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IN THIS ISSUE: MONTHLY REVIEW •Questions People Ask Me •Mississippi Nonfann Jobs In the Sixties: A Sneak Preview •D istrict Business Conditions N O V EM BER 1969 A n A d d r e s s B e fo re the R o ta r y C lu b o f A tla n ta A tla n ta , G eorgia O cto b er 2 0 , 1 9 6 9 Q u e s t io n s P e o p le A s k M e B y M o n r o e K im b r e l President, Federal Reserve Bank of Atlanta Immediately when someone learns that I am associated with the Federal Reserve System, he feels impelled to ask me, “Why are you always talking about inflation?” I must admit that generally, any public remarks I make inevitably touch upon our current inflationary problems. As I shall discuss later, I believe that I have good reasons for doing so. But, if people do not ask me why I am con cerned about inflation, they will almost always ask me, “When are we going to get some relief from high interest rates?” For example, the other day I made an appointment with my doctor and was looking forward to listing my major and minor aches and pains in answer to his expected, “How do you feel today?” What happened was that instead of asking me how I was feeling he started with, “Why are interest rates so high?” I felt as if I should be charging him a fee when the appointment was over. Before I left I explained, in the clearest language possible, the reasons for present high interest rates. He then asked me, “When will rates go down?” Lately another question has become very popular. Generally, the individual starts the questioning saying, “Isn’t it true that you have been exercising monetary and fiscal restraint for some time now, and prices are still going up? Isn’t it true,” he will continue, “that rising costs are the true source of inflation? Isn’t it true you ought to admit defeat and should adopt some kind of direct wage and price controls?” More specifically, these are the questions peo ple ask me: 134 1. Why are you always talking about infla tion? 2. Why don’t you give us some relief from high interest rates? 3. When will interest rates go down? 4. Why don’t you substitute wage and price controls for monetary and fiscal restraint? I shall touch on each of these in turn. Why the Talk About Inflation? There was a time, not so long ago, when you would not always find me talking about infla tion. The nation was enjoying a period of rela tive price stability. Wholesale prices, on average, had changed little for several years prior to 1965, and consumer prices had been rising at an annual rate of only one percent. The dollar was re taining its purchasing power. But, beginning with 1965, stability in price trends gave way to steady increases, and these increases have continued almost without inter ruption since then. Wholesale prices have risen about 13 percent since 1964. Today, the dollar, as measured in terms of wholesale prices, is worth only 88 cents compared with what it would buy in 1964. In addition, the consumer has experienced significant losses in purchasing power. From 1964 to date, the rise in consumer prices, as measured by the consumer price index, has been more than 19 percent. The con sumer dollar today is worth only 84 cents if compared with what it was worth before the accelerated rise in consumer prices began in 1965. Now the function of the Federal Reserve Sys M O N T H L Y R E V IE W tem is “to foster a flow of credit and money that will facilitate orderly economic growth, a stable dollar, and a long-run balance in our international payments.” Price increases in the past four years, therefore, cannot help but be of primary concern to any official in the Federal Reserve System who has even a modest part in policy determination. Such price rises in the long run are not only inherently harmful, but history has shown that inflation prevents orderly economic growth and the achievement of a balance in our international payments. Do you wonder why I am always talking about infla tion? Despite the claims of both our friends and critics, the Federal Reserve System does not pretend that its policies are the sole or even the principal force influencing the direction of the economy. Its powers are largely limited to influencing the availability of credit through its control over the amount of reserves it makes available to the banking system. Nevertheless, the Federal Reserve System has an obligation to use whatever powers it has in creating con ditions that will produce greater price stability. I have no doubt that there are many persons, perhaps in this group, who are not impressed by the figures I have just cited concerning the dollar’s loss in purchasing power. I can imagine that some of them will be saying, “So what? What is so wrong about inflation?” Some of them might say we need inflation to provide for economic growth. Inflation, they say, causes more demand, more jobs, and general prosperity. I am afraid that many persons believe this. Otherwise, we could expect more enthusiastic support in efforts to curb inflation. To some extent this attitude of tolerating, if not supporting, inflation results from inflation being such a great deceiver. We Americans like to show progress, and we generally measure this progress in terms of dollars. Corporate execu tives, for example, like to show that their earn ings per share are greater year after year. Labor union officials like to be able to show their members how much the union’s bargaining ability has improved the average wages of its members. And there are many others who desperately want to show larger dollar figures at the end of any period. Although in the back of our minds we may realize that the dollar is not a consistent unit of measurement so long as prices are rising, we very frequently forget this. Inflation means bigger and bigger dollar figures. These inflated dollar figures thus create a feeling of euphoria. To this extent, we really enjoy inflation. M y friends, as pleasant as this feeling may be, it cannot continue forever. Past experience, Digitized FRASER N O V for EM B ER 1969 not only in our own country but in other coun tries throughout the world, demonstrates that the public cannot be deceived by inflation for ever. Eventually, continued inflation is recog nized as the great deceiver that it is. Eventually, the public realizes that it destroys the value of our savings, that it distorts the pattern of invest ment, that it upsets the international value of our money, and that it imposes injustices upon a large part of our population. Indeed, as we have seen lately, inflation may topple seemingly strong governments. There are, of course, some persons who manage to come out on top in an inflationary period. These may be