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ITHLY FEDERAL RESERVE Re v i e w BANK OF ATLANTA A tlan ta, G eorgia, June 30, 1 950 V olu m e X X X V N um ber 6 The Businessman’s Stake in the Federal Reserve A n b y L e s lie a d d ress b e fo re th e K iw a n is C lu b o f E rw in , E rw in 9 T en n essee, R . D r iv e r , P r e s id e n t , F i r s t N a tio n a l B a n k in B r is t o l9 B r is t o l, T e n n e s s e e , a n d D ir e c t o r 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 t a a n y years ago A rtem us W ard, a fam ou s A m erican h u m orist, said that w ith m ost p e o p le it “ a in ’t ign oran ce that does the dam age, but k n ow in g so m an y th in g s that a in ’t so .” T od ay I w ant to talk about an in stitu tion — the F ederal R eserve System — con cern in g w h ich m ost p eo p le know a great m any th in gs that “a in ’t so .” I f you w ere to ask a hundred p e o p le on the street w hat the F ed eral R eserve S ystem is, m ore than h a lf w o u ld p rob ab ly not have the ghost o f an id ea. A few w o u ld think that it is ju st another G overnm ent a gen cy h a v in g som eth in g to do w ith banks and supported by the taxp ayer. H e w o u ld be the rare ex cep tio n w ho w ou ld have an y clear id ea o f w hat is u n d ou b t e d ly on e o f the m ost im p ortan t eco n o m ic in stitu tio n s in our coun try tod ay. T h is is n ot strange, fo r few in d iv id u a ls ever com e into d i rect contact w ith the F ed eral R eserve S ystem as such. But th is d oesn ’t m ean that p eo p le in gen eral sh ou ld not be in ter ested in it, esp e c ia lly b u sin essm en ; fo r every m an, w om an, and ch ild in the n ation is v ita lly affected b y th e F ed eral R eserve System and its op eration s. T hat’s w hy I w ant to talk about it tod ay, so that w hen you read som eth in g about the S ystem in the new spaper, you w ill know that you have a vital stake in the outcom e, w hatever the im m ediate issu e h ap p en s to be. Like the air w e breathe, our m on ey and b anking system is so p ervasive that w e h a rd ly ever giv e it a th ou gh t u n til som eth in g goes w rong w ith it. I think you w ill be im p ressed w hen I state to you that the p rin cip a l p u rp ose o f the F ed eral R eserve is to regu late the su p p ly , a v a ila b ility , and cost o f m on ey, w ith a view to co n trib u tin g to the m aintenance o f a h ig h le v el o f em p loym en t, stab le valu es, and a risin g standard o f liv in g . I h o p e that you w ill keep that statem ent in m ind. A s in te llig e n t citizens w e sh ou ld acq u ain t o u rselv es w ith this in stitu tion that so v ita lly affects us and our w ell-b ein g . T w o very com m on m iscon cep tio n s about the F ederal R eserve S ystem , how ever, sh ou ld be corrected. T he first o f th ese is that it is som e sort o f G overnm ent agen cy. T h is is o n ly p ar tia lly true. T he System , o f course, w as created b y an act of C ongress in 1913 and is governed by a board o f seven G ov ernors, each ap p oin ted by the P resid en t w ith the ad vice and con sent o f the Senate. T he term s are so staggered that one term exp ires every tw o years. T he Board sits in W ash in gton . T he System itse lf, how ever, con sists o f tw elv e reg io n a l cen tral banks w ith tw enty-four branches. T he on e fo r the S o u th east — the S ixth F ed eral R eserve Bank — is located in A t M lanta. A lth o u g h th ey are under th e gen eral ov ersig h t o f the Board o f G overnors, th ese tw elve F ed eral R eserve B anks are p riv a tely ow ned corp oration s, their cap ita l stock b ein g ow ned b y the so -ca lled “m em ber b an k s.” T h ese are p rivate com m ercial banks. A ll n a tio n a l banks are required to b e m em bers, and state banks w h ich m eet the e lig ib ility requirem ents are in vited to jo in . T od ay about 5 ,0 0 0 n a tio n a l and 2 ,0 0 0 state banks b elo n g . T h ese banks h o ld about 85 p ercent o f a ll com m ercial bank deposits. T w o-thirds o f the directors o f the F ed eral R eserve Banks are elected b y th ese m em ber banks, and the others are a p p oin ted b y the B oard o f G overnors. H a lf o f the directors elected b y the stock -h old in g m em ber banks are bankers, rep resen tin g large, m edium -size, and sm a ll banks. T he other h a lf is m ade up o f prom in en t b u sin ess leaders w ho represent the interests o f in d u stry, com m erce, and a gricu ltu re. T h e d irec tors a p p oin ted b y the B oard o f G overnors represent the p u b lic at large and are u su a lly ou tstan d in g and p u b lic-sp irited citizen s, educators, and the lik e. T hus, alth o u g h the System is integrated through a Governm ent-appointed board, it is not r e a lly a G overnm ent agency, d esp ite the w ord “ F ed era l” in its title. M oreover, alth ou gh it is p rim a rily a b an k in g in stitu tion , bankers do not dom inate the directorates o f the F ed eral R eserve Banks. B usinessm en! and other citizen s are a lso represented. Indeed, nonbankersl h ave tw o-thirds o f the votes in the B oard o f D irectors of? every F ed eral R eserve Bank. T h is g iv es every businessm an! an im portant stake in the F ederal R eserve System . A second m isco n cep tio n about the F ederal R eserve is th is: It is freq u en tly th ou gh t that every agen cy o f the G overnm ent N o t ic e Please check the address on the enve lope in which this issue of the Monthly R eview was received and notify the Re search Department of this Bank of any change that may be necessary. Your cooperation will be appreciated. 5 4 M o n t h l y R e v ie w is a contrivance o f the d ev il fo r the w a stin g o f th e ta x p a y er’s m oney. B ut let m e say th is — the F ed eral R eserve S ystem does not cost the G overnm ent or th e taxp ayer a p en n y. It is self-fin a n cin g out o f its ow n earn in gs. T he F ed eral R eserve Banks p a y their stock -h o ld in g m em ber banks a le g a lly re stricted d ividend o f 6 percen t a year, but 9 0 percent o f their net earn in gs are handed over to th e U n ited States T reasury. \ In 1948 the F ederal R eserve B ank o f A tlan ta p aid the T reas ury over 10 m illio n d o lla rs, w h ile the w h o le system p a id in over 190 m illio n d o lla rs. T h e System is, thus, not a burden on the taxp ayer or on the G overnm ent. On the contrary, these contributions to th e T reasu ry a c tu a lly lig h ten the ta x p a y er’s burden. o f th e F ederal R e se rv e B a n k o f A tla n ta fo r J u n e 1950 % A nother th in g sh o u ld b e n oted about the F ed eral R eserve Banks — alth ou gh th ey are p rivate corp oration