 3,200* ♦ Estimated. by real estate rather than loans to purchase farm lands. In the nonreal estate sector of the market, the PCA’s loans have nearly doubled in size since 1958. This reflects, in part, the success of the PCA’s to attract loans from the larger commer cial farms. Banks still have an average loan size of only $3,200. Although this is more than twice the level that existed in 1958, it represents a very large number of small farm loans. Even though some banks have been successful in attracting and holding the prime farm loan customers; more fre quently they find themselves providing financial needs of part-time and small subsistence-type farmers. The Banking Sector Why have many bankers been less successful in maintaining the prime farm customers and in maintaining their relative market shares of the farm loan market? One major problem is that many banks serve relatively small agricultural communities. Because of their local market orien tation, country banks find it difficult to grow. The health of the local community to a large extent dictates the long-run growth of deposits and the supply of loanable funds. The problem is accen tuated further because agriculture has historically been a relatively poor source of bank deposits. Most farmers usually keep their bank balances at minimum levels, while their loan demands are often fairly high. Thus, the local market orienta tion creates a vicious cycle that is difficult for for many country banks to break. However, some banks have not done all they can to increase the mobility of funds within the agricultural sector of the economy. The failure of some banks to use participation loans to meet credit needs of large commercial farmers is an example. Some small bankers have sent farm 80 customers with loan demands they cannot or will not meet to the local PCA rather than using a multibank participation loan. This action may have been taken because the small banker thought the city correspondent might take his best cus tomer the next year. When he refers the loan ac count to a PCA, the local banker may still main tain the farmer’s checking and savings accounts, even though he loses the loan. Another important point is that some country banks have managerial inertia. Perhaps the prob lem is less acute than in the past, but there are still rural bankers who have failed to maintain an awareness of financial needs in agriculture. Two Proposals Two conclusions can be drawn from this review of agricultural credit markets. One is that some individual banks, especially those in rural areas, have not kept pace with the growing capital re quirements of agriculture. Meanwhile, the prob lems that have plagued rural banks in the past are not likely to be solved in the near future. Sec ondly, and simultaneously, farm credit demands will expand quite rapidly, thus raising serious questions about the availability of funds and the banking sector’s ability to compete aggressively for them. Two major solutions to this double-pronged problem have been proposed. The first is based on the philosophy that banks should be the major supplier of farm credit. Proponents of this posi tion assume that bankers are best able to supply farm credit needs because they are familiar with the particular problems of agriculture and farm ers located in their service areas. If one accepts this assumption, some revisions in the structure of existing agricultural credit markets may be advis able. These changes might revolve around meth ods of breaking the tie between deposit growth and the slow growth of the local community in which the rural bank is located. Usually the pro posals include procedures for giving banks access to national money