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Atlanta, Georgia Bankings Paper Curtain March • 1961 Also in this issue: IS THE CONSUMER MISBEHAVING? DISTRICT BUSINESS CONDITIONS SIXTH DISTRICT STATISTICS SIXTH DISTRICT INDEXES Sw feraf l^sem IBanko f _ ‘S fa n ta Bankers have been doing a good bit of homework lately. They have been wrestling with the problem of what methods and machines to use in day-to-day operations. This is not a new problem, of course. For two decades operating costs have almost matched the rise in bank earnings. Bankers, therefore, have had to adopt more efficient procedures and try out new equipment to relieve the squeeze on profits. District bankers are studying the feasibility of new and powerful equipment that could revolutionize traditional bank accounting, and this is the real reason for the midnight oil. They have been listening to the growing number of people who think the second half of this century will be recorded as the “age of the computer.” Advocates of bank “automation,” a word that has not yet found its way into Webster’s Unabridged, point to the computer and its blood relatives as the foil to the rise in costs and the growing volume of paper that bankers must handle. The potential of this equipment is so important that this Bank re cently conducted a comprehensive survey to determine bankers’ plans in this area. We asked commercial banks in the District several ques tions about equipment and procedures now in use and plans for them in the future. Over 82 percent of the banks returned our questionnaire. We obtained information not only from this excellent response but also from personal visits to many of the larger banks. Sizing Up the Problem Bankers tell us that growth in the types of bank services that involve frequent entries, especially instalment loans, have contributed significantly to the rise in bank costs. Almost to a man, however, they feel that the most im mediate problem lies in demand deposit accounting. Each year bank customers write more and more checks and each year banks gain depositors. Activity in checking accounts is phenomenal, amounting to $24 8 billion at District commercial banks in 1960. Depositors wrote 1.3 billion checks in that year. These checks, placed end to end, would span 1 3 4 ,8 2 8 miles, enough to circle the Sixth District 45 times. Add to this figure the millions of checks drawn on other banks and you can see the moun tains of paper banks must handle. Each check in the deluge must be handled several times. First, checks drawn on other banks must be sepa rated and sent to those banks for collection. Frequently this involves further sorting, listing, and processing. The remaining checks, representing those written by depositors at the bank— called “on us” checks— are usually sorted further before being posted to the depositors’ accounts. It is this multiple handling of each check combined with an increasing number of checks that has given bank opera tions men grey hair. After they are sorted, checks must be deducted from the accounts on which they are written. Similarly, deposits must be added. Bankers have progressed a long way from the days of green visors and quills, but the posting opera tion is still laborious. Most of the District’s commercial banks still use conventional bookkeeping machines to some degree to update depositors’ accounts. These ma chines, a blend of typewriter and adding machine, require an operator to key in the amount of the old balance and of each check or deposit to update the account. A few of the smaller banks report that they post to the accounts manually. Many banks, especially the larger ones, have thrown fresh troops into the paper tussle— machines known as “tronics.” Bankers tell us that these machines post at rates up to twice as fast as conventional machines. In addition, they are able to verify that the correct account is being posted, as well as to update the ledger auto matically. Some District bankers seem content with the present equipment, but many feel that even the newer “tronics” will be clogged by checks in a short time. Some of them feel that the paper barrier will not be pierced until auto matic machines take over the entire job of sorting, rout ing, and posting checks. Spurred by the claims of advo cates of these machines, many bankers are doing some hard thinking, but at the moment are wary of jumping into the race for new machines. Accounting b y Electrical Impulse What is the new equipment, and why do some refer to its use as bank automation? Two pieces of machinery form the core of a new and revolutionary means of handling checks and of processing data. One of these is the elec tronic computer, a mass of tubes, transistors, and blinking lights. Although commonly referred to as an electronic “brain,” this computer is no great shakes at “thinking.” About all it can do is add and subtract. This machine, however, has two claims to fame. First is its blinding speed— even a smaller one can perform several hundred thousands of separate subtractions in one second, for instance. Second is its ability to make certain decisions on its own hook after it has been given instruc tions, that is, after it has been programmed. For example, it can choose alternative