Full text of Economic Review (Federal Reserve Bank of Atlanta) : May 31, 1946, Volume 31, Number 5

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Monthly

Review

FED ERA L RESERV E BANK OF ATLAN TA
Volume X X X I

In c re a s in g

Atlanta, Georgia, May 31, 1946

th e

V a lu e

o f

th e

th ro u g h
addition has recently been made to the growing
number of industrial-research institutions in the Sixth
Federal Reserve District. The organization of the Wood Re­
search Institute, Incorporated, of Atlanta, in September 1945
was one more result of a growing recognition on the part of
the South’s leaders that industrial research will influence in­
creasingly the direction of the region’s economic future.
The Wood Research Institute is the fruit of an idea nurtured
by the founder, Don Gavan. His idea was to make the benefits
of industrial research accessible to the lumber industry of the
whole South. The significance of the institute can be ap­
preciated only against a background that points out the
changing emphasis science has given to factors of industrial
location, the importance of the lumber industry to the South,
the importance of science in industry, and the ability of
science to change the physical and chemical characteristics
of wood.
That the industrialization of the area will not depend
solely on the advantages of natural resources and an abun­
dant labor supply is receiving more and more emphasis. Tra­
ditional factors affecting industrial location do not influence
the location of an industry born out of a test tube in a scien­
tific laboratory to the extent that they influence the location
of those industries which merely change the form of raw
materials without altering their structure. Since the former
type of industry is becoming increasingly important, longrange plans for Southern industrial advancement must in­
clude extensive industrial research to provide the bases for
new finished-goods industries. Aside from its importance to
new industries, this application of science is one of the means
by which existing industries learn to adapt their raw ma­
terials and products to the demands of an ever advancing
technological market and thus retain their importance in the
South’s economy.
An individual manufacturing establishment encounters
competition from similar establishments located not only in
the region but in all parts of the country. Its ability to sur­
vive is determined by both changing market demands and
costs of production. Many factors, including the cost of raw
materials, labor costs, efficiency of management, financial
costs, and transportation costs, influence the success of an
individual establishment and whether or not it will be able
to survive in any given location. The natural resources of the
Sixth Federal Reserve District and its labor supply were
among those important factors influencing the recent ex­
pansion of the area’s manufacturing. Growing industrializa­
tion in the region will eventually reduce whatever differential
a n o t h e r




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advantage may exist in wage costs, and recent scientific and
technological advances may reduce in some instances the
differential advantages of abundant raw materials. In the
future the industries of this region will probably compete
more and more upon the basis of technological and mana­
gerial efficiency and an efficient utilization of resources.
Scientific and technological developments make competitors
out of industries that might at first sight seem competitive
only in a remote sense.
At one time the petroleum industry would scarcely have
been considered a competitor by the producers of natural
rubber. Yet today, as the result of scientific and technological
advances, synthetic rubber has become so improved and so
much cheaper that it is doubtful if natural rubber will ever
regain its prewar position.
That seawater would provide a source of raw materials
seriously competitive with steel for a part of its market would
at one time have been termed fantastic. Yet the production of
magnesium derived from seawater has been so reduced in cost
that the metal can now be used economically for many pur­
poses traditionally confined to other metals. Costing $5 a
pound in 1915, magnesium ingots were selling at 27 cents a
pound in 1939 and recently have been selling at 20 cents. One
company expects to be able to market magnesium at an even
lower price, and the knowledge and fabrication skills gained
during the war years will help to spread the use of the metal.
Plastics, the development of which has long appealed to
the public imagination, have an advantage in that they can
be specifically created for particular markets and particular
uses. Various types have appeared as competitors of a wide
range of conventional materials. Many other products that
compete with the products of existing industries have already
arisen, and they will probably continue to provide compe­
tition in the future.
Industrial research, according to many Southern leaders, is
consequently essential to continued economic development in
the region. Already the Southern Regional Research Labora­
tory at New Orleans, sponsored by the United States Depart­
ment of Agriculture, has contributed importantly to the
Southeast’s economic progress. Private industry realizes, how­
ever, the necessity of carrying on independent research that
will adapt the findings of Governmental agencies to com­
mercial uses and will at the same time point the way to new
scientific developments. One method of the pooling of private
resources for industrial research is used by the Southern Re­
search Institute in Birmingham, Alabama, which was dis­
cussed in the September 1944 issue of the Review. Now, this

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new, wood research institute has been sponsored by private
industry to enlarge the possible uses of the forest resources
of the District.
The Sixth District’s forest resources are the basis for one
of its most important industries. Before the war the forests of
the Sixth District states, it was estimated, covered 57 percent
of the total land area of those states. Almost 98 percent of
these resources were commercially owned. About one out of
every three manufacturing workers in these states, Alabama,
Florida, Georgia, Louisiana, Mississippi, and Tennessee, was
employed in a forest industry. Before the war 20 percent of
the total value of manufactured products in the District was
contributed by the forest industries. Furthermore, the Dis­
trict’s forest products constitute a resource that, by proper
utilization, is constantly being renewed. Fire is the greatest
enemy of sustained yield. Professor Edwin A. Ziegler of the
University of Florida believes that if adequate fire protection
combined with forest management were practiced, Florida,
which is a net importer of wood now, would be able to pro­
duce eight times the amount of wood used in all its industries.

Lumber’s Role in the W ar
Wartime shortages of metal made the forest-products industry
a leading contributor to victory. Engineering and technologi­
cal advances during the war not only increased the value of
wood in its traditional roles but expanded its economic possi­
bilities. The industry’s expansion in the District was limited
by the availability of labor and other factors. Still, employ­
ment in the industry was considerably higher during the war
years than in 1939 before the influence of the European con­
flict was felt. In Alabama, Florida, and Georgia, for which
states monthly data are available, the peak of employment in
lumber and timber basic industries was reached in 1943, ac­
cording to the Bureau of Labor Statistics. As indicated on the
chart, employment in other forest-products industries also
made wartime gains. Lumber production in the Sixth District
states during 1945 amounted to more than 380 million board
feet, or 20 percent of all lumber production in the United
States.
Present shortages of building materials would apparently
insure sufficient demand at present for all the lumber the in­
dustry could produce. Though the chief concern at present is
with production difficulties caused by labor shortages and
price problems, it is these difficulties that will stimulate the
manufacture of additional wood substitutes, some of which
might permanently displace lumber in many of its present
uses.
Retention of already-existing markets for wood products is
not the only benefit resulting from scientific research. The
new processes make it possible to utilize the inferior grades
of trees that formerly were considered to have no commercial
value. Scientific research makes possible sustained forestry
practices. Moreover it increases the value of the region’s
timber resources by making selective cutting profitable. For
example, an owner of a tract of timber will, if the market
exists, receives a greater return by selling part of the timber
for poles, part for saw logs, and part for pulpwood than he
will by selling the timber for any one purpose alone.
A utilization of the waste products of the lumber industry
also represents one of the greatest challenges. It has been
stated that only about 25 percent of a tree is used in the ma­
terials that go into a house. The branches, slabs, bark, saw­
dust, and other wastage are not only an economic loss to the




industry but an expense in themselves because of the dis­
posal problem they present. The pulp industry probably
utilizes more of the forest material than other forest in­
dustries do, but still it rejects the bark, branches, and stumps.
If this material could be utilized at a profit, the region’s
forest resources would provide a much greater return than
they do now. Already one company has found it possible
to utilize the stumps of trees from which it obtains wood oils
and materials for paints, road stabilizers, and explosives, but
for the most part the wastage constitutes a liability rather
than an asset.

The Development ol Wood Research
Modern wood research in the United States owes its be­
ginning to the establishment in 1910 of the Forest Products
Laboratory of the Forestry Service at Madison, Wisconsin. In
the South forestry research has been undertaken by the
Southern and Appalachian Forest Experiment Stations, by the
Herty Foundation, and by private enterprises. A school of
forestry was accredited at the University of Florida in 1943.
Research is also being carried on by the region’s pulp com­
panies and other organizations. The Wood Research Institute,
Incorporated, will receive its support from private industry
through a pooling of the resources of individual firms and
will in no way compete with existing organizations. Rather,
the institute should be able to adapt scientific and techno­
logical discoveries to the practical requirements of com­
mercial operation, as well as to create new processes that will
utilize the region’s timber resources. The accomplishments of
the past illustrate some of the possibilities of research in
this field.
Wood research has resulted, first of all, in overcoming
some of the inherent faults of wood that new materials pur­
port to correct. Wrood rots; it shrinks; it swells; it warps;
it burns; and it is difficult to dry and bend. Other types of
research have enlarged the number of uses for wood without
transforming its basic structure. A third type has trans­
formed wood completely, turning it into such products as
pulp, paper, rayon, industrial alcohol, and various types of
plastics. One of the most recent developments makes wood
through impregnation into something better than it was be­
fore without changing its essential nature.

M A N U F A C T U R IN G E M P L O Y M E N T , F O R E S T P R O D U C T S I N D U S T R I E S
A L A B A M A , G E O R G IA , AN D M IS S IS S IP P I
1939 M ON TH LY A V E R A G E > 10 0

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Through chemical processes it is possible to treat wood so
that it resists fire, termites, and decay. Wood treated against
decay was in wide use before the war for dock and railway
structures, railway ties, telegraph poles, and bridge founda­
tions. By applying Wohlman salts, it is possible to create an
odorless product that is easily painted. Recent improvements
utilize other types of chemicals to meet the specific require­
ments of the market. The war stimulated wood preserving,
with special emphasis upon flameproofing. Almost 75 million
board feet were so treated in 1943 by the 229 United States
wood-preserving plants, 84 of which were in the South.
Enlarging the number of uses to which wood may be put is
equally as important as overcoming what are considered to
be the inherent defects of wood. Laminated wood, which is
made by gluing pieces of wood together with their grains
parallel, has been increasingly incorporated in arches for
buildings. The idea was gaining acceptance in the United
States before the war, since these arches, when treated for
insects, fire, and decay, meet many of the requirements of
steel and at a lower cost. The use of laminated wood ex­
panded during the war and because of recent technological
improvements will probably continue in the postwar period.
In contrast with laminated wood, plywood is made by
sandwiching thin sheets of wood together, each sheet laid
crosswise to the grain of the other. Relatively little waste re­
sults from its manufacture, and it can utilize logs of small
size and of a quality not suitable for ordinary lumber. When
bound with resinous glues and water the plywood can be
molded into many shapes. The manufacture of a waterproof
plywood is possible. Plywood tubing was employed ex­
tensively during the war for antennas, masts, reinforcing
members, large rafts, and various sectional types of con­
struction. A plywood mast produced by one manufacturer can
be extended to 90 feet but can be telescoped to eight or six
feet. Plywood, it is expected, will be incorporated to a con­
siderable extent in prefabricated homes.
The growth of the pulp-and-paper industry in the South is
a direct result of the type of scientific research that trans­
forms the products of Southern forests completely. Chemistry
has made it possible to utilize Southern timber in the manu­
facture of paper, rayon, and other materials. The pulp-andpaper industry was advancing rapidly prior to the war. In the
Sixth District states 2.9 million tons of wood pulp were pro­
duced in 1945, approximately 29 percent of the total United
States production. An expansion of existing pulp mills and
the erection of new ones have constituted one of the most im­
portant factors in the postwar growth of the District’s in­
dustry. If the wastes and by-products of the pulp industry
could be profitably employed, however, an even greater re­
turn would be realized. Though many possible uses for these
by-products have been explored, much additional scientific
research will be required before the scientific discoveries be­
come commercially feasible.
Out of experiments originating at the Forest Products
Laboratory have grown the processes by which woods, though
not transformed completely into other substances, are so im­
proved that they are able not only to compete with modern
materials but to enter new fields. A whole new series of words
created to describe the products such as impreg, compreg,
staypak, papreg, pregwood, superwood, indurated wood,
transmuted wood, asidbar, urwood, and uraloy may yet be­
come common words in the layman’s vocabulary.




