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Atlanta, Georgia, June 30, 1949

Volume XXXIV

F o r e s tr y :

A n

I n v e s tm e n t

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T A

Number 6

O p p o r tu n ity

the past few years, heavy demands for the products than 260 acres declined from 71 to 60 percent of all farm
of the forest industry have made the growing of trees land. During the same period the proportion of land in
farms of 500 acres or more increased from 17 percent of all
an attractive financial venture. Interest has therefore tended
to shift from forest conservation and watershed protection to farm land to 29 percent. These changes have occurred for the
most part since 1935. The large farms became larger mainly
the possibilities of forestry as an investment opportunity.
To most woodland owners who have large acreages, in­ by absorbing other farm units, small or even fairly large, or
vestment in the growing of trees is not new, of course. These parts of such units. To a lesser degree, some small farms
owners have long regarded the land and the growing timber have been combined with other small farms to form larger
as capital and the annual growth as a crop. If the forest and more efficient units.
industry is to make its maximum contribution to the economy
C h a n g e s in F arm L an d A c re a g e
of the Sixth District, this attitude must become general
T o ta l F a r m A c r e s
among all owners of woodland. Owners who regard their
S iz e G r o u p
in S iz e G r o u p s
P e rc e n t
(I n m illio n s )
woodlands as investments are more likely to follow manage­
(A c r e s )
C hange
1935
ment practices that will result in the largest possible sus1945
L e s s th a n 10
— 17
0 .6
tained-yield production.
0 .5
10 - 99'
— 15
3 7 .0
3 1 .3
Investment in forest lands may prove to be particularly
10 - 2 5 9
3 2 .1
— 8
2 9 .6
260 - 499
1 2 .3
1 2 .3
0
advantageous to farmers who can enlarge their farms and
500 - 999
7 .6
9 .0
+ 18
1 ,0 0 0 a n d m o r e
1 0 .6
2 0 .5
+ 19
also to those nonfarm investors who are not interested in
A ll S iz e s
1 0 0 .2
1 0 3 .3
+ 3
immediate returns on their money. Whether or not either
group of potential investors can realize adequate returns
These figures indicate that the farmers having small acre­
from forestry depends upon the location of the land and its ages are not making much progress in increasing the size
ability to produce forest products, the nature of the markets, of their farms by the addition of more land. The reasons are
the attitudes and resources of the owner or the investor, and apparent. These farmers’ earning power is usually low and
the public’s attitude toward forestry.
their net worth relatively small. Few have been able to save
enough from farm earnings to make needed capital improve­
The Farm O w ner
ments even on their present acreage. Although nearly all such
Most District farmers earn relatively small incomes because farms contain some woodland, many years of poor forest
their farm businesses are small. A farmer can enlarge his management has reduced the woodland’s income-producing
business either by using more capital and labor on his present ability to a very low level.
acreage or by buying additional land. During the past decade
This does not mean, however, that additional acreages of
the physical inputs on each acre of cropland in the District woodland could not greatly increase the returns to land and
have been increased about 50 percent. Farm units may be still labor on these farms, or that additional woodlands might not
further increased by even larger inputs on each acre, but yield a favorable return on the money invested in them. In a
on many farms some increase in acreage will be required. study of forestry as a farm enterprise in Washington Parish,
In this District, however, cropland is so intermingled with Louisiana, the Southern Forest Experiment Station suggested
pasture and woods that the enlargement of a farm will be that the area of the usual farm wood lot be increased four to
accompanied by an increase in the acreage of both pasture eight times. In a report on agricultural production after the
and woodland. A farmer who enlarges his farm business by war, the Mississippi Production Capacity Committee recom­
adding to his acreage, therefore, is compelled to give atten­ mended that at least one-quarter of a million acres of nontion to forestry as a long-time investment.
farm forest land in the Brown Loam area should be added
The rapidity with which farmers develop an interest in to farms. A recent study of the requirements for an efficient
forestry depends in part on how rapidly they can increase Southern agriculture, made at the request of House Agri­
the acreage of their farms. During the past 25 years there has cultural Subcommittee on Cotton, states that the ultimate
been little change in the average size of District farms. returns from timber production will more than justify addi­
Significant changes, however, have occurred in the proportion tional capital investment in this field.
of farm land falling within certain size groups of farms.
Although no general prescription for improving farm ef­
From 1925 to 1945 the proportion of land in farms of less ficiency can be made to fit all situations, the Subcommittee
u rin g

D




54

M o n t h ly R e v ie w

o f

Report suggests minimum farm acreages for the more im­
portant cotton-producing areas. If the ownership pattern of
Southern agriculture were to be altered so as to meet the re­
quirements for efficient-sized farms, about two-fifths of the
farms would have to be eliminated and absorbed into other
farms. A comparison of the distribution of farms by size
groups with the size suggested for efficient production in the
Piedmont area, for example, shows that nearly four-fifths of
the farms are too small.
Because they do not have the money to make large invest­
ments of any kind and because their woodlands have yielded
very small profits in the past, most of these small owners are
not likely to invest in additional woodland. Unless subsidized
rather extensively by Government, these farms are likely to
remain small and inefficient or else they will be absorbed
into farms that are already large enough for efficient
operation.
Large investments in forestry, therefore, will probably be
made by less than one-fifth of all farm owners. There is evi­
dence that this group possesses the resources and attitudes
essential for profitable investments in the growing of trees. In
1944 these farmers had an investment in land and buildings
of $20,000 or more, or sold farm products valued at $3,000
or more. In that year they obtained larger returns per dcre of
farm woodland than the farmers with smaller acreages.
The Nonfarm Investor

In Europe much forest land is owned by individuals who are
interested in producing continuous crops of timber products
for the market. This type of forestry investment is relatively
new in the United States, but in the Sixth District it probably
presents greater opportunities for the individual investor to
use capital profitably than any other type of forestry invest­
ment. Except for the length of time required for the crop to
mature, this kind of enterprise closely resembles the com­
mercial production of other agricultural crops.
Most of the land suitable for this type of enterprise that
is not already owned by farmers or industrial users of wood
products is in rather small tracts intermingled with other
forest lands. In order to start an independent forestry opera­
tion, enough of these small tracts would have to be purchased
to provide a total area of adequate size for efficient operation.

t h e

F e d e r a l

R e s e r v e

B a n k

o f

A t l a n t a

f o r

1 9 4 9

Beginning with small tracts would, of course, entail very low
returns for the first few years. Recent surveys by the Forest
Service indicate that the forest management on small nonfarm
tracts has usually been very poor. Some of them would have
to be replanted artificially if they were to yield any merchant­
able forest products.
The steps in developing such a forest property would vary
according to local conditions but in general they would in­
clude the following: investigation of sites and the selection
of a purchase area; purchase of the lands; establishment and
improvement of stands; provision of protection against fire
and trespass; and, finally, the harvesting of products. Al­
though the costs of administration and protection are usually
lowest in purchase areas that are almost completely blocked
in, such areas could not be bought in most of the District
at prices low enough to make investment profitable. The pur­
chase area should be much larger than the expected size of
the forest holding so that only those lands within it that
are suitable for a profitable forestry enterprise need to be
bought.
In some areas the acquisition costs may add considerably
to the purchase price. Included in these costs are such items
as appraisals, title searches, registrations, and the salary or
fee of the person who makes the actual purchase. The larger
the number of parcels of land that must be bought to obtain
a given forest area the larger, of course, are the costs of
acquisition.
Although precise data are not available on the minimum
size of tract required for efficient operations, some foresters
estimate that in the District’s pine areas such a holding
should include at least 10,000 acres. The individual tracts
should be located in such a manner that the supervising
forester would not have to travel more than 10 to 15 miles to
reach any one of them.
National M arkets

How profitable an investment in forestry will turn out to
be depends in large measure upon future prices of forest
products and upon the marketing facilities that will be avail­
able. To obtain maximum profits, investors must usually
organize the forestry enterprise to produce several products.
An appraisal of market possibilities, therefore, must be made

FOREST PRO D UCT SALES PER A C R E O F W O O D LA N D , 1944

DOLLARS

J u n e

DOLLARS

2.00

2 .00

1.00

1.00

A LA BA M A

F L O R ID A

AVERAGE ACREAGE OF WOODLAND PER FARM:
La rg e

.

.

M e d iu m - s iz e f a m ily f a r m s

.

S m a ll

f a m ily

f a m ily

fa rm s

fa rm s

.

.

.

.

