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LIBRARY
MAygi m
ebbem # n n
In T h i s Is s u e :
W h a t D o B a n k s P ro d u c e ?
P la n t in g C h a n g e s t o R e d u c e F a rm
P r o d u c t io n E x p e n d itu re s
B a n k in g N o t e s : M a n u f a c t u r in g L o a n s
D is t r ic t B u s in e s s C o n d it io n s
F e d e r a l R e s e r v e B a n k O f A t la n t a
F e d e r a l R e s e r v e S t a t io n
A t la n t a , G e o r g ia 3 0 3 0 3
A d d r e s s C o r r e c t io n R e q u e s t e d
BU LK R A TE
U .S. P O S T A G E
PA ID
A tla n ta, Georgia
Perm it N o . 292
W h a t D o
B a n k s P ro d u c e ?
b y W . F. M a c k a ra
One
o f th e
m o re
f r u s t r a t in g
p r o b le m s
f a c in g
f in a n c ia l
m e a s u r e m e n t o f b a n k o u t p u t , i.e ., w h a t a b a n k
e c o n o m is ts
p ro d u ce s.
B a se d
is
on
th e
v o lu m e
o f r e s e a r c h , o n e m ig h t i n f e r t h a t e c o n o m i s t s h a v e a c l e a r i d e a o f h o w t o
m e a s u r e b a n k o u t p u t . R a t h e r t h a n a c o n s e n s u s , h o w e v e r , t h e r e e x is t s a v a r i e t y
of co n ce p ts and
m e th o d s , n o n e o f w h ic h
is w i t h o u t its d i s a d v a n t a g e s . T h i s
a r t ic le e x a m in e s s e v e r a l o f t h e s e m e t h o d s f o r t h e ir s tr e n g t h s a n d s h o r t c o m in g s ,
t h o u g h n o a t t e m p t is m a d e a t c o m p l e t e n e s s . ( F o r m o r e d e t a i l e d
a n a ly s e s , s e e
t h e r e f e r e n c e s c it e d a t t h e e n d o f th e a r t ic le .)
The Problems
It is u s e f u l t o q u a n t i f y
b a n k o u tp u t fo r se v e ra l
re aso n s.
In e v a l u a t i n g t h e p r o d u c t i v e e f f i c i e n c y o f t h e b a n k i n g i n d u s t r y , t h e a v e r a g e
co st o f o u tp u t
(t o t a l o p e r a t i n g
c o sts
d iv id e d
by
th e
to tal
p ro d u ct)
can
h e lp
a n a l y z e w h e t h e r , o n a v e r a g e , c o s t s i n c r e a s e m o r e t h a n , le s s t h a n , o r b y t h e
sam e
am ount
a s o u t p u t. T h is
h e lp s
d e t e r m in e
w h e th e r
a
la r g e
bank
is
le s s
c o s t l y o n a v e r a g e t o o p e r a t e t h a n a s m a l l e r o n e , i . e . , if " e c o n o m i e s o f s c a l e "
a re p re se n t.
If s o , t h e n
b y a t le a s t o n e
m e a s u r e , la r g e r b a n k s
u se
re so u rce s
m o r e e f f i c i e n t l y . T h i s in t u r n is u s e f u l in e v a l u a t i n g is s u e s in b a n k i n g l e g i s l a t i o n
a n d r e g u la t io n . T o m e a s u r e a v e ra g e c o s t , h o w e v e r , o n e
m u s t f ir s t q u a n t i f y
to ta l b a n k p r o d u c t .
A n o th e r u se o f o u tp u t
m e a s u r e s f o r b a n k in g
le g is la t io n
and
r e g u la t io n
r e la t e s t o t h e s t r u c t u r e a s w e l l a s t o t h e s i z e o f b a n k s . Is b r a n c h b a n k i n g m o r e
e f f ic ie n t th a n u n it b a n k in g o r b a n k h o ld in g c o m p a n ie s ?
th e c o m p e t it iv e im p a c t o f th e a c q u is it io n
o r a h o ld in g c o m p a n y ? W o u ld
of a b ra n ch ?
D oes
e x is t in g
th e e n try o f a n e w
le g is la t io n
How
can
w e d e t e r m in e
o f a b a n k in to a b r a n c h in g s y s t e m
p ro m o te
or
bank be
im p e d e
p r e f e r a b le
an
to
th a t
e f f ic ie n t
M onthly Review, V o l. LX, N o . 5. Free su b s c rip tio n and a d d itio n a l c o p ie s a va ila b le
u p o n req u est to the R esearch D e p a rtm e n t, Federal R e serve Bank o f A tla n ta ,
A tla n ta, G e o rg ia 30303. M aterial h e re in m a y b e re p rin te d o r abstracted p ro v id e d
this Review, th e Bank, and th e a u th o r are cre d ite d . Please p ro v id e this Bank's
Research D e p a rtm e n t w ith a c o p y o f a n y p u b lic a tio n in w h ic h such m aterial is
re p rin te d .
M A Y 1975, M O N T H LY R EV IEW
b a n k in g s y s t e m ? T h e s e a re q u e s t io n s w h ic h
b e a n a ly z e d
o u tp u t.
A
m ay
by
if w e h a v e s o m e w a y t o m e a s u r e b a n k
m easu rem e n t
of
bank
o u tp u t
is
a ls o
u s e f u l in n a t i o n a l p r o d u c t a c c o u n t i n g f o r d e t e r m i n
in g h o w
th e
m u c h t h e b a n k in g in d u s t r y c o n t r ib u t e s to
g ro ss
n a t io n a l
B e fo re
we
can
in d u s t r y ,
we
have
p ro d u ct.
m e asu re
to
d e f in e
o u tp u t o f any
w hat
we
w ant
to
F o r e x a m p le , s u p p o s e
X
p r o d u c t w h ic h
th e y
a re
d a ily
to tal
we
t h a t a ll w i d g e t s
th e
o n ly
m a n u fa ctu re s
s h a ll
a re
o u tp u t,
c a ll
c a lc u la t in g
p r o d u c t w o u ld
m ean
a
and
f ir m ' s
th e w id g e t m a k e r, b a n k s
fo r th e
m o st
c r e d i t ( lo a n s a n d
w it h
lo w
or
b y f u n c t io n in g
as a so u rce
of
in v e s t m e n t s ) , p r o v i d i n g c u s t o m e r s
n o - r is k
a sse ts
of
B a n k in g ' s
m u lt ip r o d u c t n a tu r e c o m p o u n d s th e
of
m e a s u r in g
o u tp u t.
Not
o n ly
m u st
a
M o r e o v e r , b a n k in g 's m u lt ip r o d u c t n a t u r e c r e a t e s
it m ig h t b e p e r f e c t l y
r e a s o n a b le
to tre a t
b u s i n e s s X a s if it w e r e t w o s e p a r a t e f ir m s , o n e
p r o d u c in g w id g e t s a n d t h e o t h e r s a d g e t s , t h e r e a re
( t im e
and
E c o n o m ic a lly
th e re
m ay
be
“ jo in t n e s s "
or
i n t e r d e p e n d e n c e in t h e d e m a n d o r s u p p l y o f b a n k
s e r v i c e s . In o t h e r w o r d s , p r o v i d i n g o n e s e r v i c e m a y
p a rt p r o d u c e n o p h y s ic a l o u t p u t . R a t h e r , t h e y
s e r v ic e s
w ay
t o d o t h is f o r b a n k s .
N o w c o n t r a s t t h is h y p o t h e t i c a l f ir m w i t h a b a n k .
“ p ro d u ce "
s im ila r
e c o n o m i c a n d le g a l r e a s o n s w h y w e m ig h t n o t w a n t
th e
n u m b e r o f w id g e t s c o m p le t e d .1
F irs t, u n lik e
a
u sed
Som e
m e a s u r in g b a n k o u t p u t.
Though
th a t
th e
c o u n t in g
su g g e ste d
sum
p r o d u c t ."
p r o b l e m s n o t f o u n d in m o s t o t h e r in d u s t r i e s .
w id g e t s .
id e n t ic a l
have
“ to tal
m a n y d iff e r e n t s e r v ic e s to b e so d e f in e d .
in t h e c a s e o f b a n k in g .
A s s u m in g
e c o n o m is t s
th e w e ig h t e d
of
u n it o f s e r v i c e o u t p u t b e d e t e r m i n e d , b u t t h e r e a r e
m e a s u r e , n o s m a ll p r o b le m
p h y s ic a l
m e asu rem e n t
p r o b le m
th e
f ir m
its m a r k e t p r i c e , a n d
as o u r
s a v in g s
e n t a il p r o v id in g o t h e r s , a n d
th e d e m a n d
fo r o n e
b a n k s e r v ic e m a y n e c e s s a r ily a c c o m p a n y d e m a n d
fo r a n o th e r s e r v ic e . A s a n e x a m p le , w h e n a n in d i
d e p o s it s ) , p r o t e c t in g v a lu a b le s (sa fe d e p o s it b o x e s ),
v i d u a l p l a c e s m o n e y in a c h e c k i n g a c c o u n t , h e is
p r o v id in g a c c o u n t in g s e r v ic e s ( m o n t h ly s ta t e m e n t s ),
a c t u a lly g e t t in g a t le a s t t w o c o n c e p t u a ll y s e p a r a t e
and
s e r v i c e s : s a f e k e e p i n g o f h is m o n e y a n d a c c o u n t i n g
m a in t a in in g
p u b lic
Even
(tru st
in v e s t m e n t
d e p a rtm e n t
p o r tfo lio s
fo r
th e
s e r v ic e s ).
s e r v ic e s . B y d e m a n d in g o n e o f t h e s e s e r v ic e s , h e
le s s t a n g i b l e a r e b a n k i n g ' s i n t e r m e d i a t i o n
g e ts th e o t h e r ; a n d b y s u p p ly in g o n e , th e b a n k
s e r v ic e s . In d iv id u a ls w ith m o r e m o n e y th a n t h e y
s u p p l i e s t h e o t h e r . T h e r e is n o w a y o f s e p a r a t i n g
w is h
th e se
to s p e n d
can
keep
d e p o s it s
in
b a n k s;
th o se
s e r v ic e s
and
p r ic in g
th e m
in d iv id u a lly .
w is h in g to s p e n d m o r e th a n t h e ir p r e s e n t ly a v a ila b le
B e c a u s e o f t h is i n t e r d e p e n d e n c e , it h a s b e e n a r g u e d
in c o m e c a n
t h a t b a n k s m u s t b e v i e w e d a s a s i n g l e u n it r a t h e r
b o rro w
t h e r e . In t h is w a y , b a n k s a c t
a s a m a r k e t p la c e f o r le n d e r s a n d b o r r o w e r s . In s te a d
th a n
o f p e r s o n a l l y s e a r c h i n g f o r s o m e o n e t o le n d t o o r
p r o d u c in g s e p a ra t e p r o d u c t s .2 T h e U . S. S u p r e m e
b o r r o w f r o m a n d a c c e p t i n g f u l l y t h e r e la t e d r is k s ,
C o u r t m a d e t h is v i e w o f f i c i a l f o r r e g u l a t i n g c o m
t h e in d iv id u a l c a n g o to a b a n k w h ic h
p o o ls th e
f u n d s a n d t h e r is k s . F u r t h e r m o r e , b y h a n d l i n g
c h e c k in g d e p o s it s , b a n k s f a c ilit a t e t h e e x c h a n g e o f
g o o d s a n d s e r v ic e s , c o n t r ib u t in g
to e c o n o m ic
a re s e r v ic e s m e a s u r e d ? A
in
u n it s
li k e
s e r v ic e c a n n o t
a p h y s ic a l
good
w it h o u t
f ir s t s p e c i f y i n g w h a t a “ u n i t " o f s e r v i c e o u t p u t
two basic problem s t o t h e b a n k
q u e s t i o n : (1) defining p r e c i s e l y w h a t c o n
b a n k o u t p u t , a n d (2) measuring t h is o u t p u t
is . T h e r e a r e , t h e n ,
s titu te s
so
d e f in e d .
f ir m
h y p o t h e t i c a l f ir m
m akes
p r o v id e
d e p artm e n ts
p e t it io n
in b a n k i n g , a d d i n g a le g a l r a t i o n a l e f o r
a s in g le
m e asu re
of bank
o u t p u t.3
T h e r e is y e t a t h ir d c o m p l i c a t i o n . S u p p o s e o n e
X 's p r o d u c t s
m a y n o t o n ly
is n ' t o n l y a n
o u tp u t g o o d
but
o n ly
m any
one
is t h e
a s s u m p t io n
p ro d u ct.