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Impregnated Woods
The “ preg” family of woods originated at the Forest Products
Laboratory. Treating wood with resin so that the resin
actually penetrated the wood cells produced a material
called impreg. This material was found to be almost swellproof, shrinkproof, and decayproof. Compression of the
wood to about half its size during the heating process created
a hard dense substance called “ compreg.” Further improve­
ments resulted in “ staypak” and eliminated the springback
and swelling of the former types and the brittle qualities of
compreg.
A search for a cheap chemical suitable for treating re­
fractory woods prior to the drying process revealed that wood
soaked in urea and placed in a drying oven became plastic.
It was found that this plastic could be rendered stable when
treated with formaldehyde. It was also discovered that after
the wood was soaked it was as pliable as a piece of heavy
rubber and when dry retained its molded shape permanently.
This process in addition made the wood resistant to water,
weather, acids, alkalies, insects and fire. Commercial com­
panies have further developed the science of impregnating
or transmuting wood.
Each of these processed woods has its own particular ad­
vantages for particular uses, but they all have qualities that
point to manifold possibilities for the further use of the Dis­
trict’s wood resources. So hard are compreg and staypak that
they take on some of the qualities of steel. It has been stated
that one of the impregnated woods is to ordinary wood what
steel is to iron. Through this process such woods as maple be­
come as hard as ebony. Since the process may be applied to
soft woods, it makes the little-used woods competitors of such
hard woods as oak, walnut, and hard maple. The wide range
of uses for these new woods, combined with the abundant
supply of raw materials in the South, point to the value that
industrial research in this field will have if commercial pro­
duction is possible.
Some of the new woods have a finish which resembles that
of polished marble and at the same time reveals the naturally
beautiful grain of wood. Scratches can be removed from the
surface by merely smoothing and rubbing, since the material
has been impregnated all the way through. This type of lum­
ber can be reduced to the desired thickness by pressure dur­
ing processing, instead of by sawing, and made to hold that
thickness permanently. If special colors are desired, they may
be introduced along with the impregnating chemicals. A
whole new range of colors is thus possible for furniture and
interiors. Drawers and doors in furniture made of this type
of wood will not swell and will operate under all types of
climatic conditions. As the possibilities for this new type of
material are fully explored additional ways in which it may
be employed will present themselves.
Between the industrial laboratory and the factory, or mill,
there is a large area of experimentation required. Adaptation
of scientific developments to the lumber industry of the Dis­
trict and to the needs of an individual enterprise requires
systematic and constant research. Since the greater part of the
region’s forest resources are commercially owned and, also,
since the fabricating plants are privately owned and financed,
the possibility of applying many of the recent scientific de­
velopments in wood inevitably hinges upon their commercial
practicability. Whether or not he will utilize any given tech­
nique is, for an individual processor, governed by the possible

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dollars-and-cents return. Research that will be specifically
concerned with the commercial possibilities in the applica­
tion of advances in chemistry and engineering to wood is
therefore needed to supplement the work of public organiza­
tions.

The Wood Research Institute
For several years Don Gavan has been interested in the possi­
bilities of wood research as a contribution to the region’s
industrial possibilities. About two years ago he became es­
pecially interested in the possibility of commercially adapt­
ing recent discoveries for impregnating wood. Since no re­
search institute was then available, the Don Gavan Lumber
Company began to explore the possibility of a commercial
process for impregnation by the use of Arboneeld, the trade
name of Du Pont’s demethylolurea. Experiments on a pilotplant scale were made in the impregnation of gum, poplar,
cypress, persimmon, Southern pine, maple, birch, and syca­
more.
As a test for the durability of the wood under varying con­
ditions impregnated-wood floors were placed in several in­
dustrial plants. Tests were also made of other possible ways in
which impregnated wood might be employed. A block of it,
in one case, was used as a saw guide. In contrast to a hickory
guide, which usually lasts only about 90 days under severe
usage, the guide made of impregnated soft poplar was used
for eight months. Other possible uses include textile spools
and spindles, parts of instruments such as surveyors’ tran­
sit tripods laundry machines, and tubs, in addition to its use
for furniture.
The company became so interested in wood research that it
entered into a contract with the Georgia School of Technol­
ogy. Under this agreement, which was made for the period
September 1944-September 1945, the school carried on other
types of pilot-plant work.
Meanwhile other persons in the area became interested in
the possibilities of wood research, and after preliminary dis­
cussions the Wood Research Institute was established. This
institute, although aided by the efforts of Mr. Gavan, is en­
tirely divorced from the Don Gavan Lumber Company. Any
projects undertaken for that company will be on the same ba­
sis as those for any other firm.
The institute has been organized in close association with
Oglethorpe University in Atlanta, and co-operation between
the two institutions is expected. One of the directors, Dr.
Phillip Weltner, is also president of the university. The
university has agreed to provide the institute with the use of
Faith Hall for a period of 15 years, with the privilege of re­
newal for another 15 years. Repairing and modernization of
the building, 142 by 52 feet, has already begun. Half of the
structure will consist of a room two stories high, and the other
half will be made up of a main floor and a mezzanine. Conver­
sion of the building should be completed shortly.
In the building the institute will set up
pilot-plant equipment and a complete
laboratory. Furthermore, it expects to in­
stall a number of woodworking machines
common to the industry. A machine shop
equipped for the building and servicing
of laboratory and pilot-plant devices is
included in the plans. The staff will have
its own library of literature in the field
of wood research.




Under the laws of Georgia the Wood Research Institute,
Incorporated, has been organized as a nonprofit corporation
governed by a board of trustees. The board now consists of
seven individuals. As the work progresses it will be enlarged
to include representatives of the various lumber, paper, and
pulp industries in the Southeast. Present members of the board
are Mr. and Mrs. Gavan, G. Tom Bailey, Bruce Anderson,
Bruce Woodruff, Phillip Weltner, and Homer M. Meier. The
directors of the institute, after consulting with the staffs of
the principal schools of forestry and professional societies,
have secured the services of S. M. Johnson as director.

Two Types of Problems
The new organization will devote its resources to two major
types of problems. One class will concern long-range devel­
opments. The finances for carrying on this type of work will
come from the institute’s endowment and special grants. An
initial endowment of $50,000 has been made by Mr. and Mrs.
Gavan. The second type of project to be undertaken will be
made at the specific request of individual businesses. These
firms will have access to the services of the institute, but they
will be required to meet the actual cost of the work involved
in their particular projects.
The institute will lay special emphasis upon the practical
solution of the industry’s problems. One of its prime purposes
will be to locate problems that are of direct interest to the in­
dustry itself. It is difficult for persons not in the industry to
predict what type of work should actually bear the most fruit.
Problems of industrial interest and the possible solutions to
these problems, it is believed, can best come from the indus­
try itself. Therefore, the policy of closely integrating the in­
stitute’s activities with private industry is a sensible one.
As a purely hypothetical example, it might be supposed
that a furniture-manufacturing company has a large amount
of hardwood slab waste. It is impossible to sell the waste. It
is inconvenient to burn it, and in addition, a sizeable expense
is involved in disposing of the slab. In the hope of solving its
problems the company might first consult with the institute’s
staff concerning the possible utilization of this waste in some
form. The staff, being conversant with published literature and
papers delivered at scientific societies and with experiments
in the field, may be able to suggest methods of commercial
utilization without further experimentation. On the other hand,
it may be discovered that although laboratory experiments
have suggested a solution it is not known whether this method
is commercially feasible. Another possibility is that there is
no known method of utilizing the particular type of waste this
firm wants to dispose of.
All these possibilities are considered by the institute’s staff,
and the firm is requested to submit its problem in a complete
form. The business firm enters into a contract with the insti­
tute under which the latter conducts the project for a specified
period at no profit to the institute. The interested firm on its
part agrees to finance the direct cost of
the project, including payment for the
technicians’ time, the cost of materials
used, and the costs of any special equip­
ment required. Obviously, the institute
cannot guarantee to produce a desired re­
sult in an exact period of time, but the
company and the institute agree to review
the progress of the project at specified
intervals and to decide then whether to

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continue or discontinue the work.
As the project develops, the company may find it desirable
to have one of its own employees participate in the experi­
ments. By this means the company would not only receive ben­
efit from the scientific data derived from the experiment but
would at the same time acquire the practical details necessary
to apply the process to its own commercial needs. Any infor­
mation gained from the investigation would be the company’s
own. The decision of whether or not the company will re­
lease the information to the industry generally is made by the
company itself.
The availability of the institute’s staff, equipment, and ex­
perience will, of course, be one of the chief advantages of­
fered the individual firm. Such an institution may afford the
only way possible for the relatively small firm to participate
in industrial research. For the larger firm the institute’s re­
sources will constitute a valuable pool of experience from
which it may draw.
Attention to the problems of individual companies will be
only one phase of the institute’s program. A considerable part
of its work will be on various phases of a long-range pro­
gram, which will change from time to time as problems arise.
One of the immediate phases of this program will be an in­
vestigation into the chemical treatment of wood as a means of
improving its dimensional stability. Another phase that has
been suggested for the institute’s program concerns the acetylation of wood. Although a great deal of work has been done
on wood hydrolysis further work is required to adapt the proc­
esses to a commercial basis. Utilization of sulphite waste will
also be investigated. There are so many aspects to the problem
of complete wood utilization that the field of investigation
will be limited only by the institution’s resources. The insti­
tute will release to the industry generally results of the in­
vestigations concerned with its long-range program.
Since the institute is in a formative stage and it has as one
of its purposes the creation of practical benefits to the indus­
try, those people responsible for its organization hope that a
great part of the program will be the result of suggestions
made by the industry itself. The institute is open for the dis­
cussion of problems. It welcomes also any contributions in the
way of suggestions and ideas that industry may make to it.
Only by such close association will the institute fulfill its func­
tions properly. Furthermore, the directors hope there will be
close co-operation with other research agencies in the South­
east.
The South’s industrial future is linked closely to that of the
nation and depends upon a complex of factors, some of which
are outside the control of the region’s industrialists. Govern­
mental policy, world conditions, the course of the national
income, and other factors are matters with which individual
industries have only indirect influence. The nation’s success in
overcoming economic problems on a national basis is, how­
ever, no insurance that the South will share in an expansion
of the national income unless local problems receive a great
deal of attention. The establishment of institutions like the
Wood Research Institute, Incorporated, is one means by which
the South may insure its full participation in the nation’s eco­
nomic development. Many more such institutions will be re­
quired before industry in the South not only will utilize fully
its present resources of labor and raw materials but will con­
tinually renew itself.