A if one number is smaller than another and alternative B if it is greater. This elementary reasoning, together with lightning speed, enables the com puter to control the operation of other machines, which is really what automation is. The other piece of hardware that has caught bankers’ eyes is somewhat more understandable, but in many ways is just as radical as the computer in terms of the impact on traditional methods of banking. This machine is the electronic sorter, which can deal a package of checks into as many as eighteen separate piles at the rate of 7 5 0 to over 1 ,5 0 0 a minute. Since it would take over 35 clerks using conventional proof machines to do the same job, it is no wonder that this device has attracted attention. There are tricks behind most feats of magic, and there’s a trick behind this one too. Before the sorter can place the checks in the necessary groups, certain informa tion must be coded in a special type face at the bottom of the check. The ink used for this must be a special kind that can be magnetized as the check passes through the sorter. If each check had the routing symbol of the bank on which it is drawn printed in magnetic ink and if, in addi tion, the account number of the drawer and the dollar amount of the check were so encoded, then we would have a banker’s dream. It would be possible for the sorter to separate the “on us” checks from the “foreign” ones. The sorter could further group the checks drawn on other banks and even provide a listing of the amount of each of the checks, thus automatically preparing the “cash letter.” The checks drawn on the bank itself could then be passed through the sorter and read directly into the computer. The computer could post them to the de positors’ accounts, which would be kept in the form of magnetic tape or disc file. Automation in Every Bank? Does this sound like something out of science fiction? Maybe, but computer-sorter combinations are already being used at several banks around the country. A few of the medium-sized and large banks in this District have either a sorter or a computer in operation, but none as yet have both. The trend toward computers and magnetic ink sorters has not approached a stampede in the District, but a giant step has been taken by several banks. Six banks already have low-powered computers at work posting to special and regular checking accounts and handling instal ment loans. In addition, three other banks have magnetic ink sorters in operation sorting checks drawn on them to facilitate posting. Even more impressive is the number of banks that have placed orders for automatic equipment. Six District banks •2 • have ordered computers and the same number, electronic sorters. When this equipment is delivered there will be eleven banks with both sorters and computers in opera tion, five banks with a sorter only, and one bank with a computer only. Are computers and sorters destined to become a familiar sight in banks around the District? According to our survey, this is not likely in the near future. Ninetyfour percent of the banks, including almost all the small ones, said such machinery is so expensive that it is out of the question for them. Over two-thirds of the small group of banks with de posits of $50 million and over thought automatic equip ment was practical for banks of their size. But only eighteen percent of the banks with deposits in the $ 10million to $50-million range thought automation was practical. Even if all the banks that consider their volume large enough to justify a computer-sorter combination decided to proceed, therefore, only about 77 banks would be involved out of about 1,300. Additional banks, how ever, may benefit from this equipment by sharing with other users. If, by their own admission, such equipment is feasible for these 77 banks, why have so few of them placed orders for equipment? It may be because bankers are practical-minded persons with an added dash of con servatism. Many of them say it is not that they aren’t going this route. To the contrary, evidence points to this as a thing of the future, but they have many months, possibly years, of work ahead just to get ready. Preliminary Problems Bankers at the larger banks can tick off many preliminary problems. First of all, before a magnetic ink sorter and computer can team up in check handling and account posting, an efficient system of account numbering is neces sary. If done from scratch, or if a major revision is neces sary, this in itself is a Herculean task. What system should be used? Straight numeric, wherein Mr. Aaron might have the last number, or alpha-numeric, wherein accounts are retained in alphabetical sequence? Any system has its drawbacks, as bankers can testify! Then there is the question of the form in which deposit ledgers are kept. Top management at some banks insist that a “hard copy” ledger similar to the standard one is required. They abhor the thought of having to rely on magnetized dots on a reel of tape. Others point to the added speed possible when deposit records are stored on tape or disc and endorse the idea of accounting by electrical impulse. Since the form of the final record has a bearing on equipment, this tug of war must be recon ciled before