B an ks,
d if f e r e n t s e r v ic e s . T o
th a t th e
h o w e v e r,
u n d e rstan d
be
m a n u fa ctu re d
fo r t h e ir o w n
sake
b u t a r e a ls o u s e d t o p r o d u c e s a d g e t s . A r e w i d g e t s
s t ill a n o u t p u t o r a r e t h e y a n
a b s o lu t e ly
" r ig h t "
w ay
of
in p u t ? T h e r e
t re a t in g
t h is
is n o
p r o b le m .
If w e s u b s t i t u t e “ b a n k " f o r “ f ir m X , " " d e p o s i t s " f o r
“ w id g e t s ,"
and
in v e s t m e n ts )
A s e c o n d m a jo r d if f e r e n c e b e t w e e n b a n k s a n d
th e
in d e p e n d e n t
a ls o s e r v e s a s a n “ i n p u t . " In o t h e r w o r d s , w i d g e t s
be co u n te d
o u tp u t
of
s e e k in g
o f f ir m
a c t iv it y .
How
as a c o lle c tio n
“ e a r n in g
a sse ts"
fo r “ s a d g e t s ," w e
( lo a n s
se e
t h is
and
p r o b le m
in m e a s u r i n g b a n k o u t p u t .
An
in d iv id u a l
th e fo rm
can
p la c e
o f a c h e c k in g
c a s e , th e b a n k p r o v id e s
m oney
in
a bank
o r t im e d e p o s it .
p ro te c tio n
and
in
In e i t h e r
a c c o u n t in g
t h e s i g n i f i c a n c e o f t h is , s u p p o s e t h e im a g i n a r y f ir m
s e r v i c e s . If t h e m o n e y is p l a c e d in a t i m e d e p o s i t
p ro d u ced
a c c o u n t , th e in d iv id u a l h a s b o u g h t a n in te r e s t-
we
tw o
g o o d s — w id g e t s a n d
m u st s o m e h o w
sad g e ts.
t a k e in t o c o n s i d e r a t i o n
N ow ,
th e
b e a r i n g a s s e t . In t h is r e s p e c t , t h e d e p o s i t is a n
f a c t t h a t w e a r e n o lo n g e r p r o d u c i n g j u s t o n e g o o d .
o u t p u t o f t h e b a n k . B u t t h e b a n k u s e s t h is m o n e y
R a th e r
th a n
p h y s ic a l
(e x ce p t
o u tp u t
m ay
be
“ w e ig h t in g " )
u n it s ,
co m p u te d
t h e p h y s ic a l
th e
by
d o lla r v a lu e
m u lt ip ly in g
n um b er of each
of
th a t
p o r tio n
w h ic h
m u st
be
h e ld
as
(o r
p ro d u ct
2See the paper by Adar, Agmon, and Orgler for an expansion
of the "jointness" problem.
1This disregards the problem of partially completed widgets.
FE D ER A L R ESERV E BANK O F A TLAN TA
:,United States vs. Philadelphia National Bank
71
r e s e r v e s ) t o m a k e lo a n s a n d in v e s t m e n t s , w h i c h
a re
b y e a r n in g a s s e ts . F lo w
a s o u r c e o f i n c o m e j u s t a s s e l l i n g s a d g e t s is t o f ir m
th e
X . D e p o s it s a re a ls o in p u ts , t h e n , p r o v id in g th e ra w
am ount
m a t e r ia ls u s e d
co m p u te d
to m a k e
lo a n s a n d
in v e s t m e n t s .
bank
has
m ade
m a n y lo a n s a n d in v e s t m e n ts
depends
o u t s t a n d in g
w hen
n o t o n ly
th e
on
b a la n c e
th e
sheet
is
b u t a ls o o n t h e e x t e n s io n s , r e p a y m e n t s ,
T o th e d e g r e e th a t t h e t r e a t m e n t o f d e p o s it s in
and
th e
am ount
o u t s t a n d in g
v o lv e s a n a r b it r a r y c h o ic e , s o d o e s th e m e a s u r e m e n t
p r e v io u s
b a la n c e
s h e e t .7
re p o rte d
in
th e
F u r t h e r m o r e , u s in g t o ta l e a r n in g a s s e t s m a k e s
o f o u t p u t.4
n o d is t in c t io n
D e s p it e t h e s e d if f ic u lt ie s , a n u m b e r o f s tu d ie s
h a v e trie d
to q u a n t if y
c o n c lu s io n
m a y b e d ra w n fro m
o f lit e r a t u r e ,
b a n k o u t p u t . 5 If a n y s i n g l e
it is t h a t t h e
t h is la r g e v o l u m e
c h o ic e
o f an
as to s iz e o r ty p e o f a sse t. T h u s , te n
c o n s u m e r lo a n s o f $ 1 , 0 0 0 b e c o m e e q u i v a l e n t t o
o n e $ 1 0 ,0 0 0 b u s in e s s lo a n . T h e r e a r e s o m e o b j e c
t io n s to t h is : A lt h o u g h
o u tp u t
t h e s in g le b u s in e s s
lo a n
m e a s u r e d e p e n d s l a r g e ly o n w h a t a s p e c t o f b a n k i n g
is e q u a l t o s e v e r a l c o n s u m e r l o a n s d o l l a r w i s e , it
is b e i n g in v e s t i g a t e d a n d w h a t t h e p r i m a r y f u n c t i o n
d o e s n o t n e c e s s a r ily f o llo w
of a bank
d e s ir a b le
is c o n s i d e r e d
to
be.
W i t h t h i s in m i n d , le t u s e x a m i n e s o m e m e t h o d s
o f m e a s u r in g
in d iv id u a l
b a n k o u t p u t , a lo n g
stre n g th s
and
w it h
t h e ir
in
te rm s
th a t t h e y a re e q u a lly
o f s o c ia l w e lf a r e
and
e c o n o m ic
i m p a c t . T h e c o n s u m e r lo a n s m a y s t i m u l a t e p r iv a t e
c o n s u m p t io n a n d in c r e a s e d e m a n d . A b u s in e s s
lo a n , o n t h e o t h e r h a n d , m a y b e u s e d to e x p a n d
s h o r t c o m in g s .
p la n t
A S in g le -V a lu e d M e a s u re
f a c ilit ie s
and
in c r e a s e
s u p p ly .
M o re o v e r,
s in c e d if f e r e n t lo a n s a n d in v e s t m e n t s c a r r y d if f e r e n t
in te r e s t
rate s, th e y
m ay
be
o f d is s im ila r v a lu e
P e r h a p s t h e s i m p l e s t w a y o f m e a s u r i n g o u t p u t is
to s o c i e t y a n d o f d i f f e r e n t c o s t s ( i n c l u d i n g r is k )
t o d e f i n e it a s a b a n k ' s t o t a l lo a n s a n d
to th e
in v e s t m e n t s
bank.
In e s s e n c e , l u m p i n g t o g e t h e r a ll e a r n i n g a s s e t s
( e a r n in g a s s e t s ) , t h e r a t i o n a l e b e i n g t h a t lo a n s a n d
in v e s t m e n t s a re b y fa r t h e m o s t im p o r t a n t s o u r c e
w it h o u t d is t in g u is h in g t y p e s o v e r lo o k s b a n k in g 's
o f i n c o m e t o a b a n k . If f ir m X 's o u t p u t is t h e m a r k e t
m u ltip r o d u c t
v a l u e o f its w i d g e t s a n d
p r o v id e
b a n k w o u ld
b e th e
in v e s t m e n t s . T h i s
sa d g e ts, th e o u tp u t o f a
m a r k e t v a lu e
o u tp u t
o f its lo a n s a n d
m e asu re
a ls o
stre sse s
th e
n a tu re .
" p ro d u cts"
Ig n o r in g
th e
(s e r v ic e s )
f a c t t h a t b an ks^
o th e r
th a n
c r e d it
m a y b e r a t io n a liz e d as a s h o r t c u t , s in c e t h e s e o t h e r
s e r v ic e s
re p re se n t
o n ly
a
r e la t iv e ly
s m a ll
p a rt
of
c r e d it f u n c t io n o f b a n k in g , w ith th e a d v a n t a g e o f
b a n k i n c o m e . B u t u s e o f t o t a l e a r n i n g a s s e t s f a ils
its b e i n g
to c o n s id e r t h a t le n d in g a n d
r e a d ily a v a ila b le
fro m
b a n k in g
b a la n c e
T h e r e a r e s e v e r a l d r a w b a c k s , h o w e v e r , in u s in g
e a r n in g
co n ce p t,
in v e s t in g a c t iv it ie s
t h e m s e lv e s a re m a d e u p o f m a n y q u it e d iff e r e n t
s h e e t s .6
a sse ts.
F irs t o f a ll,
e x p re sse d
as
p r o d u c t io n
so m e
am ount
is
a
per
" p r o d u c t s ."
“ f lo w "
W e ig h t e d In d e x e s o f O u t p u t
u n it
o f t im e (s u c h a s 1 0 0 w id g e t s p e r m o n t h ). T h e to ta l
a m o u n t o f e a r n in g
is a " s t o c k "
a sse ts, o n
th e
c o n c e p t , r e p r e s e n t in g
a t a p a r t ic u la r p o in t
A p r i l 1 5 , 1 9 7 5 , f ir m
in
t im e .
F o r e x a m p le ,
stock
b e m i s l e a d i n g . L o o k i n g a t f ir m
be
v ir t u a lly
o f e a r n in g a s s e t s h a v e b e e n u s e d to m e a s u r e o u t p u t .
if o n
T h e u n d e r l y i n g c o n c e p t is s i m i l a r t o t h a t o f f ir m
X m a k i n g t w o p r o d u c t s , t h a t is , w e i g h t i n g ( m u l t i p l y
in g ) t h e n u m b e r o f e a c h
c o n c e p t can
X 's s t o c k o f i n v e n
u s e le s s
in
m e a s u r in g
f ir m
A
w e ig h t e d
o f a s s e t 's
th e
ago, and h o w
a s in g le - v a lu e d
in t h e m e a n t i m e .
in d e x
o f e a r n in g
c o n t r ib u t io n
w e ig h t e d
m easu re.
in m e a s u r i n g b a n k o u t p u t
u n it b y
its m a r k e t
asse ts
w o rk s
in
a n a n a lo g o u s w a y , w it h w e ig h t s b a s e d o n e a c h t y p e
w i d g e t s w e r e in t h e w a r e h o u s e , s a y , t h r e e m o n t h s
m a n y w e r e s o ld
typ e
p r ic e .
X 's f l o w o f o u t p u t w i t h o u t s u c h f a c t s a s h o w m a n y
T h i s is t h e p r o b l e m
in d e x e s
am ount
o f in v e n t o r y .
U s in g a s t o c k to m e a s u r e a f lo w
w o u ld
T o c o r r e c t fo r t h e s e d r a w b a c k s , w e ig h t e d
hand,
a g iv e n
X h a d 1 0 0 w i d g e t s in its
w a r e h o u s e , t h a t is its
to ry
o th e r
in d e x 's
U n lik e
to
bank
in c o m e .
a d v a n ta g e s
is
in
O ne
of
p r o v id in g
o u t p u t m e a s u r e , j u s t a s t h e f ir s t
it,
h o w e v e r,
th e
w e ig h t e d
in d e x
e x p lic it ly r e c o g n iz e s th e m u lt ip r o d u c t n a t u r e o f
bank
‘ D eterm ining inputs and outputs depends in part on the scope
of analysis. From a m icro eco n o m ic view po int, i.e ., concentrating
on a bank as an individual unit, deposits are an input to banks
and loans, and investm ents are an output. From a m acroeconom ic
view po int, i.e ., concentrating on the banking system 's
im pact on the w h o le econom y, loans and investm ents are
inputs and deposits the output. A third concept sees banks as
producing interm ediation services, and the inputs are such
things as labor and m achinery.
in d iv id u a lly , many of these problem s are app licable to
industries. It is the convergence of all of them in banking
that makes output m easurem ent there so difficult.
''See Alhadeff and Horvitz.
72
c r e d it
o p e r a t io n s .
A ls o ,
becau se
w e ig h t s
a re
b a s e d o n th e im p a c t o f e a r n in g a ss e ts o n in c o m e ,
it t a k e s a c c o u n t o f t h e s t o c k v s . f l o w
p r o b le m .8
7ln defense of this approach, how ever, it cou ld be argued that
stock m easures can indeed serve as proxies of flo w concepts.
An obvious exam ple is the use of the stock of houses as a
m easure of the flow of services provided by housing.
other
^Actually, such indexes don't com p le tely elim in ate the stock-flow
problem . Earning assets are still balance sheet (stock) items.
They are m athem atically converted to a flo w , but it w ou ld be
preferable to use a flow m easure to begin w ith.
