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Review Monthly F E D E R A L R E S E R V E B A N K O F A T L A Atlanta, Georgia, October 31, 1952 Volume XXXVII S ix t h D is t r ic t B u s in e s s N T A Number 10 C o n d it io n s Sources of Incom e Paym ents Now that ten months of 1952 have passed, there is little doubt that by the end of the year individuals living in the Sixth District will have received more dollars in income than ever before. Last year, according to Department of Commerce estimates, residents of Sixth District states re ceived 18.9 billion dollars, a sum greater than for any preceding year. Preliminary estimates by this bank show that total income payments in the first half of 1952 were about 5 percent greater than in that part of 1951. Although data for the remainder of the year will not be available for many months, current economic indicators point to a total for 1952 very near, if not over, 20 billion dollars. Evidence of greater income payments in 1952 is found in the rate of consumer spending at District department stores, which in September was 12 percent higher than a year earlier, and preliminary data for October show a growth of about 13 percent. Sales for 1952 through October 25 were 7 percent greater than for the like period in 1951. The growth in income has also meant greater deposits at District member banks, which were up 8 percent in September from a year earlier. It has meant greater with drawals from demand and time deposit accounts, as indi cated by bank debits, which for the first nine months of 1952 were 6 percent more than for the first three quarters of 1951. At the same time, it has meant a greater rate of saving, with time deposits at member banks 7 percent greater than a year earlier. To some extent these developments have run contrary to what has happened throughout the country. It is inevitable, therefore, that questions about the source of this income growth come frequently, not only from businessmen in this section, but also from observers in other parts of the country. To answer these questions requires some knowl edge of the types of industry in the District and their geo graphical locations. Trade, manufacturing, Government, and agriculture ac counted for 64 percent of total District income payments in 1951. Seventeen cents of each income dollar came from trade. Manufacturing was the source of 16.4 cents of each dollar. Agriculture accounted for 11.4 cents and Govern ment for 19.3 cents. The source of the remaining 36 cents of the income dollar was widely distributed. Service activities accounted for 9.2 cents, and construction and transportation for slightly more than 5 cents each. Finance, public utilities, and mining each accounted for about 2 cents of the income dollar. About a fifth of the increased income over last year, judging from the estimates for the first half of the year, can be traced to greater Government payments, followed closely in importance by a gain in trade income. Service and manufacturing each provided about 10 percent of the increased income. Agriculture provided little additional in come, but there was some growth in the other types of income. The influence of the defense program spending is readily apparent from the importance of Government payrolls in the total income growth. Furthermore, this influence has permeated many other types of economic activity. Defense demands have been great enough to more than offset reduced civilian demands in manufacturing. They have stimulated construction and account for much of the increased trade in come. How the defense program has influenced the District’s economy can be illustrated by a review of recent develop ments reflecting income changes in the various states of the District. INCOME PAYMENTS TO INDIVIDUALS Sixth District States (In d ex, 1945 = 100) 7 8 M o n t h l y R e v ie w o f t h e F e d e r d t" R e s e r i) e A labam a Total income payments from all sources in Alabama were up £Ppercent for the first half of 1952 over the same period last year according to preliminary estimates by this bank. Gains were registered in agricultural, trade, service, and Gov ernment income, with the 20-percent rise in Government payments reflecting increased activity involving the national defense effort. In the face of a decline in agricultural prices, agricul tural income jumped an estimated 21 percent over the previ ous year, as the volume of marketings rose. Cattle slaughter, for example, was up 15 percent in the first half of the year over a year earlier. Also, there has been a growing propor tion of farm income from poultry products in Alabama and this tends to distribute agricultural income more evenly throughout the year. In Alabama, income from trade activities gained about 4 percent in the first half of 1952. The upward movement continued through the second quarter as a 6-percent gain over that quarter of 1951 showed up. The outlook for the last half of the year is for a continued rise in trade, which if realized will then extend into 1953. Income from services rendered has advanced similarly; gains of 9 percent in the first half and the second quarter of 1952 over the same periods a year earlier were registered. Income from trade and service will, of course, depend heavily on income pay ments in manufacturing and agriculture. Present indications are that such incomes will continue high. Income payments from manufacturing in Alabama, which accounted for about 21 percent of all payments in 1951, de clined slightly in the first half of 1952 from that period last year. Depressed employment in textiles and lumber in the first and second quarters of 1952 contributed to the decline in manufacturing income, since these two industries employ 24 and 19 percent, respectively, of Alabama’s workers in manufacturing enterprises. Payments were further reduced in the first half, as a result of the steel strike and the coal mine shut-down which accompanied it. Each of these hap penings led to a reduced workweek and smaller payrolls, but the drop in manufacturing payrolls resulting from these causes was offset to some extent by gains in employment in the construction, transportation equipment, chemical, and food-processing industries. Although construction accounts for only 4 percent of total income in Alabama, the substantial