a specific order can be placed. Finally, there’s the question of preprinting their cus tomers’ checks. This is a seemingly simple task, but should it be done on the premises or through an outside printer? Can local printers adhere to the close tolerances required of such printing? Then there is the question of checks the bank does not supply— company accounts and the like— which will have to be redesigned. Some bankers feel that they have other expensive equip ment that has not been fully exploited. This is especially true of the “tronics” bookkeeping machines, which are modern in every sense. Having to dispose of them be fore they are amortized can be a deterrent in the purchase of new equipment, particularly if another manufacturer’s equipment is being considered. Besides, reputations were laid on the line when the “tronics” were purchased, and the persons involved are understandably anxious to give them a chance. Despite the hesitation to place immediate orders, one cannot fail to be impressed with the headway banks have made in their decision to put these marvels of science to work in the mundane affairs of banking. Although only a small percentage of banks have ordered automatic equip ment, they hold one demand deposit account in every ten in the District and account for 15 percent of total de posits. Impact on District Banking What do the magnetic ink sorter and electronic computer portend for the future of banking? Will this equipment knock down banking costs and thus contribute to bank profits? Will other banks be forced to join the parade once their competitors are reaping the benefits of automation? The proponents of automation have never claimed that bank costs will go down. Banks that have placed com puters in limited operation say that they have not as yet been able to reduce clerical help. Through the use of this high-speed equipment, however, they hope they can stop an unlimited rise in the number of employees and in costs and thus cut through the paper curtain that threatens to stifle bank operations. Over a longer period, therefore, bank costs may well be held down. This will undoubtedly be a factor in equipment decisions of competing banks. Automatic equipment also may enable a bank to meet the growing demand for special services more easily, poten tially a strong competitive advantage also. Will the computer be adaptable to other phases of bank operations than demand deposit accounting? Al though most bankers feel that the initial installation must be justified on the basis of demand deposit accounting, they feel that the computer can be applied to such other operations as payrolls, trust transactions, and time de posits. At least one computer is already processing instal ment loans. There is even talk of the computer’s ability to assist loan officers by approving loan applications of ob vious merit while calling the not-so-obvious ones to the officers’ attention! What will happen to the “underprivileged” 94 percent of banks that may not be able to justify having automatic equipment? No one expects these banks to be at a serious competitive disadvantage. For one thing, they may now be using equipment best suited to their needs. More over, other less costly machines, such as the “tronics,” are available. There is the possibility, too, of sharing a computer-sorter installation with other banks, a solution suggested by 26 percent of the banks that feel they can not afford a system themselves. What does bank “automation” mean as a tool of bank management? With a computer it may be possible for bank officers to keep closer tabs on their loan portfolios, in cluding the status of each repayment schedule. Demand Continued on Page 6 • 3 • Is the Consum Producers' Durable Equipment Businessmen rely on consumers to buy about sixty-five of every one hundred dollars worth of goods and services produced in the United States each year. It is no wonder, then, that many of them are asking whether some sudden, irrational change in consumers’ buying habits may not explain the current slowdown in economic activity. Business Construction Shift A w ay from Goods Gross National Product, the valu e of goods and services produced, w as slightly low er in the last half of 1960 than in the record second q uarter, larg ely because of reduced inventory investment. Nondurable Goods Services Residential Construction Consumption expenditures on durable and nondurable goods averag ed about the sam e or low er, w hile spending for services and governm ent purchases continued upward. Extended Repaid------! 