Full text of Review (Federal Reserve Bank of St. Louis) : January 1952

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Monthly Review
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Volume X X X IV

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JANUARY, 1952

Review
and
Outlook
by

Delos CL Johns,
President
Federal Reserve Bank
of St* Louis




B

Number 1

1951
was a year of achievement for the
United States. This nation and its allies
gained strength and position for the free
world, a net result of fair progress in
Western Europe and Japan, losses in the
Middle East9 and perhaps some small net
gain in Asia. The outlook thus is a little
less dark than a year earlier•
Stability was the keynote of the domestic
economy in 1951 • Balance resulted mainly
from (1) the productive capacity and pro­
duction volume of the American economy,
(2) the stabilization program, and (3) a
high rate of consumer saving. Financial
policy contributed strongly to stability in
1951 , through Federal Reserve action and
through the Voluntary Credit Restraint
Program.
Two primary factors will influence the
course of domestic business in 1952: The
scope and size of the defense program9 and
the extent and nature of consumer demand.
In combination these could well produce
more inflationary pressure. Continued re­
straint is the indicated policy in such a
situation.
Inflation stems from imbalance between
demand for and supply of goods and services.
Purchasing power comes from income9 sav­
ings and credit• Federal Reserve action is
taken in the credit field and permits much
freedom for individual lenders. Freedom
of action is the cornerstone of our political
system and has resulted in an efficient eco­
nomic system.

Pacific, a new Japan gained strength in 1951 and
represented a growing factor in the global position
of the free nations.

1951 was a year of achievement for the United
States.

The beginning of a new year is traditionally a
time for stock taking and for resolutions. It is a
time to look back on the record of the past twelve
months, to view the year's events from a vantage
point which gives some perspective. It is also a
time to resolve to make greater efforts during the
next twelve months to overcome deficiencies and
to attain desired goals.
The practice of looking back over the entire year
seems particularly useful in periods of great fer­
ment— a characteristic of these middle years of
the Twentieth Century. Viewed with the perspec­
tive of time, 1951 appears as a year of great achieve­
ment for the United States. This nation gave more
evidences of growing maturity in international
affairs. Its military strength showed a pronounced
net gain. The domestic economy grew stronger
and more productive. The enervating effects of in­
flation were largely arrested. In January, 1951
the outlook was most somber. While the state of
the world today is cause for no particular optimism,
the outlook appears less dark than it did a year ago.
This is not to say that 1951 showed uninterrupted
progress for the United States either in world posi­
tion or in national affairs. The record shows debit
entries as well as credit entries. There were errors
both of commission and of omission. But on bal­
ance 1951 should go down as a good year for the
nation.
This nation and its allies gained strength and
position for the free world, a net result of . .

.

In the international arena the gains, losses and
shifts seem to have netted out to some gain in the
position of the United States and the free world as
a whole. Here the credits were more nearly bal­
anced by the debits, however, than was the case in
the field of national affairs.
. .

• fair progress in Western Europe and
Japan, . . •

In Western Europe progress was made toward
strengthening that region’s capacity and will for
military defense. At the close of the year especially
some progress also was apparent in the movement
toward greater European unity both politically and
economically. W hile the strain of rearming has
been great and has put heavy pressure on the
civilian economies of the Western European states,
thus giving rise to a new set of problems, there
seems to be little question but that this area is in
better shape to contribute to the struggle against
aggression than was true a year ago. In the
Page 2




. .

.

losses in the Middle East9

. . .

The record in the Middle East was in direct con­
trast to that in Western Europe and Japan. The free
world lost through death some strong friends there.
The rising tide of nationalism kept the area in
ferment and led to growing hostility toward the
western world. At year end there was no cause to
view the future in the Middle East with any op­
timism; tensions might well increase in 1952 and
lead to even more serious situations than developed
in 1951.
.

.

.

and perhaps some small net gain in Asia.

The record in Asia in 1951 was mixed, and it is
particularly difficult to total up developments there
to a net plus or minus. As this article is written,
Korean peace negotiations are still in progress and
the results are still in doubt. But regardless of the
outcome of the negotiations the free world position
in Korea at the close of the year was better than
it was twelve months earlier. In Malaya and IndoChina the British and French positions of strength
had improved, although the basic problems there
still seemed far from settlement. The factor of
growing nationalism throughout Southeast Asia led
to continued distrust of the western powers and to
continued opportunity for Communist power pene­
tration. At year end India, traditionally friendly
to the United States, seemed farther away from the
west than in January, 1951.
The outlook thus is a little less dark than a
year earlier.

Taking all developments together, there seems
to have been progress in our international position
during 1951. The big question, however, still is un­
answered as 1952 begins. W ill there be global war
between the free world and the Communist powers ?
Certainly the free world now is better prepared to
fight if war should come than it was a year ago. A
year from now its strength should be substantially
greater. On balance the outlook at the beginning
of 1952 seems a little less dark than it was twelve
months before.
Stability was the keynote of the domestic
economy in 1 9 51 .

The key fact about the domestic economy in 1951
was the remarkable stability which characterized
it despite the strains of a major defense program.
As the year began there was much cause for belief

that 1951 would be disrupted by shifts fronf nondefense to defense output and by continued strong
inflationary forces. However, the production shifts
were made quite smoothly and only for a short time
early in the year were inflationary pressures sub­
stantial. Thus, while there was considerable diver­
sity in important areas of demand and markets, for
the bulk of the year stability and balance were the
keynotes.
Various basic statistics indicate the stability
which characterized the year's activity. Employ­
ment rose but average hours worked per week
dropped off slightly. Total production increased
enough so that the defense program take did not
impinge appreciably on total civilian supply (al­
though supplies of durables and housing declined).
In fact, production probably could have been larger
than it was had demand been stronger. The gross
national product was at an annual rate of $319
billion in the first quarter of 1951 and about $330
billion in the last quarter. Industrial production in
the second half was actually smaller than in the
first half (by about 2 per cent). Farm output was
larger than in 1950.
On the whole, prices were fairly stable during the
year. Basic commodity prices fluctuated appreci­
ably, but general wholesale prices and consumer
prices were more stable. Wholesale prices at year
end were a little lower than twelve months earlier.
There was an upturn earlier in 1951, followed by
a downturn, and then an almost horizontal move­
ment. Consumer prices increased in the year by
about 3 per cent, reflecting partly some earlier cost
increases.
Balance resulted mainly from ( 1 ) the productive
capacity and production volume of the
American economy9 . . .