markets in order to provide them with a more “elastic” supply of loanable funds. This might be done under one proposal in which a system similar to that of the Farm Credit Administration is developed. Using this system, local banks could discount loans with some type of regional or national agency. This agency could then use the notes as collateral behind bonds issued in national capital markets. The farmer is thus given access to the national capital markets through the banking system. MONTHLY REVIEW The second major proposal to the broad farm lending problem rests on the premise that the type of agency granting the loan is not critical as long as the farmer gets the required capital. The proponents of this argument conclude that banks can remain competitive if they desire. Bankers with imagination could develop ways to attract new deposits, say from agricultural credit corporations, or improve corresponding relation ships so that participation loans are more work able. However, in other regions, banks may not t>e able to fill the agricultural credit needs. In these markets, the PCA’s, FLBA’s, life insurance companies, and trade credit would fill the gap. In this case, banks might become only a residual supplier of farm loans while providing the finan cial needs of individuals and businesses located within their service areas. How the agricultural credit needs will be met and what specific role banks will play, only time will tell. R obert E. Sweeney B a n k A n n o u n c e m e n ts On May 1, Bank of Dawson, Dawson, Georgia, a non member bank, began to remit at par for checks drawn on it when received from the Federal Reserve Bank. The Northeast Commerical Bank, Doraville, Georgia, opened on May 5 as a newly organized nonmember bank and began to remit at par. Officers are Luther M. Ezell, Jr., president; Roy V. Price, vice president and cashier; and Edward E. Carter, vice president. Capital is $300,000; surplus and other capital funds, $300,000. Oceanside Bank, Pompano Beach, Florida, opened on May 6 as a newly organized, nonmember, parremitting bank. Stewart R. Kester is president; Robert C. Wilkins, executive vice president; and W. Earle Laing, vice president. Capital is $500,000; surplus and other capital funds, $200,000. A new member bank, Beach National Bank of Pompano Beach, Pompano Beach, Florida, opened on May 26. Officers are Walter A. Hobbs, Jr., president; Joseph M. Ibert, Jr., vice president and cashier; and M. G. Sanchez, vice president. Capital is $500,000; surplus and other capital funds $500,000. JUNE 1969 N E W P U B L IC A T IO N B ank Financing of the Southern A gricul tural R evolu tion — a compilation of a rti cles from this B ank’s M on th ly R eview and B anker’s Farm B ulletin on the 1 947, 1956, and 196 6 surveys of farm lending practices— is now available on request to the Research D epartm ent, Federal R e serve B ank of A tlanta, A tlanta, Georgia 30303. 81 S ix t h D is t r ic t S t a t is t ic s Seasonally Adjusted (All data are indexes, 1957-59 = 100, unless indicated otherwise.) L a te st M o n t h 1969 S IX T H One M o n th Ago Two M on th s A go O ne Year Ago L a t e st M o n t h 1969 D IS T R IC T , , , , . . . . . M ar. 68,4 1 4 Apr. 239 M ar. 16 8 M ar. 1 73 M ar. 17 0 . Apr. 6 8,5 77 238 177 19 0 172 67,8 7 2 238 1 64 167 169 i6 2,0 79 219 154 183 1 48 355 314 293r 294 296 278 308 280 147 146 17 4 137 167 11 6 147 146 1 74 1 39 16 8 1 16 147 147 1 75 140 1 68 117 1 42 141 173 133 157 112 107 12 8 13 2 113 107 127 13 4 109 128 133 1 04 123 1 32 202 112 20 2 112 202 147 1 37 57 147 140 59 146 143 63 181 142 135 61 3.5 3.3 3.2 3.7 1.9 40.3 147 1 94 107 149 1 09 227 One Year Ago 168 163 1 25 95 1 67 1 58 105 80 2.7 