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FEDERAL RESERVE BANK OF ATLANTA
V o lu m e
X X I X
A t la n t a , G e o r g ia , S e p te m b e r 3 0 , 1 9 4 4
N u m b e r 9
Pine, Pulp and Paper
ith the discovery that the Southern pine tree provides an
economic and renewable source of cellulose, the pulp,
paper, and paper-products industry in the Southeast was ele
vated to an important place in the region’s economy. The pulp
industry in the South is relatively new. About 3.8 million
short tons of wood pulp were produced in the United States in
1920, but the South was responsible for less than one-half
million tons of that amount. By 1942, however, it was pro
ducing more than twice as much wood pulp as any other
region in the country was; in that year approximately 4.6
million short tons of the nation’s total 10.4 million were
produced in this section of the country. The War Production
Board has set a 1944 goal of 14 million cords for domestic
pulpwood producers. Of this total, the Southern states from
Virginia to Texas are expected to produce about 8 million
cords. Thus, the increasing importance of the Southern forests
in the production of pulpwood during the years since World
War I has been accentuated during the present war.
Pulp mills have been established in each of the six states
of the District. The Gulf States Paper Corporation established
a pulp mill at Tuscaloosa, Alabama, in 1928. That same year,
the Mobile Paper Mill Company established a mill at Crich
ton, Alabama. Three additional paper mills that came to the
state were located in Mobile: the International Paper Com
pany established a plant there in 1929; the National Gypsum
Company, in 1938; and the Hollingsworth and Whitney Com
pany, in 1940.
Although its progress has been rapid in the past few years,
the development of pulp manufacture in Florida did not get
under way until 1930. In that year the International Paper
Company’s plant at Panama City was built. Three more new
mills were located in Florida in 1938. These were the Con
tainer Corporation of America plant at Fernandina; the
National Container Corporation mill at Jacksonville; and the
St. Joe Paper Corporation mill at Port St. Joe. In the follow
ing year, Rayonier, Inc., established a pulp mill in Fernan
dina. TEe Florida Pulp and Paper Company built a mill at
Pensacola in 1941, and the Santa Rosa Pulp Company is now
constructing another mill there.
Not until the middle 1930’s did the Georgia development
come. The Union Bag and Paper Corporation in 1936 estab
lished a mill at Savannah; in 1938, the Brunswick Pulp and
Paper Company began operations at Brunswick; and in 1941,
St. Mary’s Kraft Corporation built a mill at St. Mary’s.
Concentrated in the decade between 1918 and 1928, the
development in Louisiana began with the construction of the
Gaylord Container Corporation mill at Bogalusa during the
first year of the period. The International Paper Company
became the owner of two mills at Bastrop between 1921 and
1924, and the Brown Paper Mill Company, Inc., began oper
ations in West Monroe in 1924. Two years later, the Calcasieu
Paper Company built a mill at Elizabeth, and the Southern
W
Advance Bag and Paper Company began production at Hodge
in 1928. Ten years passed before any additional pulp mills
were established in the state. Then, in 1938, the International
Paper Company built a pulp mill at Spring Hill.
Though pulp manufacture began in Mississippi before
World War I with the establishment of an International
Paper Company plant at Moss Point, subsequent development
was sporadic. The Masonite Corporation began to manufac
ture pulp at Laurel in 1926, and within the next four years
the United States Gypsum Company opened a mill at Green
ville. Ten years later, in 1940, the Flintkote Company began
operations at Meridian.
* Three pulp mills are located in Tennessee, all established
during the 1920’s. The Mead Corporation built a mill in
Kingsport in 1923, the Southern Extract Company began
operations in Knoxville in 1925, and the Mead Corporation
established a second mill at Harriman in the last year of the
decade.
►At the time of the last Census of Manufactures, 1939, the
pulp and paper industry in the District had already reached
major proportions, and some expansion has taken place since
that year. The census figures for the year 1939 showed that
manufacturers of paper, paperboard, and paper products
employed 2,914 persons in Alabama. Total wages paid in the
industry there during the same year were 2.9 million dollars.
In Florida, 2,180 persons employed in the manufacture of
the same products earned 2.5 million dollars. Earning 3.0
million dollars in the industry in Georgia were 3,192 em
ployees. The industry in Louisiana paid 6.5 million dollars
in wages to a total of 5,910 employees. Tennessee wage earn
ers in the industry numbered 2,491 and earned a total of 2.5
million dollars during the year.
Similar figures for Mississippi are not available because
the number of establishments in the state in 1939 was so
small that release of the figures would indicate the size of
individual plants. It is impossible to secure comparable fig
ures for the woods’ end of the industry in the District, but
additional thousands of persons were employed in cutting
pulpwood and transporting it to the mills, and their wages
amounted to several million dollars. A ll these figures have
risen substantially since that year.
When the pulp and paper industry began to come South
early in the present century, wage costs were substantially
lower in the Southern area than they were in the rest of the
country. This differential has now been narrowed. The Quar
terly Labor Review of the American Paper and Pulp Associ
ation reveals that in January 1944 the average hourly wage
rate paid to male common labor in the South in the industry
was 60.4 cents; in the country as a whole it was 67.2 cents.
States included in the Southern region by the association are
South Carolina, Georgia, Florida, Alabama, Louisiana, Mis
sissippi, Arkansas, and Texas. Tennessee is classified by the
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association as being in the Central zone. In January 1944, the
wage rate for male common labor in that zone was 65.1 cents.
Excluding employees of converting departments, i.e., em
ployees engaged in manufacturing paper products, the aver
age hourly earnings of productive employees in 204 United
States pulp and paper mills increased from 49.9 cents in
January 1934 to 89.3 cents in January 1944. Over the same
10-year period, average hourly earnings of productive em
ployees in the Southern industry as represented by the figures
supplied by nine mills in that zone increased from 44.8 cents
to 87.8 cents. The differential has thus been narrowed from
5.1 cents to 1.5 cents in the last 10 years.
Hours of work have been increased during the past decade,
but less rapidly in the South than in the country as a whole.
In January 1934, 204 pulp and paper mills in the United
States reported that the average number of hours worked
weekly by productive employees (all employees excepting
office workers, mill managers, and superintendents) was 33.8.
Ten years later, the average work week had increased to
46.4 hours. The average work week in the South was 2.1 hours
longer in January 1934 than the national average work week.
That month, nine Southern mills reported an average work
week of 35.9 hours. The Southern average in January 1944
was 44.6 hours, 1.8 hours less than the national figure.
Between January 1934 and January 1944, mills reporting
to the Pulp and Paper Association increased employment by
almost 10,000 workers, from 53,758 to 63,454. Almost half of
this increase took place in the South. Nine identical Southern
mills in January 1934 had on their pay rolls 4,951 productive
employees, and 10 years later they had 8,733. Nothing like
this rate of increase was recorded in any other region. The
average size of the Southern mills is much greater than that
in other regions. For example, 16 mills in the Central states
employed only 3,474 persons in January 1944, and 50 mills
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in New England employed only 13,976 persons in that month.
^ Wartime demands have led to increased production by the
pulp and paper industry. In the first seven months of 1944,
pulpwood receipts at Southern mills were 15.5 per cent higher
than they were in the corresponding period of the preceding
year, but this difference was lower than the national increase
of 21.7 per cent for the same period. The country’s produc
tion of wood pulp to August 1 of this year was 4.2 per cent
above the 1943 figure, but, because of fewer imports, total
inventory of pulp on July 31, 1944, was 33.4 per cent below
the level of July 31, 1943.
Paper and paperboard requirements of the war effort are
immense, and supplies available for civilian uses have been
seriously curtailed in recent months. Some 700,000 articles
are being manufactured for the Army and Navy, and most of
these items must be packaged before they can be shipped to
the fronts. Perhaps the most spectacular wartime development
in packaging is waterproof paper. Items wrapped in this
paper can be thrown overboard and floated ashore with no
danger of water damage. Military requirements for this
waterproof paper were 20,000 tons during the last three
months of 1943. In the first quarter of 1944, requirements
jumped to 150,000 tons.
Total wood-pulp supplies available to United States mills
during the three-month period from July 1 to October 1,
1944, are estimated at 2.8 million tons, of which it is esti
mated 2.5 million tons were domestically produced, the re
mainder having been imported from Canada. Total paper
and paperboard production during the third quarter of this
year is estimated at 4.3 million tons. Of this total, container
board took 1.1 million tons, wrapping paper and bags and
other coarse paper products 475,508 tons.
The continuing labor shortage has seriously handicapped
attempts to expand production of wood pulp during the war.