The balance which prevailed was the product of
several forces operating in the economy. First and
most important, the existing productive capacity
and power of the American economy was very great
and very adaptable. In addition capacity was in­
creased tremendously. This base permitted the
American genius for production to come into full
play. The net result was that both guns and butter
were produced in volume. Actually, there was more
than enough butter to take care of civilian demand
when inventories were considered.
In part this situation reflected the fact that the
defense program in terms of goods (as contrasted
with capacity to produce) turned out to be smaller
than most people visualized it would be at the be­
ginning of 1951. In turn this reflected both con­
scious policy aimed at avoiding economic dislocation




and unforeseen difficulties in reaching goals in terms
of certain defense goods.
.

.

.

( 2 ) the stabilization program,

.

. .

Second, the general stabilization program took
hold and worked reasonably well during the year.
The key factors here were fiscal policy, which re­
sulted in a cash surplus for the Treasury, and
monetary policy, which resulted in restricting total
credit growth and led to channeling of credit away
from less essential to more essential uses. These
factors, plus the adequacy of available supply of
goods, permitted the direct controls over wages and
prices to operate under less pressure than in World
War II.
.

.

.

and ( 3 ) a high rate of consumer saving.

Third, consumers increased savings and thus
curtailed demand, a situation which made available
supply more adequate. The fact of the stabiliza­
tion program gave some assurances that prices
would not rise rapidly, and together with the pres­
ence of large supplies of goods (and the allocations
program for industry) curtailed large-scale antic­
ipatory buying.
Financial policy contributed strongly to
stability in 1951 . . .

The financial system of the United States did an
excellent job in 1951. It provided needed financing
for essential activities, particularly defense and de­
fense supporting activities, and at the same time
held down the growth in total credit outstanding.
The factors responsible for this record of achieve­
ment w ere: a policy of credit restraint, both general
and through selective credit regulations, carried on
by the Federal Reserve System, and a comple­
mentary policy of voluntary credit restraint effec­
tively carried out by the private financial system.
.

.

.

through Federal Reserve action

.

.

.

Following the Treasury-Federal Reserve accord
announced early in March, the Federal Reserve
System regained some primary control over the
volume of reserves available to the commercial
banks. Lessening of availability of reserves, and
resultant increases in cost of reserves, influenced
the commercial banking system to curtail further
credit extension.
* .

. and through the Voluntary Credit
Restraint Program.

Very shortly thereafter, the financial community,
including the commercial banks, acting under au­
thority in the Defense Production Act, embarked
Page 3

on a program of voluntary credit restraint which
resulted in more efficient channeling of available
credit into more essential uses and away from less
essential uses. As a measure of the effectiveness
of the two factors, total loans at commercial banks
rose less than $5.8 billion in 1951, in contrast to a
gain of over $9.3 billion in 1950. Essential activities
were financed adequately; curtailment took place
in the less essential lines.
This kind of program, combined central bank and
private financial community cooperation, is in keep­
ing with the best traditions of American life. Bank­
ers and other financial leaders can look back on the
record of 1951 with pride.
Two primary factors will influence the course o f
domestic business in 1 9 5 2 : . . .

The outlook for the domestic economy in 1952 is
clouded by some major uncertainties. The two
primary factors in the outlook are the scope and
size of the defense program and the extent and
nature of consumer demand. The first factor will
be influenced by the state of international tensions
and in turn will have some influence on consumer
demand. Business demands also will be important,
of course, but are likely to reflect actions of the key
factors rather than to determine them.
• .

• The scope and size of the defense
program , . . .

Public statements by responsible authorities indi­
cate that the defense program will increase sharply
throughout 1952. If it proceeds as scheduled, Gov­
ernment expenditures for defense will rise consid­
erably and the Treasury will run a cash deficit in
1952 instead of a surplus. Furthermore, a program
of the size and scope scheduled would press much
more heavily on total goods supply, reducing the
total volume available to the civilian economy and
changing considerably the “ mix” of goods and
services available. Allocations of scarce materials
already announced for the first quarter of 1952 will
result in further declines in output of various con­
sumer durable goods.
Whether the defense program is carried through
as presently scheduled remains to be seen. Failing
a complete agreement with Russia and her satellites,
a most improbable development, there is every rea­
son for this country and its friends to keep on
working toward greater military strength. But full
peace in Korea and relaxation of tensions elsewhere
could reduce military demand somewhat in 1952
and result in pushing the peak target date for mili­
tary output further into the future. In such event
the total civilian supply and the “ mix” of that sup­
Page 4




ply would be changed less than present plans would
indicate. Thus one major factor to watch in 1952 is
the size and scope of the defense program and its
relation to presently announced schedules.
and the extent and nature of consumer
demand• In c o m b in a tio n these could well
produce more inflationary pressure.

• • •

The second key question for 1952 has to do with
consumer demand, spending and saving. Again, if
the defense program proceeds as announced, there
will be a continued rise in consumer income without
an equivalent rise in goods available. Even if the
defense program were to be somewhat smaller
there still would be a probable gap between con­
sumer income and supply. And that income could
be reinforced by greater use of past savings and
further credit extension. If consumers maintain
or increase their present rate of saving, total con­
sumer demand can be equated roughly with total
consumer supply. If the saving rate is reduced,
potential inflationary forces can become real and
strong.
Continued restraint is the indicated policy in such
a situation.

Given the uncertainties which confront us at
the present time, it would seem most unwise to
proceed on any assumption other than that infla­
tion still is a danger. This means continued efforts
to “ pay as we go,” to maintain a policy of credit
restraint, to continue the direct economic controls
and to forestall any actions which would disturb
the present delicate balance in the economy. With
such policies consumer spending can be held down,
the rate of saving maintained and inflationary pres­
sures minimized.
inflation stems from im b a la n ce between
purchasing power and goods supply.