astute speculators, or they may be persons who always seem to profit from the misfortunes of others. But for the vast majority, continued inflation is a great misfortune. This applies especially to the poor, although it may apply to the rich as well. In mid-1969, the average welfare payment in Georgia to families with dependent children was $24.55 per month. This figure is indeed low, but ostensibly it was some improvement over the $22.09 figure for 1964 before prices began to rise sharply. Let us see what happened, how ever, to the purchasing power of that $2.46 increase. In 1969, $24.55 buys only what $20.62 bought in 1964. The recipient has lost $1.33 in purchasing power, rather than gained $2.46. Let me give another example. Most of us are happy that it has been possible to raise the social security benefits for retired workers. In 1964, I am told, the average monthly payment was $77.57. Today it is $99.47. Here again in flation has been a great deceiver. Today’s pay ment buys what $83.55 bought in 1964. Thus, the increase was only $5.98 in 1964 consumer dollars instead of $21.90. Inflation has robbed the manufacturing worker of a major part of his higher earnings. Average weekly earnings in manufacturing for the United States were about $130 in mid-1969 as compared with $103 in 1964. Thus, the average pay in creased about $27. Measured in dollars of 1964 purchasing power, however, the increase is re duced to $6 . Even more significant is that despite an increase of about $6 in average weekly earnings in manufacturing, the average weekly earnings in 1969 actually bought a little less than in 1968. I assume there are at least some Rotarians here today who are enjoying incomes that put them in the high tax brackets and that part of the incomes come from investments in interestbearing securities. Let us suppose you are in the 30-percent bracket. Let us suppose further that somehow or other you have found a place to 135 invest funds to yield an interest rate of 10 per cent. But inflation has robbed you, too. If the calculations published by the Machinery and Allied Products Institute are correct, your real return—after taking taxes and a 5-percent in flation into consideration—would be only 1.9 percent. When am I going to stop talking about infla tion? Just as soon as the nation achieves price stability. When Will Interest Rates Decline? “What has all this to do with high interest rates,” you may well ask. Furthermore, you quite often have asked me, “Why don’t you give me some relief from high interest rates?” Rising prices, as you know, are a symptom that effective demand is greater than the nation’s productive resources at constant prices can satisfy. It is elementary that a further increase in this demand will push up prices further. Under conditions of nearly full employment any thing that adds to the purchasing power of the nation adds to the pressure on prices. Now interest rates, of course, like prices of commodities and services, are determined by both supply and demand. The price of money— interest rates—is determined by the supply of and demand for funds. The Federal Reserve System’s influence on interest rates comes from its ability to change the availability of member bank reserves. As reserves made available to banks shrink, the banks find it difficult to supply credit to individuals, businesses, and governments. With a strong demand for credit, rates rise. The Federal Reserve System could try to prevent rates from going up by supplying more reserves. But when you increase reserves to the banking system and indirectly increase the availability of credit, you also increase the purchasing power in the hands of individuals, businesses, and governments. Under the condi tions of inflationary pressures that prevail today, the addition of purchasing power would result, of course, in even more rapidly rising prices. That more credit does not automatically create more goods when you have conditions of full employment is dramatically illustrated by what has happened to the nation’s gross national product, measured in terms of both current and constant dollars. Total spending, as measured by the GNP in current inflated dollars, rose at about a 7-percent annual rate in the second quarter of this year. But most of this increase was explained by rising prices. Measured in dollars of constant purchasing power, it increased at only a 2 -percent annual rate. 136 You have a choice. Would you rather have lower interest rates and continued inflation, or would you rather have, for a time, high prices for the money you borrow with some hope of getting inflation under control? We believe the Federal Reserve System has the responsibility for choosing the latter course. I should be guilty of gross misrepresentation if I were to attempt to set any specific timetable as to when interest rates will come down. I can, however, point out the kinds of conditions and circumstances under which a decline in interest rates seems likely to occur. First of all, interest rates will come down when you fellows stop borrowing so much money, or in the words of the economist, when the demand for credit drops off. Contrary to what is sometimes supposed to be the case, tremendous amounts of funds have been borrowed in the credit markets. Corporate securities offerings in the third quarter of this year, although down a little from the second quarter, totaled about $2 .1 billion—up $400 mil lion from the corresponding quarter in 1968. State and local governments borrowed heavily in the second quarter of this year, for a total of $ 1.6 billion, although there was a sharp reduc tion to $ 1 billion in the third quarter. The de mand for mortgage funds has apparently ex ceeded the funds available, but so far this year, in support of the residential mortgage market, the Federal Home Loan Bank System has raised about $2.4 billion in the money and capital markets. Because of a relatively favorable budget position, the Federal Government as a whole has not been a net borrower so far this year. Direct borrowing by Federal agencies has increased sharply, however. Loans made by commercial banks continued to increase in response to heavy credit demands, with business loans up in the third quarter of 1969 at an annual rate of about 4 percent. Thus, any softening in the demand for funds would reduce the pressures on interest rates. For example, funds for business plant and equip ment expenditures have been one of the chief causes of increased credit demands. Interest rates will decline, therefore, when these expenditures slacken. The demands of the Treasury for funds will, of course, depend upon the U. S. budgetary position. A budgetary surplus, therefore, could