s, th ey are not operated fo r profit. T h ey do, ind eed , m ake p rofits under cer tain fa v o ra b le con d ition s, but, as I just said, the b u lk o f these profits are returned to the G overnm ent, w h ich rep re sents the p u b lic. T h ese Banks w ere n ot set up to m ake m oney, but rather to m ain tain m on etary and credit co n d itio n s con d u cive to the p rosp ero u s d ev elo p m en t o f in d u stry, co m m erce, and agricu ltu re. Y ou see, th ey w ere set up p rim a rily to serve you and you r interests. T hat is another stake that you h ave in the System — another reason w h y you , as b u si nessm en, sh ou ld b e interested in the S ystem ’s w elfare. A s I h ave ju st said, the custom ers o f m y bank can p a y each other b y check w ith o u t an y m ovem en t o f fu n d s w hatsoever. But that isn ’t a ll. T h ey can p a y p e o p le a ll over the country in the sam e w ay. F or ju st as m y ban k acts as a clea r in g h ou se fo r the checks o f its cu stom ers, so th e F ed eral R eserve Bank acts as a clea r in g h o u se fo r ch eck s draw n on a ll the niem ber banks o f the D istrict. A n d th at s till is n ’t th e end o f the story. T he tw elv e F ed eral R eserve B an k s carry th eir le g a lly p re scrib ed reserves in w hat is k n ow n a s th e In terd istrict S ettle m ent Fund. T h is fu n d acts as a cle a r in g h o u se fo r the tw elve F ed eral R eserve B anks. In 1 9 4 8 th e S ystem h an d led two b illio n checks to ta lin g in am ou n t over 9 0 0 b illio n d o lla rs. Checks con stitu te n ine-tenths o f our m o n ey su p p ly in m aking paym ents. T hus, th rou gh th e in d iv id u a l com m ercial bank, th rou gh th e F ed eral R eserve B ank in the D istrict, and through the In terd istrict S ettlem en t F und, it b eco m es p o ss ib le fo r an en orm ou s v o lu m e o f b u sin ess to be d on e a ll over the cou n try w ith a m in im u m m ovem en t o f cash . T h e ea se w ith w hich paym en ts b y check can b e m ad e in an y part o f the country thus d ep en d s u p o n the sm ooth w o rk in g o f the F ederal R e serve S ystem . It w orks so sm o o th ly , in d eed , that it is hard fo r us to im a g in e the c o n fu sio n , the d ela y , the chaos that w ould resu lt i f b y som e il l ch an ce it sh o u ld su d d en ly break dow n. W hether yo u are aw are o f it or not, th is is another stake that you h a v e in the S ystem . T o arouse and m ain tain you r in terest in the F ed eral R e serve System , how ever, w ill req u ire an act o f w ill on you r part because few o f you , u n fo rtu n a tely , have ever seen a F ed eral R eserve Bank. A fter a ll, th ere are o n ly tw elv e o f them in the country. Y ou do have a d irect contact w ith the System , h ow ever, b y w ay o f you r lo c a l bank, i f it h ap p en s to b e a m em ber o f the S ystem . Y ou h ave an in d irect contact even if your bank is n ot a m em ber. F or it is th rou gh the b an k in g structure o f the coun try that the S ystem tries to do w hat it is supposed to do — maintain sound monetary and credit con ditions in the interest of a generally prosperous economy . I w ant to te ll you a little about h ow the System attem pts to do this, but first I w ou ld lik e to m en tion a few o f its m any other services. A further service that the lo c a l bank renders to its cu sto m ers is the m ak in g o f lo a n s. E veryon e at som e tim e or other finds it n ecessary or ad v a n ta g eo u s to borrow . T hat is w hat a com m ercial bank is fo r . T o m ak e lo a n s to its cu stom ers. But in order to accom m od ate th eir cu stom ers, banks m ust them selv es som etim es b ecom e b orrow ers. W hen a m em ber bank needs to b orrow in order to exten d fu rth er loan s to its cu s tom ers, it can a lw a y s do so fro m its F ed era l R eserve B ank on an y go o d assets. A s bankers, th erefo re, our a b ility to serve b u sin essm en and oth er in d iv id u a ls is m ade p o ssib le by the F ed eral R eserve S ystem — b y our a b ility , th rough it, to draw u p on the resources o f the w h o le b a n k in g system . T here thus need n ever be a sh ortage o f fu n d s a v a ila b le to credit w orthy borrow ers. O ne o f th ese is that o f actin g as a bank fo r bankers. A s p resident o f a bank, I lik e to think that m y in stitu tio n ren ders an im p ortan t service to its custom ers. T h ey d ep o sit their fu n d s in the bank and can then p a y each other b y m ean s o f checks so that little m on ey need lea v e the bank. T here is o n ly a sh ift o f b alan ces from on e accou n t to another. T h is is a great con ven ien ce to the custom ers and it is go o d fo r the country as a w h o le fo r it econ om izes in the u se o f currency. Our custom ers, o f course, can w ithdraw cash if th ey w ish . But every coin and every p ie c e o f p ap er m on ey in th eir pockets has com e into circu la tio n th rou gh som e bank, w h ich g o t it from a F ed eral R eserve Bank. O f a p p ro x im a tely 2 7 b illio n d ollars o f m on ey in circu la tio n , about 2 3 b illio n are in F ed eral R eserve notes. T h rou gh the op eration s o f the F ed eral R eserve S ystem , the am ount o f currency in circ u la tio n a u to m a tica lly adju sts its e lf to the dem ands o f in d iv id u a ls and b u siness firm s — ex p a n d in g as dem and in creases and co n tracting as it d im in ish es. T he F ed eral R eserve B anks a lso p erfo rm certain im portant fu n ctio n s fo r th e G overnm ent. T h e is su in g and redeem ing and serv icin g o f G overnm ent b on d s, fo r ex a m p le, w hich a 2 5 7 -b illio n -d o lla r debt en ta ils, is d o n e b y th ese banks. W ith out th e F ed eral R eserve B anks, the fin a n cin g o f the recent war w o u ld h ave b een ex trem ely d ifficult, fo r th e G overnm ent, like the rest o f us, m u st som etim es b ecom e a borrow er, e sp ecia lly in tim e o f w ar. W hen such a situ a tio n arises, th e F ed eral R e serv e-B a n k s are on e im p ortan t sou rce fro m w h ich the G ov ernm ent can get credit. T h ese B anks a lso act as fiscal agents and cu stod ian s fo r the C om m od ity C redit C orp oration and th ey are n ow tak in g over th e receip t o f w ith h o ld in g taxes for G overnm ent accou n t. M oreover, w h en con su m er credit con trol w as still in fo rce, its a d m in istra tio n w as vested in the F ed eral R eserve B anks. Our custom ers, n a tu ra lly , cannot get cash from us u n less they have a d ep osit in the bank. S im ila rly , w e cannot get cur rency from the F ederal R eserve B ank u n less w e carry a d e p osit there. Our d ep osit w ith the F ed eral R