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Monthly Review F E D E R A L R E S E R V E B A N K O F ATLANTA Volume XXXIII Atlanta, Georgia, November 30, 1948 Number 11 Artificial Insemination an d the D istrict’s D airy Industry F th e many possibilities that Sixth District dairymen O have for increasing the milk production of their herds, artificial breeding ranks near the top of the list. If breeding were the only factor limiting milk production, it would be possible by artificial insemination to double the production rates of many dairy herds in a few years. In the present dis cussion of this method of breeding, attention will be focused on the organizations through which it must be made available and on the increased production of milk. Much of the success of the organizations, of course, depends on the techniques employed, but a thorough understanding of these is not required for an appraisal of the economics of artificial insemination. The artificial breeding of dairy cattle is merely another instance in which natural barriers or limitations have been forced to yield to greater human needs. A great deal of the nation’s scientific progress has been achieved by overcoming, or partially overcoming, the limitations of time and space. Progress of this sort, however, is not always accepted as readily, or to the same extent, in biology as in the physical sciences. Nevertheless, it has been proven that a high-quality bull can sire two hundred calves as easily as one and thus multiply his productivity and efficiency. Artificial breeding of dairy cows is not new. Only or ganizations that provide for the widespread dissemination of semen and for the insemination of cows on a commercial scale are of recent origin. Although the exact date of the first commercial breeding association is not known, one of the first associations of the type now in use was organized in New Jersey in May, 1938, with Dr. K. Larsen of Denmark acting as technical adviser. In the Sixth District states, the oldest artificial breeding association, at Tupelo, Mississippi, dates from 1941. The main object of artificial breeding is to obtain the use of better herd sires and, as a result, to increase the calves’ rate of milk production. This potential improvement is made possible by two basic facts: the power of a sire to transmit high or low production characters; and the pos sibility of widely disseminating his ability by means of appropriate biological techniques made available through suitable organizations. That District dairy farmers need to raise the production rates of their cows was pointed out in the June issue of the Review . Economy is directly related to efficiency of production; the greater the rate of production of a herd, the lower the cost per hundred pounds of milk and, ultimately, the lower the price per quart of milk to the consumer. Present low rates of production in the District states can be raised by better feeding and by better breeding. Feeding practices can be greatly improved by the use of minerals on pastures and feed crops, by planting quality seed at recommended rates, and by certain cultural practices such as mowing. These things can be done gradually and fairly inexpensively. Improving breeding, however, is not accom plished so easily. The ability of a bull to transmit the ca pacity for high production cannot be altered. Bulls capable of greatly increasing the milk production rates of their off spring are usually high priced and so are beyond the means of most farmers. The use of a bull of that quality, however, is not beyond a farmer’s financial reach if he can share the cost with hundreds of his neighbors through the medium of a breeding association. For many farmers this is virtually the only way of achieving significant improvement in the quality of their herds. Within the past ten years artificial breeding associations have been organized in most of the District states. Breeding associations in Alabama and Mississippi have many locals covering a large part of the two states. Few of these associa tions have been in existence long enough, however, to yield sufficient data for a comprehensive analysis of their oper ations. Records of the increase in production of the daughters over that of their dams, for example, are particularly scarce. Sufficient experience has been accumulated, however, to pro vide some basis for the study of problems involved in setting up breeding associations. In a few instances the records are adequate for an appraisal of this method of breeding under conditions existing in the District. Although artificial breeding in the District states is of fairly recent origin and is not yet extensive, in the nation it is a big business. At the beginning of this year 1,745,000 cows were enrolled in artificial breeding associations in the United States. These cows, making up 224,500 herds, are to be bred to 1,745 bulls in breeding associations. Throughout the nation, therefore, the number of cows enrolled per bull is about 1,000. It is possible, of course, to breed more than 1,000 cows to a bull, and the higher the number the lower the unit costs to the association. The Alabama Artificial Breeding Association, for example, bred 9,000 cows to 12 bulls during the first seven months of this year. By the end of the year the association expects to have bred an average of at least 1,600 cows to each bull. The biological foundation of artificial breeding is that in one year a bull can sire a great many calves. The service of a bull contains many times the number of sperm cells 118 M o n t h l y R e v ie w o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 necessary to insure conception. In fact, only one sperm cell can enter the egg and start new life. Nature thus provides a great excess of sperm cells so that a sufficient number may survive the many obstacles in their path and reach the egg with sufficient strength to effect a union. By means of artifi cial insemination, this excess can be utilized by transferring it to other cows. The semen, of course, has to be diluted many times in order to distribute it widely. When the artificial breeding of dairy cows was first established, semen was diluted in a ratio of one to three. Dilutions of one to 50, one to 80, and even one to 100 are now successfully employed. Breeding and Local Inseminating Associations The technique of artificial breeding is fairly simple, but the organizations required to bring the service to the dairy farmer are rather complicated. Moreover, the conditions un der which artificial breeding associations can be organized and operated successfully are limited. The first of these con ditions is that the bulls must be of high quality and must be proven. There must, indeed, be several of them in order that fresh semen may be available every day in the year. When the semen is collected, it must be handled under exact ing conditions and must be distributed immediately to the technicians. Farmers who desire the services of a technician must be able to get in touch with him quickly—by phone, by a milk-route driver, or in person. Success thus hinges on three “T’s”—timing, technician, and training. A fourth “T,” testing, should follow the breeding in order to measure the improvement in the daughter’s rate of production over that of her dam. Successful operation also requires the keeping of accurate and detailed records on the bulls and on the cows that are bred. Where semen of different breeds is made available as, for example, from Jersey and Guernsey bulls, the handling and record keeping become rather complicated. As in all business organizations, of course, complete financial records must be kept. Of the many factors necessary for the successful operation of artificial breeding programs, the quality and potency of the bulls is perhaps the most important. The first organiza tion needed, therefore, is one that is responsible for the selection, purchase, and management of the bulls, and for the distribution of semen to technicians. The organization of a breeding association, or bull pen, as it is often called, may be a private enterprise or a co operative association. Regardless of its form, however, it must be a fairly large-scale undertaking. Semen must be collected and shipped each day. It is the practice in most of the breeding associations to take semen from a bull every third day, but not more often than that. The minimum num ber of bulls necessary to start an association is three. Usually, however, a larger number is required to insure viable semen each day. Five bulls would be a practicable minimum to avoid any possibility of skips in supply. If the number of cows necessary to support a bull at stud was 1,000, which is the national average, then 5,000 cows would be needed to justify setting up a pen of bulls. Choosing the bulls is an important task. Few associations have unlimited capital with which to buy bulls, so the prob lem of value is a matter of paramount concern. Some highquality bulls are overpriced because of their show records, yet there is always a demand from some patrons for sires of this type. The cost of a bull depends on his record and to some extent on the breed. In Michigan, for example, prices paid for Holstein and Guernsey bulls used in the Michigan Artificial Breeding Association ranged from $185 to $700 each. Jersey bulls used in the Alabama and Mississippi breed ing associations were considerably higher, some of them costing as much as $3,500. Another problem is the selection of bulls of about the same production record. If one or two of the bulls have superior records, patrons of the association will want service from them and will become disgruntled if required to breed their cows to a bull of poorer quality. In order to solve these and other problems associated with the selection of bulls, cooperative associations usually ap point an advisory committee composed of dairy farmers and representatives of the state college and breeding associations. Provisions are made for changing the membership of this committee so that friction may be kept to a minimum. In private breeding associations, of course, the owners make the decisions. A breeding association also requires adequately trained personnel. The bulls must be kept in good condition if they are to produce active, potent sperm cells. This requires exercising and careful balancing of their rations. In large associations a