do much to lower the total demand for funds. But some of the demand for funds has come from individuals and businesses who borrow because they expect that inflation will continue forever. Let me be quite frank on this point and say that I speak solely for myself. If the Federal Reserve System is going to convince the general public that inflation will not last forever, it will M O N T H L Y R E V IE W need to hold fast to a firm policy, not only until some of the pressures begin to ease but until we have clear evidence that the job has been accomplished. Removing restrictions too soon can be as bad as holding onto them too long. Interest rates will eventually decline when credit demands soften and inflationary expectations subside. Winning the fight against inflation, therefore, is a key to lowering interest rates. Are Wage and Price Controls the Answer? But there are some people who feel that we should be making more progress toward getting inflation under control. They expect and want an instant solution. Now, of course, it can be said that inflation has taken some time to develop and that we should expect it to take some time to diminish. We have the lessons of history which show us that it takes several months for a restrictive monetary policy to effectively halt rising prices. But we also need to remember one additional thing. How soon rising price trends will end depends upon both the type and severity of the restrictions that are imposed. The Federal Reserve has applied the brakes gradually in its efforts to contribute toward a more orderly and sustainable rate of economic growth. Policy is not designed to bring about a recession. Al though a deep recession might bring rising prices to a halt, it would also create a multitude of other problems. Contrary to what some persons imply, evi dence is developing that restrictive monetary and fiscal policies are gradually taking effect. Monetary restraint is most clearly evident at the commercial banks and especially at the larger banks. Total bank credit at all commerical banks has changed little during the past four months. Since their loanable funds have been limited, banks have been forced to become more selective in extending loans. Total bank loans increased at an annual rate of about 2 percent during the June-September period, whereas they increased at an annual rate of about 1 1 percent during the first five months of this year. These and other financial developments have had an impact on spending and plans for spend ing by individuals and businesses. Retail sales, as you know, have been relatively stable lately, and there was some curtailment in expansion plans for new plant and equipment as suggested by recent surveys of intentions. Other definite signs of economic cooling are cropping up. Thus, although we have no assurance that the process of cooling off has progressed to the point where we can relax restrictions, we can be sure that these restrictions are beginning to take effect. N O V EM B ER 1969 As for prices, wholesale prices in September rose at an annual rate of only one percent after having risen substantially more during the early part of the year. During the first half of 1969, wholesale prices rose at an annual rate of over 4 percent. Part of the slowdown results from a softening in farm and food prices. In Septem ber, industrial wholesale prices rose at an annual rate of 4 percent, a rate still excessively high but somewhat lower than earlier this year. Con sumer prices are still rising more rapidly than we should like. The August rise at an annual rate of about 5 percent, however, is somewhat lower than the preceding several months. Recent economic and financial developments suggest to me that the gradually imposed mone tary policies have gradually begun to take hold, but inflationary pressures are still strong. Conse quently, it would, in my opinion, be extremely unwise to abandon a policy that is beginning to work for a policy of direct wage and price con trols that from all past experience seems unlikely to work. I am sure that many businessmen who have suggested direct wage and price controls as a substitute for general credit policies have not thought through all the implications of such a program. This is so because I do not believe businessmen generally would welcome a harness of controls that would extend from the top to the bottom of their businesses and that would substitute the decisions of administrators for their own judgment. Because this solution is being suggested today with less frequency than it was a few months ago indicates perhaps that more businessmen are realizing what might be the consequences of direct wage and price controls. As for myself, I- am opposed to a system of direct wage and price controls because it runs contrary to my general philosophy and because I believe such a system would inevitably result in failure. Philosophically, I am opposed to direct controls because they would eliminate economic freedom. I am convinced that, despite its imperfections, our present market-oriented economic system has a greater chance of satisfy ing the legitimate wants of our citizens and of pro moting economic growth than any system con ceived by a group of administrators. Further more, I have not yet been shown where a system of direct controls has been an outstanding suc cess. If you are looking for an example of the difficulties and distortions involved in direct controls, you have only to study experiences in this country during and after World War II. Those were relatively favorable times when public support on patriotic grounds could be 137 relied upon. Today, I believe, we could not count on that kind of support. Another misconception is that direct controls would be a complete substitute for general monetary and fiscal controls. Somehow or other, some people seem to believe that if there were direct wage and price controls there would not be any restrictions on credit. Some persons suppose that they would be able to get all the money they wanted at low interest rates. On the fiscal side, they seem to think, there would be no need to balance the Federal budget. As a matter of fact, the only chance that direct controls might have of achieving even mediocre success would be as a supplement and not as a substitute for general controls. General controls would still be used to limit excess demand which is the basic cause of inflationary pressures. We would, therefore, likely find ourselves with direct controls on top of general monetary and fiscal controls. Perhaps persons advocating direct controls naively believe that these controls will be selec tive and will pick on someone else instead of on them. Perhaps businessmen