H

M ISSISSIPPI

TEN N ESSEE

ALABAMA

FLORIDA

GEORGIA

LOUISIANA

MISSISSIPPI

372

276

298

1 49

260

TENNESSEE
86

87
^

S m a ll h o l d i n g s ............................. F!vJ




L O U IS IA N A

G E O R G IA

82

87

46

75

43

34

43

41

13

21

92

24

23

32

II

18

18

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o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

on the basis of individual forest products. Most finished pro­
ducts made from wood have national markets, and the pri­
mary processing is largely done near the site where the
timber is grown. For this reason the adequacy of the local
processing facilities is often as important in determining
profits as is the long-run price trend for a particular product.
Although wood that is grown in the District yields a large
number of products, sawlogs and pulpwood are the principal
raw materials from the standpoint of income to the forest
owner. Most of the sawlogs are manufactured into lumber
for residential and commercial construction and, except for
the small quantities used for rayon, cellophane, and similar
products, nearly all of the pulpwood goes into paper or
paperboard. The demand for sawlogs and pulpwood, there­
fore, is derived largely from the demand for lumber, paper,
and paperboard.
In its re-appraisal reports on the forest situation, the
Forest Service has estimated the quantities of the main
products that would be used annually during 1950-55, given a
high level of employment and a gross national product of
200 billion dollars in terms of 1944 prices. Lumber consump­
tion, it is estimated, would amount to 42.5 billion board feet
annually. Of this amount 31.5 billion board feet would be for
construction, 5 billion for manufacturers, and 6 billion for
lumber used in shipping. Estimated total consumption is
about 20 percent larger than that for the 1948 figure, al­
though for the past 20 years the general trend in the per
capita use of lumber has been downward. These estimates,
therefore, assume a continuation of this downward trend but
that it will be more than offset by the growth of population.
During the next decade lumber for urban residential con­
struction will continue to be the largest single component of
total lumber consumption. Annual requirements for this pur­
pose are estimated at 11 billion board feet. This estimate is
based upon the assumption that the Government will promote
a housing program of a million and a quarter new units a
year for ten years. Changes in lumber consumption for other
nonfarm construction have been closely related to changes
in the general business activity for the past 30 years. Given a
high level of employment, timber consumption for this pur­
pose is estimated at 8.5 billion board feet.
Because of low farm income during the ten years preceding
the war, few farm buildings were constructed and many were
inadequately maintained. Although farm incomes have been
relatively high since the beginning of the war, wartime short­
ages of materials and labor have restricted construction until
the past two or three years. This backlog of construction, to­
gether with normal replacements and repairs of farm build­
ings, would require about 6.5 billion board feet of lumber
annually.
Since 1920 the annual consumption of lumber has ranged
from a low of 15 billion board feet in 1933 to a high of 43
billion board feet in 1942. Of the 35 billion feet consumed
last year, 24 billion went into construction and maintenance,
5 billion into manufacturing, and 6 billion into shipping.
Although consumption for manufacturing and shipping pur­
poses was about equal last year to the Forest Service esti­
mates for 1950-55, consumption for building was about onefourth less than the estimates. Last year, of course, consump­
tion was checked by the relatively high price of lumber and
by the short supply. For the entire year, lumber prices were
over three times as high as they were in 1939. Prices of other



5 5

building materials, on the other hand, were only about twice
as high as they were in 1939. In 1948 the production of 36
billion board feet of lumber was not enough to permit the
realization of the Forest Service estimates even if stocks had
been reduced to the very low levels that prevailed during
1946. With lower prices and an increase in supply, an annual
consumption of 42.5 billion board feet of lumber appears
reasonable for 1950-55. After 1955 less lumber would be
needed but the decline would probably be moderate.
For the individual investor in timber production, the prob­
able supply is as important as the ability and willingness
of consumers to buy the product. In 1944, saw timber was
being grown at the rate of 35.3 billion board feet annually
and was being used or destroyed at an annual rate of
53.9 billion board feet. In that year 32.9 billion board feet
of lumber were produced and 33.8 billion were consumed.
This rate of consumption obviously cannot be maintained
without depleting the growing stock still further. The annual
drain of saw timber will have to be kept below its present
level for several decades if any permanent increase in lumber
supplies is to be attained. The investor who starts to grow
saw timber now either by artificial planting or by building
up the growing stock on depleted stands is therefore not
likely to encounter a market in which prices are depressed
because of an excessive supply.
P P RAND P PE B A D PR D C N INT EU IT DST T S
AE
A R O R O U TIO
H N E AE
1904-1948
80
50

20
10
5

2
1900

1910

1920

1930

1940

1950

I960

1970

The Council of Economic Advisors in its January 1949 re­
port found the depletion of saw timber to be so serious that
it recommended immediate consideration of legislation for
the regulation of forest practices. In addition, it recom­
mended a strengthening of forest conservation programs and
a substantial investment on privately owned timberland in
the form of planting and stand improvement as well as pro­
tection against fire, insects, and disease.
Since the data on paper and paperboard consumption
are not adequate for estimating potential consumption, pro­
duction data must suffice. Based upon past trends, the future
production of paper and paperboard is expected to be
substantially larger than it was in 1948 when about 22 mil­
lion tons were produced. Combined paper and paperboard
production has been expanding at a rate of about 4 percent

5 6

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a year for the past 35 years. This upward trend was halted
only temporarily by declines in business activity and by pro­
duction restrictions in effect during the recent war. Newsprint
was the only important item of which the production declined
during the past few decades. Any further decline in news­
print output, however, would have little effect upon total
production for the 1948 production of that item was less
than a million tons.
Although paper and paperboard production will probably
expand still further, past production trends cannot reason­
ably be projected into the indefinite future. If present trends
continue for the next decade, production during 1950-55
would be about 24 million tons. After 1955, production prob­
ably will increase at a slower rate and per capita consumption
may reach a saturation point. Domestic consumption, how­
ever, could easily reach 40 million tons annually during the
next 50 years.
The production of 24 million tons of paper and paper­
board annually during 1950-55 would require about 17 mil­
lion tons of wood pulp a year. An additional million tons of
pulp would be needed in the manufacture of rayon, cello­
phane, plastics, and for new uses. Imports of wood pulp,
chiefly from Canada, are expected to average about 2 million
tons annually. About 16 million tons of pulp would have
to come from domestic sources which would require about
22 million cords of pulpwood. Pulpwood imports are ex­
pected to decline from the 2.2 million cords imported in
1948 to about 1.5 million cords in 1950-55. Domestic pro­
duction of pulpwood, therefore, would have to be about
20.5 million cords annually during the next few years. Pro­
duction during 1948, as indicated by mill receipts, was 20.1
million cords.
For the nation as a whole, the annual production of pulp
timber is likely to exceed the amount consumed by a sub­
stantial margin. Harvesting for pulpwood now accounts for
only 11 percent of the total annual cut from commercial
timber stands. For the individual producer, however, the re­
lationship between the prospective national supply of and
demand for pulpwood is not nearly as important as the
nature of the local market.
Local Markets
A permanent and profitable local market for pulpwood de­
pends first, of course, upon nearness to a pulp mill that can
convert the wood into wood products at relatively low cost.
Modern pulp mills must be large in order to achieve the most
efficient operation. Mills located in areas where there is an
actual or potential concentration of pulpwood production,
therefore, are most likely to provide dependable markets for
the pulpwood producer. In New England, the Lake States,
and the Pacific States, the future of the pulping industry is
already threatened by a shortage of low-cost raw materials.
Many of these mills depend upon imports from Canada and
other neighboring areas for a large part of their supplies.
The use of imported wood makes these mills relatively highcost producers.
Mills in the Sixth District states, on the other hand, depend
almost entirely upon wood produced within 150 miles of the
mill. Furthermore, most of them have bought large acreages
of timberland in order to insure adequate supplies of raw
materials. Since the pulp and paper industry in the South
is relatively new, it has been able to profit from the mistakes
of the older centers and so to produce more efficiently.