The cutting of pulpwood is still almost entirely a hand oper
ation. About the only machines used are the five-foot saw
and the smaller trucks. A portable power saw is being used
in a few operations. A new saw operated on the chain princi
ple is being tried out, and it may revolutionize the woods
end of the pulp and paper industry by mechanizing the cut
ting of pulpwood. The problem of getting the wood to the
mill after cutting is an acute one because of the heavy reli
ance upon trucks for this work. Shortages of repair parts,
heavy-duty tires, and gasoline plus the limited supply of new
trucks available to the industry are seriously handicapping
operations, though the situation has improved somewhat in
recent months.
► In general, the pulp and paper industry in the Southeast can
face the future with a degree of optimism. One reason for
optimism is that the Southern mills have two distinct advan
tages over the Northern mills. In the first place, Southern
mills are larger and newer and hence more efficient than the
Northern mills. Secondly, Southern mills do not have to
maintain a large stock of pulpwood because they can get
deliveries the year around. Northern mills, on the contrary,
cannot ordinarily get wood out of the forests during the
winter months and hence must maintain huge inventories.
Maintenance of inventories involves interest costs and in ad
dition involves expensive insurance premiums against fire.
The production of kraft paper promises to continue to
dominate the paper industry in the District. Some years ago
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the possibility of manufacturing newsprint from Southern
pine pulp received enthusiastic publicity. It seems unlikely,
however, that the industry in the South will take this direc
tion. In the first place, newsprint is a low-value product rela
tive to the other possible end products from Southern pine.
Secondly, the plants in the South are chemical-process plants
— chiefly sulphate— and newsprint contains about 80 per cent
ground wood since the pulp is made by the physical disin
tegration of pine logs rather than by chemical disintegration.
As a result, the capital loss involved in converting Southern
kraft mills to newsprint production constitutes a prohibitive
expense. Furthermore, the tremendous advances in recent
years in the bleaching of kraft paper have reached a point
where paper of a whiteness comparable to that manufactured
in Northern mills from spruce and other timber can be pro
duced from pine. Paper products from white paper are far
more profitable to manufacture than is newsprint.
Continued sound operation of any industry dependent upon
the forest is, in its turn, absolutely dependent upon sound
forestry practices in the area. That is to say, the forest must
be treated as a crop that is planted and harvested rather
than as a mineral that is mined once and for all. The larger
pulp and paper mills in the South own outright vast acreages
of pine forest, and they are, in varying degrees, applying the
best forest management practices on these acreages to assure
a continuing supply of raw material.
One of the large costs in the manufacture of paper is
freight, and the farther back from the mill the forest is cut
down, the farther the pulpwood has to be hauled and the
higher is the freight charge against the paper. As a result,
mills in cut-over areas cannot compete in price with mills in
sections where wood is abundant. The large pulp and paper
producers, the more progressive of them, attempt not only
to manage their own holdings properly but also to encourage
the private timber owners, from whom they purchase pulp
wood through contractors, to adopt modern management
practices.
A major problem for all Southern industries drawing their
raw materials from the forests is the continuing enormous
loss by fire of vast stands of timber. It is estimated that 90
per cent of all forest areas burned in recent years have been
concentrated in 11 Southern states. It is probable that more
wood is burned in Southern forests each year than is con
sumed in pulp mills.
The treating of trees as a recurrent crop involves not only
fire protection and reforestation but also the use of the forest
in the most advantageous manner. The butt cuts of pine trees
worked for turpentine, for example, are not in ordinary
times acceptable to the pulp mills because they have been so
burned that they are less desirable for the pulping process.
Some attention has been given to the possibility of manu
facturing pulp from bamboo. The United States Plant Intro
duction Station is currently experimenting on new uses for
bamboo at the Bamboo Gardens near Savannah. Although
industrial uses undoubtedly will be developed for bamboo
types that can be grown in the South, there seems little reason
to expect any wide use of bamboo for paper pulp. Proper
forest management practice requires the thinning of stands
of pine, and the major market for such trees is the pulp mill.
Furthermore, bamboo is so light that the transportation cost
involved in moving a sufficient tonnage to pulp mills would
be prohibitive.
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►The Southern Forest Survey in the mid-1930’s indicated that
there was a considerable margin of growth above drain so far
as cordwood was concerned. Thus, some millions of cords
each year are available for pulping without reducing the
total forest area or volume. Furthermore, the annual produc
tion of 500,000 barrels of turpentine, the average prewar
production, means that enough trees are discarded from the
naval-stores operation annually to provide 1,800,000 cords
for pulping. The average diameter of the abandoned turpen
tine tree is approximately 12 inches, and, because of damage
to the wood through the turpentining operation under old
methods that still dominate the industry, only about 15 per
cent of the volume of timber abandoned by naval-stores pro
ducers is of saw-timber quality and size.
Foresters believe the existence of a good pulpwood market
may often mean the difference between the success and failure
of a sustained forest operation, since the money realized on
the sales of pulpwood from thinnings and intermediate cut
tings while the stand is growing to final saw-timber size may
suffice to carry the cost of the stand during the period of
waiting. It is true that an overexpansion of the industry in
the area would mean excessive cutting of trees for pulp, and
this degree of development is to be avoided.
►What does the postwar future hold for the pulp and paper
industry? The U. S. Department of Commerce has made fore
casts of estimated domestic production and imports of wood
pulp at various levels of gross national product. The depart
ment took 1946 as the assumed first postwar normal year and
calculated production of wood pulp for various levels of
gross national product ranging from 145 to 165 billion dol
lars. The statistical projection indicates that, with a gross
national product of 145 billion dollars, domestic production
of pulpwood would be 10.89 million short tons, imports
would total 3.35 million short tons, and domestic consump
tion would be 14.24 million short tons. On the optimistic
assumption of 165 billion dollars gross national product in
1946, all these factors would increase. Domestic production
of wood pulp would then be 12.00 million short tons with
imports of 3.68 million short tons and approximate domestic
consumption of 15.68.
These calculations of domestic consumption exclude exports
of pulp and give no consideration to inventory changes, but
these items are relatively insignificant. Exports of wood pulp
from domestic production averaged only about 3 per cent
of consumption from 1935 to 1941. The gross national prod
uct was 119 billion dollars in 1941. In that year, domestic
production of wood pulp was 10.20 million short tons with
imports estimated at 1.00 million short tons; the apparent
domestic consumption was, therefore, about 11.20 million
short tons.
The Department of Commerce has also made estimates,
based on statistical projection of 1941 figures for various
assumed levels of gross national product in 1946, for paper
and paperboard manufactured from pulp. That series of esti
mates is shown in the accompanying table.
^ In the years just preceding the war, the pulp and paper
industry as a whole had a good bit of excess capacity and
there were a number of marginal plants, i.e., plants that
could operate only on a high market. During the war, this
capacity has almost all come into production and the problem
has been that of meeting rising demands. It seems unlikely
that total demand will not fall somewhat at the end of the
EST IM A T E D P R O D U C T IO N O F P A P E R AN D P A P ER B O A R D IN 1946 AT
V A R IO U S L E V E L S O F G R O S S N A TIO N A L P R O D U C T 1
(L e v e ls oi gross
national product in
b illions oi dollars)
1941
(A ctual)
119.20
1946
------ —----------------------------------------------- -----145.00
150.00
155.00
160.00
165.00
Item
In M illions oi Short Tons
T o ta l..................................... 17.30
21.00
21.62
P ap erb oard ...................
8.25
10.44
10.75
N ewsprint2.....................
1.05
.57
.58
W rapping p a p e r.......... 2.75
3.65
3.76
Book p a p e r..................... 2.02
2.18
2.25
Tissu e p a p e r......................... 96
1.22
1.25
A ll other p a p e r............. 2.27
2.94
3.03
22.24
11.05
.60
3.88
2.31
1.29
3.'1'1
22.85
11.36
.62
3.98
2.37
1.33
3.19
23.47
11.67
.63
4.08
2.44
1.36
3.29
1 G ro ss national product in clu des total expenditures for consum ers' goods
and serv ices, capital formation b y private enterprise, and the product of
Government.
1 Although domestic new sprint production d isp lay s a dow nw ard trend at
estimated production le v e ls in 1946, this does not n ecessarily indicate a
falling-off in consumption of new sprint. From 80 to 85 per cent of all paper
imported into the United States is composed of newsprint.
S o u rce: Domestic Com m erce. June 1943, p. 26.
war, but the experience of the Southern branch of the indus
try seemingly will differ from that of the industry as a whole.