40.2 Apr. Apr. Apr. Apr. 170 164 116 77 169 164 124 83 Apr. Apr. 2.3 41.5 2.6 2.6 41.1 41.4 M e m b e r B a n k L o a n s ..........................Apr. M e m b e r B a n k D e p o s i t s ...................... Apr. B a n k D e b i t s * * .....................................Apr. 358 259 273 347 253 2 51 338 2 51 257 221 13,2 25 247 1 74 13,3 10 249 13,162 2 47 12,0 28 214 1 66 171 1 47 147 1 40 150 151 46 1 47 140 1 50 154 52 147 140 150 157 141 134 145 14 9 52 2.8 40.2 4 1.0 41.1 3.3 40.1 333 255 302 329 250 283 328 249 287 288 226 249 9,931 188 180 9,96 7 186 197 9,971 185 175 9,171 171 151 1 34 1 24 1 36 153 55 134 12 4 137 146 1 34 125 13 6 151 132 4.7 41.8 4.5 41.2 IN C O M E A N D S P E N D IN G P e rs o n a l In c o m e (M il. $, A n n u a l R a t e ) ............... M a n u f a c t u r in g P a y r o l l s .................. F a rm C a s h R e c e i p t s ...................... C r o p s ........................................ L i v e s t o c k .................................... In s ta lm e n t C re d it at B a n k s * (M il. $) N e w L o a n s ................................. R e p aym ents ............................. O ne Tw o M on th M o n th s Ago Ago U n e m p lo y m e n t R a te (P e rc e n t o f W o rk F o rc e )! . . A vg. W e e k ly H rs. in M fg . (H rs.) F IN A N C E A N D B A N K IN G 289 228 P R O D U C T IO N A N D E M P L O Y M E N T N o n fa r m E m p l o y m e n t ! .................. M a n u f a c t u r in g .......................... . Apr. A p p a re l .................................... C h e m i c a l s ................................. F a b ric a te d M e t a l s ...................... . Apr. F o o d ........................................... . Apr. Lbr., W o o d Prod., Fu rn . & Fix. . . • Apr. Paper ........................................ . Apr. P r im a ry M e t a l s ......................... • Apr. T e x t ile s .................................... T r a n sp o rta tio n E q u ip m e n t . . . . Apr. N o n m a n u f a c t u r i n g ! ...................... . Apr. C o n s t r u c t i o n ............................. . Apr. F a rm E m p l o y m e n t ......................... . Apr. U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o rc e )! . . . . . Apr. In s u r e d U n e m p lo y m e n t (P e rc e n t of C ov. E m p . ) ............... . Apr. Avg. W e e k ly H rs. in M fg . (H rs.) . . . Apr. C o n s tr u c t io n C o n t r a c t s * ............... . Apr. R e s i d e n t i a l ................................. A ll O t h e r .................................... . Apr. E le ctric P o w e r P r o d u c t io n * * . . . . M ar. C otto n C o n s u m p t i o n * * .................. Petrol. Prod, in C o a sta l La. a n d M iss.*'• M a y 1.8 1.8 40.8 193 225 165 1 54 41.1 18 2 207 161 159 1.9 41.1 249 278 225 1 54 10 2 110 22 2 21 7 237 10 2 111 F IN A N C E A N D B A N K I N G Loans* All M e m b e r B a n k s ...................... L a rg e B a n k s ............................. D e p o s it s * A ll M e m b e r B a n k s ...................... L a rg e B a n k s ............................. B a n k D e b i t s * / * * ............................. . Apr. . Apr. 318 274 313 268 309 2 67 274 242 . Apr. . Apr. . Apr. 231 19 8 266 2 25 189 2 53 224 191 2 55 2 07 182 227 8,53 5 8,44 0 20 2 20 1 . M ar. 8,443 204 1 54 15 9 150 7,89 7 1 88 150 IN C O M E P e rs o n a l In c o m e (M il. $, A n n u a l R a t e ) .................. M ar. M a n u f a c t u r in g P a y r o l l s ...................... Apr. F a rm C a s h R e c e i p t s ..........................M ar. P R O D U C T IO N A N D E M P L O Y M E N T N o n fa rm E m p l o y m e n t ! ...................... Apr. ............................. Apr. M