barn manager is usually employed to supervise the care of the bulls and to collect the semen. The preparation and handling of semen requires a trained technician. Semen must be handled under sterile conditions at all times. After collection it is studied for its morphology and, if it meets certain standards, is diluted and prepared for shipment. Records are kept at each stage of processing so that any failures can be traced and the trouble be corrected. Semen must be sent to the inseminators shortly after it is prepared. In order to insure prompt shipment, rigid ad herence to a mailing schedule is necessary. Where a breeding association serves many technicians, as in Alabama and Mis sissippi, various methods of delivery may be required. In some cases it has been necessary to work out agreements with truck operators to supplement mail deliveries. Caring for such details is part of the work of a breeding association. A breeding association’s income is gained almost entirely from the sale of semen. In some instances inseminators work out directly from the bull barn. For the most part, however, breeding associations contract to supply semen to other or ganizations, called insemination associations. An agreement is made to supply semen every day. The semen is not paid for as such but for each cow that is bred the inseminating association, rather, pays a fee to the breeding association. The most common fee in the District states is two dollars. This rather unusual financial arrangement ties the breeding and inseminating associations together. Under such a plan, the success of a breeding association is directly dependent upon the success of the inseminating associations with which it has contracts. The high cost of establishing a breeding association, to gether with its dependence upon the success of other or ganizations for its income, makes it a hazardous financial undertaking. Because of the high risk involved, breeding associations in the District states have had difficulty in ob taining financial assistance in getting started. At Tupelo, Mississippi, the Chamber of Commerce contributed heavily to the organization of both a breeding and an inseminating association. In Alabama and Mississippi the state legisla tures appropriated money to help start cooperative breeding associations. With a fee of two dollars for each cow bred, an association M o n t h l y R e v ie w o f th e F e d e r a l R e s e r v e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 1 1 9 breeding 5,000 cows a year would have an income of only breeding fees bring in and what the directors agreed to pay $10,000 out of which to pay the wages of at least one man the technician as a minimum. In some cases the subsidy has and a helper; feed costs; amortization of the cost of the bulls, been large, in others it has been negligible. barns, equipment, and supplies. The financial experience of In most associations the technician is guaranteed a mini breeding associations in Alabama and Mississippi, as well mum salary. The usual practice is that out of the five-dol as in other states, indicates that a breeding association would lar breeding fee the technician gets two dollars, the associa probably need more than $10,000 to meet all expenses. tion keeps one dollar, and the balance goes to the breeding The second type of organization needed to make artificial association. The salaries of technicians are low, compared insemination successful is the local insemination association. with those of nonfarm jobs. In the District states they range This organization is built around the man who actually from $150 to $300 per month and the technician pays his breeds the cow—the inseminator. He is the person who has own transportation expenses. The average salary is $175. to receive the semen, take the calls from dairymen, organize Experience of local associations in District states, as well itineraries, keep records, and handle the money. Since the as in the dairy states of the Midwest and the East, shows success of the whole breeding program depends, to a great that 1,200 cows is about the lowest number that will keep a extent, on the success of the insemination association, it is technician busy and pay the expenses of a local insemination imperative that it be organized and operated successfully. association. A larger number, of course, is highly desirable. Most of the local insemination associations in Alabama Associations in Operation and Mississippi are cooperatives. Farmers in a county or The success of artificial insemination in the District states community who desire to breed their cows artificially and who have sufficient cows to warrant employing a technician has not been phenomenal, and some failures are recorded. organize, incorporate, and contract for semen. The directors Even though the experience of associations in other parts of then employ a technician, establish an office, and supervise the United States has generally been good, there are regional the management of the association. Record forms and pro differences that create special problems in this district. Conception rates were frequently quite low during the cedures recommended by the breeding association are usually adopted. In some cases these recommendations are made part first few months of operation of insemination associations. of the contract. These records are necessary for registering An Alabama dairyman, for example, reported that he had purebred cattle, for determining conception rates, and for only four calves from 80 cows which the technician had tried to breed. With such low conception rates, many patrons proper accounting. Much, if not most, of the success of artificial breeding de became discouraged, as would be expected, and dropped out pends on the technician who breeds the cow, and there are of the associations. To insure continued patronage of dairy few experienced technicians available in the District at pres farmers, it is therefore necessary for technicians to obtain ent. The selection of someone to learn how to do the work artificially as high a rate of conception as could be obtained has been an important problem. Professional competence is by direct breeding. Farmers cannot afford the cost of low conception rates. mandatory, but, in addition, the technician should also be a good salesman of artificial breeding and other improved The loss of a calf through breeding failures is costly, but the loss of milk that results when a cow does not calve may dairy practices. When most of the associations in the District were set up, be still more costly. Cows give milk to nurse their young; if no schools were available where the men could acquire the they do not give birth to calves their flow of milk will great necessary skill. In Alabama and Mississippi the need for ly decrease or may cease entirely, and the dairyman will schools of this kind was met by the state agricultural col have a barn full of pets rather than of producers. Moreover, leges. The records made by some technicians from the first many dairymen breed their cows to freshen in the fall so as training schools, however, were such that many were re to take advantage of the higher prices for milk during the called for further instruction. The quality of the schools and fall and winter months. To be successful in this, they must be able to depend on the technicians “catching” the cow thus of the technicians has subsequently improved. Local insemination associations have had other personnel within rather narrow time limits. Conception rates attained by most of the technicians in in problems. Some of the men chosen to attend training schools found that the work was not to their liking and quit. Others semination associations have steadily improved in recent who finished the school and started work found that the job years, and in August of this year Mississippi and Alabama was too confining and for that reason resigned. In both in associations reported state averages of about 60 percent. As stances new men had to be selected and trained. Changes in conception rates have improved, membership in the associa personnel cannot, of course, be eliminated entirely but as tions has increased. Some associations reported that dairy the work becomes more widespread, turnover will undoubt men who had dropped out because of low conception rates were returning now that they could depend on their cows edly be reduced. Directors of local associations are also faced with the being bred. A conception rate of 60 percent is a high aver problem of determining what salary they can offer the tech age to maintain over a long period of time. The conception nician. They must, of course, pay a wage high enough to rate for direct or natural breeding is just over 60 percent attract a competent man even though they cannot predict and a rate higher than this is not to be expected from arti accurately what the income to the local association will be. ficial breeding. The value of artificial breeding, therefore, In order to guarantee the inseminator’s salary while building lies in the use of better sires rather than in any further im up the patronage to a profitable level, a local association provement in conception rates. From a financial standpoint, District breeding and insem has often called on civic associations for donations. Cham bers of Commerce have underwritten the technician’s salary inating associations have fared rather badly. None of the in several associations in Mississippi. In these cases, the breeding associations covered in this survey were established Chamber of Commerce pays the difference between what the without a subsidy of some kind. The Alabama and Missis 120 M o n t h l y R e v ie w o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 sippi state legislatures appropriated money for the purchase of bulls, for the construction of barns, and to cover other initial costs. Salaries of some supervisory personnel have been paid wholly, or in part, from funds allocated to the state agricultural colleges. The Tupelo association, which is not a member of the Mississippi Breeding Association, was subsidized, as mentioned earlier, by business men through the Chamber of Commerce. It should not be inferred, how ever, that artificial breeding associations always require sub sidization. In other sections of the nation, many associations were established without financial aid from either public or civic