In the first place, Southern plants are newer and larger, and
have lower unit costs than the average plant in the country,
and, in the second place, the development of successful pro
cesses for bleaching sulphate pulp makes it likely that the
paper industry will continue to move south so that the fall in
production will probably be concentrated in the Northern
plants. Another favorable factor, at least so far as Southern
plants are concerned, is the increasing stress upon attractive
packaging. Kraft paper and paperboard made from pine
pulp thus have a bright future in the development of new
outlets for packaging materials in postwar America.
B
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O N September 1, 1944, the Little River Bank and
Trust Company, Miami, Florida, was added to the
Federal Reserve Pftr List. Effective on that date, this
bank is remitting to the Jacksonville branch of the
Federal Reserve Bank of Atlanta at par for checks
drawn upon it by its depositors.
The Little River Bank and Trust Company was es
tablished in 1926 under a charter issued to it by the
state comptroller of Florida. Its capital is $100,000;
it has surplus and undivided profits of $247,000; and
its deposits exceed $7,600,000.
E. C. Romfh is chairman of the board of directors
and president; Charles E. Buker is executive vice presi
dent; James G. Garner is vice president and trust
officer; Laurence Romfh and Alec Baker are assistant
vice presidents and assistant trust officers; C. S. Rye
is vice president; W. W. Asmus is secretary and
treasurer; and J. M. Frohock and Violet H. Reid each
have the title of assistant secretary and assistant
treasurer. In addition to Messrs. E. C. Romfh, Buker,
Garner, Baker, and Laurence Romfh, the board of di
rectors includes J. L. Davis, C. B. Rose, W. II. Gragg,
Lucian L. Renuart, and H. P. Emerson.
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The Southern Research Institute
A f t e r four years of preliminary planning and promotion on
the part of a group of Alabama businessmen, the Southern
Research Institute is now a reality. More than $400,000 of the
capital required for the institute has been raised by private
subscription. This amount has been subscribed primarily in
Alabama, where the movement to found the institute began.
With the extension of the capital-raising campaign to other
states, the supporters of the institute believe that perhaps
$1,500,000 can be raised. Meanwhile, the amount now avail
able has been regarded as sufficient for the commencement of
actual work. A large brick dwelling on a two-acre site near
downtown Birmingham has been purchased and is at present
being fitted with modern laboratory and office equipment for
a staff of 20 to 25 research workers. The newly appointed
director, Wilbur Arthur Lazier, a well-known research
chemist, is now in Birmingham and will assume his duties
on October 1. Actual research work on the first of several
industrial projects submitted to the institute by manufactur
ing companies of the South is scheduled to be under way by
the end of 1944.
In its present beginning stage, the institute is a significant
example of regional venturing in behalf of the technological
advancement of Southern industry. If the institute develops
as its founders confidently anticipate, an important contribu
tion will have been made to the industrial research facilities
of the region and to the development of high-value products
manufactured from Southern materials.
In its method of operation, the Southern Research Institute
is closely modeled upon the Mellon Institute of Industrial Re
search. An obvious distinction between the two is found in the
sources of their capital funds. The Mellon Institute’s source
was a large private endowment; the Southern Research Insti
tute is receiving such funds through private subscriptions
that so far number more than 200 and range in amount from
a maximum of $25,000 to a minimum of $25 a year.
The capital fund of the institute will not be used to pay the
direct cost of research projects of any private enterprise, but
to provide the laboratory equipment and other essential
facilities of a modern research center. Most research projects
and scientific investigations conducted in this center will be
paid for by the business enterprises that suggest the projects
and agree to sponsor them within the institute. The institute,
from one aspect, may be termed a commercial laboratory and
scientific investigative service organization, accepting private
business companies as its paying clients. But it is a nonprofit
corporation, and its charge for a given task of research will
be the actual cost of that particular work plus a stipulated
amount for overhead expenses. With a sufficient number of
research investigations in progress, the institute accordingly
may be expected to become self-supporting.
►The first step in the working process is taken when a com
pany or individual in the business field, to be generally in
some branch of manufacturing or agriculture, comes to the
institute with a technical problem, or an idea for a potential
discovery, requiring chemical or other scientific research. As
the second step, the institute makes a study of the proposal to
determine to its own satisfaction that no previous patent
covers the situation and that the project is worth while.
If the institute becomes satisfied upon these points and
accepts the assignment, the third step is then taken. This step
consists in the making of an agreement between the institute
and the applicant business concern. The agreement ordinarily
will cover a period of one year, but renewal may be permitted.
Under the terms of the agreement, the institute takes full
charge of the desired investigation and assumes responsibility
for it. The institute agrees to create a research fellowship,
devoted to the particular project, within its organization,
and to find and employ a competent scientific specialist to
undertake the given investigative task. The institute also
agrees to direct and aid the research and to place its scientific
resources at the specialist’s disposal.
The business client, in turn, agrees to sponsor the particu
lar fellowship that is established for the investigation that
he has proposed. Sponsorship will include the payment to the
institute of the actual costs of the work— primarily, the salary
of the research fellow for the contract period— plus the con
tribution to overhead. Sponsorship will also include such
co-operation as the business itself would ordinarily give a
research worker of its own.
►The relationship between the institute and the sponsor of a
research project is entirely confidential. Without the consent
of the sponsor, no publication of scientific findings may be
made within a stipulated period. If a patentable new product
or process results from a sponsored investigation, all owner
ship of patents and patent rights is to be vested in the sponsor.
Some investigations may, of course, require only short-time
work. In such cases, the costs are estimated in advance and
no special fellowship may be required. In addition, the insti
tute itself will, as funds permit, originate and undertake cer
tain investigations in its own behalf. These may include new
or improved uses for Southern raw materials. In such cases,
the institute itself would hold the patents and, upon proper
occasion, lease them for purposes of production.
The plan thus outlined is in large part the one that the
Mellon Institute has found to be the most workable in its 30
years’ experience. Initially, the industrial fellowship system
was conceived by Robert Kennedy Duncan, eminent scientist,
in 1906 while he was in attendance at the Sixth International
Congress of Applied Chemistry in Rome. Dr. Duncan in 1913
became the first director of the Mellon Institute and there put
into practice the system that is now to be adapted to the
industrial needs of the South.
Specific action leading to the establishment of the institute
was first taken three years ago. For some time prior to that,
the idea had been repeatedly urged upon business men by
Dr. Stewart J. Lloyd of the School of Chemistry, University
of Alabama. A few businessmen of Alabama had become con
vinced that the advancement of industry along lines of scien
tific exploration was not only a primary need of the South
but was also the best means of furthering industrial ex
pansion and improving the income of the region. Accordingly,
the subject of scientific research was again presented at the
annual meeting of Alabama State Chamber of Commerce in
October 1940, by Dr. George D. Palmer, Dean of Chemistry,
University of Alabama. Dr. Palmer’s report proved of so
much interest that a committee was appointed, at the sug
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gestion of Thomas W. Martin of Birmingham, to study the
question.
Almost a year was spent by the committee,' and its report
was presented by Mr. Martin at the 1941 meeting of the
State Chamber of Commerce, and adopted. The result was the
decision to form the Alabama Research Institute, which was
incorporated on October 11, 1941.
As the work of organization and fund-raising proceeded,
the concept of the institute expanded to that of an allSouthern organization, capable of operating across state
boundaries and aiding industry throughout the South and, in
fact, throughout the nation. By amendment of the corpora
tion’s constitution and by-laws on June 15, 1944, the name
Southern Research Institute was adopted. Business leaders of
the Tennessee area gathered in Nashville on September 6 to
consider the plans for the institute, and a similar meeting is
scheduled for Atlanta, under the auspices of the industrial di
vision of the Agricultural and Industrial Development Board
of Georgia, on October 5.
The officers of the Southern Research Institute are at
present those of the originally projected Alabama organiza
tion. They are: chairman, Thomas W. Martin, president of
the Alabama Power Company; vice chairman, Wallace L.
Caldwell, president of the Alabama Asphaltic Limestone
Company, Birmingham; treasurer, Milton H. Fies, consulting
engineer, Birmingham; secretary, John A. Maguire, Birming
ham. The 27 trustees include members of the original found
ing group and several from other Southeastern states.
