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Atlanta, Gecrgia October • 1961 Also in this issue: IA N CIA L G R O W IN G PAINS OF SOUTHERN CITIES BA N KS HELP FINANCE CITIES' G R O W TH NEEDS DISTRICT BUSINESS C O N D ITIO N S SIXTH DISTRICT STATISTICS SIXTH DISTRICT INDEXES Southern Cities and How They Grew Around the middle of 1952— probably late August or early September — a seemingly commonplace event occurred in some Sixth District city. We don’t know exactly what that event was. Perhaps a young girl, recently graduated from a rural high school, stepped off a bus and started her search for a job in the city. A newly-assigned branch manager of a New York-based firm may have moved his family into a comfortable suburb. Maybe a baby was bom in the city hospital. We do know that the event was far more important than it seemed at the time, for it signaled the end of the South’s traditional role as a predominantly rural area. Since that date, more Southerners have lived in urban areas— cities with over 2,500 persons and thickly settled fringes of larger cities— than in the country. The nation as a whole became urbanized at a much earlier date than the South. The chart indicates that the proportion of the nation’s people living in urban areas has increased steadily since 1840— an average of 5 percentage points each decade. As early as 1870 over a quarter of the population lived in cities and towns, and in 1920 over half lived in urban areas. By 1960 almost 70 percent of the nation’s population was urbanized. In the Deep South states included entirely or partly in the Sixth Federal Reserve District, on the other hand, cities grew for a while at a much slower rate than in the nation. Less than 10 percent of the population lived in urban areas in 1870, and by 1920 the proportion had increased to only 25 percent. Since 1940, though, the percentage of people living in the urban areas of Alabama, Florida, Georgia, Lou isiana, Mississippi and Tennessee has increased at well over twice the Urban Population Sixth District States and United States 1790-1960 S e c fe r a f ffeern IBan/tgf j$ /a n ta national rate. By 1960, the area was five-sixths as urban ized as the entire country. A look at the factors that usually go along with the rise and fall of cities helps to explain the nature of the recent growth and development of urban areas here. Economic Growth Precedes City Growth The earliest towns were small, simply because agriculture yielded barely enough food to support those working the land. As farming methods improved, more and more people were free to move to the towns. Most of the re sulting ancient population centers were artificial creations arising from military needs and the whims of rulers. Such places rose and fell with the tides of empires. Only in cities where economic functions— trade, com merce, and industry—became important did any sig nificant growth occur. Rome and Constantinople attained great size, even by modern standards, because they were economic as well as political centers of empires. When their empires crumbled from the onslaughts of the Huns and Vandals, however, so did their economic importance, and their populations were sharply reduced. City life all but vanished during the Middle Ages as trade and commerce declined in importance and each lo cale tended to become self-sufficient. Most of the pop ulace lived in small clusters of servants’ dwellings sur rounding feudal castles. Markets and forums, the institu tions that characterized early cities, did not exist. The revival of trade that accompanied the political and social reforms of the twelfth and thirteenth centuries set the stage for the redevelopment of towns. Most of the existing cities of Europe can trace their beginnings to this period. As the world emerged from the Dark Ages, its economy developed many of the features that can be recognized in a modern economy. Towns, in turn, took on more of the characteristics of modern cities. Many of the factors that determine the location and growth of cities today became discernible. The earliest Renaissance towns were founded at “breaks” in travel routes, where the main roads crossed navigable rivers or ended at the sea. As commercial activities other than trade became important, towns were established at “central” points most convenient to the surrounding countryside. Later, as the Industrial Revolu tion emerged, towns were located where there was suf ficient water power to drive the wheels of industry. Mod ern industrial techniques and improved transportation re sulted in urban development in places where natural re sources such as coal or iron could be found. The mere act of establishing towns did not insure that they would grow into large urban areas. The first movement of large numbers of people to cities— the process we call urbanization—began in earnest in England during the latter part of the eighteenth century, at the out set of the Industrial Revolution. Newly discovered man ufacturing processes required large numbers of people to work together in a single plant. The firms that supplied the manufacturers found it more economical to be near by. As more and more people concentrated in single areas, city life itself created a demand for new products and services, and the process became self-generating: New industries needed workers who created markets for other new industries, and so on. Industrialization came to the United States shortly after the country was settled. Being isolated from the European manufacturing centers and having an abundance of raw materials assured the nation of a rapid rate of industrial growth. The first manufacturing plants were located in New England, where waterfalls provided the necessary power. The discovery of coal, iron ore, and other resources led to rapid industrialization in the Midwest. Both of these areas amassed large urban populations at the time they became industrialized, as did England and other European countries. One important fact emerges from reviewing the his tory of European and American city development: The proportion of a region’s population living in urban areas depends primarily on the extent of that region’s economic activities requiring large concentrations of people. City growth, therefore, is in a sense an index of the economic character of the region in which the cities are located. The establishment and development of cities in this part of the South further illustrates the principle set forth above. The earliest Deep South cities— Savannah, Au gusta, and Mobile— were established as military and ad ministrative centers. Nevertheless, they became important on the basis of their economic functions as port cities. New Orleans, Memphis, Columbus, Macon, and Pensacola, other cities that achieved early prominence, were also ports. As the interior of this region became more heavily populated, towns were established at central locations to serve as market centers or transportation junctions. Most of the county seats were founded to serve this function. The South's Cities Remain Undeveloped at First With the exception of New Orleans, a trans-shipment point for the produce of the industrial Midwest, Southern cities remained relatively small until well into the twentieth century. Only New Orleans and Memphis con tained over 100,000 people in 1900. By 1920, when 68 cities in the nation had reached this population size, only Atlanta, Birmingham, and Nashville in the District area had joined the list. Thus, an area that contained 12 per cent of the nation’s population had only 7 percent of its large cities and less than 4 percent of the population of these cities. As long as the South remained predom inantly agricultural, its cities, reflecting this type of econ omy, remained small. Recent changes in the South’s economic structure have been accompanied by a growth of cities because the economic activities that have become important are those generally concentrated in urban areas. The rapid industrialization of the Deep South in recent years has been documented in a series of Monthly Review articles published in 1960. By 1960, this part of the South con tained less than 12 percent of the nation’s population. It had increased its share of the number of cities with over . 