Full text of Economic Review (Federal Reserve Bank of Atlanta) : September 30, 1949, Volume 34, Number 9

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Review

Monthly
F

Volume XXXIV

Atlanta, Georgia, September 30, 1949

T L A

T A

Number 9

Farm Community Improvement
American businessman is unique among the business fare of the people on the land are in some way the personal
men of the world in many ways, not the least of which is responsibility of each of us.
his public spirit and his sense of social responsibility. Al Aside from this feeling, there are very practical reasons
though he has a healthy regard for his own interests in all of for being concerned with the living conditions prevailing in
his business relationships, outside of business there is no one farm communities. For a couple of generations there has
who gives more of his time, money, and effort to the im been a marked tendency for population to move from the
provement of social and economic conditions than does the farm to the city. Insofar as improved farm technology re
American businessman. The amazing profusion with which quires fewer people on the land, this migration is healthy,
hospitals and medical foundations, schools, colleges, and uni especially if it is the less efficient farmer who migrates.
versities, churches and libraries, to say nothing of a myriad There is reason to suspect, however, that this may not always
of local welfare and cultural institutions, are strewn across be the case. The farmer who migrates to the city may actually
the country is tangible evidence of the American business be a man who is more alert than others to his opportunities
man’s practical idealism.
and who has initiative enough to take advantage of them. He
Among the many things to which the businessman has may be precisely the kind of man who, in the interest of
given his support, agriculture and the welfare of the farmer better agriculture, should remain on the farm.
stand out as particularly important. If any of the traditional
Although living conditions on American farms have im
hostility between the countryside and the city still persists proved enormously during the last few decades and farmers
—a hostility that has its roots deep in history—it cannot generally have prospered during and since the recent war, it
fairly be laid at the door of the city businessman in the remains true that the typical farm community lags far be
United States. In nearly all of his organizations—the Cham hind the town or the city in the comforts and conveniences
bers of Commerce and the many civic clubs—he sponsors of modern life. If the better men of the younger generation
and supports a wide variety of programs that have for their are to be retained on the farm, this difference between the
purpose the bridging of the gap between town and country; quality of life on the farm and the quality of life in the city
the cultivation of more intimate rural-urban relations; a must be narrowed. Anything that contributes to this end,
greater understanding of each other’s problems; and the im therefore, is important to the future of agriculture, to say
provement of social and economic conditions within farm nothing of its importance for the stability of the nation’s so
communities.
cial structure.
This widespread interest of businessmen in the welfare
Sensing this, businessmen, through their various organiza
of the farmer springs from more than one source. In part tions, have tried in many ways to do what they could to keep
it is explained by the fact that many businessmen are still the right kind of young people on the farms. They have
close to fairly humble beginnings and are proud of it. To a interested themselves in farm youth organizations and have
large extent, they have come from the country and the small sponsored contests and have awarded prizes to 4-H Club boys
town and, in spite of all their later achievements, have never and girls and to the Future Farmers of America for achieve
ceased to identify themselves with the people and places that ments in many lines. They have given plaques and certifi
weave the tapestry of their boyhood memories.
cates of recognition to farmers who have followed approved
In part, too, this interest in agriculture arises from a pro soil conservation practices. They have done these and many
found conviction that the land is the ultimate source of all other things, all of them good, but their total impact on the
that we are and of all that we have, and that the cultivators level of farm living has been negligible.
of the soil deserve special consideration from all the rest of
The Birth of qn Idea
us. This conviction may be mistaken. It can easily be dis
posed of by arguments built of words and concepts. Never Early in 1943 the dissatisfaction of certain business groups in
theless, in the world of fact as opposed to the world of East Tennessee with their previous approach to the problem
theory, it abides as a persistent element in the thinking of of improving urban-rural relations led to the inauguration of
anyone who still senses the unity of man and nature. The a new type of program that has now assumed the proportions
businessman is no theoretician, so it is not surprising that he of a “movement.” Specifically, the idea appears to have been
should share the general feeling that the land and the wel born in Knoxville in the course of discussions held by the
h e

8 2

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

agricultural committee of the Rotary Club with the Kiwanis
Club and the Agricultural Extension Service of the University
of Tennessee for the purpose of developing a more signifi
cant type of farm program.
The outcome of these discussions was the organization of
the East Tennessee Community Improvement Contest. Be
cause of the magnitude of the undertaking, it was thought
best to invite the participation of all civic and business
groups. The committee that sponsors the program in the
Knoxville trade area, therefore, consists of two representa
tives each from the Knoxville Chamber of Commerce, the
Junior Chamber of Commerce, the Tourist Bureau, the Ten
nessee Valley Agricultural and Industrial Fair, the Exchange
Club, the Optimist Club, the Rotary Club, the Kiwanis Club,
the Civitan Club, and the Lions Club. The Extension Service
of the University is also included and plays an important
role in the whole plan. The chairmanship of the committee
is rotated among the co-operating organizations and the
whole committee meets monthly to handle the many details
and problems that arise.
Essentially, the idea of the Community Improvement Con
test is simple. The sponsoring committee in Knoxville
raises money by subscription from organizations and indi
viduals for the purpose of awarding prizes to farm communi
ties making the greatest progress in improving community
conditions during the contest year. The contest is carried out
on a county basis, some one or more organizations in each
county of the area acting as sponsor. The county sponsor,
with the co-operation of the County Agent and the Home
Demonstration Agent, then seeks to organize as many farm
communities as possible for entry in the contest.
The new community organization, usually called a Com
munity Improvement Club, is not meant to displace organi
zations already existing in the community. It aims, rather, at
integrating the work of such organizations into a common
plan for community improvement. Each participating com
munity studies its own needs, makes its own plan for the
year, and proceeds to carry out its plan to the best of its
ability. In all of these steps, the technical assistance of the
Extension Service is vitally important.
At the close of the contest year, each community is judged
by local judges appointed by the county sponsor and the
county winner is then determined. Prizes in the county con
tests are awarded from subscriptions raised by the county
sponsors. The winners of the county contests then become
the participants in the trade area contest and are judged by
a group chosen by the East Tennessee Community Improve
ment Contest Committee. Prizes in the area contest are
usually awarded to the county winners at a banquet given
in their honor. There are additional sweepstakes prizes that
are awarded to the best communities among the previous
area winners.
All judging in the three contests—the county contest, the
area contest, and the sweepstakes contest—is done partly on
the basis of written reports submitted by each participating
community and containing a narrative description of its plan
and its accomplishments for the year together with support
ing statistical data. In addition to this, however, the judges
visit each community so that they may see with their own
eyes what has been done and thus be in better position to
evaluate the progress that has been made.
Scoring in the contest is on the basis of 1,000 points. In
East
200 points are allotted to the development
Digitized
for Tennessee,
FRASER

and improvement of sound systems of farming, including
erosion control, soil improvement, production of food and
feed, and the development of balanced farm plans. The
provision of a home food supply also rates 200 points. This
includes the production, conservation, storage, and use of
adequate amounts of the proper foods for maintaining a
balanced diet for the family. Another 400 points is allotted
to community organization and development. This category
includes the social, economic, educational, and religious
activities of the community as well as the extent to which
families co-operate in the community plan. A final 200
points is allotted to improvement in the appearance, con
venience, and comfort of the home and farm. This includes
all improvements in living conditions that contribute to
greater beauty, better health, more convenient operations,
the saving of labor, and the more economical use of time.
This, then, is the skeleton of the farm community improve
ment program that was developed in East Tennessee. The
objectives of the program are nothing new. They are things
that have, for years, been striven for by the Extension Service
and by business and civic groups in their various agricultural
programs. The method of achieving these objectives, more
over, is simple and, indeed, almost naive—the calling forth
of action by means of contests and prizes. In spite of the
obviousness of its objectives and the simplicity of its
methods, however, this plan has “caught on” where others
have failed to do so. In a relatively short time it has brought
about an amazing transformation in many communities, a re
sult that would have been achieved under other plans only
after years of patient and laborious effort, if at all.
The Idea Spreads

The idea that was born in East Tennessee, however, did not
long remain the exclusive possession of that area. Its striking
success led to its adoption elsewhere in the state until every
county in Tennessee is now included in the movement. East
Tennessee began in 1944, its first contest year, with 64
communities organized in 16 counties. By 1948 this area
had 190 communities organized in 26 counties.
From East Tennessee, the idea spread to Middle Tennessee,
where the Farmers Club of the Nashville Chamber of Com
merce took it up. Beginning in 1945 with 121 communities
in 23 counties, the Middle Tennessee area had 256 communi
ties in 37 counties in 1948.
The program was next adopted for Lower East Tennessee
by the Chattanooga Chamber of Commerce in 1946. There
it began with 33 communities in 11 counties and by 1948
had grown to cover 59 communities. These figures do not
include 9 communities in 3 counties in Georgia that lie
within the Chattanooga trade area, nor one community in
Alabama that also falls within the same trade area.
In 1948 the Jackson Chamber of Commerce, with the co
operation of the civic clubs, inaugurated the program with
112 communities organized in 21 counties in West Tennessee.
To summarize for the state of Tennessee, therefore, it can
be said that in 1944 there were 64 organized communities in
16 counties. In 1948 these figures had grown to 617 and 95.
In terms of the number of rural people involved in the pro
gram, there were in 1944 some 25,600 persons engaged in
community improvement work. In 1948 there were 246,800.
With a population of about three million, half of whom live
on farms, Tennessee had about 16 percent of its entire farm
population, with every county represented, actively engaged
in this program of community improvement in 1948.

