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Atlanta, Georgia November • 1963L Also in this issue: SCROOTCH OWL IN LOUISIANA SIXTH DISTRICT STATISTICS DISTRICT BUSINESS CONDITIONS District Banks Finance Foreign Trade Geographical specialization is a characteristic of economic life in the United States. Automobile production is always associated with Detroit. Wheat is mostly produced in the central plains states, cotton and petroleum in the southwest, citrus in Florida, Texas, and California, and so on. Historically, New York City has been preeminently the center for foreign trade financing. Yet, economic history proves that centers of concentration do not always hold their positions indefinitely. Textile manufacturing moved south from New England; cotton growing moved west; and even automobile production is becoming more decentralized. The South’s economic growth has fostered an increased interest in foreign trade activities. A shift to manufacturing is changing the char acter of the South’s exports, and income growth has created a greater market for imports, so that today the South is not a negligible factor in foreign trade. Ports in the Sixth Federal Reserve District, for example, handled almost 10 percent of total U. S. foreign trade in 1961. Exports of manufactured goods originating in District states accounted for about 6V percent of total U. S. exports of manufactures in 1960. 2 District banks, too, are not without resources, for their deposits amount to over 6 percent of total bank deposits. Will this considerable economic potential be reflected in greater foreign trade financing in this area? Certainly interest in foreign trade financing seems to be growing. There are now about fifteen banks with full-fledged international depart ments in the District, whereas before World War II there were no more than five or six. In addition, eight or ten banks regularly provide inter national services; and, of course, many banks issue an occasional letter of credit, or buy and sell foreign currency. Yet, measured by the volume of the principal types of financial instruments used in foreign trade, District banks still account for a relatively small portion of the national total. Techniques of International Trade Financing S v fe % r a f s e m IB a n k o f j^ t/a n ta Foreign trade financing may take many forms, and we shall find that District banks are more active in some types than in others. We can understand their activity a little better if, first, we review the functions by which banks in general finance foreign trade. Some of these functions are in the nature of services, whereby the bank lends its name or its specialized facilities but not its money. Others involve the commitment of the bank’s own funds to finance a transaction. The service functions include: (1) Trading in foreign exchange. This involves the purchase and sale of foreign paper currency and checks and making remittances to and from foreigners. In other words, banks sell or buy drafts or tele graphic transfers on their foreign correspondent banks and honor drafts and transfers on themselves that their foreign correspondents provide for their own customers. Most banks do not buy and sell foreign exchange for their own account, for they prefer to maintain balanced positions and avoid the risk of loss due to a change in exchange rates. They reimburse themselves for the expense of providing this service by selling foreign exchange at a slightly higher price than they buy it. There is no foreign exchange market in the District, so that if a bank accumulates more foreign currency than it wishes, for example, it will sell it in the New York market. (2) Collections. Customers may wish to obtain payment of their drafts on foreigners, or they may own bonds of a foreign corporation or government and wish to collect the interest represented by the bond coupon, or they may wish to collect any other debt owed them by foreigners. Banks that maintain connections with other banks around the world are able to perform these services for their customers for a small fee— usually y8 of one percent of the total amount. For their correspondent banks abroad, they will present items to be collected from firms and individuals in this country. (3) Opening letters of credit. A letter of credit is a promise by the bank that it will honor drafts drawn upon it up to a certain amount within a certain period of time, provided that the conditions set forth in the letter of credit (such as provision of the proper shipping and insurance documents) are met. American exporters are frequently not in a position to determine accurately the credit rating of a foreign customer. If they can rely instead upon the promise of a bank, they are more willing to enter into the transaction. The foreign importer will ordinarily take the initiative in arranging for the letter of credit, but the American exporter may know as little about foreign banks as he does about the importer. In such a case, he may request that an American bank open the letter of credit or, alternatively, that an American bank confirm the letter of credit opened by the foreign bank. In either case, the American bank assumes a liability to pay any drafts the exporter may draw within the terms of the letter of credit. In both cases, it looks, of course, to the foreign bank for reimbursement, and the foreign bank looks, in turn, to the foreign importer. American importers, too, may request the opening of a letter of credit if the foreign exporter demands it and, again, the bank assumes the obligation to pay drafts. In this case, the bank looks to the importer for repayment. Smaller banks may make these services available to their customers by acting as agents for larger banks. This saves the small bank the trouble and expense