eserve is ca lle d our “reserve accou n t.” A ll m em ber banks are req u ired to carry their reserves w ith the F ed eral R eserve Bank. W e com e now to the m ain p u rp o se o f the F ed eral R eserve System — the m ain ten an ce o f sou n d cred it con d ition s — and h ow it tries to a c c o m p lish th is task. S in ce th e end o f the war, w e h ave had som e ex p erie n c e w ith in flation . W e have seen the g en eral p rice le v e l rise to record h eig h ts and the v a lu e o f m on ey m elt aw a y in con seq u en ce. M ost o f us a lso had som e ex p erien c e w ith d eflation in th e e a r ly th irties. In th ose days w e saw p rices f a ll to ru in ou s lev els, and b u sin esses b y the th ou san ds g o in g bankrupt, w h ile m illio n s w alk ed the streets M o n t h l y R e v ie w o f th e F ederal R eserve B a n k o f A tla n ta fo r J u n e 1950 seeking jobs that were not to be found. These violent changes in the value of money, up and down, although they may favor certain groups, nevertheless work immeasurable hardship on the great majority of people. They certainly make it difficult for any businessman to plan his business rationally. What causes these violent changes in the value of money, remembering that bank credit is our main form of money? Fundamentally the trouble lies in the relation between the volume of money and the volume of goods and services to be bought with money. When the stream of money grows faster than the stream of goods, we have rising prices — inflation. When the stream of money does not grow as fast as the stream of goods we have falling prices — deflation. The Federal Re serve tries to minimize these fluctuations by influencing the size of the money stream in such a way that it w ill more nearly match the size of the goods stream. How does it do this? Let us see. The ability of a member bank to extend credit to its customers, and thus add to the supply of money, depends upon the size of the reserve which it carries with the Federal Reserve Bank. For each dollar in its reserve account, a bank can extend five or six dollars in deposit credit to its customers. The more dollars it has in its reserve, therefore, the more credit it can extend. The fewer dollars, the less credit it can extend. Because the Federal Reserve has the power, within certain limits prescribed by law, to vary the reserve requirement for member banks, it has, consequently, the power to restrict or to increase the banks5 ability to extend credit to their customers. The Federal Reserve works to this same end in still an other way — through the buying and selling of Government securities in the open market. When the Federal Reserve buys securities, it obviously puts money into the hands of the persons from whom the securities are bought. This money eventually finds its way into the banks and thence into their reserve accounts, where it enables them to extend more credit. On the other hand, when the Federal Reserve sells securities in the open market, it takes money out of the accounts of the purchasers and so, ultimately, reduces the reserve accounts of the banks. In this way the ability of banks to extend credit is diminished. The Federal Reserve can therefore act upon reserves either directly, by varying reserve requirements, or, indirectly, through its buying and selling of securities, pro viding banks with reserves by buying operations, or depriv ing them of reserves by selling. Still another method is to influence the volume of borrowing by member banks from the Federal Reserve Banks by raising or lowering the discount rate. A higher rate makes it more expensive for member banks to increase their reserves through borrowing and thus tends to discourage credit expansion. A decrease in the dis count rate makes it less expensive for the member banks to increase their reserves and, therefore encourages credit ex pansion. This is relatively ineffective now when reserves can be obtained by selling Government securities — held to such a large extent by the banks. It is primarily through the use of these instruments that the Federal Reserve seeks to minimize fluctuations in the value of money and so to protect business from its tendency to go through disastrous booms and busts. Of course the Federal Reserve System has not worked per fectly — no human institution ever does. In the first place, only a part of the banking system has accepted the voluntary discipline involved in membership in the System. Many banks remain outside the System. In the second place, too many other things are involved in the problem of inflation 5 5 and deflation for it to be solved completely or solely by mone tary means. Nevertheless, imperfect though it be, the Federal Reserve is today the only instrument that exists primarily for the protection of business and the public against these violent changes in the value of money. It is the only alternative to direct Government intervention if the nation is to be pro tected to any degree at all against violent business fluctua tions. Federal Reserve actions, even though adapted to chang ing conditions, tend to be unpopular because if effective they place the System in position of constantly bucking the popu lar trend. But it is a job which must be done and when done successfully results in great benefits for every individual and every business firm, proving again your stake in this System and your interest in preserving, extending, and improving it. In order to formulate its policies so that they may best serve the interests of the whole economy, the Board of Gov ernors must know as much as it can about business condi tions as they continuously change. It must have at its dis posal an enormous body of facts upon which to base deci sions. To collect these facts, the Board maintains a large staff of economists, statisticians, and other highly trained profes sional men. Each Federal Reserve Bank maintains a similar but smaller staff in its Research Department to collect figures and to study the economic problems of its particular District. Neither the Board nor the Federal Reserve Banks keep this information secret, for they know that it is valuable to busi ness as well as to System authorities. It is therefore the policy of the System to make this information public. The Board of Governors publishes monthly the Federal Reserve Bulletin, which may be obtained for a very small charge. This publication is one of the most complete, authoritative, and up-to-the-minute compilations of business figures in the country. Each Federal Reserve Bank also publishes one or more monthly periodicals which may be received regularly, with out cost, merely by