organizations and have operated at a profit. As the use of artificial insemination becomes more widespread, an as sociation should be able to meet its costs out of its service charges. Insemination associations, of course, are much more nu merous than bull or breeding associations. Most of those in the District states are cooperatives, organized under state ag ricultural cooperative statutes. Subsidies to such local asso ciations are quite common and may be justified, perhaps, as being necessary to start a new and promising enterprise. In addition to Chamber of Commerce sponsorship, county governing bodies have underwritten salaries, have supplied equipment, or have furnished free office space and secretarial help. Dairy products companies have also frequently pro vided free services by collecting calls from route men, by furnishing telephone service, and by deducting breeding fees from milk checks. The financial records of some associations indicate that they could not have existed without these va rious subsidies and, in general, progress toward financial in dependence has been very slow. The continuing need for subsidies, both for breeding and inseminating associations, suggests that the schedule of charges may be too low. The most common charge for breeding in the District states is five dollars per cow, three to the local, and two to the state association. As artificial breeding spreads, the breeding associations may be able to meet their costs from the two-dollar fee. They usually have sufficient semen to allow for a great increase in the number of cows that are bred and their costs would not increase ap preciably with an increase in their volume of business. Lo cal associations, however, face different problems. An in crease in the number of cows bred means increased costs for transportation and supplies. The cost of traveling great er distances may sometimes be more than the fee. If a tech nician, for example, were required to travel 20 miles in or der to gain a new patron, it is questionable whether the new patron really should be added. At a charge of six cents per mile, traveling expenses would total $2.40 which would leave only 60 cents for the local association. If local associations are to be self-supporting, therefore, the breeding fees should perhaps be raised and the increase should go to the insemi nation association. There are many reasons, of course, why the success of some of the artificial breeding associations has been less than was anticipated. Some of the associations started with too few cows signed up and quickly got into financial trouble; others made unfortunate selections of technicians. Then, too, a low initial rate of conception was enough to cause some associations to fail or to reorganize. A more general cause for limited success was, however, the lack of a comprehen sive educational program preceding the organization of breeding and inseminating associations. The most important point that an educational program could have covered is that artificial breeding is only one part of a dairy program, and that it cannot succeed unless the other parts are also successful. Few people knew what to expect at the time many of the inseminating associations started operations. Even experi enced dairymen thought that the conception rate would be 100 percent. Many technicians were surprised to find that so few farmers knew how to tell when a cow was ready for breeding. An educational program explaining conception rates would have prevented many disappointments and would have forestalled many unfavorable comments on the value of artificial breeding. A farmer must watch his cows very carefully to determine when they are ready to breed. One technician reported be ing called to breed a cow that had already been bred for four months. That unnecessary trip cost the loss of an hour in time and automobile expenses for 25 miles. Some mis takes of this kind are inexcusable but it is not always easy to tell just when a cow is ready to be bred. Careful and con tinuous observation is necessary. If a cow is not bred when she is capable of conceiving, both time and milk production will be lost. The problem of identifying cows in heat is particularly acute on dairy farms that are supervised by hired help. For some reason or other, many milkers and caretakers will nei ther observe the cows closely nor report breeders promptly. On farms where this is the case, herdsmen should be thor oughly sold on artificial insemination, otherwise it might be more profitable to continue direct breeding. Although the farmer need not be present when his cows are bred, he should identify the cows and tie them in a clean barn space. When the inseminator is called someone should remain at home until he arrives to give directions and sup ply him with clean, warm water. A technician should not be required to find the cow, draw the water, look for a halter, and perform other time-consuming chores that are not a part of his primary function. The farmer should also have the cow’s registration papers and the breeding fee ready for the technician. A careful check on conception rates has revealed a high correlation between the incidence of conception and the ade quacy of the farm’s feed and pasture program. For concep tion rates to be high, cows must be in excellent health and should therefore be provided with abundant and high-qual ity pasturage. Low conception rates have often been the re sult of mineral deficiencies in pasture soils. If a cow is so deficient in any of the essential minerals that her calf would not be fully developed, the chances of her conceiving are slight. Even though mineral requirements are low, some pas tures have been depleted even below the minimum. The breeding program, in short, should be accompanied by a better-feed program. Better breeding merely increases the capacity to produce ; feeding determines how much of that capacity will actually be used. Unless there is a marked change in feeding prac tices, artificially-sired calves on many farms are not likely to yield the production that has been anticipated. A bal anced and adequate feed program may keep artificial insem ination from being blamed for feed deficiencies. Artificial breeding will be successful only as long as dairying itself is a profitable enterprise for District farmers. M o n t h l y R e v ie w 121 o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 Com parative Costs Possibilities and Applicabilities For 80 to 90 percent of the farmers in the District states who have dairy cows, the most usual method of breeding is to take the cow to the bull. This involves time lost from other farm work, transportation costs, and the payment of a bull fee. A check of breeding fees in Mississippi and Alabama revealed that the lowest is three dollars for a grade bull. Transportation costs and the value of time lost would likely be two dollars or more, making the minimum cost of direct breeding about five dollars. There is no assurance, however, that the cow will be settled on her first trip. In only about 60 percent of direct breedings does the cow conceive with the first service, and, if this is taken into account, the minimum cost would likely be, on the average, at least seven dollars. A grade bull, however, whose service could be had for this minimum cost, would tend to perpetuate low rates of milk production. In all probability, breeding to grade bulls is the most expensive practice a dairyman can follow. In many parts of the District the services of purebred bulls are available. The charge made for the services of a pure bred bull ranges upward from five dollars. If two dollars are added for transportation and time, the minimum cost would be seven dollars. Adding the cost of possible return trips, the minimum breeding cost, on an average, would be almost ten dollars. Moreover, in many cases the farmer does not know what production characters he may expect even from a purebred bull. Unfortunately the designation “purebred” means little unless milk-production records have been kept on the bull’s offspring that definitely establish or prove his ability to transmit high production characters. Very few purebred bulls have been thus proven. The cost of artificial breeding, in comparison, is quite low. With few exceptions the cost of artificial breeding in District states is five dollars per cow. This includes two returns, if necessary, without added cost. The quality of the bulls used in artificial breeding associations is very high. Many of them have been proven so that their ability to increase pro duction is known. Even those bulls that have not yet been proven have probably come from sires and dams whose pro duction rates are known, and in time they too will be prov en. All bulls, of course, are purebred. Farmers using artifi cial insemination as a means of breeding do not themselves incur transportation costs nor do they lose time from other farm work. In many instances the costs of artificial breeding are lower than the costs of direct breeding, thus effecting some savings to the dairy farmer. Few farmers who have no bulls of their own can afford not to use the services of an artificial breeding association if they are available. The cost of purchasing and maintaining a quality bull varies widely so that any comparisons with artificial breed ing on a service basis would be purely arbitrary. A test that a dairy farmer can make is to compare his bull with the bulls in the breeding pens of the association. If his bull has a record of transmitting production equal to that of the bulls in the association, there would be no point in chang ing his method of breeding. Few farmers, however, have herd sires that compare favorably with the bulls in an asso ciation. It would therefore be advantageous, in many in stances, for dairymen to dispose of their bulls and use se men from the better sires. Cost comparisons should be based on a comparison of production rates of offspring from the respective sires. The artificial breeding of dairy cows has not been practiced long enough in this district to yield much accurate informa tion on increases in production of daughters over their dams. During the war years the practice of testing cows’ production rates declined because of a shortage of personnel. Thus, al though many farmers report that their “artificial” heifers are good producers or are heavy producers, the lack of spe cific