of maintaining relationships with foreign banks. If a customer engages frequently or in large volume in foreign trade, however, it may well occur to him that he might save time and expense by dealing with the issuing bank directly. Each individual bank must decide for itself whether there are enough customers in its area to make it worthwhile to incur the expenses involved in providing these services directly. The expenses of opening letters of credit include, of course, the paper work involved. This work is greater than in most other departments of the bank per dollar of business handled, because when drafts are presented, they and the many documents that accompany them must be carefully scrutinized by experts in the field to be sure they are in accordance with the terms of the letter of credit. Otherwise, the bank might be unable to obtain reimburse ment. In addition, the bank must commit a certain amount of funds to maintaining accounts with foreign banks, al though it can reasonably expect to receive reciprocal balances from many of them. But, besides all this, the bank’s international department must provide its cus tomers with a variety of information about foreign political and credit conditions that cannot be obtained from any other department of the bank. Banks charge a fee for opening letters of credit, usually Vs or X °f one percent of the amount. Unlike the other A service functions described, the opening of a letter of credit creates at least a contingent liability on the part of the bank. It need not commit the bank’s funds, how ever, even when a draft is drawn under its terms. If it is a sight draft (i.e., payable on sight), the bank immediately reimburses itself. In the case of an export, this is done by charging the account of the foreign bank through which the foreign importer made the arrangements or, in the case of an import, by charging the account of the importer or asking him for immediate payment. Even if it is a time draft (i.e., payable at a certain time in the future), the bank does not necessarily tie up any money. Ordinarily, the bank agrees to “accept” the draft for payment at maturity. The one who presents the draft for acceptance (the foreign bank in the case of imports, the exporter in the case of exports) may hold the draft to maturity, at which time the bank pays it and immediately reimburses itself. Banks M ay Lend Their Own M oney Other functions do involve the commitment of the bank’s own funds. They may be divided into three types. (1) Discounting drafts written under letters of credit that the bank has opened or confirmed. If the holder of an accepted time draft wants his money immediately, the accepting bank may discount it and, if it does, it in effect lends the holder the money. One virtue of an ac cepted draft on a bank (known as a “banker’s accept ance” ) is that it is negotiable and may readily be sold in the New York money market if the bank holding it wishes to release the funds it has thus committed. In this respect, it is superior to an ordinary loan, although partly because of this feature, the discount rate is lower than that on ordinary loans. Banks usually charge a commission of one and one-half percent per annum (to other banks and prime customers) for accepting a draft and a discount rate of, currently, 3 y8 percent per annum for ninety-day bills. This amounts to 4% percent, whereas an ordinary loan might carry a rate of 5y2 to 6y2 percent. (2) Discounting or purchasing other drafts. A letter of credit may stipulate the bank that will pay a draft (this is a “straight” letter of credit) or it may not (in which case it is called a “negotiation” or “circular” letter of credit). Drafts drawn under the latter type may be presented at any bank, and the bank may discount or make advances on them, although it has no obligation to do so. Again, an exporter may draw, not upon a bank, but upon his foreign customer. In this case, no letter of credit is involved, and no obligations of any bank. If the bank advances money on such a draft, it will ordinarily • 2 • retain the right of recourse against the exporter if the im The survey revealed that service functions predominate porter does not pay. Indeed, the bank may retain this in District banks’ foreign operations. Foreign exchange right of recourse on any draft it pays, if it so desires. accounted for the largest volume in 1961, followed by (3) Direct loans to importers or exporters. If an collections and letters of credit. These are the three service exporter, for example, is selling to foreign customers functions mentioned earlier. An attempt was made to find on open account, he may very well want to finance his out to what extent banks discounted drafts or otherwise operations during the period in which he extends credit committed funds under letters of credit they had opened or confirmed, but returns were so scanty that no conclusions to his customer, just as he would in the case of a domestic account. Even if the transaction is covered by a letter of could be reached from them. This in itself perhaps indi credit, he may wish to finance himself during the period cates the lack of importance of this function. The amount of time drafts accepted is the closest approximation we before the goods are ready for shipment and the draft is drawn. To do this, he may assign the proceeds of the have to the answer we are seeking, and their total is quite letter of credit to his bank and borrow on his own note. small. Direct loans and the discounting or purchase of Or, a bank, instead of buying or discounting an exporter’s drafts not arising out of letters of credit that the bank itself time draft, may prefer to take it as collateral for a direct has issued or confirmed are the other ways a bank may loan. Importers, too, may need