2 • 100,000 people to 13 percent, however, and it held almost 9 percent of the population of these cities. Just as the recent changes in the economic char acteristics of this part of the South have been diverse, so have the economic factors that have influenced the growth of Southern cities. Manufacturing provided a large part of the original push to urban development in the sixstate area, as it did elsewhere, and is still a relatively important factor. A rapidly increasing manufacturing productivity means that we are getting more and more of the goods we need, however, with little or no increase in the amount of labor required. Thus, people and re sources have been directed toward other activities. Because the nation’s people have more leisure time and higher incomes, the resort business in parts of the South has become a major industry. The growth of the Southern market has resulted in the establishment of branch offices and plants in the region. Moreover, with increased incomes the demand for services from laundries, repair shops, law offices, and many others has helped to raise employment in Southern cities. Increased governmental operations in this part of the South has been an important factor in recent city growth. Large military bases require nearby city services. The new space-age installations have caused cities to be built out of near-wildernesses. Governmental health and welfare activities have brought about a need for regional admin istrative centers. Within manufacturing many changes have taken place in recent years. Employment in textiles, lumber and wood products, and primary metals, the first important manu facturing industries in this part of the South, has remained unchanged or declined in recent years. On the other hand, other industries, such as petro-chemicals, apparel manu facture, and electronics, have enjoyed rapid growth in the past decade or so and have attracted thousands of people to the region’s cities. Urban developments in the various District cities in the past ten years reflect the effects of all of these growth factors. Florida, representing over 40 percent of the urban dwellers added to the six-state area in the past decade, has a smaller percentage of manufacturing em ployment than any other District state. Its climate and recreational facilities have been the main attractions. Its new residents have found jobs in the growing resort in dustry and other service occupations that are carried on more efficiently in a mild climate. In choosing Florida for one of its missile testing sites, the Federal Government has brought about the establishment of many defenseoriented industries. Government installations and defense industries have been partly responsible for the recent growth of an un usually large number of cities in the entire District. Some of the metropolitan areas that owe a great deal of their recent growth to Government activities include Columbus, Augusta, Macon, Albany, and Huntsville. The decentralization of industry and the increasing importance of the Southern market have contributed heavily to the recent growth of Atlanta, Jacksonville, and Nashville. Because of such factors as their central lo cations and good transportation facilities, these cities have been able to attract a large share of the branch offices and branch manufacturing facilities that have come to the area in recent years. The development of an important petro-chemicals industry has spurred the growth of such cities as Baton Rouge, Lake Charles, and New Orleans. New manu facturing plants have been instrumental in the growth of a number of smaller cities. Some large manufacturing cen ters, on the other hand, including Birmingham, Chatta nooga, and Knoxville, have experienced lower rates of growth in recent years because their basic industries have not expanded and other growth factors have been absent. Characteristics of Southern City Growth Although the factors that have influenced the growth of cities have been diverse, certain general characteristics may be observed about recent urban growth in the sixstate region. In the first place, a major portion of the area’s new urban residents have moved to the large cities. Cities with over 50,000 people and their thickly settled fringes in 1960 had absorbed 80 percent of the increase in urban population over the decade. Thirty-eight percent of the District’s people lived in such areas in 1960, compared with only 27 percent in 1950. The growth of large cities in the region has been out ward. These cities are largely products of twentieth cen tury developments. Perhaps the most important innova tion has been the automobile, which has enabled the worker to five at a relatively great distance from his place of employment. Thus, the average District city that has over 100,000 population has only 3,600 people per square mile. This contrasts sharply with the Northeast, where the average large city crowds almost 15,000 people into each square mile. Factors other than the newness of a city determine its density, of course. One of the most important of these is the ability, or lack of it, to annex outlying territory. A large number of District cities have expanded their areas by this method in the past decade. As a matter of fact, about two out of each five persons added to the popula tion of urban places in the region during this period lived in areas that were annexed to cities after 1950. The total land area of District cities with more than 50,000 people increased over 50 percent in the ten-year period. An nexations were particularly important to the growth of Atlanta, which added 171,467 people in 91.3 square miles; Tampa, which picked up 140,331 new residents and 66.0 square miles; and Mobile, which added 62,375 people in a 127.5 square-mile area. The greater part of the recent growth has occurred in the suburbs, despite large annexations to major cities. Thus, during the 1950’s the populations of the central cities of District metropolitan areas increased only about 28 percent. The number of people living in the remainder of these areas, including the urban fringes and the more distant suburbs, jumped 66 percent. Indeed, the tendency for city dwellers to move farther from the middle of town has led some analysts to observe a trend toward “super” Continued on Page 10 • 3 • Financial Growing Fains of Southern Cities Recently, we asked an important official of a large Southern city to describe his number one financial prob lem. Without hesitation, he answered in a word: “Money.” He continued with Shakespearian-like rhetoric: “More money might not cure all of our ills, but it would sure help to ease the pain.” The pain, which most major District cities feel with varying degrees of severity, is partly the result of growing. Population has increased sharply in recent decades. But more than that, people have demanded— and in many cases obtained— a higher quality of public services. The dilemma of municipal managers in just about every major city in the nation is that the services citizens and govern mental officials alike feel they need have generally ex ceeded the funds available to pay for them. What are some of the needs that cities must respond to if they are to fulfill their role as important economic, social, and cultural centers? Are the sources of revenue available to cities equal to the demands placed upon them? How may the consolidation of metropolitan gov ernments and functions contribute to the ideal of maxi mum public service at minimum cost? Answers to these questions are of more than academic interest. Most of us now live or work in cities; thus, their progress or de cline will vitally affect our own well-being. It is no exag geration to say that the cities’ problems are our problems. Population Growth Boosts City Spending Most people are aware that population in and around our major cities grew rapidly during the decade of the Fifties. One does not have to review population statistics to veri fy this. It can be deduced from our crowded schools, the shortage of downtown parking space for autos, and the slow-moving traffic on express highways at “rush” hours. What is sometimes overlooked is the degree to which people have packed themselves into metropolitan areas, and the financial pressures on cities as a result of growth in