o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

About a third of the nation’s wood-pulping plant capacity
is now in Sixth District states. The migration of this industry
to the District has been so rapid that plant capacity has in­
creased fourfold since 1936. As local pulpwood supplies de­
cline in the older pulp-producing areas, a larger proportion
of all pulpwood will tend to be processed in Southern mills.
Receipts at mills in the South have increased from 6.2 mil­
lion cords in 1941 to 9.4 million in 1948. The Southeastern
Forest Experiment Station estimates that Southern pulpwood
production will exceed 11 million cords a year by 1950.
Other Considerations
Although the success of most business enterprises depends in
part upon the attitude of the public, the future of forestry
in the Sixth District is particularly dependent upon the atti­
tude of people toward the woodlands. Adequate fire protec­
tion, an essential condition for profitable investment in for­
estry, can be attained only if an appropriate local fire con­
trol organization is maintained. Since organized fire protec­
tion is usually financed by a combination of Federal, state,
and local funds, the potential investor in timberland is ob­
liged to ascertain the attitudes of local people as well as of
the general public if he is to invest intelligently.
Only a third of the commercial forest area in the District
is now receiving adequate fire protection. Protection, how­
ever, is being extended as more and more people come to
realize the value of forest lands. The trend of expenditures for
forest fire protection provides one indication of the progress
that is being made. For the nation, Federal expenditures in­
creased from 1.1 million dollars in 1929 to 7.9 million dol­
lars in 1946. State and county expenditures increased from
2.1 million dollars to 9.5 million during the same period.
In the District the most rapid progress has come during the
last few years. From 1944 to 1947, state and county expendi­
tures for fire protection have doubled. For the 1947 fiscal
year total expenditures for this purpose in District states
amounted to 3.3 million dollars, of which the Federal Gov­
ernment contributed 1.3 million, state and county govern­
ments 1.4 million, and private agencies and individuals 0.6
million.
In several states there is a tendency for the state govern­
ment to assume a larger share of the responsibility for con­
trolling forest fires. Georgia, for example, has recently passed
a law that will decrease the proportion of the expenses of
local fire protection units that must be contributed by the
local government unit. Under the new law, the county or
other local unit must provide only one-third of the funds
for the fire protection unit. On January 1, 1949, Georgia had
43 active protection units that covered 8.6 million acres.
By July 1 of this year at least 22 new units will be organized
covering an area of 3.1 million acres. Within the next year
and a half, the State Forestry Department expects to bring
another 3 million acres under organized protection. This
tendency for the state governments to assume greater re­
sponsibility for fire control should decrease some of the
risks to forestry investments, for state governments are more
likely than local units to maintain the permanent fire pro­
tection that is necessary for a successful forestry enterprise.
Although investments are usually compared in regard to
the annual rate of return and the degree of risk, in the case
of forest lands the possibility of fluctuations in sales value

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o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

may also be important. In general, the value of a forest
property may fluctuate because of changes in production
risks, in the size and quality of the trees, in unit prices, in the
margin for stumpage, or in the general price level. In the
past the greatest element of uncertainty in the production of
timber products has been the fire hazard. The current rate of
improvement in fire protection indicates that timber will be­
come a more certain crop. As risks are reduced and future
income becomes more predictable, the value of forest land
per acre will tend to increase.
At present the purchase of forest property cannot be fi­
nanced in the same way as farm land, largely because the
fire hazard makes forest property unacceptable as collateral.
Although this difficulty could be overcome by means of in­
surance, such insurance is not generally available. If it
proves possible to reduce the fire hazard sufficiently to make
forest fire insurance practical on a large scale, the sales
value of forest land would tend to rise even further.
Throughout most of the District, growing conditions are
so favorable that a rather rapid increase in property values
can be expected because of an increase in the size and quality
of trees. Management for sustained yield also usually results
in an up-grading of the timber stand and an increase in the
volume of growing stock. This biological aspect of an invest­
ment in the growing of trees is the principal feature that dis­
tinguishes forestry from other types of investment. If the
wealth represented by the money invested in a factory is to
be kept intact or is to be increased, a portion of the annual
returns must be used to provide for replacement of produc­
tive facilities when they are worn out or become obsolete.
Some means must therefore be found for storing value in
order to keep wealth intact. An investment in the growing of
trees under a sustained-yield system, on the other hand, re­
quires no special provision for keeping the wealth intact.
The land is virtually indestructible and the remainder of the
capital, the timber-growing stock, is constantly replacing it­
self by biological action.

5 7

of production is well advanced and prices of the finished
products such as lumber, paper, sawlogs, and pulpwood have
already begun to decline.
Because forestry is a long-run proposition, however, price
changes during the past two or three decades offer a better
basis for estimating future trends. In the period 1899 to
1943, for example, the actual price of yellow pine lumber
ranged from 16 to 29 dollars a thousand board feet. In terms
of dollars of constant purchasing power, lumber prices have
been relatively stable, although the trend during the past
40 years has been definitely upward. Stumpage prices of saw
timber are marked by a similar trend.

From 1913 to 1948, wholesale prices of paper and pulp
were also relatively stable in terms of dollars of constant
purchasing power but showed only a slight upward trend.
For the nation, average stumpage prices of pulpwood have
declined but the decline is apparently the result of shifts in
the sources of supply. In recent years a larger proportion of
total pulpwood has come from Southern pine. The average
price of pulpwood from Southern pine in 1947 was the low­
est for any producing region or species. The fragmentary
data that are available indicate, however, that stumpage
prices of Southern pine pulpwood have increased at about
the same rate as the prices of pulp and paper.
If the unit prices of forest products continue to move as
they have in the past, therefore, forest property values will
tend to be stable and to increase slowly in relation to the
value of most other forms of physical property. Changes in
the proportion of the total value of forest products that can
be retained by the forest owner, or the margin for stumpage,
will probably change so slowly as to have little effect upon
property values.
Rote of Return

During the next few years changes in the unit prices of
forest products and in the general price level may tend to
decrease forest property values. The unprecedented demand
for forest products since the war caught the forest industry
with unusually small inventories. Prices rose to record levels.
By now the process of inventory accumulation at all stages



District timberlands differ so widely in the age and in con­
dition of the stands, the species of trees, the quality of the
soil, the terrain, and other conditions affecting their ability
to produce timber products that general estimates of rates of
return on forest investments are of limited value. One of the
most widely accepted of these general estimates is that tim­
berland suited to the growing of pines can be made to yield
a net income of $2.00 to $4.00 an acre. Although no satis­
factory data are available on forest land prices, this would
mean a rate of return of at least 10 percent on the capital

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investment. The rate of return on particular investments, of
course, may vary widely. Farmers who invest in neighboring
timberland often are able to get high rates of return. A
farmer in South Mississippi, for example, who bought a
neighboring 159-acre timber tract for $10.50 an acre in 1938
is now receiving annual gross returns for stumpage equiva­
lent to $3.00 an acre with the stumpage value figured at
prices considerably below the prevailing market price. His
annual taxes are estimated at 30 cents an acre and manage­
ment costs at 50 cents an acre. The net return of $2.20 an
acre is equivalent to a 21 percent return on his original in­
vestment. Another farmer in the longleaf pine area of the
same state is receiving a return of 18 percent on land that
has a bare-land value of about $12 an acre.
The nonfarm investor who must assemble several thousand
acres of timberland cannot always take advantage of local
opportunities for buying land as well as a resident owner
can. Obtaining extremely high returns on capital, however,
is not the main incentive for investment in the growing of
trees for the market. Among the principal incentives are the
opportunities it affords for keeping wealth intact and for
hedging against changes in the purchasing power of money.
Two earlier articles in this Review discussed some prob­
lems that must be taken into account if an investment in
forestry is to be sound. The first (April 1948) evaluated
forestry as an alternative to other farm enterprises and
showed that if landowners are to practice sustained-yield
forestry, trees as a crop must yield profits to their land and
labor as great as, or greater than, the profits from other
enterprises. The second article (August 1948) showed that
even if all landowners possessed perfect knowledge of the
most remunerative use of their land, they would still face
certain obstacles, such as the problems of fire control and
marketing, which might prevent the development of their
forest lands to the most profitable point. A forest property,
however, managed for a continuous yield and protected from
hazards such as fire, can be one of the safest forms of long­
term investments. If the potential investor uses reasonable
care, the Sixth District offers many attractive opportunities
for a safe and profitable investment in the growing of trees.
B

row n

R. R

a w l in g s

R e c o n n a is s a n c e
S ix th D istrict S ta tistic s lo r M ay 1949 c o m p a re d w ith M ay 1948
PERCENT DECREASE ^

PERCENT INCREASE

IStore Sales
tore Stocks
Sales
Fi
■ ■ ttin s
Gasoline
fflnnim m
m nr
nsumption
Bank f>ebits
Member f|ank Loans
Member Banl|; Investments
Demand Deposits Adjusted
40

30

20




1
0

10

20

30

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

S ixth . D is tr ic t S ta tis tic s

Lender

INSTALMENT CASH LOANS
Volume
No. oi
Percent C hange
Lenders
May 1949 irom
Report­
May
April
ing

O utstandings
Percent Change
May 1949 irom
May
April

1949

Federal credit un io n s..........
State credit u n io n s...............
Industrial banking compIndustrial loan com panies..
Small loan com panies..........
Commercial b a n k s...............