financing between the commit its funds. They account for a relatively small time a foreign exporter’s sight draft arrives for payment part of total District activity. and the time the goods are sold. Undoubtedly, the service functions are also very im portant at New York banks, since New York is the country’s principal money market, and a great volume of Foreign Trade Financing in the Sixth District trading in foreign exchange takes place there. Yet, other The Research Department of this Bank recently conducted available information suggests that New York banks a survey to determine the actual practices of District banks commit their own funds to a proportionally greater extent in the field of foreign trade financing. Twenty banks, in than do District banks. The Monthly Acceptance Survey port cities in Florida, Alabama, and Louisiana and in of the Federal Reserve Bank of New York reports the one inland city, Atlanta, were interviewed. Fourteen banks volume of bankers’ acceptances outstanding in the U. S. provided either complete or partial statistical data. The amount accounted for by District banks is a very much smaller percentage of the national total than is the District’s foreign trade. Bankers’ acceptances average only Volume of Foreign Trade Financing in 1961 about 2/1 0 of one percent of total U. S. volume, while Selected Sixth District Banks District ports’ share of foreign trade is, as we have seen, nearly 10 percent. Volume Another source of information confirms the impression Num ber Banks (Thousands ______________________________ Reporting o f Dollars) that District banks tend to concentrate on the less venture FOREIGN EXCHANGE some types of financing. Some of the larger banks in the Foreign currency, checks and paper District report monthly on their liabilities to and claims currency, purchases and sales . . 11 9,004 on foreigners. Liabilities are divided into deposits of Sales of drafts on foreign banks and other remittances abroad foreign banks and official institutions, deposits of other Drawn on own foreign foreigners (firms and individuals), and liabilities other correspondent................................ 13 57,139 Under protection of domestic than deposits. This last category consists mostly of U. S. correspondent................................ 13 10,654 Treasury bills and certificates held by U. S. banks for Payments to domestic accounts on foreign banks and official institutions, and, to a lesser foreign o r d e r ................................ 10 38,623 COLLECTIONS extent, of drafts drawn upon U. S. firms, banks, and indi O u tg o in g ..................................................... 12 67,521 viduals and held by U. S. banks for foreign correspon In c o m in g ..................................................... 10 19,253 dents, either for collection or as an investment. This last LETTERS OF CREDIT category is much more important nationally than in the Total commercial letters of credit opened 14 74,344 I m p o r t ................................................ District and reflects the important investment function that 11 44,896 Export New York banks perform for their foreign depositors. O w n ................................................ 10 3,003 Foreign banks’ letters of credit Claims on foreigners are divided into long-term (those c o n f ir m e d ............................... 10 5,310 with a maturity of more than one year) and short-term. Drafts paid or accepted for domestic District banks report little or no long-term claims. Short importers S ight...................................................... 9 14,853 term claims consist of collections outstanding, loans to T im e...................................................... 8 8,933 foreign banks and official institutions, loans to “others,” Drafts paid or accepted for domestic and other claims (acceptances made for the accounts of exporters S i g h t .................................................... 9 5,023 foreigners, dollar deposits with foreigners, and other short Time ................................................ 6 545 term claims owned or held for domestic customers). Na LOANS AND DISCOUNTS tionally loans and “other” claims were the largest items, Loans to importers..................................... 8 8,020 while, in the District, collections made up the great bulk Direct loans to exp orters..................... 8 4,798 Exporters’ drafts discounted (not arising of claims. out of letters of credit) . . . . 11 24,248 The available evidence leads inescapably to the con Source: Special Survey by Research Department, Federal Reserve Bank of Atlanta, of banks with International Departments. clusion that the financing of international trade is now • 3 • emerging as a serious function of District banks. Whether it will develop as an important part of their activities depends on a number of factors. One encouraging feature is the growth of foreign sales on open account. As con tacts between businessmen of different countries increase and as exchange controls are dismantled (thus making it more certain that importers will be allowed by their governments to pay their bills promptly), sellers are more willing to “carry” their customers on their books with only a simple contract to buy, just as is done domesti cally. This means, however, that letters of credit and all the more complicated paraphernalia of foreign trade financing may become less and less important. The New York banks owe their dominant position to a great extent to their highly skilled personnel who are trained in the intricacies of their profession. To succeed in foreign trade financing a bank must still devote money and effort to develop correspondent rela tionships throughout the world and to acquire specialized knowledge of business conditions abroad. But