increase in em ployment for the first half of 1952 over the first half of 1951 figured significantly in determining the trend of all payments. Construction awards were down 3 percent in Alabama for the first half of the year, compared with the first half of 1951, but such awards showed a gain of 69 percent in August over August 1951. The relatively high level of income payments helped bring department store sales 8 percent above the volume of the first nine months of 1951, and furniture store sales up 20 percent. The business indicators of total deposits and total loans at reporting banks in Alabama in September were up 6 and 5 percent, respectively. These increases, taken in conjunction with a gain of 13 percent in bank debits, are indicative of the upward trend in business activity in the state. S a n k o f A t la m a f o r O a o b e r 1952 G eorgia More income came from manufacturing in Georgia in 1951 than from any other single source; the 300,000 manufactur ing workers in the state got about 20 percent of total income payments. About 64 percent of these, however, are em ployed in the textile, lumber and lumber products, and apparel industries, which respond less strongly to current defense measures than some other manufacturing industries. This may explain why income payments from manufac turing this year have not exceeded those last year. For the first eight months of 1952, textile and lumber employment were off 5 and 7 percent, respectively, from 1951, and apparel employment was down 3 percent. Just about offsetting these declines was the employment growth in the transportation equipment, food processing, and paper and pulp industries. Current indicators point to a slightly better picture for the remainder of the year since both textile and apparel activity are picking up somewhat. Other types of economic activity have also raised total income payments substantially in Georgia during 1952. Chief among these is a growth in Government payments, which, including payrolls, accounted for almost as much as manufacturing income in 1951, and probably expanded fur ther in 1952. Payments made directly to individuals do not entirely reflect the magnitude of Government spending. In some Government construction, for example, workers receive their income directly from contractors. The rate of consumer spending in two areas of the District show how important Government spending is. In Augusta, where the Savannah River atomic energy project has a multi-million-dollar weekly payroll, department store sales were up 29 percent for the first nine months of 1952, compared with that period of 1951. In Savannah, where there is a high level of activity at the military installations, such sales were up 20 percent. Sales gains in these two cities were largely responsible for the 8-percent growth in total sales in Georgia. Atlanta, Macon, and Rome sales were up only 4, 6, and 5 percent, respectively. Construction has also bolstered income in the state. Total contracts awarded in the first seven months of this year were 16 percent greater than during the like period last year and construction employment averaged one percent greater. In 1951, income payments from construction activ ity had increased 18 percent over those for 1950. Much of the activity stems from the erection of new or expanded industrial facilities. Of particular importance are the plant expansions by the pulp and paper industry. Among these are the National Container plant at Clyattville, the Rayonier plant at Doctortown, the Mengel Corporation plant at Jesup, the Southern Paperboard Corporation plant at Port Went worth, and the Rome Kraft Corporation plant at Rome. When completed, these will have cost over 100 million dollars. The bulk of Georgia’s income from agriculture, which in 1951 accounted for 11.8 percent of total income payments, is received during the last half of the year. Despite smaller cotton and peanut crops, total income this year may be close to that of 1951, partly because of higher crop prices and partly because of larger marketings of livestock. There seems to be little doubt that income from trade, service, and related activities will stay high during the %remainder of 1952. Current indications are that income payments to Georgians will be the highest on record. 7 9 After a remarkably high rate of income growth in 1951, 12 percent over 1950, the rate of Florida income growth has apparently slowed down in 1952. All major types of in come, however, except agricultural payments, were greater in the first half of 1952 than in 1951 according to current estimates. The current rate of spending as indicated by bank debits and department store sales, moreover, points to a somewhat higher rate of income growth during the re mainder of 1952. Manufacturing income in Florida, which has been sub stantially greater this year than last year, accounts for about 8 percent of the state’s total income. Between 45 and 50 percent of Florida’s manufacturing workers are employed by the food processing and lumber industries. For the first eight months of this year, lumber manufactur ing employment was almost equal to that last year and food processing employment declined only one percent. The rate of employment growth in the paper and allied products industry, however, was 12 percent and the number of transportation equipment workers increased at twice that rate. Floridians receive about one-fifth of their income from governmental sources. In 1951, Government payrolls to taled almost 470 million dollars and other types of Gov ernment payments were between 250 million and 300 mil lion. This year, with the continued activity at the many Florida military installations, Government payments will probably increase slightly in importance. Because of the significance of the tourist business in Florida, income from trade and service activities is im portant. A substantial growth in both trade and service income was indicated for the first half of 1952, but at a lower rate than the 13-percent increase reported for 1951 over 1950. Consumer spending at department stores has been heavy, with 7 percent higher sales reported for the first nine months of this year. Gains were recorded in each reporting city, ranging from 4 percent in Miami to 11 percent in Tampa; Jacksonville, 7 percent; Orlando, 6 