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

The idea, however, did not stop at the borders of Tennes
see. After studying the experience of the Farmers Club of
the Nashville Chamber of Commerce, the Farmers Club of
the Atlanta Chamber of Commerce held the first North
Georgia Farm Community Improvement Contest in 1947.
The response was enthusiastic from the start with 65 farm
communities, composed of about 5,000 farm families, in 16
counties filing entry blanks and actively participating in the
contest. In the following year there were 112 communities
in 29 counties; and in 1949 there are 135 communities, com
posed of some 45,000 persons, in 33 North Georgia counties
engaged in the business of making their communities better
places in which to live and to make a living.
As the farm community improvement idea has spread, the
details of its application have naturally varied from one area
to another. In some places, as in East Tennessee, the over
all sponsor is a composite committee drawn from several
organizations. In other places, such as Middle Tennessee and
North Georgia, the over-all sponsor is a single organization
such as the Farmers Club of the Chamber of Commerce. The
scale of prizes also varies from place to place, the grand
prize sometimes being $500 as in East Tennessee, or as
much as $1,000 in Middle Tennessee and North Georgia. In
some cases the prize money is raised by voluntary contribu
tions from a large segment of the business community; in
others it is a regular part of the budget of the sponsoring
organization. The weight given to the separate parts of the
program in scoring the contestants differs from one place to
another. The relation of negroes to the program varies: In
one place a separate contest may be conducted for negro
farm communities; in another, where the negro population
is relatively small and is interspersed with the white popula
tion, negroes may participate in the common plan for the
whole community with due regard to southern traditions re
garding the commingling of the races.
In spite of such variation in details from one area to an
other, the main structure of the plan is uniform wherever it
is found. The success that has so far been achieved is evi
dence of the program’s soundness and provides some as
surance that similar success will follow its adoption else
where. It is a foregone conclusion that this program for
community improvement contests will spread still farther.
It is said to be working already in some places in Mississippi,
and next year it is expected to spread to the Macon and
Columbus trade areas in Georgia. Reports of what is being
accomplished in the South through the community improve
ment contests have also spread to other parts of the nation
and the Nashville Chamber of Commerce claims to have re
ceived inquiries from as many as forty-three states regarding
its experience. Doubtless other area sponsors have received
similar requests.
A Contrast
The most convincing proof of the value of the community
improvement program in raising the level of living in farm
communities can be gained only through personal observa
tion. One must actually see the difference that exists between
a typical unorganized community and one in which a com
munity improvement club is active.
If one were to choose a spot in Tennessee to make such
observations and were to let his finger fall at random on
the map, it might well light on Rutherford County, of which
Murfreesboro is the county seat. Here the county sponsor is

the Murfreesboro Chamber of Commerce. Like other
counties, Rutherford has both organized and unorganized
communities. There is, of course, but one sponsor for the
county, and but one County Agent. Any differences that
might come to light as between organized and unorganized
communities could fairly be attributed, therefore, to the
presence or absence of organization, except for differences
arising from soil types and other natural factors.
Driving down a country road in Rutherford County one
comes, perhaps, upon a farm community the like of which
can be found by the thousands throughout the country. There
is nothing in particular to arrest one’s attention. The road
leading into the community is lined with wire fencing in bad
repair and with fence-rows filled with trash. The houses that
one sees, for the most part, have not been painted for years
and front yards are high with weeds. Children from the
school can be seen disporting themselves at recess in a weedy
vacant lot next the school, for there is no playground. You
are told that negro children must walk three or four miles
to reach their school since no bus transportation is provided
for them. Barns and outbuildings are nearly all in need of
repairs and plank fences badly need paint. Many fields are
unkempt and there are evidences of erosion in places. Tenant
houses are dilapidated and only some have electric lights.
At the center of the community your road intersects an
other. In one corner of the intersection stands a dingy gen
eral store that also serves as the post office. It is approached
by rickety steps and is entered by a door with broken screen
ing. Inside the dark interior a few loiterers sit amid the
clutter of merchandise piled on dirty counters or on the
sagging floor. Across the road from the store is a filling
station and a repair shop that itself needs repairs. The
churches in the community are surrounded by uncut lawns
and inside reveal a need for many improvements.
In general, the external features of this community are not
of a kind to make anyone not born here want to be a part
of it. Indeed, there is nothing to make a passerby even want
to slow down to 30 miles an hour. What kind of people live
here? Just ordinary people, you discover. They are fairly
prosperous farmers, for the soil is good and prices have
been satisfactory. There is very little organization, however.
A Parent Teachers Association functions with some difficulty
for the menfolk cannot be induced to take an interest in
its work for the school. The Home Demonstration Agent
has been keeping a Home Demonstration Club going but not
all women belong to it. There is nothing for the young peo
ple of the community. Why is this community not organ
ized like some others in the county? “I guess it’s because the
men are just too busy with other things,” one public-spirited
woman tells you.
You leave this community where they are too busy to keep
down the weeds; to paint the houses; to repair the barns and
farm buildings; to provide playgrounds for children; to do
all the things that need to be done for proper care of the
soil from which they draw their living and for the people
of the community.
You drive on, and by-and-by come to another community.
At the boundary of the community you are greeted by a
freshly painted roadside sign reading “Welcome to Milton
Community.” All roads are plainly marked and mail boxes
are painted and neatly lettered. You pass a well-kept ceme
tery with a newly graded and graveled circular drive which

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 r v 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 9

facilitates parking during funeral ceremonies. Practically
every house in view is gleaming white and the grass in the
front yards is well cut. Unsightly fences have been removed
from the roadside and the shoulders of the road have been
graded and grassed. The fields stretching off to either side
are all well cared for. At the shopping center of the com
munity you are greeted by a cheerful canna bed. The road
is wide and free of trash. The stores are clean and mer
chandise is well disposed on shelves.
One store is equipped with a commodious refrigerator
where meats and dairy products can be kept under sani
tary conditions, and in the rear of the store is a deposit
station for the mobile county library. You are told that
there are 75 regular readers of library books in this com
munity of about 56 families. Next to the store is a homeowned telephone exchange and you are told that every
family has a telephone as well as electric lights and power.
Farther down the road stands a little brick building—the
medical center. A physician and a registered nurse come
here three times a week from Murfreesboro to provide medi
cal attention for the community. The little building has a
waiting room, the physician’s office, an examination room, a
laboratory, and toilet facilities. Across the road is a wide
expanse of well-trimmed grassy meadow. This serves as a
playing field for the young people and as a gathering place
for outdoor community affairs. The churches are immacu
lately clean and are surrounded by well-kept lawns.
Some distance from the shopping center is the school. It
is approached by way of a newly graded circular drive and
the land around the school has been seeded to make a lawn
and playground. Next to the school a large physical educa
tion building is under construction. Inside the school are to
be found new electric lighting equipment, new chairs in the
auditorium, and a lunch room where well-prepared and
balanced-diet lunches are served.
Still farther off lies the negro church and school. Bus
transportation has been obtained for the negro children and
the white folks have improved the road leading to the newly
painted church. Trees and stumps have been bulldozed away
to provide for lawn and parking space.
There is no mistaking the difference between Milton and
the community first described. It is felt as soon as you enter
the community and it lingers with you long after you have
passed the “Call Again” sign at the far boundary. What
makes the difference? Everyone gives the same answer—
the presence of the community improvement club.
The club has caused the people to think and plan and
work together as a community and in doing so has generated
a spirit that has not only transformed the physical aspects of
the community but has also transformed the people them
selves. A farmer falls sick at harvest time and the whole
community unites to bring in his crop, turn under his land,
and plant his wheat. The church grounds need improvement
and the whole community clears away the underbrush, pushes
back the fence line, rebuilds and paints the fence. The school
needs a new gymnasium and men from the community go
90 miles away to reclaim lumber and materials from old
barracks, haul it to Milton, and erect the structure on con
crete foundations that they themselves have poured. At every
funeral a special committee of women provide food for the
kinfolk and friends who attend.
A farmer standing in the midst of a newly plowed field
is complimented on the condition of his land and home.