it may be that the cost of providing international services may be cut to the extent that at least the larger banks throughout the country can compete successfully with New York for business in their own home territories. DEFEND FREEDOM BUYU.S. SA VING, m < 5 l l i L a w r e n c e F. M a n sf ie l d Scrootch Owl in Louisiana According to Louisiana folklore, the “scrootch” owl is a bird that slips into the roost quietly, scrooches up to a hen, and talks softly to her. The hen falls in love with the owl, and, in the proverbial wink of an eye, the hen disappears without a sound. The scrootch owl has appar ently been active in Louisiana, but he has been quietly feasting on jobs— not hens. Currently, there are fewer nonfarm jobs in Louisiana than in 1957. Nonfarm employment, seasonally adjusted, reached its peak in September of that year. Since then, despite two periods of recovery in business activity, nonfarm employment has never regained that peak. The pick up that started in late 1961 ended in February 1962. Although August and September figures showed slight month-to-month improvements, nonfarm employment was still below the level of February 1962. Louisianians may well ask, “Where did the jobs go?” Before probing the scrootch owl’s misbehavior in the employment roost, a brief review of some other strategic indicators for Louisiana will acquaint any would-be orni thologist with the latest developments in the state. As you can see, the panel of charts on the next page shows seasonally adjusted data for Louisiana and the na tion; the shaded portions of the chart represent the reces sions of 1957-58 and 1960-61. All data have been plotted on a logarithmic scale, which enables you to make a visual comparison of the percentage changes in these key indi cators for the state and the nation, even though the absolute figures may differ greatly. Mild Expansion in Louisiana The upswing in Louisiana’s economy from the 1960-61 recession has been less vigorous than that of the nation as a whole. Personal income, the most comprehensive indi cator available for the state, has shown a smaller gain during the expansion period than that registered for the nation. Nationally, during the eighteen months from the February 1961 trough of the latest recession to August 1962, personal income rose about 10 percent. In Louisi ana, during this same period, income increased 8 percent. Although wages and other forms of income received by Louisianians have not increased as rapidly as they have in the nation, retail spending, as reflected in bank debits, department store sales, and automobile registrations, has kept pace with national spending. Bank debits, which measure check payments made by businesses, individuals, and state and local governments, have shown a slightly larger increase in Louisiana than in the nation during the current expansion phase. Louisiana checkbook spending during September 1962 was 17 percent above the February 1961 level. Consumer purchases at department stores located with• 4 • Louisiana's current economic expansion appears to be pro ceeding at a modest pace, but the strength of the upswing in the Pelican state has been less vigorous than that of the nation as a w hole. Employment and income have been two of the strategic economic indicators that have lagged behind th eir national counterparts. Billions of Dollars 500 Billions of Dollars in the Sixth District portion of the Pelican state marked up a somewhat smaller increase than did national retail spend ing during the nineteen months of expansion. Sales of automobiles, as revealed by registration figures, were up 28 percent in the first eight months of this year, as com pared with the same period last year. Nationally, registra tions increased 22 percent over this period. The Bird Again Millions ........ 1 1 1■ Nonfarm Employment 111 S Aj. eas. d1 r ............. 60 l i f t 11 ^/United States ■BE Louisiana m » .......— -I------ --- L .. -1-----------1 --- 9 6 - ------- 1 Note: The shaded portions of the chart represent the recessions of 1957-58 and 1960-61. Although income earned by Louisianians rose less than that earned by the nation’s citizens during the recovery period and retail spending apparently matched the level of national spending, employment has presented a different story. During the current expansion period from February 1961 to September 1962, national nonfarm employment rose about 4 percent, providing Americans with more than 2 million additional jobs. In contrast, during the same period, seasonally adjusted employment in nonagricultural establishments in Louisiana changed little. Part of the answer to the puzzle of the lack of growth in employment during a period of economic expansion may be found by comparing the changes in the number of manufacturing jobs in Louisiana with those in the U. S. Nationally, the number of manufacturing jobs fell rather sharply from the previous business peak to the February 1961 trough. However, during the nineteen months since the trough, U. S. manufacturing jobs have rebounded, expanding about 5 percent. In contrast with the roller-coaster movements of na tional manufacturing employment during business down turns and upswings, manufacturing employment in the Pelican state simply leveled off after the 1958 trough and declined further during the 1960-61 recession. Employ ment gains in chemicals, paper, and lumber bolstered manufacturing employment in late 1961 and early 1962, but strength in these key industries faded during the summer. The upswing in manufacturing jobs, which you typically expect during a period of economic expansion, failed to materialize in Louisiana, and other types of employment edged down slightly. Construction employment dropped, and, to a lesser extent, there was weakness in