In connection with this subject it seems desirable
to stress certain primary facts which do not always
obtain complete and widespread understanding.
First, inflationary forces result basically from a
relatively more rapid increase in purchasing power
than in available supply of goods and services. Thus
the basic cure for inflation is to attempt to balance
purchasing power with goods supply. In periods
like the present and prospective future, that balance
necessarily has to be achieved mainly through cur­
tailing growth in purchasing power rather than in
increasing goods supply. It is extremely difficult
to increase the supply of goods appreciably over a
short period when the economy is operating at close
to full capacity.

Purchasing power comes from income9 savings
and credit.

Second, purchasing power comes from current
income, from the use of past savings and from in­
creased credit. T o bring the level of purchasing
power down, if it needs to be reduced, action can
be taken to limit current income (through higher
taxes), to inhibit the use of past savings, and per­
haps to increase the savings rate (through programs
aimed at promoting savings habits and practices),
and to curtail credit growth (through restrictive
action on the part of the monetary authorities).
Federal Reserve action is taken in the credit
field and permits much freedom for individual
lenders.

Third, the Federal Reserve System is charged
with the responsibility of influencing the supply,
cost and availability of credit in the interests of
stable values, high employment and a rising stand­
ard of living. In a period of inflation or of potential
inflationary danger, Federal Reserve policy aims at
restricting credit growth. Basic Federal Reserve
action in this field takes the form of making bank
reserves less available and more costly. By so
doing it sets a sort of over-all ceiling on credit
expansion. Under that ceiling individual lenders
determine how and where their credit flows. Ideally
the credit flows to the more essential uses and the
more efficient users. The important fact is that
this kind of arrangement meets the basic issue and

maintains a high degree of individual freedom of
action.
This freedom of action is the cornerstone of our
political system and has resulted in an efficient
economic system.

Fourth, our democratic capitalistic system pos­
sesses two major virtues. It leads to a high degree
of individual freedom, the cornerstone of our polit­
ical system, and it has met the test of time as a
most efficient economic system. Free choice has
resulted in having more to choose from.
The major issue which divides the free nations of
the world from the remainder is the degree of free­
dom permitted the individual. In periods of stress,
individuals in free nations are willing to give up
certain freedoms in the common interest, but it is of
the highest importance that the maximum degree of
freedom be maintained in the philosophical interest
of preserving our kind of political system and in the
more materialistic interest of maintaining long-run
dynamic economic strength.
1952
will be a difficult year. T o make it a suc­
cessful year will call for continuation of the efforts
which were made in 1951 and perhaps intensification
of those efforts. It is vital that everyone realize that
continued restraint is needed. W e did a fairly good
job in 1951; we should continue to do an equally
good job in 1952 when the pressures may well be
greater.

Survey of Current Conditions
At mid-December business activity in the Eighth
District appeared to have leveled off after showing
improvement in recent months. The current rate
of activity remained high but, allowing for sea­
sonal factors, no over-all improvement was dis­
played over a month ago. W hile retail trade in­
creased moderately and production of shoes and
certain garments showed signs of recovering from
their recent low levels, construction volume was
down and industrial production was off slightly.
T o some extent early winter weather probably
was responsible for the leveling off. But to a large
extent the hesitation in the recovery of business
activity mirrors the “ wait and see” attitude of a
great many people and businesses. This caution




stems principally from the fact that there is a
growing area of uncertainty over what is ahead.
Presently the question of armistice or more and
bigger war still hangs fire in Korea and the future
of the Government's economic stabilization pro­
gram hinges to a large degree on the solution to
the steel wage negotiations. These key factors—
one in the process of development for over five
months, the other for almost a full month— are
still unfinished business. But because solutions of
one kind or another to both appear to be not far
away, because the manner in which they may be
settled will have an important bearing on our eco­
nomic future, there has been a growing disposition
on the part of consumers and most businesses to
Page 5

make only immediately necessary decisions until
the situation clears. The net result appears to be
an arresting of the gradual uptrend evident in dis­
trict business during the months ending about midOctober and mid-November.
The national economy in early December ap­
peared to have extended for another month the
rough high-level balance between diverse trends in
various activities. The Federal Reserve Board’s
index of industrial production for October and
November was 218 per cent of the 1935-39 average
as compared with 219 per cent for September.
Employment in the nation decreased seasonally
between October and November largely as a result
of declining farm operations. Retail sales in Novem­
ber showed a more than seasonal increase, but in
terms of physical units were probably still below
last year* Loans increased less than seasonally in
November and early December and bank interest
rates increased again in December, reflecting the
tight reserve position of member banks. Weekly
wholesale prices remained steady in the first part
of December. Since mid-July this price index has
fluctuated within a very narrow range.
EM PLOYM ENT

Total employment in the nation decreased sea­
sonally between October and November. A drop in
the number of workers on farms, construction proj­
ects and in seasonal manufacturing industries more
than offset additional employment in defense
manufacturing, trade and service employment.
Unemployment did not increase as much as
the reduction in employment since many of the
P R IC E S
W HOLESALE

P R IC E S IN T H E

Bureau of Labor
Statistics
(1 9 2 6 = 1 0 0 )

N o v .,*51
178.3
A ll Commodities.
195.2
Farm Products
188.8
Foods................
166.9
O ther...................

O c t ./5 1
178.2
192.4
189.5
166.7

U N IT E D

N o v .,*50
171.6
183.7
175.2
163.5

STATES

N o v ., 1951
compared with
O c t .,’ 51
N o v .,*50
+ 0 .1 %
+ 1.5
— 0.4
+ 0.1

+
+
+
+

3 .9 %
6 .S

7.8'
2.1

C O N S U M E R P R IC E I N D E X *
Bureau of Labor
Statistics
N o v . 15,
1951
(1 9 3 5 -3 9 = 1 0 0 )
U nited States........ , 188.6

O ct. 15,
1951
187.4

N o v . 15,
1950
176.4

N o v . 15, 1951
compared with
O ct. 1 5 /5 1 N o v . 1 5 /5 0
+ 0 .6 %
+ 6 .9 %

* N ew series.
R E T A IL F O O D *
Bureau of Labor
Statistics
N o v . 15,
(1935-39 = 100)
1951
U . S. (51 cities)....
St. L ou is..........
Louisville.........
M em phis........... .
* N ew series.