the number and concentration of people. “Population in metropolitan areas is expanding,” you may say, “but what’s a metropolitan area?” Well, metro politan areas vary in geographic and population size and in the composition of political units within their bounda ries. In general, a metropolitan area is defined as a county or group of contiguous counties that contain a city of at least 50,000 inhabitants or “twin cities” with a combined population of 50,000. The largest city within the metropolitan area is called the central city. This is the hub, the center around which the economic and social activities of the entire metropolitan area revolve. During the Fifties, 3.7 million persons were added to the population of the District states’ 29 metropolitan areas. As a result of this growth, about 10 million people, or almost one-half of the population, slept and ate, worked and played, lived and died in these areas in 1960. Al though their number and size increased over the past decade, these areas still account for only 10 percent of the land surface of District states. In terms of the bunch ing of people, at least, we have moved toward greater “togetherness.” The first article in this Review points out that most of this increase in population during the Fifties was due to an increase in the number of people outside central cities. As may be seen in the chart, this pattern of growth is vividly illustrated in the population changes in the largest metropolitan areas in the District: Atlanta, Birmingham, Jackson, Miami, Nashville, and New Orleans. Growth in population both inside and outside central cities has been an important element shaping the public service requirements of such cities. Population increases have boosted spending in most cities located in District metropolitan areas ranging from Albany, Georgia, the smallest, to Atlanta, the largest. The financial pressures created by this expansion in spending vary only slightly in kind and degree from area to area. Cities Spend to Service Geographic boundaries determine cities’ jurisdiction in taxation and other matters. Suburbanites, in the course Population of Standard M etropolitan A reas W ithin District States, 1960 (T h o u s a n d s ) Metropolitan Area Central City 635 97 117 314 169 109 341 58 72 203 134 63 294 39 45 119 215 254 643 231 147 316 172 Alabam a Birmingham Gadsden Huntsville Mobile Montgomery Tuscaloosa Outside Central City Total 111 35 46 Florida Fort LauderdaleHollywood Jacksonville Miami Orlando Pensacola Tampa-St. Petersburg West Palm Beach 334 455 935 319 203 772 228 292 88 57 456 56 76 1,017 217 218 180 188 56 487 71 117 70 149 230 145 868 281 152 63 53 627 164 78 82 49 241 117 187 144 43 283 368 627 400 130 153 256 129 229 201 Georgia Albany Atlanta Augusta* Columbus* Macon Savannah 20 530 146 101 110 39 Louisiana Baton Rouge Lake Charles Monroe New Orleans Shreveport Mississippi Jackson 102 Tennessee Chattanooga* Knoxville Memphis Nashville 112 498 171 * Parts of the Augusta, Columbus, and Chattanooga metropolitan areas overlap into the states of South Carolina, Alabama, and Georgia, respectively. • 4 • of their work or play, however, are bound to be drawn into the “downtown area.” In so doing, they add to the already heavy demand for services created by city resi dents. Expenditures for freeways, streets and highways, and traffic control are probably the most obvious areas of city spending influenced by suburbanites. The commuter —who works in the city but retreats into the quiet of the country in the evening—must, morning and night, fight the traffic jams that often clog the entrance to the city. As he creeps along the road in his high-powered car, he may mutter darkly that “the city ought to widen the street” or “extend the highway” or “build an access road.” Other casual travelers, the suburban housewife go ing downtown to shop and the salesman just passing through, add to the city’s transportation problems. Also, since more people are flowing into and out of the city as a result of suburban expansion, a larger number of city police officers are needed to direct traffic and safeguard the peace. In addition to the suburban influence, cities of all sizes have had to spend more because of the increase in the number of their residents and the extension of their city boundaries. The six major central cities noted earlier in creased their total expenditures 82 percent from 1951 to 1959. Spending for current operations rose more sharply than capital outlays, but as the finance officer of one major Southern city put it, “We can usually squeeze out enough money to cover operating costs. It’s the capital outlays that kill us.” Current operating expenditures include spending for what some city managers call “housekeeping.” This in volves expenditures for such things as police and fire protection, sanitation, and recreation, which account for a huge chunk of the budget of most Southern cities. “Sani tation may not seem like an important function,” said one official, “but you ought to hear the screams from resi dents if the trash can overflows one day.” In the area of “housekeeping,” many city managers feel they provide better services to their residents than are available to suburbanites. In areas outside the central city, trash and garbage collection is sometimes less fre quent than in the city. Recreational facilities are scarce. Finally, the job of providing satisfactory police and fire protection is difficult because homes sprawl over a wide area. The operation of schools also falls into the category of day-to-day services the city must provide. The schoolage population has become so large and problems of management so great that many Southern cities maintain their school operations separate from other functions. A school district or school board handles the program, and frequently the annual amount spent for schools is about equal to that spent on all other city functions. The expenditures of most Southern cities for current operations have risen at a gradual rate from year to year. Capital outlays of individual cities, however, are quite vola tile. For the period 1950-59, the six major central cities spent over $500 million for such things as land, roads, sewer and water systems, schools, and public buildings. Again, population growth was the major stimulus to spend ing. More people need more residential housing. Expan sion in housing frequently requires an accompanying growth in streets and in water systems and sewerage plants. Children live in many of the houses, so schools must be built. The increased volume of city activity demands more employees and more public buildings to house them. And so it goes. Spending to renew and develop cities has not, as yet, absorbed local capital funds in any quantity. Although less obvious to him than his transportation needs, the suburbanite, as well as the city dweller, has a direct stake in the way his central city grows. The elimination of slums, the renovation of downtown shopping areas, and the general beautification of the city benefit all of us. Urban renewal projects and other redevelopment pro grams to revitalize the city are moving forward in many places. Often, however, the pace of progress is slow. Those in the business of city renewal point to one en couraging sign that may give their movement impetus. People are coming to recognize that the functions of the city and the suburbs are more complementary than com petitive. It makes sense to purchase bread and milk at the neighborhood store; but for specialized goods and services you are apt to find a “better buy” downtown. One may also go to the neighborhood movie as a matter of convenience; it is the central city, however, that is more likely to be able to cater to the specialized recrea tional wants of citizens by providing cultural and sport ing facilities, such as auditoriums and stadiums. Since most Southern cities are just able to meet ex penses for current operations, a large share of capital expenditures has been financed through the sale of long term bonds. As a result, the long-term debt of most Southern cities increased and that of the six large cities noted earlier doubled from 1950 to 1959. Despite this huge increase, the level of general obligation debt of almost all cities is below