C h arles T . T aylor

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S ix t h D i s t r i c t S t a t is t ic s
CONDITION OF 20 MEMBER BANKS IN SELECTED CITIES
(In Thousands oi Dollars)
Percent Change
May 22 April 24 May 23 May 22, 1946, irom
Item
1946
1945 April 24 May23
1946
1945
1946
Loans and investments—
Total......................... 2,214,435 2,251,677 1,840,600 — 2
+ 20
Loans—total............... 496,305 496,597 319,409 — 0 + 55
Commercial, industrial,
+ 29
and agricultural loans 235,135 237,282 182,665 — 1
Loans to brokers and
+ 49
dealers in securities.
+
3
'
,1
1
,0
3
4
7
,6
3
9
11,353
Other loans for pur­
chasing and carrying
+254
securities.............. 124,518 124,147 35,,155
4* 9
4 + 16
Real estate loans........ 28,232 27,034 24,435 +
+126 + 77
Loans to banks.........
1,408
1,801 —
3,.183
2 + 39
Other loans.............. 93,884 95,692 67,716
Investments—total........ 1,718,130 1,755,080 1,521,,191 — 2 + 13
U. S. direct obligations 1,558,096 1,600,5,18 1,379,622 — 3 + 13
Obligations guaranteed
by U. S................
— 73
6,192 — 1
1,676
1,652
Other securities......... 158,382 152,886 135,377 + 4 + 17
Reserve with F. R. Bank__ 363,185 363,785 349,031 — 0 + 4
Cash in vault.................
29,178 30,427 30,Jl 6 — 4 — 3
Balances with domestic
147,029 ,146,333 ,128,828 + 0 + 14
Demand deposits adjusted. 1,363,043 1,331,766 .1,275,054 + 2 + 7
Time deposits................. 442,629 436,018 365,427 <+ 2 + 2J
+203
U. S. Gov't deposits......... 336,483 382,330 >1,10,995 — 12
Deposits of domestic banks. 490/880 512,937 489,003 — 4 + 2
3,500 — 88 — 57
1,500 12,200
Borrowings...................

Place

DEBITS TO INDIVIDUAL BANK ACCOUNTS
(In Thousands oi Dollars)
Percent Change
No. oi
March
April April 1946irom
Banks April
1945 March April
1946
Report­ 1946
1946 1945
ing

ALABAMA
Anniston......
Birmingham...
Gadsden......
Montgomery...
FLORIDA
Jacksonville...
Miami..........
Greater Miami*
Orlando........
Pensacola.....
St. Petersburg.
Tampa..........
GEORGIA,
Albany.........
Atlanta.........
Augusta........
Brunswick.....
Columbus.....
Elberton.......
Gainesville*...

3

6
2
3
4
3
3
7

11
2

3
3
3

2

4
3
2
4
2
3
2
3
2
3
4

22,356
225,572
8,165
12,616
93,908
52,367

.18,103
227,866
9,569
12,927
98,985
56,596

16,037
198,064
6,583
9,78(1
103,173
36,015

+. 23 + 39
— 1 + 14
15 + 24
— 2 + 29
— 5 — 9
— 7 + 45

202,061
197,419
289,919
45,437
27,755
46,072
97,631

212,463
231,944
336,340
46,714
29,152
47,577
98,610

170,029
138„137
197,229
35,507
23,113
30,523
85,,222

— 5
— 15
—♦14
— 3
— 5
— 3
— 1

+ 19
+ 43
+ 47
+ 28
+ 20
+ 51
+ 15

12,092
586,495
45,776
9,640
42,513
2,883
9,73.2
8,341
42,502
7,094
16,520
78,658
9,414

12,772
613,913
43,747
8,306
42,202
3,093
10,865
8,067
44,193
9,186
17,054
80,023
8,803

8,845
457,599
34,042
1,1,955
33,7,18
.1
*,7
*44
**
37,401
4
*,8
*54
87,518
6,637

— 5
— 4
+ 5
+ 16
— 0
— 7
— 10
+ 3
— 4
— 23
— 3
2
+ 7

.+ 37
>+ 28
+>34
— 19
+ 25
+* *65
**
+ 14
.+
* *46
—«10
+ 42

Newnan........
Savannah......
Valdosta.......
2
LOUISIANA
Baton Rouge..
43,026
3
55,785
55,485
Lake Charles..
3
20,03.2
21,086
,15,391
NewOrleans..
4
06,537
7
492,438 503,632
MISSISSIPPI
Hattiesburg...
1,1,497
2
13,924
,15,485
Jackson.........
58,228
4
81,935
88,019
Meridian......
22,184
16,405
3
24,717
Vicksburg.....
15,142
21,741
2
25,168
TENNESSEE
Chattanooga...
4
100,589 .104,404
83,11,2
Knoxville......
96,423 104,184 120,697
4
Nashville......
227,174 209,879 172,973
6
SIXTH DISTRICT
32 Cities........ 108 3,000,151 3,108,370 2,479,505
UNITED STATES
334Cities......
87,532,000 87,578,000 74,139,000
*Not included in £SixthDis1trict total
**Not a1irailable

+ .1 + 30
— 5 + 30
i— 2 ,+ 21

10 + 21
— 7 + 41
—. 10 + 35
— 14 + 44
— 4 + 21
— 7 — 20
f+ 8 ,+ 31
— 3 .+ 21
— 0

+ 18

4 6

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o n t h l y

R e v ie w

V in s o n

o f th e F e d e ra l R e s e rv e B a n k o f A t la n ta f o r M a y 1946

o n

th e

B ritis h

L o a n

A statement, somewhat condensed, made by the Secretary of the Treasury
before the House Committee on Banking and Currency, May 14, 1946

I AM very glad to appear before this Committee and to ex­
plain what, in my judgment, the proposed Financial agree­
ment with the United Kingdom means to America and to the
world.
With the end of the war we in the Administration and you
in Congress have a new responsibility to our people. The
sacrifices they have borne will have been largely meaningless
unless we do all in our power to achieve lasting peace and
sound prosperity. This is the one reward of victory that our
people and the people of all the United Nations ask — a
world in which countries work and live together in peace and
prosperity.
As you are well aware, world peace and prosperity are inter­
linked. The world cannot have a stable, enduring peace while
devastation and hunger stalk the earth. This country cannot
prosper in a world torn by fear and strife. No country, no
matter how big or strong, can remain either in political or
economic isolation.
We must have international co-operation on political
problems. That is most important, but it is not enough. The
economic causes of conflict must be eliminated. The every-day
relations between the businessmen of all countries must be
carried on in a fair and friendly way, conducive to good will
and mutually beneficial trade.
The Financial Agreement with England, which you are now
considering, is above all for the purpose of establishing a
sound and fair basis for world trade and in this way lessening
the dangers of political and economic warfare.
This Government has advocated a program of international
economic co-operation to restore world trade and to eliminate
the currency and trade discriminations that divide nations
into conflicting economic blocs. No one country can by itself
deal with international economic problems, because they are
not national in character. They are the responsibility of all
countries. We have proposed, therefore, that the United
Nations provide the means for continuing co-operation
through the International Bank, the International Fund, and
through an international trade organization.
The success of this program will mean a good deal to the
United States. Our economy has always been dependent on
foreign trade. It will be more dependent on exports and im­
ports in the years ahead. We must buy abroad many of the
raw materials for our industries and some important goods
for our consumers. We must sell abroad a large part of our
production, as much as 8 or 10 percent, to keep our agri­
culture and industry running.
Let’s not forget the lesson of the decade before the war
when our agriculture and industry suffered severely from
trade and currency restrictions. Because of these measures
the exports of the United States were harder hit than those of
any other country. Our share of world exports, which in 1928
was 15.8 percent of the world total of 32.5 billion dollars,
fell in 1934 to 11.5 percent of the much smaller total of 18.5
billion dollars. This decline in our exports contributed to the
severe depression in industry and the collapse in agriculture.
Our exports of wheat, cotton, tobacco, and lard were par­




ticularly hard hit. From 1925 to 1928 we sold abroad on the
average more than 1,250 million dollars of these four crops
annually. From 1931 to 1934, our average sales were only
473 million dollars a year. The difficulty of finding markets
abroad for our agricultural surplus was an important factor
in the decline of nearly 60 percent in farm prices from 1928
to 1932. The depreciation in currencies was also an important
element in this decline in farm prices. When the pound
sterling, for example, depreciated from $4.86 per pound to
$3.20, it put pressure on the prices of all American farm
products sold in world markets.
Our trade cannot reach the high levels necessary for Ameri­
can prosperity if the world again resorts to currency and
trade restrictions. Unless our exporters have access to world
markets on fair and equal terms we will not be able to main­
tain our production in those fields in which we have long
specialized — growing cotton, tobacco, and wheat; making
automobiles, machinery, and equipment. In short, we must
have a high level of trade between our nation and other
nations to have full production, full employment, and a large
national income in America. All sections of our country, all
sectors of our economy are directly or indirectly dependent
upon foreign trade.
International economic co-operation and the expansion of
world trade are definitely in the interest of this country and
all countries. When countries exchange their surplus products
they all gain because it makes possible increased production
of their specialized products. This means more production
and a higher level of income in the country which sells, as
well as more goods and a better standard of living in the
country which buys.
This program for the general welfare can be put into effect
if the United Nations, and particularly the United States and
England, adopt the same fair currency and trade practices.
Together these two countries do about one-third of the trade
of the entire world. The countries closely linked in trade with
England and the United States account for 75 percent of
world trade. If these two countries were to adopt the same
fair currency and trade practices, the rest of the world would
inevitably follow. On the other hand, conflict between the
United States and England on currency and trade policies
would just as inevitably divide the world into economic blocs.
Consider what would happen if England should have to
maintain the present currency and trade restrictions. Ameri­
can goods can be bought by foreign countries only with dol­
lars. The only way to buy American cotton and wheat, Ameri­
can automobiles and machinery is to pay in dollars. If, and
only if, sterling is convertible into dollars, can the holders of
sterling buy our products. As a matter of fact many countries
can get the dollars they need to buy goods in America only
with the money England pays them for the goods they sell to
her. In brief, American export trade is directly dependent
upon the convertibility of sterling into dollars.
If sterling cannot be converted into dollars, England and
the sterling area countries must concentrate on their trade
with each other, not because their goods are better, but be­