hope that controls will be imposed on wages and on prices of things they buy but will not be imposed on their profits and the things they sell. But you and I know that, once started, there will be no limit to the facets of our economy which would eventually be placed under restrictions and controls. Someone has said that this nation gets the kind of economic and monetary policies it de serves. I presume this means that, without a fairly general support from the public, no mone B a n k A n n o u n c e m e n ts On October 1, the Milledgeville Banking Company, Milledgeville, Georgia, a nonmember bank, began to remit at par for checks drawn on them when received from the Federal Reserve Bank. Also on October 1, the former Bank of Blountville, Prentiss, Mississippi, changed its name to Bank of Prentiss and began to remit at par. The Citizens Bank of Douglasviile, Douglasville, Georgia, a nonmember bank, began on October 10 to remit at par. The newly organized United National Bank of Dadeland, Miami, Florida, opened for business on October 15 as a member of the Federal Reserve System. Of ficers are George E. Stock, chairman; Frank Smathers, Jr., vice chairman; William J. Klug, Jr., president; Arthur R. Roy, Jr., senior vice president; Dennis P. Clum, vice president and trust officer; William D. Duncan, Theodore J. Hoepner, Paul J. Kane, and Robert J. Schumann, vice presidents; William R. Slover, cashier; Arthur Lewis, assistant cashier; and 138 tary or economic policy, as good as it may be theoretically, stands any chance of working. To work, any policy must have general public sup port. Responsible for a major part of our troubles today are both the unwillingness of the American people to accept the kind of economic discipline that is needed and to accept the conflicting pulls of special interests. I find it difficult, therefore, to believe that a nation becoming restive under restrictive monetary and credit policies, which allow almost complete economic and financial freedom in spending available financial resources, would submit to a program that would transfer decisions to government officials. Why am I always talking about inflation? I am because it is not only the Federal Reserve’s function to contribute to maintaining price stability, but because continued inflation places the burdens on the less fortunate members of our society and in the long run is an obstacle to economic progress. Why don’t we give you some relief from high interest rates? It is because doing so under present conditions would only add to inflationary pressures. When can we expect interest rates to come down? We can expect interest rates to come down when inflationary pressures have been brought under control and when credit demands have been more nearly satisfied by the financial savings of the nation.. Why don’t I advocate adopting direct wage and price controls? It is because I believe they are unworkable and incompatible with a free economy. Kenneth F. Everly, auditor. Capital is $400,000; sur plus and other capital funds, $350,000. On October 22, Palm Beach Mall Bank, West Palm Beach, Florida, a newly organized nonmember bank, opened for business on a par-remitting basis. Officers are William K. DeVeer, president; Richard L. Adams and J. E. Spooner Jr., vice presidents; Paul L. E. HelliwelI, cashier; Mrs. Dalphine B. Ormandy, assistant cashier. Capital is $500,000; surplus and other capital funds, $263,106.00. First State Bank of Winter Garden, Winter Garden, Florida, opened for business on October 23 as a newly organized nonmember bank and began to remit at par. Officers are Ray Clements, president; E. L. Johnson, Jr., vice president; Donald C. Doughley, vice president (inactive); Gerald Hussey, cashier. Capital is $500,000; surplus and other capital funds, $150,000. On October 24, Cordele Banking Company, Cordele, Georgia, a nonmember bank, began to remit at par. M O N T H L Y R E V IE W M is s is s ip p i N o n f a r m J o b s in t h e S ix t ie s : A S n e a k P r e v ie w The end of a decade customarily encourages a reassessment of the economic events of the past ten years. The advent of 1970, therefore, will no doubt bring a host of commentary about Missis sippi’s economic progress during the Sixties. This article jumps the gun a bit by taking a look now at the period from 1960 through 1968 in much the same way that a sports writer prepares his story while the ninth inning is still being played. The focus here is on one of Mississippi’s big gest problems: providing additional nonfarm jobs. This is a particularly important problem for Mississippi (as suggested before in the M onthly Review1) because when compared to the national average, the state has a higher proportion of her workforce in farming. Agricultural mechani zation and the expanding population have com bined to make Mississippi’s problem particularly acute, since workers pushed off the farm have had to compete with nonfarm workers for the nonfarm jobs in the area. The alternative for many of these persons is out-migration. Because of the importance of this problem, the state’s BAWI (Balance Agriculture With Industry) program has concentrated on bringing new industry and 1“Mississippi: Industrialization Brings Interdependence,” Monthly Review, May 1968. Copies available on request. N O V EM BER 1969 new nonfarm jobs into Mississippi. A Qualified Success Mississippi’s efforts to expand nonfarm employ ment in the Sixties can be labeled a qualified success. From 1960 to 1968, her nonfann em ployment increased 36 percent, an increase equivalent to four percent per year. This expan sion far outstripped the 25-percent increase for the nation. Nonfarm employment in the six states comprising the Sixth District grew 37 percent in the same period2, making Mississippi’s em ployment growth average for the Southeast. An other reason for qualifying Mississippi’s success is the lack of time for a breathing spell. If the standard of living in Mississippi is to continue upward, the Magnolia State must keep outpacing the nation in the growth rate of nonfarm jobs. When we look behind these aggregate percent ages and compare Mississippi’s employment 2The southern half of Mississippi is included in the Sixth Federal Reserve District; the remainder includes all of Alabama, Georgia and Florida and parts of Louisiana and Tennessee. The figures cited for the Sixth District cover each of the six states in their entirety. In the 1960 to 1968 period, nonfarm employment growth in Florida (46.5 percent), Tennessee (37.3 percent), and Georgia (36.6 percent) was higher than Mississippi’s 35.9-percent expan sion; whereas growth in Alabama (23.8 percent) and Louisiana (31.3 percent) fell below Mississippi’s 35.9-percent expansion. 