1948

1949

1948

43
17

+ 16
+ 69,

+ 36
+ 59

+
+

3
3

+ 30
+ 25

10
15
40

+
—

-K
—

1
1

33

2
4

+
+
+

+ 11

+
+
+
+

7
9

9
4

+ 11
+ 30

+' 4

9

§
|

+ 35

RETAIL FURNITURE STORE OPERATIONS
Number
Percent Change
oi
May 1949 Irom
Item
Stores
May 1948
April 1949
Reporting
Total sa le s......................................
— 8
103
+ 15
— 25
Cash sa le s ......................................
90
“ 5
h
— 6
Instalm ent and other credit sa le s..
90
+ 20
Accounts receivable, end of m onth.
102
+ 12
+ 4
— 4
Collections during m onth...............
— 0
102
— 10
Inventories, end of m onth...............
— 4
75

Item

WHOLESALE SALES AND INVENTORIES*
INVENTORIES
SALES
Percent Change
No. oi Percent C hange
No. oi
May 1949 irom
Firm s May 31,1949, irom
Firms
Report­ Apr. 30 May 31
Report­ April
May
ing
ing
1949
1949
1949
1948

Automotive supplies.
Electrical group
W iring su p p lies_
_
A ppliances..............
G eneral h a rd w a re ...
Lumber and bldg.
m aterials.................
M achinery equip­
ment and supplies.
Plumbing and neat-i
ing su p p lies...........
Drugs and su n d ries..
Groceries*
Full lin e s.................
Specialty lin e s........
Shoes and other
footw ear...................
Tobacco p ro d u cts___
M iscellaneous............

— 6

— 17

4
9
9
4

—
+
+
—

—
—
—
—

3

+ 15

3)

o

5

19
7
8
28

+ 18
— 1
+ 2

4
8
4

— 0
— 10
— 7

3

— 0

+

io

— ’6

— 3i

14

— 7

— 25

‘5
23
71

+ '8
— 3
— 5

— *4
— 15
— 13

0

7

— 70

4
8
15

— 16
— 0
— 4

— 17
+ 3
— 18

25
5

+ 4
—> 1

— 8
— 11

3

3
10
18
126
* Based on U. S. Departm ent of

+

8
11

— 15
— 52
+ 3
+ 1
— 6
— 23
— Q
— 14
Commerce figures

7

DEPARTMENT STORE SALES AND INVENTORIES
INVENTORIES
SALES
Percent Change
Percent Change
No. oi
No. oi
May 1949 irom
Place
Stores May 31,1949, irom
Stores
Report­ Apr. 30 May 31
Report­
May
April
ing
ing
1949
1948
1948
1949
ALABAMA,
—1 5
Birmingham ---— 2
3
— 7
4
+; 4
— 7
1
— 5
M obile...............
5
— 1
M ontgom ery...
3
— *7
— 4
3
- 1
3
FLORIDA
3
Jacksonville---7
— 10
— 17
4
+ 7
—. 3,
— 17
3
—« 4
4
+ 1
—. 7
O rlando............
3
+. 2
— 6
3
3
— i3
— 8
5
GEORGIA
— 5
5
— 6
— 5
— 10
6
— 1
A ugusta............
3
— 10
— 20
4
+ 4
—, 8
C olum bus........
3
+■ 0
— 15
4
— 13
— ‘7
— '7
4
__ 14
— 9
4
4
S avannah..........
— 3
— i
+ 2
6
+ *i
LOUISIANA,
Baton R o u g e ...
— 8
5,
4
— 7
4
+ 3
New O rle a n s...
— 10
4
—* 0
6
— 13
+ 5
MISSISSIPPI
Jackson.............
— 10
— 4
—, 4.
4
4
+ 6
M eridian...........
— 6
3
8
TENNESSEE
_, 9
Bristol...............
— 14
3
3
+ 15
+ 17
_! 6
C h attan o o g a...
— 4
— 6
4
3
— 2
__ 5
Knoxville..........
4
— 4
N ashville..........
— ’8
—ii
6
5
+! 1 __ 10
_ 3
— 4
— 2
OTHER CITIES*..
22
— 17
22
— 2
DISTRICT.............
111
76
—. 6
— 7
— 7
* W hen fewer than three stores report in a given city, the sales or stocks
are grouped together under "o th er cities."

M

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

5 9

District Business Conditions
Demand Deposits in Textile Communities

one out of every five member banks in the Sixth
L District serves what may be called a textile manufactur­
ing community, and many other member banks serve com­
munities where incomes are provided largely by textile manu­
facturing. In the entire District, the industry accounts for
about 20 percent of total manufacturing pay rolls; and it is
of even greater importance in Alabama, Georgia, and Ten­
nessee where it employs about a quarter of all manufacturing
workers. In some communities, jobs in textile manufacturing
are practically the only manufacturing jobs available.
The level of textile manufacturing activity is therefore of
extreme importance not only to the level of incomes in
many communities but to the banks serving those communi­
ties. Some analysts have hazarded the explanation that the
recent decline in textile manufacturing activity may explain
in part the decline in privately held business and personal
demand deposits that took place at the District banks be­
tween January 1948 and January 1949. This 2.8-percent de­
cline exceeded the less-than-two-percent decline for the na­
tion and was exceeded only in the Richmond and New York
Federal Reserve Districts. Personal demand deposits alone
declined 7 percent at the District banks, a rate of decline ex­
ceeding that in any other Federal Reserve District.
Textile mills in Alabama, Georgia, and Tennessee were
employing approximately 28,000 fewer workers in April this
year than in April last year. Activity was still above the
prewar level, however, with the District mills consuming 16
percent more cotton in April than in the average month of
1935-39. In April last year, they were consuming 54 percent
more than in 1935-39. Consequently, there has been a sig­
nificant decline in income during the last year. It is estimated
that the decline in actual hours worked has been over 50
percent greater than is indicated by the decline in employ­
ment because some mills have shortened work weeks, stag­
gered shifts, and otherwise avoided complete layoffs.
Because the business of banking is so closely tied to the eco­
nomic activity of the communities the banks serve, deposits
of a good many banks in the District would be expected to
reflect this changing textile activity. Indeed, a study recently
completed by this Bank shows that declining deposits in
many banks can be traced directly to the moderation in tex­
tile manufacturing activity, although in many cases the re­
sults so far have been comparatively minor.
For the purpose of the study, a textile community was
defined as one where the percentage of workers in textile
manufacturing exceeded the percentage in any other non­
agricultural employment. This definition, of course, excludes
many communities where textile employment is an important
source of income, even though its manufacturing is diversi­
fied, and it also excludes most of the large cities. Tabulations
of deposits were made for each month from January 1947
to date. The deposit trends at country banks, those outside
the large reserve cities of Atlanta, Birmingham, Jacksonville,
Nashville, and New Orleans, were believed to offer the most
valid comparisons.
DEMAND DEPOSITS d e c l in e IN l a t e 1948. During 1947 and the
first half of 1948, the changes in deposits at the banks in tex­
tile communities were little different from those at banks in

A

bout




TEXTILE MANUFACTURING ACTIVITY AND
MEMBER BANK DEPOSITS IN THE SIXTH
DISTRICT
I. Cuts in textile m
anufacturing have resulted in declining
em
ploym at m in the principal textile states.
ent
ills

110

110

T E X T IL E

EM PLO YM EN T

-----100

IN A L A . , G A ., AN D

TEN N .