mining, transportation, communications, and public utilities. Louisiana’s current employment problems no doubt re flect, in part, the difficulty of regaining the record level of activity reached in mid-1957, which largely resulted from the stimulus of an unprecedented plant expansion boom and the high level of petroleum activity induced by the Suez crisis of 1956 and 1957. These problems have been further compounded by the steady employment declines in such basic manufacturing industries as food and lumber, and the less rapid expansion in Louisiana’s traditional growth industries. Some Louisianians may feel that these developments, past and present, are far removed from their everyday lives, but their incomes are inextricably bound up in these changes. For example, during the plant expansion boom of 1947-57, per capita income rose much faster in Louisiana than in the nation as a whole. As could be ex pected, since 1957, income gains in the Pelican state have dropped behind those of the U. S. • 5 • Against this background, the scrootch owl appears to be formidable indeed. However, recent developments in Louisiana’s fast-growing space industry hold the promise that this bird may be put to flight. The National Aero nautics and Space Administration has estimated that between mid-1960 and mid-1963 Louisiana plants will re ceive more than $443 million in new contracts. Preliminary figures for September indicate that employ ment in this strategic industry has picked up and is ex pected to reach a peak of about 6,500 workers when operations are in full swing. The roar of Saturn space engines may well signal the first stage of a series of take offs that will eventually send manufacturing employment into its proper orbit, boost incomes, and make the scrootch owl a stranger in Louisiana. , T _ e Jack L. C o o per This is one of a series in which economic developments in each of the Sixth District states are discussed. Develop ments in Mississippi’s economy were analyzed in the October R e v ie w , and a discussion of Tennessee’s economy is scheduled for a forthcoming issue. Bank Announcement On October 1, the Merchants and Marine Bank, Pasca goula, Mississippi, a nonmember bank, began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Officers include Alton L. Thom son, President; P. W. Cox, Senior Vice President; Thomas S. Leatherbury, Executive Vice President; Mrs. A. F. Penola, E. L. Horne, Jr., and Horace I. Ward, Vice Presidents; and Joiner M. Haltom, Jr., Vice Presi dent and Cashier. Department Store Sales and Inventories* Percent Change Place Sales________________ Sept. 1962 from 9 Months Aug. Sept. 1962 from 1962 1961 1961 . —2 ALABAMA . . . . +0 Birmingham . . . . M o b ile....................... . — 15 Montgomery . . . . —8 F LO R ID A ....................... Daytona Beach . . . — 20 Jacksonville . . . . — 15 Miami Area . . . . — 14 . — 16 Miami . . . . Orlando....................... . — 10 St. Ptrsbg-TampaArea . — 7 GEORGIA....................... . —0 Atlanta** . . . . • +2 . —5 Augusta . . . . —7 M a co n ....................... . . +17 Rome** . . . . . —7 Savannah . . . . LOUISIANA . . . . . — 20 Baton Rouge . . . . —8 New Orleans . . . . — 22 MISSISSIPPI . . . . —8 Jackson ....................... . —6 TENNESSEE . . . . • +5 Bristol-KingsportJohnson City** . • + 1 Bristol (Tenn. & Va.)** + 1 Chattanooga . . . . +13 Knoxville . . . . . +4 DISTRIC T....................... —4 —4 —4 —5 +8 —2 +9 +1 —4 +57 + 12 +5 +5 +4 +7 +1 6 +0 —0 —2 —1 —4 —5 +4 +0 —1 +5 +3 + 12 +2 +6 +7 +4 +51 + 19 +7 +10 +5 +3 +8 +3 +3 +11 +2 +5 +6 +2 +5 +2 + 17 —5 +4 +4 +2 +6 +0 +7 (In Thousands of Dollars) Percent Change Sept. 1962 Aug. 1962 Year-to-date 9 months Sept. 1962 from 1962 Sept. Aug. Sept. from 1961 1962 1961 1961 ALABAMA 45,061 860,847 43,551 34,963 85,048 279,407 188,307 34,350 64,606 1,636,140 739,418 47,555 918,731 38,780 36,948 84,703 303,360 205,616 26,901 70,651 1,733,245 775,893r 42,346 835,346 38,538 33,507 72,206 275,672 160,851 28,281 59,077 1,545,824 724,277r —5 —6 + 12 —5 +0 —8 —8 + 28 —9 —6 —5 +6 +3 + 13 +4 + 18 +1 + 17 + 21 +9 +6 +2 +8 +8 +7 +4 + 19 +2 +9 + 10 + 13 +7 +1 38,082 53,170 181,455 48,525 772,195 15,604 71,585 850,332 1,233,766 226,954 82,929 187,802 63,585 66,280 392,446 135,786 3,570,164 1,431,520 44,452 58,960 196,404 52,584 939,932 16,846 80,150 958,231 1,371,424 262,264 87,178 198,814 72,771 74,506 422,844 149,868 4,028,997 l,638,719r n.a. 50,387 173,924 42,594 777,647 14,720 71,458 781,930 1,158,523 222,976 86,088 204,526 n.a. n.a. 383,836 125,732 3,312,411 l,545,388r — 14 — 10 —8 —8 — 18 —7 — 11 — 11 — 10 — 13 —5 —6 — 13 — 11 —7 —9 — 11 — 13 n.a. +6 +4 + 14 —1 +6 +0 +9 +6 +2 —4 —8 n.a. n.a. +2 +8 +8 —7 n.a. +7 +6 +13 +6 +6 +3 +9 +7 +6 +2 +5 n.a. n.a. +6 + 16 +11 +3 55,613 40,454 2,348,846 125,215 29,484 115,323 53,497 10,669 52,610 21,250 16,375 128,364 36,366 19,797 47,036 176,295 33,653 3,310,847 958,411 59,511 44,808 2,570,304 127,155 34,367 129,700 54,734 8,807 55,047 21,744 17,060 145,646 37,122 24,655 49,421 184,485 45,672 3,610,238 l,033,734r 52,273 41,109 2,127,273 106,710 26,698 116,669 n.a. 8,270 48,192 18,602 16,168 121,833 32,823 21,314 44,587 172,357 33,298 2,988,176 973,227r —7 — 10 —9 —2 — 14 — 11 —2 +21 —4 —2 —4 — 12 —2 — 20 —5 —4 — 26 —8 —7 +6 —2 + 10 + 17 + 10 —1 n.a. + 29 +9 + 14 +1 +5 + 11 —7 +5 +2 +1 +11 —2 + 12 -t9 + 15 + 13 +25 +9 n.a. +8 + 10 +11 —1 +11 + 12 +8 +3 +7 +3 + 15 +6 75,757 272,346 68,324 79,971 1,306,373 1,802,771 622,840 85,058 309,721 73,521 83,611 1,463,900 2,015,811 614,888r 68,148 244,307 64,673 77,865 1,195,111 1,650,104 568,675r — 11 — 12 —7 —4 —11 — 11 +1 +11 +11 +6 +3 +9 +9 + 10 + 16 + 13 + 10 +9 +8 +9 +7 56,143 38,643 338,445 25,710 46,832 24,342 22,828 552,943 262,202 62,674 40,703 371,915 30,529 50,088 26,198 22,929 605,036 283,165r 52,598 38,097 312,828 27,923 45,658 23,259 21,236 521,599 264,068r — 10 —5 —9 — 16 —7 —7 —0 —9 —7 +7 +1 +8 —8 +3 +5 +7 +6 —1 + 14 +5 + 12 +1 + 10 +8 +9 +11 +3 Bristol* . . . . Chattanooga . . Johnson City* . . Kingsport* . . . Knoxville . . . . Nashville . . . . Total Reporting Cities Other Citiest . . . 