139 NONFARM EMPLOYMENT GROWTH: 1960-1968 PART I Percent Miss. 6th U.S. 40 20 Mississippi's nonfarm employment grew 36 percent during the period, far outstripping the national increase and approximately equaling growth in the six states of the Sixth Federal Reserve District. Percent 40 20 FINANCE, INSURANCE, AND REAL ESTATE In these three major employment categories-non-durable goods manufacturing, construction, and finance-insurance-real estateMississippi's employment growth outpaced both the nation and the District. 140 for FRASER Digitized growth with both the District and the nation on an industry-by-industry basis, a number of inter esting results appear. Of the nine broad cate gories of nonfarm employment differentiated by the U. S. Department of Commerce, Mississippi’s 1960-68 employment growth outpaced both the District and the nation in three of these categories —nondurable manufacturing, construction, and finance-insurance-real estate. Mississippi topped the nation in six of the nine categories and the District in four. Much of Mississippi’s effort to expand nonfarm employment has been concentrated in the durable and nondurable manufacturing sectors which therefore deserve our special attention. On the non-durable goods side of manufacturing, Mississippi’s 28-percent expansion was not much different than the District’s 27 percent, but signi ficantly higher than the nation’s 1 1 -percent em ployment expansion in the 1960-68 period. In the state’s nondurable goods industries, employment expansion was boosted by strong gains in the im portant apparel industry, which in 1968 ac counted for almost 45 percent of Mississippi’s nondurable manufacturing employment. In the durable goods manufacturing sector, Mississippi’s employment growth—70 percent— topped the District’s 54 percent, but fell far short of the phenomenal national increase of 134 per cent. There were some bright spots in individual durable goods industries: From 1960 to 1968, employment doubled in the state’s furniture, elec trical machinery and transportation equipment industries. In each case it increased faster than in the District, which in turn grew much faster than the nation as a whole. In the lumber and wood industry neither the nation nor the District showed any employment increase in the 1960-68 period; Mississippi’s increase was a meager but still positive 8 percent. On the negative side of the ledger, Mississippi ranked at the bottom of the three-way comparison in two categories of nonfarm employment: ( 1 ) trade and (2) services. This is not surprising when the nature of these two sectors is consid ered, however. Higher levels of per capita income are usually associated with a higher proportion of spending for services (this association helps explain the strong national expansion of service industries in the Sixties). And in the wholesale and retail trade sectors, higher volumes tend to be concentrated in urban centers. Mississippi is not an urban state, nor can it boast of high per capita income relative to the District or the na tion, which makes the relative weakness of the trade and services sectors understandable. M O N TH LY R E V IE W The Ninth Inning: 1969 But the ball game of the Sixties is not yet over; the score for 1969 has not been posted. What will it be? We can get a pretty good idea by inspect ing Mississippi’s economic performance in the first seven months of 1969, comparing this per formance against the first seven months of 1968, and making allowances for the disruption caused by the September visit of Hurricane Camille. Nationally, 1969 has been a year of impressive economic expansion—probably too impressive when one considers the inflation that has accom panied the expansion. Mississippi’s performance has followed a similar pattern. From 1968 to 1969, personal income, one of the most reliable overall indicators, rose 10.7 percent. Farm cash receipts, bolstered by soaring livestock prices, jumped an amazing 2 1 percent. Manufacturing payrolls increased 10 percent, and the average worker in manufacturing worked 1 2 more minutes each week in the first seven months of 1969 than he did in the same period in 1968. At first glance, the 2.1-percent overall expan sion in nonfarm employment looks weak—much weaker than the 4-percent average recorded in the 1960-68 period. The weakness was not evident in manufacturing, where employment increased 3.3 percent, but was apparent in the construction industry, which reported an actual decline of 0.7 percent. This inter-industry pattern has reversed itself in the wake of Hurricane Camille. Rebuild ing efforts will compensate somewhat for a re duced pace in manufacturing by providing em ployment for many construction workers. Farm employment is continuing to decline in 1969: An 8.9 percent decrease in farm employment was recorded in the 1968-69 comparison of the first seven months. Before the hurricane, financial activity was booming, and its pace can be expected to pick up again as hurricane repairs proceed. For the southern part of Mississippi (Sixth District por tion), member bank loan activity jumped 7 per cent; deposits at member banks rose 8 percent; and debits to deposit accounts, thought by some analysts to be a good index of overall commercial activity, were 15 percent higher in the first seven months of 1969. When we look back over the 1960-to-68 period, adding what we know of 1969, it seems likely that next year’s decennial reassessments of Mis sissippi’s economic progress will read something like this: in the Sixties, substantial economic progress; in the Seventies, the need for continuing that progress in the face of the challenge to raise the standard of living for all Mississippians. William N. Cox N O V EM BER 1969 NONFARM EMPLOYMENT GROWTH: 1960-1968 P A R T II Percent — “ 140 — 120 U.S. u Miss. — 100 — 80 6th DURABLE GOODS MANUFACTURING - 60 — 40 — 20 immm0 In durable goods manufacturing, Mississippi again outran the District in employment growth. Neither the state nor District matched the national expansion, however. Percent — TRADE — 40 l r — 40 SERVICE AND MISCELLANEOUS — 20 In these two employment categories-trade. service and miscellaneousMississippi ranked last in the three-way comparison. These industries tend to be associated with a pattern not yet characterizing Mississippi. 