“
•"■>^ocl948
1 9 4 7 MONTHLY A V E R A G E * 1 0 0

100

^

1949-7
90

D

J

F

M

A

M

J

J

A

S

O

N

D

90

J

2. D and deposits (exclusive of interbank) at banks in
em
textile com unities at the end of A this year were 2.9
m
pril
percent less than at the end of A last year.
pril

110

no
DEM A ND

D E P O S IT S ( E X C L U S I V E O F IN T E R B A N K )
AT BANKS IN T E X T IL E COM M UNITIES

100

100

1 4 MNHYAEAE 1 0
9 7 OTL VRG= 0

90

90

D

J

F

M

A

M

J

J

A

S

O

N

D

J

3. T decline w m pronounced at banks in the
he
as ore
sm com unities w it am
aller m
here
ounted to 6.6 percent.
110

no

DEM A N D D E P O S IT S ( E X C L U S I V E O F I N T E R B A N K )
AT BANKS IN T E X T IL E COMMUNITIES OF LE S S THAN

_ 15,000 P P L T N
OUAIO

____________1948^^""

100

_
^

V

100

1 4 MNHYA E A E1 0
9 7 OTL VR G* 0
90

90

D J

no

F

M

A

M

J

J

A S

O N D

4. W
hereas, at D
istrict banks outside reserve cities w
here
textile em
ploym is less im
ent
portant, dem deposits were
and
2.9 percent greater at the end of A this year than at
pril
the end of A 1948.
pril

110

1948

100

100

1947MNHY AEAE 1 0
OTL VRG? 0
-D E M A N D D E P O S I T S ( E X C L U S I V E O F I N T E R B A N K )
AT COUNTRY BANKS NOT IN T E X T IL E COM M UNITIES

90

90

M

110

J

J

A S

O

N

D

J

5. T e deposits at banks in textile com unities declined
im
m
less than one percent between A 1948 and A 1949,
pril
pril
but on the latter date were 2.6 percent less than at the
end of A 1947. At other country banks, tim deposits
pril
e
declined less than one percent in the sam period.
e
110

T IM E D E P O S I T S
- AT BANKS IN T E X T IL E COMMUNITIES

1947 MNHYAE A E100_______
OTL VRG«

100

-A *--- •--- •----ft__ •
---

90

D

J

F

M

A

M

J

J

A

S

•
O

•
N

100

<
D

J

90

6 0

M

o n t h l y

R e v ie w

nontextile communities. Seasonal changes from month to
month were approximately the same at both types of banks.
At the end of 1947, demand deposits, exclusive of interbank
deposits, at banks in textile communities were 5 percent
greater than the monthly average for 1947, whereas at other
country banks they were up only 4 percent. During the last
half of 1948, however, deposits at banks in textile communi­
ties began to fall below the level of the preceding year and
the decline has continued into 1949. Because employment is
less diversified there, the decline has been greatest at the
banks in textile cities of less than 15,000 population.
Beginning with the first month of 1949, there has been a
noticeable divergence in trend between the demand deposits
at the banks within and outside textile communities. By the
end of April, deposits at banks in nontextile communities
were still about 7 percent greater than during the average
month of 1947 and were 2.9 percent greater than in April
1948. At banks in textile communities, deposits declined in
April to only 97 percent of the 1947 average and were 2.9
percent less than in April 1948.
Although there has been a significant, but moderate, de­
cline in deposits at banks in the larger textile communities,
the decline has been most pronounced in the smaller ones.
In textile cities of less than 15,000 population in Alabama,
demand deposits were down 4.9 percent from April 1948, in
cities of that size in Georgia they were down 5.1 percent, and
in Tennessee they were off 11.8 percent.
TIME DEPOSITS fell e a r l ie r . Time deposits at banks in tex­
tile communities began to decline somewhat earlier than
demand deposits. In each month of 1948, time deposits at
member banks in textile communities were less than in the
corresponding month of 1947, whereas time deposits did not
fall below the previous year’s level at banks in other com­
munities until September 1948. Because they had declined
earlier, a comparison between time deposits at the banks in
textile communities in April this year and in April last year
is less striking than a similar comparison of demand de­
posits. In April 1949, time deposits at banks in textile com­
munities were down less than one percent from the level of
April 1948 although they were 2.6 percent less than in
April 1947. At country banks in other communities, they
were less than one percent smaller in April this year, com­
pared with April 1947.
DEPOSITS INCREASE IN NONTEXTILE STATES. The significance of
these contrasting trends in deposits lies not in the size of the
changes but rather in the explanation they provide for the
variation in deposit changes found at banks in the different
areas of the District. In Florida and Louisiana, with little or
no textile employment, total deposits at the end of April this
year were greater than on the corresponding date in 1949.
In Georgia, on the other hand, where textile manufactur­
ing accounts for approximately two-fifths of all manufactur­
ing employment, total deposits were down 4 percent. In Ala­
bama, with textile employees numbering about a fourth of
total manufacturing employees, deposits were down only
slightly—less than one percent—and in Tennessee with 14
percent of its manufacturing employees in textiles, a similar
decline took place. Textile manufacturing is also of some
importance in southern Mississippi where deposits were
down slightly. It was found, moreover, that within each
state, deposit declines were greatest in areas where textile
manufacturing predominates.
C .t . t .



o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

Farm Mortgage Debt

The decline in the prices of many farm products from last
year’s levels is now beginning to be reflected in the value
of farm real estate. The index of farm real estate values
which had been going up for the past ten years has now
begun to turn downward. In the nation as a whole the de­
cline from November 1, 1948, to March 1, 1949, amounted
to one percent. This decrease was indeed slight and did not
occur in all states but it may mark the beginning of the
long-predicted downward adjustment in farm land prices.
Remembering the situation that followed World War I
when the value of farm property dropped so precipitously
that many farms could be sold for only a fraction of the
mortgage indebtedness held against them, farmers and
bankers are now watching the trends in values and in mort­
gage debt with a great deal of interest and some concern.
The current uncertainty is being reflected in a fairly sharp
decline in the number of voluntary sales of farms. For the
nation as a whole, the number of such sales during the year
that ended in March 1949 was 17 percent less than in the
preceding year, and was a third less than in the year that
ended in March 1947.
DISTRICT LAND PRICES RISE. Although the national trend in
farm land prices is now downward, in the District states the
trend continues upward. Between November 1, 1948, and
March 1, 1949, only seven states in the nation experienced an
increase of 4 percent or more in farm land values and of these
seven states, four are found in this District—Tennessee, Ala­
bama, Mississippi, and Louisiana. Of the two remaining Dis­
trict states, Georgia reported a one-percent increase in farm
land values and Florida reported no change.
FARM m o r t g a g e DEBT INCREASES. Despite the decline in farm
land prices in the nation as a whole, farm mortgage indebted­
ness increased from 4.9 billion dollars on January 1, 1948,
to 5.1 billion on January 1, 1949—an increase of 4.6 percent.
During the same period, however, farm mortgage debt in the
District rose much more rapidly, the rate of increase amount­
ing to 9.7 percent, or more than double the national rate.
The increase in farm mortgage debt for the nation has
come largely since 1946 and for the District since 1945. In the
years immediately preceding the war, there was little change
T T L F R M R A E D B IN D R T ST T S
O A A M O TG G E T
IST IC A E
January I, 1930-49
MLOS O DLAS
I I N F OLR
L
MLOSO DLAS
ILI N F OLR

M

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

in the volume of this form of debt. During the war, farm
income increased rapidly as a result of the almost insatiable
demand for farm products despite their high prices, and
farm mortgages, consequently, were paid off more rapidly
than new ones were created. In the Sixth District the volume
of this form of debt declined from 454 million dollars on
January 1, 1942, to 360 million on January 1, 1945. This rep­
resented a decline of 21 percent, almost as great as the 23percent decline for the nation as a whole. That farm mortgage
debt has been rising much more rapidly in this District than
in the nation as a whole, and that it continues to rise, sug­
gests that both buyers of farm property and lenders on such
property should weigh carefully the risks they may be run­
ning, if and when the trend of land values in the District
turns downward in conformity with the national trend.
WHO h o ld s THE FARM MORTGAGE DEBT? Commercial banks
have increased their holdings of farm mortgage paper at a
more rapid rate than any other type of lending agency during
the last four years. On January 1, 1949, they held more than
twice the volume of such paper as on January 1, 1945. During
that period the commercial banks of the Sixth District states
increased their holdings of farm mortgages by 49 million
dollars—an increase of 135 percent.
The amount of bank-held farm mortgage debt varies con­
siderably, of course, from state to state. At the turn of the
year, Tennessee banks held almost a third of all the farm
mortgage debt in the District. Georgia ranked second with
about a fifth of the total. In every District state, however, the
amount of bank-held farm mortgage debt had more than
doubled during the past four years.
In contrast to the commercial banks, Federal agencies have
reduced the amount of* farm mortgage credit in their port­
folios by 26.8 million dollars since the beginning of 1945.
On January 1, 1945, Federal agencies held 47 percent of all
farm mortgage indebtedness in this District, but on the first
day of this year they held only 28 percent. Whether this re­
duction indicates a more conservative policy on the part of
the Federal agencies, or whether it indicates that borrowers
have first sought and obtained loans from their banks is not