“How much of this would you have done if it had not been
for the community club?” he is asked. “If it were not for the
club I would not be here at all. I was fixing to buy a place
somewhere else. But when I saw how everybody here was
working for each other, I decided that this is the kind of a
place I want to live and bring up my children. I wanted to
stay in Milton.”
This, however, does not quite answer the question. “You
seem to be farming your land pretty efficiently. Wouldn’t
you have done just as well by the land even if there had
been no community club?” “I guess I would have done
some things,” he replies, “but nothing like what I’m doing
now. I didn’t want mine to be a drag-tail farm when every
one else was improving theirs.” The attitude of this farmer
is probably as good a summary as any of what goes on inside
the people of an organized community; and what goes on
inside them is reflected in what goes on outside.
The club’s work is organized so as to embrace all existing
organizations—4-H Clubs, Future Farmers, Junior Wild
life Club, the P.T.A., the Boy Scouts. Every man, woman,
and child finds something to do, some part to take in the
community program. At a community meeting are to be
found babies in arms, children, and every other age group
up to the oldest. These people are organized into some 21
committees, each having a specific task. These committees
study the community’s needs and plan for the necessary im
provements. Some plans look into the future for as much
as several years, and each year sees the community moving
closer to their fulfillment.
Statistics

Hard-headed businessmen having a love for figures would
not be satisfied, of course, to measure the value of this
program in terms of the impressions of any roving reporter.
They want statistics. Unfortunately, most areas in which
community improvement contests are being conducted have
not yet gotten around to keeping a statistical record of the
impact of the program on their respective economies. A
wealth of material is available in the reports submitted by
the communities participating in the various contests, but in
most cases it is not in usable form for it has been neither
edited nor tabulated. Middle Tennessee, however, is an ex
ception that deserves to be imitated elsewhere. There the
Farmers Club of the Nashville Chamber of Commerce has
made a serious effort to express community improvement in
terms of fairly reliable figures. The accompanying summary
shows the accomplishments of the program in four classes of
activity of the participating communities in 1948, compared
with 1947.
Allowing for all possible discrepancies in the figures as
well as for special circumstances influencing year-to-year
changes, the record of accomplishment in Middle Tennessee
has been more than sufficient to justify the few thousand
dollars expended in prize money and the time that the
Farmers Club and county sponsors have devoted to this
program. The businessmen of Nashville and of all the other
cities and towns in the area have undoubtedly profited
greatly through the betterment of the farm communities.
There is little wonder, therefore, that they have given this
program their support. The only wonder is that more of
them have not fully awakened to their purely selfish stake
in its success and have not more actively and personally par
ticipated in the various aspects of the program.

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

Community Planning,
Organization, etc.
Individuals taking part in church
and Sunday Sch ool.................
Number taking part in general civic
and community work.................

1947

1948

Percent
Change

22,234

24,603

+ 10.7

16,832

20,177

+ 19.9

Family Food Supply
Families growing 75 percent or more
of their food supply (no.) . . .
6,264
Families having gardens at least 9
4,749
mos. of year (no.).....................
Food canned (q ts.)..................... 1,976,602
410,759
Food frozen ( l b s .) .....................
Families having two or more milk
cows ( n o . ) ..............................
6,342

6,536

4.3

5,330
1,961,329
694,129

+ 12.2
— .8
+ 69.0

6,132

— 3.3

73,574
1,417,952
18,420

— 12.6
— 1.6
+ 46.5

19,800
7,900
10,007
35,297
49,093
1,072,391

+
+
+
+
+
+

Developing and Improving
Sound Systems of Farming
Lime used (tons).........................
84,201
Terraces constructed (feet) . . . 1,440,826
Fertilizer on row crops (tons) . .
12,576
Fertilizer on soil-conserving crops,
small grains (to n s).................
18,319
Acres seeded to alfalfa.................
5,172
Acres seeded to red clover . . .
6,588
Acres of permanent pasture seeded
25,132
Acres of pasture clipped . . . .
39,592
Small grain harvested (bus.) . . .
740,533
Cover crops seeded, including small
grains (acres).........................
60,643
All hay (tons).............................
108,077
Com harvested:
Open pollinated (bus.) . . . .
1,299,904
Hybrid (b u s.)......................... 1,427,824
Tobacco harvested (lbs.) . . . .
8,479,150
Cotton harvested (bales) . . . .
6,153
Green manure crops turned (acres)
25,775
Beef cattle kept (n o .).................
30,601
Dairy cows kept (n o .).................
26,073
Hogs raised ( n o . ) .....................
86,226
Lambs raised (n o .).....................
20,228
Chickens raised ( n o .) .................
618,520
New fence built (rods) . . . .
224,018
Amount spent for farm machinery . $1,432,465

8.1
52.7
51.9
40.4
24.0
44.8

106,433
154,515

+ 75.5
+ 43.0

1,334,667
2,321,623
7,442,337
6,698
33,768
35,772
31,057
105,267
22,504
667,878
310,531
$2,880,508

+ 2.7
+ 62.6
— 12.2
+ 8.9
+ 31.0
+ 16.9
+ 19.1
+ 22.0
+ 11.3
+ 8.0
+ 38.6
+101.1

Improving Convenience of
Farm and Home
Families installing running water
( n o . ) ......................................
514
748
Families installing bathrooms (no.)
274
464
Families installing electricity (no.)
1,030
2,142
Amount spent for:
Building and repairs . . . .
$2,085,038 $3,734,077
Electrical appliances . . . .
$ 760,940 $1,109,932
Furniture and furnishings . .
$ 542,434 $1,325,165

+ 45.5
+ 69.3
+108.0
+ 79.1
+ 45.9
+144.3

All facts, of course, cannot be reduced to figures, and all
benefits accruing from the community improvement program
cannot be embalmed in statistical tables. Some of the most
important benefits are intangible in character. Businessmen
should be as interested in these as in the more tangible re
sults. The list of these intangible benefits is long and there
is space to barely mention but a few.
In a time when it is all too easy to look to government or to
someone else for support, the community improvement pro
gram teaches people to do things for themselves and to take
pride in their own accomplishments. In an age when differ
ent economic groups tend to look upon each other as enemies,
this program brings farmers and businessmen together as

8 5

friends and neighbors. In the democratic formulation and
execution of community projects, people discover their de
pendence upon each other and the productiveness of team
work and mutual aid. Unsuspected qualities of leadership
are revealed within the community and a field of action is
provided for their exercise.
All existing organizations in the community draw support
and new life from the work of the community club and find
new meaning in their own specific tasks through being in
tegrated into a common program of action. County Agents
find their work lightened, or at least made more fruitful,
when they work with groups of people who are on fire with
enthusiasm for community improvement instead of having to
work with a large number of separate individuals. In cases
where a County Agent is not as active as he might be, the
prodding of county sponsors and the demands of farm com
munities for advice and help may stimulate him to more
and better work and thus make of him a better agent.
In communities that have learned to work together in these
improvement contests, there is a marked tendency for local
jealousies and friction to be allayed and for cliques to dis
appear. Where the racial composition of the community has
in the past tended to cause friction, the activity of a com
munity club has often dissipated the tension and developed
attitudes of mutual respect and consideration. With each
racial group maintaining its own identity and taking pride
in its own accomplishments, they have nevertheless learned
to co-operate in raising the level of living for both of them.
Rationale