M A Y 1975, M O N TH LY R E V IE W
H o w e v e r , t h e w e i g h t e d - i n d e x m e a s u r e is n o t
w it h o u t
it s
d is a g r e e
f la w s .
am ong
P ro p o n e n ts
t h e m s e lv e s
of
t h is
as
to
m e th o d
th e
p ro p e r
d e p o s it s
se rv e
a cco u n ts
a re
as
a
an
s e r v ic e s . T h e r e
ju s t as th e re
in t e r e s t r a t e s c h a r g e d o n e a c h t y p e o f e a r n i n g a s s e t
d if f e r e n t t y p e s a n d
s h o u ld
u se d
a s w e ig h t s , f o r t h e
a sse t
is a d e m a n d
and
p u r c h a s in g
fo r th e se
f o r lo a n s .
s iz e s o f lo a n s
c h e c k in g
goods
and
s e r v ic e s ,
I g n o r in g
d is r e g a r d s t h e
ra te
d if f e r e n t ia l im p a c t o f b a n k c r e d it a c t iv it y o n s o c ie t y ;
r e f le c t s t h e v a lu e p la c e d o n th a t t y p e o f a s s e t b y
s o d o e s t h e e x c l u s i o n o f d e p o s i t s . F o r in t h e b r o a d e r
s o c i e t y . A s a c o r o l l a r y , it is a r g u e d
m a c r o e c o n o m ic s e n s e , d e p o s it s a re a v e r y
w h ic h
c o m m a n d s h ig h e r ra te s o n
m e n ts
m u s t b e p r o v id in g
o u tp u t)
w is e ,
th a n
a bank
cu sto m e rs
The
th a t a b a n k
lo a n s a n d
m o r e s e r v ic e s
c h a rg in g
w o u ld n 't
c h ie f o b je c t io n
in t e r e s t
of
is a d e m a n d
a s s ig n m e n t o f w e ig h t s . S o m e s a y th a t t h e a c t u a l
be
e a r n in g
m eans
lo w e r
pay
th e
in
h ig h e r
c o m p e t it io n
t h is
re aso n ,
syste m s
have
rate s
a m o re
in
le v e l
c o m p lic a te d
d e v is e d
ro u n d a b o u t
in t e r e s t
in f la t io n .
rate s
a re
If i n f l a t i o n
b ased
w o u ld
on
rate s
u t iliz e
b ia s . Ju s t a s
th e v a lu e
b ia s ,
and
w h ic h
a ls o
in c lu d e s
d e p o s it s
th e
rate
a v o id s a s m u c h
of
rate s te n d
or
is
m e th o d
r a d ic a lly
a s p o s s ib le
in
any
se v e ra l
tru st
fu n c tio n s
d e p o s it s ,
su ch
as
b u s in e s s
d e p a rtm e n t,
sa fe
is b r o k e n
dem and
lo a n s ,
d e p o s it
of
bank
o u tp u t
The
w e ig h t e d - in d e x
m e asu res d o a
bank
it
in t o
e tc.
lo a n s ,
The
as th e a v e ra g e
in e a c h
fu n c tio n
per
y e a r (o r m o n th ).
t o a r r i v e a t s o m e " r e a l " m e a s u r e . 11
g o o d jo b o f r e c o g n iz in g
down
in s t a lm e n t
n u m b e r o f a c c o u n t s h a n d le d
v a lu e
th a t
d e p o s it s ,
b o xes,
b a s i c u n i t o f o u t p u t is t h e n d e f i n e d
th e
th e se
in
in d e f i n i n g b a n k p r o d u c t s .
t im e
a n in
h a s a ll
d if f e r e n t
so
d e f la t e
as
u s in g d o lla r a m o u n t s
B y t h is a p p r o a c h , a c t i v i t y
in d ir e c t ly )
o f o u tp u t
n u m b er o f a cco u n ts
c h a r a c t e r is t ic s , y e t
o t h e r in d u s t r y m u s t b e d e f la t e d b y t h e p r ic e le v e l,
m u st o n e
ta k e s
b a n k in g ,
Num ber of Accounts M ethod
r e m a in s
p r o d u c e a n o u t p u t m e a s u r e w ith
f la t io n a r y
of
in te r e s t
The
(d ir e c t ly
w h ic h
n atu re
o f s e r v ic e .
i n c r e a s e s , in t e r e s t
in t e r e s t
o f o u tp u t
m u ltip r o d u c t
o u tp u t?
t o r is e , a n d c o n v e r s e l y . A n in d e x w h o s e w e i g h t s
a re
m e asu re
d o e s n o t o v e r lo o k t h e d if f e r e n t ia l im p a c t s o f t y p e s
a ry
in
w a y . 10
by
any
o f th e
w e ig h t in g
w h ic h
a ffe cte d
account
o f lo a n s a n d n o n l e n d i n g o u t p u t , l a c k s a n i n f l a t i o n
r e f le c t
In e i t h e r c a s e , h o w e v e r , t h e p r o b l e m
th a t
r a t e s .9
d iffe r e n c e s
ra th e r th a n
m o re
been
or
i m p o r t a n t p a r t o f b a n k o p e r a t i o n s . 14
Is t h e r e
o th e r
t o t h is w e i g h t i n g s c h e m e
m a n a g e r ia l e f f ic ie n c y
For
(h ig h e r
rate s;
is t h a t h i g h e r r a t e s f o r o n e b a n k m a y
im p e r f e c t io n s
in v e s t
r e a s o n a b ly
le n d in g 's
m u ltip r o d
T h is m e t h o d
has b een
u se d
in s e v e r a l s t u d i e s
o f b a n k c o s t s . B y s p l i t t i n g b a n k a c t i v i t y in t o s e v e r a l
u c t n a t u r e b u t a r e r e l a t i v e l y w e a k in d o i n g s o f o r
f u n c t io n s , in c lu d in g d e p o s it s a n d o t h e r n o n le n d in g
n o n c r e d i t b a n k o u t p u t . In s o m e v e r s i o n s , t o t a l b a n k
a c t iv it ie s , b o th
in c o m e o v e r a n d a b o v e th a t d e r iv e d fro m
a n d t h e o u t p u t n a t u r e o f d e p o s it s a re ta k e n
a n d i n v e s t m e n t s is s i m p l y t h r o w n
e q u a t io n .
B u t t h is
ig n o r e s t h e
lo a n s
in t o t h e o u t p u t
m u lt ip r o d u c t
n atu re
M o re
f u n d a m e n t a lly ,
b a n k s'
lo o k
h o w e v e r , a ll
th e
a t o u t p u t a lm o s t e n t ir e ly
v ie w p o in t .
D e p o s it s
a re
tre a te d
above
fro m
th e
e x c lu s iv e ly
a s a n i n p u t . 13 T o t h e p u b l i c a n d t h e e c o n o m y in
g e n e r a l,
d e p o s it s
a ls o
p r o v id e
s e r v ic e s :
T im e
m u lt ip r o d u c t n a t u r e o f b a n k in g
in f la t io n a r y
b ia s
is a b s e n t
in t o
becau se
n u m b e r s w it h o u t a p r ic e d im e n s io n a re u s e d
th a n
o f n o n l e n d i n g o u t p u t . 12
m e th o d s
a cco u n t. T h e
th e
d o lla r a m o u n ts a n d
b ecau se
o u tp u t
is e x p r e s s e d
(n u m b e r o f a c c o u n ts
f lo w
Is
p r o b le m
t h is
th e
in t e r e s t
ra th e r
r a t e s . 15 F i n a l l y ,
as a f lo w
co n cept
p e r u n it o f t i m e ) ,
th e
sto ck -
is a v o i d e d .
id e a l
m e asu re
of
bank
o u tp u t?
U n f o r t u n a t e l y n o t , f o r it, t o o , h a s its s h o r t c o m i n g s .
T h is m e t h o d m e a s u r e s o u t p u t f o r s e p a r a t e b a n k
" p r o d u c t s ,"
but
it d o e s
n o t g iv e
a
m e a su re
“This is essentially the view taken by J. A. Powers.
aggregate
10For instance, Greenbaum uses linear regression to derive a set
of "average" interest rates charged on various categories of
earning assets by a sample of banks. These average rates were
then used as weights.
in g t o m e a s u r e t h e m i n d i v i d u a l l y w o u l d b e
of
b a n k o u t p u t (th e jo in t n e s s p r o b le m ).
If b a n k s e r v i c e s a r e n o t i n d e p e n d e n t , t h e n a t t e m p t
in c o r r e c t . T o a r r iv e a t a s in g le n u m b e r r e p r e s e n t in g
t o t a l o u t p u t w o u l d r e q u i r e in d e x i n g a n d w e i g h t i n g
“ See p. 29 of the article by Speagle and Kohn.
,2Another criticism of some of these weighted indexes is that
they disregard the size of a credit transaction. This argument
maintains that a loan of $10,000 has a different impact on the
economy than 10 loans of $1,000 each. In a sense, then,
failing to account for this is similar to ignoring the different
types of earning assets. Furthermore, if larger customers tend
to patronize large banks and if a single large loan to a
well-established firm is cheaper to make in terms of paperwork,
risk, and credit checking, then econom ies of scale would be
overstated by not taking this factor into consideration. See the
August 1967 article by Greenbaum for a discussion of this point.
13Powers presents a model weighting the various earning assets
and nonlending outputs, including deposits.
FE D
ER A
L R ESER V E BANK O F A TLAN TA
a n d a ll t h e a t t e n d a n t p r o b l e m s . 16
14Nevertheless, some writers question the validity of treating
deposits as an output.
ir’Benston, Bell, and Murphy used such an approach. However,
it should be noted that interest rates and dollar volumes do
appear in their equations. Thus, some inflationary bias may
affect these measures.
' “It can be argued, however, that measures of individual bank
products are useful for comparing banks' efficiency in producing
a given product with that of a nonbank firm. For instance,
one could compare banks' efficiency in providing consumer
instalment loans with that of a consumer finance company.
73
d e p o s it o r s . O t h e r s
N a t io n a l P r o d u c t A c c o u n t in g M e t h o d
a ls o
S t ill a n o t h e r m e t h o d
of C o m m e rce
in
is u s e d
by
c o n s t r u c t in g
th e
th e
in c o m e
a n d p r o d u c t a c c o u n t s . 17 T h e s e a r e m a d e u p o f g r o s s
p ro d u ct
(a n d
c a t e g o r ie s
in c o m e )
of
o r ig in a t in g
in d u s t r ie s ,
in
in c lu d in g
o t h e r w is e
m e asu re
c o n t r ib u t io n
to
g ro ss p ro d u c t b y
y ie ld s
th e
c ir c u m s t a n c e s .
If
one
m e a su re s
bank
s a le s
th e
w e ll
(su ch
as s a f e d e p o s it s e r v ic e s )
and
s u b t r a c t s f r o m t h is t o t a l p u r c h a s e s f r o m o t h e r
b a n k in g 's
b ecau se m u ch
v a lu e
added
is v e r y
lo w .
T h is
p r ic e ,
e .g .,
dem and
d e p o s it s .
m e n su ra te
w ith
and
so m e
an
o th e r
in a c c u r a te
th e
th e re
as
g e n e ra l
b e h in d
p ro d u ct
t h is is t h a t b a n k s
c o s t o f s e r v ic e s
m u st b e
and
so m e
in v e s t in g
d e p o s it s
on
rate s
f o r im p u t a t io n
lo a n s a n d
p r ic e s ,
th e
(s in c e
th e
w ill v a r y w ith
in v e s t m e n t s ), a s
n a t io n a l
a c c o u n t in g
C o n c lu s io n
T h u s,
Each
m e th o d
p r o v id e d
to
o f m e a s u r in g
and
f la w s .
im p lic it c h a r g e s .
c o r r e c t ly ,
bank
N one
s im u lt a n e o u s ly
tre a tm e n t
of
s o lv e s
d e p o s it s ,
th e
if w e
a ll
a
of
has
its
m e asu re
p r o b le m s :
n a tu re ,
in f la t io n a r y
im p a c t
ty p e s o f b a n k c r e d it a n d
Even
o u tp u t
p r o v id e s
jo in t n e s s - m u lt ip r o d u c t
d is t in g u is h in g
h a n d lin g
(o r m o r e
w h ic h
f lo w ,
T h e s e a re v ie w e d as th e in c o m e w h ic h b a n k s e a rn o n
le n d in g
(o r
w ill y ie ld
in d e x o f in t e r e s t
u se d
rate s c h a r g e d
stre n g th s
(in t e r m s o f b o o k k e e p i n g
ch e ck s), and
tu rn o v e r
u sa g e )
s e r v i c e , i. e .,
a g iv e n v o l u m e ,
is
“ im p u t e d ."