Dr. Lazier, whose appointment as director of the institute
was announced on August 27, 1944, was offered this post
after a considerable inquiry in scientific circles had resulted
in repeated recommendations of his scientific and personal
qualifications. Dr. Lazier, at 44 years of age, ranks as one
of America’s distinguished younger scientists in the field of
chemistry. He graduated from the University of Illinois in
1922, took his doctorate in chemistry at the University of
Wisconsin three years later, and since then has been occupied
in research and development work at the du Pont Experi
mental Station in Wilmington, Delaware. He is one of the
nation’s foremost authorities on problems of catalytic hydro
genation and played a leading part in the development of
processes for producing intermediates used in the manu
facture of nylon. For these and other scientific achievements,
he was granted a Modern Pioneer Award of the National
Association of Manufacturers in 1940. Since 1942 he has
served as consultant to the National Defense Research Com
mittee and has devoted much time to special chemical assign
ments for the armed services. ,
► Implications for Southern industry in the establishment of
the institute are of considerable long-range importance. By
attracting research workers to the South, the institute is ex
pected to ameliorate a condition of old standing, namely, a
marked deficiency in the number of resident research workers,
and to avoid the resulting effects upon the development of
regional resources. According to the National Research
Council, immediately prior to the war only 983 research
workers resided in nine Southeastern states. Of this number,
Alabama had 188; Arkansas, 8; Florida, 50; Georgia, 71;
Louisiana, 356; Mississippi, 53; North Carolina, 49; South
Carolina, 95; and Tennessee, 113. By comparison, New York
alone had 9,514 research workers, and New Jersey, 6,057.
Ohio, Pennsylvania, and Illinois had approximately 4,700
each, and Connecticut, ranking eleventh in the number of
such workers, had 965, or almost as many as the nine
Southeastern states combined.
The number of patents granted in a recent 10-year period
by the United States Patent Office shows a general correla
tion with the number of research workers, by states. Thus
New York in the years 1934-43, inclusive, received 79,072
patents; Illinois, 4l,853; Pennsylvania and New Jersey, about
30,000 each; and Connecticut, 12,069. In contrast, the nine
Southeastern states in the same period received 10,825
patents, distributed as follows: Alabama, 1,013; Arkansas,
469; Florida, 2,185; Georgia, 1,465; Louisiana, 1,288;
Mississippi, 383; North Carolina, 1,458; South Carolina, 560;
and Tennessee, 2,004. This total of 10,825 patents was only
2.9 per cent of the national total of patents issued during
the decade 1934-43, and the proportion of the nation’s re
search workers living in the £>outh was but 2.2 per cent.
Partly accounting for the relative lack of discoveries lead
ing to patents owned by Southern enterprises is the familiar
fact that the Southern area,, in general, has an unusually
high percentage of manufacturing plants that are affiliates or
branches of national concerns. These plants utilize the
patents of their parent companies. But there are also many
independent manufacturing enterprises, generally small or
medium in size, and it is in connection with such enterprises
that the work of the institute may have an especial sig
nificance. An important differential between the smaller and
the larger enterprises lies in their access to scientific work
and the findings of technical research. Leaders of the institute
believe the new facilities will tend to equalize this differential
for the South. “One of the advantages of associative re
search,” states a pamphlet of the new institute, “is that it
enables a small manufacturer, who cannot afford to have a
laboratory of his own, to profit from scientific research in
the same manner as a larger manufacturer.” Since the cost
for most projects of practical importance is not prohibitive,
it is believed that many of the institute’s clients will be the
smaller and unaffiliated concerns.
►The productive economy of the Southeast has, up to the
present war at least, suffered from a neglect, in the section,
of the higher and more elaborate types of processing, and the
abundant raw materials of the region, whether mineral or
agricultural, have not been fully utilized in the scientific
sense. That much of the region’s manufacturing output was
more or less rudimentary in type was reflected in the Census
of Manufactures for 1939, which showed that the nine South
eastern states previously mentioned, though having 14.1
per cent of the nation’s workers in manufacturing, produced
but 8.7 per cent of the total value of manufactured products.
The average manufacturing worker of the nation added $3,130
to the value of the raw materials processed in 1939, but the
average worker of the nine Southern states added only $1,825
in product value.
Apparently, Chairman Martin had these facts in mind when
he said, in a recent public address: “We, in the Southern
region, must recognize that in research in the natural sciences
we have in the past been highly deficient; that it is techno
logical research, generally absent in the South, that creates
new finished goods industries; and that the increase of techno
logical research is perhaps the most important long-range
project in the South. . . . It is a happy omen that the South
is awakening to its opportunity.”
M
o n t h l y
R e v ie w
o f th e F e d e r a l R e s e rv e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 4
T e r m
in a tio n
L o a n s
R e c o n n a is s a n c e
O NE of the major problems of the reconversion period now
rapidly approaching will be the financing of war con
tractors during the time elapsing between the termination of
their contracts and the receipt of settlement payments from
the Government. With this problem in mind, Congress passed
the Contract Settlement Act, which was approved on July 1,
1944. To carry out the provisions of the act, Robert H.
Hinckley has been appointed Director of Contract Settlement
by the President.
A responsibility of the Director of Contract Settlement is
to see that all war contractors having any termination claims
are provided pending the settlement of those claims, “with
adequate interim financing, within 30 days after proper appli
cation therefor.” The interim financing is to be provided in
one of two ways: either by loans or by partial payments iny
advance of final settlement.
►The Federal Reserve System, with the approval of the Di
rector of Contract Settlement, has instituted a plan to expedite
and aid the private banks in making such termination loans
pending final settlement of war contractors’ claims against
the Government. This plan is the T-loan program, a further
development of the earlier V and V T programs.
The termination-loan framework has now been established
by agreement between the Director of Contract Settlement,
the Board of Governors of the Federal Reserve System, the
armed services, and the Maritime Commission. Regulations
of the Board, issued with the approval of the Director of
Contract Settlement, authorize the Federal Reserve Banks to
act, on behalf of the War and Navy Departments and the
Maritime Commission, as fiscal agents of the United States
guaranteeing loans as authorized by the Contract Settlement
Act.
The original V-loan program began on March 26, 1942,
with the issuance by the President of Executive Order No.
9112 authorizing Government guaranty of bank loans against
war contracts. The Federal Reserve Banks were authorized
by that order to guarantee, as fiscal agents for the War and
Navy Departments and the Maritime Commission, production
loans for war contractors. The Regulation V program, which
had been set up to give effect to this executive order, was
amended, effective September 1, 1943, to provide financing
for both production and termination claims. Financing of
termination claims, however, could be undertaken under the
VT-loan program only while production was in progress and
before cancellation occurred. T loans, on the other hand,
may be guaranteed after the borrower’s war-production con
tract has been terminated, though commitments for such
loans may be guaranteed in advance of cancellation.
A revision of Regulation V of the Board of Governors of
the Federal Reserve System pertaining to the financing of war
production and war-contract termination became effective
September 11, 1944. This revision gives effect to the new
termination-loan program. On the same date, the Board of
Governors amended Regulation A, which required, among
other things, that a note be negotiable in order to be eligible
for discount by a Federal Reserve Bank. The new amendment
exempts from this requirement notes resulting from loans
that are the subject of a guarantee or commitment made
pursuant to the Contract Settlement Act of 1944. Loans
guaranteed pursuant to Executive Order 9112 were exempted
7 9
Sixth District Statistics for A ugust 1944 com pared w ith A ugust 1943
P E R C E N T D E C R E A S E 'V ' P E R C E N T IN C R E A S E
D e p a r t m § j§ | S t o r e
S to re
F u n » e
C
*
B
C o tto n
G a s o lin e
B
a
S a le s .
S to ck s
S a le s
C o n tra cts
C c ||||{ |u n p t io n
T a j||||p o lle c t io n s
M e m b e & :!$ a n k L o a n s
M e m b e r B a n |$ In v e s t m e n t s
—________________________________________________ +
40
30
20
10
0
10
20
30
40
from the negotiability requirement by an amendment dated
September 21, 1942.
The maximum commitment fee that may be charged the
borrower by a financing institution under the T-loan program
will be one-fourth of 1 per cent per annum or, as an al
ternative, a flat fee not to exceed $50. Under the new program,
this fee is not shared by the guarantor. The maximum rate of
interest on any T loan is 4 ^ per cent per annum, compared
with the maximum rate of 5 per cent on V and V T loans.
This new maximum rate is hereafter also made applicable to
new V loans, which may provide for both production and
termination financing.
►The steps involved in securing a T loan or commitment
may be briefly summarized. In the first place, the war con
tractor anticipating a termination or having already received
notice of termination of his contract requests his bank to pro
vide him with the necessary financing during the period prior
to his receipt of payment from the Government. The bank
may, of course, be willing to make the loan without any
guaranty. Indeed, the Director of Contract Settlement encour
ages financing institutions to make unguaranteed loans for war
production and for termination financing. In the Director’s
General Regulation No. 1 of August 18, 1944, the statement is
made that a financing institution which makes such a loan on
an unguaranteed basis does not thereby affect its right to ap
ply subsequently for a T-loan guarantee even though the pro
ceeds of the T loan are used to retire the earlier loan to the
war contractor. But if the bank desires a guarantee on the war
contractor’s loan, it will furnish the contractor with copies
of the standard form of loan agreement and exhibits, to
accompany the bank’s application.