the ceiling frequently established by law or statute. Thus, cities have the authority to incur debt to finance additional capital outlays. Some officials, how ever, are beginning to wonder how long they can continue to get approval of bond issues that involve a tax increase and are subject to referendum. Public services cost money. Some cities, it is true, have received Federal funds for urban renewal and for other purposes. Federal and state aid, particularly through the Interstate Highway Program, have helped develop a net work of roads and highways into, through, and around the city. Substantial state help and some Federal assistance have enabled cities to finance their school programs. Still, cities must raise a large share of the funds needed to pro vide public services. The demands are many. And money is in short supply. Cities Tax to Spend The sources of general revenue available to finance city spending may be classified into three standard Census categories: intergovernmental revenue, charges, and taxes. Intergovernmental revenue represents amounts re ceived by the city from other governments as fiscal aid or as reimbursement for the performance of services rendered. Charges reflect amounts received for perform• 5 • From 1950 to 1960, the growth in population inside and outside central cities in metropolitan are as resulted in a sharp expansion in demand for m any types of public services. Percent C han ge in Population 20 -0+ _______ 8 0 _______________1 2 0 _______________ 160 i----- r i i Central City IIHDHouTside Central City Atlanta Jackson 40 ..... i i..... i i 8 Miami New Orleans Birmingham I Nashville u i h b i All Other I J..... l ... J-___ J— - 1.-... 1..... -1 ......1-----1------ 1 Central cities and special districts o verlying the cities accounted for a large share of the total expenditures for public services made by all governm ents in metropolitan a re a s, according to 1957 Census data. The sharp rise in expenditures for purposes other than schools illustrates the financial effort of the s ix cities noted above to try to keep pace with population needs. Millions of Dollars Millions of Dollars Capital outlays for schools, w ater and sew ers, streets and highw ays, and the like resulted in a rise in total long term debt of cities. Millions of Dollars New Orleans M illio ns of Dollars Atlanta Miami Nashville Birmingham Jackson ance of specific services and from the sale of commodi ties and services except by city utilities. Taxes represent that amount collected directly by the city as well as the rebate of some taxes imposed by the state. Taxes are the major source of revenue of most South ern cities, regardless of the cities’ size. The property tax provides the bulk of taxable revenue. In 1959, for ex ample, the share of total tax revenue accounted for by the property tax in the six cities noted earlier ranged from 51 percent in Birmingham to 79 percent in Nashville. The property tax, although it appears to be slipping some what in importance as a major source of revenue, con tinues to be the cities’ mainstay. During the Fifties, the tax base of many cities rose at a faster rate than the population. This greater relative in crease in the tax base reflects the general rise in income, the growth in the number of residential houses and in dustrial and commercial buildings, and the increase in property values. The inflationary factors that helped push up the tax base, however, also acted to increase current and capital expenditures. Thus, throughout much of the past decade, cities have been searching about for new revenue sources. Fees and licenses have, it is true, increased in impor tance as a source of revenue to many Southern cities. Some cities outside the South have taxed the earnings of per sons who work in the city but reside outside its limits. Others have been granted authority to levy a tax on the sales of goods and services. Still others have looked for new revenue sources, to no avail. The lament of most cities inside and outside the South, however, is that their revenue sources are limited. The finance officer of one Southern city summed it up like this: “The Federal Government gets first crack at the choice taxes; the state comes next; and we get what’s left over.” Someone less partisan, however, might have re sponded that if properties were reasonably and uniformly valued and if exemptions were lower and the tax rate higher, the cities’ problems would be less acute. While readjustment of the property tax would yield some addi tional income, it is questionable whether this tax can con tinue to bear the brunt of all necessary revenue increases. Another common complaint of Southern cities is that the state government does not provide them with adequate financial assistance, either in the form of aid or in the re bate of taxes collected in their areas. This condition, it is alleged, has been perpetuated by rural-dominated legis latures. State governments, on the other hand, might point out that their funds are also scarce and must be allocated among competing needs. Cities want more revenue. They also want to promote the economic growth of their areas. Both of these ob jectives may be encouraged if cities work toward a bal anced tax structure. In such a structure, each sector of the economy would carry its “fair share” of the tax load. Taxes on residential property would not be so great as to slow down home building or drive families outside the city limits. Nor would taxes on industrial or commercial properties be so high as to discourage the growth of new businesses. To avoid undue taxation of property owners, other sources of revenue would have to become available. • 6 • Economic growth is an objective common to most political units in metropolitan areas. The success of an individual community in attaining this objective, however, is partly dependent upon expansion of the nation’s econ omy and that of the region within which it is located. In the metropolitan environment that is developing, it is increasingly difficult for a community to “go it alone.” This applies not only to the ability of a government to achieve broad economic objectives, but also to its ability to satisfactorily provide public services. The Metropolitan Environment Changes Large cities, with their high population densities, fre quently provide efficient services, particularly of the “housekeeping” variety. In some instances, however, a small city or town may provide low-quality service be cause of an inadequate economic base, a small scale of operations, and/or a low population density. If a govern ment of this type also happens to be on the fringe of a large city, it is a likely candidate for annexation— a proc ess by which a small community is absorbed into a politi cal and economic unit big enough in size to provide effi cient public service. The laws and statutes regarding annexation vary among District states. Even when the laws are favorable, it is sometimes difficult to persuade the political leaders and the citizens of a community that annexation is good for them. Those people holding political power may be re luctant to give it up or share it with others. The hearts of many “to-be-annexed” citizens, moreover, may be filled to overflowing with community pride, and they may be un willing to trade their autonomy for potential economic efficiency. Their resistance may be even more intense if annexation also means an increase in their taxes. Even though the larger cities are swallowing up the smaller ones, they are aware of their own limitations. As a result, they are trying to distinguish between those services they can efficiently perform locally and those that might best be provided on an area basis. Why are they doing this? Basically, because functions such as transportation, sewerage, water supply, and air pollution overlap the boundaries of individual political units. These functions are metropolitan in character and frequently may be beyond the political authority and economic ability of individual units to cope with. The governments in metropolitan areas in District states have responded in different ways to the challenge of area problems. The most formal plan is that of metro politan Miami, which includes 33 separate governmental units. In 1957, a