production data precludes any reliable evaluation. In states where studies have been made of the results of artificial insemination, it has been found that the greatest increase in milk production, percentagewise and in pounds, has been made by daughters of low-producing dams. In New York, for example, each of six daughters from Guernsey dams whose production averaged 6,074 pounds of milk per year, produced on the average 413 pounds more than did their dams. Where the dams averaged 8,178 pounds, the daughters averaged 8,239 pounds per year, or a gain of 61 pounds. In this district, where production averages only a little over 3,000 pounds per year, breeding cows to high-quality bulls should greatly increase the production rates of the off spring. For a bull to transmit a high production rate, how ever, he must be mated to a dam of comparable quality. If a bull capable of transmitting characters that would produce up to 10,000 pounds was mated to a cow producing 3,000 pounds of milk annually, the heifer from this mating might be expected to produce a maximum of only 6,000 pounds, or twice the rate of the dam. It would be more reasonable, however, to expect only about 4,500 pounds. That amount would represent a 50-percent gain from the first mating. The period from breeding to full production would be approxi mately two and a half years. If this heifer was bred to her sire, the daughter from this mating would produce about 5,800 pounds or almost twice as much as her grandam, pro vided she made the same relative increase as her dam. The time required would be about five years, unless bull calves were dropped, in which case, of course, it would be longer. At present the production rate of cows in this district in herds of from 50 to 75 animals is nearly 5,000 pounds, which is the national average. In time, farmers who have smaller herds but who utilize the service of high-quality sires in artificial breeding associations may expect to bring their average milk production per cow up to 5,000 pounds or more annually, provided they also improve their feeding practices. A v e r a g e P r o d u c tio n P e r C o w B y S iz e o f H e r d , 1 9 39 (P o u n d s ) N u m b e r of C o w s G e o r g i a ....................... T e n n e s s e e .................. A la b a m a .................. M is s is s ip p i............... D is tric t S t a t e s .......... U n ite d S t a t e s .......... W is c o n s i n .................. N e w Y o rk .................. 5 -9 10-19 5 0 -7 4 A ll C o w s 2,46,1 1,896 3,1.38 2,478 2,588 2,084 4,000 4,094 3,526 3,380 2,976 3,397 5,093 4,691 4,978 4,458 4,072 3,997 3/324 3,494 3,463 3,387 2,834 2,571 2,4411 3,562 5,083 5,650 5,805 4,564 6,226 6,665 6.287 3,170 4,515 5,SI 6 5,676 4 ,il2 8 5,169 5,134 There are many dairy herds in the District, of course, with high average production rates. The great majority of cows on farms, however, produce at rates that are too low for the economical production of milk. The amount of milk pro duced per cow has been increasing in every state in the Dis 1 2 2 M o n t h l y R e v ie w o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 trict, but only in Florida was the increase in 1947 over the The need to increase production could hardly be greater, 1930-39 average equal to that made by dairy farmers in the and with such a high percentage of the District’s cows in nation as a whole. For the period 1930-39 the average small herds, the possibilities of artificial insemination might amount of milk produced per cow in the District was 68 per seem particularly attractive. Further investigation, however, cent of the national rate; in 1947 the percentage had de does not warrant such a conclusion. clined to 66. These figures indicate that District farmers The larger dairy farmers, most of whom produce Grade must make very rapid gains in milk production if they are “A” milk, have not utilized the services of artificial insemi to compete successfully in the production of milk for process nation associations to the extent that was originally expected. ing and manufacturing purposes with dairymen in other sections. In the first place their production rates are high, 4,564 It is apparent that milk production rates in the District pounds against 3,170 pounds, the average of all cows in states are low, compared with the national average and very 1939. They have less to gain, therefore, from better sires low, compared with those in the two leading dairy states, than do the smaller herd owners. As one large Grade “A” Wisconsin and New York. This is particularly true in the dairyman explained it, “The possible gain is not worth the case of the family-size dairy farm where milk is produced possible risk.” Many of the larger dairy farms have highchiefly for processing plants. In 1939, for example, the pro quality herd sires and do not wish to change their methods duction rate for the 5-9 cow group in the District states was of operation. “Why,” asked one owner of a large herd, 59 percent of the national average for that group and only “should I rely on a man over whom I can exercise no con 47 percent of Wisconsin’s production rate for the same size trol to perform one of the most essential parts of my dairy program?” herds. Further proof that it is the small dairy farmer who makes The relationship between the production rate in the 5-9 cow group to the 50-74 cow group is likewise significant. the best patron comes from data covering all insemination The average annual production of the cows in the 5-9 cow associations in the nation. In 1939, 1940, and 1941 the aver group in the District was 2,441 pounds, or only 54 percent age size of herd signed up in artificial insemination associ of the average rate in the 50-74 cow group. In the nation as ations was 12 cows. In 1942 the average was nine, and in a whole, the rate in the 5-9 cow herds was 66 percent of the rate each year since that date it has been eight cows. The Michi in the 50-74 cow herds, while in Wisconsin it was 78 percent. gan Artificial Breeding Cooperative, a state-wide organiza Such comparisons clearly indicate that the farmers who tion, reported an average of eight cows per patron in 1944, are most in need of increasing the production rate of their six in 1945, and three in 1947. If the large herd owners in the District do not support cows are the small or part-time dairyman who cannot afford to buy and maintain high-priced bulls. Moreover, if the dairy artificial insemination associations, it will be difficult for industry in the District is to expand to any great extent, the many areas to enroll the number of cows necessary to make the program succeed. The District states do not have many increase must come from these dairymen. family-size herds on which to base an artificial breeding It is pertinent to examine some of the reasons for the low program. Only 6 percent of the farms with cows have from rates of production among the small dairy farmers. One is five to 20 cows, whereas in Wisconsin and New York the the scarcity of quality bulls that could increase the capacity percentage is 74 and 45, respectively. Since there are few of cows to produce milk. This scarcity of quality bulls can, family-size dairy farms in the District, artificial insemina in turn, be attributed to the small size of dairy herds on Dis tion associations must combine the large herds with numer trict farms. ous family milk cows if they are to gain the volume requisite P e rc e n ta g e ol F a rm s w ith C o w s C lassified for profitable operation. By S ize of H erd , 1939 Eighty-one percent of the farms that reported cows had N u m b e r of C o w s only one or two cows per farm. For the most part, these are 1 2 3 4 10-19 20 an d O v er 5-9 family milk cows. Many of this group may use the services G e o r g i a ___ 59 28 7 2 2 of an insemination association, but by no means all of them F l o r i d a ........... 53 28 8 4 4 T e n n e s s e e .. 47 27 9 5 8 will be interested. Even if a cow produces only 3,000 pounds A la b a m a ___ 28 61 6 2 2 M is s is s ip p i. 47 29 5 >10 6 of milk per year, that may be more milk than the family L o u i s i a n a .. . 46 33 10 5 4 uses in the home, and there would be little interest in in D is tric t S ta t e s . 5,2 5 8 4 29 creasing the production of her offspring. As one farmer ex U n ite d S t a t e s . . 31 25 (13 W i s c o n s i n .......... 4 3 *3 3 pressed it, “The hog would get the surplus.” 27 18 5 18 N e w Y o rk . 15 6 Ll It is seldom feasible, moreover, for an inseminator to Only a few farms have enough cows to justify the keeping cover a radius of more than 20 miles to secure the 1,000 or of any kind of a bull. Eighty-one percent of District farms more cows needed to make the program work. The areas have only one or two cows, and 93 percent have fewer than where such volume could be obtained within this radius, five cows. Except under unusual circumstances, not many however, are very limited in the Sixth District. Regardless farms in this group are likely to have a bull and it is nec of the need for better sires, therefore, artificial insemina essary to take the cows to the bulls. Farms that have five or tion cannot be made available to all farmers who might like more cows, or farms where the income from the sale of milk to use this method of breeding. That the practice of artificial breeding would be beneficial for fluid consumption or for processing accounts for a siz able portion of total cash receipts, may be considered com for the dairy industry in this district is beyond question. The mercial dairy farms. Most of these probably have a bull of need for improvement is acute. Like many another desirable some kind. There are, however, only 57,184 such farms in program, however, its widespread adoption is limited by the the Disrtict, which is 7 percent of all farms with cows. Of economic context within which it would have to be applied. J ohn L. L iles this number, 39,715 have from five to 10 cows. M o n t h l y R e v ie w o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 1 2 3 District Business Conditions District were up approximately 40 percent from a year ago. People in the trade give “style changes” as one of the e p a r t m e n t STORE SALES during October showed compara tively little change from those of September after account main reasons for greater women’s ready-to-wear sales. Women is taken of seasonal influences. Thus the trend that has