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cause of monetary impediments. It will mean that Egyptian
and Indian cotton will replace American cotton, Rhodesian
and Near Eastern tobacco will replace American tobacco, and
British automobiles and machinery will replace American
automobiles and machinery. In half the trading area of the
world, American products would be at a serious disadvantage
in competing with the products of the sterling area countries.
Our trade with Britain and the sterling area would become a
mere trickle.
American exporters ask no special advantages in trading
with foreign countries. They do ask that no discriminations be
directed against them. Our producers are perfectly willing to
sell their products in competition with the products of other
countries, provided the buyer has a fair chance to select
American goods on the basis of quality and price. But Ameri­
can producers will not have their fair chance to sell their
products in the sterling area until the dollar pool is terminated.
The dollar pool is the wartime arrangement made by Eng­
land to mobilize and conserve the dollar resources of all of
the countries of the sterling area. Under this arrangement a
country of the sterling area that secures a surplus of dollars
from exports to the United States transfers the dollars to
England for a sterling deposit in London. The dollars are
then allocated by London to the various members of the
sterling area for the most essential purchases requiring pay­
ment in dollars. In practice, dollars are not allocated for
buying American machinery or any other American goods
which can be bought in England or anywhere in the sterling
area. Some American exporters are in effect excluded from
a large part of the world’s markets. That is why we want the
dollar pool brought to an end.
Another danger to American trade is the large amount of
blocked sterling. During the war the countries of the sterling
area accumulated large sterling balances held as deposits in
London banks or invested in British Treasury securities. These
balances were acquired as a result of their wartime exports to
England or military expenditures made by England in India
and the Middle East which were paid in sterling. Because
these sterling balances could not be converted into dollars or
used to buy exports from England, they were called “blocked
sterling balances.”
What is done about the liquidation of these blocked
sterling balances will make a big difference to American
trade. If England says that these balances can be used only to
buy goods in England, then the countries holding more than
13 billion dollars of these sterling balances will, in effect, be
compelled to concentrate their purchases in England. Ameri­
can producers will have little chance to export to the countries
holding blocked sterling. On the other hand, if the countries
holding these balances can get them gradually converted into
dollars, our exporters will be in a position to compete on fair
and equal terms throughout the sterling area.
The continuation of these wartime restrictions will reduce
world trade and force it into uneconomic channels. There is
only one desirable way to protect world trade from this result,
and that is by establishing the currency and trade practices
that we have proposed. These practices are based on the prin­
ciple that the export markets of the world should remain open
on fair and equal terms to the exporters of all countries. It
is another application of the old American doctrine of fair
play and equal opportunity.
England is a country that must live by imports. Two-thirds
of the food consumed by the British people and virtually all




4 7

of the basic raw materials, except coal, used in British in­
dustry must be purchased abroad. As a consequence, England
is a great importing country. She is the best customer of the
United States and of a score of other countries. What England
does to eliminate wartime currency and trade restrictions will
affect our trade and the trade of the entire world.
England’s international economic position has been ser­
iously distorted by the war. For five years, England was the
principal target of the Luftwaffe, as well as the principal
base of operations of the Western allies against Germany, Her
life was at stake, and ours. The punishment which she took —
and which she handed out — wrote stirring chapters in the
history of free men.
I speak of this not as a reason for the Financial Agreement,
because the Agreement looks to the present and the future, not
to the past, but I speak of it to emphasize that during the war,
England had little time to think of her export trade. She de­
voted every resource which she could mobilize to her defense
and to the attack on the enemy. British exports fell until, by
1944, they were only 30 percent of their prewar volume. The
men released from the export industries were put to work at
war production or were inducted into the armed forces.
Lend-lease from the United States and Mutual Aid from
Canada filled part of the gap between her wartime needs —
mostly for our common cause — and her current supply of
foreign exchange. Nevertheless, she had to draw heavily on
her accumulated foreign exchange resources, and strain her
credit abroad in order to secure her essential war imports.
She sold 4.5 billion dollars of her foreign investments; she
reduced her gold and dollar reserves by 615 million dollars;
and she incurred foreign debts which now amount to more
than 13 billion dollars, very largely blocked sterling balances
held by foreigners in London. As a result of her war effort,
Britain’s international financial position deteriorated by
about 17 billion dollars from 1939 to 1945.
Meanwhile, Britain’s earnings abroad from shipping and
other services have also been sharply reduced. Because of
enemy sinkings, the British merchant marine is one-fourth
smaller than before the war, in spite of the large building
program. The earnings from financial and commercial serv­
ices have fallen off along with England’s trade and shipping.
With the recovery of world trade, these services will again
expand and become an important part of England’s foreign
business.
Before the war the British people were able to earn enough
from their exports and their services to foreigners to purchase
abroad the food and raw materials essential to their economy.
In 1938, about one-half of Britain’s imports was paid for by
the export of British goods. About one-fourth was paid for
by services of the British merchant marine, insurance com­
panies, and other financial and commercial institutions. An
additional one-fourth was paid for out of the net income of
British capital investments abroad.
The British people have industriously set about to restore
their international economic position. They are reconverting
their war industries to civilian production. They are making a
determined effort to increase their industrial efficiency. They
are exporting as much as they can without depriving them­
selves of the essentials of life. These are problems which the
British people must work out for themselves over the next
few years. But during this transition period, the feeding of
the British people and the supplying of British industry will
result in a substantial need for foreign credit.

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The British can finance this transitional need in one of two
ways. One is the road of economic blocs and economic war­
fare. It is the road of economic isolation. The other is the
road of Bretton Woods. It is the road of international eco­
nomic co-operation.
During the war England imposed comprehensive currency
and trade restrictions. These restrictions were one aspect, and
a very necessary aspect, of Britain’s wartime financing. What
England did, in effect, was to create an economic bloc com­
posed of the British Empire except Canada, and including a
number of other countries, principally in the Middle East.
This bloc is now in operation. If England cannot get help in
meeting her import needs over the next few years, she will be
forced to continue and even extend her wartime restrictions
and discriminations.
The great danger before us is the division of the world
into conflicting blocs. In the economic sphere, we are trying
to meet this problem through co-operation in the World Fund
and Bank. If England adopts the fair currency and trade
practices we have proposed, it may be possible to avoid the
formation of a bloc outside the Fund and Bank under the
leadership of a great power. But if England finds it necessary
to keep her wartime restrictions, it will result in a British
bloc and an American bloc. And it will also act as an en­
couragement to a Russian bloc. Such a development would be
a menace to peace and prosperity everywhere. No country
wants this kind of world; no country can afford this kind
of world.
The British people have shown clearly their desire to co­
operate in building a world in which trade can be carried on
fully and fairly. The British people are with us in our effort
to secure the widest possible flow of world trade by establish­
ing stable and orderly conditions. They know that restrictions
and discriminations stifle world trade and lead to conflicts
which can have disastrous consequences. But Britain cannot
abandon her wartime currency and trade restrictions unless
she secures help, primarily from the United States and
Canada. With such help, England would be able to put into
effect the fair currency and trade standards which we have
proposed and which she supports.
After friendly discussions over several months, the Ameri­
can and British negotiators agreed that England would need
a credit of 3% billion dollars from the United States. This
credit, together with that from Canada, will enable England
to continue her essential imports during the next few years,
while removing the wartime currency and trade restrictions
and discriminations. The Financial Agreement thus provides
two things, a commitment to end discriminatory currency and
trade practices and a credit to enable England to carry out
the commitment.
Here is what the Financial Agreement provides:
1. England will not discriminate against American pro­
ducts in any of her import controls. So long as she buys
cotton or fruits abroad, she will not discriminate against
the import of American cotton or fruits. If it becomes
necessary for England to limit her agricultural or industrial
imports, this will be done on a basis fair to all countries,
including the United States.
2. For any goods or services purchased in the United
States, England will pay in dollars or if payment is made
in pounds, American exporters will be able to convert the
sterling into dollars. That goes for American movies as




well as American machinery. And it applies to income
from American investments in England. No American firm
need hesitate to do business with England for fear that its
earnings cannot be transferred. American businessmen will
be just as sure of payment in dollars from England as
they were before the war.
3. Within a year, unless we agree to a temporary ex­
tension, England will remove all of the restrictions on the
convertibility of sterling for ordinary current transactions.
In practice, this will mean that the money that England
pays to Canada, Australia, and India for her imports will
be converted by England into dollars and can be used by
these countries to pay for goods they purchase in the
United States.
4. Within a year, unless we agree to a temporary ex­
tension, England will dissolve the Sterling Area Dollar
Pool. Each country in the sterling area will be completely
free to use any dollars it earns to buy goods anywhere.
India, for example, could use the dollars it gets for its ex­
ports to the United States and Latin America without turn­
ing over any part of them to England.
5. A settlement will be made by England with the
countries holding blocked sterling balances. England has
agreed that any payment in liquidation of these blocked
balances can be used to buy goods in any country, includ­
ing the United States. Instead of being forced to spend the
blocked sterling balances in England, the holders of these
balances, like India and Egypt, w ill be free to buy goods
wherever they prefer. American exporters will have a fair
chance to export in these markets.
6. In addition, England has agreed to support the
American proposal for an international trade organization
to reduce trade barriers and eliminate trade discrimina­
tions. With England supporting this proposal, the forth­
coming United Nations Trade Conference holds forth every
prospect of success.
These six commitments are important commitments. They
represent a wholehearted adoption of the letter and spirit of
the United Nations program for fair currency and trade prac­
tices. To carry out these commitments England will need help
during the next few years. That help she will get from the
credit under the Financial Agreement with the United States
and, it should be added, from the same Financial Agreement
with Canada.
If Congress approves, the United States Government will
open a line of credit of 3% billion dollars in favor of Eng­
land. This credit can be drawn on by England until December
3 1, 19 5 1, to purchase goods and services in the United States.
It can also be used by England for meeting the transitional
postwar deficit in her current balance of payments, and for
helping England assume the obligations of multilateral trade.
None of the credit can be used for paying off the blocked
sterling balances or any of Britain’s wartime debts; these
obligations will have to be met from other resources.
Beginning in 19 5 1, England will repay the credit over a
50-year period, with interest at 2 percent. The principal of
the credit must be repaid without qualification. Under con­
ditions of severe depression in world trade, the interest due
in any given year may be waived under objective standards
stated in the Agreement. If such an emergency situation de­
velops, it is clearly in the interest of the United States to ac­