percent; St. Petersburg, 10 percent; and in other Florida cities, 8 percent. The high level of construction activity that helped boost Florida income in 1951 has continued into 1952. Construc tion contract awards for the first nine months of this year were 9 percent greater than for the same period of 1951, although total construction employment averaged 4 percent lower for the period. Practically the only thing repressing Florida’s income during the first half of this year has been slight declines in agricultural income. Cash receipts from livestock and livestock products were down 2 percent, compared with last year, and receipts from crops, 3 percent. A 134-million-dollar increase in total deposits has been reported by Florida member banks between the end of September 1951 and the end of September 1952, an in crease of 9 percent. The greatest rate of growth was re ported by the Pensacola area. Jacksonville area deposits rose 7 percent. At the Miami area banks, they were up 11 per cent; at the Orlando area banks, 9 percent; and in the Tampa-St. Petersburg area, 6 percent. Both time and demand, deposits increased. Sixth District Statistics Florida INSTALMENTCASHLOANS No. of Lenders _ ReportLender___________________ ing Federal credit unions............... 35 State credit unions..................16 Industrial banks.....................10 Industrial loan companies . . . . 10 Small loan companies...............34 Commercial banks..................33 Volume____ Percent Change Sept. 1952from Aug. Sept. 1952 1951 +8 +41 +25 —3 —6 +6 Outstandings Percent Change Sept. 1952from Aug. Sept. 1951 1952 +26 +2 +25 —1 + 18 +30 + 18 +26 +1 +6 —1 +0 —0 +1 +2 —11 +11 +0 RETAILFURNITURE STORE OPERATIONS Number of Stores Reporting Item Instalment and other credit sales. Accounts receivable, end of month . Collections during month . Inventories, end of month . . . . . , ... ... ... ... ... 129 129 137 137 100 Percent Change September 1952 from Sept. 1951 Aug. 1952 +15 —5 —11 +0 + 15 —5 +37 +2 —1 + 16 +4 —4 WHOLESALESALES ANDi INVENTORIES* Sales Percent Change No. of Sept. 1952 from Firms Report Aug. Sept. Type of ing 1952 1951. Wholesaler +22 +9 Automotive supplies. . . . 5 +4 +6 Electrical—Full-line . . . 3 “ Wiring supplies . 4 —4 —25 7 +9 +6 “ Appliances. . . 10 +9 +6 +25 + 26 Industrial supplies . . . . 11 —7 +5 5 + 12 Lumber and bldg. mat’ls . . 3 +33 Plumbing&heating supplies . 4 —2 —26 Refrigeration equipment . . 6 —7 —5 5 +39 + 17 Confectionery............ Drugs and sundries . . . . 11 +9 + 11 . 15 + 10 + 14 +5 Groceries—Full-line . . . . 41 +4 “ Specialty lines . 10 +5 + 11 Tobacco products . . . . . 9 +3 + 16 +2 +7 Miscellaneous............ . 12 Total....................... . 161 +8 +8 *Based on U. S. Department of Commerce Figures. Inventories ercent Change no. or Sept.P30,1952, from Firms Report- Aug. 31 Sept. 30 ing 1951 1952 4 +2 +1 . 4 —4 —8 —24 6 +3 5 +5 +8 3 —3 —29 3 6 +5 +3 + 12 —2 ii —3 +2 +8 —7 —0 +1 —9 —2 —22 —4 —2 —6 32 6 5 13 98 DEPARTMENTSTORESALESANDINVENTORIES* Percent Change Sales Inventories Sept. 1952from Sept. 30,1952, from Yr.-to-Date Aug. Sept. 1952Aug. 31 Sept. 30 1952 1951 Place 1951 1952 1951 ALABAMA ............... + 17 + 14 +8 +4 +5 +27 Birmingham............ + 15 +5 +1 +1 ., +6 + 18 + 16 Montgomery............ +5 +8 +7 +14 +7 +3 +6 —3 +8 Jacksonville............ +4 +7 + 10 +4 +0 + 15 +4 +4 —8 +3 +6 +11 St. Petersburg . . . . +6 + 14 + 10 +7 +i +6 + 15 + 11 GEORGIA ................. +2 +13 +8 +9 —2 +10 Atlanta**............... —1 +4 +9 —5 +13 +30 +29 Columbus............... +1 —4 + 18 +6 + 10 +9 +8 +6 +8 +4 + 14 + 15 +5 Savannah**............ +9 +25 +20 LOUISIANA............... + 1 + 14 + 10 +6 —0 Baton Rouge ............ + 17 + 23 +8 —4 +1 NewOrleans............ —2 + 13 +9 +9 +1 MISSISSIPPI............ + 12 +3 +4 +7 —7 +10 +2 +4 +6 —6 Meridian**............ + 19 +3 +2 TENNESSEE.............. +8 +5 +3 +7 —5 Bristol**............... —4 —6 —4 +9 —3 Bristol-Kingsport## Johnson City** . . . +3 —4 —5 Chattanooga........... + 16 +8 +5 —3 Knoxville............... —2 —3 +io —5 +14 + 15 +9 +8 +1 DISTRICT................. +5 + 12 +8 +7 —1 ♦Includes reports from 122 stores throughout the Sixth Federal Reserve District. **ln order to permit publication of figures for this city, a special sample has been con structed which is not confined exclusively to department stores. Figures for any such non-department stores, however, are not used in computing the District percentage changes. 8 0 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 O c to b e r 1 9 5 2 Louisiana Louisiana’s business activity in 1952 is well on the way toward breaking the record of 1951. If the first six months’ trend continues, total income payments to individuals in 1952 will be 7 percent above last year’s 3.1 billion dollars. The most important source of income in Louisiana is Government payments, which were 10 percent larger in the first half of 1952 than in that part of 1951. Payments from trade, the second most important source of income, were up 4 percent. The largest gain, almost 20 percent, occurred in mining, as a result of increased activity in crude petro leum production and oil-well drilling. Gains also occurred in finance, transportation, and construction, which provided 15 percent of the state’s income in 1951. Agricultural income was about 4 percent greater in the first half of 1952 than in 1951, largely because of a greater volume of livestock and crop marketings. Agriculture pro vides about 10 percent of Louisiana’s income, with 70 per cent of this coming from crops—particularly cotton, rice, and sugar cane. Income from manufacturing, which accounts for 14 per cent of the state’s income, was up almost 7 percent in the first half of 1952. A longer workweek and higher hourly earnings help explain the rise. Manufacturing employment, moreover, averaged 5 percent higher in the first eight months of 1952 than in that period of 1951. New contracts in ship building and repairs accounted for part of the larger number of workers in the transportation equipment industry, and increasing ordnance production required additional workers in the metal products industry. Employment in most other manufacturing industries in the first eight months of this year lagged behind year-ago levels. A revival in demand for textile products recently was sufficient to