charwho made their old, short coats do last year felt compelled acterized the District’s department store trade since April to buy a longer coat this year. Some merchants believe that this year continues. The October seasonally adjusted index better values are being offered this year for the same price that women have recognized them. At least a wider se of 396 percent of the 1935-39 average was only 2 percent and lection as to price and quality is available. By the end of below the adjusted index for September, which in turn was September, for example, the value of stocks of ready-to-wear at approximately the same level as the August index. The was up 23 percent from that of last September. April seasonally adjusted index was 390, and the indexes IN V EN TO R Y GRO W TH e x c e e d s SALES GRO W TH . The merchan for the months of May through August showed comparatively dise bought by the department stores during the first ten little change from month to month. The relatively constant months of the year has increased more than the increase in level of sales for the past six months contrasts sharply with the monthly changes in sales during most of the period since the sales figures would indicate. Merchandise received had an estimated retail value of 491 million dollars, which is 18 the close of the war. percent greater than last year’s receipts and 12 percent greater than this year’s sales. So far this year, merchandise received DEPARTMENT STORE SALES AND STOCKS during each month has had a greater retail value than that Sixth District for the corresponding month last year. 450 450 This condition is explained, of course, by the generally high level of inventories this year. Despite the relative decline 400 400 in inventories from April to August, as is shown on the chart, inventories have exceeded those of each month last year. The 350 350 decline in the seasonally adjusted inventories from April through August, however, has meant that sustained retail 300 300 sales during that period have not been fully translated into effective demand for merchandise from suppliers. 250 250 EXPO RTS D O W N , IM PORTS UP. Although both merchandise exports and imports through the customs districts of Florida, 200 200 Georgia, Mobile, and New Orleans during 1948 have con tinued to exceed their prewar value, the trend of declining 150 150 exports and rising imports that has occurred throughout the 1945 1946 1947 1948 nation as a whole has been repeated at the District’s ports. The indexes of seasonally adjusted sales have varied com The decline in the value of exports from the Sixth District paratively little from month to month since April. Prelim inary estimates indicate, however, that the final November was at about the same rate as for the country as a whole, index may fall below the index of 396 for October, the but the rate of increase in imports was somewhat smaller. latest shown on the chart, and below the index for No For the first nine months of this year the value of United vember, 1947. States merchandise exported was approximately 9.5 billion dollars, which is 19 percent less than the 11.7 billion dollars Unless sales during the last half of November were better in exports for the corresponding months last year. Imports than those during the first half, the seasonally adjusted index during the same period amounting to 5.2 billion dollars ex for November will be substantially below that of October. ceeded the value of imports for the corresponding period At the District weekly reporting department stores during last year 24 percent. During the first eight months of this the week ended November 6, sales were down 6 percent from year, exports valued at 735 million dollars and 375 million those of the corresponding week last year, and were down dollars worth of imports passed through the customs districts 7 percent for the week ended November 13. of the Atlanta Federal Reserve District. Exports were 19 GREATER SALES O F W O M EN ’S R EA D Y -TO -W EA R . The present percent below last year’s total, whereas imports exceeded importance of women’s ready-to-wear sales in sustaining total last year’s by 9 percent. sales at the District stores contrasts with sales experience of American exports to practically every country have de both last year and the first part of this year. Last year, sales clined this year. Shipments during the first eight months of of women’s and misses’ suits and coats showed no increase the year to Canada and other North American countries were over 1946 sales, and dress sales were down 4 percent. Sales 11 percent below the value of shipments during the corre of all types of women’s and misses’ ready-to-wear for the sponding period in 1947. The value of shipments to southern first six months of this year were only 5 percent above those North America was 12 percent less; to South America ship for the first six months of 1947. In the third quarter of this ments were down 17 percent; to Europe they were down 27 year, sales increased to such an extent over those of the percent; to Asia, 11 percent; and to Africa, 2 percent. corresponding months last year—11 percent in July, 21 per Faced with declining dollar resources, foreigners have cent in August, and 19 percent in September—that the total become more selective in the types of goods they buy, limiting for the first three-quarters exceeded that of last year 9 per their purchases of goods which they could supply from their cent. Sales of coats were up 39 percent for the nine months. own resources, do without, or secure from countries with Preliminary reports indicate that October sales for the Sixth which they have had fewer balance-of-payments difficulties Trade D M 1 2 4 o n t h l y R e v ie w o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 than with the United States. Exports of United States ma chinery were approximately the same as last year and exports of petroleum products increased about 5 percent. There were also slightly greater exports of wheat this year than last year although total agricultural exports declined 19 percent, in cluding a 30-percent decline in American exports of raw cotton. Exports of chemicals and related products, however, declined only 7 percent. Textile exports declined at a greater rate than did any other major nonagricultural export. Exports of rubber manufactured products declined 40 percent and those of automobile parts and accessories, 58 percent. VALUE OF IMPORTS AND EXPORTS 1938-48 M IL U O M S OF DOLLARS 1 ,5 0 0 M IL LIO N S OF DOLLARS I, I00 7 0 0 3 0 0 1938 1940 1942 1944 1946 1947 1948 Although the value of merchandise exports through Sixth District ports exceeded the prewar value, the 735-million-dollar total for the first eight months of 1948 was 19 percent less than the value of exports for the corresponding period last year. Imports were up 9 percent, whereas for the United States as a whole they were up 24 percent. The effects of the European Recovery Program upon the nation’s and the District’s foreign trade as yet have not been completely realized. As the authorizations made under the program are translated into actual purchases and shipments of greater quantities of goods, the total of American exports may move upward during the remainder of the year. Total exports this year, however, are expected to be down from 15 to 20 percent below last year’s. Over a longer period, however, the future trend of exports from the United States and from the District ports depends fundamentally upon the ability of other countries to increase production and to sell part of that production in the United States. Their success in this program will largely determine the future of that important segment of the District’s economy depending upon foreign trade. c .t .t . were the week before. The October increase in loans at all member banks was not only greater than that for any other month this year, but was also greater than that in any month in 1947 except one. The recent loan increase contrasts sharply with previous experiences this year. Although minor changes in member bank loans have occurred from month to month, total loans at the end of September were only 37 million dollars greater than they were at the first of the year. Moreover, the expan sion had taken place entirely at the banks outside the re serve cities of Atlanta, Birmingham, Jacksonville, Nashville, and New Orleans. Loans at the country banks had increased 67 million dollars since the first of the year, whereas those of the reserve city banks had declined 30 million dollars. In October, however, both the country banks and the reserve city banks expanded their loans, and the increase at the reserve city banks was about twice as great as the increase at the country banks. COTTON AND PEANUT LOANS UP. Lending activity in con nection with marketing the District’s cotton and peanut crops accounts for a large part of the loan expansion. A much greater part of this year’s cotton crop is being placed under loans guaranteed by the Commodity Credit Corporation than last year, and, in addition, some loans are being made on cotton without the guarantee. Banks that are authorized lending agents for the Com modity Credit Corporation must carry the notes of their cus tomers until such time as they are forwarded to the Cor poration and processed. Some banks retain title to the notes and participate in the interest, but for others the process represents primarily a service to their customers. Some of the District’s city banks that have a large number of smaller correspondent banks give immediate credit to their corre spondent banks on all such notes remitted to them. The city bank may retain title and participate in the interest or it may prefer to obtain credit immediately for the notes from the Commodity Credit Corporation. All this activity results in an increase in bank loans. Whether the recent loan expansion is relatively permanent or whether it will be liquidated as soon as the cotton-loan DEMAND DEPOSITS ADJUSTED All Member Banks B IL L IO N S O F D O L L A R S ..1 NITI :d si 74 —^ 1 ATEJ3 y 72 72 1948 70 68 \ 'in/' 70 V"" \ > C fa 47 1 VIA l l eJ iv Ti u niOTDirT 3.6 68 3.6 1C*to— Banking INCREASED LENDING ACTIVITY during October and November was reported by the District member banks. At the end of October, their total loans were 46 million dollars greater than they had been at the end of September, and reports from the weekly