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cept the principal and not to force a default which would
have serious consequences to the world economy.
Naturally, the interest rate is less than Britain would have
to pay on a strictly commercial loan obtained from bankers.
The Financial Agreement, however, is much more than a
loan. It is an Agreement on the major aspects of financial and
commercial policy. When we take into consideration the com­
mitments we receive from England on her currency and trade
policies, it becomes clear that the Agreement would amply
repay the American people even if no interest were paid. And
some would say we would have made a good investment if
the whole sum were a gift.
As a matter of fact, the interest is substantial. If the credit
were used in five equal annual amounts and all interest pay­
ments were met, the effective rate of interest under the
Financial Agreement would be 1.83 percent, and over 2.5
billion dollars of interest would be paid. The rate of interest
is reasonably close to the average cost of money to the
Treasury.
This point will bear emphasis: the credit is only a part
of the Financial Agreement. The purpose of the Financial
Agreement is to enable England to participate fully in our
international economic program. The full participation of
Britain in this program is necessary if it is to become effective.
The approval of the Financial Agreement by Congress will
assure the implementation of our whole international eco­
nomic program.
The credit to Britain cannot be a precedent for a loan to
any other country. The National Advisory Council on Inter­
national Monetary and Financial Problems has issued a state­
ment of our foreign loan policy in which this is made clear.
I read from that report:
“ The proposed loan to Britain, requiring Congressional
authorization, is a special case, but one which is an integral
part of the foreign economic program of this Government.
No other country has the same crucial position in world
trade as England. Because of the wide use of the pound
sterling in world trade, the large proportion of the world's
trade which is carried on by the countries of the British
Empire, and the extreme dependence of England upon im­
ports, the financial and commercial practices of Britain are
of utmost significance in determining what kind of world
economy we shall have. The early realization of the full
objectives of the Bretton Woods program, including the
elimination of exchange restrictions and other barriers to
world trade and investment, requires an immediate solution
to Britain’s financial problem. The International Monetary
Fund agreement permits the continued imposition of cer­
tain of these restrictions for as much as 5 years; in the
Financial Agreement of December 6, 1945, the British
agree to their removal within 1 year from the effective date
of that Agreement. It is the view of the Council that the
British case is unique and will not be a precedent for a
loan to any other country,”
Other countries will need help. This help will be available
to them from the institutions that are now in operation. The
International Fund will provide help needed for currency
stabilization. The International Bank will be the principal
agency to facilitate foreign loans out of private capital for
reconstruction and development. In the emergency period,
until the International Bank is in full operation, the Exportlmport Bank will meet only the most urgent needs for re­




4 9

construction aid. It is the policy of this Government to make
the agencies estabished by the United Nations the means for
continuing co-operation on currency and investment problems,
and to leave to these institutions the task of providing the
funds necessary to implement this program.
There are some people who recognize that it is in the inter­
est of the United States to offer England the proposed credit,
but they fear that the credit will add to inflationary pressures
in this country. I am much concerned about the inflation
problem. I know, from first-hand experience, how important
the inflation problem is in this country. I believe that the
credit to Britain will not materially increase the danger of
inflation.
The total amount of credit to England under the Financial
Agreement is less than one-half of one percent of the aggre­
gate expenditures in this country in the next five years. A
considerable part of the credit will be used in later years
when the supply problem is less acute. Some of the credit will
undoubtedly be used for goods that are in abundant supply.
Inevitably, some of the credit will be needed for goods that
are in scarce supply. The Commerce Department estimates
that about one-fourth of the proceeds of foreign loans will be
spent on such products. In those cases allocation and export
controls will prevent any undue drain on our domestic supply
and assure the minimum essential needs of other countries.
In the end the way to beat the inflation problem is to pro­
duce enough goods. The Financial Agreement will encourage
production in this country and abroad by removing the re­
strictions which hamper trade.
The Financial Agreement with England is an essential part
of our whole program of international economic co-operation.
This program of the United Nations is concerned with some
of the most important problems of everyday life. How we
meet these problems will determine in large part whether the
United States and the world will again go through devastating
cycles of war and depression or whether at long last we
realize the hope for peace and prosperity.
If we do not remove the irritations and alleviate the im­
pediments to trade, we feed the greedy god of war and largely
nullify the other efforts we make toward a stable enduring
peace. But if we meet our problems in the fields of inter­
national exchange and world trade and build a sound eco­
nomic order in the several United Nations and in the world,
we create an atmosphere conducive to peace. And good
economic relationships between nations can, in themselves,
give us more than a fighting chance for lasting peace.
I want to stress the importance of production and employ­
ment right here at home. The United States is the greatest
single economic force in the entire world. The level of our
national income is the determinant of world trade. If we
maintain production and employment, world trade will
flourish. The greatest contribution the United States can make
to the peace and prosperity of the world is to keep America
strong and prosperous and the advocate of justice in the
council of the nations.
This is a world in which all countries must share the same
destiny. It will be peace and prosperity for all, or war and
depression for all. We cannot escape from these problems by
withdrawing from the world. Political or economic isolation
is an anachronism; it is a dangerous policy because it is
unreal. There is only one way to assure the security and
welfare of this country. That is to face the world’s problems
and deal with them in co-operation with other countries.

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C o n su m e rs’P ric e

CONSUMER PRICES IN THE SIXTH DISTRICT
R OS E

DURING T H E W A R Y E A R S M O R E T H A N
T H E Y D I D IN T H E N A T I O N G E N E R A L L Y

Prices paid by consumers were 32.2 percent higher in March of this year
than in March 1941. This measurement is based on an average of the con­
sumers' price indexes for moderate income families in six large cities of the
Sixth Federal Reserve District. In the index for all cities in the United States
the advance was 28.7 percent. The advance of 2.2 percent in the District
since March 1945, however, is less than the increase of 2.7 percent for the
United States.

FOOD AND CLOTHING PRICE INCREASES
ACCOUNTED

FOR THE GREATER PART OF
OVER-ALL INCREASE

THE

The index for all items is a weighted average of the prices of several types
of commodities and services bought by families of wage earners and moderate-lncome workers in large cities. The price of food and clothing bought
by these families increased 47.9 and 44.1 percent respectively above prices
paid by them for such items in March J94I and 1.7 and 4.9 perceot above
those paid a year ago. The cost of rent advanced 4.0 percent during the
five-year period. Not shown on the chart but included in the index are the
costs of fuel, electricity, and ice, which advanced 13.6 percent; of housefurnishings, which advanced 46.2 percent; and of miscellaneous items, which
advanced 29.6 percent in the same period.




In d e x

of the cost of living are useful devices for economic
anaylsis. In addition they are interesting to most persons
because of the effects that consumer-price changes have on
their economic welfare. The indexes are sometimes used, how­
ever, to perform functions of measurement of which they are
incapable and for which they were never intended. Misunder­
standings often arise as a consequence.
The consumers’ price index, published each month in the
Review and formerly called the cost-of-living index, is based
upon the consumers’ price indexes prepared by the Bureau of
Labor Statistics of the United States Department of Labor.
The District index is a weighted average of the indexes for
the various large cities in the District, for which the B.L.S.
collects data. For Savannah and Birmingham the Bureau
issues indexes monthly and for Atlanta, New Orleans, Jack­
sonville, and Mobile quarterly. Food-price indexes are issued
each month for all these cities and, in addition, for Jackson,
Mississippi.
Every month the regional office of the B.L.S. at Atlanta
sends out a release giving changes in indexes for all those
cities covered in the District with the exception of New Or­
leans. A release including the New Orleans index may be
obtained from the Bureau’s Dallas office. These releases not
only indicate the price changes by cities but show the price
changes for selected commodities.
The District index cannot be regarded either as an absolute
measure of variations in consumers’ prices within the Sixth
District or as a perfect means of making a regional com­
parison with other parts of the United States. In the first
place, the index is an average of only a small number of the
large cities in the District, and there are, of course, many
variations not measured. An adequate index for the District
would require a sample of cities equal to the number now
covered in the national series. Despite these deficiencies the
District index, as the most comprehensive available, makes
some contribution toward measuring contrasting changes in
consumers’ prices.
Preparation on a national basis of the B.L.S. index on the
cost of living was first instituted in 1919. The index was
based on a study of budgets for the years 1917-19. By the use
of family-budget studies made for the years 1934-36, weights
have been adjusted on a more recent basis, and minor adjust­
ments are made from time to time. The index at present
measures the purchasing power of the dollar for moderateincome groups in any given year against the purchasing power
for the average years 1935-39. The annual income of this
group averaged $1,524 in 1934-36. Expenditures for the items
included in the index made up approximately 70 percent of
the total expenditures of these families. The index thus does
not measure the consumer expenditures of other income
groups, nor does it indicate howr much more all families spent
on an average in 1945 than in the base period. So far as the
prices of the goods purchased by other income groups change
in the same manner, the indexes are a guide to changes in the
prices paid by other groups.
The average income of families in the United States has
increased greatly in recent years. As a result the family in
some cases may have moved to better living quarters, may
have adopted a different pattern of consumer expenditures,
or, in the process of increasing its income, may have trans-

I

ndexes

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o f the F e d e ra l R e s e rv e B a n k o f A tla n ta f o r M a y 1946

ferred from one community to another, where the pattern of
consumption differs. During the war period the average per
capita income in the Sixth District expanded greatly. It is a
well-known principle of consumption that as a fam ily’s in­
come grows the proportion of its expenditures going for
fresh vegetables and fruits and more expensive food items
increases. Moreover, the purchase of food is a day-to-day
occurrence. Since the prices of this type of commodity rose
substantially, an impression often received is that the in­
crease in all items going into the index was equally great.
The index for “ all items” is a weighted average of the
prices paid for commodities classified in the following
groups: food; clothing; housefurnishings; fuel, electricity,
and ice; rent; and miscellaneous. Thus the index covers some
expenditures that have remained relatively fixed during the
war period.
It is designed to measure changes in consumers’ prices be­
tween periods and is not designed to indicate variations in
the cost of living between cities. The index does not tell
whether it cost more or cost less to purchase a given amount
of consumers’ goods in one city than in another. It is entirely
possible that even though the index may have risen higher in
one city than in another, the actual dollar cost of living
might be lower in that city in which the price rises have been
the greatest.
It was contended in some quarters in 1943 that the B.L.S.
index failed to measure accurately the advances in the cost
of living. In an effort to determine the validity of these
criticisms, a special committee of the American Statistical
Association, whose membership is composed of leading
statisticians of the country, conducted an independent ap­
praisal of the index. In general, the committee found that the
index was a reasonably accurate device for measuring what
it was designed to measure.
The association’s committee concluded that the prices re­
ported to the Bureau were those actually paid by the cus­
tomers, although the index did not accurately measure blackmarket operations. It concluded that there was probably an
error, of not more than 2 percent, in the index caused by
underreporting of above-ceiling prices. Regarding the charge
that the index failed to measure the hidden price increases
resulting from quality deterioration, the committee stated
that although it believed there had been some lowering of
quality during the war not reflected in reported prices, no
dollar value could be assigned to the loss.
On the other hand, the President’s Committee on the Cost
of Living decided that changes in the quality and availability
of consumer goods and other factors would add a maximum
of from three to four points for large cities between January
19 4 1 and September 1944. It was also decided that if small
cities were included in the national average, another half
point would be added. Taking account of continuing deteriora­
tion of quality and disappearance of low-priced merchandise,
the over-all adjustment for the period from January 19 4 1 to
September 1945 would total an approximate increase of 5
points. The B.L.S. believes that when prewar quality mer­
chandise comes back to the market this adjustment factor
will greatly decrease and finally disappear.
This is the first of a series of short articles that will appear
from time to time in the Review, describing the composition
and possible use of some of the Sixth District statistical series.