In such a case, the bank will assist the contractor in the
completion of the forms, in quadruplicates. To each copy of
the application form, the bank will attach a copy of the pro
posed guarantee agreement and of the loan agreement, as well
as exhibits showing the form of note and a certificate record
ing the percentage of receivables, inventory, and subcontract
settlements applicable to cancelled war contracts that may be
advanced to the contractor. Additional attachments to each
copy of the application form will be a list of the war-produc-
8 0
M
o n t h l y
o f th e F e d e ra l R e s e rv e B a n k o f A t la n t a f o r S e p te m b e r 1 9 4 4
R e v ie w
S ix th D is tr ic t I n d e x e s
DEPARTM EN T S T O R E S A L E S *
Adjusted**
D IS T R IC T ..............
Atlanta................
Baton R o u g e ...
Birm ingham. .. .
C hattano oga. . .
Jackso n...............
Ja c k so n v ille .. . .
K n o x v ille ............
M acon.................
M iam i...................
M ontgom ery....
N a sh v ille ............
N ew O rle a n s . . .
Tam pa ................
Unadjusted
A ugust
1944
July
1944
A ugust
1943
A ugust
1944
July
1944
August
1943
245
266
261
256
279
280
337
303
321
206
274
282
211
339
263
283
267
261
280
259
329
347
267
263
265
288
225
330
202
210
195
213
214
223
278
216
246
178
216
234
176
274
218
257
227
234
231
224
282
273
226
139
213
239
194
266
197
201
207
204
197
181
263
248
190
147
189
203
171
241
179
203
170
194
176
179
232
195
174
120
168
198
162
215
D EPAR TM EN T S T O R E S T O C K S
Adjusted**
U nadjusted
August
1944
July
1944
August
1943
August
1944
194
288
156
234
321
167
225
260
172
290
358
161
199
249
154
217
291
142
187
281
157
232
320
157
D IS T R IC T ...............
A tlanta ................
Birm ingham . . . .
M ontgom ery...
N a sh v ille ..........
New O rle a n s . . .
C O T T O N C O N SU M PTIO N *
July
1944
201
251
155 •
232
310
148
A ugust
1943
191
243
155
215
291
133
C O A L P R O D U C T IO N *
August
1944
July
1944
A ugust
1943
August
1944
July
1944
A ugust
1943
152
160
151
134
147
153
148
121
158
165
157
138
163
171
163
171
163
174
139
i-46
139
T O T A L .....................
A la b a m a ............
G e o rg ia ..............
T e n n e sse e ........
M A N U FA C T U R IN G EM PLO Y M EN T***
S IX S T A T E S ........ , ...................................
A lab am a..................................................
F lo rid a ......................................................
G e o rg ia ....................................................
Lo u isia n a ................................................
M ississip p i..............................................
T e n n e sse e ..............................................
July
1944
June
1944
July
1943
157
184
178
144
170
139
136
157r
186
169r
145r
170r
140r
136r
157
197
174
143
151
144
140
C O N S T R U C T IO N
CO N TRACTS
D IS T R IC T ..............
R e sid e n tial........
O th e rs................
A la b a m a............
F lo rid a ..............
G e o rg ia ............
L o u isia n a ..........
M ississip p i........
T e n n e sse e ........
Aug.
1944
July
1944
Aug.
1943
Aug.
1944
July
1944
Aug.
1943
106
79
120
69
72
78
263
1,14
126
87r
53r
104r
58
122
71
100
4.1
82
1,196
151
1,702
135
163
213
89
59
5,034
98
99
103
i02
87
99
102
95
108
i03
87
93
102
95
118
107
86
93
102
87
142
E L E C T R IC P O W E R P R O D U C TIO N *
C O S T O F L IV IN G
A L L IT E M S ..
F o o d ..........
C lo th in g . . .
R e n t.............
Fu e l, e le c
tricity,
and ic e ..
Home fur
n ish ing s.
M iscel
laneous. .
July
1944
June
1944
July
1943
130
144
137
114
130
142
137
114
128
147
130
U4
July
1944
S IX S T A T E S .
H ydro
generated
F u e l
generated.
June
1944
July
1943
237
260
264
209
230
214
327
308
268
110
,107
AN N U AL R A T E O F TU R N O V ER O F
DEM AND D E P O S IT S
138
138
123
126
125
118
A u g.
1944
July
1944
A u g.
1943
15.0
17.1
66.0
17.8
18.9
73.0
15.3
17.4
67.2
110
C R U D E P E T R O L EU M P R O D U C TIO N
IN C O A S T A L LO U IS IA N A AND
jY iia a ia a ir r i-
U n a d ju ste d ..
A d ju ste d **. .
G A S O L IN E
TA X C O L L E C T IO N S * * *
Aug.
1944
July
1944
Aug.
1943
200
200
197
197
191
191
U nadjusted. .
A d ju ste d **. . .
In d e x * * ..........
u a u y average oasis
* ‘ Adjusted for seasonal variation
***1939 m onthly average = 100; other
in dexes, 1935-39 = 100
r = R evised
tion contracts held by the borrower and one copy each of the
balance sheet and operating statement for the latest fiscal pe
riod, certified by the borrower, and of the latest available bal
ance sheet and operating statement for the time intervening
since the close of that period. Of course, the bank and the con
tractor will agree between themselves regarding the percent
ages of receivables, inventory, and subcontract settlements
to form the borrowing base, as well as any other special pro
visions to be added to the required standard loan agreement.
Three copies of the application form, together with their
attachments, will be mailed to the Federal Reserve Bank by
the financing institution. The Bank will then review the en
closures and the application forms. If they meet the require
ments of the Director of Contract Settlement and of the
guaranteeing agency, the guarantee will be officially executed
by the Reserve Bank as fiscal agent for the United States
and forwarded to the financing institution. The funds will
then be made available by the institution to the war con
tractor if he meets the requirements with respect to the
assignment of claims arising under the terminated contract.
►It is anticipated, of course, that as payments on the termina
tion claims are made to the bank from time to time by the con
tracting agencies in accordance with the assignment of claims,
such payments will retire the loan in full. Provisions are con
tained in the Contract Settlement Act of 1944 to the effect that
any overstatement by a war contractor of the amount due on
his termination claim or claims in connection with any interim
financing under the act shall constitute a debt due to the
United States and that he shall pay to the United States, as a
penalty, an amount equal to 6 per cent of the amount of the
overstatement.
To be able to obtain promptly such interim financing and to
support adequately the termination claim that must be filed,
contractors should see that all accounting, cost records, and
adequate inventory control are maintained in current form.
A prime contractor should ascertain from its contracting
agency the nature of the data that will be required in sup
port of a termination claim, and a sub-contractor should re
quest the same information of its prime contractor. All
termination claims should be filed promptly.
If it does not exceed 90 per cent, a guarantee will not ordi
narily be questioned by the Federal Reserve Bank or the con
tracting agency. A contracting agency will not usually author
ize a percentage of guarantee in excess of 90, or 95 in the case
of loans not exceeding $100,000, to any one borrower, un
less the circumstances clearly justify so large a guarantee
and unless no other means of interim financing are promptly
available.
►Since many war contracts will be cancelled with the cessa
tion of hostilities in Europe, all banks are urged to acquaint
their war-contractor customers with the procedure necessary
to obtain financing of their termination claims. Too much em
phasis cannot be placed on the importance of contractors’ ob
taining commitments covering these guaranteed loans prior to
actual termination of their war contracts. Only in this way
can funds be made available promptly after the notice of ter
mination is received.
It is suggested that all banks and war contractors obtain
copies of the Contract Settlement Act of 1944 (Public Law
395— 78th Congress). Copies are obtainable from the Super
intendent of Documents, Government Printing Office, Wash
ington, D. C., at 10 cents each.
M
o n t h l y
R e v ie w
o f th e F e d e ra l R e s e rv e B a n k
o f A t la n t a f o r S e p te m b e r 1 9 4 4
8 1
Business and Agriculture
epartment store sales in the Sixth Federal Reserve Dis daily average rate, was, however, the same as it was for July
trict continued to increase in September. In fact, the in and for August of last year.
Construction activity, reflected in F. W. Dodge statistics
crease over August is more than can be accounted for by the
seasonal factor alone. When final figures are compiled, it of contracts awarded, also increased somewhat in August.
seems likely that, after allowing for seasonal influences, de This activity was well below the August 1943 level.