requesting them. In addition to its Monthly Review , the Federal Reserve Bank of Atlanta, for example, also publishes a Bankers Farm Bulletin as a special service to the numerous country banks in this District — keeping them informed of important agricultural develop ments and letting them know what other banks are doing and how the problems of our rapidly changing southern agricul ture are being met. Many mimeographed releases are also put out dealing with current developments in various kinds of business. These, too, are available free to those who may be interested. In the short time at my disposal, I have been able to give you only a few of the high-lights of the Federal Reserve Sys tem. I wish I could have told you more about it. If you ever have the opportunity to do so, I wish you would visit one or another of the Federal Reserve Banks or their Branches. You will receive a cordial welcome from all of its officers and employees. You will find all of them eager to tell you everything they can about their work. They are not operating secretly and in the dark. You will discover that a Federal Reserve Bank is not a cold, austere, and impersonal institu tion. You will find, on the contrary, a warm and friendly group of highly competent and devoted men who are working in the interest of a more prosperous America. You will come away from such a visit, I am sure, with a wholesome respect for this the greatest central banking system in the world, the Federal Reserve System, of which my bank and thousands like it are proud to be members. M 5 6 o n t h l y R e v ie w o f th e F ederal R e se rv e B a n k o f A tla n ta fo r J u n e 1950 Deposit Growth at Georgia Member Banks the 396 commercial banks in Georgia added up the amounts they had to the credit of their depositors on December 3 1, 1949, they arrived at a total of 1,624 million dollars. Just ten years before, the year-end total was only 496 million dollars. This 227-percent increase raised per capita bank deposits from 159 dollars at the end of 1939 to 508 dollars at the end of 1949. Data on deposits at all Georgia banks for earlier periods are more difficult to obtain. Deposit changes at banks that are members of the Federal Reserve System, however, fairly well reflect changes at all banks. About 70 percent of the total bank deposits in Georgia are kept at member banks, a ratio which has changed little over the years. In general, bank deposits change because of an increase or a decrease in the credit granted by the nation’s banks. Economic conditions governing credit throughout the coun try, of course, have been the most important factors govern ing the level of deposits at Georgia member banks. But dur ing the last thirty years, there have been many times when Georgia bankers have seen the deposits at their banks change in a different degree or in a different direction than deposits in other parts of the country. Most of these differences can be traced to dissimilarities in the rates of income growth and decline. hen W Depression After World W ar I One of those periods was from 19 19 through 19 2 1. The events of those years have been deeply etched in the mem ories of Georgia bankers whose experience dates back thirty years or more. They saw their bank deposits shrink by a third in the three years, most of the drop occurring in 19 19 . Banks all over the country were losing deposits during this period— the primary postwar depression after World War I — but their loss amounted to only 10 percent. Cotton was king in Georgia in those days. Loans and de posits had been expanded on the basis of cotton, which sold in the middle of 1920 for over 40 cents a pound. In August of that year, the price began to drop and by mid-19 2 1 it had fallen to around 12 cents. With about 40 percent of the state’s income coming from agriculture, Georgia’s whole economy felt the impact of this decline. Recovery from the low point in 19 2 1 at Georgia banks roughly paralleled growth throughout the nation. At the end of 1926, however, deposits were lower than at the end of 1925, contrary to the national trend. Moreover, although Georgia deposits remained practically unchanged from 1926 through 1928, deposits throughout the country expanded. The period from 1925 through 1928 demonstrates how the relative rates of income changes in any area can influence the flow of deposits into and out of the area. Agriculture was less important as a source of income than in the early part of the decade, but was still the direct source of a fifth of the income received by individuals as well as a very important indirect source of most of the remaining four-fifths. Cash farm income in Georgia was 20 percent lower in 1926 than in 19 2 5 ; national farm income declined only 4 percent. Georgia agriculture fared worse during the years that followed than agriculture throughout the country. And in 19 32 cash receipts from Georgia farm marketings were only 3 1 percent of what they had been in 1925. This decline was accompanied by a loss of over 25 percent in deposits of the Georgia member banks. Wartime Growth and Postwar Decline After the low point in 19 33, recovery at Georgia banks again paralleled that of the country as a whole. At the begin ning of the war period in 1939, deposits at Georgia member banks were at about the same position relative to deposits at all member banks as they had been twenty years earlier. Most persons are fam iliar with the wartime developments that increased deposits at practically every bank in the coun try. But the growth at Georgia banks exceeded the national rate of growth. By the end of 1945, deposits were 2 3 1 per cent greater than at the end of 1939, compared with an in crease of 16 3 percent for the country as a whole. In Georgia, total deposits declined after the war just as they did elsewhere. The decline in 1946 was accounted for pri m arily by the use of the Treasury’s war-loan accounts to retire bank-held Government securities. Each year since then, however, deposits at Georgia member banks have been lower than at the end of the preceding year. By the end of 1949, Georgia deposits were 4 percent less than they were at the end of 1946, whereas for the nation, deposits rose 4 percent. INDEX O F TOTAL MEMBER BANK DEPOSITS PERCENT 1935"39 * 100 PERCENT M o n t h l y R e v ie w o f th e F ederal R eserve B a n k o f A tla n ta fo r J u n e 1950 The deposit decline since 1946 at Georgia member banks cannot be blamed on a decline in income. United States De partment of Commerce estimates of income payments to individuals in Georgia show a growth of 6 percent between 1946 and 1947 and one of 5 percent between 1947 and 