51,838 339,908 44,429 87,556 245,917 781,921 1,551,569 691,777 53,497 369,442 48,208 92,254 264,752 913,180 1,741,333 7l6,921r 51,313 332,093 41,736 86,850 249,338 763,819 1,525,149 610,930r —3 —8 —8 —5 —7 — 14 — 11 —4 +1 +2 +6 +1 —1 +2 +2 + 13 +8 +5 + 12 +8 +3 +7 +6 + 11 17,130,602 12,424,434 4,706,168 10,481,237 18,797,980r 16,229,828r 13,734,660 11,543,263 5,063,320r 4,686,565r 11,640,796 9,910,310 —9 — 10 —7 — 10 +6 +8 +0 +6 +9 + 10 +5 +9 —6 +7 +11 Anniston . . . . Birmingham . . . Dothan . . . . Gadsden . . . . Huntsville* . . . Mobile . . . . Montgomery . . . Selma* . . . . Tuscaloosa* . . . Total Reporting Cities Other Citiest . . . FLORIDA Bradenton* . . . Daytona Beach* Fort Lauderdale* . Gainesville* . . . Jacksonville . . . Key West* . . . Lakeland* . . . Miami . . . . Greater Miami* Orlando . . . . Pensacola . . . St. Petersburg . . Sarasota* . . . Tallahassee* . . Tampa . . . . W. Palm-Palm Bch.* Total Reporting Cities Other Citiest . . . GEORGIA Albany . . . . Athens* . . . . Atlanta . . . . Augusta . . . . Brunswick . . . Columbus . . . Dalton* . . . . Elberton . . . . Gainesville* . . . Griffin* . . . . LaGrange* . . . Macon . . . . Marietta* . . . Newnan . . . . Rome* . . . . Savannah . . . . Valdosta . . . . Total Reporting Cities Other Citiest . • • LOUISIANA Inventories Sept. 30, 1962 from Aug. 31, Sept. 30, 1962 1961 Alexandria* . . . Baton Rouge . . . Lafayette* . . . Lake Charles . . New Orleans . . Total Reporting Cities Other Citiest • • • +7 +6 +4 +5 +9 +18 +7 +9 +2 +6 +6 + 18 —2 —2 + 13 +1 +9 +8 +9 +3 +1 + 10 +6 +4 +7 + 12 + 16 + 19 +8 +8 SIXTH DISTRICT . Reporting Cities . Other Citiest . . Total, 32 Cities . . +8 +9 UNITED STATES MISSISSIPPI •Reporting stores account for over 80 percent of total District department store sales. **In order to permit publication of figures for this city, a special sample has been constructed that is not confined exclusively to department stores. Figures for non department stores, however, are not used in computing the District percent changes. Debits to Individual Demand Deposit Accounts Biloxi-Gulfport* . Hattiesburg . . . Jackson . . . . Laurel* . . . . Meridian . . . . Natchez* . . . . Vicksburg . . . Total Reporting Cities Other Citiest . . • TENNESSEE 344 Cities . . . 263,300,000 281,100,OOOr 246,600,000 ♦Not included in total for 32 cities that are part of the national debit series maintained by the Board of Governors. fEstimated. r Revised. n.a. Not available. • 6 • Sixth District Statistics Seasonally Adjusted (All data are indexes, Latest Month (1962) One Month Ago 1957-59 Two Months Ago = 100, unless indicated otherwise.) One Year Ago Latest Month (1962) SIXTH DISTRICT INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate)*** Aug. 7,221 144 Farm Cash R e c e ip ts ........................................Aug. Department Store S a l e s * * .............................Sept. 113 Two Months Ago One Year Ago GEO R G IA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate)*** Aug. 38,304 37,684r 37,509r 35,783r 114 114 106 123 Farm Cash R e c e ip ts ........................................Aug. 106 123 119 C r o p s ...............................................................Aug. 129 109 106 111 Livestock.........................................................Aug. 117 111 121 118 Department Store S a l e s * / * * ....................... Oct. 114p 109 116 120 Department Store S t o c k s * .............................Sept. 119 Instalment Credit at Banks,* (Mil. $) 126 141 142 New Loans ................................................... Sept. 133 126 140 135 Repayments................................................... Sept. 137 One Month Ago PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ Sept. Manufacturing..............................................Sept. Apparel......................................................... Sept. Chemicals....................................................Sept. Fabricated M e t a ls .................................. Sept. Food...............................................................Sept. Lbr., Wood Prod., Furn. & Fix. . . . Sept. P a p e r ......................................................... Sept. Primary M e ta ls ........................................ Sept. Textiles ................................................... Sept. Transportation Equipment . . . . Sept. Nonmanufacturing........................................ Sept. Construction..............................................Sept. Farm Employment..............................................Sept. Insured Unemployment, (Percentof Cov. Emp.) Sept. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Sept. Manufacturing Payrolls***.............................Sept. Construction Contracts*.................................. Aug. R e sid e n tia l................................................... Aug. All O th e r .........................................................Aug. Electric Power P ro d u ctio n **.......................July .................................. Sept. Cotton Consumption** Petrol. Prod, in Coastal La. and Miss.