231.4
242.2
225.4
218.6
237.7

Page 6




O ct. 15,
1951
229.2
239.3
224.4
216.7
238.0

N o v . 15,
1950
210.8
221.2
211.7
198.0
218.3

N o v . 1 5 ,1 9 5 1
compared with
O ct. 1 5 /5 1 N o v . 1 5 /5 0
+ 1 .0 %
+ 9 .8 %
+ 1.2
+ 9.5
+ 0.4
4- 6.5
+ 0.9
+ 1 0 .4
— 0.1
+ 8.9

laid-off workers temporarily left the labor market.
Unemployment in November was estimated at 1.8
million, up some 200,000 from the previous month,
but still about 400,000 below the level of a year
earlier;
The average work week, 40.3 hours at midNovember, dropped slightly from October and was
nearly one hour less than a year ago. Durable goods
industries were working longer hours than other
industries.
Some temporary unemployment in certain areas
of the district has been caused recently by curtailed
production resulting from lagging demand or from
restricted supplies of critical materials. So far these
dislocations have not been corrected by increased
employment in defense work. Many district defense
production lines still are in process of being tooled
up, and expansion of others has yet to be accom­
plished.
<•
Tw o smaller areas in the Eighth District, Vin­
cennes, Indiana, and Crab Orchard, Illinois, still
have a substantial surplus of labor. The surplus
in the Grab Orchard area is one of long standing
due to the decline in the basic industry— coal min­
ing. However, recent plant locations in the area
should be helpful in reducing dependence on coal
mining. And the steam electric power plants being
constructed by T V A and Electric Energy, Inc.,
should help revive the coal mines in this area. The
Vincennes area has been affected by the closing of
a coal mine upon exhaustion of its working seams
and the shutting down of a shoe factory. In a third
area, Bedford, Indiana, a greater than seasonal de­
cline in limestone quarries and a temporary shut
down of a large aluminum foundry, recently caused
a large increase in unemployment.
In St. Louis, November employment was off from
October, largely as a result of fewer construction
and government jobs and seasonal layoffs in shoe
manufacturing. Gains in trade and defense jobs
were not large enough to offset the decreases.
In Louisville, employment during 1951 has been
stable, fluctuating less than one per cent from
W H O L E S A L IN G
Line of Commodities
D ata furnished by
Bureau of Census
U .S . D ept, of Commerce*
.
.
D ry Goods........................................................ ..
.

N e t Sales
N ovem ber, 1951
compared with
O c t ./5 1
N o v ./5 0
+ 2%
+ 5%
— 4
+ 6
- 0— 11
— 4
+ 4
+ 3
— 4
— 12
+ 4
4-23
— 6
+ 4%
— 7%

Tobacco and its P rodu cts...................... .
Miscellaneous.................................................. .
**T o ta l A ll Lin es.....................................
* Preliminary.
**Includes certain items not listed above.

Stocks
N o v . 30, 1951
compared with
N o v . 30, 1950
+ 19%
+ 6
+ 7
+ 2
+ 16
— 5
— 7
+ 14%

month to month. November employment was at a
peak for the year, 3 per cent over November 1950.
IN D U S T R Y

Over-all industrial activity in the Eighth District
in November was about the same as in previous
months, allowing for usual seasonal change. Indus­
trial electric power consumption and coal produc­
tion was greater in November than in October.
Construction activity also improved slightly. Other
important industrial activities, steel, lumber, and
shoes, showed decreases from October.
Manufacturing— Industrial consumption of elec­
tric power on a daily average basis increased 5 per
cent in major district manufacturing centers during
November from both October, 1951 and November,
1950. Every center, except Evansville, showed an
increase over October.
Production of steel ingot in the St. Louis area
was down to 91 per cent of capacity in November,
the lowest monthly production in over a year, and
continued at an even lower rate in early December.
The decline reflected the shutdown of furnaces pro­
ducing primarily for nondefense markets. Defense
production continued full-blast with mills using
scrap faster than it was being received.
Lumber production showed a moderate decline
from October to November and was about 10 per
cent lower for both soft and hardwoods than in
November, 1950. Some improvement was reported
in the hardwood market which has been weak in
recent months. December, generally a quiet month
in production and sales, was expected to follow that
pattern this year.
District production of shoes has continued to lag
according to latest reports.
Livestock slaughter in the St. Louis area in No­
vember increased 9 per cent over October and was
7 per cent over that of November, 1950. The
monthly gain was in line with past seasonal experi­
ence. The gain over November a year ago was due
to a large increase in hog slaughter, which was
expected to peak in early December.
Virtually no change in the volume of whiskey
production during November was indicated by the
fact that only one less distillery was operating at
month's end than 30 days earlier. Late fall and
PRODUCTION INDEXES

holiday sales of whiskey are reported as satisfac­
tory. There is usually a decline in sales after the
first of the year. It may be more than seasonal in
1952 because of the pinch of higher taxes and prices
on consumers and due to consumer reserve stocks
accumulated to beat the November 1 liquor tax
hike.
Mining—The daily average production rate of
crude oil in November and the first week of Decem­
ber showed very little change from that of the prior
month or the month a year ago. New drilling activ­
ity continued vigorously in the four district oil pro­
ducing states.
Coal production, according to the preliminary
November adjusted index for the district, was at its
highest level since last April. On a total production
basis, district production was also high, showing
an absolute gain of 4 per cent over the prior month,
though slightly lower than November, 1950.
Transportation— Railroad freight interchanges at
St. Louis during November declined 12 per cent
from October and were down 4 per cent compared
with November, 1950.
Construction—The value of new construction put
in place during November in the nation was $2.5
billion, reflecting a slightly less than seasonal de­
cline from October. The total value of work con­
tracted for in the district in November amounted
to $64.8 million, compared with $67.9 million in
October and $54.8 million in November, 1950.
The value of construction contracts in the district
awarded in the first eleven months of 1951 were
$1.2 billion, or 51 per cent higher than in the com­
parable period of 1950.
INDUSTRY
C O N S U M P T IO N O F E L E C T R IC IT Y
( K . W .H .
in thous.)