restore employment for the eight-month period to the year-ago average. The current pickup in the lumber and wood products industry has held the eightmonth average decline to 9 percent. Since one out of five manufacturing workers is employed by this industry, its slump has accordingly dampened the growth in over-all manufacturing income. A strike lasting two months and affecting 2,400 workers caused employment in the paper and allied products industry to fall an average of 6 percent in the January-August period. Construction contract awards in the first eight months of 1952 were up 48 percent from a year ago. Business invest ments in new and expanded plant facilities have amounted to over 400 million dollars in the last fifteen months. More than half of the announced capital expenditures were made in Baton Rouge, Lake Charles, and New Orleans. Louisianians are spending their increased income at a faster rate this year, as is evidenced by an 8-percent gain in bank debits for the first nine months. Department store sales through September advanced 10 percent over last year. Furniture store sales during the same period climbed 23 percent, as business more than recovered from the doldrums of last year. Not all retailers, however, showed gains; ac cumulated new passenger car registrations in the state were off 19 percent by August. Louisiana’s economy, aided by the national defense pro gram, has progressed rapidly in 1952. In all likelihood, this pace will continue to the end of the year and to a new alltime high. SOURCES OF INCOME PAYMENTS TO INDIVIDUALS Percentage Distribution—1951 Ala. Agriculture ............ Mining .................... Manufacturing . . . . Construction .......... Transportation ----Public U tilities----Trade ...................... Finance .................. Government ............ Service .................... Other ...................... 11.3 2.5 21.2 4.0 5.0 1.6 16.2 2.6 20.1 7.9 7.6 Fla. Ga. La. 8.9 .6 7.8 6.8 5.2 1.6 19.0 3.0 19.4 12.5 15.2 11.8 .5 20.0 4.2 4.9 1.9 17.5 2.6 19.2 8.2 9.2 9.5 3.9 14.3 6.3 6.4 2.3 16.7 2.2 19.5 8.5 10.4 Miss. Tenn. Dist. 23.09.9 11.4 .6 1.0 12.4 21.7 3.9 7.2 3.9 4.9 1.6 1.2 14.9 16.6 1.9 2.6 21.1 17.6 8.9 8.5 7.8 8.8 1.5 16.4 5.6 5.1 1.7 17.1 2.5 19.3 9.2 10.2 Source: U. S. Department of Commerce M ississippi Of the five major sources of income to individuals in Mississippi, payments from trade and service combined rep resent about one-fourth of the total and those from agri cultural activities, one quarter; one-eighth comes from manufacturing and one-fifth from Government payments. All these sources are providing much more income in 1952 than in most other postwar years. The trend of total income in the state has been markedly upward since 1949, but a slight decline was registered for the first half of 1952 from the like period last year, largely because of declines in agricultural, construction, and Gov ernment payments. These declines were offset to some extent by a rise in manufacturing income, brought about by greater demands for such items as paper and allied products and apparel. Construction awards in Mississippi declined 23 percent in the first eight months of 1952. As a result, payments from construction, representing 4 percent of the state’s in come payments, were probably down. Government pay ments for the period also declined. The decrease in these two items seems to reflect a slowing down of defense ac tivities in Mississippi, where the reactivating of military installations has proceeded far since 1950. Agricultural marketings—principally cotton—and agri cultural prices were down somewhat in the winter and spring of 1952, with the result that agricultural income was off 16 percent from the first six months of last year. Farm marketings in the last quarter of 1952, however, are likely to bring total agricultural income for the year slightly below the 392-million-dollar level of 1951. More heartening to Mississippi businessmen are the gains of 8 percent in total deposits and 11 percent in total loans at reporting banks in September this year over a year ago. Also significant is the pickup of 12 percent in manufactur ing payrolls for the first eight months of this year, which took place primarily in the apparel, textile, and paper fields. These shifts in the business indicators have been reflected in department store sales, which show a gain of 4 percent over the first nine months of 1951, and in furniture store sales, which show a gain of 12 percent. Sales are also influenced, of course, by the expanded use of consumer credit. In spite of high incomes and a greater use of credit, however, new car sales were off 27 percent. From all indications income from the five major sources will continue at a high level, even though total income in the state for 1952 may be slightly below the level of 1951. 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 O c to b e r 1 9 5 2 T en nessee In 1951, income payments to Tennesseans reached an alltime high of 3.5 billion dollars. If current trends in income payments continue, the total for 1952 will be 4 percent above that figure. Except for mining and construction, all areas of business contributed to Tennessee’s income growth in the first half of 1952, compared with that period last year. Manufacturing income, the most important single source of the state’s in come, accounted for 22 percent of the total in 1951. In the first half of this year, it increased about 3 percent, principally because a slightly shorter workweek was more than compensated for by hourly wage increases. Part of the rise in manufacturing income, however, came from a moderately higher level of employment. In the first eight months of 1952, total manufacturing employment av eraged one percent higher than a year ago. A 28-percent surge in employment in the fabricated metals industry and a 4-percent increase in paper and allied products were partly responsible for the total gain. Government payrolls and transfer payments rose at about the same rate as income from manufacturing, chiefly as a result of a sizable increase in the first quarter. Two-fifths of Tennessee’s income in 1951 came from manufacturing and Government. Despite an increased demand for textile products in re cent months, employment for the eight months was off one percent; lumber employment was