metropolitan charter was adopted by the residents of Dade County, the equivalent of the Miami metropolitan area. The “Metro” government, as it is called, has jurisdiction over all county-wide functions ex cept state courts and the public schools. It is charged with the responsibility of planning county development and has the power to provide and/or regulate a wide range of public services throughout the metropolitan area. In many other large metropolitan areas in District states, there is some appointed body grappling with areawide problems. Recently, the Atlanta Region Metropolitan Tax revenue of most cities accounted for a somewhat sm aller proportion of g en eral revenue in 1959 than in 1950. Percent Percent Atlanta Miami Birmingham Nashville New Orleans Jackson In 1959, as in other y e a rs, about 87 percent of the total ta x revenue of cities and other local governm ents through, out the country stemmed from property taxes. Percent In 1957, as in more recent y e a rs, differences in ta x struc tures, ab ility to p ay, and population density among the m any political units located within metropolitan a re a s pro duced v ariatio n s in revenue and in q uality of services rendered. Number of Political Units Atlanto B ham New Orleans Miami Nashville Jackson If the expanding population in m etropolitan are as through out the country is to be ad equ ately provided with public services in the ye ars ah ead , some modification of the ta x and revenue structures of these areas m ay be necessary. • 7 • Planning Commission came forth with its proposal for a rapid transit system to supplement the expressway network now under construction. Such a system would relieve traffic congestion and be a boon to citizens. It would also be of tremendous economic significance to the region. The Commission has pointed out that “With rapid transit, the outlying commercial and industrial establishments in all five counties will have available to them markets and labor forces unknown in smaller metropolitan areas. Moreover, the future economic growth of these outlying areas is enhanced by having a big-city downtown with big-city financial houses, skyscrapers, and ideas.” Although the dream of a rapid transit system is off the drawing board, much will have to be done before the wheels of the train begin to roll. The first step would be the passage of state-enabling legislation to set up an organ ization to carry forward the project. Continued consulta tion and cooperation of political units in five counties would be required to plan such things as the type of transit equipment to be used, how the capital expenditures will be financed, and how the system will be managed. If all goes well, construction of the initial system may be completed in the period 1966-69. When governments are consolidated through annexa tion and public service functions are consolidated through the creation of transit systems or other agencies, the structure of metropolitan government is modified. Often, those seeking such modifications may hope to reduce the cost of public services to citizens. In practice, the result is more likely to be better service for each tax dollar. Changes in the metropolitan structure frequently are considered in terms of economics. It should be clear, however, that political and individual values are closely intertwined with the economics of metropolitan problems. Before snapping at the bait of even limited area-wide government, individuals must be convinced that certain of their public service needs are metropolitan in char acter. Political leaders, in turn, must be convinced that their constituents are convinced of this. It may well be that the ingredients for success of the metropolitan ap proach are education, consultation, and compromise. If population growth in metropolitan areas continues as expected, both citizens and political leaders will be required to further adapt themselves to their changing economic environment. Metropolitan man has not yet evolved. If he ever does materialize in pure form, he may have some of these characteristics: He will be proud of his local community and retain the best of the “town hall” concept of government. He will recognize, however, that he must at times subordinate his personal wishes in the interest of area progress. He will demand and get from his political leaders a clear statement of the costs of public services of varying degrees of quality. He will ra tionally choose that combination of quality and price that best suits his needs, recognizing that he will get in service only that which he pays for. A _ T J r A l f r e d P. J o h n s o n Banks Help Finance Cities’ Growth Needs “As long as we think that our city and county are in good shape financially and that their financial adminis tration is satisfactory, we believe we have an obligation to support their credit.” This is about the way a Southern banker recently described his attitude toward financing city and other local governments. The statement illustrates bankers’ public-spiritedness. We are reminded, however, that banks are not charitable institutions; they have obli gations to their stockholders and depositors as well as to municipalities. Fortunately, Southern banks have generally found the financing of urban governments both profitable and consistent with “sound” banking practices. The chief financial need of municipal governments aris ing from the growth of cities is that of credit for capital expansion and improvements. How and to what extent are banks in this District helping to furnish this credit to Southern municipalities? Available data, together with bankers’ responses to inquiries made by this Bank, can help us answer this question. Most Banks Invest in Municipal Securities At the end of 1960, insured commercial banks in District states held over $1.4 billion in state and local government obligations. Most of these securities are of local govern ments. Moreover, a large proportion represents credit ex tended to political units within the area for expanding and improving public facilities. Banks invest in substantial amounts of securities issued by political units within their trading areas, although they hold issues of governments throughout the country. This policy reflects the responsibility banks feel toward local credit support and their access to the market for bonds of nearby governments. The tendency to concen trate municipal bond purchases locally is probably stronger for small banks than for large ones. Generally located in small communities, they are more apt to play the role of a local credit institution. The amount of banks’ short-term lending to state and local governments, which is mainly used by nearby politi cal units in anticipation of tax receipts and bond sales, is relatively small. Instead of borrowing from banks, many municipal managers maintain a cash fund to draw upon when expenditures exceed tax revenues. Bond anticipa tion borrowing is prohibited to most state and local governments. Even if District banks were to purchase securities of municipalities only within this area, they could not supply them with all the credit needed. In the five years ended 1960, local governments in District states offered for sale about $5 billion in securities. Banks in this area would have had to use roughly a third of their resources to supply this credit. To do so would have meant denying to busi nesses and others much of the credit that was granted them. • 8 • Judging from national data, however, the contribution of banks is substantial. In 1960 commercial banks in the U. S. held about one-fourth of the $66 billion of out standing state and local government securities. The larg est share, about two-fifths, was held by individuals and the remainder mainly by insurance companies. Banks' Holdings Increase Faster Than Their Assets The large amount of municipal securities now held by District banks reflects their response to the rapid increase in demand for this credit over the postwar period. From 1945 to 1960, banks in District states roughly tripled their holdings of state and local government securities. As a result, the proportion of their total assets held in such securities climbed from 4.4 percent to 7.4 percent. The percentage varies considerably from bank to bank