Launchings were made by Sixth District shipyards in
partment store sales for the District in September will be 4
per cent greater than they were in August. This rise repre August of 33 vessels, 25 of them Liberty ships. The July total
sents a substantial reversal of the situation in August, when of 36 vessels was the record for this District. During August
the seasonally adjusted sales index declined 7 per cent com of last year, the number of vessels completed was only 14.
Figures for the entire country indicate that 119 vessels were
pared with that for July.
Retail sales in Sixth District department stores continue to launched in August, 126 in July, and 164 in August last year.
run ahead of those in the rest of the country. During the week ►The September 1 cotton estimate shows an increase of 8
ending September 16, 28 department stores in the District re per cent for* the six states of the District over the August 1
ported sales 25 per cent above those for the corresponding estimate. These states are now expected to produce 4,649,000
week of 1943. In the United States as a whole, sales during bales of cotton, which will be 5 per cent under the production
the second week of September were only 9 per cent above during 1943. The greatest increase from August 1 to Sep
those for the comparable period of 1943. No other Reserve tember 1 was recorded in Tennessee, where the estimate was
District had so large an increase as the Atlanta District. Most raised by 11 per cent. Only in Mississippi and Louisiana,
spectacular of the increases in the Sixth District was that re however, is 1944 cotton production expected to exceed that of
corded in New Orleans, where four reporting department 1943. The crop is later than usual this year but harvesting
stores had sales 54 per cent greater than they had in the is in progress, hampered by inadequate labor supply. The
corresponding week of 1943. Atlanta sales were 23 per cent cotton ginned in August was of a somewhat lower average
higher in the week ending September 16 than those reported grade than a year ago but of a somewhat longer staple length.
a year earlier. Sales increased 18 per cent in Birmingham, 9
In mid-September, too much rainfall in middle Alabama
per cent in Miami, and 6 per cent in Nashville.
delayed cotton picking but elsewhere in the state, cotton
August sales by Sixth District wholesale firms increased 13 picking progress was good. The commercial peanut belt in
per cent over July and were also 13 per cent greater than in south Alabama is too wet for fighting worm activity. Sweet
August last year. Only one of the 16 reporting lines, farm potatoes in the state are yielding a good crop this year.
supplies, registered a decrease from July to August. Whole
Cotton in Georgia is, for the most part, in good condition.
sale sales for August 1944, compared with August 1943, in The condition of the state’s corn, yams, and peanuts ranges
creased in all reporting lines, with the exception of paper and from fair to good.
paper products. Currently, a substantial shortage of available
Temperatures were favorable for growth in Louisiana in
supplies is hampering the latter industry. For the 16 lines of mid-September, and the rainfall was adequate. Rice, truck,
wholesale trade combined, sales between January 1 and Sep sugar cane, and sweet potatoes are making progress, and
tember 1 of this year have been 9 per cent larger than in pastures are good there. Excessive rain, however, has recently
the corresponding months of 1943.
caused some deterioration in the quality of the Louisiana
►Cotton textile activity in the Sixth District increased in cotton crop.
August. The daily average rate of cotton consumption by mills
Favorable temperatures and adequate rainfall characterize
in Alabama, Georgia, and Tennessee in August was 10,769 the situation in Mississippi. Corn is in a rather poor con
bales. This figure was up 3 per cent from July but 4 per cent dition, but peas, sweet potatoes, lespedeza, soybeans, legumes,
below the August 1943 rate and 20 per cent below the record and sorghum are making fair progress.
high point reached in 1942.
The corn in Tennessee is in fair condition, and it is mak
A diminishing of the prolonged and persistent demand for ing progress. The tobacco crop in Tennessee this year is good
Southern pine lumber for the war effort is considered only to very good and is now being cut and housed. In recent
temporary. Further huge Government buying seems certain, weeks, the quality of apples in Tennessee has improved, and
since the rebuilding of retaken ports of Western Europe and sweet potatoes, truck, meadows, and pastures are showing
Italy, and the rehabilitation of ruined areas of the Continent good growth.
will undoubtedly call for quick deliveries of heavier lumber
Florida citrus fruit is sizing well, and the general prospects
items abroad. In spite of the easing of the urgency of Govern are excellent. The condition of all oranges on September 1
ment buying, Southern pine is still very hard to find. Weather was 76 per cent of normal, compared with 72 per cent a
conditions in August and early September grew worse as Gulf year ago. The condition of grapefruit was reported at the
storms became more frequent, and in wide areas drenching same time as 71 per cent of normal, compared with 59 per
rains have prevented work in the woods. The manpower cent a year ago. The first shipments of grapefruit will
situation is still acute, and truck tires are becoming extremely probably be made soon. The pecan crop in Florida this
year is now estimated at 5,440,000 pounds, compared with
scarce.
The actual output of coal increased from July to August in 4,524,000 pounds last year. The pear crop is about 75 per
both Alabama and Tennessee. Since August had two more cent larger this year than last. Harvesting of the tobacco crop
working days than July, the production index, based on the in Florida has been completed, and it is estimated that the
D
8 2
M
o n t h l y
o f th e F e d e r a l R e s e rv e B a n k o f A t la n t a f o r S e p te m b e r 1 9 4 4
R e v ie w
B a n k S ta tis tic s
N U M BER AND D E P O S IT S O F PAR AND N ON PAR B A N K IN G O F F IC E S , BY
S T A T E S , JUN E 30, 1944
(In clu d es branches and additional ofiices, except offices at m ilitary re serva
tions, classified according to Fe d era l Reserve Par List status.
Prelim inary figures, sub ject to minor change.)
(D eposits as oi Decem ber 1943, in Thousands oi Dollars)
State
Total, A ll
Com m ercial
Banking
Offices1
Banking Ofiices
Not on
Fe d eral
O i Nonmember
R eserve
Banks
Par List
Banking O fiices on
Fed eral R eserve Par List
O i Member
Banks2
No.
Deposits
No.
Deposits
706,896
198,130
348,905
8,100,708
662,258
7
10
33
123
48
13,666
31,058
32,936
756,950
58,069
127
120,860
141
101,830
69
18
47
60
83
873,090
278,728
685,422
842,772
913,273
63
34
4
18
18
417,228
94,042
20,307
69,098
48,820
86
268
146,004
229,776
257,898
8,520,887
1,974,956
1,428,031
1,028,152
63
466
246
162
213
225,031
7,953,023
1,446,149
774,486
695,494
23
359
318
646
407
32,867
566,083
528,807
653,545
331,808
2
1,781
2
850
420
202
126
255
312
1,022,057
1,062,773
346,111
1,322,927
3,581,779
134
69
73
131
264
697,077
833,888
251,717
974,796
3,302,333
279
7
53
124
48
322,773
26,350
94,394
348,131
279,446
7
126
2,207
202,535
M ic h .. . .
M inn____
M iss---Mo..........
M ont.. . .
614
677
248
591
110
3,760,199
1,873,354
486,214
2,901,699
319,052
373
215
25
171
69
3,391,755
1,498,988
187,473
2,410,913
264,542
240
40
2
343
21
368,176
78,429
5,734
423,898
24,737
1
422
221
77
20
268
295,937
293,007
66,888
29,773
Neb
N ev........
N. H ........
N. J........
N. M .. ..
410
23
67
472
47
834,275
99,101
158,644
3,098,143
162,238
148
20
54
388
27
661,373
93,359
134,492
2,633,344
130,427
110
3
13
84
20
95,153
5,742
24,152
464,799
31,811
152
77,749
N. Y ........
N. C ........
N. D . . . .
O h io . . . .
O k la .. . .
1,332
341
176
849
382
28,102,757 1,174 26,687,950
682,049
1,127,680
70
129,913
299,836
42
5,068,468
563 4,580,990
793,707
215
914,691
158
30
3
286
155
1,414,807
148,756
59,087
487,478
115,780
241
131
296,875
110,836
12
5,204
Oregon.
P e n n a.. .
R. I ........
S. C ........
S. D ........
138
1,135
59
169
205
897,132
7,489,012
507,894
393,510
240,051
98
850
39
49
80
848,329
6,509,211
457,230
283,974
168,264
40
285
20
4
7
48,803
979,801
50,664
6,552
6,604
116
118
102,984
65,183
T e n n ....
T e x a s ...
U t a h ....
Vt ........
V a ..........
344.
848
70
.79
386
1,297,637
3,658,958
383,855
159,804
1,255,671
105
535
43
41
221
1,046,847
3,302,448
327,925
85,647
1,035,782
57
229
27
38
118
114,978
307,859
55,930
74,157
179,269
182
84
135,812
48,651
47
40,620
W a s h ...