down 4 percent. These two industries normally employ a fourth of all manufac turing workers in Tennessee. Despite more vigorous de mands for chemical and allied products in recent months, the average number employed in that industry in the Janu ary-August period was the same as last year. Agricultural income in Tennessee for the first half of 1952 equaled that of a year ago. Tennessee’s agriculture, which is the most diversified in the Sixth District, is about evenly divided between livestock and crops. During the first half of 1952, cash receipts from livestock were off 1.5 percent because of lower prices, but receipts from crops rose 4 percent. Construction was off in the first eight months of 1952, judging from a 7-percent decline in employment. Comple tion of several major projects which were underway last year and a month-long labor dispute in the Chattanooga area partly explain the reduction. A strengthening of con struction activity may be in the offing since awards through August ran 44 percent ahead of the like 1951 time interval. New or expanded plant facilities, either in the planning, building, or completed stages, announced during the last fifteen months were valued at almost 700 million dollars. Projects, mainly in the chemical and textile industries, were announced for scattered areas of the state. Further evidence of the growth in income is reflected in expanded consumer spending at department and furniture stores, where sales through September were up 3 percent and 7 percent, respectively. If the current department store sales rate continues, sales for 1952 will total 100 million dollars. Thus, business activity in Tennessee, measured by the rel ative stability in bank debits through September, appears to be leveling off. Because of its relatively high degree of in dustrialization, Tennessee will continue to be strongly af fected by changes in defense expenditures. 8 1 Sixth District Indexes 1 9 4 7 - 4 9 = IOO DEPARTMENTSTORESALESANDSTOCKS* ____ Adjusted**____ _____ Unadjusted Sept. Aug. Sept. Sept. Aug. Sept. Place_______________ 1952 1952 1951______ 1952 1952 1951 DISTRICT SALES . . . . 121 131 112r 126 115 117r 123 107r 129 126 123r Atlanta1 .................. 113 Baton Rouge............ 10S 111 91 119 99 100 Birmingham............... 127 119 115 139 105 126 Chattanooga...............121 124 117r 133 110 129 Jackson.................... 101 119 102 121 106 123 Jacksonville............... 110 114 106 108 100 103 Knoxville.................. 105 120 113 110 108 119 Macon..................... 127 156 126 144 128 142 141 119 108 103 98 Miami.................... 131 Nashville.................. 118 114 107r 123 104 112 NewOrleans............... 113 129 104 117 114 108 Tampa..................... 119 122 108 113 102 102 DISTRICT STOCKS. . . . 130 129 132_______135 127r 137 *ln order to permit publication of figures for this city, a special sample has been con structed which is not confined exclusively to department stores. Figures for any such non-department stores, however, are not used in computing the District index. GASOLINETAXCOLLECTIONS Place Alabama . . Louisiana . . Mississippi . Tennessee . . . . . . . Sept. 1952 . 141 . 141 . 141 . 140 144 . 136 Adjusted** Sept. Aug. 1952 1951 142 154 136 145 127 147 134 146 148 157 152 161 157 157 Aug. 1952 109r 105r 107 103 125 101 Sept. 1951 111 113 108 117 113 101 MANUFACTURINGEMPLOYMENT Aug. Place 1952 TOTAL**. . . 109 Unadiustcd 109 Alabama . . 104 Florida. . . 112 Georgia. . . 112 Louisiana . . 104 Mississippi . 111 Tennessee . . 110 July 1952 107 105 93 111 109 102 110 107 Aug. 1951 107 107 103 106 113 99 109 107 CONSUMERS PRICE INDEX*** Sept. Item 1952 ALL ITEMS. . 197 Food . . . . 237 Clothing . . 208 Fuel, elec., and refrig. 144 Home fur nishings . 201 Misc. . . . 176 Purchasing power of dollar . . . .51 Aug. 1952 199 241 208 144 204 175 Sept. 1951 192 233 214 143 201 165 .50 .52 *Daily average basis **Adjusted for seasonal variation ***1935-39 = 100 r Revised Unadjusted Aug. Sept. 1952 1951 152 145 146 143 124 142 149 140 159 155 166 156 158 160 ELECTRICPOWERPRODUCTION* COTTONCONSUMPTION* Sept. Place 1952 TOTAL**. . . 108 Unadjusted 110 Alabama . . 113 Georgia. . . 109 Mississippi . 129 Tennessee. . 105 Sept. 1952 143 145 138 147 147 148 138 Aug. 1952 SIX STATES . 158 Hydro generated . 77 Fuelgenerated . 233 July 1952 154 78 224 Aug. 1951 140 84 191 CONSTRUCTIONCONTRACTS Place DISTRICT . Residential Other . . Alabama . . Florida. . . Georgia . . Louisiana. . Mississippi . Tennessee . . . . . . . . . . Sept. 1952 704 156 1,119 180 165 140 109 126 2,737 Aug. 1952 222r 194r 244r 264 231 209 319 106 217 Sept. 1951 130 149 116 86 151 119 163 72 140 ANNUAL RATE OF TURNOVER OF DEMAND DEPOSITS Sept. 1952 Unadjusted . . 23.1 Adjusted** . . 22.9 Index** . . . 118.9 Aug. 1952 20.8r 23.1r 119.9r Sept. 1951 23.5 23.3 120.9 CRUDE PETROLEUMPRODUCTION INCOASTALLOUISIANAAND MISSISSIPPI* Sept. 1952 Unadjusted . . 136 Adjusted** . . 137 Aug. 1952 135 135 Sept. 1951 129 131 Momt hmf nBrtew »/ th e, F id e m l I l t s iii ue. Dim/i p/ jltftmtu fvn Octofew J96fl Productive Capacity o f Agriculture By 1955, the nation’s farm production could be increased 20 percent over the 1950 level, according to a study under taken in 1951 by the Land Grant Colleges and the Depart ment of Agriculture to determine agriculture’s ability to meet defense needs. Of particular significance to this sec tion of the country is that 44 percent of the increase would conceivably take place in the South, where farm output could rise by a fourth in the five-year period. Data for individual states were assembled by sub-committees consisting of agricultural engineers and economists, agronomists, and extension workers, who are familiar with conditions in their respective states. Committee members used historical data to establish trends and then, pooling their judgments based on practical experience in farming and knowledge of research results in different areas, esti mated the possibilities for their state. Subsequently, the state estimates were combined to form a national report. Assumptions upon which the technicians based their projections included a national population of 162 million in 1955, compared with 153 million in 1950, and a civilian employment level of 63.5 million, in contrast to 60 million. Personal