reporting member banks in leading cities indicate that the loan expansion has continued during No vember. For the week ended November 3, total loans at the banks in leading cities increased 12 million dollars and dur ing the following week, 14 million. On November 17, total loans at these banks were 8 million dollars less than they B IL L IO N S O F D O L L A R S 74 3.5 s. 3.4 m/*' V / / ' 1947 - ^L - 1S ar--— 3.5 S ' 3.4 I wv That part of business and personal deposits represented by demand deposits adjusted rose at District member banks during October and reversed the declining trend that has been taking place recently in the District. The increase, however, did not bring deposits for tha month up to the October 1947 level. M o n t h l y R e v ie w 1 2 5 o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 program is completed will depend, of course, upon the willingness and ability of the banks to participate in the Government loans. The loan expansion does not appear to reflect increased lending to business and industry by the Dis trict banks. At the weekly reporting banks, which report a breakdown of loans by type of borrower, no important in creases were reported for consumer and “all other” loans nor for security loans. Slight decreases were reported in real estate loans and loans to banks. DEPOSITS INCREASE IN OCTOBER. The growth in loans in Oc tober was accompanied by a growth in the deposits of the member banks, the first time since June that deposits have increased. Total deposits at the end of October were 101 million dollars greater than they were at the end of Sep tember. Demand deposits adjusted, representing business and personal deposits and excluding Government deposits and items in process of collection, increased 44 million dollars during the same period. Demand deposits adjusted, as in dicated on the chart, had previously been declining at the District member banks contrary to the general trend through out the country. The October increase, however, failed to bring deposits up to the level of the corresponding month last year. September and October were the first months for many years in which demand deposits adjusted were below the levels of the corresponding months in the previous year. Governm ent Cotton Program s D EPARTM ENT S T O R E SALES* U n a d ju s te d A d ju s te d * * P la c e DISTRICT............. A tlanta............... Baton R ouge... Birmingham. .. . C hattanooga. .. Jackson............. Jacksonville.. .. Knoxville......... M acon............... Miami................. M ontgom ery.. . N ashville......... New O rle a n s... Tam pa............... O c t. 1 9 48 S e p t. 1948 O c t. 1 9 47 O c t. 1 9 48 S e p t. 1 9 48 O c t. 1947 396 471 442 386 365 394 459 397 332 447 376 453 337 508 402 461 433 412 377 396 416 4j28 336 426 370 452 359 461 348 403 356 333 343 311 431 297 309 391 '333 407 299 492 424 508 477 421 383 453 492 429 359 393 428 480 374 498 410 489 472 428 392 455 408 437 352 333 39,2 461 384 438 372 432 385 363 360 358 462 321 334 344 380 432 332 483 D EPARTM ENT S T O R E S T O C K S A d ju s te d * * P la c e O c t. 19 48 DISTRICT............. 362 474 296 422 528 313 Birmingham. .. . M ontgom ery. .. Nashville......... New Orleans. . . . U n a d ju s te d S e p t. 19 48 O c t. 1 9 47 O c t. 1948 S e p t. 1 9 48 O c t. 1947 348 481 315 314 541 328 300 387 238 313 453 238 406 556 333 478 606 353 383 514 320 351 586 344 335 454 268 355 520 269 G A S O L IN E TAX C O L L E C T IO N S *** C T T Prospective large entries of cotton into the Government loan during the current season may be the beginning of the “cotton problem” which has been anticipated since early in the war period. When this country entered the war, cotton stocks were about the equivalent of one season’s consumption. Since annual production was about as large as annual consumption, there was little opportunity to reduce the large stocks which tended to keep market prices low. The extraordinary demands that accompanied the war provided a temporary solution to the surplus problem, but as early as 1944 the United States Department of Agriculture announced a proposed plan for shifting land out of cotton production after the war in the hope of avoiding another surplus of cotton. Like many other economic forecasts which were made about postwar con ditions, the burdensome surpluses of cotton which had been forecast failed to materialize in the crop years immediately following the war. A negligible amount of cotton entered the Government loan during the 1946 and 1947 crop years and most of it was redeemed by the growers. If the current estimate of domestic consumption and exports for this crop year proves to be correct, however, about three million bales of cotton may be in the Government loan at the end of the season. Unless the acreage planted in 1949 is considerably less than the 1948 acreage, or unless yields in 1949 are con siderably below normal, some controls on production will be needed. Decisions regarding a price-and-production policy for cot ton have been postponed for so long that the next few years are likely to call for much more than merely a continuation of past programs. Major changes are in prospect, some of which will significantly affect District farmers who grow cotton. The problem which calls for the earliest solution, of course, pertains to acreage allotments. In his statement that no acreage allotments would be in effect for the 1949 crop, the Secretary of Agriculture called attention to the features of the existing legislation that are unworkable with respect to acreage allotments. The present law would permit S ix th D is tr ic t I n d e x e s A d ju s te d * * P la c e O c t. 1 948 SIX STATES A labam a........... F lorida............. G eorgia......... Louisiana......... M ississippi....... T ennessee....... 197 203 177 179 229 191 208 S e p t. 1948 196 196 171 178 222 196 218 C O T T O N C O N S U M P T IO N * P la c e TOTAL........... Alabam a.. . Georgia. . . . Mississippi. Tennessee. SIX STATES. . Alabama. . . Florida. . . . G eorgia. .. Louisiana. . Mississippi. T ennessee. S e p t. 19 48 O c t. 19 47 131 136 132 93 115 144 152 142 99 127 148 160 146 108 137 S e p t. 1 9 48 A ug. 19 48 S e p t. 1 9 47 152 157 132 147 157 146 158 151 157 129 147 152 154 156 151 155 130 148 151 162 156 C O N S U M E R S ' P R IC E IN DEX Ite m O c t. 1 9 48 S e p t. 1 948 O c t. 1 9 48 S e p t. 1 9 48 O c t. 1 9 47 173 191 167 171 162 165 182 193 201 161 177 235 194 207 200 206 168 186 233 202 222 170 189 152 170 166 168 182 E L EC TR IC P O W E R P R O D U C T IO N * O c t. 1948 M A N U FA C TU R IN G EM PLO YM EN T*** P la c e U n a d ju s te d O c t. 1 947 O c t. 1 9 47 ALL ITEMS.. 177 178 169 F ood......... 220 215 214 C lo th in g ... 206 206 188 Fuel, elec., and ice. . 138 138 129 Home fur nishings. 195 18,2 193 Misc........... 156r 145 148 Purchasing pow er of dollar. . . . .56 .56 .59 *Daily average basis **Adiusted for seasonal variation ***1939 monthly average = 100; other indexes, 1935-39 = 100 SIX STATES.. Hydrogenerated F uel generated S e p t. 19 48 A ug. 1 948 S e p t. 1947 341 336 296 226 242 195 491 458 427 C O N S T R U C T IO N C O N T R A C T S S e p t. A ug. S e p t. P la c e 19 48 19 48 19 47 DISTRICT.... R esidential. O th er......... A labam a... F lo rid a.... G eorgia. .. Louisiana. . Mississippi Tennessee. 379 387 376 415 398 519 375 280 272 490r 701r 387r 243 582 466 543 281 399 321 468 250 317 442 328 126 386 300 ANNUAL RATE O F TU RN O V ER O F DEM AND D E P O S IT S S e p t. O c t. O c t. 1 9 48 1948 1 9 47 U nadjusted. . A djusted**... Index**......... 21.1 20.1 81.6 19.8 20.6 83.5 19.0 18.1 73.3 C R U D E PETRO LEUM P R O D U C T IO N IN CO A STA L LO U ISIA N A AND M IS S IS S IP P I* O c t. O c t. S e p t. 1 9 47 19 48 1 948 U nadjusted. . Adjusted. .. . r Revised 295 296 296 299 265 266 1 2 6 M o n t h l y o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 R e v ie w S ix t h D is tr ic t S ta tistic s IN STALM ENT C A SH LO A N S N o. oi L e n d ers R e p o rt in g L e n d ers Federal credit u n io n s......... State credit u n io n s............... Industrial banking com panies.......................... Industrial loan co m p an ies.. Small loan com panies......... Commercial b an k s............... V o lu m e O u ts ta n d i n g s P e rc e n t C h a n g e O c to b e r 1 9 48 iro m P e rc e n t C h a n g e O c to b e r 1 9 4 8 iro m S e p t. 19 48 O c t. 1 9 47 S e p t. 1 9 48 O c t. 1 9 47 .39 24 — 17 - 14 + 14 + 49 — 7 — 1 + 47 4- 50 11 20 4- + — — + + + — 4- + 5 1 - 54 34 4- 3 — 13 17 3 23 14 2 2 0 10 4- 5 4- 2 4- 45 18 RETAIL FU R N ITU R E S T O R E O PE R A T IO N S N um ber oi S to r e s R e p o r tin g Ite m Total s a le s.......................................... Cash sa le s.......................................... Instalm ent and other credit sa le s.. Accounts receivable, end of month Collections during m onth............... Inventories, end of m onth............... P e rc e n t C h an g e O c to b e r 1 9 4 8 iro m S e p t. 19 48 — 4— — 4+ 104 96 96 103 103 78 O c t. 1 9 47 — — 44+ 35 11 40 2 2 11 20 32 19 48 9 16 W H O L E S A L E SA LES AND IN V E N T O R IE S* SALES Ite m IN V E N T O R IE S P e rc e n t C h a n g e O c t. 1 9 4 8 iro m N o . oi F irm s R e p o r t in g O c t. 1 9 47 S e p t. 19 48 Automotive su p p lie s. 3 Electrical g roup W iring supplies 4 6 A ppliances............. G eneral h ard w are. . . 8 Industrial hardw are 3 5 Jew elry........................ Confectionery............. 5 9 Drugs and s u n d rie s .. Dry g o o d s................... 14 G roceries 32 Full lin e s................. 8 Specialty lin e s........ Shoes and other footw ear................... 3 Tobacco p ro d u c ts.. . . 9 19 M iscellaneous........... Total.............................. 