3.5 Nondurable Monthly retail sales trended irre g u larly dow nward from last April through Ja n u ary of this y e a r, p rim arily because of declines in sales of durable goods. Along with this has come a decline in the use of consumer instalm ent credit. Less Pressing Needs ES& SALES Inventories Inventories, 1955 1956 1957 1958 1959 I960 1961 1952 1954 1956 1958 1960 Sales of autom obiles and home goods such as furniture, television sets, radios, refrigerators, and w ashers fell short of expectations in 1960; inventories rose, and output w as curtailed. The consumer’s behavior at the nation’s retail outlets has certainly been disappointing since April 1960. After reaching a record at that time, total sales trended irregu larly downward through the third quarter 1960; then, after an encouraging partial recovery in October, dropped more persistently. By January of this year, they were about 6 percent below last April’s sales. A downward movement in sales of durable goods such as automobiles, furniture, and appliances was largely responsible, but some decrease in spending for nondurable goods also occurred. Seeing a roughly comparable drop in the production of consumer goods, some observers have apparently rea soned that failure to buy all that is produced in some way represents misbehavior on the part of the consumer. The automobile market is frequently used as an example, because sales, though at a high level through most of 1960, were not sufficiently high to absorb production. The resulting large inventory of unsold cars led to sharp production cuts after October 1960, but, because sales also declined, inventories remained very high. Sales of home goods such as furniture, television sets, radios, refrigerators, and washers also failed to meet anticipations in 1960, and sharp production cuts were necessary before high inventories could be reduced. Spending for new houses has been at a reduced level for nearly two years, reflecting the sharp decline that has occurred in new housing starts since early 1959. The businessman who knows from his own experience the truth of the old economic axiom, “Man’s wants are unlimited,” may well wonder why the American con sumer is disappointing him by not buying as many goods as the economy can produce. Granted the limitlessness of wants, it is true, however, that wants for specific items have limits. As a result, we find consumers changing their patterns of spending as specific demands are satisfied or disappear, perhaps be cause of changes in tastes. This is a type of long-run development that probably explains, in part, why spend ing for some goods has slackened recently. With the need for these goods less pressing now than before, consumers may be choosing to spend more for other items. In the automobile market there is evidence of an easing demand over the years, because, as the appearance of new cars in the immediate postwar years quickly improved the adequacy of transportation, maintaining adequate • 4 • iisbehaving? transportation through replacements became more im portant than adding to the total number in use. Similarly, demand for a number of home goods now has to come, in large part, from replacement needs, for, according to a study by the McGraw-Hill Publishing Company, about 98 percent of American households wired for electricity have refrigerators, 95 percent have electric washers, 94 percent have radios, and 89 percent have television sets. A longrun easing of demand is also evident in the housing market, where the number of new houses built has ex ceeded the number of new households formed each year since 1949, the number of couples without their own households has steadily declined, and the rental vacancy rate has risen. PASSENGER CARS HOUSING MARKET Under 3 Yrs. Millions Additions Replacements'^ 1955 1357 1959 Long-run easing of demand has occurred in the m arket for passenger cars, w here replacem ents have assumed increased importance. Other evidence indicates an easing of demand in the housing m arket. POSTWAR GROWTH IN CONSUMPTION CONSUMER PRICES Shift Toward Services While spending on goods was declining in 1960, expendi tures on consumer services continued their steady upward movement, reaching a new record in the fourth quarter of the year. As a result, total consumer expenditures also reached a record high in the fourth quarter of 1960, the latest period for which total spending figures are avail able. Rather than suddenly curtailing his total spending, therefore, the consumer has changed his pattern of spending, allocating more of his income to services and less to goods. The relative shift toward services occurring in 1960 continued a trend that has been apparent through out the postwar period. The easing of demands for many goods over a period of years helps explain why the consumer has chosen to spend more on services. Undoubtedly, however, another reason for the tendency to spend more on services is the steady rise of prices of many of those services necessary to the maintenance of health and to the maintenance and use of the huge stock of houses and durable goods consumers have purchased in the past. Prices of goods have risen less in the postwar period, particularly in the past decade. Consumption of services has shown the most rapid and persistent postw ar growth. Stead ily rising prices for services, m any of which have become essential, help exp lain the increased importance of service expenditures. INCOME AND EXPENDITURES Wages & Salaries Billions of Dollarsj What N ext? Our review seems to absolve the consumer of the charge of misbehavior. Rather than behaving irrationally, he appears to have been freely allocating his income to derive maximum satisfaction from it. Moreover, since his combined spending on goods and services reached a record high in the fourth quarter of 1960, the consumer has undoubtedly moderated the decline in business activity that has largely reflected businessmen’s