disposable income, it was assumed, would rise from 203 billion dollars in 1950 to 252 billion in 1955 with the index of wholesale prices (1926=100) rising from 162 to 185. Prices paid by farmers were not expected to increase as much as prices received, with a resulting favorable parity ratio for all farm products of about 105. Another assump tion was that the national economy would be strongly in fluenced by defense activities through 1955, in which case the economic climate would be favorable for farmers, since for agriculture as a whole, income would exceed outlays, markets would expand, and value of assets would rise. The report pointed out that even if the assumptions did not hold, the ability to increase output would still be present al though a longer period of time might be required. Agricultural productive capacity at a particular time and with a fixed land base is limited largely by adverse weather, lack of knowledge, failure to apply existent knowledge, un certainty about the profitableness of new investments as well as shortages of funds for such investments, unavailability of supplies and, possibly, a labor shortage. Most encour aging in the national effort to increase agricultural produc tion is the great store of scientific knowledge and improved practices that will increase yields of crops and animals. Twenty percent more output by 1955 compares favorably with the actual gain of 28 percent for the war years of 1942-44 over the prewar years of 1935-39. Favorable weath er explains about one-fourth of the wartime gain, and at least normal weather conditions will be necessary to realize the estimates for 1955. Know-how regarding farm mechani zation, hybrid seed, use of lime, fertilizers, insect poisons, and disease preventives, livestock rations, and conservation practices had been acquired during the 1930’s. When called upon for more output under the stimulus of high prices, farmers put the additional knowledge to work and, despite a declining labor supply and scarcities of machinery and some farm supplies, attained record levels of produc tion. In the final analysis, this attainment was made pos sible because the improved methods complemented each other—the use of one often permitting or expanding the use of another. Further improvements in farm management practices are possible. It is upon this feature that the estimates for 1955 are built, and if science continues to break new ground in agricultural knowledge, the productive capacity may prove to have been underestimated. In th e N ation To realize the estimated gain by 1955, the nation’s farmers will have to incur increased costs involving the purchase of about 70 percent more commercial fertilizer, more ma chinery, lime, seeds, and insect poisons. These added costs would reflect a continuation of the greater use of production goods in relation to land and labor that has been occurring at a rapid pace since the early 1940’s. National output per man-hour by 1955 would be about 18 percent above that of 1950, with 58 percent of the gain in feed crop and livestock production. Output of crops and livestock would increase one-fifth each, with crop production requiring only 3 percent more acres. Contributing to the crop and livestock production gains would be an estimated decrease of about 30 percent in animal power. This implies a further decline in numbers of horses and mules on farms and consequently a release of feed and forage for other types of stock. Wheat and corn would be very, significant in the high level of national production in 1955. By planting 9 percent more acres to wheat and by raising yields 24 percent, farm ers should be able to increase wheat production 36 percent. The 17-percent increase in corn would simply be a matter of increasing yields, since the same number of acres would be planted as in 1950. Cotton production could reach a level 70 percent over that of 1950 with an acreage increase of 30 percent and a yield gain of 31 percent. Other projected levels of production include a gain of 33 percent for rice, 25 percent for tobacco, 22 percent for tame hay, and 12 percent for peanuts. Production of broilers and beef cattle are visualized as reaching a level 64 and 21 percent, respectively, above the 1950 production. With an estimated 14-percent increase in the number of pigs saved, the quantity of pork produced would be 19 percent higher in 1955. A combination of 4 percent more cows and 7 percent more milk per cow would insure an 11-percent increase in total milk production. More hens and pullets on farms and more eggs per layer indicate an attainable gain in egg production of 13 percent. This attainable production denotes extended use of soilconserving hay and pasture crops, fewer acres of row crops, and more livestock. With advancing farm mechanization, such shifts in production patterns are underway. In th e S outheast Livestock, with ample feed grains to support them, account for about one-half of the possible increase in the entire South. Fundamental in this gain would be pasture develop ment. Estimates by the state committees indicate that through the use of more lime and fertilizer, feed produc- M o m h e y R e v ie w o f tim -F e d e r a l R e s e rv e B m v k -o f A t la n ta f o r O c to b e r 1 9 5 2 tion from rotation pastures in the Southeast can be in creased by about 12 percent and that of other open pas tures by 64 percent. Such improvement of permanent pas tures, plus a greater stress on high-yielding legumes and more efficient methods of harvesting and curing, would help raise hay yields 23 percent. With a 13-percent increase in acreage, total hay production could then be 39 percent over that for 1950. With added forage and grains, the number of cattle and calves on southeastern farms as of January 1, 1955, could well be up 39 percent from 1950. Beef cows would be up 53 percent and cows kept for milk 11 percent. In order to build and maintain such a herd, farmers would have to improve their management practices. Most importantly, they would have to expand the use of their grassland, thus saving on feed concentrates. In addition, they would have to maintain body weights of brood cows so that healthy calves are born. Milk production on southeastern farms is tied closely to pasture development, but improved management prac tices such as