1.28 — 7 — 24 4— 4+ 4— — — + — 44- 5 3 4 1 4 + 5 — 2 4- 5 4- 2 - 2 4- 35 3 — "l + i6 15 18 4 5 4 4 1 — 3 4 P e rc e n t C h a n g e N o. oi F irm s O c t. 3 1 , 1 9 4 8 , iro m R e p o rt S e p t. 3 0 , O c t. 3 1 , in g 19 47 19 48 9 — 3 — 5 — 6 — 5 4- 2 — 14 + 3 19 — — — — — — — 4 30 20 14 7 '6 4- 29 4 4- 0 4- 20 — 0 4- 34 5 17 70 4- ii 4- 3 + 1 — - 9 11 26 2 7 3 4- 9 4- 11 "Based on U. S. Department of Commerce figures D EPARTM ENT STO R E SALES AND IN V E N T O R IE S P la c e N o. oi S to r e s R e p o r t in g ALABAMA Birmingham___ M obile............... M ontgom ery... FLORIDA Jacksonville---Miami................. O rlan d o ............. T am pa............... GEORGIA A tlanta............... A u g u sta............. Colum bus......... M acon............... Rome................. S avannah......... LOUISIANA Baton R o u g e ... New O rle a n s... MISSISSIPPI Jackson............. M eridian........... TENNESSEE Bristol............... C hattanooga. . . Knoxville........... N ashville........... OTHER CITIES*.. DISTRICT............. SA LES P ercen t C h a n g e O c t. 1948 iro m IN V E N T O R IE S N o. oi S to r e s R e p o r t in g P ercen t C h a n g e O c t. 3 1 ,1 9 4 8 , iro m S e p t. 1 948 O c t. 19 47 4 5 3 + 2 + 0 4- 14 4- 13 4- 1 4- 9 3 f 4 4- 25 8 4- 36 -f 35 4 4 f 25 4- 23 4- 17 4- 18 + 3 4- 7 4- 1 — 0 3 3 44- 4- 3 + 13 f 4- 8 4- 11 - 3 4- 6 4- 16 + 7 4- 14 + 6 + 8 4- 2 5 3 4- 8 4* 5 4- 22 4 3 4 3 3 4 f 4 - 4 5 4- 4 4 44- 6 3 4- 34 f 31 4 3 f 4 — 12 4- 22 6 4 +: 3 4- 29 3 4 4 + 10 3 3 4- 4- 15 4- 8 +, 8 4- 8 rf 17 4- 2 4- 29 4- 7 +■ 4 4- 9 3 5 6 .6 19 103 + — 4- 1 6 5 4- 20 1 + 4- -2 4- ,2 4- 11 8 5 22 721 S e p t. 3 0 , 1948 - 0 7 2 4 + 4- 3 7 4- 6 O c t. 3 1 , 1947 2 4- 13 24 4- 11 3 4- 17 4- 22 4- 21 *When fewer than three stores report in a given city, the sales or stocks are grouped together under “ other cities." a minimum allotment of about 27 million acres, or about 3.7 million acres more than the 1948 acreage. The pattern of acreage allotments under the present law would resemble that of 1942. Since 1942, cotton acreage has shifted from one area to another over large parts of the Cotton Belt, and technological changes in production methods have altered cot ton’s comparative advantages in the various cotton growing areas. The imposition of acreage quotas under the present laws would cause a reduction from the 1948 cotton acreage in the High Plains, in the Delta, and in the irrigated areas. It would permit a small increase from the 1948 acreage over most of the northern part of the District and a rather large acreage increase in the southern half. Acreage allotments which would resemble the 1942 acreage pattern might easily encourage an expansion of cotton production in the Sixth District. Farmers who are now planting less cotton than they would be alloted might increase their acreage in order to remain eligible for future allotments or to get a larger allot ment in future years. Acreage allotments could, therefore, reverse or slow down the trend toward farming systems cen tering around livestock and crops other than cotton. In order to attain effective production control and to en courage the needed changes in farming systems, some changes in the control system for cotton are urgently needed. A con trol system should meet at least two requirements. It should control the amount of cotton entering the market within rather narrow limits, and it should be acceptable to most of the farmers who grow cotton. Even these two requirements may be difficult to fulfill. Cotton is grown under more diverse climatic and economic conditions than almost any other major crop. A method of controlling production which is effective and acceptable to a cotton grower on a large irrigated farm in California, for example, might neither be effective nor acceptable if applied to a cotton grower in the Piedmont area in Georgia. Acreage allotments based upon the average acreage during a specified period before the imposition of controls were generally acceptable to most farmers. Because of large vari ations in yields from year to year, they have not, however, been a successful means of controlling output within very narrow limits. They are still more objectionable from the standpoint of encouraging changes to farming systems that take into account the long-run comparative advantages of various farm enterprises. Controlling cotton production, of course, is not strictly an economic problem. If the objective were simply to produce the nation’s requirements of food and fiber with the smallest possible amounts of land, labor, and capital, the production control system for cotton should be used to encourage the shifting of cotton production to those areas and those farms where its comparative advantage would be the greatest. This could well mean that District farmers would be allotted an even smaller proportion of the nation’s cotton acreage than they now have. For farmers who have developed alternative farming systems in which cotton has been partially replaced by other crops or by livestock, such a control system might be entirely acceptable. But for farmers who have not or cannot develop alternative sources of income, any limitation upon their right to grow cotton could mean an actual or potential loss of income. Allotments, or the right to grow a given acreage of any crop, are, in a sense, a property right. A landowner naturally feels that any tampering with any of his property rights is rather serious business and should not be done except for reasons which he clearly understands and M o n t h l y R e v ie w o f th e F e d e r a l R e s e rv e B a n k o f A tla n ta f o r N o v e m b e r 1 9 4 8 recognizes as desirable. An historical method of alloting cot ton acreage, therefore, is supported by a feeling that it is more likely to preclude any drastic changes in his right to grow cotton. Some of the proposed changes in the method of determin ing the amount of acreage allotments ior various areas retain the historical method but shilt the base period. These changes would give greater weight to more recent years in determining the historical base than the present method does. A farmer’s right to grow cotton would, therefore, depend primarily on the extent to which he had used that right in the past few years. District cotton farmers would be alloted a smaller proportion of the total cotton acreage than they would have under the present method. Many District farmers might not want to surrender any part ol their right to grow cotton, even though they are now planting considerably less cotton than they would be alloted under existing laws. If peanut acreage allotments were im posed, lor example, much of the land that was shifted from cotton to peanuts during the war and postwar period might go back to cotton. If nonfarm employment opportunities should decrease markedly, more farm labor would be avail able at lower wage rates. Under these conditions many farmers might want to increase their cotton acreage. New insecticides and better fertilization methods also seem almost certain to restore part of the advantages of the cotton crop in the Coastal Plains area. The difficulties of controlling production through acreage allotments are a strong incentive to devise a cotton program in which production control will not be necessary. Production controls are necessary, of course, if the price-support pro grams keep cotton prices higher than they would be in the absence of such programs. Although national farm policy indicates that most major farm crops will have price supports, the best policy for cotton may be entirely different from the best policy for some other crop. Cotton is unique in that it is both an export crop and is subject to increasing domestic competition from other fibers. The decreasing dependence upon cotton in areas such as the Sixth District means that cotton prices are less closely linked to the welfare of southern farmers than they were a few decades ago. Problems relating to cotton can be viewed with more detachment today, there fore, than ever before. A permanent solution to the cotton problem may well depend upon whether the trend away from cotton as a major cash crop can be maintained. Whatever controls are adopted should promote, rather than discourage, changes in District farming systems which are built around livestock and cash crops other than cotton. B .R .R . Employment and Industry S ix t h D is tr ic t S ta tistic s CONDITION O F 28 MEMBER BANKS IN LEADING CITIES (In T h o u sa n d s ol D ollars) N ov. 17 1948 Item O ct. 20 1948 N ov. 19 1947 L o a n s a n d in v e s tm e n ts — T o ta l................................................ 2 ,3 1 2 ,2 5 1 2 ,2 7 2 ,8 5 4 2 ,3 8 3 ,3 3 3 L o a n s — N e t...................................... 8 7 0 ,8 5 2 8 3 9 ,6 9 6 8 1 5 ,3 0 8 8 7 8 ,4 1 9 L o a n s —G r o s s ................................. 8 4 7 ,1 9 5 8 1 5 ,3 0 8 C o m m e rc ia l, in d u s tr i a l, a n d a g r i c u lt u r a l l o a n s . . 5 5 5 ,2 4 4 5 2 3 ,5 8 4 4 9 4 ,5 4 4 L o a n s to b r o k e r s a n d 7 ,1 6 6 d e a le r s in s e c u r i t i e s ___ 6 ,0 9 0 6 ,6 5 5 O th e r lo a n s fo r p u r c h a sin g a n d c a rry in g s e c u r i t i e s ................................. 5 3 ,8 0 8 5 4 ,1 4 8 7 4 ,4 2 5 R e a l e s ta te l o a n s .................... 6 5 ,3 2 0 6 5 ,6 3 5 6 4 ,7 8 4 L o a n s to b a n k s ......................... 5 ,5 1 7 5 ,8 1 0 5 ,0 1 6 1 9 1 ,3 6 4 1 9 1 ,9 2 8 O th e r l o a n s ................................. 1 6 9 ,8 8 4 I n v e s tm e n ts —t o t a l .................... 1 ,4 4 1 ,3 9 9 1 ,4 3 3 ,1 5 8 1 ,5 6 8 ,0 2 5 B ills, c e r tif ic a te s a n d 4 0 2 ,3 6 2 3 9 0 ,5 7 8 3 3 7 ,1 4 5 U . S. b o n d s ................................. 8 4 9 ,7 2 9 8 5 2 ,8 5 8 1 ,0 3 8 ,0 7 0 1 8 9 ,3 0 8 O th e r s e c u r i t i e s ....................... 1 8 9 ,7 2 2 1 9 2 ,8 1 0 5 0 0 ,4 7 4 R e s e rv e w ith F . R. B a n k ___ 4 7 4 ,0 7 4 4 6 9 ,1 0 1 4 4 ,1 6 0 C a s h in v a u l t ................................. 4 3 ,5 1 3 4 3 ,6 2 1 B a la n c e s w ith d o m e s tic 1 8 9 ,7 7 6 1 9 6 ,3 9 9 1 8 5 ,1 2 5 D e m a n d d e p o s it s a d j u s t e d . 1 ,7 6 7 ,0 8 4 , 1 ,7 6 0 ,2 9 9 1 ,7 9 4 ,0 3 9 T im e d e p o s i t s ................................. 5 3 0 ,6 0 6 5 3 1 ,0 6 5 5 4 8 ,5 5 2 U. S . G o v 't d e p o s i t s .................. 3 9 ,3 1 5 3 4 ,2 6 2 3 4 ,5 0 9 D e p o s its of d o m e s tic b a n k s . 5 2 3 ,3 1 9 4 7 3 ,1 3 1 5 3 7 ,2 9 9 B o r r o w in g s ...................................... 6 ,5 0 0 8 ,0 0 0 P e rc e n t C h an g e N ov. 17,1948, Irom O ct. 20 1948 + + + 2 4 4 Nov. 19 1947 — + + 3 7 8 + 6 + 12 + 18 + 8 — — __ — + 1 0 5 0 1 — 28 + 1 + 10 + 13 8 + 3 0 0 6 1 + 19 — 18 2 + 7 + 1 3 0 0 15 11 — 3 — 2 — 3 + 14 — 3 — 19 — + + + + + + DEBITS TO INDIVIDUAL BANK ACCOUNTS __________ (In T h o u s a n d ! o i D ollars)__________ Place No. of B anks R eport in g O c to b er S ep te m b e r 1948 1948 P e rc e n t C h an g e O c to b er O c to b er 1948 Irom 1947 S e p t. O ct. 1948 1947 ALABAMA A n n is to n ............. B ir m in g h a m . . . D o th a n .................. G a d s d e n ............. M o b ile .................. M o n tg o m e r y .. . 