efforts to reduce Because of continued gains in spending for services, total consumption expenditures w ere at a record high in fourth quarter 1960. Personal income, though down recently, should be m aintained rela tiv ely w ell, if the past is an y guide. POPULATION UNITEDSTATES POPULATION CHANGE i Age. la Years Under 5 1950 to 1960 Projected, 1988 to 1970 Sources for d a ta used in the charts: Gross National Product, Business Investments, Consumption Expendi tures, Government Purchases, Retail Sales, Personal Income and Population: U.S. Department of Commerce. Consumer Credit, Home Goods Output and Inventories, New A uto mobile Output, Sales and Stocks: Board of Governors, Federal Reserve System. Consumer Prices: U.S. Department of Labor. Passenger Cars: Compiled from R. L. Polk & Company data published in A u t o m o t i v e N e w s 1 9 6 0 A l m a n a c and Bureau of Public Roads data. Projected population growth and change present a challenge to lift demand by providing income from more jobs and a challenge to adjust to the shifting patterns of consumption lik e ly to occur. • 5 • inventory investment. If the past is any guide, the down swing in inventory buying may well prove to have been excessive, in view of the way consumer spending was maintained through last year’s final quarter. Thus, the consumer may already have helped set the stage for economic recovery. By so doing, he has probably done the best he can. To do still better, his greatest need would be more income. However, personal income has declined since last October, when it reached a record high. The consumer also has been borrowing less to pay later. Moreover, with the continuing need to repay debts incurred for earlier pur chases, he may have reached the point where the urgency to buy more goods is not great enough to justify going further into debt. It would seem unrealistic, therefore, to expect a sudden upsurge in consumer spending in the absence of greater income-generating expenditures by the business and government sectors of the economy. P h ilip M. W e b s t e r BANKING'S PAPER CURTAIN Continued from Page 3 deposit accounts can be analyzed daily, if desired, to de tect instances in which checks have been written against uncollected funds. Also, errors in check handling may be reduced and at the same time unpaid checks returned faster. When District bankers have finished their study of equipment, we will discover that many of them have decided to go forward to a degree of automation. Others will undoubtedly wait until they are able to learn of the experience of other banks. Still others will probably de cide that this equipment is not feasible for their banks. Regardless of the outcome, we may be sure that the bankers have poured a lot of effort into their investigation, as befits a subject so important. W. M. D a v is D eta iled tables su m m arizin g autom ation plans and practices o f Sixth D istric t com m ercial banks m ay be o btain ed fro m the R e search D epartm en t, F ederal R eserve Bank o f A tlan ta, A tla n ta 3, G eorgia. You save more than m oney * * * * * * * with. U.S. S a vin g s Bonds Bank Announcement The F ederal R eserve Bank o f A tla n ta is p leased to w elcom e the N ation al Bank o f T am pa, T am pa, F lorida, to m em bersh ip in the Federal R eserve S ystem . This bank open ed fo r business on F ebruary 1. O fficers are W illiam E arl T hom pson , Chairm an o f the Board; C. E arl H erren, P residen t; E. K . T yson, Vice P resident and Cashier; L eslie H . B lank an d S tew a rt L . P o m e roy, Vice P residents; and C harles A . W ilkeson, A ssistant Cashier. C apital stock totals $400,000, and surplus and other capital fun ds $300,000. Debits to Individual Demand Deposit Accounts (In Thousands of Dollars) Jan. 1961 ALABAMA Anniston . . . . Birmingham . . . Dothan . . . . Gadsden . . . . Huntsville* . . . Mob le . . . . Montgomery . . . Selma* . . . . Tuscaloosa* . . . Total Reporting Cities Other Citiest . . . FLORIDA Daytona Beach* Fort Lauderdale* . Gainesville* . . . Jacksonville . . . Key West* . . . Lakeland* . . . Jan. 1960 Dec. 1960 Percent Change Jan. 1961 from Dec. Jan. 1960 1960 40,046 869,790 35,308 35,688 70,674 302,055 172,606 26,027 56,164 1,608,358 808,418 45,384 853,713 38,668 37,322 77,872 326,232 175,772 28,558 55,807 1,639,328 756,169r 42,671 808 609 35,224 37,635 63,931 285,667 161,437 24,552 56,082 1,515,808 752,110r — 12 +2 —9 —9 +1 —2 +7 —6 +8 +0 —5 +11 +6 +7 +6 +0 +6 +7 64,909 239,492 48,017 913,042 19,350 98,262 1,067,114 1,577,108 288,211 89,687 255,085 481,281 157,400 4,231,844 1,791,954 55,762 218,438 46,694 893,634 17,541 88,894 996,526 1,439,217 259,115 93,805 218,201 458,598 139,027 3,928,926 l,620,745r 63,139 253,830 43,939 808,367 17,259 88,646 967,971 1,467,896 280,717 89,946 266,032 446,670 147,537 3,973,978 l,761,407r + 16 +10 +3 +2 + 10 + 11 +7 + 10 + 11 —4 + 17 +5 + 13 +8 + 11 +3 —6 +9 + 13 + 12 +11 + 10 +7 +3 —0 —4 +8 +7 +6 +2 58,660 43,373 2,184,438 120,743 27,875 115,392 9,623 50,287 22,878 20,935 124,858 37,829 26,913 52,583 194,060 34,968 3,125,415 l,023,085r 51,959 37,441 2,049,992 113,909 24,012 107,782 9,335 47,555 18,942 21,596 125,089 33,663 21,729 46,998 197,761 34,988 2,942,751 994,345r —7 —3 —1 —3 —5 —2 —5 —3 —9 —3 +1 — 13 — 34 +2 —1 +3 —1 —1 +5 + 13 +6 +3 + 10 +5 —2 +2 + 10 —6 +1 —2 — 18 + 14 —3 +3 +5 +1 71,591 276,174 68,042 88,149r 1,453,053 l,957,009r 594,807r 79,837 280,876 68,164 95,607r 1,326,661 1,851,145r 638,048r —1 +3 +0 —1 —3 —2 —3 — 11 +1 +0 —9 +6 +3 — 10 53,451 39,688 329,916 30,628 44,590 24,521 22,051 544,845 310,888r 47,787 38,815 287,288 27,610 42,647 23,664 18,654 486,465 286,068r —2 —2 —2 —6 +2 —6 + 10 —0 + 12 +4 +6 —3 +14 +9 +1 52,432 337,025 47,301 83,171 279,810 746,225 1,545,964 547 278r 17,594,459r 12,741,487r 4,852,972r 10,911,181r 46,672 386,444 44,612 85,497 238,147 706,825 1,508,197 586,666r 17 296,988r 12 278,344r 5 018,644r 10,389,466r — 10 + 19 — 11 +2 Greater Miami* Orlando . . . . Pensacola . . . St. Petersburg . . Tampa . . . . W. Palm-Palm Bch.