The reasons for the success of the farm community im
provement contest program are not far to seek. They are to
be found in the homely realism of its psychological and eco
nomic aspects.
Three fundamental, almost primitive, motives provide the
driving force behind the program: competition, co-operation,
and emulation. The love of a contest is inherent in man. It
is this which explains the enormous popularity of competi
tive sports of all kinds. It is not so much the winning of a
prize that counts, but rather the mere fact of winning out
over competitors. In the case of the community improve
ment program, however, the competition is not among indi
viduals but among communities. Herein lies a good deal of
the strength of the movement. Since the community is the
contestant, social pressure enforces an unusual degree of co
operation among the members of the community—the kind
of co-operation that in sport welds eleven men on a football
field into a team.
Finally, there is the tendency in all of us to want the kind
of things that our neighbors have. We want to live as well
as they. This spirit of emulation is at work throughout the
program, first among the contesting communities, and then
among the members of each community. It is sometimes
thought smart to scoff at the natural propensity in all of us
for “keeping up with the Joneses.” But whether this is good
or bad depends upon what the Joneses have and what they
do. No material advancement in the standard of living has
ever come about suddenly and en masse. It has always come
about first by a few people enjoying some new comfort or
luxury, and then by others who have sought to enjoy the
same thing. This is the way progress occurs.
On the economic side, the community improvement pro
gram is equally simple. Once a spirit of emulation is aroused

n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

in the course of competition, a powerful incentive is pro
vided to increase one’s productivity. The new refrigerator,
the new deep freezer, the new coat of paint on the house
costs money that must be earned by one’s work. The stimu
lation of desire for comforts and conveniences is the first
step on the road to being able to afford them. It is, there
fore, quite natural for farmers to want to improve the ef
ficiency of their farm operations and to make better use of
their land and labor, since that is the only way in which they
themselves will be able to enjoy modern conveniences and at
the same time help their community to win out in the contest.
Many of the most striking features of an organized com
munity are civic projects that have not cost much in money,
but which have been made possible by the labor and time do
nated by the members of the community. Everyone has at
his disposal a certain amount of free time. This free time
is a productive resource that can run to waste if it is al
lowed to pass in idleness, or that can be converted into eco
nomic value if employed productively. When the members of
an organized community pool their free time and use it for
some civic improvement, they are creating a sum of ecnomic values in which they all share. One important eco
nomic source of community improvement, therefore, is this
conversion of waste time into productive effort.
A third economic characteristic of the community improve
ment program is the emphasis that is placed on the quality
of living. Any given expenditure can be made to yield more
or less satisfaction, depending upon the discrimination and
wisdom with which it is spent. Spent in one way, a given in
come may yield a certain amount of temporary satisfaction;
spent in another way, it can be made to yield more substan
tial and permanent satisfaction. When a community sits
down to plan its program for a year or more ahead, it must
necessarily learn to put first things first; it must discrimi
nate between what is for the long-run and permanent good
of the community and what is of only passing importance.
The individuals who compose the community are likewise
impelled to consider their own expenditures in the same
light if the community plan is to be carried through suc
cessfully. The constant bias that is thus put behind wise
expenditure works inevitably toward a gradual raising of
the whole level of living.
Conclusion

Despite its phenomenal success wherever it has been tried,
the farm community improvement program just described is
certainly no panacea for agriculture. It is no solution for
many of the serious problems of readjustment that undoubt
edly face agriculture in the years to come. The position of
the farmer in our economic society, like that of everyone
else, is pretty much at the mercy of the winds sweeping
through the markets of the world except as these are tem
pered by governmental action. His destiny is not entirely in
his own hands.
Nevertheless, there is always a margin within which the
individual and the community can determine whether they
shall live better or worse. The community improvement pro
gram operates to keep the quality of life in farm communi
ties at the upper rather than at the lower edge of this margin.
Regardless of the economic weather, therefore, a community
will always be better off organized than unorganized. Its
power of resistance to adverse conditions will be greater, and
its recuperative power will also be stronger.

The strengthening of farm communities is a matter of vital
concern to farmers but not to them alone. It is of equally
vital concern to all businessmen who deal with farmers and
to all bankers, the safety of whose loans rests directly or in
directly on the prosperity of agriculture and on the quality
of the people living in farm communities.
Any organization, therefore, that is interested in giving ex
pression to the American businessman’s innate idealism by
building around itself a more stable, a more prosperous, and
a more productive farming area would do well to consider
the adoption of such a program as that described. Let its
representatives go to Knoxville, Nashville, Atlanta, Chatta
nooga, or Jackson and hear with their own ears the story of
what has already been accomplished. Let them see with their
own eyes the working of a movement that may never rate
even a footnote in a textbook on economics, but which may
yet do more for the farmer than many a more grandiose
scheme. There they may catch a vision of what could be
accomplished in their own trade area. They may even be
able to imagine what rural life in America might be like if
this program were adopted throughout the length and
breadth of the whole United States.
E arle L. R auber .
B a n k

A n n o u n c e m e n ts

On September 1, two banks began remitting at par for
checks drawn on them when received from the Fed
eral Reserve Bank. The first of these was the Talla
hassee State Bank, Tallahassee, Florida, a newly
organized nonmember bank in territory served by the
Jacksonville Branch. This bank has a capital of
$200,000, and su r p lu s an d u n d iv id e d profits of
$180,000. Its officers are Millard F. Caldwell, Presi
dent; W. Oris Buchan, First Vice President; /. A.
Grant, Second Vice President; Tom N . Humphress,
Cashier; and Harmon Wheeler and Walker Tharpe,
Assistant Cashiers.
The second addition to the par list was the Citizens
Bank, Hapeville, Georgia. This bank has a capital of
$50,000, and surplus and undivided profits of $40,000.
Its deposits are in excess of one and a half million
dollars. The officers of the bank are A. P. Jackson,
President; H. H. Timmerman, Vice President; M. T.
McClellan, Vice President; and B. H. Thompson, Vice
President and Cashier.

R e v isio n o f D e p a r tm e n t S to r e S a le s
a n d S to ck s I n d e x e s
The seasonal adjustment factors for the Sixth Dis
trict indexes of department store sales and stocks for
both the District and for each of the individual cities
shown in the table on page 89 have been revised. The
revisions which in most cases begin with 1944 were
made necessary by the changed seasonal pattern of
trade since the date of the previous revisions. Back
figures for both the adjusted and unadjusted indexes
for any or all of the cities in the District may be
secured upon request to the Research Department of
the Federal Reserve Bank of Atlanta.

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

8 7

District Business Conditions
Retail Sales and Inventories

SIXTH DISTRICT

FOR

ADJUSTED

450

SEASONAL

V AR IATIO N ,

1935-39= 100

450

400

400
SA LES

A
\

350
A *

/
/

3 00

f
/
/
/

250

r
f

350

DEPARTMENT STORE SALES AND STOCKS

/
1 . ..

Au g u s t sales at Sixth District department stores did nothing toward improving the year’s record. The month’s
sales were about 5 percent less on a dollar basis than those
of last August and the year-to-date figure showed sales for the
District down 4 percent from last year’s eight-month total.
Some improvement was noted at the weekly reporting
department stores for the week ended September 3, when
sales for the District were up 2 percent from the correspond
ing week a year ago. But for the week ended September 10,
sales were down 13 percent, and 17 percent for the week
ended September 17.
August sales were also lower than a year ago in other lines
of retailing from which the Bank collects statistics. Furni
ture stores reported sales down 21 percent from last year’s
exceptionally high sales, jewelry store sales were off 3 per
cent, and at household appliance stores sales fell 24 percent.
SALES d e c l in e s GENERAL. According to Department of Com
merce reports, motor vehicle dealers and drug stores are the
only types of independent merchants in the District who
made greater dollar sales during the first seven months of
this year than they did during the corresponding period last
year. Their sales were up 10 and 2 percent, respectively.
Average sales experience in the four representative areas
showed that through July, sales were down one percent at
food stores; 6 percent at restaurants; 16 percent at apparel
stores; 13 percent at men’s clothing stores; 10 percent at
lumber and building materials dealers; 7 percent at auto
tire and accessory stores; and 3 percent at liquor stores.
With a few exceptions these declines are rather moderate
and are partly explained by lower prices. Taken by them
selves, the comparatively moderate drops in consumer buying
do not explain the more severe declines in some types of
manufacturing operations. Moreover, from a glance at cur
rent retail sales reports, the present pickup in some types of
manufacturing activity is equally difficult to explain.
in v e n t o r y l iq u id a t io n .
Because the curtailed retail buying
apparently started a process of inventory liquidation, it
resulted in a much greater decrease in buying from pro
ducers. The accompanying chart shows that until November
of last year, the District’s department stores were not only
replacing merchandise currently sold but were adding to
their stocks as well. This year many merchants have reduced
their buying in proportion to their sales and have even failed
to replace some of the merchandise sold.
The seasonally adjusted index of department store stocks,
for example, has declined practically every month since last
November. By the end of August, stocks were down 16 per
cent. The seasonally adjusted sales index, on the other hand,
fell only about 11 percent between its peak in October last
year and August this year. At the end of August, inventories
at furniture stores were 11 percent below those of
August 1948. Presumably, similar changes occurred at other
types of retail stores.
Lower prices explain part of the decline in the value of
inventories just as they explain part of the decline in the
value of sales. According to an estimate of department store
inventory prices made for the end of July by the Bureau of
Labor Statistics, however, the average decline in department
store inventory prices throughout the country was only 3.4

percent from July last year, considerably less than the
decline in inventories.
The value of stocks carried exceeds, in most cases, the
value of sales made during any month. Consequently, even
at stores reducing inventories percentagewise only as much as
their sales declined, the dollar decline in stocks exceeded the
dollar decline in sales. For example, dollar sales of piece
goods, domestics, and draperies at District department stores
were 15 percent lower this July than last July. Stocks of
these goods were down 13 percent for that period. Yet the
total dollar decline in stocks was over three times as great as
the dollar decline in sales. Where merchants have gone fur
ther and have attempted to reduce the ratio of their stocks to
sales, the decline in dollar sales has been even greater.