3 6 2 3 5 3 2 2 ,6 2 5 3 5 2 ,6 8 0 1 5 ,5 3 5 2 0 ,8 5 2 1 3 8 ,2 6 5 8 6 ,5 1 3 2 0 ,8 1 7 3 1 0 ,4 9 6 1 3 ,7 0 0 1 7 ,7 5 8 1 4 2 ,9 6 4 7 8 ,5 9 6 2 1 ,2 4 4 3 2 5 ,7 3 4 1 4 ,1 1 5 2 0 ,2 5 1 1 2 9 ,9 3 5 FLO R ID A J a c k s o n v i l l e .. . M ia m i.................... G r e a te r M iam i* O r la n d o ............... P e n s a c o l a .......... S t. P e te r s b u r g . T a m p a .................... 3 7 13 3 3 3 3 2 6 7 ,4 7 6 2 1 7 ,0 8 3 3 0 8 ,4 3 1 4 4 ,7 5 1 3 5 ,2 6 5 4 9 ,1 9 7 1 1 1 ,5 5 1 2 G E O R G IA A lb a n y .................. A tla n ta .................. A u g u s t a ............... B r u n s w i c k .......... C o lu m b u s .......... E l b e r to n ............... G a in e s v i lle * . . . G riffin * .................. M a c o n .................... N e w n a n ............... S a v a n n a h ............. V a ld o s ta ............... L O U ISIA N A B a to n R o u o e . . . Lake C h a rle s .. N ew O r le a n s .. 4 3 2 4 2 3 2 3 2 3 4 2 86,454 + + + + — + 9 14 13 17 3 10 + + + + + + 6 8 10 3 6 0 2 4 4 ,4 5 0 2 0 7 ,9 3 7 2 9 0 ,9 0 6 4 1 ,4 0 2 3 1 ,9 6 5 4 4 ,2 7 3 1 0 6 ,6 0 9 2 5 1 ,4 5 2 2 2 1 ,6 0 9 3 0 5 ,0 7 7 4 3 ,6 6 0 3 3 ,1 9 7 4 7 ,7 5 0 1 0 3 ,2 7 4 + + + + + + + 9 4 6 8 10 11 5 + — + 4+ + + 6 2 1 2 6 3 8 2 8 ,9 9 5 8 8 1 ,9 4 4 6 3 ,2 7 0 8 ,7 8 5 5 5 ,8 1 9 5 ,1 2 0 1 6 ,1 7 3 1 2 ,0 5 4 5 8 ,9 6 8 7 ,8 0 9 2 5 ,3 8 0 8 9 ,0 6 2 1 2 ,9 5 0 2 1 ,0 4 9 8 2 3 ,6 7 9 5 7 ,8 8 6 8 ,7 6 3 5 6 ,0 3 7 4 ,1 6 4 1 4 ,9 4 7 1 0 ,5 4 2 6 8 ,0 6 6 7 ,8 3 8 2 1 ,1 8 5 9 1 ,0 5 3 1 1 ,3 1 3 2 1 ,2 0 6 8 1 4 ,3 9 8 5 9 ,9 1 9 9 ,0 3 4 5 8 ,3 1 7 4 ,6 4 3 1 5 ,8 4 8 1 1 ,7 8 7 6 0 ,0 4 0 9 ,6 0 4 2 9 ,3 6 0 8 7 ,8 1 5 1 0 ,9 3 8 + + + 14 7 9 o 0 23 8 14 13 0 20 2 + + + — — + + + — — — + 13 8 6 3 4 10 2 2 2 19 14 1 + 14 + 18 1 0 5 ,2 2 9 3 5 ,7 3 5 6 8 6 ,9 5 0 9 9 ,0 2 3 3 5 ,2 2 5 6 8 9 ,8 7 8 8 3 ,0 3 4 3 1 ,0 7 7 6 7 9 ,4 7 6 + — + + 27 + 15 + 1 1 8 ,1 7 9 1 3 6 ,3 6 7 2 9 ,6 0 0 2 6 ,9 1 9 1 7 ,2 8 4 1 1 5 ,4 7 3 3 0 ,9 5 1 3 1 ,7 9 9 — 5 — 0 + 7 + 21 + + + + 0 18 2 3 1 4 2 ,3 4 8 1 1 1 ,4 1 3 2 9 1 ,3 0 8 13 9,6 6 1 10 5 ,5 1 5 3 0 6 ,0 8 1 + + + 1 4 7 + + + 3 9 2 3 ,9 9 1 ,0 7 5 3 ,9 7 4 ,9 4 0 + 5 + 5 1 0 4 ,7 2 9 ,0 0 0 1 0 5 ,2 9 0 ,0 0 0 + 2 + 2 3 in the District’s manufacturing es 3 7 tablishments turned slightly upward in August, and a further small gain was recorded in September. In both August and M IS S IS S IP P I 1 7 ,3 4 2 H a t t i e s b u r g ___ 2 September, manufacturing employment declined somewhat 1 3 5 ,9 5 9 J a c k s o n .................. 4 3 1 ,6 2 2 M e r id ia n ............. 3 in Alabama and Mississippi, but increases in the other four 3 2 ,6 4 0 V ic k s b u r g .......... 2 states slightly more than offset those losses. The August N ESSEE decline in Alabama was largely due to shipyard layoffs in TEN 1 4 3 ,3 8 4 C h a tta n o o g a . . . 4 1 1 5 ,3 4 2 K n o x v ille ............. 4 the Mobile area. The shipbuilding industry is, of course, 3 1 1 ,3 5 3 6 N a s h v ill e ............. subject to fluctuations resulting from contract completions. D ISTR IC T There were also declines in the number of workers at textile SIXTH 4 ,1 8 5 ,0 7 1 32 C i t i e s ............... 110 mills in August, and at sawmills and planing mills in both U NITED STATES 3 3 3 C i t i e s ............. 1 0 7 ,1 4 1 ,0 0 0 August and September; but there were increases in employ ment at blast furnaces and steel mills, in food processing | *Not included in Sixth District total THE TREND OF EMPLOYMENT 1 2 7 + — + + + — — + — 6 1 0 128 M o n t h l y R e v ie w o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r N o v e m b e r 1 9 4 8 plants, and in the chemical and allied products industries. Employment at fertilizer plants and at cottonseed-oil mills increased in August and September over the seasonal low level in July. Florida reported small gains in manufacturing employ ment for both August and September, following a fourmonths’ decline. An important part of th^ese increases was in cigar manufacturing, which recovered from the semi annual inventory layoffs in July and which began expanding in anticipation of the Christmas trade. Some sawmills had been shut down in August because of high water, but in September lumber manufacturing employment advanced as a combined result of receding water and expanded production of wooden containers needed because of seasonal expansion of agricultural production. Employment in ship- and boat building declined because expected orders did not materialize and because of the reduced amount of repairs on small craft. Georgia manufacturing employment registered a small gain in August and changed little in September. The August in crease was shared by textile plants, food processing indus tries, and apparel and furniture plants. The lumber products establishments, however, reported a decrease. In September there were further gains in employment in food and food products plants, principally in those that can and preserve fruits and vegetables; in fertilizer plants; and in a few other industries. Textile employment, however, dropped sub stantially from August, the major part of the loss being in yarn and thread mills affected by labor disputes. An increase of 3.3 percent in government employment in September was, for the most part, due to the large enrollment in elementary and high schools that necessitated an increase in the number of teachers. In Mississippi employment continued to decrease at ship building plants, at food industries, and at lumber and wood products establishments. Increases were reported in chemical plants, particularly those manufacturing vegetable and cotton seed oil, and in some other industries. Employment continues at a high level in Tennessee but there has been a seasonal decline in employment in the food industry, and also a slight decrease in textiles and leather goods plants. A shortage of steel needles in several areas has adversely affected textile employment. On the other hand, chemicals, apparel, and printing employment has recently increased somewhat. Employment in lumber establishments is slightly down, but the furniture industry reports an increase. CONSTRUCTION. Construction employment has recently de clined in Georgia and in Mississippi but increased somewhat in Louisiana and Tennessee. Increases have also been reported in some areas of Alabama and Florida, but in other areas there have been declines due to completion of contracts and resistance to the current high costs of construction. The value of construction contracts awarded in the Sixth District during September, according to F. W. Dodge Cor poration statistics, was about 77 million dollars. This is a drop of 23 percent from August but is 18 percent greater than the total for September 1947. Residential contracts awarded in September were down 45 percent from August, and, as in July and August, were smaller than they were a year ago. For the January-September period, total construction awards were up 37 percent from that period last year. ELECTRIC POWER p r o d u c t i o n . Most of the 7-percent decline which took place between April and July in electric power production by public utilities in the District states was re covered during August and September. In September, pro duction was 6 percent above that in July but was still slightly below the record rate for April. The proportion of output by use of water power has been declining in recent months. Last February, 60 percent of production was by use of water power and 40 percent was by plants using fuels—coal, oil, and gas. By September, total output produced by use of water power had declined to 37.5 percent and, consequently, 62.5 percent of the total was produced by use of fuels. September production was 15 percent greater than that in Septem ber 1947. FREIGHT CAR l o a d i n g s . Revenue freight loaded by the rail roads composing the Southern group of the American Asso ciation of Railroads has been increasing since midsummer. In July the average number of cars loaded with revenue freight was smaller than in any earlier month of the year. The weekly figures for August averaged about 6 percent more than those for July; the average for September was somewhat smaller, because of the reduction in the week that included the Labor Day holiday; and the October average increased 7 percent over that for September and was more than 11 percent above the July average. This 11-percent increase represents a little more than 12,000 cars of revenue freight. In May, June, July, and August the average number of cars loaded was larger than for the same months last year, but in September the average was about one percent lower than it was a year ago and in October it was about 2 percent lower. In the first quarter of the year, shipments of forest products averaged 13 percent less than they were a year earlier, but in each month since March loadings have been larger than in corresponding periods last year. Loadings of merchandise in less-than-carload lots have been consistently smaller in each of the first ten months of this year than they were during the same months of 1947. In September the decrease was 7 percent and in October it was 8 percent. Loadings of mis cellaneous freight were 2 percent larger in September this year than last, and was about the same in October as in October 1947. d .e .m . B a n k A n n o u n c e m e n ts The First National Bank of Eufaula, Eufaula, Ala bama, opened for business on November 1, 1948, as a member of the Federal Reserve System. The new bank has a capital stock of $100,000 and a surplus of $20,000. A . B. Roberts is president and J. R. Morgan is executive vice president and cashier. On November 15, the Comptroller of the Cur rency authorized The Hamilton National Bank of Knoxville , Knoxville , Tennessee, to establish a branch at 1848 West Cumberland Avenue in Knox ville. This branch opened for business on Novem ber 16 and is known as the West Knoxville Branch. On November 19, the newly organized Cartersville Bank, Cartersville , Georgia, began remitting at par. This is a nonmember bank with capital amounting to $100,000; surplus to $50,000, and deposits to $301,113. The president of the bank is S. Luke Pettit, the vice president is John W. Hodge, and the cashier is Walter B. Atwater .
@FedFRASER