* Total Reporting Cities Other Citiest . . . GEORGIA Albany . . . . 54,307 Athens* . . . . 42,243 2,170,801 Atlanta . . . . Augusta . . . . 117,649 Brunswick . . . 26,456 Columbus . . . 113,365 Elberton . . . . 9,154 Gainesville* . . . 48,554 Griffin* . . . . 20,918 LaGrange* . . . 20,360 Macon . . . . 126,594 Marietta* . . . 33,076 Newnan . . . . 17,852 Rome* . . . . 53,775 Savannah . . . . 191,881 Valdosta . . . . 35,940 Total Reporting Cities 3,082,925 1,007,816 Other Citiest . . . LOUISIANA 71,191 Alexandria* . . . Baton Rouge . . 283,296 Lafayette* . . . 68,220 Lake Charles . . 87,044 New Orleans . . . 1,403,891 Total Reporting Cities 1,913,642 575,287 Other Citiest . . . MISSISSIPPI Biloxi-Gulfport* 52,466 Hattiesburg . . . 38,776 Jackson . . . . 322,001 Laurel* . . . . 28,702 Meridian . . . . 45,350 Natchez* . . . 23,067 Vicksburg . . . 21,213 Total Reporting Cities 531,575 288,912 Other Citiest . . . TENNESSEE Bristol* . . . . 46,984 400,303 Chattanooga . . . Johnson City* . . 42,077 Kingsport* . . . 85,071 Knoxville . . . . 269,989 Nashville . . . . 762,726 Total Reporting Cities 1,607,150 Othe- Citiest . . . 559,978 SIXTH DISTRICT . . 18,007.859 Reporting Cities 12,975 494 5,032 365 Other Citiest • • Total, 32 C'ties . . 11,048,501 UNITED STATES 344 Cities . . . 247,660,000 256,905,OOOr 230,119,000 — o, —9 —7 —2 —A —2 —7 +2 +4 +2 +2 +2 +4 +1 +1 +4 —6 —0 + 13 +8 +7 —5 +4 +6 +0 +6 —4 +8 —A •Not included in total for 32 cities that are part of the national debit series maintained by the Board of Governors. fEstimated. r Revised. • 6 • Sixth District Indexes Seasonally Adjusted (1947-49 = 100) SIXTH DISTRICT DEC. Nonfarm Employment.................................. ...142 Manufacturing Employment . . . . 123 A p p a re l................................................... ...191 C h e m ic a ls.................................................132 Fabricated Metals ................................185 F o o d .........................................................113 Lbr., Wood Prod., Fur. & Fix. . . 80 Paper & Allied Products . . . . 160 .................................. ...103 Primary Metals T e x tile s ................................................... 87 Transportation Equipment . . . . 199 Nonmanufacturing Employment . . . 149 Manufacturing Payrolls ................................220 Cotton Consumption**.................................. 91 Electric Power Production**..........................346r Petrol. Prod, in Coastal Louisiana & M ississippi**..........................231 Construction C o n tra c ts * ................................302 Residential.......................................................367 All O t h e r ................................................... ...249 Farm Cash Receipts...........................................133 Crops............................................................... 99 L iv e s t o c k ................................................... ...184 Department Store S a le s * / * * ..........................185 Department Store Stocks*................................225r Furniture Store S a l e s * / * * ..........................151 Member Bank Deposits*/*** . . . . 181 Member Bank Loans*/ * * * ....................... .. 337r Bank D e b its*................................................... ...286 Turnover of Demand Deposits* . . . . 154 In Leading C itie s ...........................................166 Outside Leading C i t i e s ............................... 120 ALABAMA Nonfarm Em ploym ent...............................125 Manufacturing Employment . . . . 108 Manufacturing Payrolls...............................194 Department Store S a le s * * .........................163 Furniture Store S a l e s ...............................128 Member Bank Deposits***.........................158 Member Bank Loans***...............................276r Farm Cash R eceip ts.................................. ..112 Bank Debits ................................................247 FLORIDA Nonfarm Em ploym ent...............................197 Manufacturing Employment . . . . 201 Manufacturing Payrolls...............................374 Department Store S a le s * * .........................257 Furniture Store S a l e s ...............................195 Member Bank Deposits***.........................239r Member Bank Loans***...............................552r Farm Cash R eceip ts.................................. ..201 Bank D e b i t s ................................................424 GEORGIA Nonfarm Em ploym ent...............................136 Manufacturing Employment . . . . 