300

/
---STOCKS

/
250

/
/
/
/

2 00

200

1945

1946

1947

1 948

------------- TSI/v
1949

A combination of these factors means that at all Sixth Dis
trict department stores, the value of merchandise received
during the first seven months was 11 percent less than that
received during the first seven months of 1948. Sales were
down only 4 percent. The drop in the dollar value of mer
chandise received was over three and a half times as great as
the dollar reduction in sales.
EFFECT OF INVENTORY d e c l in e s .
Such a process snowballs. It
means that retailers purchase less from wholesalers and other
suppliers than they sell. By way of illustration, Department
of Commerce reports for July showed sales of dry goods
wholesalers in the District down 36 percent from July 1948.
This decline exceeds the rate of sales decline for any com
parable type of merchandise sold by the department stores or
any type of independent retailer selling dry goods. The pro
cess snowballs further if wholesalers also attempt to reduce
inventories. A substantial reduction in manufacturers’ sales
may consequently result from only a small reduction in con
sumer buying.
A chain of events of that nature seems to have taken place
throughout the country as well as in the District. Because
such developments have been particularly marked in the tex
tile and apparel fields, which are primary manufacturing
industries in the District, they explain to some degree the

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

S ix t h D is tr ic t S ta tis tic s
CONDITION O F 28 MEMBER BANES IN LEADING CITIES
__________________ (In T h o u sa n d s of D ollars)
S e p t. 21
1949

Item

A ug. 17
1949

P e rc e n t C h a n g e
S e p t. 15 S e p t. 2 L 1949/ from
1948
A u g . 17 S e p t. 15
1949
1948

Loans and investm ents—
Total.................................. 2,367,664 2,355,387 2,304,249
785,254
Loans—N et...........................
765,325
810,686
796,327
Loans—G ro ss.......................
776,428
818,131
Commercial, industrial,
and agricultural lo an s. 462,644
439,315
502,475
Loans to brokers and
dealers in secu rities..
6,537
7,402
7,485
Other loans for p u r
chasing and carrying
secu rities.......................
35,203
37,341
54,520
Real estate lo an s.............
70,166
69,396
64,511
Loans to b a n k s.................
5,148
6,149
4,420
Other lo an s.......................
219,419
182,991
215,764
Investments—to tal............. 1,582,410 1,590,062 1,493,563
Bills, certificates, and
n o te s..............................
492,223
434,605
502,739
U. S. b o n d s.......................
892.455
867,518
870,104
O ther secu rities...............
205,384
191,440
209,567
Reserve with F. R. Bank. . .
408.455
445,373
368,023
Cash in v a u lt.......................
38,386
42,365
40,810
Balances with domestic
b an k s................................
192,283
171,306
217,248
Demand deposits adjusted 1,703,507 1,751,303 1,783,093
Time d ep o sits.......................
541,106
531,035
540,864
37,008
U. S. G ov't d ep o sits..........
36,014
53,793
480,758
Deposits of dom estic b an k s. 454,463
484,114
Borrow ings..........................
4,500

+ 1
+
+ 32
+

+ 3
— 3
— 3

+ 13

— 6
4* 1
+ 16
— 2
— 0
+ 2
— 3
+ 2
— 10
+ 6
— 11
— 3
— 0
+ 45
— 5

— 35

+ 9

— 16
+ 18

+ 6
+ 16

+ 92

— 17
— 4

— 21
— 4
+ 2
+ 49
— 6

DEBITS TO INDIVIDUAL BANK ACCOUNTS
(In T h o u sa n d s of D ollars)
P lace

N o. of
B anks A u g u st
R ep o rt
1949
in g

A u g u st
1948

P e rc e n t C h a n g e
A u g . 1949, from
A u g u st
1948

ALABAMA
Anniston.........
B irm ingham ...
D othan.............
G ad sd en .........
M obile.............
M ontgom ery..

3
6
21
3
5
3i

19,168
292,518
12,178
16,627
110,930
70,025

17,607
298,602
11,080
15,753
113,252
66,939

18,630
298,007
11,789
16,645
135,579
71,464

+
—
+
+
—
+

9
2
10
6
2
5

+
—
+.
—
—
—

3
2
3
0
18
2

FLORIDA
lack so n v ille...
Miami...............
G reater Miami*
O rlando...........
P ensacola........
St. Petersburg.
Tam pa.............

4
7
13
3
3
3
6

252,533
226,320
303,267
42,978
35,636
45,739
106,752

251,122
208,108
287,351
45,454
34,090
49,431
108,752

244,610
211,834
301,703
45,340
33,176
43,618
101,123

+
+
+
—
+
—
—

1
9
6
5
5
7
Z

+,
+
-h
—»
+
+.
+

3
7
1
5
7
5
6

GEORGIA
A lbany.............
A tlanta.............
A u g u sta...........
Brunsw ick.......
Colum bus........
E lberton..........
Gainesville*...
Griffin*...........
M acon.............
N ew nan...........
Rome*..............
S avannah........
V aldosta..........

3
4
3
2
4
2
3
2
3
2
3
4
2

20,935
820,692
49,270
8,790
48,948
3,313
12,996
10,871
59,857
9,268
17,665
84,509
35,652

20,331
741,488
54,894
8,350
47,394
3,312
12,517
10,012
50,679
7,916
17,157
83,530
12,694

19,186
815,966
52,957
9,028
58,205
3,445
12,913
10,136
63,966
7,192
19,603
87,857
24,266

+ 3
+ 11
— 10
+ 5
+, 3
+ o
+ 4
+ 9
+ 18
+ 17
+ 3
+ 1
+ 181

+ 9
+ 1
—. 7
— 3
— 16
— 4
+ 1
+ 7
— 6
+ 29
— 10
— 4
+ 47

LOUISIANA
Alexandria*. . .
Baton R o u g e ..
Lake C h arles..
New O rle a n s..

3
3
3
8

28,763
100,893
33,310
668,364

29,147
105,247
36,420
609,614

27,464
105,324
33,060
648,123

—
—
—
+

1
4
9
10

i+
—
+
+

5
4
1
3

MISSISSIPPI
H attiesb u rg ...
Jackson............
M eridian..........
V icksburg........

2
3
3
2

15,601
124,127
23,226
21,474

15,553
109,811
23,092
21,940

16,083
129,103
27,243
22,641

+i 0
+ la
+ i
— 2

—
—
—
—

3
4
15
5

TENNESSEE
C hattanooga..
Knoxville.........
N ashville.........

3
4
6

128,829
99,164
303,392

126,362
99,991
275,869

133,065
105,272
288,743

+ 2
— 1
+ 10

— 3
— 6
+ 5

SIXTH DISTRICT
32 C ities......... 114

3,891,018

3,674,677

3,882,540

98,804,000 98,490,000 97,940,000

UNITED STATES.
333 C ities.......