and even among District states, but the average ratio for the area has been somewhat higher than elsewhere in the nation. Insured Commercial Bank Holdings of State and lo cal Governm ent Securities Banks, of course, must weigh the higher risk and in ferior marketability of municipal bonds against this ad vantage in yield. Tax exemption seems to have encouraged banks to buy more municipals, though, as evidenced by the aggressiveness with which banks bought them after the Federal Government ceased to allow exemption on its own obligations in 1941. To some banks, another enticing feature of acquiring municipals is the possibility of getting more governmental deposits. As many bankers point out, however, large mu nicipalities are tending to hold less of their liquid assets in bank deposits and more in short-term U. S. Government securities. On the other hand, banks do find municipal securities useful against such public deposits as they al ready have. Banks Seek Shorter Maturities and High Quality Tending to counterbalance banks’ desire for profit is their insistent need for liquidity and safety. While gov ernmental units find it necessary or desirable to issue bonds with serial maturities up to twenty or thirty years, District banks provide a good market only for those ma turing within ten years. A few large District banks are willing to hold longer issues. In addition, banks seek bonds with high formal quality ratings unless they are familiar with the financial circum stances of the borrowing unit. Some set a limit on the amount of their revenue bonds relative to the amount backed by “full faith and credit,” or general obligation bonds. Bankers are aware, however, that the revenue issues of certain political units for such things as water and sewerage improvements are equal in quality to many general obligations. A Few Banks Underwrite Municipal Securities During the postwar period, the rate at which banks ex panded their holdings of municipals was strongly influ enced by credit conditions. For example, in 1958— a year characterized by credit ease— insured banks in District states increased their holdings $210 million. However, in the following year and a half, when banks were subject to considerable restraint, their investments in municipals ad vanced only $35 million. In periods of tight credit, gov ernments compete more intensely for credit with other bank borrowers because banks are more wary of reducing their liquidity. Municipal Securities Are Profitable Bank Investments Banks have purchased municipals in periods of both credit tightness and ease because exemption of these obligations from Federal income taxes makes them es pecially profitable investments. For a bank subject to a 52-percent tax rate, for example, a municipal bond yield ing 21/2 percent at par is equivalent in earning power to a fully taxable U. S. Government bond of the same ma turity yielding 5.2 percent. Although banks do not invest in municipal bonds of ail maturities, they can help market longer- as well as shorterterm issues by successfully bidding on new offerings and reselling them. Nationally, according to a recent estimate, commercial banks underwrite roughly two-fifths of the dollar amount of new issues. In the District no more than ten banks, all large and located in large cities, continually engage in underwriting municipals. Many banks in small communities occasion ally underwrite issues of nearby political units. During a recent eighteen-month period, banks in District states underwrote, either singly or in participation with other bank and nonbank underwriters, 17 percent of the offer ings by governments in the same area. Large money mar ket banks in the nation’s financial centers, however, sub stantially supplemented the relatively small underwriting contribution of District banks. Why have certain District banks chosen to participate actively in municipal bond underwriting? As in the case of investing in municipals, when a bank bids on new issues for resale it may feel that it is fulfilling an obligation to promote community development. Moreover, to a sizable bank with personnel to specialize in this activity, under • 9 • writing can mean extra net earnings. Given access to a developed retail market for new issues, banks, like other dealers, can profit from a spread between buying and selling prices. If banks retain underwritten issues in their investment accounts, they avoid having to pay dealer commissions. Dealer banks also enjoy a tax advantage. They do not have to amortize premiums for a security held for less than thirty days or for one maturing after five years unless the security is sold at a loss. This benefit is in addition to tax exemption on coupon yields. The majority of banks, however, have not found it possible or desirable to engage actively in underwriting municipal securities. To underwrite larger issues, they must be able to join syndicates. For many banks, the overhead costs associated with underwriting are prohibi tive. Moreover, member banks of the Federal Reserve System are not permitted to underwrite revenue bonds. In addition to investing in and underwriting securities of municipal governments, banks provide them with cer tain other direct and indirect financial services. They receive and disburse state and local government deposits. Their trust departments purchase municipal securities for individuals. They lend to nonbank dealers for purchasing and carrying such securities. Finally, municipal managers say that banks have been most helpful in providing them with financial counseling. Perhaps the greatest contribu tion banks can make to city governments is helping them to achieve sound financial practices. A l b e r t A . H i r s c h SOUTHERN CITIES Continued from Page 3 cities, as the suburbs of one city ultimately meet those of another, and one large urban area is formed. The lower east coast of Florida has already reached this stage, with an unbroken concentration of people stretching from West Palm Beach to south of Miami, a distance of 80 miles. There is evidence that the area between New Orleans and Baton Rouge and the strip between Atlanta and Greens boro, North Carolina, may be headed in this direction. These characteristics pose certain common problems for our cities. Rapid population growth puts a strain on existing municipal facilities. The direction and strength of future growth must be anticipated if new services are to be provided when needed. Although economic factors will largely determine the extent of future city growth, the ability of cities to cope with the problems of growth will determine whether or not they will function as efficient economic units. ~ R o b e r t M. Y o u n g Debits to Individual Demand Deposit Accounts (In Thousands of Dollars) ALABAMA Anniston . . . . Birmingham . . . Dothan . . . . Gadsden . . . . Huntsville* . . . Mobile . . . . Montgomery . . . Selma* . . . . Tuscaloosa* . . . Total Reporting Cities Other Citiesf • • • FLORIDA Daytona Beach* Fort Lauderdale* . Gainesville* . . . Jacksonville . . . Key West* . . . Lakeland* . . . M iami.................... Greater Miami* Orlando . . . . Pensacola . . . St. Petersburg . . Tampa . . . . W. Palm-Palm Bch.