61

apparent from the data. Regardless of the cause, however, the
fact remains that the Government credit agencies are less
loaded with this type of paper than are the commercial banks.
Like the commercial banks, life insurance companies had
more money loaned on farm mortgages at the beginning of
this year than they had four years ago. Holdings by life in­
surance companies are mainly in Mississippi and Tennessee
and are probably on Delta cotton farms.
More farm mortgage paper is held by individuals and
“others” (noninstitutional lenders) than by any other class of
lenders. This is true for the Sixth District as well as for the
nation. In both cases a little over 40 percent of the farm
mortgage indebtedness is held by such lenders. Much of this
debt is doubtless owed to relatives and arose out of direct
borrowing or from partial inheritances. Variations were
small among the Sixth District states with respect to the
percentage of the farm mortgage debt held by this class of
lenders. Florida headed the list with 51 percent and Tenn­
essee came last with 35 percent of the farm mortgage debt
in the hands of noninstitutional lenders.
SOME REASONS FOR INCREASE. The increase in farm mortgage
indebtedness is the result of many factors, not all of which
are entirely clear at this time. One thing, however, is virtu­
ally certain—the increase has not all been due to financing
the purchase of farms.
One reason probably lies in the changing relation of farm
costs to the prices of farm products. From 1945 to 1947
when the prices of farm products were rising, many farmers
obtained credit for their operations either on open account
or by the assignment of collateral other than mortgages on
their land. In the last two years, however, the cost of pro­
ducing the District’s crops and livestock has increased more
rapidly than the prices of the things the farmer sells. The
resulting squeeze on farm net income has had two effects. In
the first place, it has meant that some farmers have had to
borrow from banks part of the operating capital they had
formerly taken out of current earnings. Secondly, it has
meant that bankers have had to watch more carefully the
amount and type of collateral tendered by farmers as se-

FARM MORTGAGE DEBT IN DISTRICT STATES BY LENDING AGENCY
JANUARY I, 1949
JANUARY I, 1945
M L N O DLAS
ILIOS F OLR
M L N O DLAS
ILIOS F OLR
MLOSO DLAS
I I N F OLR
L

MLOSO DLAS
I I N F OLR
L
300

300

300

300

250

250

250

250

200

200

200

200

150

150

150

150

100

100

100

S M DR
E
MR AM T L
TTL I CRD FLN L LF. FHMS FFEA INO- .
OA NUE EAD IN AOE E R L N N
OL EA IS R E DR S N
.
BNS BN CM N S AM. M TAE LNES
AK AK OP I D N O GG EDR
AE
R




I S RD FDRL L E FRES FDRL NN
NUE EEA IF AM EEA OR
TTL CM LN
OA
OL AD IN. HM FR I SN.
.
S
OE AM NTL
BNS BN CM N S AM. M TAE LNES
AK AK OP I D N O GG EDR
AE
R

6 2

M

o n t h l y

R e v ie w

S ix th D is tr ic t I n d e x e s
DEPARTMENT STORE SALES*
A djusted**
P la c e

U n a d ju ste d

M ay
1949

M ay
1948

M ay
1949

A pril
1949

M ay
1948

376
415
441
401
342
387
425
402
270
371
37»
452
372
456

D IS T R IC T ...............
A tla n ta ................
Baton R o u g e ...
Birm ingham ____
C h a tta n o o g a ...
Jackso n ...............
Jackso nville ____
K n o x v ille ...........
M acon.................
M iam i...................
M ontgom ery...
N ash v ille ...........
N ew O r le a n s ...
Tam pa.................

A pril
1949
389
440
454
370
336
377
382
402
297
385
375
419
395
460

386r;
437
428
420
363
347
457
422
319
382
384
502
355
467

365
394
436
381
342
364
404
382
262
326
356
443
350
456

393
421
469
365
350
379
378
400
301
393
372,
439
403,
488

375
415
424
399
363
326
434
401
310
336
361
492
334
467

DEPARTMENT STORE STOCKS
A djusted**
P lace

U n ad ju sted

M ay
1949

M ay
1948

M ay
1949

A pril
1949

M ay
1948

342
404
273
356
474
307

D IS T R IC T .. . . . . . .
Atlanta...............
Birm ingham ____
Montgom ery. . .
N a sh v ille ..........
N ew O r le a n s ...

A pril
1949
355
405
291
361
472
299

368
449
278
404
537
340

332
410
279
362
482
317

352
431
302
390
524
318

357
457
285
410
545
350

.
k

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

curity for loans. In many cases the result has been that a
farmer’s bank loans were consolidated and a mortgage given
as security for the combined loans. In such cases the margin
of safety is probably greater than in those where loans were
made to purchase farms.
OUTLOOK. On the basis of present land values, the mortgage
indebtedness of District farms does not appear to be unduly
burdensome, nor do the commercial banks seem to be in a
particularly vulnerable position as yet. Nevertheless, the data
show a growing need for a cautious and conservative lending
policy in the future. This is especially true in connection
with the financing of farm purchases.
No information is presently available to show whether
lenders are following a more conservative policy this year.
They were clearly not doing so in the fourth quarter of
1948 when the number of farm mortgages recorded in the
third and fifth Farm Credit Districts (North Carolina, south'
ward and westward through Louisiana) was 2 percent greater
than in the same quarter of 1947, and in which the dollar
volume of recorded mortgages was also greater than in the
last quarter of 1947 but by a little less than 2 percent.
j.

L. L.

Industry and Employment
c o n s t r u c t io n c o n t r a c t s awarded in the Sixth
District in May, according to F. W. Dodge Corporation sta­
tistics, was 103 million dollars. This total was 27 percent
more than that for April; it was 43 million dollars larger
than the January total; and it was the largest amount reported
in 11 months. It was also slightly larger than the total for
May last year. Residential contracts increased more percent­
agewise, than other contracts and were somewhat larger than
a year ago. Total awards for the month increased in five of
the District states—Alabama had the only decrease—and resi­
dential contracts increased in each state except Mississippi.

THE VALUE OF
GASOLINE TAX COLLECTIONS***
U n a d ju ste d

A djusted**
P lace

M ay
1949

S IX S T A T E S ........
A la b a m a .............
F lo rid a .................
G e o rg ia .............
Lo u isia n a ...........
M ississip p i........
T e n n e sse e ........

A pril
1949

M ay
1948

M ay
1949

A pril
1949

M ay
1948

216
208
200
192
258
234
233

210
214
218
193
233
218
196

188
195
188
181
179
192
204

218
212
202
192
253
229
233

216
217
233
199
229
222
198

189
199
190
181
176
188
204

COTTON CONSUMPTION*
M av
1949

P la c e
T O T A L .............
A la b a m a .. .
G e o rg ia ---M ississip p i.
Te n n e ssee .

A pril
1949

M ay
1948

109
118
106
49
104

116
125
115
65
102

145
152
146
97
120

S IX S T A T E S ..
A la b a m a .. . .
F lo r id a ........
G e o rg ia ---L o u is ia n a ...
M ississip p i.
T e n n e s s e e ..

A pril
1949

M arch
1949

A pril
1948

140
146f
135
136
149
121
143

144
151;
141
139
148
136r
145

151
156
141
146
149
151
159-

CONSUMERS PRICE INDEX
Item

M ay
1949

A pril
1949

M ay
1948

174
172
172
A L L I T E M S ...
215
204
203
Fo o d ............
196
201
196
C lo t h in g ...
F u e l, e le c .,
and refrig.
137
135
134
Home fur-i
n is h in g s ..
190
192
189
154
154
148
M isc............
Purchasin g
pow er oi
.57
.58
d o lla r........
.58
*D aily average basisi
**Adjusted for seasonal variation
***1939 monthly average '= 100;
other indexes, 1935-39 *=* 100




S IX S T A T E S ..
H ydro­
generated
F u e l­
generated

357

364

344

317

341

324

409

394

371

CONSTRUCTION CONTRACTS
A pril M arch A pril
P lace
1949
1949
1948

MANUFACTURING
EMPLOYMENT***
P la c e

ELECTRIC POW ER PRODUCTION*
A pril M arch A pril
1949
1948
1949

D I S T R IC T .. . .
R e sid e n tial.
O th e r...........
A la b a m a ...
F lo rid a ........
G e o rg ia ____
L o u is ia n a ..
M ississip p i
Ten nessee.