** . Sept. FINANCE AND BANKING Member Bank Loans* All B a n k s ......................................................... Sept. Leading C i t i e s ..............................................Oct. Member Bank Deposits* All B a n k s......................................................... Sept. Leading C i t i e s ..............................................Oct. Bank D e b it s * / * * ..............................................Sept. 107 106 119 102 104 103 97 104 92 95 Ill 107 96 88 4.3 40.6 125 112 115 109 136 100 155 106 106 120 101 99r 104 97 105 93 96r 106 106 96 85 4.5 40.3 124r 113 111 114 131 104 147 106 107 122 101 105 105 98 104 93 96 105 106 96 89 4.4 40.7 123r 117 120 114 130 106 146 138 138 136 137 123 122 122r 123 120 127r 6,995r 95 113 6,553r 103 122 104 107 105 108 112 76 3.2 40.4 125 107 105r 109r 115r 82 3.2 40.2 122r 107 104 109 114 93 3.4 39.9 121r 104 % 87 4.4 39.9 FINANCE AND BANKING Member Bank L o a n s ........................................Sept. Member Bank D e p o s its .................................. Sept. Bank D e b its * * ................................................... Sept. 143 128 135 145 126 128 143 127 136 128 117 119 5,607r 102 107 5,558r 122 107 5,396r 111 98 97 94 98 71 99 4.5 43.1 114 97 94 98 73 94 4.5 42.2r lllr 97 94 98 74 90 4.6 41.7 108r 97 91 99 74 110 6.3 40.7 103 132 114 117 131 115 lllr 131 115 118r 121 109 102 126 126 124 125 130 111 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Sept. Manufacturing..............................................Sept. Nonmanufacturing........................................ Sept. Construction..............................................Sept. Farm Employment..............................................Sept. Insured Unemployment, (Percent of Cov. Emp.) Sept. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Sept. Manufacturing Payrolls***.............................Sept. 104 102 112 101 100 102 95 102 94 97 88 105 91 91 5.4 40.2 116 112 112 112 122 100 128 139 140 7,073r 94 114 117 118 100 111 LO U ISIA N A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate)*** Aug. 5,756 Aug. 155 Farm Cash R e c e ip ts ........................................Aug. Department Store S a l e s * / * * ....................... Sept, Sept. 102 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Sept Sept. Manufacturing..............................................Sept Sept. Nonmanufacturing........................................Sept Sept. Construction..............................................Sept Sept. Sept. Farm Employment..............................................Sept Insured Unemployment, (Percentof Cov. Emp.) Sept. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Sept. Manufacturing Payrolls***............................. Sept. FINANCE AND BANKING Member Bank L o a n s*........................................ Sept. Sept. Sept. M ISSISSIPPI A LA BA M A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate)*** Aug. 5,185 112 Farm Cash R e c e ip ts ........................................Aug. 109 Department Store S a l e s * * .............................Sept. 5,093r 104 107 5,127r 103 107 4,948r 95 110 102 99 104 90 103 5.1 39.8 lllr 102 97 105 92 79 5.1 40.6 110 134 122 122r 127 112 118 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Sept. Manufacturing..............................................Sept. Nonmanufacturing........................................ Sept. Construction..............................................Sept. Farm Employment..............................................Sept. Insured Unemployment, (Percent of Cov. Emp.) Sept. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Sept. Manufacturing Payrolls***.............................Sept. 85 4.9 40.6 114 102 99 103 88r 85 5.0 40.8 114r FINANCE AND BANKING Member Bank L o a n s ........................................Sept. Member Bank D e p o s its .................................. Sept. Bank D e b its * * ................................................... Sept. 137 124 130 137 122 118r 102 98 103 88 2,853r 92 105 2,837r 112 100 2,716r 93 100 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Sept. Manufacturing..............................................Sept. Nonmanufacturing........................................Sept. Construction..............................................Sept. Farm Employment..............................................Sept. Insured Unemployment, (Percent of Cov. Emp.) Sept. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Sept. Manufacturing Payrolls***.............................Sept. 110 114 109 101 88 4.7 40.5 128 109r 114 106 99r 84 4.7 40.1r 128r 109 114 107 107 106 107 85 4.6 40.2 127r 40.3 116 FINANCE AND BANKING Member Bank Lo a n s*........................................ Sept. Member Bank Deposits*.................................. Sept. Bank D e b it s * / * * ..............................................Sept. 158 133 139 154 131 130r 152 133 130 137 117 127 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate)*** Aug. 6,170 114 Farm Cash R e c e ip ts ........................................ Aug Aug. Department Store S a l e s * / * * .......................Sept, Sept. 113 6,102r 97 102 6,053r 93 101 5,824r 111 104 105 107 104 113 95 5.5 40.9 123 105 106r 105 112r 85 5.3 40.5 120r 105 108 104 112 84 5.3 40.7 124r 103 105 103 110 92 6.7 40.4 115 141 125 139 139 123 126r 136 122 130r 128 115 125 100 100 88 6.6 TENNESSEE FLORIDA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate)*** Aug. 11,064 10,956r 10,939r 10,346r 149 131 118 Farm Cash R e c e ip ts ........................................Aug. 144 129 142 142 Department Store S a l e s * * .............................Sept. 146 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Sept. Manufacturing..............................................Sept. Nonmanufacturing........................................Sept. Construction..............................................Sept. Farm Employment..............................................Sept. Insured Unemployment, (Percentof Cov. Emp.) Sept. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Sept. Manufacturing Payrolls***.............................Sept. 115 120 114 100 92 4.0 41.9 153 114 121 113 98 91 4.2 41.0 153r 115 124 113 96 86 4.0 41.0 153r 111 116 110 89 97 4.3 42.1 146 FINANCE AND BANKING Member Bank L o a n s ........................................Sept. Member Bank D e p o s its .................................. Sept. Bank D e b its * * ................................................... Sept. 136 126 130 135 125 124 132 126 126 123 114 119 *For Sixth District area only. **Daily average basis. INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate)*** Aug. 2,908 Farm Cash R e c e ip ts ........................................Aug. Ill Department Store S a l e s * / * * .......................Sept. 102 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Sept Sept. Manufacturing..............................................Sept Sept. Nonmanufacturing........................................ Sept, Sept. Construction..............................................Sept. Sept. Farm Employment..............................................Sept Sept. Insured Unemployment, (Percent of Cov. Emp.) Sept. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Sept. Manufacturing P ayrolls***.............................Sept, Sept. FINANCE AND BANKING Other totals for entire six states. p Preliminary. Bank Debits*/1 Sept. Sept. Sept. r Revised. ***Figures for personal income and manufacturing payrolls reflect revisions of current monthly estimates to 1961 U.S. Dept, of Commerce benchmarks. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U.S. Bureau of Mines; elec. power prod., Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. • 7 • D I S T R T B U S I N E S S C O N D I T I O N S i I i i i i i I I I I I I | I I I 1I I I I I I I | I I I I I illio o _Baunda Dlla AnasRte o rs n f S s. l j. e A - I C Persona) Income I he District's economy continues to am ble along am idst oft-repeated claim s that its behavior lacks strength and decisiveness. It is true that total economic activity has not exhibited g reat forw ard momentum in recent months. Yet, month after month, the pattern of m ixed economic changes has added up to a gradual overall expansion or, at least, a sustained high level of activity. Total em ploym ent has held relativ ely steady since m id-year. Income has advanced slow ly. Consumer spend ing has helped sustain economic activity. Bank loans and investments have risen alm ost continuously. \S Average Weekly Hours* In Septem ber, total nonfarm em ploym ent rose slightly and more than regained the minor loss of the preceding month. This gain was at tributed to a rise in nonmanufacturing employment. Manufacturing employ ment remained unchanged, following a drop in August. In Florida and Alabama, however, manufacturing employment declined for the second month in a row. Despite these developments, manufacturing payrolls rose to a new high because of an increase in the average work week. This rise in the number of hours worked reversed the downward drift of the last three months. In the m ixed picture of change, recent developm ents in tex tile and construction activity would have to be counted on the minus side of the o verall economic balance sheet. Cotton consumption, an important measure of activity in the textile industry, dropped sharply in September, con tinuing a decline begun in July. Construction contracts dropped further. Con struction employment, however, remained unchanged because increases in Florida and Mississippi offset declines in Georgia and Louisiana. In contrast with recent developments in textiles and construction, petroleum and steel production both increased in September. Recent changes in income and consumer spending should probably be counted on the plus side. Personal income rose further in August with all District states registering gains. Expansion in total employment and manu facturing payrolls in September suggests a further rise in total income. This slow but rather steady growth in income since last spring has undoubtedly helped sustain the high but unspectacular level of consumer expenditures. In September, department store sales rose slightly to their highest level since last March, but dropped sharply in the first three weeks of October. Spending at furniture stores turned up moderately in September, but sales remained below the volume of early and mid-1962. More comprehensive measures of total spending at retail stores indicate that it has fluctuated within a fairly narrow range for several months. Developments in agriculture a re acting as a m oderate stimulant to the economy. Farmers are experiencing more bountiful harvests and larger gross revenues than they did a year ago. Also, in August, cash receipts from farm marketings were up in every District state except Florida. Farmers re ceived higher prices for most products in September. In that month, farm em ployment also expanded because of gains in Louisiana, Mississippi, Florida, and Tennessee. . , , v* v* P RE TO RQIRDRSRE E CN F EU E EEVS Excess Reserves A Borrowings from V l F. R. Bank A . „ . m m 11111 i i i h « n 4 |-ri« i I * -.3, Digitized Ifor 0FRASER 96 1961 1962 http://fraser.stlouisfed.org/ index. "Seas. adj. figure; not an Federal Reserve Bank of St. Louis Bank loans and investments continue to expand . Loan changes in October at weekly reporting banks in the District suggest a loan-performance similar to that in September. In that month, total loans at member banks rose somewhat further as gains were made by banks in the District’s leading cities and in its smaller cities and towns. Investments at member banks also increased in September mainly because of a rise at banks outside leading cities. During the eighteen months ending last September, total loans and investments at member banks expanded by more than $1 billion. Note: Data on which statements are based have been adjusted to eliminate seasonal influences.
@FedFRASER