141 S ix th D is tric t S ta tis tic s Seasonally Adjusted ( A ll d a t a a r e in d e x e s , 1957-59 = 10 0 , u n l e s s i n d ic a t e d o t h e r w is e . ) L a t e s t M onth 1969 SIXTHDISTRICT One M on th Ago Two M o n th s Ago One Year Ago IN C O M E A N O S P E N D IN G P e r s o n a l In c o m e (M il. $ , A n n u a l R a t e ) ........................... Aug. 7 1 ,7 9 2 M a n u f a c t u r in g P a y r o l l s .................................S e p t. 248 F a r m C a s h R e c e i p t s ......................................J u ly 196 C r o p s .................................................................J u ly 154 L i v e s t o c k ........................................................... J u ly 201 I n s t a lm e n t C r e d it a t B a n k s * (M il. $) N ew L o a n s ......................................................S e p t. 3 2 6 .2 R e p a y m e n ts .................................................S e p t 2 8 7 .4 7 1 ,7 1 7 248 184 203 173 7 0 ,9 5 6 244 173 188 172 6 5 ,2 3 6 233 159 143 159 3 0 3 .9 3 0 0 .6 3 1 5 .8 3 0 7 .3 3 4 2 .5 310.1 148 146 176 141 169 112 106 128 140 113 2 02 1 49 139 49 148 147 175 141 1 69 114 106 129 1 39 113 217 149 137 58 1 48 146 175 1 40 168 115 106 1 29 136 113 204 148 137 62 144 142 177 135 157 113 106 125 130 3 .7 3 .5 3.5 4 .0 1.9 4 1 .1 196 217 1 78 160 103 243 1 .9 4 0 .8 310 2 75 340 164 99 248 1 .9 4 0 .9 240 2 65 219 162 One Two One L a t e s t M on th M o n th M o n th s 1969 Ag o Ago Ago Year . . . . . . . . S e p t. S e p t. S e p t. S e p t. 170 170 133 78 171 169 132 81 171 169 131 84 170 162 115 79 . . . S e p t. . S e p t. 2 .6 4 1 .7 2 .7 4 1 .8 2 .6 4 1 .1 2 .8 4 2 .1 . . . . S e p t. . S e p t. . S e p t. 374 258 282 370 261 2 82 315 2 35 245 1 4 ,0 1 5 274 157 1 3 ,7 6 2 260 163 1 2 ,7 9 6 234 170 149 141 152 147 45 149 144 152 1 47 58 149 141 152 150 55 144 137 147 147 48 3 .4 4 1 .2 2 .9 4 0 .9 3 .0 4 1 .0 3 .5 4 1 .5 341 236 318 338 242 308 332 242 306 308 237 268 P e rso n a l In c o m e (M il. $ , A n n u a l R a te ) . . . . . .A u g . 1 0 ,1 2 5 M a n u f a c tu rin g P a y r o lls . . . . . . . S e p t. 188 F a r m C a s h ^ R e c e i p t s ................................ J u ly 247 1 0 ,0 8 2 188 191 1 0 ,1 7 7 191 165 9 ,4 1 9 181 170 134 123 137 135 45 134 133 132 137 132 50 136 133 54 1 35 138 51 5 .0 4 1 .6 4 .9 4 1 .3 4 .9 4 2 .3 5 .2 4 1 .8 275 178 203 268 179 208 268 182 205 242 172 1 90 5,304 267 263 5 ,2 9 6 263 204 5 ,2 3 1 265 195 4 ,8 0 3 254 175 147 156 143 1 59 34 147 156 143 148 50 147 156 143 143 62 144 155 140 145 38 4 .7 4 0 .8 4 .6 4 0 .1 4 .3 4 0 .4 5 .2 4 0 .9 396 272 301 388 270 259 389 266 256 347 249 251 M a n u f a c tu r in g ................................. N o n m a n u f a c t u r in g ........................... C o n s t r u c t i o n ................................. F a r m E m p l o y m e n t ................................. U n e m p lo y m e n t R a te (P e r c e n t o f W ork F o r c e ) t . . . Avg. W e e k ly H rs. in M fg. (H r s .) . F IN A N C E A N D B A N K IN G M e m b e r B a n k L o a n s ........................... M e m b e r B a n k D e p o s i t s ...................... B a n k D e b i t s * * ........................................... 374 260 277r P R O D U C T IO N A N D E M P L O Y M E N T G E O R G IA N o n fa rm E m p l o y m e n t t .................................S e p t. M a n u f a c tu rin g ........................................... S e p t. A p p a re l ........................................................... S e p t. C h e m i c a l s ......................................................S e p t. F a b r ic a t e d M e t a l s ......................................S e p t. F o o d ......................................................................S e p t. L b r., W ood P ro d ., F u r n . & F ix . . . . S e p t. P a p e r ................................................................ S e p t. P r im a ry M e t a l s ........................................... S e p t. T e x t ile s ...........................................................S e p t. T ra n s p o rta tio n E q u ip m e n t . . . . S e p t. N o n m a n u f a c tu rin g t ......................................S e p t. C o n s t r u c t i o n ................................................ S e p t. F a rm E m p l o y m e n t ........................................... S e p t. U n e m p lo y m e n t R a te ( P e r c e n t of W o rk F o r c e J t ......................S e p t. In s u re d U n e m p lo y m e n t ( P e r c e n t o f C o v . E m p . ) ........................... S e p t. A vg . W e e k ly H rs. in M fg. (H r s .) . . . S e p t. C o n s tr u c t io n C o n t r a c t s * ........................... S e p t. R e s i d e n t i a l ......................................................S e p t. A ll O t h e r ........................................................... S e p t. E le c t r ic P o w e r P ro d u c t io n * * . . . . A u g. C o tto n C o n s u m p t i o n * * .................................S e p t. P e tro l. P ro d , in C o a s t a l (.a. a n d M is s .* * S e p t . 102 238 111 191 142 133 51 2.0 4 1 .4 172 198 150 146 104 217 Lo an s* A ll M e m b e r B a n k s ......................................S e p t. L a rg e B a n k s ................................................ S e p t. D e p o sits * A ll M e m b e r B a n k s ......................................S e p t. L a r g e B a n k s ................................................ S e p t. B a n k D e b i t s * / * * ................................................ S e p t. 331 2 76 330 272 327 273 291 254 226 1 89 271 229 191 269 229 191 270 2 15 187 2 41 A LA B A M A IN C O M E P e r s o n a l In c o m e (M il. $ , A n n u a l R a t e ) ...........................A ug. M a n u f a c tu rin g P a y r o l l s ................................ S e p t. F a r m C a s h R e c e i p t s ......................................J u ly 8 ,8 7 4 210 189 8 ,9 6 0 210 173 8 ,7 5 4 211 1 62 8 ,1 0 9 192 161 131 132 130 127 51 130 131 130 126 64 131 131 130 126 69 128 128 128 125 52 4 .2 4 0 .9 4.1 4 0 .7 3 .8 4 1 .4 4 .9 4 1 .3 294 212 225 304 214 241 294 214 236 2 65 2 05 221 P e r s o n a l In c o m e (M il. $ , A n n u a l R a t e ) ........................... A ug. 2 2 ,3 03 M a n u f a c t u r in g P a y r o lls . . . . S e p t. 332 F a r m C a s h R e c e i p t s ......................................J u ly 180 2 2 ,2 6 1 337 218 2 2 ,0 0 2 327 204 1 9 ,9 82 300 182 P R O D U C T IO N A N D E M P L O Y M E N T N o n fa rm E m p l o y m e n t t .................................S e p t. M a n u f a c t u r in g ........................................... S e p t. N o n m a n u f a c t u r in g ................................ S e p t. C o n s t r u c t i o n ........................................... S e p t. F a r m E m p l o y m e n t ........................................... S e p t U n e m p lo y m e n t R a t e (P e r c e n t o f W o rk F o r c e ) t ......................S e p t. Avg. W e e k ly H r s . in M fg. (H r s .) . . . S e p t. F IN A N C E A N D B A N K IN G M e m b e r B a n k i L p a n s ......................................S e p t. M e m b e r B a n k d e p o s i t s ........................... S e p t. B a n k D e b i t s * * .................................................S e p t. F L O R ID A IN C O M E . y. P R O D U C T IO N A N D E M P L O Y M E N T E m p lo y m e n t t P e rso n a l In c o m e (M il. $ , A n n u a l R a t e ) ........................... A u g. 1 4 ,1 1 7 258 M a n u f a c tu r in g P a y r o l l s ........................... S e p t. F a r m C a s h R e c e i p t s ......................................J u ly 1 36 P R O D U C T IO N A N D E M P L O Y M E N T N o n fa rm E m p lo y m e n t t ........................... S e p t. M a n u f a c tu r in g ........................................... S e p t. N o n m a n u f a c t u r in g ......................................S e p t. C o n s t r u c t i o n ........................................... S e p t. F a r m E m p l o y m e n t ........................................... S e p t. U n e m p lo y m e n t R a te (P e r c e n t of W o rk F o r c e ) t ......................S e p t. A vg . W e e k ly H r s . in M fg. (H r s .) . . . S e p t. F IN A N C E A N D B A N K IN G M e m b e r B a n k L o a n s ......................................S e p t. M e m b e r B a n k D e p o s i t s .................................S e p t. B a n k D e b i t s * * ...................................................... S e p t. L O U IS IA N A IN C O M E F IN A N C E A N D B A N K IN G N o n fa rm IN C O M E ........................... S e p t. Digitized 142 for FRASER 170 P R O D U C T IO N A N D E M P L O Y M E N T N o n fa rm E m p lo y m e n t t . . . . . . . S e p t. M a n u f a c tu r in g ........................................... S e p t. N o n m a n u f a c tu r in g .................................S e p t. C o n s t r u c t i o n ........................................... S e p t. F a r m E m p l o y m e n t ........................................... S e p t U n e m p lo y m e n t R a te (P e r c e n t o f W o rk F o r c e J t ......................S e p t. A vg . W e e k ly H rs. in M fg. (H r s .) . . . S e p t 122 122 122 F IN A N C E A N D B A N K IN G M e m b e r B a n k L o a n s * .................................S e p t. M e m b e r B a n k D e p o s i t s * ........................... S e p t. B a n k D e b i t s * / * * .................................................S e p t. M I S S IS S IP P I P e r s o n a l In c o m e (M il. $ , A n n u a l R a t e ) ........................... Aug. M a n u f a c tu r in g P a y r o l ls ................................ S e p t. F a r m C a s h R e c e i p t s ......................................J u ly P R O D U C T IO N A N D E M P L O Y M E N T N o n fa rm E m p l o y m e n t t .................................S e p t. M a n u f a c tu r in g ........................................... S e p t. N o n m a n u f a c t u r in g ......................................S e p t. C o n s t r u c t i o n ........................................... S e p t. F a r m E m p l o y m e n t ........................................... S e p t. U n e m p lo y m e n t R a te (P e r c e n t of W ork F o r c e ) t ......................S e p t. Avg. W e e k ly H r s . in M fg. (H r s .) . . . S e p t. F IN A N C E A N D B A N K IN G M em ber B an k Lo an s* M e m b e r B a n k D e p o s its * B a n k D e b it s * / * * . . . . . S e p t. . S e p t. . S e p t. M O N T H L Y R E V IE W One TWo One Latest Month Month Months Year 1969 Ago Ago Ago One Two One Latest Month Month Months Year 1969 Ago Ago Ago TENNESSEE Nonmanufacturing............. . Sept. 141 140 140 139 Construction............... 163 161 159 150 INCOME 58 Farm Employment............... . Sept. 53 58 52 Personal Income Unemployment Rate (Mil. $, Annual Rate) . . . Aug. 11,069 11,103 11,030 10,127 (Percent of Work Force)*. . . 3.7 3.6 3.7 4.0 Manufacturing Payrolls. . . . Sept. 239 240 241 216 Avg. Weekly Hours in Mfg. (Hrs.) . Sept. 40.7 40.1 40.1 40.8 FarmCash Receipts.......... July 198 157 132 134 FINANCE ANDBANKING PRODUCTIONANDEMPLOYMENT Member Bank Loans*.......... 312 304 313 277 Nonfarm Employment)-. . . . Sept 146 145 145 144 Member Bank Deposits* . . . . 203 205 204 192 Manufacturing ............. Bank Debits*/**.................. 279 286 301 263 Sept 155 155 156 153 *For Sixth District area only. Other totals for entire six states. **Daily average basis. *Preliminary data. r-Revised. 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; industrial use of elec. power, 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. D e b its to D e m a n d D e p o s it A c c o u n ts Insured Commercial Banks in the Sixth District (In Thousands of Dollars) Percent Change Year to September date 1969 9 mos. From 1969 September August September Aug. Sept. from 1969 1968 1969 1968 1968 1969 STANDARDMETROPOLITAN STATISTICALAREASt Birmingham . . . 1,810,454 1,862,732 1,793,079 - 3 + 1 +10 67,234 64,169 60,255 + 5 +12 + 5 Gadsden .......... 208,930 192,894 181,898 + 8 +15 + 7 Huntsville . . . . Mobile .......... 608,416 615,397 501,169 - 1 +21 +14 Montgomery . . . 364,291 344,794 325,725 + 6 +12 +12 123,132 124,711 133,411 - 1 + 9 +14 Tuscaloosa . . . . Ft LauderdaleHollywood . . . 953,124 911,759 753,354 + 5 +26 +30 Jacksonville . . . 1,998,953 1,773,173 1,815,989 +13 +10 +16 Miami............. 3,298,022 3,106,575 2,713,647 + 6 +22 +19 694,344 642,999 612,609 + 8 +13 +10 Orlando.......... 248,208 231,744 214,696 + 7 +16 +11 Pensacola . . . . Tallahassee . . . 178,989 203,127 147,886 -12 +21 +17 Tampa-St. Pete.. . 1,892,153 1,738,016 1,468,059 + 9 +29 +21 566,036 542,564 464,141 + 4 +22 +24 w. PalmBeach . . Albany .......... 116,959 106,117 103,257 +10 +13 +11 Atlanta .......... 7,448,622 6,863,448 5,799,193 + 9 +28 +21 309,786 300,911 304,541 + 3 + 2 - 4 Augusta.......... Columbus . . . . 300,968 266,998 248,279 +13 +21 +15 340,567 328,954 263,671 + 4 +29 +17 Macon .......... 346,828 317,733 305,941 + 9 +13 +10 Savannah . . . . 721,878 671,606 567,014 + 7 +27 + 5 Baton Rouge . . . Lafayette . . . . 165,817 152,425 136,895 + 9 +21 +17 165,843 165,671 159,858 + 0 + 4 + 7 Lake Charles . NewOrleans . . . 2,630,658 2,500,879 2,441,728 + 5 + 8 + 4 156,573 109,330 116,084 +43 +35 +14 Biloxi-Gulfport . . 904,548 741,418 686,932 +22 +32 +12 Jackson .......... Chattanooga . . . 805,826 770,555 621,296 + 5 +30 +20 Knoxville . . . . 597,826 548,974 519,417 + 9 +15 +10 Nashville . . . . 1,859,623 2,149,371 1,941,591 -13 - 4 +19 )THER CENTERS Anniston . . . . 73,067 75,086 - 2 - 5 + 6 71,258 86,611 Dothan .......... 78,599 74,784 +10 +16 +14 52,024 47,219 46,935 +10 +11 + 7 Selma............. 34,119 32,275 Bartow .......... 