399
552
325
567
418
458
241
181
352

403
531
341;
352
497
482
303
202
401

606
762
530
854
780
654
330
191
432

ANNUAL RATE O F TURNOVER O F
DEMAND DEPOSITS
M ay
A pril
M ay
1949
1949
1948
U n a d ju ste d ..
A d ju s te d * *...
In d e x * * .. . . . . .

18.7
20.3
82.4

18.6,
18.8
76.2

18.7
20.3
82.4

CRUDE PETROLEUM PRODUCTION
IN COASTAL LOUISIANA
AND M ISSISSIPPI*
M ay
M ay
A pril
1949
1948
1949
U n a d ju ste d ..
A d ju s te d * * ...
r R e vised

292
297

289
284

285
289

In the January-May period, total awards were 9.1 percent
less than in that part of 1948, residential contracts were
down 10.1 percent, and other contracts were off 8.3 percent.
All the District states shared the five-month decrease in total
awards, and Alabama was the only state not reporting a de­
crease in residential contracts.
ELECTRIC POWER PRODUCTION for public use in the District
states declined in March and April after increasing every
month but one since last July. Production had increased
monthly from July 1947 through April 1948. In April,
output was 3.6 percent larger than it was a year ago —
hydro-generated power was down 2 percent, but fuel-gen­
erated power increased 10 percent. Electric power produc­
tion in this District has increased greatly over a period of
years. In 1920 the daily average rate of production was 5.8

M

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

million k.w. hours. In 1930 it had increased to 16 mil­
lion; in 1940 to nearly 34 million; and in 1948 it was 80
million k.w. hours.

S ix t h D is tr ic t S ta tistic s
CONDITION O F 28 MEMBER BANES IN LEADING CITIES
_________________(In T h o u sa n d s ol D ollars)_________________

in the District states declined
in April for the fifth consecutive month according to latest
available figures. The April index, at 140.2 percent of the
1935-39 average, was down 7.7 percent from November, and
was 7.4 percent below the index for April 1948. The number
of workers at apparel establishments increased 1.9 percent
for the month of April; but decreases occurred in other lead­
ing industrial groups, ranging from 0.9 percent in food and
food-processing plants to 8.8 percent in fabricated metal pro­
ducts. Employment in food and food-processing plants, in
chemicals and allied industries, and in primary metals was
somewhat larger than in April 1948. In other leading groups,
however, there were decreases of 16.5 percent in transporta­
tion equipment, 13.2 percent in textiles, and 19.5 percent in
fabricated metal products.
In Louisiana, manufacturing employment increased 0.2
percent from March to April, but in the other five states there
were decreases, the largest of which was 10.6 percent in Mis­
sissippi. The small gain in Louisiana was due to increased
employment in lumber and wood products, in metal products
and machinery, and in paper and allied products. In Ala­
bama, a decline of 3.1 percent was due largely to reductions
of 2,500 shipyard workers because of contract completions
and 1,600 textile workers when two plants were closed. Small­
er decreases were reported in other groups and were offset
only in small part by increases at apparel and machinery
plants. In Florida, the number of workers declined 4.6 percent.
There were large seasonal declines in the manufacture of tin
cans for citrus canning and in the canning and preserving in­
dustries, as well as a decrease of 10.5 percent in chemicals
and allied products (primarily fertilizer), and smaller de­
creases in other groups. These declines were partly offset by
increased employment in transportation equipment and other
durable goods. A monthly decline of 1.6 percent was reported
in Georgia. Although there were gains of 5.6 percent in food
and kindred products, 2.8 percent in machinery, and 8.1 per­
cent in transportation equipment, they did not completely
offset decreases of 7.5 percent in fabricated metal products,
6.1 percent in chemicals, 3.5 percent in textile products and
smaller decreases in other groups. In Tennessee, employment
declined in chemicals, fabricated metal products, leather, tex­
tiles, and other groups; but increases were reported in food
and food products, apparel, and printing.
d.e .m .




P e rc e n t C h an g e
Ju n e 22,1949, irom

Ju n e 22
1949

Item

MANUFACTURING EMPLOYMENT

6 3

Loans and investm
ents—
Loans—
Net................
Loans—
Gross.............
Com ercial, industrial,
m
and agricultural loans.
Loans to brokers and
dealers in securities...
Other loans for pur­
chasing and carrying
securities.............
Real estate loans........
Loans to banks..........
Other loans.............
Investm
ents—
total.........
Bills, certificates and
notes...................
U S. bonds.............
.
Other securities.........
Reserve with F. R Bank...
.
Cash in vault..............
Balances with dom
estic
banks....................
D and deposits adjusted.
em
Tim deposits.............
e
U S. Gov't deposits......
.
Deposits of dom banks
estic
Borrowings................

M ay 25
1949

M ay 25
1949

June 23
1948

2 6 ,3 5
,2 1 5
75 4
9 ,7 1
86 8
0 ,7 3
47 4
8 ,3 2
86
,7 4

2 6 ,6 6 2 8 ,4 9
,2 9 5 ,2 8 9
0
8 1 5 8 0 1 __ 2
1 ,1 3 1 ,8 1
82 1
2 ,1 9
2
53 4 41 0
1 ,9 7 9 ,1 6
5
66 +1
,8 2
8
75
,4 4

— 1
— 2

3 ,3 5
94
6 ,2 4
98
52
,2 8
16 2
9 ,8 0
1 6 ,6 4
,4 5 1
38 5
5 ,3 3
99 5
0 ,8 1
17 1
9 ,4 0
41 1
5 ,4 7
4 ,8 9
06
16 3
5 ,7 6
1 2 ,6 5
,7 4 0
59 9
3 ,5 7
2 ,2 5
72
45 2
2 ,8 2
60
,5 0

3 ,6 2
92
6 ,4 7
73
42
,8 5
18 3
8 ,8 4
1 5 ,5 3
,4 8 0
33 7
5 ,4 8
91 8
1 ,7 8
13 3
9 ,2 7
49 1
5 ,0 4
4 ,9 5
02
16 0
6 ,3 8
1 5 ,9 6
,7 5 1
52 2
4 ,8 8
2 ,5 2
99
44 5
2 ,5 8
20
,0 0

June 23
1948

5 ,8 4
80
7 ,6 1
34
56
,3 4
15 3
7 ,0 4
1 7 ,6 8
,4 7 8
45 8
2 ,6 9
84 8
6 ,6 0
17 1
8 ,3 9
45 9
2 ,1 4
4 ,1 9
32
16 8
6 ,6 0
1 4 ,3 9
,7 6 2
50 9
4 ,4 6
3 ,2 8
64
43 8
1 ,4 8
90
,5 0