N o v ., 1951
K .W . H .

13,948
14,013
Little Rock...
82,737
Louisville.... ..
Memphis..... ... 32,145
Pine Bluff... , 11,075
.. 101,401
.. 255,319
R— Revised.

______________Unadjusted_____________
N o v .,’ 51
O c t.,’ 51
N o v .,’ 50
186.1*
162.7*
•Preliminary.




164.8

_______________ Adjusted_______________
N o v .,’ 51
O c t.,*51
N o v .,*50
1 69.2*

152.1*

149.8

14,057
14,292 r
77,757
30,159
8,815
99,938 r
245,018

r * ov.,
oi
compared with
O c t.,*51
N o v .,*50

—
—
—
—
—
—

10.8 %
3.Q
1.7
4.2
3.2
5.7

—

4 .3 %

— 0.8 %
— 2.0
+ 6.4
+ 6.6
+ 25.6
+ 1.5
+ 4 .2 %

F O R 25 R A I L R O A D S A T S T . L O U I S
First N ine D ays
N o v .,*51 O c t.,’ 51 N o v .,*50 D e c .,*51 D e c .,*50 11 mos. *51 11 m o s .’ 50
110,176
121,009
115,346 ’ 34,407
35,200
1,279,368
1,244,180
Source: Terminal Railroad Association of St. Louis.

(I n thousands
o fb b ls .)
N o v ., 1951

IN D E X

15,629
14,440
84,191
33,566
11,440
107,544
266,810

N o v ., 1950
K .W . H .

L O A D S IN T E R C H A N G E D

C R U D E O IL
C O A L P R O D U C T IO N
1935-39 = 100

O c t., 1951
K .W . H .

Arkansas... ........ 76.5
........ 164.8
........

33.9

P R O D U C T IO N — D A IL Y

O c t., 1951 N o v ., 1950
77.3
168.9
33.1
32.8
312.1

81.5
173.9
30.1
29.9
315.4

AVERAGE
N o v ., 1951
compared with
O c t.,’ 51
N o v .,*50
— 1%
— 3
— ■3
+ 3
— 2%

— 6%
— 5
+ 6
+ 13
—

3%

Page 7

TRADE
DEPARTM ENT

STORES

Stocks
Net Sales
on Hand
Nov., 1951
11 mos.’ 51 Nov. 30,’ 51
compared with
to same
comp, with
O ct.,’ 51 N ov.,*50 period *50 Nov. 30,’ 50

Stock
Turnover
Jan. 1, to
Nov. 30,
1951 1950

8th F. R. District... + 8?
Ft. Smith, Ark.1.... + 6
Little Rock, Ark.... + 18
Quincy, 111............. + 5
Evansville, Ind...... + 26
Louisville, K y........ + 1 7
St. Louis Area 2..... + 5
Springfield, M o..... — 14
Memphis, Tenn..... +11
All Other Cities*.... — 1
*
Fayetteville, Arkansas; Harrisburg, Mt. Vernon, Illinois; Vincennes,
Indiana; Danville, Hopkinsville, Mayfield, Paducah, Kentucky; Chillicothe, M issouri; GreenVille, Mississippi; and Jackson, Tennessee.
1 In order to permit publication of figures for this city, a special
sample has been constructed which is not confined exclusively to depart­
ment stores. Figures for any such nondepartment stores, however, are
not used in computing the district percentage changes or in computing
department store indexes.
2 Includes St. Louis, Clayton, Maplewood, Missouri; Alton and Belle­
ville, Illinois.
Outstanding orders of reporting stores at the end of November, 1951,
were 8 per cent smaller than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding November
1, 1951, collected during November, by cities:
Instalment Excl. Instal.
Accounts
Accounts
F?rt Smith............. %
Little R o c k ..... 20
Louisville ....... 22
Memphis ......... 21
IN D E X E S

OF

53%
50
48
43

DEPARTM ENT

Instalment Excl. Instal.
Accounts
Accounts
Quincy .............
St. L o u is.........
Other Cities.....
8th F.R. Dist...
STORE

24%
22
15
22

SALES

AND

64%
53
56
50
STO C K S

8th Federal Reserve District

Nov., Oct., Sept., Nov.,
1951 1951 1951 1950
111
105
134
119

111
105
135
127

125
106
137
124

8 Daily average 1947-49=100.
4 End of month average 1947-49=100.
S P E C IA L T Y

STORES

Stocks
Stock
Net Sales ________
on Hand
Turnover
Nov., 1951
llm o s .’ 51 N ov.30/51 Jan. 1, to
compared with
to same
comp, with Nov. 30,
Oct.,’ 51 N ov.,*50 period’ 50 Nov. 30/50 1951 1950
Men’s Furnishings....+ 14% + 3 %
+2%
+ 9%
1.72 2.18
Boots and Shoes..... — 17
+ 11
+10
+ 5
z.7 2 3.87
Percentage of accounts and notes receivable outstanding Nov. 1, 1951,
collected during November:
Furnishings............... 48%
B°o*s and Shoes................... 45%
Trading days: Nov., 1951— 25; Oct., 1951— 27; Nov., 1950— 25.
R E T A IL F U R N IT U R E

STO R ES

Net Sales
_____ Inventories
Ratio
Nov., 1951
Nov. 30, 1951
of
compared with
compared with
Collections
Oct.,’ 51 N ov.,’ 50 Oct. 31,’ 51 Nov. 30/50 Nov.,’ 51 Nov./SO
8th Dist. Total1L— 6% + 4%
24%
21%
+ 1% — 8%
— 7
— 1
-0 33
— 9
26
— 9
— 2
-0 — 9
33
26
!— 15
+ 15
+ 4
— 3
14
13
Louisville.... — 12
+ 14
— 3
+ 5
13
13
Memphis.......... + 3
+ 33
— 4
— 18
15
13
Little Rock...... + 2
+ 3
+ 14
— 12
20
19
— 13
— 6
+ 3
+ 12
17
17
*
*
*
*
— 4
+ 10
*Not shown separately due to insufficient coverage, but included in
Eighth District totals.
2In addition to following cities, includes stores in Blytheville, Pine
Bluff, Arkansas; Hopkinsville, Owensboro, Kentucky; Greenwood, Mis­
sissippi; Hannibal, Missouri; and Evansville, Indiana.
2Includes St. Louis, Missouri; and Alton, Illinois.
3Includes Louisville, Kentucky; and New Albany, Indiana.
PERCENTAGE

D IS T R IB U T IO N

OF

Cash Sales ........................................................
Credit Sales ......................................................
Total Sales .......... .......................................