1948. Estimates are not yet available for 1949, but it is probable that income was less than in 1948. A more likely explanation is that income was not expanding as rapidly in Georgia as elsewhere. For the same two periods, income payments in the nation increased 10 and 9 percent, respectively. Industrial development in Georgia since the war has been characterized by a substantial growth but not the spectacular rise that is typical in some parts of the country. Moreover, because its manufacturing is concentrated in the nondurable lines, the state’s income was increased less by the postwar boom in durable goods sales than income elsewhere. At the same time, many Georgians were using their accumulated bank balances to buy the durable goods manufactured in other regions that they could not get during the war. The result was a drain on Georgia bank deposits. Finally, agri cultural income declined in 1949. TOTAL DEPOSITS AT GEORGIA MEMBER BANKS ____________ Classified by Area Percent Change, End of Year A rea* 1939-45 Atlanta Area.................... + 224 Atlanta ........................ + 211 Outside Atlanta............ + 3 10 Augusta .......................... + 1 8 5 Columbus, (Ga.) Area. . + 32 5 Savannah ........................ + 248 South Georgia.................. + 142 Georgia Total................ . +231 Sixth District Total........ + 2 54 United States................... . .+ 1 6 3 1945-46 194G-48 1948-49 — 2 — 2 + o — 4 — 2 — 4 + 12 — 2 + 1 + 2 — 4 — 3 — 4 +10 + 2 — 2 — 4 — 2 + o + 2 +171 + 152 +296 +188 +360 +183 +117 +182 +2 2 8 +151 *Areas include several counties surrounding each city. Georgia farmers last year received 16 percent less from their marketings than they did in 1948. A decline at this rate thirty years ago would probably have had a much more noticeable effect on the level of Georgia bank deposits than it did last year, when total deposits declined only 2 percent. Agriculture still constitutes a very important source of in come for Georgians, but its relative importance has declined considerably. Instead of accounting for almost 40 percent of the state’s income as it did in 19 19 , it now accounts for somewhat less than 15 percent. Manufacturing pay rolls in 19 19 made up only 12 percent of total income. Now the ratio is close to 20 percent. With a more diversified income base, therefore, it appears likely that in the future, deposit changes at Georgia banks will correspond to national changes more closely than during the 1920’s and 1930’s. The postwar deposit decline, however, has been minor and in no way resembled that which occurred after World War I. Georgia member bank deposits at the end of last year were 182 percent higher than at the end of 1939, a considerably greater rate of growth than the 1 5 1 -percent increase shown for the country as a whole. The current level of deposits at Georgia member banks reflects the growth in manufacturing income which began during the last half of 1949. At the end of May, total deposits at all Georgia member banks were 4 percent higher than last May. C harles T. T a y l o r This article is the third in a series in which deposit trends m the individual Sixth District states are being discussed. S ix t h D is t r ic t S t a t is t ic s CONDITION OF 27 MEMBER BANKS IN LEADING CITIES (In Thousands of Dollars) Percent C hange May 24 June 22 June 21,1950 frorc June 21 Item 1949 1950 1950 May 24 June 22 1949 1950 Loans and investm ents— Total................. 2,444,984 2,446,597 2,261,355 — 0 + 8 Loans—N et......... 795,741 914,273 903,399 + 1 4 15 Loans—Gross. . , , 927,876 805,783 916,946 4- 1 4- 15. Commercial, industrial, and agricultural loans 518,673 487,342 516,663 4- 0 + 6 Loans to brokers and dealers in secu rities. . 12,531 -j- 43 12,978 8,764 — 3 Other loans for purchasing and carrying secu rities___ 39,345 — 2 — 12 34,744 35,354 Real estate lo an s........... 82,163 69,284 4- 19 79,925 4" 3 4- 32 6,897 5,228 + 20 Loans to b an k s, 5,746 Other loans 196,820 272,868 4- 39 266,280 + 2 Investments—to tal............. 1,530,711 1,543,198 1,465,614 — 1 4- 4 Bills, certificates and + 59 n o te s............. — 4 568,122 591,446 358,353 U. S. bonds. ... 750,523 909,851 740,069 + 1 — 18 197,410 Other S ecurities............. 212,066 211,683 + 7 + o 451,417 — 4 — 13 393,737 409,571 Reserve with F. R. B a n k .. 40,869 — 5 — 3 Cash in v a u lt. . . . 39,674 41,782 Balances with domestic 156,736 — 1 160,372 162,199 b an k s............... 4- 2 Demand deposits ad ju ste d . 1,789,203 1,793,377 1,724,605 — 0 4- 4 539,597 — 0 539,184 Time deposits. , . . 539,973 — 0 60,377 61,353 27,225 — 2 4-122 U. S. Gov't d ep o sits......... 425,822 — 2 463,163 Deposits of domestic banks 454,699 4- 7 6,500 — 88 1,000 8,500 — 85 Borrow ings......... DEBITS TO INDIVIDUAL BANK ACCOUNTS (In Thousands of Dollars) 1939-49 — 12 — 15 + o — 4 + 9 — 13 — 16 — 11 — 8 + 9 57 Place ALABAMA A nniston.......... Birmingham.. . D othan............. G ad sd en ......... M obile............. M ontgom ery... May 1950 April 1950 May 1949 Percent Change May 1950 from Year-todate 5 April May mos. 1950, 1950 1949 from 1949 21,167 344,104 13,002 21,303 122,493 78,502 20,945 327,863 12,518 19,574 112,166 67,358 17,314 311,612 10,875 16,956 119,793 72,413 + + + + + + 1 > 5 4 9 9 17 + 10 + 20 + 26 + 2 + 8 +22 + + + + — + 305,780 273,917 411,816 64,219 35,171 65,649 140,830 288,828 273,151 410,809 60,753 33,352 66,541 137,590 277,116 233,304 335,476 50,182 32,006 52,258 120,805 + + + + + — + 6 0 O ' 6 5 1 2 + 10. + 17 + 23 + 28 + 10 + 26 + 17 + 10 + 11 + 12 +24 + 5 + 14 + 15 Savannah ....... V aldosta......... 24,356 931,727 58,270 9,643 64.095 4,046 14,932 10,769 69,279 9,419 20,411 94,362 11,780 23,065 843,868 57,866 9,142 58,620 3,885 13,939 11,288 56,562 7,894 20,936 83,555 10,477 20,739 783,851 49,764 8,541 47,340 3,445 13,214 9,736 53,312 7,717 17,296 79,669 11,306 + 6 + 10 + 1 + 5 + 9 + 4 + 7 — 5 + 22 + 19 — 3 + 13 + 12 + 17 + 19 + 17 + 13 + 35 + 17 + 13 + 11 + 30 + 22 + 18 + 18 + 4 + 2 + 9 + o + 7 + 19 + 7 + 5 + 5 + 11 + 10 + 11 + 4 + 1 LOUISIANA Alexandria*.. . Baton R o u g e .. Lake C h arles.. New O rle a n s.. 32,466 101,473 36,979 769,373 32,627 97,515 33,731 633,573 29,434 113,437 34,483 697,541 — 1 + 4 + 10 + 21 —11 + 10 + 7 + 10 + 11 — 9 + 1 + 5 MISSISSIPPI H attiesburg. .. Jackson........... M eridian......... V icksburg........ 17,439 137,402 26,503 24,309 17,339 136,837 25,773 23,176 15,913 124,809 23,861 23,818 + + + + + + + + + + + + TENNESSEE C h attan o o g a.. Knoxville......... N ashville......... 148,195 108,460 329,376 139,931 109,498 306,659 127,963 96,624 280,204 + 6 — 1 + 7 + 16 + 12 + 18 + 7 + 6 + 13 SIXTH DISTRICT 32 C ities......... 