a n u f a c t u r in g N o n m a n u f a c t u r i n g ..........................Apr. C o n s t r u c t i o n ............................. Apr. F a rm E m p l o y m e n t ............................. Apr. U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o r c e ) t ...............Apr. Avg. W e e k ly H rs. in M fg . (H rs.) . . . Apr. 2.6 2.6 F IN A N C E A N D B A N K IN G M e m b e r B a n k L o a n s ......................... Apr. M e m b e r B a n k D e p o s i t s ...................... Apr. B a n k D e b i t s * * .....................................Apr. P e rs o n a l In c o m e (M il. $, A n n u a l R a t e ) .................. M ar. M a n u f a c t u r in g P a y r o l l s ...................... Apr. F a rm C a s h R e c e i p t s ......................... M ar. P R O D U C T IO N A N D E M P L O Y M E N T ALABAM A IN C O M E P e r s o n a l In c o m e ( M il. $, A n n u a l R a t e ) ............... M a n u f a c t u r in g P a y r o l l s .................. F a rm C a s h R e c e i p t s ...................... G E O R G IA N o n fa rm E m p l o y m e n t ! ...................... Apr. M a n u f a c t u r in g ............................. Apr. N o n m a n u f a c t u r i n g ..........................Apr. C o n s t r u c t i o n ............................. Apr. F a rm E m p l o y m e n t ............................. Apr. U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o r c e ) t .............. Apr. Avg. W e e k ly H rs. in M fg . (H rs.) . . . Apr. F IN A N C E A N D B A N K IN G M em ber B ank Loans* P R O D U C T IO N A N D E M P L O Y M E N T N o n fa rm E m p l o y m e n t ! .................. ......................... M a n u f a c t u r in g N o n m a n u f a c t u r i n g ...................... C o n s t r u c t i o n ......................... . Apr. F a rm E m p l o y m e n t ......................... . Apr. U n e m p lo y m e n t R a te (P e rc e n t of W o r k F o rc e )! . . . . . Apr. A vg. W e e k ly H rs. in M fg . (H rs.) . . . Apr. 62 130 132 1 29 124 64 1 27 1 29 1 27 1 14 69 4.0 41.4 3.8 41.6 3.8 41.4 4.5 41.1 279 216 233 278 2 76 2 13 2 33 25 4 129 130 129 12 9 131 12 9 121 122 67 5.5 4 1.4 121 134 16 0 25 3 1 78 1 97 254 176 192 253 177 188 235 16 9 184 5,22 8 265 1 79 5,10 8 2 61 214 4,951 263 186 4,67 8 235 132 147 157 142 1 48 1 59 1 44 148 159 1 43 143 153 139 1 46 49 154 52 160 58 1 43 4.1 4 0.9 3.7 40.8 3.7 41.2 4.3 39.8 386 264 267 373 255 265 375 254 254 237 228 M IS S IS S IP P I IN C O M E P e rs o n a l In c o m e F IN A N C E A N D B A N K IN G M e m b e r B a n k L o a n s ...................... M e m b e r B a n k D e p o s i t s ............... B a n k D e b it s * * ............................. . Apr. . Apr. 212 231 200 211 F L O R ID A IN C O M E P e rs o n a l In c o m e (M il. $, A n n u a l R a t e ) .................. M ar. 2 0 ,6 8 4 M a n u f a c t u r in g P a y r o l l s ......................Apr. 3 11 F a rm C a s h R e c e i p t s ......................... M ar. 1 75 P R O D U C T IO N A N D N o n fa rm 2 0 ,6 7 8 310 1 88 20,5 3 4 312 173 18.3 26 269 1 88 1 65 164 160 EM PLOYM ENT E m p lo y m e n t t .................. Apr. 82 1 65 P R O D U C T IO N A N D E M P L O Y M E N T N o n fa rm E m p l o y m e n t ! ...................... Apr. M a n u f a c t u r in g ............................. Apr. N o n m a n u f a c t u r i n g ......................... Apr. C o n s t r u c t i o n ............................. Apr. F a rm E m p l o y m e n t ............................. Apr. U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o r c e ) ! ...............Apr. Avg. W e e k ly H rs. in M fg . (H rs.) . . . Apr. F IN A N C E A N D B A N K IN G M e m b e r B a n k L o a n