5 1

CONSUMER PRICES RO SE MORE IN
SOME CITIES THAN IN OTH ERS

The index of all items for Savannah in March of this year had increased 36.5
percent since March 1941 and 2.5 percent since March 1945. Since March
1941 the percentage rise in food had been 53.6; clothing 50.7; rent 9.6; fuel,
electricity, and ice, 16.7; housefurnishings 62.3; and miscellaneous 29.5.

The index for Jacksonville had increased 32.9 percent since March 1941 and
1.9 percent since March 1945. Since March 1941 the percentage rise in food
had been 48.0; clothing 43.3; rent 3.5; fuel, electricity, and ice 19.6; house­
furnishings 47.5; and miscellaneous 33.1.
I 4 0 j---------------------- —------------------------------------------------------------- 114 0

__ J

! NEW ORLEANS
I

A LL IT EM S

120 >

<,120

S

1935-39*100

iooU-^_____i________»________ t________f_______ •________ Iioo
1941

1942

1943

1944

1945

1946

The index for New Orleans had increased 31.3 percent since March 1941 and
2.3 percent since March 1945. Since March 1941 the percentage rise in food
had been 47.2; clothing 42.7; rent 3.0; fuel, electricity, and ice 6.8; house­
furnishings 36.5; and miscellaneous 24.7.

The index for Birmingham had increased 31.1 percent since March 1941 and
2.2 percent since March 1945. Since March 1941 the percentage rise in food
had been 49.8; clothing 43.3; rent 3.9; fuel, electricity, and ice 15.3; house­
furnishings 40.8; and miscellaneous 26.9.

, 4 0 -------------------------------------------------------------------------- -, 40

■ ATI AKITA

I

The index for Atlanta had increased 30.9 percent since March 1941 and 2.3
percent since March 1945. Since March 1941 the percentage rise in food had
been 42.4; clothing 43.8; rent 2.7; fuel, electricity, and ice 9.7; housefurnish­
ings 54.2; and miscellaneous 35.2.

The index for Mobile had increased 29.1 percent since March 1941 and 2.3
percent since March 1945. Since March 1941 the percentage rise in food had
been 48.0; clothing 46.4; rent, 2.1; fuel, electricity, and ice 7.4; housefurnish­
ings 42.8; and miscellaneous 18.8.

5 2

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A n n o u n c e m e n ts

the month of May one bank was admitted to mem­
bership in the Federal Reserve System. This was the
First National Bank of West Point, West Point, Georgia,
which was certified by the Comptroller of the Currency to be­
gin business 011 May 1. This bank, formerly the Citizens Bank
and Trust Company, represents a conversion from state-bank
status to National-bank status. It was originally organized in
1906 with a capital stock of $100,000 and a surplus of
$20,000. At present its capital amounts to $200,000, its sur­
plus and undivided profits amount to $140,000, and its de­
posits to $8,000,000.
The chairman of the board of the bank is H. H. Greene, who
has been a resident of West Point for 40 years and a cotton
buyer for the West Point Manufacturing Company for the
past 20 years. The president, Willis Johnson, began his bank­
ing career in 1908 and has spent most of his life in West
Point. From 1928 to March 1930 he served as vice president,
cashier, and director of the National Bank of Athens, Athens,
Georgia. Between that time and 1932, when he returned to
West Point, he served as vice president and cashier of the
North Carolina Bank and Trust Company, Greensboro, North
Carolina. Mr. Johnson was elected president of the West Point
bank in 1937. George H. Lanier is vice president of the bank.
He is also president of the West Point Manufacturing Com­
pany, a position he has held for more than 25 years. In ad­
dition, Mr. Lanier serves as president of the Lanett Bleachery
and Dye Works and has many other business connections. The
cashier of the bank is J. E. Robinson, who has been connected
with the institution since 1937.
West Point is an important center for cotton-textile manu­
factures. It is located 84 miles southwest of Atlanta on the
Chattahoochee River, at the Alabama state line. The 1940
population of West Point was 3,692, and that of the adjacent
town of Lanett, Alabama, was 6,152. The population of the
trade area is estimated at something more than 30,000.
The past month has also seen the addition of four banks
to the Federal Reserve Par List. On April 22 the Bank of
Lexington, Lexington, Alabama, a nonmember located in the
territory served by the Birmingham branch began remitting
at par. The capital stock of this bank is $15,000, its surplus
also is $15,000, its undivided profits are $17 ,9 4 1, and its
deposits $1,523,000. The bank is officered by L. M. Foster,
president; J. H. Belew, vice president; Charles P. McMeans,
cashier; and B. A. Porter, assistant cashier.
The Bank of Lexington is situated in one of the richest
sections of the Tennessee valley. The Tennessee Valley
Authority’s Wilson and Wheeler Dams are in the vicinity, as
are the Reynolds Company alloys, metals, and metallurgical
plants. Farmers in the region, or members of their families,
in many cases supplement their incomes by working in these
plants. Wheeler and Wilson Dams provide excellent fishing
facilities, and some well-equipped fishing camps are to be
found there. The bank serves more than 4,000 customers in
the area.
Another nonmember bank, the Claiborne County Bank,
Tazewell, Tennessee, began remitting at par on May 1.
This bank is located in the territory served by the Nashville
branch. Its officers are G. S. McCollough, president; William
I. Davis and William I. Davis, Jr., vice presidents; Glenn




Yoakum, cashier, now on military leave; and Archie Jen­
nings, assistant cashier. The bank has capital of $25,000,
surplus of $25,000, undivided profits of $31,000, and de­
posits of $1,776,000.
The City Bank and Trust Company, Natchez, Mississippi,
also began remitting at par on May 1. This is a nonmember
located in the territory served by the New Orleans branch.
The City Bank and Trust Company was incorporated in 1909
and was originally known as the Southern Banking and In­
vestment Company. At the time of its incorporation, the bank’s
capital stock amounted to $15,000. With the amendment of
the bank’s charter in February 19 14 its name was changed to
the City Bank and Trust Company. On April 29 of this year
its capital stock was $175,000, surplus $180,000, its undivided
profits were $38,104, and its deposits $8 ,250 ,121. The presi­
dent of this bank is H. M. Alexander. J. B. Kellogg is active
vice president, and J. N. Carpenter and C. S. Sherrouse are
vice presidents. The cashier is L. R. Martin, and the two
assistant cashiers are F. D. Perrault and William S. Burns.
A third bank to begin remitting at par on May 1 was the
Mechanics-State Bank, McComb, Mississippi. This is a non­
member bank located in the territory served by the New Or­
leans branch. On December 3 1, 1945, the capital stock of this
bank amounted to $72,500, surplus to $107,000, undivided
profits $2,808, and deposits $4,851,882.
On May 30 the Valley National Bank of Lanett, Alabama,
opened for business as a new member bank. This bank has
capital stock of $100,000 and surplus of $20,000.
It is officered by J. H. Morgan, president, and J. L. Reese,
executive vice president and cashier. The directors of the
bank are J. H. Morgan, J. L. Reese, W. W. Bradfield, C. E.
Combs, Weyman A. Darden, C. E. DeLoach, Clarence H. Hill,
G. E. Goggans, George L. Johnson, J. W. Johnson, T. H.
Kirby, R. W. McClendon, Basil B. McGinty, W. H. Scott,
and O. G. Skinner.
This bank will serve the 7,000 people of Lanett and the
almost 40,000 people living in the Chattahoochee Valley.

R e c o n n a is s a n c e

Sixth District Statistics for April 1946 compared with April 1945
PERCENT DECREASE ^ PERCENT INCREASE
Department U H l U l l i H
Department i i l l l i i i l
Furmtui^!||j|iil|||||||||||||||||||!||||||||||||||||||||||||||||||||lll
G asolin e

Cotton C oJIIum ption
Bank
Member
Member B a n f l l l ^
Demand PepdtMMIAdjusted
40

30

20

10

0

10

20

30

40

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o f th e F e d e ra l R e s e rve B a n k o f A tla n ta f o r M a y 1946

T h e

D is tric t

B u s in e s s

I

N the Sixth District during May department store sales have
apparently declined less than they usually do in that
month. They increased in April less than might have been ex­
pected, but in both these months they have continued well
above the figures for the corresponding periods of earlier
years. Wholesale distribution, also, increased somewhat in
April. Reports indicate that life insurance sales were greater
in that month than they have been in any month for which
statistics are available. Gasoline consumption, as reflected in
tax collections, increased 19 percent over the March con­
sumption. Moreover, it was 5 1 percent greater than it was in
April of last year, when gas rationing was still in effect.
Though much of the District’s industry has been crippled
by the coal strike, in April the effects had then been felt
neither by the textile mills, which were able to operate at a
slightly higher rate of activity than they were in the pre­
ceding month, or in April of last year, nor, according to re­
ports, by the lumber industry, which also was able to in­
crease its output. Coal mining, of course, had virtually ceased
the last of March, and as a result activity in the steel mills
dropped more than a half between early April and the middle
of May. It is too early, at the time the Review goes to press,
to appraise the effects of the 48-hour railroad strike.
D e p a rtm e n t S to re T ra d e

That Sixth District department store sales have continued in
May, as in other recent months, to break all previous sales
records for the corresponding month in other years is indi­
cated by sales figures reported to this bank for the first three
weeks in May by more than thirty stores located throughout
the District. The figures show an increase of 35 percent over
the figures for those weeks last year. If this comparison holds
good for the entire month, it will mean, when reports for
more than ninety stores are received, a decline from April
sales of 5 percent, a reduction smaller than might have been
expected in May. It will also result in a 3 percent rise in the
sales index after allowance is made for seasonal tendencies.
The daily average rate of sales in the District in April rose
7 percent over the rate for March. It was, furthermore, 48
percent higher than the rate in April 1945. The difference in
the March and April figures, however, was only a little more
than half as great as might have been expected on the basis
of past experience. When allowance was made for seasonal
factors and the changing date of Easter, the adjusted index
declined 5 percent. The adjusted index of 318 percent of the
1935-39 average was up 36 percent from that for April last
year. A comparison of April sales this year with those of last
year showed the change to be somewhat less favorable than
the comparison of the first two weeks’ sales given in the April
Review had indicated it would be. The principal reason for
this is that the first two weeks of April came before Easter
this year and after Easter in 1945. The index for April this
year is about two and a third times as high as it was for the
last prewar April, in 19 4 1, and it is more than five times as
high as it was in April 1933.
In a table on page 54 of this issue of the Review are shown
percentage comparisons of total dollar sales in April and
stocks at the end of April with those for March this year and
for April of last year. Macon had the largest increase in sales
over April last year, a gain of 73 percent. Other cities that re­




5 3

S itu a tio n

ported gains larger than the average for the District were
Augusta, Nashville, Jacksonville, Atlanta, Baton Rouge, Bris­
tol, and Chattanooga. The increase in New Orleans was the
same as that for the District as a whole, and there were
smaller increases at Tampa, Orlando, Birmingham, Miami,
Jackson, Montgomery, Columbus, Mobile, and Knoxville.
At those stores that classified their sales figures, cash sales
in April accounted for 58 percent of the total this year, com­
pared with 62 percent a year ago. Open-book credit sales ac­
counted for 38 percent of the total this year against 35 per­
cent last April. Though instalment sales were only 4 percent
of the total, the percentage was higher than it was in April
last year, when they amounted to 3 percent.
April inventories showed increases over inventories held a
month earlier at almost all reporting cities. They were also
greater than those of a year ago.