feeding balanced rations, breeding for produc tion, and disease control, are also significant. An estimated 8-percent increase in average number of milk cows on farms and a 19-percent increase in production per cow adds up to a 29-percent gain in southeastern milk output by 1955. This increase is predicated on a prospective strong demand for milk, as well as on the concentration of cows in herds of commercial size under reasonably efficient management. Southeastern hog production could increase 38 percent over 1950, principally through improved practices, such as feeding brood sows adequately, using farrowing pens to reduce pig mortality, using antibiotics and following proper sanitation and vaccination programs to control diseases and parasites. Poultrymen in the Southeast who specialize in commercial flocks and who pay close attention to feeding, breeding, selection, and disease control in their flocks, will account for the estimated increase of 27 percent in egg pro duction. Although improved management practices are paramount in achieving high yields from livestock, the yields of rough age rest in part upon extended mechanization. Harvesting of feed grains and hay, for example, can be more fully mechanized. In considering future mechanization, the agri cultural experts felt that stepped-up southern production would require half again as many pick-up balers, about a fourth more mechanical corn pickers and combines, and an eighth more milking machines and silos. The small invest ment in machinery per crop acre in the South, compared with that in the nation, lends substance to the contention that mechanical developments already within sight can create as influential an impact on agricultural production in the next decade as occurred in the last decade. Especially signifi cant for owners of small farms on rolling land has been the development of a small-size tractor with appropriate equipment. Fortunately the greatest opportunity for producing more in the near future lies in the application of approved farm practices, which may be divided into two groups—those which are a “combination” of practices because of interre lated effects and those which, when introduced singly, will have a major effect on yields. A “combination” of practices is embodied in the feeding, breeding, selection, and disease control of a dairy herd. An important single practice is fer *83 Sixth District Statistics CONDITION OF27 MEMBERBANKS INLEADINGCITIES (In Thousands of Dollars) Item Loans and investments— Oct. 22 1952 Sept. 24 1952 Oct. 24 1951 Percent Change Oct. 22,1952, from Sept. 24 Oct. 24 1952 1951 2,893,195 2,829,444 2,692,311 Loans—Net................. , 1,167,356 1,132,341 1,066,156 Loans—Gross..............., 1,187,861 1,152,250 1,084,751 Commercial, industrial, and agricultural loans . 671,605 650,654 621,055 Loans to brokers and 13x169 dealers in securities . . 16,059 12,489 Other loans for pur chasing or carrying securities.............. 39,976 42,513 34,358 Real estate loans. . . , 94,473 91,459 86,299 37144 Loans to banks............ 2,712 4,462 Other loans.............. 363,036 351,311 326,088 Investments—Total . . . . 1,725,839 1,697,103 1,626,155 Bills, certificates, and notes ............... 744,469 722,323 753,162 U. S. bonds ............... 714,712 714,076 6367850 Other securities . . . , 266,658 260,704 236,143 Reservewith F. R. Bank . . 536,316 513,020 524,837 Cash in vault............... 47,818 48,244 47,013 Balances with domestic 205,123 226,363 207,441 Demand deposits adjusted . 2,097,363 2,044,013 2,008,949 Time deposits.............. 556,095 554,503 529,947 U. S. Gov't deposits. . . ,. 129,043 152,007 100,037 Deposits of domestic banks . 623,875 615*088 603,618 42,500 20,200 12,000 *0ver 100 Percent. +2 +3 +3 +3 +22 +7 +9 +10 +8 +29 —6 +3 —14 +3 +2 +16 +9 —39 + 11 +6 —1 + 12 +13 +2 +2 +3 +0 +2 +5 —1 —9 +3 +0 —15 +1* —1 +4 +5 +29 +3 * DEBITS TOINDIVIDUALBANKACCOUNTS (In Thousands of Dollars) Percent Change Sept. 1952from ------ Yr.-to-uate Sept. Aug. Sept. 9 Mos. 1952 1951 1952 1951 from 1951 Sept. Aug. 1952 1952 Place ALABAMA 31,112 31,168 27,271 Anniston . . . . 392,371 Birmingham . . 437,640 378,905 17^328 21,635 18,716 Dothan . . . . 22,941 23,740 22,471 Gadsden . . . . 169,412 152,777 149,879 Mobile . . . . 89,474 Montgomery . . 100,184 95,857 31,241 28,646 29,804 Tuscaloosa* . . FLORIDA 374,007 331,629 Jacksonville . . 386,468 311,927 282,546 260,978 430,880 Greater Miami* . 470,520 398,620 75,006 78,015 61,127 Orlando . . . . 50,799 49,149 39,668 Pensacola . . . 78,426 75,545 66,761 St. Petersburg . . 160.638 156,672 141,236 Tampa........... 49,283 45,235 42,442 West PalmBeach* GEORGIA 34,896 33,301 32,483 Albany . . . . 972,068 Atlanta . . . . 1,205,969 1,039,559 98,018 90,269 87,641 Augusta . . . . 11,888 11,653 Brunswick . . . 11,668 80,971 76,321 Columbus . . . 76,779 5,965 4,458 Elberton . . . . 4,823 28,732 24,024 Gainesville* . . 24,582 14,690 12,842 Griffin* . . . . 13,098 85,394 80,649 81,139 11,346 Newnan . . . . 11,146 9,541 28,718 ‘ 23,929 22,608 Savannah . . . . 118,165 114A691 111,032 16,786 36,654 Valdosta. . . . 15,246 LOUISIANA Alexandria* . * 49,020 42,572 42,348 115,707 Baton Rouge . . 122,959 100,848 Lake Charles . . 52,477 50,524 46,868 NewOrleans . . 901,665 888,141 807,725 MISSISSIPPI 22,014 Hattiesburg . . . 19,947 19,600 Jackson . . . . 185,089 166,857 165,615 Meridian . . . . 37,194 30,479 34,627 Vicksburg . . . 34,942 27,949 32,173 TENNESSEE Chattanooga . . 183,607 174,162 175,796 Knoxville . . . 128,538 129,449 129,939 Nashville . . . 408,142 447,019 388,674 SIXTH DISTRICT 32 Cities. . . . 5,593a012 5,270,928 4,898,783 UNITED STATES 342 Cities . . 