s * ...................... Apr. M e m b e r B a n k D e p o s i t s * .................. Apr. B a n k D e b i t s * / * * .................................Apr. 327 MONTHLY REVIEW O ne M onth A go L a t e st M o n t h 1969 Two M o n th s Ago TEN N ESSEE One Year A go One Two L a te st M o n t h M onth Ago 1969 N o n m a n u f a c t u r in g IN C O M E P e r s o n a l In c o m e (M il. $, A n n u a l Ra te ) . . . . M a n u f a c t u r in g P a y r o l l s ............... F a rm C a s h R e c e i p t s .................. . . M ar. 10,9 03 . . Apr. 236 . . M ar. 1 39 10,9 7 9 2 36 135 1 0,8 15 2 36 9,97 9 121 144 2 11 ...................... . C o n s t r u c t i o n .......................... . F a rm E m p l o y m e n t .............................. U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o rc e )t . . . . . A v e ra g e W e e k ly H o u r s in M fg. (H rs.) , M o n th s Ago One Ye a r Ago Apr. Apr. Apr. 1 42 173 59 144 1 80 61 145 1 85 63 135 1 72 Apr. Apr. 3.6 40.3 3.1 40.5 3.1 40.4 4.0 39.7 M e m b e r B a n k L o a n s * ...................... Apr. M e m b e r B a n k D e p o s i t s * .................. Apr. B a n k D e b i t s * / * * ............................., Apr. 304 206 305 300 193 302 293 1 90 2 95 266 194 25 2 66 F IN A N C E A N D B A N K IN G P R O D U C T IO N A N D EM PLOYM ENT N o n fa r m E m p l o y m e n t t ............... M a n u f a c t u r in g ...................... . . Apr. . . Apr. 147 156 14 8 157 149 1 58 *F o r S ix t h D istric t area only. O th e r to ta ls fo r en tire s ix states. 145 148 * D a il y ave ra g e b a s is. t P r e lim in a r y data. S o u rc e s : P e rs o n a l in co m e e s tim a te d b y t h is B a n k ; n o n fa rm . m fg. a n d n o n m fg. em p ., m fg. p a y ro lls a n d h o u rs, a n d unem p., U.S. Dept, of L a b o r a n d c o o p e ra tin g state a g e n c ie s; cotto n c o n su m p tio n . U.S. B u re a u of C e n s u s ; c o n stru c tio n c o n tra c ts, F. W. D o d g e Corp.; petrol, prod., U .S. B u re a u of M in e s; in d u s tria l u s e o f elec. power, Fed. P o w e r C om m .; fa rm c a s h re c e ip ts a n d fa rm em p., U.S.D.A. O th e r in d e x e s b a s e d o n d ata co lle c te d b y t h is B a n k . All in d e x e s c a lc u la te d b y t h is B a n k . D e b it s t o D e m a n d D e p o s it A c c o u n t s Insured Commercial Banks in the Sixth District (In Thousands of Dollars) P e rc e n t C h a n g e P e rc e n t C h a n g e year to A p ril '6 9 fro m A pril 1969 M a rc h 1969 A p ril 1968 M ar. A pril 1 9 6 9 1 96 8 4 m os. 1969 fro m 1968 S T A N D A R D M E T R O P O L IT A N S T A T IS T IC A L A R E A S t B ir m in g h a m G adsden . . . H u n t s v ille . . M o b ile .............. M on tg o m e ry . . T u s c a lo o sa . . . . 1,924,845 6 8,7 27 21 0 ,3 5 0 572,531 354 ,9 6 0 117 ,462 1,732,225 65,5 83 194 ,417 54 2 ,1 2 2 1,627,525 6 3,2 07 190 ,022 542 ,4 2 2 + 11 + 5 + 8 + 6 + 18 + 9 + 11 + 6 + 12 + 6 + 6 + 8 3 4 8 ,9 5 4 113 ,036 337 ,6 2 4 9 4,1 42 + 2 + 4 + 5 +25 + 13 + 17 Ft. L a u d e r d a le H o lly w o o d . . 1,119,215 J a c k s o n v ille . . . 1,904,587 M ia m i . . . . . 3,631,358 O r l a n d o .............. 765,337 P e n s a c o la . . . . 23 2 ,5 8 4 T a lla h a s s e e . . . 172 ,752 T a m p a - S t . Pete. . . 1,982,325 W. P a lm B e a c h 7 0 5 ,6 9 2 1,856,845 3 ,08 0,449r 70 3 ,151 2 1 6 ,2 3 9 1 5 2 ,424 1,809,860 572 ,6 6 5 A lb a n y ............... A t la n t a ............... . A u g u sta . . . . C o lu m b u s . . . . M acon ............... Savannah . . . . 10 9 ,1 0 9 7,0 1 7 ,0 5 0 31 8 ,8 3 8 274 ,3 9 8 3 4 6 ,2 2 9 34 7 ,115 B a to n R o u g e . . . L afay e tte . . . . L a k e C h a r le s . . N e w O r le a n s . . 