Wholesale Trade
Though wholesale distribution of merchandise in April was
only slightly higher than the March total, it was 27 percent
greater than the distribution in April one year ago. Of the 18
groups of reporting firms, only four reported decreases com­
pared with sales in April 1945. They were the groups selling
lumber and building materials; machinery, equipment, and
supplies; farm supplies; and beer. April inventories were
about the same as March inventories but were 14 percent
larger than those held a year ago.

Life Insurance Sales
According to statistics released by the Life Insurance Agency
Management Association, the record-breaking sales of ordi­
nary life insurance in the Six States during April totaled
$98,879,000, a rise of 10 percent over the March total and a
figure 82 percent higher than the total for April 1945. In­
creases over the figures for April of last year in the various
states ranged from 53 percent in Louisiana through 68 percent
in Florida, 77 percent in Georgia, 88 percent in Alabama and
Tennessee to 91 percent in Mississippi. Nationally the in­
crease over the April 1945 sales averaged 75 percent.

Agricultural Prospects
Spring weather was generally favorable in most parts of the
Sixth District during April and early May. There has been
too much rain in some parts of Georgia, Louisiana, and
Tennessee, however, and too little in parts of southern A la­
bama and Mississippi.
According to the May 1 Crop Report of the United States
Department of Agriculture, potatoes and strawberries in the
southern part of Alabama suffered from the lack of rain, but
corn, cotton, and some peanuts are up to a good stand. Field
work and crop growth on the whole are about up to normal.
Reports indicate the labor situation to be tight, but complaints
are not as numerous as they were in the war years. A wheat
crop in Alabama amounting to 196,000 bushels, compared
with 240,000 bushels in 1945, was indicated. The 1934-44 av­
erage wheat production in Alabama was 101,000 bushels.
Only twice has the indicated yield of 14 bushels an acre been
exceeded— in 1944 and in 1945. The condition of oats in A la­
bama on May 1 was reported at 83 percent of normal, three
points under the condition of a year ago. Early potatoes de­
clined three points in April to 78 percent on May 1. Digging

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o f th e F e d e ra l R e s e rv e B a n k o f A t la n ta f o r M a y 1946

S ix t h D i s t r i c t S t a t i s t ic s
INSTALMENT CASH LOANS
Percent Change
Number
oi
March 1946to April 1946
Lender
Lenders
Reporting
Volume
Outstandings
Federal credit unions...............
37
+ 4
4
* 5
State credit unions...................
23
+ ,22
+ 4
Industrial-banking companies.....
10
+ 7
+ 6
Industrial-loan companies..........
— 5
— il
20
Small-loan companies...............
53
— ilO
+ 1
Commercial banks...................
4- 10
34
+ 9
RETAIL FURNITURE STORE OPERATIONS
Percent Change
Number
April 1946irom
oi
Item
Stores
April 1945
Reporting March 1946
Total sales..............................
+ 57
100
4- ,1
Cash sales............................
4- 89
92
4- 5
Instalment and other credit sales..
4
- 49
+
o
92
4- 18
Accounts receivable, end of month
99
4- 3
—
1
4- 36
Collections during month..........
99
Inventories, end of month..........
81
+ 10
4- 16
WHOLESALE SALES AND INVENTORIES* —APRIL 1946
SALES
INVENTORIES
No. oi Percent Change No. oi Percent Change
Item
Firms April 1946 irom Firms April 1946irom
Report­ March April Report­ March April
ing
ing
1945
1946
1946
1945
Automotive supplies.
5
7
4- 3 4- 25
4- 4 4- 59
Shoes and other
3
footwear............
4- 44
4- a
*4
— 2
Drugs and sundries.. 9
— 2
4- 4
4- 7
4
Dry goods............. ,10 ,4- ‘19 4- 51
4- 27 4- 36
Fresh fruits and
vegetables.........
5
4- 15 4- 27
Confectionery........
6 — 4 4- 76
Groceries!—full-line
wholesalers........ 37
18
— 4 4- 6
— 6 4- 31
Groceries,—specialtyline wholesalers... 112
8
—
4 4- 19
— 5 4- 28
3
— 12 — il
Beer....................
—, 21
4
— 29
6 — 0 4- 6
Hardwares—general.. 12
4- 8 4- 37
Hardwares—industrial 6
4- 5 — 5
Machinery, equip­
ment and supplies,
except elect.......
— 13 4“ 56
3
Paper and its
4- 59
products............
3
— ,1
Tobacco and its
— 2 4- 35
7
products............
— 2
is
— 4 + 26
4- 32
Miscellaneous........ 1,1
66
Total................... 144
4- 0 4- 14
4- 1 4* 27
*Based on U. S. Department of Commerce figures

Place

DEPARTMENT STORE SALES AND STOCKS
SALES
INVENTORIES
Change No. oi Percent Change
No. oi Percent
Stores April 1946irom Stores April 30, 1946, irom
Report­ March April Report­ March 3,1 April 30
ing
ing
1946
1945
1946
1945

ALABAMA
4
Birmingham...
4- 10 4- 11
5
4- 7 4- 51
Mobile.........
5
4- 14 4- 42
3
+ “ 9 + "6
Montgomery...
3
4- e 4- 47
FLORIDA
3
4
,4- 5 + 9
,4- 10 •4- 65
Jacksonville...
— 4 4- 49
3
4- il3 + ,19
4
Miami..........
3
4- 4 4- 52
Orlando........
'3
+ 14
+ ',ii
5
Tampa.........
4- 4 4- 53
GEORGIA
5
4
.1
3
4- 15
6
Atlantan........
4- 1 4- 60
3
— '17 + 10
4
4- 4 4- 69
Augusta........
3
4- 9 4- 46
Columbus.....
4
4
4- 6 + 27
+ 19 4- 73
Macon.........
LOUISIANA
4
+ 5 — 7
4
4- 7 4- 60
Baton Rouge..
3
4
4- 20 4- 55
+ 4 + 45
NewOrleans..
MISSISSIPPI
4
+ 8 + 13
4- 48
4
4- 11
lackson........
3
4- 3 4- 6
TENNESSEE
Bristol..........
3
4- 5 4- 59
+ 12
3
Chattanooga...
4- 10 + 26
4- 57
4
4- 34
Knoxville......
4
+
'5
4- 5 + 17
Nashville......
6
4- 25 + 68
22
+ 8 + 22
18
OTHER CITIES*.
4- 5 + 46
72
83
4- 6 4- 55
+ 8 + 18
DISTRICT........
*When fewer than 3 stores5report iri a given city, the isales or stocks are
grouped togeth<3r under ''other citi<es."




has been under way in the southern commercial counties
since the third week in April. Yields are running lighter than
they were last year, and insufficient rainfall has retarded
growth. Although hail on April 7 reduced prospects for
peaches in some northern counties, the commercial area es­
caped damage. Prospects pointed to a crop of 2,048,000
bushels, a large crop but, even so, one about 16 percent
smaller than last year’s.
Dry, cool weather prevailed over most of Florida during
April. Showers during the early part of May, however, re­
lieved drought conditions in the citrus and vegetable sections,
and in a few North Florida areas the rainfall has been ex­
cessive, causing some damage to the vegetable crops that were
being harvested. Staple crops, cotton, com, peanuts, and to­
bacco, made good progress during April. By the fourth of
May about 4 1.5 million boxes of oranges, of an estimated 49.5
million, had been marketed. Canners had used almost 15
million boxes. Of the 32 million boxes of grapefruit esti­
mated, 26.5 million had been utilized by May 4, 18.3 million
of them by canners. Recent rains have been favorable for the
newly set citrus crop of the L946-47 season. Grinding of
sugarcane for sugar was completed by the first of May after
a record output in the Everglades. In the 1945-46 season
30,900 acres of cane were harvested, and 1,112 ,0 0 0 tons of it
were ground. The production of sugar amounted to 106,000
tons, compared with 68,000 tons last season.
Favorable weather during March and April made it pos­
sible for Georgia crops to be planted earlier than usual, and
prospects generally were good in most areas on May 1. Be­
cause cool weather has retarded growth some replanting has
been necessary in local areas. Harvesting of commercial vege­
tables in southern parts of the state was in full swing at the
middle of May, with good yields reported. Peaches are mov­
ing to market in carload lots, and the crop is expected to
total 6,580,000 bushels. Though this will be a reduction of
19 percent from the large 1945 crop, it will be larger than
crops in other recent years. In addition to winter injury to
trees reported in some orchards in the area south of Macon,
some damage has been caused by spring hail in local areas.
Good progress in planting and cultivating was made in
Louisiana during April. Dry weather retarded germination
and crop growth in some sections the first three weeks of the
month, but general rains occurred in almost all areas the last
week. Temperatures for the state averaged slightly higher
than normal. By May 1 most of the corn had been planted
and was up to good stands. Most of the rice acreage had
been seeded, with many of the fields also up to good stands.
Although sugarcane was about normal for May 1, it was not
so far advanced as it was at that time last year. The con­
dition of oats in Louisiana, at 77 percent of normal on May
1, was better than at that time a year ago. Compared with a
sown acreage of 225,000 acres last year, the estimate this
year is for only 180,000 acres. The Louisiana peach-crop
estimate on May 1 for 384,000 bushels, is 9 percent under
last year’s production of 422,000 bushels.
Dry conditions in the main potato-producing areas of
Mississippi were relieved by rains during the last week of
April. Although the dry weather delayed maturity, prospects
have improved. Some early-planted acreage was expected to
be dug the second week in May, with the general movement
to be started the next week. The Mississippi tomato crop held
up well under the dry conditions in April, but they caused

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some bad watermelon stands and retarded growth of this crop
in the southern part of the state. The prospects for the crop
improved, however, when rains fell during the last week of
the month. In the northern part of the state the crop is in
good condition. Colton, it is reported, is also in good con­
dition, and progress in cultivation is being made.
Though there have been rains in Tennessee, the spring
weather has been generally favorable in the state, which has
meant that planting operations have made good progress in
most areas despite difficulties caused by the limited number
of farm workers and the scarcity of repair parts for ma­
chinery. With the exception of frost damage to fruits and
tender plants in some localities, the state has escaped cold
damage. The yield of wheat on the 356,000 acres for harvest
is estimated at 14 bushels an acre. The crop is expected to
total 4,984,000 bushels, 6 percent less than last year’s pro­
duction of 5,325,000 bushels.
This year the winter crop of strawberries in Florida was
much larger than it was a year ago. Increases are also indi­
cated for Louisiana, Tennessee, and Alabama. Florida pro­
duction was estimated at 224,000 crates, an increase of 56
percent over the 144,000 crates produced in 1945. In Louisi­
ana the crop was expected to be 967,000 crates, a gain of 27
percent; in Tennessee 660,000 crates, an increase of 22 per­
cent; and in Alabama 234,000 crates, an increase of 8 percent.