139,078,000124,641,000121,201,000 * N o t included in S ix th D is tric t to ta ls . —0 +12 +25 +3 + 11 +12 +9 +3 + 10 +9 —4 +3 +4 +3 +9 +5 +16 +9 +2 +6 +34 +20 + 14 +6 +2 +20 +3 —54 +15 +6 +4 +2 +14 + 15 + 16 +6 + 13 +5 +5 + 17 +20 +18 +23 +28 + 17 +14 +16 +7 +24 + 12 +2 +5 +24 + 17 +12 +5 + 19 +27 +6 +10 +16 +22 + 12 + 12 +6 +6 —0 +2 +4 +3 +0 +6 +9 +9 + 10 +15 +11 +6 +2 +7 + 6 +15 +1 +9 +7 +15 +4 +3 +2 +1 +3 +11 +11 +5 +12 +8 +10 +11 +22 +25 +5 —1 —9 +6 +12 +12 + 12 +7 +9 +4 —1 +5 +14 +15 +6 +6 +2 + 14 —0 —7 +6 +6 +6 M 8 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 O c to b e r 1 9 5 2 tilization. In the Southeast the land would need 54 percent more plant nutrients in the form of fertilizer to reach attain able 1955 production. Estimated requirements are 64 per cent more nitrogen, 38 percent more phosphorous, and 68 percent more potash. As is true for the nation, increases in crop production in the South would not come from cultivating more acres, but from more output per acre. Total output would increase as a result of better land use as well as of higher yielding varieties. Contour farming and strip cropping, beneficial in the Southeast in reducing soil erosion and holding water for thirsty crops, would be expanded. Additional planting of green manure crops would aid in erosion control, pro duce winter grazing, and improve fertility. More and more southern farmers are turning to such crops. Better land use is also facilitated by the gradual consolidation of small farms into larger units. Such forces as these, which have helped shape the rising trends of production since the 1930’s, will continue to influence production in the future. Crop production per acre in the South by 1955 could reach a point 28 percent above that for 1950, the greatest gain for any section of the nation. Higher yields would be paramount in this gain. Corn production in the Southeast, for example, would grow by 43 percent, in the face of a 10-percent decline in acreage. To accomplish such produc tion, farmers would have to use plenty of fertilizer and hybrid seed; they would have to improve their crop rota tions, make use of green manures and residues, and control pests. Great dependence would be put on hybrid seed which can, according to tests, increase corn yields 20 percent over open-pollinated varieties with the proportionate gain usually about the same on good and poor land. Cotton yields in the Southeast may be raised by 83 per cent if the known fertilizer practices, pest controls, improved seeds and seed treatment, and improved crop rotations are put into use by more farmers. Greater efficiency plus 17 percent more acres planted to cotton would raise south eastern production by 115 percent. The possible gain of 41 percent in rice production would come primarily from 36 percent more acres, since yields could only be increased about an estimated 4 percent. More efficient harvesting with the combine-drier would help to B a n k A n n o u n c e m e n ts On October 13, the Farmers and Merchants Bank, Columbia, Tennessee, was admitted to membership in the Federal Reserve System . Officers are: C. A. Whelchel, President; H. N . Harrison and J. 0 . Wil liams, Vice Presidents; S. E. Witt, Assistant Vice President; Joe Roberts, Cashier; A. Elizabeth Smith and Evelyn Atkerson* Assistant Cashiers. It has capi tal stock of $200,000 and surplus and undivided profits of $86,500. Effective November 1, the Gulf State Bank, New Port Richey, Florida, will remit at par for checks drawn on it when received by the Federal Reserve Bank. Officers are A. L. Ellis, President; R. Draft, Vice President; and Richard A. Cooper, Cashier. It has capital stock of $75,000 and surplus and undi vided profits of $37,500. lower costs and place rice in an improved competitive po sition. Yet to sell more rice, farmers would have to depend on continued export demand. Peanut production could be raised 23 percent through a combination of increasing acreage 7 percent and yields 15 percent. Yields would be improved by better rotations, greater use of proper fertilizers, seed treatment, and dusting for leaf spot. The need for more peanuts would depend upon future demand and supply for vegetable oils. These estimates of possible production levels in southern agriculture focus attention on the fact that commercial farming will become a more complex business, requiring more capital, more training, and top-notch managerial abilities. An Evaluation The report on agriculture’s productive capacity is not regarded as a forecast of what farmers will do, but rather of what farmers could attain by 1955. Potential production of the magnitude envisioned rests, of course, upon recent agricultural trends and adjustments taken in conjunction with some general assumptions about the state of the econ omy in the intervening years. These assumptions include average weather throughout the period, ample supplies of production goods, and improved practices adopted by more farmers, the last of which would have to be promoted through more intensive educational programs. Given the production supplies, the favorable weather, the market, and the price incentive, the key factor becomes the farmer. His ability to produce more encompasses many things—skill as a laborer, as a mechanic, as a purchasing agent, as a marketer, and as a progressive manager in find ing out about and applying improved practices that have been demonstrated as capable of increasing production. Most difficult for farmers to overcome is inadequate knowl edge. Farmers are sometimes reluctant to try improved practices because they are not sure of the results on their particular farm. Sometimes they wish to watch neighbors experiment a little longer. And, of course, there is the element of risk in injecting more capital into their business es; the willingness to take such risks and the ability to see them through varies among men. The dynamic forces operating in our economy will bring forth many changes during the period covered by this study. It would be interesting to speculate as to what may happen to production in the event that farm prices begin to decline in the next few years, a viewpoint to which many economists subscribe. During such periods, costs of farming reflected in prices paid by farmers invariably lag behind the more rapid decline of returns reflected in prices received, with the result that net incomes are squeezed to the point that some lose money. As a whole, farmers are in a much sounder financial condition now than they have ever been in a similar period, and for this reason can take some price declines without disastrous results. In their attempt to main tain incomes, however, individual farmers undoubtedly will try to produce a larger volume for sale at lower prices. At the same time they will make an effort to eliminate un necessary expenditures. Price declines of prolonged dura tion, of course, will be reflected in lowered total production. A rth u r H. Kantner
@FedFRASER