*N ot in c lu d e d in S ix th D is tric t total.

marked midsummer slowing down of operations at many
District plants.
Current reports indicate that some retail merchants are
finding that they have carried out the inventory liquidation
process too far. Some are learning that they cannot supply
the variety of goods the customers demanded. Others are dis
covering that because manufacturers have reduced opera
tions, they cannot obtain the quick deliveries necessary for a
hand-to-mouth buying policy. Still others are finding that
anticipated price reductions did not materialize to the extent
they had expected.
CURRENT c o n d it io n s . Up to the present, available data indi
cate no substantial increase in department store inventories
that might reflect a change in inventory policies. The Dis
trict’s seasonally adjusted index for department store stocks
showed an increase of less than one percent from its July low
but a similar rise occurred last March, followed by declines
during the succeeding months.
The current pickup at some textile plants in the District
seems to have been sparked by the inability of manufacturers
to meet new orders out of their depleted inventories. In both
1947 and 1948, sales by manufacturers of textile products
rose substantially during August and September from low
points in July. In both years, however, the manufacturers
could fill some of the orders from inventories built up during
the first half of each year. This year their inventories dropped
considerably and by June were 4.3 percent less than they
were in January and 6.5 percent below June 1948. Many new
orders could be filled only by expanding operations.
PROSPECTS. Two possible developments in retail trade will
help to determine whether textile operations will remain at
an increased level. One would be a reversal of the tight
retail inventory policy prevailing in recent months. Another
would be an expansion in retail buying of textile and other
consumer goods items. Because department store operations
will reflect these developments, both sales and inventory
changes during the coming months are of considerable im
portance to future business conditions in the District.
C .T .T .

A Disappointing Cotton Crop

Many District cotton farmers will remember 1949 as the year
in which they bet rather heavily on the weather—and lost.
The main reason why so many producers took a greaterthan-average chance, as measured by their investment in the
crop, was that 1949 was the last year in which they were not
limited by acreage or marketing controls and yet were guar
anteed a high price for their cotton. It was a good bet, but
there is little satisfaction to be gained from that knowledge
now that the results are known.
In an effort to wring every possible dollar from cotton
before the imposition of acreage allotments, farmers in the
six states increased their plantings 764,000 acres, or 11 per
cent, over the 1948 acreage. Increases in the individual states
ranged from 77 percent in Florida to 6 percent in Tennessee.
Of course, some of the three-quarter-million-acre increase was
planted on land which had been diverted from peanuts, but
part of it was gained at the expense of corn and other crops.
Not only did District farmers increase their acreage in
cotton but they sought to obtain a higher production per acre
as well. Last year they used fertilizer on 85 percent of their
cotton plantings; this year they put fertilizer under 89 per
cent of them. Moreover, the amount of fertilizer applied per
acre was greater this year than last. As a result the cost of

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

fertilizer used under cotton increased from 47.3 million
dollars in 1948 to 59.8 million in 1949—a gain of 27 per
cent. Increases in fertilizer costs over last year ranged from
126 percent in Florida down to 19 percent in Alabama.
Since fertilizer costs constitute one of the largest single
items of cash expenditure in cotton production, a rough
estimate of total costs can be obtained from them. On that
basis, then, the current crop has cost farmers about 25 per
cent more than last year’s crop.
The additional investment would probably have paid off,
had the weather been favorable. The past winter was un
usually mild and, unfortunately, a high percentage of boll
weevils survived. Then the rains came and, in some sections,
continued intermittently from planting time to harvest. In a
few areas grass got the upper hand and fields were plowed
up or abandoned. In other areas cotton put on a rank growth
but few bolls, and weevil damage was heavy. True, farmers
poisoned and repoisoned but most often the rains washed
the poison off before it had time to be very effective. As a
result the demand for poison was so heavy that dealers in
some sections found it impossible to obtain additional sup
plies. In desperation, cotton farmers of the Tennessee Valley
operated bug catchers over their fields in an attempt to
lessen the damage but the results were negligible.
Cotton

1948

DEPARTMENT STORE SALES*
U nad ju sted

A djusted**
P lace

DISTRICT
Atlanta....
Baton Rouge...
Birmingham
Chattanooga...
Jackson.,. .
Jacksonville
Knoxville. . ,
Montgomery...
Nashville. ,
New Orleans...
Tampa....

A ug.

July

A ug.

July

A ug.

1949

1948

1949

1948

360!
410
393
326
343
353
352
399
311
375
313
406
379
467

377
389
403.
350
357
369
382
416
353r
404
346
393
359
508

393n
438r
449r;
395r
380r
366r
41lr
427r
348r
417f
363r
459r
381r
480r it

324/
414
346
299
308
325
313
343
270
281
279
369
330
397

294
303
334
291
289
273
310
337
254r
283
274
303
277
40S

354
443
395
364
342
337
365
367
302r
312
323
417
332
408

DEPARTMENT STORE STOCKS
U n a d ju ste d

A djusted**
P lace

A ug.

July

A ug.

July

A ug.

1949

1948

1949

1948

DISTRICT
319
Atlanta....
427
Birmingham
257
Montgomery... 292
Nashville...
476
New Orleans. .. 271

319
412
266
341
450
282

360r
456r
306r
394r
548r
336r

316
431
252
307
431
261

300:
379
245
317
436
271

356
460
300
414
553
323

745
15
670
1,197
2,353
756
5,736
14,868

(Estimate)
600
18
625
900
1,450
625
4,218
14,943

GASOLINE TAX COLLECTIONS***

Change
—
+
—
—
—
—
—
+

19.5
20.0
6.7
24.8
38.4
17.3
26.5
.5

According to the September 1 estimate of the Crop Report
ing Service, cotton production in the District states will total
4,218,000 bales; 26.5 percent less than last year’s harvest.
Thus the farmers’ efforts to capitalize on an unlimited oppor
tunity to grow cotton—efforts indicated by 764,000 addi
tional acres and 12.6 million dollars more for fertilizer—
were thwarted by unfavorable weather.
The disappointing cotton crop will have marked effects on
the economy of the District. Also it evidences a fact that is
sometimes overlooked, namely, that high rates of fertilization
and seeding are accompanied by rather high weather risks.
Within reason, these risks must be taken by both the farmer
and the farm lender. Several years of results on high rates
of fertilization by experiment stations give some measure of
the weather risk involved and help to establish the bounds
of “reasonableness.” Such records are available and even
though their use cannot eliminate risks, it can be a help in
appraising them. Cotton farmers bet on the weather this
year with favorable odds; that they lost merely emphasizes
the importance of the role of unpredictable weather.
Weather risks will become more important factors in the
future. As acreage restrictions are imposed on an increasing
number of crops, farmers will intensify their efforts on the
reduced acreage. The practice of high rates of seeding and
fertilizing probably will increase. That will mean high cash
costs per acre in an effort to obtain high yields at low unit
costs. In the long run, those practices will doubtless pay but
farmers and lenders should take some precautions against
years when weather may upset the most carefully laid plans.

S ix th D is tr ic t I n d e x e s

P ro d uctio n

(In T h o u sa n d s oi B ales)

G eorgia.............................................
F lo r id a .............................................
T en n essee........................................
A la b a m a ........................................
M is s is s ip p i...................................
L o u isia n a ........................................
District S t a t e s .........................
United S tates...................................

8 9

J .L .L .

A djusted**
Place

SIX STATES
Alabama, .
Florida....
Georgia. ,. ,
Louisiana
Mississippi.
Tennessee.. »

U n a d ju ste d

A ug.

July

A ug.

July

A ug.

1949

1948

1949

1948

21li
208
185
202
236
200
218

213
213
195
196
252
210
231

202
204
177
181,
206
197
237

208
210’
181
20a
238'
20S
220|

209>
208
182
190
246
204
233

2oa

20S
172
185
208
203
239

ELECTRIC POW ER PRODUCTION*

COTTON CONSUMPTION*
A ug.

July

A ug.

July

June

1949

1948

1949

1948

TOTAL
119
Alabama... 133
Georgia... 115
Mississippi 55
Tennessee. 111

89
96
88
4L
79

135 SIX STATES.. 348
Hydro
143
135
generated 324
62
Fuel
122
generated 379

352
280
445

221

Place

MANUFACTURING
EMPLOYME1NTT***
Place

SIX STATES.
Alabama...
Florida....
Georgia...
Louisiana. .
Mississippi.
Tennessee.

July
1QAQ

136
138
127
130,
149
129
141

June

July
1948

321
453

CONSTRUCTION CONTRACTS
July
June
July
P lace
1949
1949
1948

DISTRICT... .
Residential.
Other
151
Alabama. ..
158
Florida. .. .
129
Georgia. . .
144
Louisiana. .
153r
Mississippi.
155
159r
Tennessee.