4,462,623 4,099,605 3,918,971 + 9 + 14 + 6 UNITED STATES 333 C ities........ 112,078,000 102,528,000 99,280,000 * Not included in Sixth District total. + 9 : +13 + 6 FLORIDA Jacksonville... Miami............... G reater Miami* O rlando........... P ensacola........ St. P etersburg. GEORGIA A lbany............. A tlanta............. A ugusta........... Brunsw ick....... C olum bus....... E lberton........... G ainesville*... Griffin*........... M acon............. N ew nan........... 1 o 3 5 10 10: 11; 2 3 5 5 8 8 8 9 6 4 1 M 5 8 o n t h l y R e v ie w o f th e F ederal R e se rv e B a n k o f A tla n ta fo r J u n e 1950 District Business Conditions Increase in Deposit Activity deposits are being used more actively than before, according to data on the turnover of deposits at banks in leading cities of the Sixth District. In May, demand deposits at these banks were being used at a seasonally adjusted rate of 22.2 times a year. The rate was 20.3 times a year ago. Early reports indicate that the increased activity was main tained in June. The turnover of demand deposits is a measure of the re lationship between deposits and bank debits, consisting of checks and other withdrawals from deposit accounts. Con verted to an annual basis, the turnover figure shows how many times, on an average, deposits are withdrawn and re deposited during the year. The turnover rates thus measure roughly what is sometimes called the velocity of circulation of that important part of the money supply represented by bank deposits. D em and TURNOVER O F DEMAND DEPOSITS SIXTH DISTRICT MEMBER BANKS IN LEA DIN G CITIES and services needed to offset an increased rate of spending, there need necessarily be no rise in the general price level even though the rate of deposit turnover is expanding. A l though production was increasing from 1945 to 1948, the in crease was insufficient to satisfy the increased demands at the old prices. The general price level as measured by the Bureau of Labor Statistics Wholesale Price Index rose 56 percent between 1945 and 1948. During 1949, a slight decline in the rate of spending was indicated by the average rate of turnover at the District banks, reflecting the business recession and a decline in the general price level. This year, however, the seasonally ad justed rate has increased each month. In May the rate amounted to 90 percent of the 1935-39 average, an increase of 17 percent since December 1949. The May rate was high est for any month since early in 1942. This growth has been accompanied by an increase in the general price level. SPEN DIN G IIP IN EACH STATE. A higher rate of spending this May than last is shown by all except one of the 36 District cities reporting bank debits. For the District as a whole, debits were 14 percent greater. Deposits at the reporting banks, however, expanded only 5 percent. The same contrast is shown when the figures are grouped by states. At the Georgia reporting banks, debits were 20 percent greater this May than they were last year; deposits were up 4 percent. Debits at the Florida reporting banks were 18 percent greater, but deposits rose only 7 percent. At the Mississippi reporting banks, debits rose 9 percent, but deposits were at just about the same level this May as they were in May 1949. An identical rate of increase in bank debits was reported for the Alabama banks; deposits rose 4 percent. At the banks reporting from Tennessee, debits were up 16 percent, but deposits rose only 8 percent. c .t .t . Inventory Growth and Sales Trends An increase in the rate of deposit turnover generally means that spending is growing faster than deposits. This May, for example, the amount of demand deposits at the banks in leading cities of the District averaged only 2 percent higher than in May 1949. Debits to those deposit accounts, however, were 13 percent greater. W ARTIM E DECLINE. Generally speaking, an increase in the rate of deposit turnover is characteristic of a period of expanding business activity. The war period was a notable exception. Although deposits expanded during the war, limitations on spending led to a decline in the rate of turnover and by 1945 it was only 55 percent of the 1935-39 average. The lowered rate meant that the expanded money supply was not exerting its full potential effect on increasing the price level. P O STW A R D EVELOPM EN TS. Beginning with 1946, the rate of turnover rose and the rise continued throughout 1948, when the turnover averaged 80 percent of the 1935-39 figure. Dur ing the same period demand deposits remained relatively stable. As a result of the increased rate of turnover, how ever, the deposits in 1946 were performing the work that would have required about 80 percent more deposits if they had been used at the rate prevailing in 1945. So long as production is sufficient to provide the goods Even without the stimulus provided by the National Service Life Insurance refunds during previous months, sales at Sixth District department stores in May continued at approximately the same level as in April after allowance is made for seasonal influences. During the first half of June, sales at the weekly reporting stores were 8 percent greater than those during that part of last June. I f the trend continued throughout the remainder of the month, seasonally adjusted sales for June will be at about the same level as in May. The contrast between the trends in inventories this year and those of last year is more striking than the contrast in the sales trends. At the end of May this year, total inven tories of District department stores were 10 percent greater than on the corresponding date in 1949. Moreover, inven tories have been increasng faster in recent months than sales. B a n k A n n o u n c e m e n t On June 1, 1950, the St. Simons State Bank, St. Simons Island, Georgia, a. newly organized nonmember bank, opened for business and began remitting at par. This bank has a capital of $25,000 and surplus and un divided profits of $15,000. The President and Cashier of the bank is J. H. Lester, Jr., and the Vice President is J. C. Strother. M o n t h l y R e v ie w o f th e F ederal R eserve B a n k o f A tla n ta fo r J u n e 1950 Merchants were reducing their inventories during the first half of last year. Sales were below the levels of the corre sponding months in 1948, and prices were declining. Inven tories, however, were being cut at even greater rates than the rates at which sales were declining. Department store inven tories reached their postwar peak in November 1948 when the seasonally adjusted index stood at 377 percent of the 1935-39 average. Immediately thereafter reductions