121 Manufacturing Payrolls...............................210 Department Store S a le s * * ....................... ..172 Furniture Store S a l e s ...............................150 Member Bank Deposits***.......................159r Member Bank Loans***...............................267 Farm Cash R eceip ts.................................. ..153 Bank D e b i t s ................................................261 LOUISIANA Nonfarm Em ploym ent...............................130 Manufacturing Employment . . . . 93 Manufacturing Payrolls...............................168 Department Store Sales*/** . . . . 155 Furniture Store Sales* : ....................... ..184 Member Bank Deposits*/*** . . . . 159r Member Bank Loans*/*** . . . . 313r Farm Cash Receipts.................................. ..112 Bank D e b its * ................................................238 MISSISSIPPI Nonfarm Em ploym ent..............................135 Manufacturing Employment . . . . 135 Manufacturing P ayrolls..............................244 Department Store Sales*/** . . . . 169 Furniture Store S a le s * ..............................133 Member Bank Deposits*/*** . . . . 206r Member Bank Loans*/*** . . . . 409r Farm Cash R eceip ts.................................. .128 Bank D e b its * ...............................................252 TENNESSEE Nonfarm Em ploym ent..............................124 Manufacturing Employment . . . . 123 Manufacturing Payrolls..............................214 Department Store Sales*/** . . . . 157 Furniture Store S a le s * ..............................109 Member Bank Deposits*/*** . . . . 165r Member Bank Loans*/*** . . . . 297r Farm Cash R eceip ts.................................. .116 Bank D e b its * ...............................................232 | JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. J JAN. 142 124 192 132 191 117 80 166 101 87 209 150 222 95 358 142 124 190 133 193 117 80 165 100 87 208 150 218 95 375 142 124 191 132 190 115 79 164 95 88 206 149 214 94 387 143 125 194 135 188 116 79 166 98 87 210 151 223 95 363 143 126 195 135 192 117 79 167 99 87 211 151 227 94 366 143 125 195 136 194 116 79 165 99 87 206 150 230 93 375 143 125 197 135 194 116 78 166 97 88 200 151 234 93 382 143 124 192 135 195 117 78 164 95 87 202 151 226 90 385 143 124 189 129 190 120 77 164 87 86 203 151 219 85 373 142 122 183 128 186 119 77 162 93 86 208 151 218 83 372 142 121 184 128 185 117 76 162 88 85 187 150 215 83 369 141 120 184 130 186 116 75 161 89 84 193 149 215r 79 390 141 119 183 130 188 117 74 159 87 83 193 150 211 78 n.a. 227 328 351 309 124 93 169 180 224r 166 181r 339r 274r 154 166 119 226 345 366 327 124 96 176 175 223 143 181 342r 292r 156 168 120 228 333 360 311 121 95 179 162 225 129 181r 345r 285r 153 167 119 224 333 356 315 126 100 188 192 223 149 180r 347 274r 148 167 114 222 351 384 325 132 111 185 176 223 145 180 349r 271r 163 181 126 220 371 387 359 132 98 192 183 227 142 180r 349r 281r 159 183 119 220 370 376 365 127 83 194 194 227 147 183r 351r 265r 162 179 129 221 361 367 357 155 147 189 178 232 143 183r 354r 279r 167 190 124 223 353 362 346 149 134 188 185 230 135 185 353r 283r 158 175 120 232 337 364 316 167 157 186 189 231 141 188 353r 263r 152 159 113 233 322 305 336r 156 131 201 179 235 140 188r 352r 281r 153 162 111 248 286 300 276 132 94 199 187 233r 134 189 359r 279r 151r 163r 125r 240 n.a. n.a. n.a. n.a. n.a. n.a. 177p 225p 133p 189 351 285 162 173 119 126 108 198 166r 148 159 280r 113 235r 125 107 192 158 133 160r 283 122 245 124 106 190 156 112 161r 289r 125 244 125 108 195 176 127 159r 296 122 239r 126 109 198 162 128 159 298r 131 239r 126 109 201 171 127 159r 293r 123 244r 126 109 202 178 126 160r 291r 124 233r 126 108 194 170 119 162r 293r 123 256r 125 106 184 166 117 164r 292 150 257r 125 104 189 166 120 169 293 182 245r 125 104 185 155 110 165r 294 130 252r 124 103 177r 165 lllr 167r 299r 121 246 125 102 177 157p 109p 169 300 n.a. 251 197 204 366 249r 189 240r 553r 231 389r 197 204 364 240 174 239r 554r 206 419r 197 202 352 245 157 238r 552r 171 404r 199 205 372 274 181 237r 553 217 380r 201 209 389 260 175 235 551r 225 395r 202 211 392 264 167 236r 553r 187 431r 204 213 409 277 167 242r 557r 204 388r 203 214 406 263 203 240r 564r 270 425r 203 213 394 256 172 241r 560r 248 415r 202 210 402 261 156 246r 561r 212 400r 200 207 387 268 168 248r 551 196 415r 198 207 387r 276 164 250r 560r 232 407r 196 205 371 262p 156 247 550 n.a. 409 137 122 216 172 149 160r 269 130 253r 136 122 211 164 127 160r 270r 134 264r 135 122 205 156 120 159r 271r 146 252r 138 122 215 170 142 159r 271 153 251r 137 122 223 169 132 160r 275 144 252r 136 122 221 164 135 160 275r 150 263r 136 121 226 175 134 161r 278 125 252r 135 120 216 159 137 164r 286r 215 258r 135 120 211 168 134 166r 288r 160 274r 135 119 208 172 144 170 286r 204 249r 135 117 203 158 138 169r 291r 120 257r 134 117 202 164 135r 170r 289 148 256r 135 116 197 157 124p 169 285 n.a. 263 131 94 173 154r 188 160r 316r 90 206r 131 95 173 150 192 159 317r 90 220r 130 95 176 147 172 159r 328r 94 238r 131 95 179 156 176 160r 329r 89 227r 131 95 178 152 175 159r 334r 101 225r 