T h e b a s ic a s s u m p t io n
by an
fo r
d o n o t e x p lic it ly c h a r g e d e p o s it o r s a p r ic e c o m
th e m
d e p o s it
fro m
p r o c e d u r e w ill m is r e p r e s e n t re a l b a n k o u t p u t.
o f b a n k i n g ' s p r o d u c t is n o t s o l d
s o m e w a y o f i n c l u d i n g t h is n o n p e c u n i a r y
be
“ p r o d u c t ."
im p lie s th a t m o r e
o f d e p o s it
in te r e s t in c o m e
as
b a n k s e r v ic e s
m u st
ig n o r i n g
is d e f l a t e d
to ta l s e r v ic e c h a r g e s a n d o t h e r e x p lic it c h a r g e s fo r
e x p lic it
b o r r o w in g
F in a lly , u n le s s t h e im p u t e d p r ic e o f b a n k s e r v ic e s
F o r b a n k in g , h o w e v e r , t h e r e a re c o m p lic a t in g
an
th a t b o rro w e rs
above
m e a su re o f b a n k o u tp u t.
t h a t in d u s t r y
( v a lu e a d d e d ) .
f ir m s ,
as
p r o d u c t , is b e i n g d e r i v e d
th e n
s a le s . T h i s
co u n te d
u s a g e o f d e p o s it s
f ir m
to tal
and
M o r e o v e r , t h e d is t r ib u t io n o f im p u t e d b e n e f it s
g r o s s p r o d u c t o r i g i n a t i n g in v o l v e s s u b t r a c t i n g i n t e r
fro m
m a in ta in e d
over
m a y d e p e n d o n t h e u s a g e o f d e p o s i t s . If a g r e a t e r
v a r io u s
b a n k in g .
F o r m o s t in d u s t r ie s , th e p r o c e d u r e fo r m e a s u r in g
p u rch a se s
have
s e r v ic e s
c o s ts (s u c h a s in v e s t m e n t a d v ic e ) , w h ic h a re n o t
D e p a rtm e n t
n a t io n a l
r e c e iv e
sto ck -
in p u t - o u t p u t
b ia s ,
d iffe r e n t
and
s iz e s
and
d e p o s it s .
c a n n o t c o n c lu d e
th a t th e re
is a
m e a s u re o f o u tp u t, w e n e e d n 't a c c e p t th e c o n tra ry .
th e a m o u n t o f d e p o s it s o v e r a n d a b o v e r e q u ir e d
T h ere
r e s e r v e s ), a n d w h ic h t h e y d o n o t p a y o u t f u lly to
th e c h o ic e o f m e t h o d w ill d e p e n d o n w h a t a s p e c t
th e
o f b a n k i n g is u n d e r s t u d y . If a b a n k ' s m a i n f u n c t i o n
o w n e rs
of
th e se
d e p o s it s .
The
im p u t e d
p r ic e
is a w h o l e
v a r ie t y
o f t h e s e r v i c e b a n k s s e l l , t h e n , is t h e t o t a l in t e r e s t
is v i e w e d
banks
w o r r y in g a b o u t to w h o m
th e
r e c e iv e
on
in te r e s t t h e y
W hen
lo a n s
pay
im p u t e d
and
out
s e r v ic e
in v e s t m e n t s
to
d e p o s i t o r s . 18
ch arg e s
e x p lic it s e r v ic e c h a r g e s a n d
m in u s
a re
in t e r f ir m
as a s o u rc e
s in g le - v a lu e d
added
to
p u rc h a s e s a re
m e a su re
s u f f ic e .
If o n e
v a r io u s
se cto rs
s u b t r a c t e d o u t , t h e r e s u lt is g r o s s p r o d u c t o r i g i n a t
g r a n t in g , t h e n
in g in b a n k i n g .
u s e f u l. A n d
T h e r e is a n a d d i t i o n a l c o m p l i c a t i o n . In o r d e r to
w a n ts
of
th e
o f su ch
of
g e n e ra l
m e a su re s,
c r e d it
and
w it h o u t
it g o e s , t h e n p e r h a p s t h e
(to ta l e a r n in g a ss e ts ) w ill
to
stu d y
b a n k s'
im p a c t
on
econo m y
th ro u g h
c r e d it
a w e ig h t e d - in d e x
m e a su re
m ig h t b e
if o n e w a n t s t o v i e w
d u cer of a “ m oney g o od"
b a n k s as a p ro
( c h e c k in g a c c o u n t s ),
e s t a b l i s h w h a t t h e u l t i m a t e e f f e c t o f b a n k p r o d u c t is
th e n p e rh a p s th e n u m b e r o f a c c o u n ts m e th o d s
o n t h e n a t io n a l e c o n o m y , t h e o w n e r s h ip o f d e p o s it s
c o u ld
b e u se d . ■
m u s t b e c o n s id e r e d . T o th e e x t e n t th a t d e p o s it s
a re o w n e d b y b u s in e s s e s , th e im p u t e d b a n k p r o d u c t
is a n
in t e r m e d ia t e
c a n c e ls
out
in
th e
p u rch a se
by
b u s in e s s e s ;
c o n s o lid a te d
GNP
it
a cco u n ts.
T o t h e e x t e n t , h o w e v e r , th a t t h e s e d e p o s it s a re
ow ned
b y p r iv a t e i n d i v i d u a l s , t h e i m p u t e d
re p re sen ts a p u rch a se
o f f in a l g o o d s ; a n d
p ro d u ct
GNP
in c r e a s e s .
T h is m e t h o d h a s b e e n c r it ic iz e d a s t o o c o m p le x
and
in v o lv in g
so m e
d u b io u s
a s s u m p t io n s .
P e r
h a p s m o s t q u e s t i o n a b l e is t h e i d e a t h a t a ll i m p u t e d
b e n e f it s
of
b a n k in g
s e r v ic e s
a re
e n jo y e d
‘ ’ Because of the com plexity of the m ethod,
excludes many com plicating factors.
by
this discussion
l s This is m athem atically equal to gross operating expenses plus
profits m inus e xplicitly charged services.
7 4 for FRASER
Digitized
M A Y 1975, M O N TH LY R EV IEW
R eferen ces
A d a r , Z v i ; A g m o n , T a m i r ; a n d O r g l e r , Y a i r E. O u tp u t M ix a n d Jo in tn e ss in P ro d u c tio n in
th e B anking Firm . W o r k i n g P a p e r N o . 7 4 -5 , B a n k in g a n d E c o n o m i c R e s e a rc h S e c t io n , D i v i
s io n o f R e s e a rc h , F e d e ra l D e p o s i t In s u r a n c e C o r p o r a t i o n .
A lh a d e f f , D . A . M o n o p o ly a n d C o m p e titio n a n d B an k in g , ( B e r k e le y , C a l i f o r n i a :
o f C a lif o r n ia P re ss, 1 95 4 ).
B e ll, F. W . a n d M u r p h y , N . B. " B a n k S e r v ic e C h a r g e s a n d
J u n e 1 9 6 7 , p p . 4 4 9 -4 5 7 .
C o s ts ,"
U n iv e r s it y
N ation al Bank R e v ie w ,
----------------------- . C o s ts in C o m m e rc ia l B a n k in g : A Q u a n tita tiv e A n a lysis o f Bank B e h a v io r a n d
Its R ela tio n to Bank R e g u la tio n , F e d e ra l R e s e r v e B a n k o f B o s t o n , 196 8 .
—
----------------- . " E c o n o m ie s o f S c a le a n d D i v i s i o n o f L a b o r in C o m m e r c ia l B a n k in g ," S o u th e rn
E c o n o m ic Jo u rn a l, O c t o b e r 1 9 6 8 , p p . 1 3 1 -1 3 9 .
B e n s t o n , G . J. " B ra n c h B a n k in g a n d E c o n o m i e s o f S c a le ," Jo u rn a l o f F in a n c e , M a y 1 9 6 5 ,
p p . 3 1 2 -3 3 1 .
----------------------- . " E c o n o m ie s o f S c a le a n d M a r g in a l C o s ts in B a n k in g O p e r a t i o n , " N ation al Bank
R e v ie w , J u n e 1 9 6 5 , p p . 5 0 7 -5 4 9 .
----------- ------------. " E c o n o m ie s o f S c a le o f F in a n c ia l In s titu tio n s ," Jo u rn a l o f M o n e y C re d it a n d
B a n k in g , M a y 1 9 7 2 , p p . 3 1 2 -3 4 0 .
G o r m a n , J. A . " A lt e r n a t iv e M e a s u re s o f th e R e a l O u t p u t a n d P r o d u c t i v it y o f C o m m e r c ia l
B a n k s ," in P ro d u c tio n a n d P ro d u c tiv ity in the S e rv ic e In d u strie s (V . R. F u c h s , Ed.), N a t io n a l
B u re a u o f E c o n o m i c R e s e a rc h , ( N e w Y o r k : C o l u m b i a U n i v e r s i t y P re ss, 1 9 6 9 ), p p . 1 5 5 -1 8 9 .
G r e e n b a u m , S. I. " C o m p e t i t io n a n d E f f ic ie n c y in th e B a n k in g S y s t e m — E m p ir ic a l R e s e a rc h
a n d Its P o lic y I m p lic a t io n s ," Jo u rn a l o f P o litica l E c o n o m y , A u g u s t 1 9 6 7 , S u p p le m e n t , p p .
4 6 1 -4 7 9 .
----------------------- . " A S t u d y o f B a n k C o s ts ," N a tio n a l Bank R e v ie w , J u n e 1 9 6 7 , p p . 4 1 5 -4 3 4 .
H o r v i t z , P. M . " E c o n o m ie s o f S c a le in B a n k in g ," in Private Fin a n cia l In stitu tio n s, C o m m i s
s io n o n M o n e y a n d C r e d i t ( E n g l e w o o d C lif f s , N . J.: P r e n t ic e - H a ll, 1 9 6 3 ), p p . 1 -5 4 .
M u r p h y , N e il B. " A R e e s t im a t io n o f t h e B e n s t o n - B e l l- M u r p h y C o s t F u n c t io n s f o r a L a rg e r
S a m p le w i t h G r e a t e r S iz e a n d G e o g r a p h ic D i s p e r s io n . " Jo u rn a l o f Fin an cial a n d Q u a n tita
tive A n a lysis, D e c e m b e r 1 9 7 2 , p p . 2 0 9 7 -2 1 0 5 .
P o w e r s , J. A . " B ra n c h V e r s u s U n i t B a n k in g : B a n k O u t p u t a n d C o s t E c o n o m ie s ," S o u th e rn
E c o n o m ic Jo u rn a l, O c t o b e r 1 9 6 9 , p p . 1 5 3 -1 6 4 .
S p e a g le , R. E. a n d K o h n , E. " E m p l o y m e n t a n d
O u t p u t in
B a n k in g 1 9 1 9 -1 9 5 5 ,"
R e v ie w
of
E c o n o m ic s a n d Sta tistics, F e b r u a r y 1 9 5 8 , p p . 2 2 -3 5 .
U . S. D e p a r t m e n t o f C o m m e r c e , N ation al In c o m e 1954 Ed itio n ( W a s h i n g t o n : U . S. G o v
e r n m e n t P r in t in g O f f i c e , 195 4 ).
U n ite d States vs. P h ila d e lp h ia N ation al B ank, 201 F. S u p p l. 348 (E .D . Pa. 1 9 6 2 ; 3 7 4 U . S. 321
[1963]).
FE for
D ERFRASER
A L R ESER V E BANK O F A TLAN TA
Digitized
75
P la n t in g C h a n g e s
to R e d u c e
F a rm
P r o d u c t io n
E x p e n d it u r e s
b y G e n e D . S u lliv a n
F a r m e r s ' p r o d u c t i o n s p e n d i n g in S ix t h D i s t r i c t s t a t e s w i l l b e d o w n
1975.
A
3 7 -p e rce n t
d o w n tu rn .
In c r e a s e d
r e d u c t io n
in
a cre ag e s
of
p la n n e d
o th e r
c o tto n
c ro p s
a cre a g e
(in d ic a t e d
w ill
by
s h a r p l y in
p ro d u ce
th e
th e
U .S .D .A .
M a r c h s u r v e y ) w i l l o n l y p a r t ia lly o ff s e t th e im p a c t o f r e d u c e d p r o d u c t i o n
e x p e n d itu re s fo r c o tto n .