Page 8




F U R N IT U R E

Nov.,’ 51
15%
85
100%

Oct.,’ 51
14%
86
100%

SALES

Nov.,’ 50
16%
84
100%

The migration to defense centers and military
establishments has created housing problems in
several areas in the Eighth District. T o help meet
this problem, credit restrictions of Regulation X
have been relaxed for a specified number of home
units to be erected by private builders in these
areas. The areas of critical housing so far announced
are: Fort Leonard W ood, Rolla, Sedalia, Missouri;
Benton-Bauxite, Camden-Shumaker, and Pine Bluff,
Arkansas; Fort Campbell, Fort Knox, and Paducah,
Kentucky.
Public Housing in the Eighth District is active—
5,411 dwelling units were under construction as
of September 30, 1951, and 7,030 more were being
planned.
TRADE

Reporting retail lines, with the exception of fur­
niture stores, registered greater sales volume dur­
ing November than in October. In comparison with
November, 1950, all reporting lines except women’s
specialty stores experienced greater sales. Adverse
shopping weather early in the month probably lim­
ited the increase of consumer spending. In the St.
Louis area, for example, an extremely heavy snow
early in the month impeded transportation for sev­
eral days.
The fact that consumers would, and could, spend
money was demonstrated by the success of special
and seasonal promotions. In St. Louis, sales of
television sets at department stores through the
first nine months of 1951 were more than one-fifth
below those in 1950. In October, extensive promo­
tion with price cuts lifted sales about one-eighth
over those in the like month of 1950. In November
sales of television sets were 58 per cent larger than
in November, 1950.
Inventories held by reporting retail lines on No­
vember 30 did not show much change from either
a month or a year earlier. W ith inventory replace­
ment problems at a minimum the value of outstand­
ing orders at department stores on November 30
were not much different than on October 31 or
November 30, 1950.
C O N S T R U C T IO N

B U IL D IN G P E R M IT S
Month of November
Repairs, etc.
New Construction
Number
Cost
Number
Cost
(Cost in
1950
1951
1951 1950
1951 1950
1951
1950
thousands)
36 $
16 $ 61
31
48
54 $
61 $ 188
Evansville........
104
126
142 131
37
91
737
1,042
Little Rock...... ...
66
59
57
50
133
1,135
663
Louisville......... ... 159
129
123
115 180
1,713
3,560
Memphis..........., ,1,807 1,898
539
526
196
184
196
301
1,210
1,953
St. Louis.......... ....
Nov. Totals...,..2,247 2,477 $ 4,856 $ 7,406J 534 588 $ 847 $ 899
874 928 $1,669 $1,346
Oct. Totals,..,...3,183 3,171 $12,529 $10,226

Department Stores— For the district as a whole,
department store sales in November totaled 8 per
cent larger than in October and were 7 per cent
above those in November, 1950. Seasonally ad­
justed daily average sales in the month were 109
per cent of the 1947-1949 average in comparison
with 105 per cent in October and 106 per cent a
year ago. Through November cumulative 1951
sales for the district were 3 per cent larger than in
1950. Preliminary reports through mid-December
indicate that this rate of gain from last year may
be maintained throughout the month.
Sales in all major district cities increased in
November. As compared with October, sales gains,
except in Springfield, ranged from 5 per cent in
Quincy and the St. Louis area to 26 per cent in
Evansville. As compared with November, 1950,
sales increases ranged from 3 per cent in the St.
Louis area to an average gain of 18 per cent in
several small cities.
The retail value of inventories held by reporting
department stores in the district on November 30
was 3 per cent less than October 31 and was 3 per
cent below that on November 30, 1950. The dollar
volume of outstanding orders at the end of the
month was 8 per cent less than a month earlier but
was 2 per cent larger than a year ago.
In St. Louis, women’s specialty stores sales dur­
ing November were slightly larger than a month
ago but dropped about one-tenth below those last
year. The retail value of inventories on November
30 was slightly larger than at the end of the pre­
vious month and a year ago.
At district men’s wear stores November sales
volume was 14 per cent larger than in October and
was 3 per cent larger than in November, 1950. The
value of inventories held on November 30 dropped
3 per cent below that on October 31, but was 9 per
cent above that on November 30, 1950.
District furniture stores reported that Novem­
ber sales declined 6 per cent below those in Octo­
ber but were 4 per cent above those during Novem­
ber, 1950. The level of inventories on November
30 was not much different than a month ago, but
was 8 per cent below that a year ago.
A G R IC U L T U R E

Recently announced Department of Agriculture
production goals for major crops highlight efforts
to increase production of most crops and particu­
larly of feed crops in 1952. In order to achieve this
level of production, an additional three or four
million acres will need to be planted. Three million
sicres of cropland remained idle in 1951 which it is
hoped will be utilized in 1952.




The national acreage goal for corn is 89 million
acres, or 3 per cent larger than the 1951 acreage.
With normal yields this would result in a crop of
3,375 million bushels, 15 per cent more than the
2,941 million bushels produced in 1951. Corn acre­
age goals for Indiana, Illinois and Missouri all are
1 per cent above those of 1951 with somewhat larger
percentage increases for other district states. The
acreage goals established for district states for two
other feed crops, oats and barley, exceed the acre­
age planted to these crops in 1951. But, nationally,
the oats acreage goal is the same as for 1951.
Slightly larger wheat acreage goals are indicated
for district states, although there is no increase
nationally. The acreage goal for rice is higher in
Mississippi but lower in Arkansas, compared with
1951 acreage. Increased acreages of cotton are
asked for in district states but the national acreage
goal remains approximately the same as the 1950
acreage. Less soybeans are called for in Illinois,
Indiana, and Missouri than in 1951, but increases
are called for in other district states.
A C R E A G E G O A L S F O R 1952
E IG H T H D IS T R IC T S T A T E S
Eighth District States
United States
1952 acreage % change 1952 acreage
% change
goals
from 1951
goals
from 1951
(in thousands)
acreage
(in thousands)
acreage
C om ...................................
26,390
+ 3%
89,000
+ 3%
Oats ...................................
7,685
+ 2
42,900
- 0Barley ..............................
364
+21
12,865
+14
W heat ..............................
5,903
+ 2
78,850
- 0Rice ...................................
485
+ 1
1,950
— 1
Cotton ..............................
6,290
+ 3
28,000
- 07,610
— 1
13,000
— 1
Soybeans ....... .................
Source:
1952
Production
Goals
Program
(Prelim inary)
U SD A
N ov. 1951.