137
140
130
131
149
131r
140

July

416
477
386
525
389
387
608
428
478

595
702
543
565
455
748
213
668
968

450
465
443
385
548
465
397
293
529

CONSUMERS PRICE INDEX

ANNUAL RATE O F TURNOVER O F
DEMAND DEPOSITS

Aug.

A ug.
1948

A ug.
1949

July
1949

A ug.
1948

ALL ITEMS... 173 172 18Q
Food...... 206 204 221>
Clothing... 193 194, 204
Fuel, elec.,
and refrig. 135 125, 139
Home fur-1
nishings.. 182 186 193
Misc...... 154 154 153
Purchasing
power of
dollar. .. . .58
.56
.58
rDaily average basis*
rAdjusted for seasonal variation
r 1939monthly average = 100;
Other indexes, 1935-39 =»100

Unadjusted. 17.9
Adjusted**.. 20.2
Index**.... 81.8

19.0
20.2
81.9

18.1
20.4
82.9

Item

1949

July
1949

CRUDE PETROLEUM PRODUCTION
IN COASTAL LOUISIANA
AND MISSISSIPPI*
A ug.
1949

July
1949

A ug.
1948

Unadjusted. . 278
Adjusted**... 278

277
277

296
296

r Revised

9 0

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

1939

TOTAL PAYMENTS

$4,765,000,000

$4,519,000,000

1948

AG RICU LTU RE
H

GOVERNMENT

□

MFG. PAY ROLLS

TRADE 8 SERVICE

■

A LL

OTHER

TOTAL PAYMENTS

$15,659,000,000
SO U RCE:

U. S. Department of Commerce.

Reserves and Member Bank Loans

Because of the series of reductions in reserve requirements
initiated by the Board of Governors on August 1, required
reserves of Sixth District member banks averaged approxi
mately 63 million dollars less during the last half of August
than they did during the first half. At banks in the reserve
cities of Atlanta, Birmingham, Jacksonville, Nashville, and
New Orleans, required reserves were reduced about 14 mil
lion dollars and at the country banks, those outside the
reserve cities, they were 49 million dollars lower. The reduc
tion in requirements at the reserve city banks was offset in
part by an increase in deposits subject to reserve. At the
country banks, deposits subject to reserves declined slightly.
In both 1947 and 1948, loans at the member banks reached
their seasonal low in July or August, when certificates of
interest held in connection with the Commodity Credit Cor
poration’s cotton loan program had been redeemed and when
certificates covering the new crop loans had not yet been is
sued. Consequently, any increased lending activity in August
that might have resulted from the freeing of reserves would
be overshadowed by the normal seasonal decline in loans.
Total loans of all member banks at the end of August were
8 million dollars lower than they were at the end of July.
The decline equaled that for the corresponding month last
year but contrasted sharply with the increase of 25 million
dollars reported for the comparable period in 1947.
At the weekly reporting banks in leading cities of the
District, total loans on September 14 were 6 million dollars
greater than on the last day of August. Commercial, indus
trial,
and agricultural loans were 15 million dollars greater.

Apparently the banks have utilized most of their released
reserves to increase their holdings in Government certificates
rather than to expand their lending operations. At the end of
August total security holdings of all member banks amounted
to 88 million dollars more than at the end of July. Judging
from the statements of member banks in leading cities, Treas
ury certificates of indebtedness are the most popular type of
security. Between the last Wednesday of July and the last
Wednesday of August, these banks increased their holdings
of such certificates 53 million dollars. Their holdings of
Treasury bills rose 26 million and United States bonds 12
million. By September 14 their holdings of certificates had
increased 8 million dollars more.
If loans during the rest of this year follow the precedent
of the past two years, a rather substantial growth can be
expected. It is reported that the banks will find the CCC
certificates of interest more attractive this year because of
the reduced yields offered by Government securities. For this
reason alone, total member bank loans can be expected to
expand during the coming months even without an expansion
in business loans.
C .T .T .
Industry and Employment

awarded in the Sixth
District during August, according to F. W. Dodge Corpora
tion statistics, declined less than 2 percent from the July total,
and was about 16 percent less than that for last August. Resi
dential contracts awarded in August, however, increased 39
percent from July and were only 4 percent below the August
1948 total. These awards were up in each of the six states
for the month, the gains ranging from 10 percent in Alabama

THE VALUE OF CONSTRUCTION CONTRACTS

CONSTRUCTION CONTRACTS AWARDED
(In Millions of Dollars)

to 138 percent in Mississippi. They were also larger than
they were a year ago in each state except Florida and
Louisiana. Residential contracts accounted for 53 percent of
total awards in August; in the individual states the propor
tion ranged from 20 percent in Mississippi to 61 percent in
Florida.
TEXTILE MILL ACTIVITY in the District increased substantially
in August, after having reached in July the lowest rate for
any month in eleven years. The mills nearly always increase
their consumption of cotton in August, but this year the
August increase over July was 34 percent, a much larger
gain than usual. Improvement in the cotton goods markets
began to be evident in July and was more pronounced in
August, reportedly because inventories had been worked off

o n t h l y

R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

as a result of lower prices in recent months. The 34-percent
increase compares favorably with one of 28 percent for the
country as a whole. August consumption was 17 percent
less in the District than a year ago and 12 percent less
throughout the country.
COAL PRODUCTION in Alabama and Tennessee during August
and early September was about a third less than it was a
year ago. In the first six months of 1949, output was 17
percent less than in that part of 1948. In July, however,
production was down 52 percent from July last year, and in
August it averaged 34 percent less than in August 1948.
The first effect of the September 19 strike by the union
miners was the laying off of railroad workers. In the Birming
ham area, no major cutbacks in steel and iron production
were expected immediately and industrial stock piles of coal
were reported to be sufficient for about a month.
STEEL MILL OPERATIONS in the Birmingham-Gadsden area
dropped to 97 percent of rated capacity for each of the first
two weeks in August, but they have recently been reported
at 101 percent.
ELECTRIC POWER PRODUCTION in the District states, on a daily
average basis, was off one percent from June to July, a de
crease less than a third as large as that which occurred at
the same time a year ago. Hydro-generated power, which
accounted for 53 percent of the total, was up 16 percent for
the month, whereas fuel-generated current declined 15 per
cent. The July rate of production was 8.4 percent greater
than that for July 1948, a gain of 47 percent in hydro
generated current being partly offset by a decrease of 16
percent in power generated by the use of fuels.
MANUFACTURING EMPLOYMENT in the District declined in July
for the eighth consecutive month. The July index, at 136
percent of the 1939 monthly average, was down only seventenths of one percent from June but it was 9.6 percent below
the index for July 1948. Small increases from June to July
in Tennessee and Louisiana were not enough to compensate
for the decreases in the other four states.
Employment at food and food processing establishments
was up 4.3 percent in July. In Florida, citrus canning ac
tivities declined seasonally but in the other states, employ
ment increased in the canning and preserving of fruits and
vegetables. In Louisiana, beverage manufacturers have been
operating at peak levels. Early resumption of seafood pro
cessing and rice milling will probably result in a further
increase there. July employment in the fabricated metals
industries increased, except in Alabama, and an increase at
Tennessee apparel manufacturing establishments was more
than sufficient to offset small decreases in Alabama and
Georgia. On the other hand, employment at textile mills in
the District declined 1.9 percent in July and there was a de
crease of 1.8 percent in the lumber and wood products in
dustries.
The increase in cotton consumption in August indicates a
probable increase in textile employment, and recent reports
of increased operations in logging and planing mills may
reflect increased employment in the lumber industry. Em
ployment in the chemicals industry was at a seasonally low
level in July but an increase there is also probable as cottonseed-oil mills increase their operations with the market
ing of the cotton crop, and as fertilizer plants become more
active.
d. e . m.

9 1

S ix th D is tr ic t S ta tistic s
INSTALMENT CASH LOANS
No. of
L e n d e rs
R ep o rt
in g

Lender

F e d e ra l c re d it u n io n s ..........
S ta te c re d it u n io n s .................
In d u stria l b a n k in g com->
p a n ie s .....................................
In d u stria l lo an c o m p a n ie s ..
Sm all lo an c o m p a n ie s ..........
C om m ercial b a n k s .................