began and by mid-1949 inventories were 14 percent lower on a sea sonally adjusted basis than seven months earlier. During the second half of 1949, although the general level of sales did not differ markedly from that of the first half, the stores began to build up their inventories. By the end of the year, department stores in the District reported that after ad justment was made for seasonal variation, inventories were 10 percent higher than at midyear. Although the rate of growth has slowed down since the beginning of this year, inventories were considerably higher this May than last. But they are still below the peak reached in late 1948. An effort to restore a better balance between inventories and sales rather than a scramble to build up stocks in antici pation of price increases seems to be reflected in the current figures. The stores have added to their inventories most in those departments where sales showed the greatest rates of growth over last year. Preliminary reports from a selected group of department stores, for example, show May sales of pianos, radios, television sets, and phonographs up 88 per cent from last year. The inventories of these items were up 29 percent, the greatest increase reported for any major de partment. On the other hand the women’s coat and suit de partment reported sales down 5 percent from last year and inventories reduced 7 percent in value. These comparisons show no “ involuntary” inventory accumulation. 5 9 S ix t h D is t r ic t In d e x e s Place DISTRICT............. A tlanta............... Baton R o u g e ... Birmingham C hattanooga. .. Jackson............. Jacksonville Knoxville......... Miami................ M ontgom ery... N ashville......... New O rleans. .. T am pa............... Place DISTRICT......... A tlanta........... Birmingham. . Montgomery. N ashville....... New Orleans. Place SIX STATES. Alabama. .. Florida. .. . G eorgia. . . Louisiana. . Mississippi Tennessee. DEPARTMENT STORE SALES Adjusted** U nadjusted May May May Apr. Apr. 1950 1950 1950 1949 1950 390 397 376r 378 389 426 446 415r 405 428 423 413 441r 419 413 386 372 384r 382 354 371 342r 388 388 371 395r 433 384 398 399 430r 415 442 368 364 378 409 371r 390 413 409 395 330H 384 340 379n 392 420 361 407 390 383 374n 370 364 451 422r 467 446 444 357 372r 367 345 374 511 521 485r 489 516 DEPARTMENT STORE STOCKS Adjusted* May May May Apr. 1950 1950 1950 1949 30 7' 336r 366 360 415r 478 460 473; 298 294r 283 28 1 355r 405 396 413 545 4.86r 524 529 307n 347 346 336 Unadjusted Apr. 1950 378 474 295 408 566 365 GASOLINE TAX COLLECTIONS*** Adjusted* Unadjusted May May May April April 1950 1949 1950 1950 1950 241 238 216 239 232 208 237 231 234 232 21 2 200 223 255 239 249 252 19a 249 244 271 258 227 276 231 236 212 241 208 234 232 235 233 233 232 May 1949 365 394 436 381 342 364 404 382 310 326 356 443 350 456 May 1949 332 410 279 362 482 317 M ay 218 212 202 192 253 229 233 SIXTH DISTRICT DEPARTMENT STORE SALES AND STOCKS B y D e p a r tm e n ts * S elected Departm ents Percent Change May 1950 from May 1949 Silverw are and Jewelry W om en's & M isses'Ready-to-W ear Accessories W om en's & M isses' Coats and Suits . . . W om en's & Misses' D r e s s e s ......................... M en's Clothing ......................................... Furniture and B e d d i n g ................................... Domestic Floor Coverings ............................... Major Household Appliances . . . . . . Pianos, Radios,, Television, Phonographs, etc. *Preliminary, based upon sales of selected stores Sales Stocks - 8 + 14 + 10 + 4 — 5 - 7 + o b 1 — 10 --12 -24 —21 — 9 - 8 — 12 -46 -29 + 88 in leading cities. Not only are stocks higher than they were last year, but for ward commitments are greater. In January and February, outstanding orders at a selected group of District department stores were well below those of the corresponding months last year. At the end of March, however, they were 6 percent greater and at the end of April and May, they had expanded 27 and 45 percent, respectively, from 12 months previously. C.T .T. COTTON CONSUMPTION* April May May 1949 1950 19-SO 109 TOTAL......... 135 145 118 147 135 A labam a. . . 106 G e o rg ia ... . 139 148 49 M ississippi. 83 8 6 116, Tennessee. 1 1 105 2 ELECTRIC POWER PRODUCTION* April March April 1950 1950 1949 409 357 SIX STATES.. 379 Hydro 375 317 generated 287 Fuel454 generated 500 409 MANUFACTURING EMPLOYMENT*** CONSTRUCTION CONTRACTS May April May Place 1950 1950 1949 DISTRICT... 795 531' 508 Residential 1,254 950 724 O th er........ 572 328 403 Alabama. .. 777 523 508 Florida. .. . 820 546 646 G eorgia. . . 780 640 463 Louisiana. . 488 625 517 Mississippi 596 204 212 Tennessee. 1,059 605 471 Place April 1950 SIX STATES. 140 Alabama. .. 141 F lo rid a .... 134 G eorgia. .. 141 Louisiana. . 130 Mississippi 134 T ennessee. 148 Place Copies of the Retail Credit Survey for 1949, recently completed by this Bank, are available free of charge. Requests should be addressed to the Research Depart ment. The survey is a detailed analysis of changes in sales and accounts receivable in nine major lines of business in the Sixth District, tabulated by states, prin cipal cities, and areas. April 1949 139 144 132 138 135 133 145 CONSUMERS PRICE INDEX May April May 1949 1950 1950 ALL ITEMS. .. 171 171 172 F ood ........... 200 203 18 9 Clothing. . . 191 196 191 Fuel, elec., and refrig. 137 135 139 Home fur nishings 183 183 189 Misc........... 155 154 154 Purchasing pow er of d o llar......... .58 .58 .58 *Daily average basis **Adjusted for seasonal variation ***1939 monthly average—100; other indexes, 1935-39=100 Item N e w R e ta il C r e d it S u r v e y Marchi 1950 140 141! 137 140 130 136 148 ANNUAL RATE OF TURNOVER OF DEMAND DEPOSITS May April May 1950 1950 1949 Unadjusted. 20.8 18.7 20.4 A djusted**., 22.2 2 .1 20.3 1 Index**....... 85.4 82.4 89.9 CRUDE PETROLEUM PRODUCTION IN COASTAL LOUISIANA AND MISSISSIPPI* May April May 1950 1950 1949 U n ad ju sted .. 308) 302 301 313 296 306 Adjusted**. . r Revised 60 M o n t h l y R e v ie w S ix t h D is t r ic t S ta t is t ic s INSTALMENT CASH LOANS V olum e N o. of P e rc e n t C h a n g e L e n d e rs M ay 1950, from R eporting A pril M ay 1950 1949 L ender Federal credit u n io n s........ State credit u n io n s............ Industrial b an k s................. Industrial loan com panies Small loan com panies---Commercial b an k s........... 39 17 1 0 33 + 40 + 35 + 16 — 5 + 7 + 17 +1 2 + 37 +44 + 7 — 3 +22 + 41 + 83 + 18 16 41 O u tsta n d in g s P e rc e n t C h an g e M ay 1950, from M ay A pril 1949 1950 + 36 + 6 + 1 RETAIL FURNITURE STORE OPERATIONS N u m b er P e rc e n t C h a n g e of M av 1950, from Ite m S to res A pril 1950 M av 1949 R ep o rtin g Total sa le s............................................ Cash sa le s.......................................... Instalment and other credit s a le s. . Accounts receivable, end of month Collections during m onth............... Inventories, end of m onth............... +6 +6 + 19 118 104 104 115 115 91 +2 1 +2 1 + 7 +23 + 3 + 3 — 1 + 2 + 9 WHOLESALE SALES AND INVENTORIES* INVENTORIES SALES P e rc e n t C h an g e P e rc e n t C h a n g e N o. of No. of M ay 1950 from T ype of W h o le sa le r Firm s M ay 31,1950, from Firm s R eport A pr. M ay R eport A pr. 30, M ay 31, 1949 1950 1949 in g 1950 ing' Automotive su p p lie s. Electrical group F ull-line................... A ppliances............. General h ard w are. . . Industrial su p p lies. . . Jew elry....................... Lumber and build ing su p p lies........... Plum bing and h eat ing su p p lies........... Confectionery............ Drugs and su n d ries.. Dry g o o d s................... Grocery g roup F ull-line................... Specialty lin e s........ Shoes and other footw ear................. Tobacco products M iscellaneous........... T otal............................. + 5 —1 1 + 7 — 4 + 52 + 52 + 17 —1 —1 — 5 — 3 — 1 — 7 —4 +1 2 — 5 + 5 + 18 4 5 13 18 38 + 10 —23 +2 + 6 + 54 + 14 + 5 — 20 + 5 + 13 + 25 + 3 + 5 + 3 6 13 —2 + 1 + 10 +1 1 + 14 26 + 3 + 17 —6 —3 + + + + 14 95 + 5 + 6 +2 + 7 + 10 1 2 + 18 3 9 16 151 — 1 + 7 + 7 + 5 +1 1 34 18 16 9 6 6 — 4 +1 1 +2 + 16 + 13 + 7 '‘Based on U. S. Departm ent of Commerce figures. DEPARTMENT STORE SALES AND INVENTORIES S a le s—P e rc e n t C h a n g e Place M ay 1950 from M ay 1949 A pr. 1950 Y ear to D ate 19501949 S to cks P e rc e n t C h a n g e M ay 31, 1950, from A pr. 30, M av 31, S to ck s 1950 1949 N u m b e r of S to res R ep o rtin g S a le s ALABAMA 3 — 4 + 17 — 3 4 + 4 Birm ingham .. + 13 + 9 5 + 1 M obile........... 3 — 0 + 8 3 + ‘i M ontgom ery.. + 10’ FLORIDA 3 — 1 — 9 + 23 + 7 4 Jack so n v ille.. 3 — 0 — 4 4 + 15 + 4. Miami............. + 9 + 8 3 + o O rlando.......... 3 — 4 5 + 2 + 11 + 4 Tam pa............. GEORGIA 5 — 0 + 7 6 + 2 + 5 A tlanta........... 3 — 3 —5 + 6 + 1 4 A u g u sta.......... + 32 + 13 + 16 4 C olum bus. . . . 4 + 16 —'5 + 22 6 M acon........... + 8 — 3 — 1 4 Rom e............. . — 9 4 + '3 6 + 8 + 6 Savannah....... + 4 LOUISIANA — 0 — 7 4 — 5 4 Baton R o u g e.. + 9 — 1 4 — 5 New O rleans. — 0 + 3 5 MISSISSIPPI + 14 4 — 6 Jackson........... 4 + 8 + 4 — 5 M eridian......... + 14 + 4 3 TENNESSEE — 2 3 3 Bristol............. — 5 + 4 + o C h a ttan o o g a .. + 13 + 18 4 3 — 3 + 11 Knoxville....... 4 + 6 + 2 + 1 6 — 7 N ashville....... + 13 5 + 9 + 3 22 OTHER CITIES* — 7 22 — 1 + 9 + 4 113 76 DISTRICT......... — 3 + 8 + 2 + 5 ‘W hen few er than three stores report in a given city, the sales or Digitized are FRASER together under “ other cities. for grouped + 1 + i4 + 18 + 22 + i8 +15 + 33 + 2 + 12 + 7 + 9 + 18 —11 — 2 + '9 + 1 + 10 stocks o f th e F ederal R eserve B a n k o f A tla n ta fo r J u n e 1950 Industry and Employment May was another near-record month in the volume of con struction contracts awarded in the Sixth District. Steel mills have been operating at well above rated capacity since the middle of March. Coal output has declined somewhat, how ever, from the level of March and April and is less than it was a year ago. Textile mill operations were also off some what further in May. THE VALUE O F CO N STRUCTIO N CO N TRA CTS awarded in the Dis trict in May was up 50 percent from April, and was 53 per cent greater than in last May. The gain in each instance was shared by five of the District states, Louisiana having the only decreases. Residential contracts awarded in May were 32 percent larger than in April and 72 percent greater than in May 1949. Other awards were up 74 percent for the month and were 37 percent greater than a year ago. Total awards in the District for the first five months of 1950 amounted to 688 million dollars, 72 percent more than the total for the same part of 1949. Residential awards amounted to 321 mil lion dollars, 86 percent more than a year ago. Other awards increased 61 percent. In the value of residential awards Florida continues to lead the other District states. In percentage gains over last year, however, residential awards in Florida in the January-May period this year were up only 66 percent. In Alabama the increase was 87 percent. In Georgia, residential awards were double the amount for the first five months of last year, and in Louisiana, Mississippi, and Tennessee the five-month total was about two-and-a-half times that of a year ago. M AN UFACTURIN G EM PLOYM ENT in the District continued in April at about the March level. For the first time in many months, the District index was slightly higher than in the correspond ing month a year earlier. Slight gains over March in Georgia and Louisiana were offset in the District total by decreases in the other four states. Decreases from April 1949 in Ala bama and Louisiana were almost large enough to offset in creases in the other four states. In Alabama, employment in shipbuilding and repair was off more than one-half from April last year, and in Louisiana also the largest decrease was in shipbuilding and repair. In the other four states, the April index is above that for April 1949 — by 1.4 percent in Tennessee, 1.6 percent in Florida, 2.5 percent in Georgia, and 5.2 percent in Mississippi. ELECTRIC p o w e r PRO D UCTIO N by District public utilities de clined 7 percent in April, after a small decrease in March. It was, however, 6 percent larger than in April last year. The April decrease was caused by a drop of 23 percent in current produced by hydro-generated plants, offset only in part by an increase of 10 percent at plants using fuels. Hydro-generated power accounted for 43 percent of the total in April, 52 percent in March, and 50 percent in April last year. April output at hydro-generated plants was 9 percent less than in April 1949, but at plants using fuels it was 22 percent higher. COTTON TEXTILE mill activity, on the basis of daily average rate of cotton consumption, was off about 7 percent for May, but was 24 percent above the rate for May 1949. From April to May, consumption declined 8 percent in Alabama, 6.6 per cent in Georgia, 4.5 percent in Tennessee, and 2.5 percent in Mississippi. In the ten months of the current cotton year, August through May, mills in these four states consumed 2,660,767 bales of cotton, a gain of 11.5 percent over the previous cotton year. The increase for the entire country was 10 percent. d .e .m .