S ix t h D i s t r i c t S t a t is t ic s
RETAIL JEWELRY STORE OPERATIONS
Number
Percent Change
of
Item
March 1946toApril 1946
Stores
Reporting
—
0
Total sales.............................
24
+ 3
23
—
3
Credit sales...........................
23
- 7
Accounts receivable, end of jnonth
24
Collections during month..........
+ 4
24
DEPARTMENT STORE SALES*
Unadjusted
Adjusted**
April March April
April March
1946
1946
1946
1945
1946
DISTRICT......... 3,18
234
337
335r
315r
Atlanta.........
355
392r
256
376
372r
Baton Rouge... 336
387
240
362
337
Birmingham.... 325
307
233
3,18
298
Chattanooga... 335
328
243
350
312
299
310
222
325
292
Jacksonville.... 426
404r
286
427
387r
Knoxville......
345
295
355
339
372
300
2,94
3
3
7
184
282
Miami..........
3/19
268
222
324
337
Montgomery.... 292
328
224
320
293
Nashville____
388
396
254
399
393
New Orleans... 280
278r
195
302
253r
Tampa..........
373
263
420
402
402

April
1945
227
245
238
206
230
228
269
277
197
226
226
246
203
280

DEPARTMENT STORE STOCKS
Adjusted**
Unadjusted
April March April
April March
1946
1946
1945
1946
1946
219
200
186
2,17
200
3,17
293
275
337
299
148
16(1
145
167
152
186
187
199
2.15
197
311
317
267
345
330
145
14jl
100
155
149

April
1945
184
293
151
202
296
107

Industry
A slight improvement in the District’s lumber production
during May is indicated by press reports. Apparently there is
a slow but rather steady improvement in the labor supply.
Retail dealers are, however, unable to get the stocks they need
to meet the constantly increasing demand.
Textile mills in Alabama, Georgia, and Tennessee used
292,245 bales of cotton in April, a monthly total larger than
any reported for more than a year. The daily rate was up one
percent from the March rate and almost 3 percent from the
April 1945 rate.
Steel-mill activity in the Birmingham-Gadsden area, re­
ported by the Iron Age at 95 percent of capacity in each week
of the four-week period ended April 2, began to decline the
following week as a result of the coal strike. In the first two
weeks of May it was down to 46 percent of capacity.
When a truce in the coal strike was declared approximately
all of the 23,000 miners in Alabama and most of the 2,000
miners in southeastern Tennessee returned to their jobs.

Federal Reserve Note Circulation
In the early part of December 19 4 1, just prior to the entry of
the United States into the war, the total amount of Federal
Reserve notes of this bank’s issue was 263 million dollars.
During 1942 this amount more than doubled to reach a total
of 547 million dollars, in 1943 it rose further to 955 million,
and further increases in 1944 and 1945 raised it to 1,494
million dollars. This peak was reached just before Christmas
last year. Since that time the bank’s net circulation of Federal
Reserve notes has declined to 1,425 million dollars. In the
first four months of 1946 the net circulation of notes of the
50-dollar denomination rose slightly, and the circulation of
100-dollar notes increased about 24 million dollars, but cir­
culation of notes of other denominations declined. By far the
greater part of the decrease was in 5-, 10-, and 20-dollar
notes, which constitute about two thirds of the total.




5 5

DISTRICT.........
Atlanta.........
Birmingham...
Montgomery...
Nashville......
NewOrleans..

TOTAL.............
Alabama........
Georgia.........
Tennessee.....

COTTON CONSUMPTION*
April March April
1946
1946
1945
159
157
155
164
162
161
160
159
155
128
113
130

COAL PRODUCTION*
April March April
1946
1946
1945
12
193
95
14
95
202
”8
173
*95

SIX STATES ..
Alabama........
Georgia.........
Louisiana......
Mississippi.....
Tennessee.....

MANUFACTURING
EMPLOYMENT***
Mar.
Feb.
Mar.
1946
1946
1945
123
117r
148
126r
177
155
86
89r
,146
127
,128r
.138
,156
1.15r
1,1.6
140r
\137
136
102r
,107
,13.1

GASOLINE TAX
COLLECTIONS
Apr.
Mar.
Apr.
1946
1946
1945
.157
132
104
,155
,136
,1.15
,164
,153
,108
,142
,107
125
137
'12jl
94
,154
122
94
>184
128
104

CONSUMERS' PRICE INDEX
Mar. Feb. Mar.
1946 1946 1945
ALL ITEMS.. 134
134 ,131
Food...... 145 ,145
143
Clothing... 148
146
141
Rent........ ,115 ,114 1,14
Fuel, elec­
tricity,
109
and ice.. HI
,1,11
Home fur­
144 ,141
nishings. 148
Miscel­
129
laneous ,132 ,13,1
CRUDE PETROLEUM PRODUCTION
IN COASTAL LOUISIANA AND
jxijusoiooirrx
Apr. Mar. Apr.
1946 1946 1945
Unadjusted.. 204 207 204
Adjusted**... 200 207 201

ELECTRIC POWER PRODUCTION*
Mar. Feb. Mar.
1946 1946 1945
SIX STATES.. 253 247 284
Hydro­
generated aio
295 m
Fuel­
generated ,178
185r 2,60
ANNUAL RATE OF TURNOVER OF
DEMAND DEPOSITS
Apr. Mar. Apr.
1946 1946 1945
Unadjusted.. 16,1 .15.9 .14.5
Adjusted**... 16.3 16.3 14.7
Index**...... 63,1 63.1 56.8
’'Daily average oasis
**Adjusted for seasonal variation
***1939 monthly average= 100; other
indexes, ,1935-39= 100
r=revised

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N a tio n a l B u s in e s s

Industrial

output declined somewhat in April and the early
part of May owing to the coal strike. Employment in the
economy as a whole, however, continued to expand in April.
The value of retail trade was maintained at record levels,
and commodity prices rose further.

Commodity Prices
Price ceilings on grains were increased substantially on May
13 , and ceilings for a number of nonagricultural products
have also been raised during the past month. Recent price in­
creases for industrial products have usually been between 10
and 20 percent. Recent advances announced for automobiles
were smaller than these amounts, but they were in addition to
price increases made earlier this year.
Retail prices of most groups of commodities continued to
show small advances in April, and the consumers’ price index
increased one-half percent to a point 3 percent higher than
in April 1945.

Distribution
Retail sales continued at a high rate in April and the first
half of May. During the past four weeks department store
sales have been one third larger in value than in the cor­
responding period of 1945.
Freight carloadings declined sharply in April, reflecting
chiefly the drop in coal shipments. Shipments of most manu­
factured products continued to increase until the week ended
May 13 . In that week interruptions in freight service resulted
in large decreases in loadings of manufactured products but
bituminous coal shipments were resumed, and total loadings
increased slightly.

Industrial Production
The Board’s seasonally adjusted index of industrial produc­
tion declined 2 percent in April and was at 164 percent of
the 1935-39 average. The drop in coal output after April 1
and the resultant curtailment in operations in some industries
were offset in part by substantial increases in activity in the
automobile and electrical-machinery industries following
settlement of wage disputes in the latter part of March.

Durable Goods
Production of durable manufactures as a group rose 3 per­
cent in April. Iron and steel production declined about 6 per­
cent ; decreased output of pig iron and open-hearth and Besse­
mer steel was partly offset by a sharp rise in electric-steel
production. In May activity at steel mills continued to decline
as a result of coal shortages and during the past two weeks
has averaged only about 50 percent of capacity.
The number of passenger cars and trucks assembled in
April was 80 percent greater than in March, and there also
were substantial increases in activity in the railroad equip­
ment industry and in output of many types of electrical equip­
ment. Production of lumber and stone, clay, and glass pro­
ducts was maintained at the March level, which was above
the same period last year.

Nondurable Goods
Output of most nondurable goods was maintained in April
at about the March level. Activity at cotton mills declined




S itu a tio n

slightly, owing to reduced coal supplies, but output at other
textile mills advanced further. The number of animals
slaughtered under Federal inspection continued to decline
sharply in April. Output of flour and bakery products de­
creased somewhat in April and is expected to decline sub­
stantially in May as a result of the stringent wheat-supply
situation.
Minerals production declined by a fourth from March to
April, reflecting primarily the drop in bituminous coal out­
put. There was also a further reduction in output of metals,
while crude-petroleum production increased in April and
early May. On May 13 bituminous coal production was re­
sumed under a temporary work agreement, and during the
week ending May 18 output was 70 percent of the prestrike
weekly rate.
Value of construction contracts awarded rose sharply in
April, according to reports of the F. W. Dodge Corporation.
The increase reflected a very large expansion in awards for
private residential construction to a record level; awards for
most other types of private construction were maintained at
recent high levels.

Employment
Nonagricultural employment continued to gain in April not­
withstanding the bituminous coal strike, and unemployment
decreased by about 350,000. Manufacturing employment rose
by about 400,000, largely because of settlement of major
labor disputes, and construction employment showed a further
large gain.

Bank Credit
Treasury deposits declined, reflecting disbursements in excess
of receipts, and deposits subject to reserve requirements in­
creased during April and the first three weeks of May. Re­
serve balances increased less than required reserves, and ex­
cess reserves declined to about 700 million dollars on May
22. Federal Reserve holdings of Government securities, which
declined substantially in the early months of the year, have
increased somewhat since the middle of April.
Member bank holdings of Treasury bills, certificates, and
notes declined in April and the first half of May, while hold­
ings of Treasury bonds increased further. Loans at member
banks in leading cities declined, reflecting largely reductions
in loans for purchasing and carrying Government securities.

Government Obligations
Yields of Government securities, which declined in the
early weeks of the year, rose sharply in the latter part of
April and early in May.
In the latter part of April the Reserve Banks, with the ap­
proval of the Board of Governors, eliminated the wartime
preferential discount rate of about one half of one percent
on advances to member banks secured by Government obli­
gations due or callable in not more than one year. The regular
discount rate on advances secured by Government obligations
or eligible paper remains at one percent.
T h e

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G o v er n o r s