41
17
11
17
38
33

V olum e

O u tstan d in g s

P e rc e n t C h an g e
A u g u st 1949, from

Ju ly
1949

A ug u st
1948

+ 8
4- 12
4- 24
_ 2
+ o
+ 14

4- 45
4- 1
4- 15
— 2
4- 2
4- 43

July
1949

44+
444-

A u g u st
1948

4- 31
4- 27
4- 11
4- 7
4- &
4- 39

4
5
2
0
1
4

RETAIL JEWELRY STORE OPERATIONS
Item

N um ber
of
S to res
R ep o rtin g

Total s a le s ..............................................
C ash s a le s ..............................................
C red it s a le s ............................................
A ccounts re c e iv a b le , e n d of m onth
C ollections d u rin g m o n th ..... ...........

39
38
38
37
37

Item

P e rc e n t C h an g e
A u g u st 1949, Irom
A u g u st 1948

July 1949

+
44+
4-

— 3

31
28
31
4
15

— 12
4- 2,
— 10,

WHOLESALE SALES AND INVENTORIES*
INVENTORIES
SALES
No. of P e rc e n t C h a n g e
No. of P e rc e n t C h an g e
A
u
g
u
st
1949,
from
Firm s A ug. 31,1949, from
Firm s
R eport
A u g u st R eport July 31 A ug. 31
July
1949
1948
in g
in g
1948
1949

7
4- 6 — 6
7
4- 19 — 19
3
4- 13 — 35
3
4- 85 — 26
3
4- 40 — 18
3
+ 36 _ 4
4
4- 21 — 7
6
4- 12 4- 1
15
+ 76 — 21
32
+ 4 — 10
5
4- 10 4- 5
3
4- 37 — 27
10
+ 12
4-i i
18
4- 12 — 22
119
4- 17 — 16.
*Based on U. S. Department of Commerce figures.

Electric appliances...
General hardware...
Industrial supplies...
Jewelry..............
Lumber and build-t
ing materials.....
Machinery equips
ment and supplies.
Plumbing and heat-.
ing supplies......
Drugs and sundries..
Dry goods...........
Groceries!
Full lines..........
Specialty lines....
Shoes and othefl
footwear...........
Tobacco products....
Miscellaneous.......

6
3

— 3
— 7

— 21
— 0

3
ii
17
3

4- 2
+ ■*8

— 2
— 4

— 1
— 28
— 16
— 1

6
20
69

—

4- 3
— 4
1

4- 34
— 3
— 12

DEPARTMENT STORE SALES AND INVENTORIES

Place

ALABAMA
Birmingham
Montgomery...
FLORIDA:
Jacksonville--Orlando......
GEORGIA
Augusta......
Columbus.....

N o. of
S to res
R eport
in g

SALES
P e rc e n t C h a n g e
A ug. 1949, from
July
1949

A u g u st
1948

INVENTORIES
No. of
S to res
R eport
in g

P e rc e n t C h an g e
A ug. 31,1949, from
July 31
1949

A ug. 31
1948

+ 3 — 16
4- 11 — 15
4
4- 15 —. 9
5
— 3
— 26
+ 10: — 10
3
4- 9' — 11
+ 6 — 2
4
— 7 — 19
•4- 7 — 7
4
+ 5 — 7
3
+ 6 + 1
— '3
5
4- 9
48 — 3
+ 14 — 6
6
11 — 3
4- 12
4
+ 2
10' — 6
3
20
—
7
— \2
&
+
ii
0 — 12
4
Savannah.....
4 — 1
&
4- 12
4- 12
LOUISIANA
Baton Rouge...
+ 12 — 9
4
— 11
+
1
1
New Orleans... 6
+ 29 4- 3
— 4 — 19
MISSISSIPPI
—
2
2
9
Jackson........
4- 19
4- 19
4
19 — 13
Meridian......
3
TENNESSEE
23 — 10
Bristol.........
3
3
+ 12 —11
15 — 6
Chattanooga...
3
—11
4- 7
4
10 — 5
Knoxville.....
4
32 — 6
Nashville.....
6
5
+ io — 13
4 — 9
22
OTHER CITIES*.. 22
+ 1 — 12
19 — 5
76
+ 5 —11
DISTRICT........ 113
*When fewer than three stores report in a given city, the sales or stocks
are grouped together under "other cities."_________________

M o n t h ly R e v ie w

o f th e F e d e r a l R e s e r v e B a n k o f A tla n ta f o r S e p te m b e r 1 9 4 9

National Business Conditions
production and employment increased in August

construction, which more than offset a 15-percent increase in

from mid-August to mid-September but subsequently declined.
Department store sales increased somewhat after mid-August.

Statistics, totaled 98,000 compared with 96,000 in July and
87,000 in August 1948.
Distribution
Value of department store sales increased somewhat more
than seasonally in August and the first half of September.
The Board’s adjusted index for August is estimated at 282
percent of the 1935-39 average, compared with 279 in July
and an average of 286 for the first eight months of the year.
Sales of major household appliances have increased in recent
months and have not been as far below year-ago levels as
they were earlier.
Railroad freight shipments in August and early September
were above the July level, reflecting mainly gains in coal and
numerous manufactured goods, but they subsequently de
clined again as a result of sharply curtailed coal shipments.
Total carloadings in August were 19 percent below the same
period a year ago.
Commodity Prices

n d u s t r ia l

early September. Construction activity was maintained residential contracts. The number of new housing units
Iatandadvanced
levels. Wholesale commodity prices rose slightly started in August, as estimated by the Bureau of Labor

Industrial Production

The Board’s seasonally adjusted index of industrial pro
duction advanced in August to 170 percent of the 1935-39
average, which was slightly above the June rate. According
to present indications the index may show a small further
rise in September, despite a work stoppage at coal mines
after the middle of the month.
Production of durable goods rose 5 percent in August,
mainly because of substantial gains in activity in the iron
and steel, nonferrous metals, and lumber industries. Steel
output in August was at a rate of 82 percent of capacity, the
same as in June, compared with 71 percent in July. In Sep
tember, steel production has been scheduled at about 85
percent of capacity. Assembly of passenger automobiles con
tinued at record rates in August and early September, while
truck assemblies declined, partly as a result of work stop
pages at plants of a leading producer. Over-all activity in the
machinery industries was maintained at the July level in
August, as increased output of refrigerators and other con
sumers’ electrical appliances offset further declines in indus
tries making producers’ equipment.
Nondurable goods production advanced in August to the
highest level since March. There were large increases in
output of cotton and rayon textiles, shoes, paper, paperboard,
and tobacco products. Production of meat, seasonally ad
justed, was maintained in August and early September and
was at a level substantially above that of a year ago. Output
of most other nondurable goods showed little change in
August.
Minerals output increased in August, reflecting mainly a
somewhat larger volume of coal production. Coal output in
August, however, was one-third below a year ago. Crude
petroleum production showed little change in August and
advanced 2 percent in early September. Iron ore production
declined more than seasonally in August and early Septem
ber.
Employment
Employment in nonagricultural establishments showed some
what more than the usual seasonal rise in August. Gains were
mainly in manufacturing and state and local government
employment. The number of persons unemployed declined
from 4.1 million in early July to 3.7 million in early August.
Construction

Value of construction contract awards in August, according
to the F. W. Dodge Corporation, declined slightly from the
high July level, but early reports indicate that awards in
September regained the July level. The August decrease
reflected substantial declines for most types of nonresidential

The general wholesale price index advanced somewhat from
mid-August to the middle of September but subsequently
declined again. These changes reflected to a large extent
fluctuations in livestock and meat prices. Following devalua
tion of British and many other foreign currencies, generally
by about 30 percent, dollar prices of tin, rubber, and some
other imported materials declined from 5 to 8 percent. Prices
of most nonferrous metals, following moderate advances in
July, showed little change during August and most of Sep
tember. Prices of steel scrap and of cotton and rayon cloth
continued to increase.
Bank Credit
Business loans at banks in leading cities increased moderately
during August and the first three weeks of September. Port
folios of municipal and corporate securities also were expand
ed somewhat. Holdings of Government securities increased
over 2 billion dollars, reflecting in large part the use of the
funds released by the reductions in reserve requirements in
August and early September to acquire additional bills
offered by the Treasury and to purchase short-term Govern
ment securities from the Federal Reserve Banks.
A reduction in Treasury balances at the Reserve Banks
early in September supplied reserve funds to member banks.
In the third week of the month Treasury balances were rebuilt
through quarterly income tax receipts, and excess reserves of
banks were reduced sharply.
Security Markets
Prices of Government and high-grade corporate bonds showed
relatively little change in the first three weeks of September,
After rising in the second week of September to the highest
level in nearly a year, common stock prices moved irreguIarlyT h e B oard o f G o vern o rs^