Comparisons w ith Prior Years
Cotton
C o tto n
p l a n t i n g s , f ir s t in u s e o f p r o d u c t i o n
f u n d s , b u t t h ir d
in t o t a l a c r e a g e ,
w i l l b e c u t s h a r p l y in 1 9 7 5 . S o a r i n g p r o d u c t i o n c o s t s a n d l o w p r i c e s c o m p a r e d
w it h
o th e r
th a n
o n e - t h ir d
cro p s
have
fro m
cau sed
fa rm e rs
1 9 7 4 's l e v e l
to
p la n
a cre a g e
r e d u c t io n s
of
m o re
( s e e c h a r t ) . M o s t o f t h e c u t in c o t t o n
p l a n t i n g s w i l l o c c u r in M i s s i s s i p p i , w h i c h
a cco u n ts
fo r n e a r ly
o n e - h a lf o f
th e r e g io n 's to ta l c o t to n a c r e a g e .
Soybeans
The
p la n n e d
so y b ea n
a c r e a g e s ta n d s o u t, n o t o n ly
d o u b le th a t o f a n y o t h e r c r o p b u t a ls o b e c a u s e
o v e r la s t y e a r ' s . E v e r y D i s t r i c t s t a t e is i n c r e a s i n g
and
L o u is ia n a .
a lt e r n a t iv e u s e
In
th o se
tw o
fo r a c re a g e
sta te s,
re m o v e d
so yb eans
fro m
b ecau se
it is a n
it is n e a r l y
in c r e a s e o f 2 7 p e r c e n t
p la n t in g s , e s p e c ia ll y M is s is s ip p i
o ffe r
th e
m o st
c o tto n
p r o d u c t io n .
in
r e g io n , w ill
p r o fita b le
Corn
C o rn
p la n t in g s , s e c o n d
in
to ta l
a creag e
th e
in c r e a s e
by
14
M A Y 1975, M O N T H LY R E V IE W
A C R E A G E
O F
M A JO R
S ix t h
C R O P S
D is tric t
P L A N TE D
S ta te s
Miss.
Tenn.
Other States
| +27.2% *
Upland
Cotton
- 3 7 .4 % *
O
W inter
Wheat
-0.7% '
1973
Sm all
Feed
G ra in s
{
1975
+ 5 .0 % *
I 1973
R ic e / 1974
1975
+ 3 .4 % *
1 ...........J _ .....1
I...
I........ I
Millions of Acres 0
*The percentage change from 1974 acreag e indicated
by the M arch survey of fa rm e rs’ p lanting intentions.
p e r c e n t in 1 9 7 5 . T h e u n u s u a lly h ig h f e e d g ra in
p r ic e s in 1 9 7 4 a n d e a r ly th is y e a r h a v e a p p a r e n t ly
s t im u la t e d fa r m e r s t o e x p a n d D is t r ic t c o r n a c re a g e ,
a b o u t h a lf o f w h i c h is lo c a t e d in G e o r g ia .
H o w e v e r , th e c h a n g e s in th e s e p la n t in g s a re
d w a r f e d b y th e h u g e s w in g s in s o y b e a n , c o r n ,
a n d c o t t o n a c re a g e s .
D is t r ic t D if f e r s f r o m U . S.
R ic e , W h e a t , a n d O t h e r S m a ll G r a in s
W h e a t a c re a g e is in c lu d e d in t h e c h a rt, a lt h o u g h
it w a s p la n t e d in th e fa ll o f 1 9 7 4 a n d w i l l h a v e
re a c h e d m a t u r i t y b y la te s p r in g . T h e c o m b in e d
to ta l a c re a g e p la n t e d to ric e , w h e a t , a n d s m a ll
fe e d g ra in s w i l l in c re a s e m o d e r a t e l y in 197 5 .
FE D ERfor
A L FRASER
R ESER V E BANK O F A TLAN TA
Digitized
C h a n g e s in i n t e n d e d p la n t in g s in th e U . S. as a
w h o l e a re m u c h less d r a m a t ic th a n at th e D is t r ic t
le v e l f o r all c r o p s e x c e p t c o t t o n . T o t a l U . S.
c o t t o n a c re a g e is p r o je c t e d to d e c lin e b y 28
p e r c e n t (as c o m p a r e d w i t h 3 7 p e r c e n t in th e
77
C o tto n :
A c re s
D is tric t) in 197 5 . A s m a ll a c re a g e r e d u c t io n is
in d ic a t e d f o r c o r n ; h o w e v e r , th e re t u r n o f n o r m a l
w e a t h e r to m a j o r g r a in - p r o d u c i n g a re a s s h o u ld
b o o s t 1975's c o r n p r o d u c t i o n s h a r p ly a b o v e 1974's
d r o u g h t - r e d u c e d o u t p u t . In c re a s e s in s o y b e a n a n d
s m a ll f e e d g ra in s p la n t in g s w i l l a p p r o x i m a t e l y
o ff s e t a c re a g e r e d u c t io n s in c o t t o n a n d c o r n .
R e d u c e d D is t r ic t
P r o d u c t i o n E x p e n d it u r e s
F a rm e rs ' p r o d u c t i o n e x p e n d it u r e s w i ll b e s h a r p ly
a lte re d , b o t h in d is t r ib u t io n a n d in q u a n t it y , b y
Digitized 7for
8 FRASER
H a rve s te d ,
1972
th e a n n o u n c e d a d ju s t m e n t s in c r o p a c re a g e s .
C o t t o n p r o d u c t i o n e x p e n d i t u r e s in 1 97 5 w i l l b e
r e d u c e d a n e s t im a t e d $ 2 7 6 m il l i o n , o r a b o u t
o n e - t h i r d o f 1 9 7 4 e x p e n d i t u r e s , b y th e 1 . 5 - m i l l io n a c re c u t in c o t t o n p la n t in g s (see ta b le ). T h e
fe r t iliz e r , in s e c t ic id e , a n d g i n n i n g in d u s t r ie s d o in g
b u s in e s s in c o t t o n - p r o d u c i n g c o u n t ie s (see m a p )
w i l l b e a r th e m a j o r im p a c t o f th is r e d u c t io n . M o s t
o f th e p r o d u c t s a n d s e r v ic e s m a r k e t e d t o th e c o t t o n
p r o d u c e r a re o n l y s lig h t ly , if at a ll, a d a p t a b le to
o t h e r t y p e s o f a g r ic u lt u r e . S o m e g in n e r s h a v e e v e n
in d ic a t e d th a t t h e y d o n o t p la n t o o p e r a t e at all
in 197 5 .
M A Y 1975, M O N TH LY R E V IE W
E F F E C T OF P LA N N ED A C R E A G E C H A N G E S ON 1975’S
PRO D U CTIO N E X P E N D IT U R E S
(SIXTH D IS T R IC T S T A T E S )
Cotton: Down 1,508,000 A c re s 1
C o st
Total Change
P er A c re 2
in E x p e n d itu re s1
Seed
F e rtiliz e r and lim e
Fu el, lu b rican ts, and repairs
In se c ticid e s
H erb icid es
G in n ing and w rapping
O ther
Total variable co sts
$--
$
5
35
26
37
14
30
36
$183
7,540,000
52,780,000
39,208,000
55,796,000
21,112,000
45,240,000
54,288,000
$--275,964,000
or - 3 7 % 4
So yb ean s: Up 2,212,000 A c re s 1
Seed
$ 8
17,696,000
$
F e rtiliz e r and lim e
16
35,392,000
Fu el, lu b rican ts, and repairs
12
26,544,000
6
H e rb icid es and in se c ticid e s
13,272,000
Other
9
19,908,000
Total variable co sts
$ 51
$ 112,812,000
or + 2 7 % 4
Corn: Up 541,000 A c re s 1
Seed
$ 4
Fe rtiliz e r and lim e
29
Fu e l, lu b rican ts, and repairs
13
H e rb icid es and in se c ticid e s
4
Other
12
Total variable costs
$ 62
2,164,000
15,689,000
7,033,000
2,164,000
6,492,000
33,542,000
$
or + 1 4 % 4
R ice : Up 27 ,000 A c re s ’
Seed
$ 20
Fe rtiliz e r
24
Fu el, lu b rican ts, and repairs
16
17
In se c ticid e s and herbicides
Irrigation
24
Drying
36
O ther
49
Total variable costs
$186
Net Change, Four Crops
$
540,000
648,000
432,000
459,000
648,000
972,000
1,323,000
5,022,000
$
or + 3 % 4
$
$--1 2 4 ,5 8 8 ,0 0 0
‘ C hang es from 1974 a creag e indicated by the U.S.D .A.
M arch survey of fa rm e rs’ p lanting intentions
2B ased on va ria b le c o sts p ublished by Eco no m ic R e sea rch
Se rv ice , U .S.D .A ., adju sted for in cre a se s in p rices paid
by farm ers
3Th e co st per a cre tim es the planned chan ge in acreag e
‘ P ercen tage c h an g e s in exp enditu res
resu ltin g from
planned acreag e a d ju stm e n ts from 1974 levels.
B a n k
A n n o u n c e m e n ts
March 1, 1975
U NITED SECURITY BANK
C h u rch H ill, Te n n e sse e
Opened for business as a par-remitting nonmember. Officers:
John Keyes, president and cashier; David M. Whitley, vice
president. Capital $500,000; surplus and other funds,
$750,000.
March 4, 1975
THE BANK OF FLORENCE
F lo ren ce , Alabama
Opened for business as a par-remitting nonmember.Officers:
Edward F. Mauldin, chairman of the board; James B.
Flemming, president; J. Robert Murray, III, vice president
and cashier. Capital, $375,000; surplus and other funds,
$562,500.
March 10, 1975
ELLIS N A T IO N A L BANK OF
WEST HILLSBOROUGH
Tam pa, Florida
Opened for business as a member. Officers: A. D. Wilburn,
chairman and president; Philip H. Chesnut, Jr., executive
vice president and cashier. Capital, $500,000; surplus and
other funds, $250,000.
March 14, 1975
M ARINE N A T IO N A L BANK OF
WEST JACKSONVILLE
ja ck so n ville , Florida
T h e a c r e a g e e x p a n s i o n s in t e n d e d f o r s o y b e a n s ,
c o r n , a n d r ic e w ill g e n e r a t e in c r e a s e d e x p e n d it u r e s ,
b u t th e s e in c r e a s e s w ill o n ly
e ffe cts
S in c e
o f th e
m any
c o n t r a c t io n
in p u t s
p a r tia lly o ffs e t th e
in
u t iliz e d
c o tto n
by
c o tto n
Opened for business as a member. Officers: Jerry Thomas,
chairman; Louis J. Marotta, president; Andrew P. Ignotowicz,
cashier. Capital, $400,000; surplus and other funds, $600,000.
a cre ag e .
p ro d u ce rs
March 17, 1975
$ 1 2 5 - m i l l i o n n e t r e d u c t i o n in e x p e n d i t u r e s f o r t h e
PAN AM ERIC AN BANK OF KENDALE LAKES,
N A T IO N A L ASSO C IATIO N
fo u r c ro p s c o m b in e d
M iam i, Florida
a re n o t t r a n s f e r a b le to o t h e r c r o p s , t h e in d ic a t e d
p r o b a b ly
u n d e rs ta te s th e
e c o n o m ic im p a c t o f t h e s e e x p e c t e d c h a n g e s . T h e
e ffe c t s w ill
fa rm
u n d o u b t e d ly
be
r e f le c t e d
in
re d u ce d
c r e d i t d e m a n d . In a d d i t i o n , t h e i m p a c t w i l l
b e f e lt b y b a n k e r s a n d o t h e r le n d e r s w h o
f in a n c e
Opened for business as a member. Officers: Neil Schiff,
chairman; Charles G. Sheffield, president; Ronald G. Potter,
vice president and cashier; Virginia L. Arnold, assistant vice
president and secretary; Judith L. Kirsin, assistant cashier.
Capital, $500,000; surplus and other funds, $500,000.
fa rm s u p p ly a n d p r o c e s s in g in d u s t r ie s a s s o c ia t e d
w it h
th e c o tto n
in d u s t r y . ■
Digitized
FE Dfor
ER AFRASER
L R ESER V E BANK O F A TLAN TA
79
B A N K IN G
S T A T IS T IC S
Bil. S
D E P O S ITS * *
C R E D IT *
-
— 40
Loans &
In v e s tm e n ts
T o ta l
-
—
- 36
_
A/
Net D e m a n d
_ 32
L o a n s (N et)
40
—
/V
y
24
— '
A/
O th e r
S e c u ritie s
A/
rj
T im e
rj
ii i i ii i i i i i
1974
D I S T R I C T
____^
~
S a v in g s
- 2
A/
rj
A/
I I I I I I I I I! I
1973
I I I I II II I II
1975
I i I l II I i i i i
1974
A/
A/
I I I I I I I I II I
1975
*Fig u re s are for the last W ednesday of e a ch month
**D aily average figures
LA TEST M O N TH P L O T T E D : M ARCH
S I X T H
-
JC
—
I I It I I I I I I I
1973
_
20
8
U.S. C o v ’t.