* Total Reporting Cities Other Citiesf • • • GEORGIA Albany . . . . Athens* . . . . Atlanta . . . . Augusta . . . . Brunswick . . . Columbus . . . Elberton . . . . Gainesville* . . . Griffin* . . . . LaGrange* . . . Aug. 1960 Percent Change Year-to-date 8 Months Aug. 1961 from 1961 July Aug. from 1961 1960 1960 Aug. 1961 July 1961 44,519 869,418 35,665 36,119 71,774 316,323 179,343 24,692 58,034 1,635,887 746,577 41,553 804,495 35,782 33,576 67,183 285,471 172,116 22,617 55,209 1,518,002 720,374 41,850 901,020 34,925 38,436 65,467 303,130 171,504 23,894 54,737 1,634,963 761,136r +7 +8 —0 +8 +7 + 11 +4 +9 +5 + 8 +4 +6 —4 +2 —6 +10 +4 +5 +3 +6 +0 —2 +3 + 1 + 6 —5 +11 +2 +6 +2 +5 +2 +1 55,119 191,085 41,845 866,569 16,263 73,009 858,576 1,271,921 235,155 82,676 199,594 413,184 139,808 3,586,228 1,529,597 56,398 190,659 39,486 756,086 15,619 76,701 826,162 1,238,697 253,877 82,026 214,586 394,587 140,461 3,459,183 1,533,538 61,705 192,881 39,957 903,221r 15,802 79,886 847,425 1,255,999 246,576 87,457r 199,959 410,367 118,263 3,612,073r l,524,602r —2 +0 +6 + 15 +4 —5 +4 +3 —7 +1 —7 +5 —0 +4 —0 — 11 —1 +5 —4 +3 —9 +1 +1 —5 —5 —0 +1 + 18 —1 +0 —5 —2 +1 —0 +7 +2 +2 +2 —2 —4 —3 +0 +9 +1 +3 50,981 42,239 2,314,010 112,351 27,264 120,485 10,571 49,249 20,074 15,800 130,061 33,719 20,656 47,065 178,491 50,270 3,223,286 1,003,955 51,099 44,138 2,171,330 119,037 26,621 109,972 8,630 49,234 18,816 15,821 121,777 32,889 20,251 45,525 172,050 35,527 3,042,717 946,427 54,858 40,005 2,209,861 113,982 25,749 113,650 11,043 48,240 19,890 18,203 128,835 30,904 19,651 49,550 179,791 43,453 3,107,665 936,342r —0 -A +7 —6 +2 + 10 +22 +0 +7 —0 +7 +3 +2 +3 +4 +41 +6 +6 —7 +6 +5 —1 +6 +6 —4 +2 +1 — 13 + 1 +9 +5 —5 —1 +16 +4 +7 +0 +6 +3 +0 +7 +5 —6 +2 +3 — 14 +1 +2 +1 +1 —5 +3 +2 +5 +16 +4 +5 —3 +3 +4 +7 +12 —5 +8 + 1 —1 —1 +4 —4 —5 +2 —5 —0 —1 +0 +1 + 1 + 12 —3 —2 + 12 +0 +7 —2 —2 +2 +2 —0 —4 +10 +7 +2 +0 +6 +0 +6 —1 +0 —1 +7 +4 —1 —0 +9 +7 +3 +6 —0 +3 + 1 +4 +5 +3 +5 +7 + 12 +3 +8 +8 +4 +7 +3 +2 +2 +2 +1 +7 +3 —3 +2 +5 +7 +5 +6 +2 +2 +3 +0 +3 +6 +7 Marietta* . . . Newnan . . . . Rome* . . . . Savannah . . . . Valdosta . . . . Total Reporting Cities Other Citiest . . • LOUISIANA Alexandria* . . . 78,198 67,136 69,769 268,072 Baton Rouge . . 258,177 281,476 Lafayette* . . . 65,579 62,520 60,951 Lake Charles . . 79,240 81,327 78,165r 1,364,921 New Orleans . . . 1,319,839 1,377,647 Total Reporting Cities 1,856,010 1,788,999 l,868,008r 554,727 517,331 535,578r Other Citiest • • • MISSISSIPPI Biloxi-Gulfport* 52,843 52,419 53,738 38,661 Hattiesburg . . . 38,408 37,832 Jackson . . . . 345,205 308,903 337,763 28,199 Laurel* . . . . 29,159 28,215 Meridian . . . . 44,640 45,333 46,736 24,211 21,528 Natchez* . . . . 22,088 Vicksburg . . . 22,073 20,712 21,985 Total Reporting Cities 555,832 517,735 547,084 280,271 286,188 279,134r Other Citiest • • • TENNESSEE Bristol* . . . . 48,334 48,512 45,214 366,247 Chattanooga . . . 335,828 327,721 Johnson City* . . 44,281 41,536 42,893 Kingsport* . . . 89,867 87,614 83,291 Knoxville . . . . 270,785 255,435 250,050 Nashville . . . . 829,629 833,330 797,546 Total Reporting Cities 1,649,143 1,602,255 1,546,715 595,479 Other C.tiest . . . 587,676 579,451r 17,216,992 16,520,425 16,932,751r SIXTH DISTRICT Reporting Cities 12,506,386 11,928,891 12,316,508r 4,710,606 4,591,534 4,616,243r Other Citiesf . . Total, 32 Cities . . 10,779,626 10,233,268 10,642,391r UNITED STATES 344 Cities . . . 255,536,000 247,667,000 241,771,000 *Not included in total for 32 cities that are part of the national debit series maintained by the Board of Governors. fEstimated. r Revised. Bank Announcements The Port Charlotte Bank, Port Charlotte, Florida, a newly organized nonmember bank, opened fo r business on September 19 and began to rem it at par for checks drawn on it when received from the Federal Reserve Bank. Officers are William L. Hart, President; N . H. McQueen, Vice President; James B. Cheek, Cashier; and William Crossland, Assistant Cashier. Capital totals $225,000, and surplus and undivided profits, $135,000. On Septem ber 20, the nonmember St. Martin Bank and Trust Company, St. M artinville, Louisiana, began to rem it at par. Officers are J. R. Bienvenu, President; A . C. Gauthier, Execu tive Vice President; Larry J. Comeaux, Cashier; and Martin Ducrest, Celine G. Labbe, Earl J. Bienvenu, and Gordon J. Delcambre, Assistant Cashiers. Capital totals $100,000, and sur plus and undivided profits, $339,943. • 10 • S ix th D is t r ic t In d e x e s Seasonally Adjusted (1947-49 = 100) I9 6 0 I JULY AUG. SEPT. OCT. NOV. DEC. Nonfarm Em ploym ent..............................143 Manufacturing Employment . . . . 126 A p p a r e l.............................................199 C h e m ic a ls ........................................137 Fabricated Metals ......................... 196 F o o d .................................................. 117 Lbr.( Wood Prod., Fur. & Fix. . . . 78 p a p e r.................................................. 169 Primary Metals .............................. 97 T e x tile s ............................................. 89 Transportation Equipment . . . . 197 Nonmanufacturing Employment . . . 150 Manufacturing Payrolls ......................... 236 Cotton Consumption**.............................. 93 Electric Power Production**.................... 382 Petrol. Prod, in Coastal Louisiana & M ississippi**.................... 220 Construction Contracts* ......................... 370 Residential............................................. 376 All Other ............................................. 365 Farm Cash Receipts................................... 127 Crops.......................................................83 Livestock .............................................194 Department Store S a le s * / * * .................... 194 Department Store Stocks* .................... 227 Furniture Store S a l e s * / * * .................... 144 Member Bank D e p o s it s * ......................... 183 Member Bank L o a n s * .............................. 351 Bank Debits* ............................................. 265 Turnover of Demand Deposits* . . . . 162 In Leading C it ie s ................................... 179 Outside Leading C i t i e s ......................... 129 ALABAMA Nonfarm Em plo ym en t......................... 126 Manufacturing Employment . . . . 108 Manufacturing Payrolls......................... 200 Department Store S a le s * * ....................178 Furniture Store S a l e s .........................125 Member Bank D eposits.........................160 Member Bank L o a n s .............................. 291 Farm Cash Receip ts..............................124 Bank Debits ........................................ 233 FLORIDA Nonfarm Em ploym ent......................... 202 Manufacturing Employment . . . . 208 Manufacturing P ayrolls......................... 407 Department Store S a le s * * .................... 278 Furniture Store S a l e s ......................... 173 Member Bank D ep osits......................... 242 Member Bank L o a n s .............................. 557 Farm Cash R e ce ip ts.............................. 204 Bank D e b i t s ........................................ 389 GEORGIA Nonfarm Em ploym ent......................... 136 Manufacturing Employment . . . . 123 Manufacturing P ayrolls......................... 228 Department Store S a le s * * .................... 175 Furniture Store S a l e s ......................... 133 Member Bank D ep osits.........................161 Member Bank L o a n s .............................. 278 Farm Cash R eceip ts.............................. 125 Bank Debits ........................................ 251 LOUISIANA Nonfarm Em ploym ent......................... 131 Manufacturing Employment . . . . 96 Manufacturing P ayrolls......................... 182 Department Store Sales*/** . . . . 159 Furniture Store S a l e s * ......................... 184 Member Bank Deposits* ....................161 Member Bank L o a n s * ......................... 335 Farm Cash R e ce ip ts.............................. 102 Bank D e b it s * ........................................ 216 MISSISSIPPI Nonfarm Em plo ym en t......................... 135 Manufacturing Employment . . . . 135 Manufacturing Payrolls......................... 256 Department Store Sales*/** . . . . 178 Furniture Store S a l e s * ......................... 109 Member Bank Deposits* ....................198 Member Bank L o a n s * ......................... 433 Farm Cash R eceip ts.............................. 104 Bank D e b it s * ........................................ 243 TENNESSEE Nonfarm Em ploym ent......................... 127 Manufacturing Employment . . . . 128 Manufacturing P ayrolls......................... 230 Department Store Sales*/** . . . . 167 Furniture Store S a l e s * ......................... 103 Member Bank Deposits* ....................170 Member Bank L o a n s * ......................... 313 Farm Cash R e c e ip ts.............................. 109 Bank D e b it s * ........................................ 