130 95 178 161 184 158r 334r 119 242r 130 95 177 159 203 161r 335r 102 215r 130 94 178 152 145 159r 334 91 228r 130 94 174 148 161 164r 332r 113 248r 130 94 170 151 159 163r 329r 115 209r 128 93 170 140 167 164r 323 137 222r 128 92 172r 155 172 166r 331r 113 229r 129 91 173 148p 164 165 319 n.a. 206 138 135 253 161 106 201r 424r 92 226 137 134 247 154 99 204r 429r 91 245r 136 133 254 155 94 202r 425r 115 247r 137 134 249 169 100 198r 427r 101 238r 137 135 244 154 113 199r 429r 105 224r 136 134 256 175 107 197r 431r 97 245r 136 133 253 175 112 198r 433r 104 244r 135 132 247 153 100 194r 425r 98 256r 136 131 235 149 95 196r 431r 121 254r 136 130 239 158 84 204r 431r 141 243r 136 131 236 151 101 199r 433r 162 260r 135 129r 237 164 124 209r 460r 136 256r 138 128 239 150p 93p 204 442 n.a. 240 124 124 219 153r 104 164r 297r 88 234r 124 123 219 145 95 164r 301r 90 250r 123 123 208 137 98 164r 304r 86 239r 126 124 225 159 103 164r 305r 100 231r 125 124 223 146 111 163r 309r 95 241r 125 124 223 155 107 165r 309r 102 238r 126 125 225 167 93 170r 313r 109 229r 125 124 224 151 98 167 314 113 238r 125 124 217 157 96 166171r 311r 106 234r219r 124 122 214 164 101 169r 313r 122 241r 123r 120 210 157 96 170r 328r 86 229r 123 120 212 148p 83 170 315 n.a. 242 *For Sixth District area only. Other totals for entire six states, n.a. Not Available. **Daily average basis. *** Revisions reflect new seasonal factors. p Preliminary. 124 120 211 156 98 314r 143 r Revised. Sources: Nonfarm and mfg. emp. and payrolls, state depts. of labor; cotton consumption, U. S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; elec. power prod., Fed. Power Comm. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. •7 • D IS T R IC T I I I I I I I I I 1 I I I I I I 1 I I I I | 1947- 49 = 100 ' I M ' I I I I I I I l Seosonally Adjusted 13 5 »i— ■ — Nonfarm Employment B U S IN E S S C O N D IT IO N S | I I I I I I l ■—141 R educed business activity continued to be the general rule in e a rly 1961/ but certain developm ents have underscored the mild nature of the current recession. Virtually no change occurred in seasonally adjusted nonfarm employment in January. Even though this contrasts favorably with the slight downtrend in employment occurring over the preceding five-month period, some important types of activity continued downward. Among District states, Florida experienced a further drop in total nonfarm employment. The Florida decline was approximately offset by gains in Mississippi, Alabama, and Louisiana, while employment in Georgia and Tennessee changed little during January. v* IS U* Manufacturing activity continued to be a source of w eakness in most District states in Ja n u a ry , as both employment and the average work week declined further. Reflecting this, payrolls also decreased again. Within the manufacturing sector, employment in fabricated metals, chemicals, and food has improved in the past couple of months, while employment in apparel, changing little since October, appears to have halted an earlier decline. Em ployment declines in textiles, lumbering, and other types of manufacturing have, however, outweighed improvement in other lines. Still, some observers may interpret the appearance of such mixed trends as encouraging. The decline in cotton consumption slowed somewhat in January. Steel mill output, though slightly above December’s level, was changed little from that for November; some improvement, however, occurred in mid-February. ^ In nonmanufacturing em ploym ent, increases predom inated in Jan u a ry , being sufficiently great to offset the w eakness in manufacturing em ploym ent. The rate of insured unemployment showed little change, after allowance for the usual seasonal movement. Construction again failed to show a n y sign of an upturn. Employ ment was off further in January, and the latest three-month average of con tracts for construction soon to be started, based partly on January data, dropped sharply further. Those expecting the consumer to bring a lift to business activity must still look to the future, judging from indicators of retail spending. \ l V \ I Dept. Store y Soles Department store sales, after a pickup in December, dropped in January and showed little further change in February. Since second quarter 1960, these sales, though irregular, have had a downward drift. Furniture store sales in January remained unchanged at a reduced level, while household appliance store sales showed some improvement. v* o ^ Farm activity in m any places w as reduced som ew hat, p artly because of too much of a good thing—rain. In Alabama, Georgia, and Mississippi, farm employment decreased as heavy rains hampered fieldwork and flooded some pastures. In Florida, however, sunny weather favored work in citrus groves and on vegetable farms. ^ Bank lending tended to m irror the general letharg y of economic activity. In January, member bank loans lost somewhat more than was gained in the preceding month, and, in February, showed only minor re covery at banks in leading District cities. On balance, little change has oc curred over the past six months. Reserve positions remain easy in early 1961, with excess reserves higher and borrowings from the Federal Reserve Bank of Atlanta remaining low.