S e c u ritie s
A/
B A N K I N G
N D T E 5
A N o te o n M a n u f a c tu r in g L o an s
C O R R E LA T IO N
B ET W EE N
C H A N G ES IN N ATIO NAL
IN V E N T O R IE S AND C H A N G ES IN C O M M ER C IA L
AND IN D U S T R IA L LOAN S
1 9 7 0 -1 9 7 4
U nited S ta te s
$ Chang es
Industry
P r im a r y
M e t a l ...............................
New York
$ C hang es
Atlanta
% C hang es
$ C hang es
% C hang
- .2 3 6
.1 7 4
- .0 9 4
.0 2 6
- .2 8 9
- .1 6 3
M a c h i n e r y ............................................
.7 2 7
.7 2 1
.7 5 0
.7 3 4
.2 6 4
.2 6 0
T r a n s p o r t a t io n
.
.5 8 1
.4 9 8
.4 2 1
.3 6 7
.1 0 7
.0 4 3
.
.4 7 7
.3 6 7
.4 2 6
.3 1 8
.4 4 6
.4 4 7
E q u ip m e n t .
F o o d , L iq u o r , T o b a c c o
.
.
.
% C hang es
P e t r o le u m
R e f in e r y
.
.
.
.
.1 9 9
.1 3 4
.2 3 0
.1 6 3
- .1 5 9
- .1 6 1
C h e m ic a ls ,
Rubber
.
. .
.
.2 8 2
.1 8 1
.3 5 4
.2 1 5
.0 1 6
.0 1 3
.3 9 5
.4 2 8
.3 2 1
.2 5 8
.2 5 8
.3 0 6
T e x t i le s ,
A p p a r e l,
L e a th e r*
‘ Inventory data for th is se rie s availa b le only through D ecem ber 1973.
S o u rces: Q uarterly inventory sto ck data, U .S . Departm ent of C om m erce and Fed eral R ese rve
U .S. m em ber ban ks that provide an in du stry breakdown of co m m ercial and indu strial loans.
Digitized8 0for FRASER
Bank
sam p le of
large
M A Y 1975, M O N T H LY R EV IEW
A n e a r lie r B a n k in g N o t e s u g g e s te d th a t b u s in e s s
b o r r o w i n g a t S o u t h e a s t e r n b a n k s s e e m s o u t o f s te p
w i t h n a t io n a l p a t t e r n s .1 F a c to rs w h i c h a p p a r e n t ly
in d u c e c o r p o r a t io n s t o b o r r o w f r o m b a n k s a c ro s s
th e c o u n t r y d o n o t s e e m t o h a v e t h e s a m e im p a c t
u p o n s im ila r c o r p o r a t io n s b o r r o w i n g f r o m S o u t h
e a s te rn b a n k s .
T h e s a m e a n a ly s is in d ic a t e d little , if a n y , r e la t io n
s h ip b e t w e e n n a t io n a l in v e n t o r ie s a n d b o r r o w i n g s
at S o u t h e a s t e r n b a n k s . W h i l e a s t r o n g r e la t io n s h ip
w a s f o u n d b e t w e e n n a tion a l lo a n s a n d n a t io n a l i n
v e n t o r i e s , n e it h e r d o ll a r n o r p e r c e n t a g e c h a n g e s in
n a t io n a l
in v e n t o r ie s
p ro d u c e d
c o r r e s p o n d in g
c h a n g e s in b o r r o w i n g s at S o u t h e a s t e r n b a n k s .
S in c e S o u t h e a s t e r n b a n k s s e e m to m a r c h to a
d if f e r e n t d r u m m e r , it s e e m s re a s o n a b le t o d e t e r
m in e ju s t h o w m u c h t h e y a re o u t o f s te p . T o
d e t e r m i n e th is , w e u s e d th e a p p r o a c h o f th e e a r lie r
a n a ly s is . M e m b e r b a n k lo a n s t o c o r p o r a t io n s in
s e v e n s e le c t e d in d u s t r ie s f o r e a c h o f th e t w e l v e
F e d e ra l R e s e r v e D is tric ts w e r e c o m p a r e d w i t h n a
t io n a l in d u s t r ia l lo a n a n d i n v e n t o r y a c t iv it y . P e r
c e n t a g e a n d d o ll a r c h a n g e s w e r e c a lc u la t e d f o r e a c h
o f th e s e v e n in d u s t r ie s f o r a p e r io d b e t w e e n m id 1 97 3 a n d m id - 1 9 7 4 ; a n d c o m p a r is o n s w e r e m a d e
b y c a lc u la t in g ra n k c o r r e la t io n c o e f f ic ie n t s (see
T a b l e 1). (A c o e f f ic ie n t c lo s e to z e r o in d ic a te s little
c o r r e s p o n d e n c e b e t w e e n th e t w o c h a ra c te ris tic s ; a
c o e f f ic ie n t c lo s e to o n e im p lie s a c lo s e fit.)
R e s u lts s h o w th a t S o u t h e a s t e r n b a n k s d if f e r v e r y
m u c h f r o m o t h e r r e g io n s . M o s t o t h e r D is tric ts
s h o w e d a c lo s e r r e la t io n s h ip b e t w e e n lo a n a c t iv it y
a n d n a t io n a l in v e n t o r ie s . In a d d it io n , m o s t s h o w e d
a c lo s e r e la t io n s h ip b e t w e e n r e g io n a l a n d n a tio n a l
le n d in g .
A s o n e m ig h t e x p e c t , th e N e w Y o r k a re a r e c o r d e d
th e s t r o n g e s t r e la t io n s h ip , b a s e d o n e it h e r p e r c e n t
a g e o r d o ll a r c h a n g e s , b e t w e e n lo a n s a n d n a tio n a l
in v e n t o r ie s . W h i l e th e e a s te rn U n it e d S ta te s— r e p r e
s e n t e d b y th e F irs t F e d e ra l R e s e r v e D is t r ic t (B o s to n )
— r e g is t e r e d a p e r f e c t c o r r e la t io n b e t w e e n lo a n s
a n d in v e n t o r ie s b a s e d u p o n d o ll a r c h a n g e s , th e
s a m e r e la t io n s h ip c o m p u t e d o n
a p e rc e n ta g e
c h a n g e b a s is in d ic a te s a v e r y lo o s e r e la t io n s h ip .
In c o m p a r i n g r e g io n a l w i t h n a t io n a l lo a n s , N e w
Y o r k a g a in s h o w e d th e s t r o n g e s t r e la t io n s h ip , b o t h
in d o ll a r a n d p e r c e n t a g e c h a n g e s . T h e S ix th F e d e ra l
R e s e r v e D is t r ic t (A tla n ta ), h o w e v e r , p la c e d n e a r
th e b o t t o m , m e a s u r e d in b o t h p e r c e n t a g e a n d d o l
la r c h a n g e s .
S in c e th e e a r lie r a n a ly s is f o u n d a d if f e r e n c e in
b o r r o w i n g p a tte rn s at S o u t h e a s t e r n b a n k s , w e d e
c id e d to d e t e r m i n e w h e t h e r in v e n t o r ie s c a r r ie d b y
f ir m s a c ro s s th e n a t io n h a v e an i n f lu e n c e o n b o r
r o w i n g f r o m S o u t h e a s t e r n b a n k s , p a r t ic u la r ly o v e r
a l o n g e r p e r io d o f t im e th a n w a s u s e d in th e firs t
a n a ly s is .
T h e re s u lts in d ic a t e th a t, in g e n e r a l, c h a n g e s in
‘ W illia m N. Cox,
O cto b e r 1974.
III,
"Lo an s
to
M anufacturers,”
FE D ER
R ESER V E BANK O F ATLAN TA
Digitized
forA LFRASER
this
R eview ,
Table 1
RA N K C O R R ELA TIO N C O E F F IC IE N T S
Lo an s vs. N ational In ventories
(Ju ly 1973 to Ju ly 1974)
All D istricts
Fed eral R eserve D istrict
Boston
New York
Philadelph ia
C leveland
R ichm ond
Atlanta
Chicag o
M inneapolis
St. Lo u is
K a n sa s City
D allas
San Fra n c isco
P ercen t
Change
Dollar
Change
0.57
0.86
0.21
0.75
0.57
0.00
- 0 .7 5
0.04
0.18
- 0 .4 6
0.07
0.29
0.71
0.18
1.00
0.82
0.61
0 .8 9
0.21
0.36
0.71
- 0 .0 4
0.75
0.61
0.04
0.71
Lo an s, E a c h D istrict vs. All D istricts
(Ju ly 1973 to Ju ly 1974)
Boston
New York
Philadelph ia
Cleveland
Richm ond
Atlanta
C hicag o
M inneapolis
St. Lo uis
K a n sa s City
D allas
San Fra n c isco
0.54
0.89
0.79
0.64
- 0 .3 2
0.32
0.79
- 0 .5 7
0.57
0.82
0.57
0.71
0.86
0.96
0.75
0.96
0.14
0.68
0.86
- 0 .2 1
0.93
0.68
0.29
0.86
n a tio n a l i n v e n t o r ie s h a v e v e r y little , if a n y , d ir e c t
in f lu e n c e u p o n b o r r o w i n g a t S o u t h e a s t e r n b a n k s
(see o p p o s i t e p a g e ). T h i s c o n c lu s io n is b a s e d u p o n
c o m p a r is o n s o f lo a n s m a d e b y 23 la rg e S o u t h e a s t e r n
b a n k s t o c o r p o r a t io n s in s e v e n s e le c te d in d u s t r ie s
w i t h i n f o r m a t i o n o n n a t io n a l i n v e n t o r y a c t iv it y in
th e s e in d u s trie s . Q u a r t e r l y d o ll a r a n d p e r c e n t a g e
c h a n g e s in lo a n s f r o m 1 9 7 0 to 1 9 7 4 w e r e m a t c h e d
w i t h s im ila r c h a n g e s in in v e n t o r ie s b y c a lc u la t in g
c o r r e la t io n c o e f fic ie n t s . (T h is c o e f f ic ie n t a lw a y s lie s
b e t w e e n — 1 a n d + 1 . P o s it iv e c o e f f ic ie n t v a lu e s i n
d ic a te a t e n d e n c y f o r th e t w o fa c to rs t o m o v e t o
g e t h e r ; h o w e v e r , a n e g a t iv e c o e f f ic ie n t in d ic a te s
m o v e m e n t in o p p o s i t e d ir e c t io n s .) F o r c o m p a r is o n ,
th e s a m e a n a ly s is w a s m a d e o f la rg e b a n k s c o u n t r y
w i d e a n d f o r la rg e b a n k s in N e w Y o r k .
A d d i t io n a l i n f o r m a t i o n p r e s e n t e d h e r e s u p p o r t s
th e g e n e r a liz a t io n th a t m a n u f a c t u r in g lo a n s at
S o u t h e a s t e r n b a n k s d o n o t f o l l o w n a t io n a l p a tte rn s .
W i t h o n l y o n e e x c e p t io n , S o u t h e a s t e r n m a n u f a c t u r
in g lo a n s a re little in f lu e n c e d b y n a t io n a l i n v e n t o r y
le v e ls .
O n th e o t h e r h a n d , N e w Y o r k ' s lo a n s d o s h o w a
c lo s e r e la t io n s h ip w i t h n a t io n a l i n v e n t o r ie s a n d n a
t io n a l lo a n s , as o n e m ig h t e x p e c t f r o m th a t area's
a c k n o w l e d g e d p o s it io n as th e c o u n t r y ' s fin a n c ia l
c e n te r. T h o u g h r e g io n a l f in a n c ia l c e n te rs , in c lu d in g
t h o s e in th e S o u th e a s t, a re g r o w i n g in s iz e a n d
s ta tu re , th is s t u d y s t r e n g t h e n s th e c o n t e n t io n th a t
t h e S o u t h e a s t im p o r t s f u n d s in th e f o r m o f b a n k
lo a n s . M a n y in d u s t r ia l fir m s h e a d q u a r t e r e d o u t s id e
t h e D is t r ic t w h o o p e r a t e p la n ts h e r e w o u l d l o g ic a lly
s e e k f u n d s f r o m th e n a t io n a l fin a n c ia l c e n t e r —
N e w Y o r k — o r th e r e g io n in w h i c h t h e y a re h e a d
q u a rte re d .
JO S E P H E. R O S S M A N , JR
81
S ix t h
D is t r ic t
S t a t is t ic s
S e a s o n a lly A d ju s te d
(A ll d a ta a re in d e x e s , u n le s s in d ic a te d o t h e r w is e .)
Latest Month
1975
One Two
One
Month Months Year
Ago
Ago
Ago
SIXTH DISTRICT
INCOME AND SPENDING
Manufacturing P a y r o l ls ............... Mar.