W . V a ..
W is ........
W yo—
219
180
695
56
1,458,162
545,562
1,897,237
136,023
144
107
178
37
1,367,838
426,961
1,351,252
112,008
60
68
324
18
77,432
113,060
432,511
23,754
15
5
193
1
12,892
5,542
113,474
261
17,584 105,823,257 9,362 92,369,167 5,425 10,946,291 2,797
2,507,799
No.
A la ..........
A riz........
A rk ..........
C a lif .. . .
C o lo .. . .
Deposits
No.
237
38
241
1,016
140
841,422
229,188
483,671
8,857,658
720,327
103
28
67
893
92
C o n n .. . .
D e l..........
D. C . . . .
F la ..........
G a ..........
132
52
51
164
369
1,290,318
372,770
705,729
1,057,874
1,191,869
Id a h o . . .
I ll............
In d..........
I o w a .. . .
K an ........
86
827
564
808
622
K y ..........
L a ..........
M aine..
M d ......
M a s s .. . .
Total.
Deposits
N O TE: Th is table does not in clu de deposits of industrial banks and "trust
b a la n ce s" of nondeposit trust com panies on w h ich no checks are drawn;
also, deposit figures in this table are aggregates of Decem ber 1943 figures
reported b y banks that w ere in existence in June 1944. Con sequen tly they
differ from total deposits in Decem ber 1943 of banks then in existence.
The member bank figures in clu de, and the nonmember bank figures ex
clud e, deposits of banks that becam e m em bers betw een Decem ber 1943
and June 1944.
in c lu d e s (a) 102 private banks that do not report to State banking de
partments, in G e o rg ia, Iow a, M ichigan, and Texas, (b) 13 "coop erative"
banks in Arkansas. Exclu d e s (a) all nonmember m utual savings banks,
on a few of w h ich some checks are drawn, (b) 51 nonmember industrial
banks and 54 nonmem ber nondeposit trust com panies on w h ich no
check s are draw n.
2Com prises a ll member banks, in clu din g 3 m utual savings banks and 5
nondeposit trust com panies.
harvest totaled 18,215,000 pounds as compared with
14,910,000 pounds in 1943. Prices were excellent on the
markets this year.
►Net circulation of this Bank’s Federal Reserve notes con
tinues to increase; on September 20 it was 41 per cent greater
than at the same time a year ago. The increase in net circula
tion in August was 32 million dollars, more th§n twice the
increase recorded a month earlier. Notes of the smaller de
nominations, 5-, 10- and 20-dollar notes, increased about 19
million dollars in August, and those of $50 and over in
creased about 13 million dollars. Since last December, how
ever, the total increase in the smaller-denomination notes has
amounted to about 91 million dollars, and the rise in circula
tion of the larger notes has totaled about 97 million dollars.
Demand deposits (adjusted) at the Sixth District’s 20
weekly reporting member banks show an increase in recent
weeks over the averages for July and August, but they are
still somewhat below the June 14 peak. On September 20 they
were 21 per cent greater than they were a year earlier. Time
deposits reached a new high point on September 20 and were
27 per cent greater than a year ago. During the four weeks
ending September 20, total loans and investments reported
by these banks declined 1 per cent because of a slight re
duction in holdings of investment securities.
Figures recently released by the United States Department
of Commerce indicate that income payments in the District
continued, in 1943, to increase relative to the country as a
whole, although they still remained far below the national
average. The department reports that in 1943, Alabama in
come payments per capita were $603, a 68 per cent increase
over 1941. Florida income payments in 1943 were $874 per
capita, up 65 per cent from 1941. In Georgia, income pay
ments per capita increased by 66 per cent between 1941 and
1943 and were $647 per capita in the latter year. In Louisiana,
income payments per capita were $714 in 1943, an increase
of 65 per cent in the last two years. Mississippi recorded a
71 per cent increase between 1941 and 1943; per capita in
come payment in the latter year was $484. Tennessee had a
per capita income of $449 in 1943, an increase of 57 per
cent since 1941. By comparison, the per capita income in the
United States as a whole in 1943 was $1,031, an increase of
49 per cent since 1941.
As of September 1, the War Manpower Commission classi
fied the following District cities in Group 1: Columbus,
Macon, and Savannah, Georgia; Knoxville, Tennessee; Mo
bile, Alabama; and Pascagoula, Mississippi. Group 1 areas
are those in which acute labor shortages that will endanger
essential production exist or are anticipated.
►Sales of life insurance in the six states of this District
during August, although a record total for that month, were
down 1 per cent from July. The total was, however, 14 per
cent greater than that for August a year ago. For the country
as a whole, the gain over August 1943 was 12 per cent. In
creases of 37 per cent in Mississippi, 21 per cent in Georgia,
and 13 per cent in Tennessee were larger than the national
average increase. The increase in Louisiana was 5 per cent
and that in Alabama 3 per cent, but in Florida, August sales
were the same as they were a year ago. In the first eight
months of this year, sales in the District’s six states have
been up 19 per cent compared with those of the same period
last year, against a gain of 16 per cent for the country as a
M
o n t h l y
R e v ie w
o f th e F e d e ra l R e s e rv e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 4
whole. Florida, Mississippi, and Tennessee had increases for
this period larger than the national average.
►A total of 11.0 million people were working on farms in
the United States on September 1, according to an estimate by
the United States Department of Agriculture. This figure was
4 per cent under that for the comparable date in 1943 and
8 per cent less than the average September 1 employment
in the five prewar years, 1935-39. In all geographic regions,
employment on farms has declined during the past year. The
greatest decline has taken place in the East South Central
region, covering the states of Kentucky, Tennessee, Alabama,
and Mississippi; the 1935-39 average September 1 employ
ment in that region was 2.0 million. Total farm employment
on September 1 of this year was only 1.7 million workers,
of whom 1.4 million were family workers and 0.3 million
were hired workers.
In the South Atlantic region, which includes Florida, Geor
gia, the Carolinas, the Virginias, Maryland, and Delaware,
total farm employment on September 1 of this year was 2.1
million, compared with the 1935-39 average of 2.3 million. In
the West South Central region, covering the states of
Louisiana, Arkansas, Oklahoma, and Texas, total farm em
ployment on September 1 this year was 1.7 million persons
as compared with the prewar average of 2.0 million.
Foreign agricultural workers transported by the Office of
Labor of the War Food Administration have helped the
farm-labor situation in two states of the District. Working on
Florida farms and in the orchards on August 31 were J , 582
Jamaicans and 1,000 Bahamians and doing farm work in
Tennessee were 322 Bahamians.
►Wartime demands for rosin have continued to grow in
recent weeks. In mid-September, it was announced that the
production of yellow laundry soap, requiring rosin in its
manufacture, would be increased considerably. This increase
has been made necessary by the larger requirements of the
Army for such soap as well as the rising demands of civilian
consumers. In recent weeks, synthetic resin manufacturers
have been reported among the chief buyers of the paler
grades of rosin.
Prices of gum rosin have been rising as a result of in
creased demand and short supplies, and on September 20 the
OPA established a permanent ceiling price for grade K rosin
of $5.61 a hundred pounds net in drums on the yard in Sa
vannah. Specific prices were set for the other 12 grades of
gum rosin as well as maximum prices for sales made on the
Savannah Naval Stores Exchange. The ceiling on grade X,
the top grade, is $6.31, and the prices range downward to
$4.81 for grade B. The bulk of rosin sales are made off the
exchange, and maximum prices for such sales are established
in the new OPA regulation by applying a differential to the
exchange, or base price, listed in the regulation. This differ
ential is the most favorable one realized by the seller during
the first six months of 1944 on a similar sale.
►For the country as a whole, wholesale prices of farm
products and foods showed small seasonal decreases from the
middle of August to the middle of September. Maximum
prices of such industrial goods as cotton fabrics, cement, and
bricks were increased.
Retail prices of food and other cost-of-living items in
creased slightly in August and the average of all items was
2 per cent higher than a year ago.
8 3
S ix th D is t r ic t S t a t is t ic s
R E T A IL F U R N IT U R E S T O R E O P ER A T IO N S
Per C ent Chang e
August 1944 Irom
Item
of
Stores
Ju ly 1944
Total S a le s ..................................................
C a sh S a le s ..................................................
Instalment and Other C redit S a id s..
Accounts R eceivab le, end of month..
Collection s during month.....................
Inventories, end of month.....................