1
3
8
4
o
1
0
>
2
2
0
6
— 2
, 1
— 8
+ 0
+
225

+
+
+
+
+
+
_

— 1
+2
8
—3
3
— 6
— 3
+ 12
— 1
—1
6
+ 5
+ 5
+ 6
— 5
— 6
— 1
— 0
—2
5
+ 3
—3
2

DEBITS TO INDIVIDUAL BANE ACCOUNTS
(In T h o u sa n d s ol D ollars)
P la c e

No. oi
B anks
R eport­
in g

M ay
1949

A pril
1949

M ay
1948

ALABAMA
Anniston.....
1 ,3 4
71
2 ,3 4
09
1 ,3 5
97
3
Birm
ingham
...
31 1
1 ,6 2 3 5 6
0 ,1 5 3 7 7
0 ,4 3
6
1 ,8 5
07
Dothan........
1 ,3 1
12
1 ,9 5
15
2
1 ,9 6
65
Gadsden.....
1 ,8 2
72
1 ,5 0
73
3
19 9
1 ,7 3 1 7 4
3 ,1 8
2 ,2 0 1 7 5
4
Montgom
ery... 3
7 ,4 3
21
6 ,6 3
79
7 ,3 6
16
FLORIDA
Jacksonville... 4
27 1
7 ,1 6 2 7 2
6 ,4 4 2 8 8
5 ,0 7
23 0
3 ,3 4 2 7 3
Miami.........
3 ,8 1 2 3 3
7
3 ,3 3
35 7
3 ,5 5 3 2 3
Greater M i* 1
iam
5 ,0 7 3 1 3
3
3 ,0 5
5 ,1 2
08
5 ,8 3
23
Orlando......
3
5 ,1 4
28
3 ,0 6
20
3 ,8 7
23
Pensacola....
3 ,4 2
12
3
5 ,2 8
25
6 ,3 9
12
St. Petersburg. 3
5 ,3 9
38
19 9
1 ,3 5 1 6 9
2 ,3 0 1 2 7
6
1 ,9 4
GEORGIA
2 ,7 9
03
2 ,3 1
23
2
1 ,6 0
94
73 5
8 ,8 1 7 1 6
8 ,4 7 8 3 7
0 ,1 6
4
4 ,7 4
96
5 ,6 0
49
Augusta......
3
5 ,2 3
13
84
,5 1
87
,2 5
Brunswick....
2
93
,4 7
4 ,3 0
74
4 ,6 2
85
Columbus....
5 ,2 5
38
4
34
,4 5
32
,6 1
Elberton......
38
,9 4
2
1 ,2 4
31
1 ,7 2
35
Gainesville*... 3
1 ,2 9
40
93
,7 6
1 ,1 9
09
Griffin*.......
1 ,2 8
15
2
5 ,3 2
31
5 ,7 3
04
5 ,3 5
70
3
71
,7 7
79
,4 1
Newnan......
83
,0 8
2
1 ,2 6
79
1 ,2 9
83
2 ,0 0
12
Rom
e*........
3
8 ,7 6
34
7 ,6 9
96
9 ,1 5
61
Savannah.....
4
1 ,3 6
10
1 ,4 6
02
Valdosta......
1 ,5 0
11
2
LOUISIANA
2 ,4 4
93
2 ,6 5
80
2 ,1 3
73
Alexandria*... 3
1 ,6 5
13 3
1 ,4 7 1 5 9
9 ,7 6
00
Baton Rouge... 3
3 ,5 2
50
3 ,4 3
48
3 ,2 4
39
Lake Charles.. 3
5 ,6 3 6 2 7
67 4
9 ,5 1 6 8 3
2 ,5 1
New Orleans. . 8
M
ISSISSIPPI
1 ,9 3
51
Hattiesburg.... 2
1 ,0 5
58
1 ,8 8
51
14 0
2 ,8 9 1 7 0
Jackson.......
2 ,0 8 1 3 1
2 ,4 9
3
2 ,8 1
36
Meridian.....
2 ,2 4
44
2 ,2 9
68
3
2 ,8 8
31
Vicksburg....
2 ,9 6
28
2 ,7 6
26
2
TENNESSEE
Chattanooga... 4
17 6
2 ,9 3 1 8 5
3 ,5 5
2 ,4 5 1 5 5
Knoxville.....
4
9 ,6 4
62
0 ,2 1
9 ,7 3 1 9 4
89
Nashville.....
6
20 0
8 ,2 4 2 8 0
7 ,8 3 2 7 2
7 ,7 9
SIXTH DISTRICT
3 Cities...... 1 5 3 1 ,5 1 3 0 ,2 3 3 7 ,0 9
2
1
,9 7 6 ,9 5 7 ,8 7 0
UNITED STATES
3 3 Cities.....
3
9 ,3 6 0 9 ,6 7 0 9 ,6 3 0
9 3 ,0 0 9 9 ,0 0 7 0 ,0 0
*Not included in Sixth District total.

P e rc e n t C h an g e
M ay 1949 irom
A pril
1949

M ay
1948

—1
1
+ 2
— 9
— 5
— 6
+ 7

—1
5
+ 1
— 4
— 3
—1
3
+ 1

+ 4
— 2
— 5
— 5
— 3
—1
5
— 6

+
+
—
+
—

—
+
—
+
—
—
—
—
+
+
—
—
+

7
0
9
3
3
5
4
5
5
3
5
5
8

+ 6
— 2
— 3
—1
0
—1
1
—1
4
— 7
—1
4
— 7
— 4
—1
8
—1
7
— 2

+
—
—
+

3
2
3
6

+ 8
+2
5
+ 4
+1
2

+
—
—
+

1
2
2
4

+
+
—
+

— 0
— 2
+ 1

+,

7
0
1
4
2
2
6

5
1
9
5

— 6
—1
2
+ 1

+

o

+

—

0

+ 2

1

6 4

M

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r J u n e 1 9 4 9

National Business Conditions
r o d u c t io n

at factories and mines declined further in May

Pand June.inConstruction activity increased somewhat and
employment
most other lines was maintained. Prices of
industrial commodities continued downward and prices of
farm products and food declined i*i June following some
advance in May. Department store sales were maintained at
relatively high levels.
Industrial Production

The Board’s seasonally adjusted index of industrial produc­
tion declined 5 points in May to 174 percent of the 1935-39
average and, according to present indications, may show a
similar decrease in June. The May decline reflected mainly a
further substantial reduction in activity in industries manu­
facturing durable goods. Output of nondurable goods and of
minerals, which earlier had declined more than output of
durable goods, showed only slight decreases in May.
Activity in the iron and steel, machinery, and nonferrous
metals industries showed marked declines in May, reflecting
a reduced volume of orders. Steel production averaged 93
percent of capacity and since then has declined further to a
scheduled rate of 84 percent of capacity during the week
beginning June 20, as compared with the peak of 103 in
March. Machinery production has declined about one-fifth
since the end of last year. Output of passenger cars was tem­
porarily curtailed in May as a result of a major work stop­
page, but by mid-June increased to new record postwar rates.
Activity in most other industries manufacturing durable
goods declined slightly in May.
Activity in the cotton and rayon industries decreased
further. Output of wool textiles, however, increased from the
exceptionally low April rate, which was about 40 percent
below peak postwar levels. Cotton consumption in May was
at the lowest rate since 1939. Petroleum refining activity
showed a slight gain in May, and newsprint consumption
rose further to a new record rate. Activity in most other
nondurable goods industries showed little change.
Minerals output was slightly smaller in May. Activity at
nonferrous metal mines was substantially curtailed and iron
ore output, after allowance for seasonal changes, was slightly
below the exceptionally high April level. Crude petroleum
production showed little change. Coal output increased some­
what in May, but has been curtailed sharply in June.
Construction
Value of construction contracts awarded, according to the
F. W. Dodge Corporation, rose slightly in May, reflecting
further increases in awards for public construction. Private
awards were slightly smaller than in April and continued
considerably below a year ago. The number of new housing
units started increased further in May and was close to the
peak level of 100,000 units a year ago, according to the
estimates of the Department of Labor.




Distribution

Value of department store sales in May showed little change
from April, after allowance is made for the usual seasonal
fluctuation. Sales in the first half of June were 7 percent be­
low the high level of the corresponding period in 1948, re­
flecting in part lower retail prices for apparel and house
furnishings*
Shipments of railroad freight declined in May and early
June, reflecting mainly a marked reduction in loadings of
miscellaneous products. Total carloadings, after allowance
for seasonal changes, have declined about 12 percent since
last autumnCommodity Prices
The general level of wholesale commodity prices declined 2
percent from the middle of May to the third week of June.
Meat and livestock prices showed small net change, as de­
creases in mid-June followed advances in the latter part of
May. Cash wheat prices declined about 10 percent as market­
ings of another large crop commenced. Prices of industrial
commodities, especially textiles, paper, metals, and building
materials, continued downward from May to June.
In May, retail prices of most groups of consumers’ goods
were somewhat lower than in April. The B. L. S. index for all
items, including rents and other services, was 169.2 as com­
pared with 169.7 in April and the recent low point of 169.0
in February.
Bank Credit
Business loans at banks in leading cities declined substantial­
ly during May and by somewhat smaller amounts during the
first half of June. Real estate and consumer loans increased
slightly. Banks purchased about 2 billion dollars of Govern­
ment securities of both long and short maturities, in part out
of reserve funds released by the reduction of reserve require­
ments effective in early May.
Treasury expenditures were considerably greater than re­
ceipts in the first half of June, and Treasury deposits at the
Reserve banks declined substantially. This supplied banks
with reserve funds and banks bought Government securities
from the Federal Reserve System and increased their excess
reserve balances. Subsequently banks lost reserve funds as
Treasury balances at the Reserve banks were built up by
quarterly income tax payments. Reserve System holdings of
Government bonds declined further during June.
Security Markets
Common stock prices decreased about 9 percent, with a mod­
erate volume of trading, in the four weeks ended June 13 and
recovered part of the decline in the following 10 days. Prices
of high-grade corporate bonds changed little.
T h e

B oard

o f

G o vern o rs