Final crop estimates for the 1951 crops reduced
further expected production of two major crops.
The cotton crop on December 1 was estimated at
15.3 million bales, a reduction of 481,000 bales dur­
ing the month. The Arkansas crop was reduced
95,000 bales during the same period. Similarly, the
A G R IC U L T U R E
C A S H F A R M IN C O M E
10 month total Jan. to O ct.
O ct., 1951
compared with
1951
O ct.,
Sept.,
compared with
(I n thousands
O ct.,
1951
1950
1949
1950
1951
of dollars)
1951
$ 412,841
+27%
+ 1 0 9 % + 10 %
Arkansas............$130,983
1,671,160
29
68
+16
+ 15
Illinois................ 264,249
31
+21
9 57,909
Indiana.............. 149,367
+ 31
+ 19
Kentucky...........
49,573
27
4 13,916
+ 9
+ 30
33
390,074
+40
+ 146
Mississippi........ 141,829
+ 7
23
9 88,872
+ 23
Missouri............. 165,592
22
+ 48
373,143
+ 19
Tennessee..........
77,551
11
+ 87
12

+ 8%

+

+ 8

+
+

Totals.............$979,144

+

68%

+

24%

$5,207,915

+20%

+15%

R E C E IP T S A N D

S H IP M E N T S A T N A T IO N A L ST O C K Y A R D S
Receipts
Shipments
N o v ., 1951
N o v ., 1951
compared with
compared with
N o v ., 1951 O c t .,*51 N o v .,*50 N o v ., 1951
O c t .,'51 N o v .,*50
Cattle and calves... 100,966
— 37% — 6%
37,285
— 54%
— 2%
H o g s...........................334,163
+15
+15
75,272
+ 5
+36
Sheep........................... 36,159
— 35
+10
8,254
— 66
+86
Totals.................... 471,288
— 7% + 9%
120,811
— 32%
+23%

Page 9

corn crop estimate for the nation was reduced 147
million bushels during November. The crop is now
estimated at 2,941 million bushels. However, the
feeding value of part of this amount is reduced due
to frosting and high moisture content.
A bumper winter wheat crop has been estimated
for 1952. The 918 million bushels estimate was 273
million bushels higher than 1951 production, and if
realized, would be the third largest crop on record.
Seeded acreage is slightly higher than for the crop
3^ear 1951. Although the prospective yield of 16.3
bushels per acre is substantially higher than the
11.6 bushel yield per seeded acre realized in 1951,
this prospective yield has been exceeded in four
years (1942, 1946, 1947, and 1948) out of the past
ten.
B A N K IN G A N D FIN A N C E

In November loans rose less than seasonally in
both district and nation. In both instances the
increase went largely to finance marketing and proc­
essing of farm produce. Defense loans rose more
rapidly in the nation than in the district. In early
December the loan expansion at district weekly
reporting banks was more than normal.
Our monetary gold stock increased substantially
in the last half of 1951 reflecting such factors as
larger net exports and reduction in foreign eco­
nomic aid at a more rapid rate than foreign defense
aid was expanded. About $750 million of gold
flowed into this country, July to December 1951,
reversing the sizable outflow in the nine months
following Korea.
District Banking Developments— Loans rose $27
D E B IT S T O D E P O S IT ACC O U N TS

(In thousands
of dollars)

Nov.,
1951

Oct.,
1951

Nov.,
1950

i>ov., ly ji
compared with
Oct.,’ 51 Nov.,’ 50

El Dorado, Ark..............$ 27,633 $ 28,040 $ 23,075 — 1% + 20%
Fort Smith, Ark.........
46,668
51,119
41,869 — 9
+ 11
Helena, Ark................
13,938
14,131
14,245 — 1
— 2
Iyittle Rock, Ark......... „
150,674
176,007
149,716 — 14
+ 1
_o_
Pine Bluff, Ark.......... .
48,099
49,235
48,266 — 2
Texarkana, Ark.*.......
18,930
16,108
11,102 — 15
+ 45
Alton, 111.....................
29,797
26,508 — 3
28,896
+ 9
166,382
EJ.St.Iy.-Nat.S.Y., 111...
129,227 — 17
138,155
+ 7
Quincy, 111..................
40,078
35,429
32,130 — 12
+ 10
147,762
Evansville, Ind...........
139,638
137,459 — 6
+ 2
Louisville, K y ............. ,
666,605
726,651
+ 15
581,706 — 8
46,718
40,746 — 9
Owensboro, K y..........
42,515
+ 4
Paducah, K y...............
32,808
30,184
15,609 + 9
+ 110
31,969
34,843
Greenville, Miss..........
38,676 — 8
— 17
12,866
Cape Girardeau, Mo...
13,930
+ 1
12,676 — 8
Hannibal, M o............. .
9,906
11,516
+ 5
9,435 — 14
Jefferson City, M o..... .
57,034
65,501
48,779 — 13
+ 17
St. L,ouis, M o......... . .. 1,873,676 2,046,665 1,786,980 — 8
+ 5
11,421
12,630
Sedalia, M o.................
10,937 — 10
+ 4
66,706
82,991
Springfield, M o...........
63,354 — 20
-j- 5
Jackson, Tenn.............
24,287
29,069
24,773 — 16
— 2
..
833,825
823,921
— 2
850,753 + 1
Totals........................ $4,308,856 $4,646,100 $4,098,021 — 7% + 5%
*These figures are for Texarkana, Arkansas, only. Total debits for banks
in Texarkana, Texas-Arkansas, including banks in the Eleventh District,
amounted to $37,374.