29,810 + 6 +14 +10 94,777 80,471 74,757 +18 +27 +17 Bradenton . . . . Brevard County . . 209,522 196,197 222,737 + 7 - 6 - 1 96,507 Daytona Beach . . 93,399 90,279 - 3 + 3 + 4 Ft Myers— 121,087 111,873 81,353 + 8 +49 +32 N. Ft Myers . . 'Includes only banks in the Sixth District portion of the state. *partially estim http://fraser.stlouisfed.org/ N O V EM B ER 1969 Federal Reserve Bank of St. Louis Percent Change Year to September date 1969 9 mos. From 1969 September August September Aug. Sept. from 1969 1969 1968 1969 1968 1968 Gainesville.......... 108,904 110,054 99,818 - 1 + 9 +10 139,013 131,924 116,583 + 5 +19 +16 Lakeland .......... Monroe County . . . 37,875 35,263 36,469 + 7 + 4 +5 Ocala............... 87,283 76,871r 62,783 +14 +39 +32 St. Augustine . . . . 27,095 23,817 24,494 +14 +11 +18 St. Petersburg. . . . 398,823 369,372 335,965 + 8 +19 +21 Sarasota............. 171,262 151,545118,444 +13 +45 +26 Tampa............... 1,043,683 951,250 782,157 +10 +33 +21 Winter Haven . . . . 69,587 65,314 61,847 + 7 +13 +12 Athens ............. 101,998 98,780 82,426 + 3 +24 +14 Brunswick.......... 52,827 52,365 45,637 + 1 +16 +12 Dalton ............. 133,005 121,592 116,375 + 9 +14 +17 Elberton............. 18,119 16,79716,580 + 8 + 9 +13 Gainesville.......... 87,585 77,579 72,949 +13 +20 +10 40,832 37,274 38,065 +10 + 7 +4 Griffin............... LaGrange .......... 23,488 25,650 24,479 - 8 - 4 +13 Newnan............. 27,104 23,317 25,329 +16 + 7 - 2 Rome............... 93,946 83,540 82,148 +12+14 +11 Valdosta............. 54,269 72,047 59,525 -25 - 9 +5 Abbeville .......... 15,022 12,373 14,580 +21 + 3 +9 Alexandria . . . . . 157,637 162,093 136,625 - 3 +15 +19 7,562 7,720 6,800 - 2 +11 +17 Bunkie ............. Hammond.......... 42,334 41,164 38,891 + 3 + 9 +11 NewIberia.......... 40,229 37,395 35,841 + 8 +12 +10 Plaquemine . . . . 14,275 13,689 13,134 + 4 + 9 +8 Thibodaux.......... 26,948 22,961 21,744 +17 +24 +12 Hattiesburg . . . . 84,929 58,591 63,093 +45 +35 +17 Laurel............... 51,216 49,016 38,839 + 4 +32 +18 Meridian .......... 89,535 85,841 69,625 + 4 +29 +24 Natchez............. 46,960 44,353 40,757 + 6 +15 +13 PascagoulaMoss Point . . . . 84,232 75,473 75,140 +12 +12 +23 Vicksburg .......... 48,246 45,114 38,190 + 7 +26 +5 Yazoo City . . . . . 32,155 25,274 50,522 +27 -36 - 5 Bristol ............. 98,634 86,553 82,433 +14 +20 +15 Johnson City . . . . 103,199 £9,325 85,013 +16 +21 +16 Kingsport.......... 176,735 163,107 166,558 + 8 + 6 +11 SIXTHDISTRICT TOTAL ............... 40,012,756 37,880,696r 33,945,341 + 6 +18 +15 Alabama* .......... 4,736,765 4,703,4684,446,648 + 1 + 7 +9 Florida*............. 12,474,207 il,676,367r 10,318,603 + 7 +21 +19 Georgia*............. 11,170,523 10,294,106 8,957,521 + 9 +25 +16 Louisiana** . . . . 4,643,637 4,428,9214,151,924 + 5 +12 + 7 Mississippi** . . . . 1,965,078 1,631,5161,564,140 +20+26 +13 Tennessee** . . . . 5,022,546 5,146,3184,506,505 - 2 +11 +19 *Estimated. r-Revised. 143 D is tric t B u s in e s s C o n d itio n s I I — Billions of D ollars Annual R ate — S e a s. Adj. P e rs o n a l In co rh e 1 9 5 7 -5 9 :1 0 0 S e a s. Adj. N o n fa r m E m p lo y m e n t U n e m p lo y m e n t R a te * M fg. P a y r o lls * S e a s . adj. figure; not an index. A d d it io n a l s i g n s o f re d u c e d e x p a n s io n in the D is t r ic t e c o n o m y are b e c o m in g e v id e n t. N o n f a r m e m p lo y m e n t r e m a in e d u n c h a n g e d in S e p te m b e r , a n d th e u n e m p lo y m e n t rate in c r e a se d . F a rm p r ic e s c o n t in u e d to e d g e low er. T h e d o w n w a rd tre n d in h o u s in g p e r m its a n d the r e d u c e d flo w s to s a v in g s d e p o s it s s u g g e s t t h a t the S e p t e m b e r s p u r t in h o u s in g s t a r t s d o e s n o t p o in t to a s u s t a in e d u p s w in g . ha ve in c r e a s e d th e to ta l v o lu m e o f in s t a lm e n t c re d it, e x t e n s io n s e x te n s io n s , but new lo a n C o n su m e rs c o n tin u e b e lo w y e a r -a g o le v e ls. B a n k c re d it d e c lin e d t h r o u g h o u t the f ir s t h a lf o f O c to b e r, r e v e r s in g th e s t r o n g u p s w in g d u r in g la te S e p te m b e r . T o ta l n o n fa r m e m p lo y m e n t h e ld c o n s ta n t, b u t Work ers, however, are putting in longer hours. Most persons in the Biloxi-Gulfport area displaced by Hurricane Camille have returned to their jobs or are employed in construction and clean-up opera tions. Announcements of plans for new and ex panded plant investment tumbled further in the third quarter, extending the second quarter de cline. u n e m p lo y m e n t ro se s lig h t ly in S e p te m b e r . P r ic e s r e c e iv e d by fa rm e rs edged low er in S e p te m b e r . Falling prices of corn, soybeans, cot tonseed, and vegetables slightly overshadowed rising prices of cotton. Unfavorable weather has contributed to sharply lower yields of cotton, corn, and rice, particularly in Louisiana and Mississippi where the drought has been most severe. Bumper crops of citrus, pecans, and sweet potatoes are in prospect, with a large share of the national output of these crops coming from the Sixth District. D o lla r c lin e d v o lu m e s h a r p ly of fro m c o n s t r u c t io n th e u n u s u a lly c o n tra c ts h ig h In S e p te m b e r , con su m e rs c re d it m o re e x te n s iv e ly th a n u tiliz e d in s t a lm e n t in p re v io u s m o n th s, Personal income gained less in August than in earlier months. b u t le s s th a n a y e a r a g o . D is t r ic t m e m b e r b a n k s re p o rte d re d u c e d g a i n s in lo a n s o u t s t a n d in g d u r in g O c to b e r, a fte r la rge in the f in a l w e e k s o f S e p te m b e r . At large banks, where business loan expansion con tinued, liquidity declined further in September. Demand deposits, although rising at mid-month, were below a month ago. Time deposits were still declining, and the attrition of large certificates of deposit at large banks continued at a considerable rate. in c r e a s e s de A ugust le v e ls, b u t a h ig h v o lu m e o f c o n s tr u c t io n s e e m s http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 144 fo r the r e st o f th e year. Although the downward trend in housing permits continued through September, residential contract volume declined less than other construction. Mortgage rates continued upward in October, and savings flows to mortgage lending institutions continued to weaken. assu red NOTE: D ata on w h ic h sta te m e n ts a re b a se d h a ve bee n a d ju ste d w h e n e v e r p o s s ib le to e lim in a te s e a s o n a l in flu e n c e s. M O N TH LY R E V IE W
@FedFRASER