Farm Cash Receipts.....................Feb.
C r o p s ....................................Feb.
Livestock
............................. Feb.
Instalment Credit at Banks* (Mil.$)
New Loans .............................. Mar.
Repayments ...........................Mar.
170.2 174.3
254
203
245
354
172
194
628r 621
714r 711
173.7
202
216
206
595
573
130.4 131.1 132.0
107.7 109.1 111.6
106.1 108.0 110.3
104.6 104.0 104.1
98.8
96.5
95.1
101.5 104.3 107.2
105.9 107.5 110.6
125.3 126.0 127.3
105.7 107.9 109.2
109.7 110.5 113.3
98.6
95.9
94.3
117.7 119.1 122.2
103.6 106.6 110.0
121.7 122.8 124.2
150.7 151.4 155.3
99.1
96.5
97.5
138.4 138.9 138.4
136.6 141.0 144.1
123.7 124.8 126.5
135.0 135.6 136.1
149.9 151.1 151.7
154.4 154.7 154.5
106.0 106.2 106.4
143.6 142.8 141.7
92.2
93.8
94.1
9.0
9.3
10.1
6.7
5.5
6.1
38.6
39.0
38.9
224
153
175
110
131
119
316
230
195
54
50
53
141.8 142.6 145.2
144.7 144.4 146.4
135.3 135.0 133.2
137.4 137.0 134.2
120.7 125.1 126.7
136.1 135.5 137.9
127.2 127.9 129.2
159.7 156.7 162.5
136.8 139.7 143.6
126.8 120.2 122.1
117.0 121.4 129.3
142.2 144.8 149.7
103.1 105.2 106.9
112.5 116.1 117.0
154.5 156.7 157.3
227.5 232.4 246.0
121.8 128.1 130.7
134.5
119.7
116.8
107.5
113.5
116.0
113.6
131.6
110.0
123.3
112.1
135.0
113.2
135.2
163.1
107.2
139.7
160.7
127.8
137.9
153.5
151.4
104.3
136.8
98.5
5.1
2.1
40.4
230
245
216
90
148.1
146.7
130.9
149.0
138.2
136.6
133.3
152.7
150.5
152.9
150.2
160.0
110.5
133.5
148.7
246.4
128.9
168.4
214
308
188
537
587
EMPLOYMENT AND PRODUCTION
Nonfarm Em ploym ent..................Mar.
M a n u fa ctu rin g........................Mar.
Nondurable G o o d s..................Mar.
F oo d .................................Mar.
T e x t ile s ...........................Mar.
Apparel ...........................Mar.
P a p e r ..............................Mar.
Printing and Publishing . . . Mar.
C h e m ic a ls ........................Mar.
Durable G o o d s .....................Mar.
Lbr., Wood Prods., Furn. & Fix. . Mar.
Stone, Clay, and Glass . . . . Mar.
Primary M e t a l s ..................Mar.
Fabricated M e t a ls ...............Mar.
M a c h in e ry ........................Mar.
Transportation Equipment . . Mar.
Nonmanufacturing.....................Mar.
Co nstru ction .....................Mar.
Transportation ..................Mar.
T r a d e ..............................Mar.
Fin., ins., and real est........... Mar.
S e r v ic e s ...........................Mar.
Federal Government............Mar.
State and Local Government . Mar.
Farm Employment........................Mar.
Unemployment Rate
(Percent of Work F o r c e ) ............ Mar.
Insured Unemployment
(Percent of Cov. E m p .)...............Mar.
Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Mar.
Construction C o n tra c ts* ...............Mar.
Residential..............................Mar.
All o t h e r .................................Mar.
Cotton Consumption**..................Feb.
Manufacturing Prod u ctio n ............ Feb.
Nondurable G o o d s.....................Feb.
Food
..............................Feb.
T e x t ile s ...........................Feb.
Apparel ...........................Feb.
P a p e r ..............................Feb.
Printing and Publishing . . . Feb.
C h e m ic a ls ........................Feb.
Durable G o o d s ........................Feb.
Lumber and W o o d ...............Feb.
Furniture and Fixtures . . . . Feb.
Stone, Clay, and Glass . . . . Feb.
Primary M e t a l s ..................Feb.
Fabricated M e t a ls ...............Feb.
Nonelectrical Machinery . . . Feb.
Electrical Machinery . . . . Feb.
Transportation Equipment . . Feb.
FINANCE AND BANKING
Loans*
All Member B a n k s .....................Mar.
Large B a n k s ...........................Mar.
Deposits*
All Member B a n k s .....................Mar.
Large B a n k s ...........................Mar.
Bank Debits*/** ........................Mar.
276
255r
219
193r
304
278
261
216
188
287r
278
263
215
189
289
269
248
208
180
276
171.2
233
176.4
300
183.0
244
183.1
247
118.8
106.2
124.6
133.9
120.1
109.3
125.0
134.3
112.7
121.2
111.6
125.5
138.7
115.6
122.1
118.4
123.8
145.2
ALABAMA
INCOME
Manufacturing Payrolls..................Mar.
Farm Cash R e c e ip ts.....................Feb.
EMPLOYMENT
Nonfarm Em ploym ent..................Mar.
Manufacturing ........................Mar.
Nonmanufacturing
..................Mar.
Co nstru ction ........................Mar.
Farm Employment........................Mar.
Digitized8 2for FRASER
Latest Month
1975
Unemployment Rate
(Percent of Work Force) . .
Avg. Weekly Hrs. in Mfg. (Hrs.)
FINANCE AND BANKING
Member Bank Loans............
Member Bank Deposits . . .
Bank Debits**...................
One
One Two
Month Months Year
Ago
Ago
Ago
Mar.
Mar.
38.5
10.2
9.5
39.0
8.7
39.6
5.3
40.9
Mar.
Mar.
Mar.
267
214
294
267
212
280r
270
209
277r
200
Mar.
Feb.
180.8
249
179.4
229
180.7
158
182.4
173
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
149.6
117.2
155.9
161.5
80.8
10.7
39.9
150.1
118.5
156.2
167.4
75.3
9.5
39.5
150.7
120.9
156.4
170.5
77.2
9.6
39.1
156.0
128.5
161.3
220.2
84.3
4.9
40.4
FINANCE AND BANKING
Member Bank Loans............
Member Bank Deposits . . . .
Bank Debits**...................
Mar.
Mar.
Mar.
301
242
311
308
241
296r
306
239
288
303
240
307
GEORGIA
INCOME
Manufacturing Payrolls . - .
Farm Cash Receipts............
Mar.
Feb.
149.7
218
151.5
244
157.3
280
163.1
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
125.3
97.7
137.9
128.0
104.0
11.5
38.0
125.9
98.2
138.3
133.2
104.6
127.5
101.4
139.4
135.4
99.0
10.4
38.5
131.4
Mar.
Mar.
Mar.
250
191
353
256
190
326
264
189
343r
262
181
309
Mar.
Feb.
169.8
181
166.3
346
172.6
176
158.7
199
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
121.1 121.2 121.1 120.1
108.4 108.0 108.1 110.7
123.7 124.0 123.9 122.1
107.6
102.5
8.4
39.3
109.2
102.7
Mar.
Mar.
Mar.
261
207
259
Mar.
Feb.
Mar.
Mar.
Mar.
Mar.
Mar.
FLORIDA
INCOME
Manufacturing Payrolls . . .
Farm Cash Receipts............
EMPLOYMENT
Nonfarm Employment . . . .
Manufacturing................
Nonmanufacturing............
Construction................
Farm Employment................
Unemployment Rate
(Percent of Work Force) . .
Avg. Weekly Hrs. in Mfg. (Hrs.)
EMPLOYMENT
Nonfarm Employment . . . .
Manufacturing ................
Nonmanufacturing . . . .
Construction................
Farm Employment .............
Unemployment Rate
(Percent of Work Force) . .
Avg. Weekly Hrs. in Mfg. (Hrs.)
FINANCE AND BANKING
Member Bank Loans............
Member Bank Deposits . . .
Bank Debits**...................
LOUISIANA
INCOME
Manufacturing Payrolls . . .
Farm Cash Receipts............
EMPLOYMENT
Nonfarm Employment . . . .
Manufacturing ................
Nonmanufacturing............
Construction................
Farm Employment................
Unemployment Rate
(Percent of Work Force) . .
Avg. Weekly Hrs. in Mfg. (Hrs.)
FINANCE AND BANKING
Member Bank Loans* . . . .
Member Bank Deposits* . . .
Bank Debits*/**...................
MISSISSIPPI
INCOME
Manufacturing Payrolls . . .
Farm Cash Receipts............
EMPLOYMENT
Nonfarm Employment . . . .
Manufacturing................
Nonmanufacturing.............
Construction................
Farm Employment................
11.2
38.3
243
247
221
111.8
140.3
150.1
117.1
5.2
40.4
38.8
110.4
64.5
8.4
40.3
108.1
93.8
7.0
40.5
201
253
253
253
203
245
244
186
223
192.6
215
195.4
329
196.0
233
196.6
243
127.6
120.0
131.1
135.0
128.3
121.3
131.5
140.5
85.2
130.0
124.1
132.7
144.7
84.6
130.8
134.4
129.2
154.4
92.1
86.2
8.8
M A Y 1975, M O N T H LY R EV IEW
One
Two
One
Month Months Year
Ago
Ago
Ago
Latest Month
Unemployment Rate
Mar.
(Percent of Work Force) . .
Mar.
Avg. Weekly Hrs. in Mfg. (Hrs.)
FINANCE AND BANKING
Member Bank Loans*...................Mar.
Member Bank Deposits*................Mar.
Bank Debits*/**............................ Mar.
266
217
253
7.6
38.5
6.9
37.6
3.8
39.9
263
215
237
262
214
270r
269
218
251
TENNESSEE
166.4 171.1
Manufacturing Payrolls...................Mar.
244
184
Farm Cash Receipts......................Feb.
*For Sixth District area only; other totals for entire six states
One Two
One
Month Months Year
Ago
Ago
Ago
Latest Month
EM P L O Y M E N T
Nonfarm Employment . . . .
Manufacturing ...............
Nonmanufacturing............
Construction................
Farm Employment................
Unemployment Rate
(Percent of Work Force) . .
Avg. Weekly Hrs. in Mfg. (Hrs.)
Mar.
Mar.
Mar
125.5
107.5
135.6
139.0
89.8
9.6
38.2
FINANCE AND BANKING
Member Bank Loans*...................Mar.
173.9 175.1
Member Bank Deposits*................Mar.
176
207
Bank Debits*/**............................ Mar.
fPreliminary data
**Daily average basis
r-Revised
126.9
109.4
136.6
146.0
93.6
127.8
112.4
136.3
151.2
94.0
129.2
120.4
134.1
140.6
91.4
4.5
291
287
282
224
220
218
276
260r 267r
N.A. Not available
259
200
245
Note: All in d e xe s: 1 9 6 7 = 1 0 0 .
Sources; Manufacturing production estimated by this Bank; nonfarm, mfg. and non mfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating
state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Div., McGraw-Hill Information Systems Co.; farm cash receipts and
farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank.
'Data benchmarked to June 1971 Report of Condition.
D e b it s
to
D e m a n d
D e p o s it
A cco u n ts
I n s u r e d C o m m e r c i a l B a n k s in t h e S i x t h D i s t r i c t
(In T h o u s a n d s o f D o lla rs )
March
1975
Feb.
1975
STANDARD METROPOLITAN
STATISTICAL AREAS1
Birmingham . . . . 5,213,832 4,645,431
Gadsden . . . .
99,576
92,610
Huntsville . . . .
398,694
382,379
M obile............ . 1,396,602 1,290,407
Montgomery . . .
738,199
700,792
Tuscaloosa . . .
257,096
244,068
Bartow-LakelandWinter Haven
860,623
842,364
Daytona Beach
483,914
407,587
Ft. LauderdaleHollywood . . . 1,878,105 1,845,823
Ft. Myers . . . .
445,890
402,505
Gainesville . . .
286,469
256,353
Jacksonville . . . . 4,921,194 4,432,766
MelbourneTitusville-Cocoa
456,796
405,176
Miami ............
7,302,095 6,818,037
Orlando............
1,564,279 1,479,553
Pensacola . . .
516,670
491,078
Sarasota . . . .
545,104
543,409
Tallahassee . . . . 1,170,233
789,750
Tampa-St. Pete.
. 4,245,402 3,843,059
W. Palm Beach
. 1,298,338 1,202,516
Albany ............
185,396
177,289
Atlanta............ 19,494,214 17,650,539
Augusta............
630,502
606,983r
Columbus . . . .
455,134
430,472
Macon ............
818,046
737,880
Savannah . . . .