230 143 125 196 137 197 117 78 166 95 88 199 150 228 90 385 143 124 193 132 193 120 77 167 91 87 199 150 221 85 373 142 123 188 131 190 119 76 166 92 86 205 150 220 83 372 142 122 188 131 188 117 76 165 88 85 185 150 217 83 369 221 361 367 357 155 147 189 178 232 133r 183 354 279 167 190 124 223 353 362 346 149 134 188 185 230 139 185 353 284 158 175 120 232 337 364 316 167 157 186 189 231 138 188 353 265 152 159 113 126 107 192 170 117 162 293 123 255 125 105 182 166 117 164 292 150 255 202 208 403 265r 160r 240 564 270 427 SIXTH DISTRICT 1961 JAN. FEB. MAR. APR. MAY JUNE 141 122 189 133 189 116 75 164 89 85 190 149 218 79 390 142 121 187 133 191 118 73 163 86 84 191 150 213 78 401 141 121 187 133 189 118 73 164 87 84 190 150 212 79 383 141 121 186 134 184 118 73 165 86 83 183 149 214 79 368 141 121 190 135 185 118 74 166 87 84 187 149 220 82 376 142 122 191 135 185 117 74 167 91 84 188 150 225 85 379 142 123 193 136 185 118 74 167 92 85 191 150 232 88 391 142 124 198r 135 183r 117 74 168 93 85 193 150 236 89 391 142 123 196 135 187 117 74 168 94 85 184 150 232 89 n.a. 233 322 305 336 156 131 201 179 235 133 188 352 283 153 162 111 250 286 300 276 132 94 199 187 233 134 189 359 282 151 163 119 239 307 286 324 134 97 191 177 224 127 189 351 287 162 176 125 237 313 326 303 145 123 191 181 221 130 192 355 279 156 168 116 241 323 341 309 136 104 205 178 221 134 189 353 293 155 167 122 244 344 361 330 126 99 189 183 229 135 191 354 268 146 164 111 253 361 392 337 136 113 192 175 225 129 191 357 288 165 183 127 252 374r 416 340r 141 117 191 185 227 130 189 355 287 154 175 119 243r 386 398 377 125 97 175 194 227 135 193 353 275 162 179 129 244 n.a. n.a. n.a. n.a. n.a. n.a. 179 240 132p 190 359 284 166 189 122 125 103 187 166 117 169 293 182 241 125 103 183 155 111 165 294 130 249 124 102 175 165 113 167 299 121 243 125 101 175 158 103 169 300 115 247 123 101 175 156 106 170 299 126 238 123 101 177 166 112 167 303 133 248 123 102 183 173 124 169 298 115 231 124 102 185 163 101 163 304 126 264 125 103 191 168 112 162 301 118 251 125 104 196r 177 111 163 295 117 239 125 105 196 171 117 163 302 n.a. 253 202 208 392 256 171 241 560 248 418 201 207 399 261 164 246 561 21?. 405 201 207 384 268 158 248 551 196 420 201 208 384 276 158 250 560 232 413 200 206 368 264 154 247 550 266 414 200 207 374 264 155 252 556 264 396 200 209 373 287 161 247 556 197 413 200 209 392 269 156 248 550 227 377 202 211 406 263 151 250 559 244 421 203 213 414 277 155 247 555 257 428 203 215 443r 290 162 253 553 211 396 204 214 431 274 148 250 561 n.a. 426 135 123 220 159 129 164 286 215 257 135 121 213 168 136 166 288 160 273 135 121 211 172 133 170 286 204 249 134 118 205 158 131 169 291 120 257 134 119 205 164 130 170 289 148 256 134 117 199 157 123r 169 285 144 263 134 116 200 155 120r 173 292 152 254 133 116 203 166 124r 172 292 171 266 134 117 205 155 132 172 290 149 244 134 118 215 166 133 175 292 144 266 134 118 217 166 133 173 291 147 269 134 119 223r 175 136 176 289 127 266 134 119 217 159 136 171 292 n.a. 269 130 95 181 151r 157 159 334 91 230 129 94 173 148 161 164 332 113 250 129 94 170 151 170 163 329 115 212 128 93 168 140 160 164 323 137 225 128 93 175 155 166 166 331 113 234 129 92 177 151 163 165 319 93 210 129 91 173 151 152 167 322 103 207 128 92 177 155 147 163 314 104 234 128 91 180 149 158 169 331 98 213 129 91 179 149 165 166 324 105 230 128 90 179 157 159 167 326 112 246 127 90 178r 157 164 172 327 104 218 127 90 178 152 159 169 331 n.a. 230 134 134 250 151r 94 194 425 98 255 135 132 238 149 106 196 431 121 253 135 132 242 158 108 204 431 141 242 135 133 239 151 99 199 433 162 258 134 131 240 164 102 209 460 136 254 137 130 244 149 95 204 442 86 238 136 129 237 146 100 205 446 99 234 136 130 241 154 108 207 442 116 256 136 132 244 157 95 208 449 90 236 137 134 243 153 85 210 455 99 243 136 135 256 165 91 208 451 99 256 137 136 259r 169 112 207 446 100 246 137 136 261 156 116p 205 458 n.a. 258 127 127 231 151 96 167 314 113 240 126 128 224 157 98 166 311 106 238 126 126 221 164 99 171 313 122 224 125 124 218 156 100 169 314 143 247 124 123 217 157 94 170 328 86 236 124 123 215 147 85 170 315 96 248 124 123 216 154 95 176 319 99 243 124 123 216 151 98 176 310 99 255 124 123 222 147 100 175 311 101 233 125 124 224 141 91 174 315 96 258 126 125 230 152 84 175 312 101 255 126 125 227r 157 90 179 313 100 256 126 124 234 146 89 176 320 n.a. 254 *For Sixth District area only. Other totals for entire six states. **Daily average basis. n.a. Not Available. || p Preliminary. JULY AUG. r Revised. Sources: Nonfarm and mfg. emp. and payrolls, state depts. of labor; cotton consumption, U.S. Bureau of Census, construction contracts, F. W. Dodge Corp., petrol, prod., U.S. Bureau of Mines; elec. power prod., Fed. Power Comm. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. • 11 • DISTRICT BUSINESS C O N D ITIO N S Nonfarm Employment T h e pace of economic recovery in the District has been som ew hat disappointing, at least to those optimists who expect e v ery month to be better than the last. In August most measures, seasonally adjusted, Mfg Payrolls merely held the gains previously made. Manufacturing activity showed little change, as did consumer spending. Although agricultural prospects are bright, farm cash receipts actually declined. Mfg Employment Nonfarm em ploym ent in the District as a w hole held steady in August. This over-all stability concealed small increases over July in Florida Electric Power Production and Tennessee, however, and small decreases in Alabama, Georgia, and Lou isiana. Only in Florida and Mississippi was total nonfarm employment above the level of a year ago. Factory employees put in a slightiy shorter work week, and as a result manufacturing payrolls declined somewhat from the record high set in July. Construction activity increased, as shown both by employment and the volume of new contracts. The textile industry maintained the ground it had gained earlier, but it has not yet recovered the level it reached prior to the recession. ^ ^ Construction Contracts 3~mo. m ovin g avg Cotton Consumption There are tentative indications that consumers m ay at last be loosening their purse strings. Preliminary figures show a sharp rise in September department store sales, following a decline in August. Household appliance store sales also rose, contrary to usual seasonal behavior, in August. Sales tax collections through July indicated a rise in consumer spending. Furni ture store sales, however, were slightly off in August after several months of improvement. The farm economy is faring w e ll, although setbacks have occurred in some local a re a s. Large harvests are in prospect for several major crops, Bank Debits notably corn, sugar cane, tobacco, soybeans, and pecans. In most places the open weather of recent weeks has enabled farmers to push ahead with their harvests and fall plowing and planting. Prices received by farmers for most of the important products increased in August, standing well above year-ago levels. Broiler prices were an exception; although they rose slightly in August, they were still well below last year’s. A decline in the marketing of meat animals reduced farm production in August and, with it, cash receipts. Hurri cane Carla damaged rice, sugar cane, and cotton in southern Louisiana. The rice harvest is expected to be down only 5 to 10 percent, though, and sugar cane production should be a good bit larger than last year’s, reflecting both increased yield and acreage. Dept. Store Stocks Dept Store Sales Consumers went a little m ore h e avily into debt in August. This time they were borrowing more for home repair and modernization and various consumer goods, but less for automobiles. The introduction of the new car models may change that situation in September and October. Consumer sav ings in the form of member bank time deposits and savings and loan shares increased at about the usual pace for this time of year. Member Bank Loans Member Bank Deposits P E R C E N T OF R E Q U IR E D R E S E R V E S Borrowings from / F R Bank Excess A . Reserves 1959 I960 p Preliminary 1961 Loans at member banks stubbornly refuse to advance with the general business recovery. A slight seasonally adjusted rise in August was followed by a decline in September. Total deposits after seasonal adjustment declined in August. Even time deposits, which have been advancing almost constantly, rose more slowly than in previous months. Member banks’ reserve positions remained relatively unchanged from those earlier in the year.
@FedFRASER