93
81
81
92
92
66
+ 17
+ 11
+ 17
+
1
+ 2
+ 7
August 1943
5
7
5
— 13
—
8
' — 19
+
+
+
CO N D ITIO N O F F E D E R A L R E S E R V E B A N E O F ATLAN TA
(In Thousands of Dollars)
Item
Sept. 20
1944
A ug. 23
1944
Per cent change
Sept. 22 Sept. 20. 1944. from
1943
A u g. 23 Sept. 22
1943
1944
B ills discounted.......................
2.750
2,950
Industrial a d v an ce s...............
209
25
32
U. S. se cu rities.........................
728,117
312,687
750,880
Total bills and securities.
312,896
753,855
730,899
F. R. note circu lation ............. 1,151,530 1,118,256
816,652
Member bank reserve
533,091
475,315
dep osits.................................
568,156
34,206
24,454
10,247
U. S. G ov't deposits...............
43,857
38,888
44,111
Foreign bank deposits........ .
2.750
6,116
3,613
O ther dep osits.........................
613,903
544,772
626,127
Total dep osits.......................
994,667 1,028,628
Total re se rv e s...........................
997,818
+
7
— 22
3
3
—
+
+
+
88
140
141
41
+
7
— 70
+
1
+ 31
+
2
+ o
+
—
+
—
+
—
20
58
.13
41
15
3
t
+
D EB IT S T O IN D IV ID U A L B A N E A C C O U N T S
(In Thousands of Dollars)
Per Cent Change
A u a . 1944 from
Aug.
1944
July
1944
Aug.
1943
M ontgom ery.............
17,295
167,608
6,892
9,594
112,364
35,550
16,241
177,069
5,502
9,760
114,29:1
33,883
12,609
153,294
5,554
8,720
108,851
33,095
+ S
— 5
+ 25
— 2
— 2
+ 5
+ 37
+ 9
+ 24
+ 10
+ 3
+ 7
F L O R ID A
Jackso nville...............
M iam i...........................
G reater M iam i*........
O rlan d o ......................
P e n sa co la ...................
St. P etersburg........
Tam pa.........................
170,933
114,661
149,266
22,785
23,795
19,769
69,573
167,653
110,756
144,996
25,042
23,651
21,900
76,898
167,605
90,380
113,787
18,101
21,172
18,928
68,182
+ 2
+ 4
+ 3
— 9
+
1
— 10
— 10
+
+
+
+
+
+
+
2
27
31
26
12
4
2
G E O R G IA
A lb a n y .......................
A tlanta.........................
A u g u sta.....................
B ru n sw ick .................
C olu m b u s..................
Elb erto n .....................
M acon.........................
N ew n an......................
Sa van n ah ...................
V a ld o sta .....................
8,162
476,038
33,934
13,200
30,481
1,731
43,108
4,128
89,754
15,940
8,663
460,055
34,158
14,908
32,523
1,787
45,039
4,495
97,274
6,602
7,484
405,203
29,557
15,174
31,854
1,457
42,811
3,985
76,132
14,683
—
+
—
—
—
—
—
—
+
+
+
+
—
—
+
+
+
+
+
9
17
15
13
4
19
1
4
18
9
LO U ISIA N A
Baton R o u g e ............
Lake C h a rle s ............
N ew O rle a n s ............
37,947
15,490
406,862
40,536
17,225
429,365
37,179
18,332
352,260
— 6
— 10
— 5
+ 2
— 16
+ 16
M ISSIS SIP P I
H attiesburg..............
Jackso n .......................
M eridian.....................
V ic k sb u rg .................
12,619
59,734
15,488
16,182
13,021
53,143
16,275
21,998
12,255
42,622
14,149
16,033
— 3
+ 12
— 5
— 26
+ 3
+ 40
+ 9
+
1
TEN N ESSEE
C hattanooga............
K n o x v ille ...................
N ash ville ...................
78,537
100,543
171,178
90,345
105,976
171,475
76,560
63,961
164,844
— 13
— 5
0
+ 3
+ 57
+ 4
SIX TH D IS T R IC T
32 C it ie s .....................
2,401,875
2,447,509
2,133,026
—
2
+ 13
U N ITED ST A TES
334 C it ie s ...................
69,213,000
72,945,000
60,613,000
—
5
+ 14
Area
ALABAM A
A nniston.....................
Birm ingham ..............
D othan........................
G a d sd e n .....................
*Not included in totals
July 1944 Aug. 1943
—
6
3
1
11
6
3
4
8
8
141
8 4
M
o n t h l y
R e v ie w
o f th e F e d e ra l R e s e rv e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 4
The National Business Situation
I ndustrial output and employment showed little change in
August. Retail trade was at a new high level for the month.
There"was a small further rise in retail commodity prices.
Industrial Production: Output at factories and mines was
232 per cent of the 1935-39 average in August as compared
with 231 for July, according to the Board’s seasonally ad
justed index of industrial production. Steel production was
maintained, while output of nonferrous metals continued to
decline. Over-all activity in the metal fabricating industries
continued at the level of the preceding month. There were
large increases in output of heavy trucks, tanks, and some
other critical ordnance items in August; aircraft production
showed little change; while shipbuilding declined.
Output increased in the shoe, woolen and worsted, and
paper industries in August following a drop in July which
reflected chiefly the curtailment of operations around the
Fourth. Output of manufactured foods, after allowance for
seasonal changes, declined in August, largely reflecting de
creases in output of meats, dairy products, and sugar products.
Distilleries were shifted for the month of August from produc
tion of industrial alcohol for war purposes and output of
about 50,000,000 proof gallons of beverage spirits was re
ported. Production of other nondurable goods was main
tained at the level of the preceding month.
Distribution: Value of department store sales, according to
the Board’s seasonally adjusted index, was larger in August
and the first half of September than in the first half of 1944
and averaged 12 per cent above the corresponding period of
last year. In the third quarter the index at 90 per cent above
the 1935-39 average has been at the highest level on record.
Carloadings of railroad freight were maintained in large
volume in August. During the first three weeks in September
loadings were slightly less than during the same period a year
ago, owing to decreases in all classes of freight except mer
chandise in less than carload lots and miscellaneous shipments.
Bank Credit: Bank deposits of businesses and individuals,
as well as currency in circulation, have increased since the
end of the Fifth War Loan Drive. This increase in the money
holdings of businesses and individuals is largely a reflection
of the expenditures made by the Treasury from its war-loan
accounts built up during the drive. Adjusted demand and
time deposits at member banks in leading cities increased by
nearly 4 billion dollars between the close of the drive and
mid-September, or by over three-quarters of the amount of
reduction in such funds during the drive. Deposits at non
reporting banks probably increased by nearly 2 billion dol
lars. Treasury war-loan accounts at banks declined by nearly
8 billion dollars.
In the same period loans and investments at weekly report
ing member banks in 101 leading cities declined by 2.2
billion dollars. Loans to brokers and dealers for purchasing
and carrying Government securities declined to a level ap
proximately equal to that of the predrive period. There was,
however, a temporary increase in such borrowings in late
August and early September, presumably associated with
market transactions stemming from the Treasury offer to ex
change certificates maturing on September 1 and notes matur
ing on September 15 for new issues. Loans to others for pur
chasing and carrying securities declined steadily, but on Sep
tember 13 were still well above the predrive level. Govern
ment security holdings showed a net decline of 800 million
dollars over the period, reflecting mainly substantial bill
sales by reporting banks partially offset by some increase in
bond holdings.
As the result of the increase in deposits of businesses and
individuals, the average level of required reserves at all mem
ber banks rose by about a billion dollars between the close of
the Fifth Drive and mid-September. In addition, a billion-dol
lar increase in money in circulation and some further de
crease in gold stock served to absorb reserve funds. Member
bank needs for reserves due to these factors were met largely
through an increase of 1.7 billion dollars in the Government
security portfolio of the Federal Reserve Banks and there was
also a slight increase in Reserve Bankf discounts.
( This page was written by the staff of the Board of Governors of the Federal Reserve System )
INCOME PAYMENTS TO INDIVIDUALS
AM4UM.RATO. SEASONALLYADJUSTED
INDUSTRIAL PRODUCTION
1940
F e d e ra l
R e se rve
in d e x .
la te s t s h o w n
M o n th ly
is f o r A u g u s t .
fig u r e s ,
1942
1944
1940
1942
MEMBER BANK R E S E R V E S ANO R ELA T ED ITEMS
MUJON* Of DOLLARS
1944
Based on Department of Commerce esti
mates. Wages and salaries include mili
tary pay. Monthly figures raised to
annual rates, latest shown are for July.
1939
1940
1941
1942
1943
W e d n e s d a y f ig u r e s , la t e s t s h o w n a r e
S e p te m b e r 20.
1944
fo r
@FedFRASER