5 8 8 ,272 163 ,042 1 6 8 ,896 2,69 3,173 1,01 8,724 88 3 ,0 6 2 1,689,203 2,95 2,952 66 3 ,8 8 4 21 2 ,413 151,815 1,654,067 5 3 4 ,995 + 10 + 3 + 18 + 9 + 8 + 13 + 10 +23 1 0 5 ,429 5,956,181 2 7 6 ,151 2 7 5 ,8 1 4 287 ,4 0 5 29 7 ,5 7 6 99,1 85 5,44 2,724 3 4 6 ,5 2 9 + 3 + 18 + 15 - 0 6 1 1 ,6 2 4 1 5 0 ,619 161 ,765 2,526,071 632 ,861 135 ,744 157 ,237 2,52 9,585 241 ,981 28 4 ,8 3 2 29 4 ,5 9 6 B ilo x i— G u lfp o rt Jackson . . . . 125 ,943 7 6 9 ,7 4 8 1 2 4 ,258 6 9 9 ,930 115 ,158 67 2 ,1 0 6 Chattanoo ga . . . K n o x v ille . . . . N a s h v ille . . . . 7 9 5 ,2 1 8 5 5 5 ,525 2,307,672 7 6 5 ,4 5 0 52 7 ,4 8 0 2,19 3,405 657 ,2 5 4 5 1 7 ,465 1,884,674 +27 + 13 +23 + 15 + 9 + 14 +21 +20 + 12 + 7 + 14 + 18 +32 +22 + 10 +29 - 8 + 10 + 13 +20 +22 + 17 + 18 + + + - 4 9 4 7 +31 + 16 7 +20 + + 7 6 +20 - 5 + 17 + 16 + 11 + 5 + 18 + 6 + 2 + 1 + 10 + 9 + 15 + 13 + 6 + + + +21 + + 19 + 13 +31 4 5 5 7 +22 . . . . ............... ............... 77,9 2 0 77,5 3 0 49,7 91 72,0 9 0 7 8 ,7 0 9 46,1 8 5 7 1,8 96 67,4 2 0 4 6,3 5 2 + + 8 1 8 + 8 + 15 + 7 + 10 + 17 + 18 B a rto w ............... B ra d e n to n . . . B re v a rd C o u n t y . . D a y to n a B e a c h . . Ft. M y e r s — N. Ft. M y e r s . . 40,9 57 1 03,231 2 5 2 ,465 108 ,170 35,6 7 4 9 0,6 59 21 9 ,3 1 7 9 2,4 46 36,8 57 8 8,0 24 23 7 ,5 6 9 103,041 + + + + 15 14 15 17 + 11 + 17 + 6 + 5 + 9 + 17 + 3 + 4 147 ,176 1 2 2 ,469 103 ,884 +20 +42 +28 A n n is to n D o th a n S e lm a A p ril 1969 G a in e s v ille . . . L a k e la n d . . . . M o n ro e C o u n t y . . O c a l a .................. St. A u g u s t in e . . . St. P e t e rsb u rg . . S a ra so ta . . . . Tam pa .............. W in te r H a v e n . . . 1 1 0 ,966 157 ,347 4 6 ,7 9 4 80,8 3 9 2 8 ,4 0 9 4 5 1 ,8 3 6 171 ,975 1,027,733 90,4 9 8 .............. A thens B r u n s w ic k . . . D alton .............. Elb e rto n . . . . G a in e s v ille . . . G riffin ............... L a G ra n g e . . . . Newnan ............... R o m e .................. ’ In c lu d e s o n ly b a n k s in th e S ix t h D ist r ic t p o rtio n of th e state. JU N E 1969 f P a r t ia lly e stim a te d . M a rc h 1969 A pril 1968 98,6 36 1 5 2 ,454 3 8,6 9 8 87,221 2 5,9 65 40 8 ,0 9 6 142,623 95 9 ,7 2 4 75,3 79 9 6,1 5 0 1 3 2 ,070 42,0 4 0 65,5 07 2 3 ,0 2 9 4 0 4 ,8 4 0 1 4 6 ,555 845 ,7 5 0 73,3 01 96,2 58 5 3,1 39 133 ,582 17,7 48 79,6 0 6 38,8 25 34,2 2 9 2 5,2 1 8 87,8 96 8 9,3 75 51 ,1 4 8 r 1 0 7 ,876 1 5,9 54 84,5 05 36,1 6 9 22,0 1 9 23,0 07 85,5 3 0 87,8 89 4 5 ,4 8 7 1 0 5 ,450 15,692 7 3,5 75 38,4 4 8 2 1,8 13 23,0 63 80,6 6 6 63,471 61,7 45 58,5 83 A b b e v ille . . . . A le x a n d ria . . . B u n k ie .............. H am m ond . . . . N e w Ib e ria . . . P la q u e m in e . . . T h ib o d a u x . . . . 12,107 1 9 3 ,750 8,38 4 45,2 6 2 37,8 80 14,411 25,9 93 13,2 58 1 6 7 ,164 6,971 42,8 9 4 36,751 14,562 27,5 15 11,6 5 4 1 4 6 ,326 6,293 38,0 29 3 7 ,6 0 4 12,3 98 25,5 31 + - H a t t ie s b u rg . . . L a u re l .............. M e rid ia n .............. N a tc h e z . . . . P a s c a g o u la M o s s P o in t . . V ic k s b u r g . . . . Y a z o o C ity . . . . 7 0,7 61 4 5,1 9 5 8 5,5 25 46,2 4 5 70,1 36 42,7 3 0 82,2 5 4 42,8 1 9 5 9,3 62 37,6 4 6 61,2 4 0 39,8 7 0 + + + + 80,3 64 41,4 4 5 35,891 74,5 87 39,2 66 34,2 8 8 6 5 ,1 8 9 42,9 8 2 34,2 0 2 + + + 95,0 9 4 1 0 3 ,697 2 0 5 ,4 0 4 97,9 9 8 90,6 8 8 21 3 ,8 9 7 80,8 2 9 81,5 5 6 177 ,628 V a ld o s ta . . . . B rist o l .............. J o h n so n C ity . . . K in g s p o rt . . . . O THER CEN T ERS year to d a te 4 m o s. 1969 M a r. A p ril fro m 1 9 6 9 1 96 8 1 9 6 8 A p ril ’6 9 fro m XTH D IS T R IC T , Total A la b a m a ! . . . . F lo rid a ! . . . . G e o r g i a } .............. L o u is ia n a ! * M is s is s ip p i* T e n n e sse e f* ^ E stim a te d . . ■ . ■ • . . . + 13 + 3 +21 + 15 + 19 + 11 +23 +23 + 12 + 17 + 7 +22 +20 +23 +21 - 7 + 9 + 11 + 8 + 4 +24 + 11 - 6 + 7 +55 + 10 + 10 + 17 +27 + 13 + 8 + 1 +57 + 9 + 3 + 9 + 4 + 8 - 9 + 16 + 9 + 11 + 9 +27 +27 +14 + 18 + 16 + 14 + 11 + 15 +22 + 14 + 11 + 3 + 18 - 6 + 12 8 + + 8 +26 +19 + 4 +32 +33 +19 + 1 + 16 + 2 + 13 +13 1 6 + 19 +20 +20 + 15 4 +40 + 16 + 14 5 +23 - 4 + 5 +21 - 2 + 12 - 3 + 14 - 4 + 18 +27 + 16 + 12 +17 + 17 +20 + 6 3 1 6 8 8 6 + 10 + 10 +22 4 0 ,6 8 2 ,5 3 8 36 ,8 9 6 ,4 5 8 r 3 4 ,6 82,621 + 10 +17 +15 4,76 9,251 1 3 ,4 01,809 10,6 25,792 4,59 9,087 1,743,086 5,54 3,513 4 ,45 1,960 ll, 9 5 2 , 3 0 1 r 9,24 9,1 88 r 4 ,38 2,168 1,60 7,209 5 ,25 3,632 4,33 0,621 11,2 22,915 8,75 3,777 4,30 6,510 1,486,756 4 ,58 2,042 + 7 + 12' + 15 + 5 + 8 + 6 + 10 + 19 + 9 + 18 + 15 + 7 +21 + 7 + 17 +21 + 11 +23 r-R ev ised . 83 D is t r ic t B u s in e s s C o n d it io n s The economy of the Sixth District exhibits somewhat more mixed signs of behavior than it has in recent months. Nonfarm employment registered a fractional decline in April, and contract construction activity has slowed in comparison with the early months of 1969. Consumer credit, on the other hand, showed stepped-up activity, while business loan demand continued strong. Farm prices in May moved generally upward. Consumer spending in the District maintains its upward trend. The volume of automobile loans extended increased considerably, while other types of consumer credit indicated healthy gains for the month of April. Check-credit volume rose sharply, although credit card activity rose only slightly. Personal incothe changed little in March. Credit extended by larger banks continued at a rapid pace for the first three weeks of May. The demand for business loans remained high in spite of adoption of tighter lending policies by an in creasing number of banks. To meet the loan ex pansion, large banks continued to sell U. S. Gov ernment securities and municipal issues. Loan growth at smaller banks, after slackening in April, quickened in mid-May. April District nonfarm employment edged down slightly for the first time in 12 months. All of the District states, with the exception of Florida, posted varying degrees of loss in nonfarm em ployment. Both nonmanufacturing and manu facturing employment were slightly below the March level, while there was a slight rise in the District unemployment rate. Largely because of 84 shorter factory work hours, the rise in manu facturing payrolls leveled off. Contract construction declined considerably from the early months of 1969. Strikes, rising material costs, labor shortages, and scarcer mort gage money have been instrumental in the slow down. In the current period of monetary restraint, the private market for FHA-VA single-family mortgages has almost disappeared. Recent weak ening of net funds inflows of savings and loan associations suggests an early slowdown of com mitment volume for the second half of 1969. In May, the all-commodity index for District farm products increased. Beef and calf prices rose as demand for beef continued strong. Price in creases were registered for broilers, swine, and corn; egg and rice prices were below month-ago readings. Citrus growers have received news that orange production will be 3 million boxes greater than earlier anticipated, while the forecast for grapefruit production has been revised downward. NOTE: Data o n w h i c h s t a te me nt s are b a s e d h a v e b e e n adjusted w h e n e v e r possible to e li mi na te s e a s o n a l influences. MONTHLY REVIEW
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