969,055
874,776
Alexandria . . .
331,531
269,735
Baton Rouge . . . 1,903,051 1,867,714
Lafayette . . . .
376,154
354,263
Lake Charles . .
271,125
301,082
New Orleans . . . 5,476,521 5,005,252
Biloxi-Gulfport . .
254,104
263,634
Jackson . . . .
1,656,263 1,671,621
Chattanooga . . . 1,300,110 1,181,349
Knoxville . . . . , 1,669,234 1,478,845
Nashville . . . . , 4,638,890 4,001,183
5THER CENTERS
Anniston . . . .
121,634
114,109
March
1974
Percent Change
Percent Change
March i jjate
1975 |3 mos.
from ! 1975
Feb. March from
1975 1974 1974
Mar.
date
1975 j 3 mos
from l 1975
Feb. Mar. from
1975 1974 1974
Dothan . . . .
Selma . . . .
March
1975
Feb.
1975
194,364
76.143
167.775
72.044
March
1974
190.595 + 16 -r 2 - 1
85,498 + 6 -11 -16
4,281,521
99,804
322,709
1,130,490
639,540
247,078
+ 12
+ 8
+ 4
+ 8
+ 5
+ 5
+22
- 0
+ 24
+24
+ 15
+ 4
824,648
390,322
1,842,327
405,780
254,315
4,713,682
409,299
7,428,385
1,584,793
450,554
524,370
827,765
4,294,560
1,293,757
197,933
17,526,880
532,229
441,947
746,060
554,012
288,713
1,432,961
292,870
251,639
5,054,259
251,074
1,605,143
1,471,136
1,769,974
3,711,918
+ 2
+ 19
+ 2
+ 11
+ 12
+ 11
+ 13
+ 7
+ 6
+ 5
+ 0
+48
+ 10
+ 8
+ 5
+ 10
+ 4
+ 6
+ 11
+ 11
+23
+ 2
+ 6
-10
+ 9
- 4
- 1
+ 10
+ 13
+ 16
+ 4
+ 24
+ 2
+ 10
+ 13
+ 4
+ 12
- 2
- 1
+ 15
+ 4
+41
- 1
+ 0
- 6
+ 11
+ 18
+ 3
+ 10
+75
+ 15
+33
+28
+ 8
+ 8
+ 1
+ 3
strict Total . .
. 91,053,586 82,588,136r 83,432,157 + 10 + 9 + 9r
8
Alabama . . .
Florida . . . .
Georgia . . . .
Louisiana- . .
Mississippi- . .
Tennessee- . .
11,194,767 10,225,073r 9,398,299 + 9 + 19
28,442,226 26,058,528r 28,196,069 + 9 + 1
26,830,394 24,135,320r 23,780,048 + 11 + 13
. 10,058,772 9,351,064 8,654,947 + 8 + 16
. 3,400,435 3,123,000 3,392,198 + 9 + 0
. 11,126,992 9,695,151r 10,010,596 + 15 + 11
+21
+ 3
+ 25
+27
+ 14
+ 7
Bradenton , .
Monroe County
Ocala . . . .
St. Augustine
St. Petersburg .
Tampa . . . .
201,863
142,448
225,667
49,474
962,494
2,197,768
202,926
123,950
204,966
34,570
886,883
1,921,394
206,329
113,775
197.415
53,518
994,618
2,028,920
- 1
+ 15
+ 10
+43
+ 9
+ 5
- 2
+ 25
+ 14
- 8
- 3
- 1
+ 5
+ 10
+ 3
-21
- 3
+ 4
+ 7
+ 17
- 3
+ 6
+ 8
- 1
+ 10
- lr
- 3
+ 19
+ 4
- 1
- 1
- 0
- 0
+ 6r
+11r
+ 2
+ 14
+ 66
+ 11
+43
+ 32
+ 16
+ 13
+ 12
+ 14
-12 - 9
- 6 + 7
+25 + 20
Athens . . . .
Brunswick . .
Dalton . . . .
Elberton . . .
Gainesville . .
Griffin . . . .
LaGrange . . .
Newnan . . .
Rome . . . .
Valdosta . . .
165,782
116,003
157,850
25,982
163,605
69,260
39,876
43,477
157,446
109,106
136,496
122,678
149,585
22,376
147.080
70,399
37,913
41,240
137,084
95.203
158,728
99,288
183,469
22,908
148,447
73,815
41,686
53,893
140,541
99,279
+ 21
- 5
+ 6
+ 16
+ 11
- 2
+ 5
+ 5
+ 15
+ 15
+ 4
+ 17
-14
+ 13
+ 10
- 6
- 4
-19
+ 12
+ 10
+ 4
+ 25
-16
+ 9
+ 10
- 7
-10
-14
+ 4
+ 10
Abbeville ■ - ■
Bunkie . . . .
Hammond . .
New Iberia . .
Plaquemine . .
Thibodaux . .
18,915
17,401
111,708
88,379
32,115
68,809
16,899
13,173
102,448
82,902
28,336
57,001
16,124
13,601
59,644
62,828
21,869
36,668
+ 12
+32
+ 9
+ 7
+ 13
+ 21
+ 17
+ 28
+ 87
+ 41
+ 47
+88
+ 13
+30
+36
+37
+ 33
+63
Hattiesburg . .
Laurel . . . .
Meridian . . .
Natchez - - PascagoulaMoss Point
Vicksburg . . .
Yazoo City . .
151,160
77,280
120,054
54,233
181,599
75,768
52,429
140,237
79,055
119,928
55,847
177,522
70,659
38,831r
121,309
79,177
123,073
56,538
169,358
83,540
45,246
+ 8
- 2
+ 0
- 3
+ 2
+ 7
+ 35
+25
- 2
- 2
- 4
+ 5
- 9
+ 16
+ 19
+ 2
+ 4
+ 8
+ 6
-10
+ 9r
Bristol . . . .
Johnson City
Kingsport . . .
149,755
173,483
356,381
122,799r
159,858
264,696
124,483 +22 +20 +29r
164,319 + 9 + 6 + 2
315,622 +35 + 13 + 9
112,251 + 7 +
+ 14
+ 19r
+ Or
+ 9r
+ 21
+ 7
+ 12r
'Conforms to SMSA definitions as of December 31, 1972.
-District portion only,
r-revised
Figures for some areas differ slightly from preliminary figures published n "Bank Debits and Deposit Turnover" by Board of Governors of the Federal Reserve System.
Digitized
forA FRASER
FE D ER
L R ES ER V E BANK O F A TLAN TA
83
D is t r ic t
B u s in e s s
C o n d it io n s
M fg. Production
Nonfarm Employment
Unemployment Rate'
Average Weekly Hours*
M fg. Payrolls
M oving Avg
Farm Cash Receipts
1111111111
’'S e a s. adj. figure; not an index
La te st plotting: M arch, except mfg. production, Jan uary, and farm receip ts, February.
T h e b a d n e w s f o r t h e S o u th e a s t's e c o n o m y s h o w s s o m e s ig n s o f d im i n i s h i n g . D e s p i t e g e n e r a l w e a k n e s s
in e m p l o y m e n t , s o m e s e c to rs h a v e i m p r o v e d . C o n s t r u c t io n c o n t r a c t s a d v a n c e d ; c o n s u m e r in s t a lm e n t
c r e d it d e c l in e d le ss r a p i d l y . M e m b e r b a n k s c o n t i n u e d t o r e p o r t la r g e d e p o s i t a d v a n c e s . F a rm c a s h
re c e ip ts , t h o u g h t r e n d i n g d o w n w a r d , w e r e h e lp e d b y h ig h i n c o m e f r o m s u g a r c a n e .
L a b o r m a r k e t s w e a k e n e d f u r t h e r in M a r c h . E m
p l o y m e n t d e c lin e d in n e a r ly e v e r y in d u s t r y , a n d th e
u n e m p l o y m e n t ra te a d v a n c e d t o 10.1 p e r c e n t . In
m a n u f a c t u r in g , b o t h a v e r a g e w e e k l y h o u r s a n d p a y
ro lls d e c lin e d . T h e r e w e r e s o m e b r ig h t s p o ts , h o w
e v e r . A u t o m o b i l e m a n u f a c t u r e r s r e c a lle d s e v e ra l
t h o u s a n d w o r k e r s p r e v i o u s l y id le d . F o o d p r o c e s s in g
a n d s ta te a n d lo c a l g o v e r n m e n t e m p l o y m e n t a ls o
g a in e d s lig h t ly .
R e s id e n t ia l c o n s t r u c t io n c o n t r a c t s a d v a n c e d in
M a r c h a n d n o n r e s id e n t ia l c o n s t r u c t io n g a in e d c o n
s id e r a b ly .
H o w e v e r , c o n s t r u c t io n a c t i v i t y re m a in s
w e l l b e l o w y e a r - a g o le v e ls . T h e F e d e ra l in c o m e ta x
c r e d it f o r n e w h o m e s is s p a r k in g fre s h in te re s t in
h o m e p u rc h a s e s . C o n s u m e r s a v in g s i n f lo w s at b a n k s
a n d s a v in g s a n d lo a n a s s o c ia tio n s a p p r o a c h e d r e c o r d
le v e ls f o r t h e firs t q u a r t e r a n d s h o u l d e n s u r e th e
a v a i la b i l i t y o f m o r t g a g e fu n d s .
E n c o u r a g in g d e v e l o p m e n t s a p p e a r e d in c o n s u m m e r in s t a lm e n t d e b t o w e d t o c o m m e r c i a l b a n k s .
A l t h o u g h to ta l o u t s t a n d in g in s t a lm e n t lo a n s c o n
t in u e d t o d r o p in M a r c h , th e s iz e o f th e d e c lin e
d e c re a s e d - r e la t iv e t o th a t o f p r e v i o u s m o n t h s . N o n
a u t o m o t i v e c o n s u m e r g o o d s a n d p e r s o n a l lo a n s fe ll
o n l y s jig h t ly , f o l l o w i n g s u b s ta n tia l d e c re a s e s e a rlie r.
A l m o s t a ll th e d e c l in e in to ta l in s t a lm e n t c r e d it
re fle c t e d r e d u c e d a u t o lo a n s . D e p a r t m e n t s t o r e sa le s
ro s e s l ig h t ly f r o m t h e y e a r - a g o le v e l.
M a n y b a n k s e x p e r i e n c e d s t r o n g d e p o s i t g a in s
d u r i n g A p r i l . W i t h lo a n d e m a n d still w e a k , b a n k s
c o n t i n u e d t o p u r c h a s e s iz a b le a m o u n t s o f U . S.
G o v e r n m e n t s e c u ritie s . M e m b e r b a n k s a re a ls o
b e c o m in g less d e p e n d e n t o n F e d e ra l f u n d s p u r
c h a s e s a n d in t e r e s t -s e n s it iv e d e p o s it s . In e a r ly
M a y , m a n y la r g e r b a n k s w e r e p o s t in g a 7 V 2- p e r c e n t
p r im e ra te , t h e l o w e s t s in c e m id -1 9 7 3 .
P ric e s r e c e i v e d b y f a r m e r s f e ll a g a in in M a r c h b u t
m a y h a v e s t a b iliz e d s in c e t h e n , a c c o r d i n g t o p r e
l i m i n a r y d a ta . S o m e r e c o v e r y in c a ttle a n d s o y b e a n
p ric e s o ff s e t c o n t i n u i n g d e c lin e s f o r f e e d e r c a lv e s
a n d w h e a t . S la u g h t e r o f l iv e s t o c k , e s p e c ia lly h o g s ,
d r o p p e d m a r k e d l y f r o m m o n t h - a g o le v e ls , r e f le c t in g
c u r t a ile d p r o d u c t i o n f r o m u n f a v o r a b l e f e e d - p r i c e
ra tio s . B r o ile r p la c e m e n t s s till la g g e d y e a r - a g o le v e ls
t h r o u g h A p r i l , a lt h o u g h t h e y w e r e n e a r ly u n c h a n g e d
f r o m a m o n t h a g o . T h e d e c l in e in in te re s t ra te s o n
s h o r t - t e r m a g r ic u lt u r a l lo a n s h a s s l o w e d . U n u s u a l l y
la rg e g a in s f r o m t h e s u g a r c a n e c r o p in L o u is ia n a
a n d F lo r id a h e lp e d p u s h D is t r ic t fa r m c a sh r e c e ip ts
a b o v e y e a r - a g o le v e ls .
N o te , D ata on w h ic h s t a t e m e n t s a r e b a s e d h a v e b e e n a d ju s t e d w h e n e v e r p o s s ib le to e lim in a t e s e a s o n a l in f lu e n c e s .
Digitized8 4for FRASER
M A Y 1975, M O N T H LY R EV IEW
@FedFRASER