Page 10




million at member banks in the Eighth District
during November. Normally loans increase much
more than this in November. By comparison loans
rose $75 million in the same month last year. The
increase this year resulted from a $34 million gain
at the larger city banks offset in part by a net con­
traction at the smaller banks. The increase in loans
at the larger banks went principally to commodity
dealers and food manufacturers. Outstanding loans
to textile, apparel and leather manufacturers, how­
ever declined substantially in the month. The de­
cline in loans at smaller banks reflected repayments
of agricultural loans. Investments jumped $55 mil­
lion in November at all member banks, with threefifths of the gain at the smaller banks.
In the first two weeks of December loans at the
weekly reporting banks rose $26 million. Types
of borrowers accounting for most of the increase
were food manufacturers, sales finance companies
and commodity dealers (largely to finance cotton at
Memphis and tobacco at Louisville).
Gold Flows—The flow of funds between countries
is the resultant of many factors. In addition to
trade such transactions as investments, tourist
spending and gifts (both private and governmental)
shift ownership of funds across national borders.
Furthermore, the exporting of gold provides a way
of obtaining funds to spend, while the importing of
gold is a way of investing surplus foreign funds.
Thus, countries can build their balances in foreign
centers or can help offset a net outflow of funds by
exporting gold, and countries with surplus mone­
tary balances abroad can choose between allowing
these balances to accumulate or exchanging them
for gold.
For four years after the end of the war, foreign
governments sold gold to us on balance in order to
buy goods in this country. However, by early 1950,
the outside world had made large strides toward
economic recovery, assisted in part by U. S. aid.
Most foreign currencies were devalued to more
realistic levels in September, 1949, and dollar earn­
ings in world trade picked up. As a result govern­
ments abroad found themselves in a position to buy
back a little of the gold they had previously sold
to us.
After Korea, United States’ trade surplus
dwindled rapidly. Exports rose, but imports in­
creased faster with a program of heavy stock-piling
and re-armament driving prices of basic commodi­
ties up sharply. Therefore, foreign dollar earnings,
particularly by less industrialized countries, ran

lators (both foreign and domestic) to transfer funds
out of United States dollars into these foreign cur­
rencies. Ultimately, these transactions necessi­
tated some residual settlement in gold.
In total our monetary gold stock declined $2.4
billion (10 per cent) in the nine month period. Over
half of our gold decline went to the sterling area
and most of the remainder was split between other
European and Western Hemisphere countries.
Early in 1951, United States exports rose, as for­
eigners with larger dollar earnings and fewer cur­
rency restrictions abroad found it easier to acquire
cur goods. Also European countries in order to
meet the requirements of re-armament, stock-piling
and increasing production had to increase their
imports, sharply. Furthermore, prices came down
on items imported by the United States, partly due
to cutbacks in our stock-piling program.

high. Sizable grants of foreign aid funds added
further to dollar holdings abroad.
Many countries with improved dollar holdings
took the opportunity to restock their monetary re­
serves by exchanging dollars for gold. Also, rumors
of upward valuation of foreign currencies led specu­

As a result, the gold outflow slackened in the
second quarter of 1951. Since June, gold has again
been flowing into the country. In the last half of
1951 this gold inflow amounted to roughly $750
million. Most of the inflow of gold in this period
came from the sterling area.
At the end of 1951, the country's gold stock stood
at roughly $22.5 billion, far in excess of legal re­
quirements for monetary purposes, and comprising
about two-thirds of the world's monetary gold sup­
ply outside Russia.

E IG H T H D IS T R IC T
M E M B E R B A N K A SSE TS A N D L IA B IL IT IE S
B Y SELECTED GROUPS
(In Millions of Dollars)

________________ A ll M em ber____________ ___________ Large City Banks 1________
Change fro m :
N o v ., 1950

N ov., 1951

O ct., 1951
to
N o v ., 1951

3.

a. Loans ................................... ........................... ...
b. U . S. Government Obligations................
c. O ther Securities ...... ......................................
Reserves and O ther Cash Balances...*........
a. Reserves with the F . R . bank.......... .
b. Other Cash Balances8....................... ........
Other A ssets .........................................................

$4,276
1,936
1,966
374
1,445
716
729
53

$ + 89
+ 27
+ 55
+
7
— 73
— 11
— 62
+
1

$+207
+ 84
+ 116
+
7
+ 183
+ 119
+ 64
+
4

4.

Total A ssets ........................................................

$5,774

$+

17

$4,346
785
3,561
990
75
363

$—
__
+

3
9
6

$5,774

$+

Assets

2.

Liabilities and Capital
5. Gross Demand Deposits................................. .
a. Deposits of Banks.............
b. Other Dem and D eposits......................
6. Tim e Deposits ................ ....................... ............
7. Borrowings and Other Liabilities..............
9. Total Liabilities and Capital Accounts......

Change fr o m :

O ct., 1951
to
N o v ., 1951

N o v ., 1950

O ct., 1951

to
N o v ., 1951 N o v ., 1951

to
N o v ., 1951

$2,518
1,315
1,028
175
885
467
418
31

$ + 58
+ 34
+ 22
+
2
— 54
— 12
— 42
- 0-

$ + 116
+ 45
+ 75
—
4
+ 107
+ 80
+ 27
+
2

$1,758
621
938
199
560
249
311
22

$+
—
+
+
—
+
—
+

31
7
33
5
19
1
20
1

$+
+
+
+
+
+
+
+

$ + 394

$3,434

$+

4

$ + 225

$2,340

$+

13

$ + 169

$2,671
736
1,935
483
68
212

$— 15
—
9
—
6
—
2
+ 21
- 0-

$ + 194
+ 77
+ 117
+
6
+
7
+ 18

$1,675
49
1,626
507
7
151

$+

$3,434

$+

$+225

$2,340

$+

to
N o v ., 1951 N ov., 1951

__

2

+

23
1

$+327
+ 82
+245
+ 30
+
8
+ 29

17

$ + 394

—

_____________ Smaller Banks 2

Change fr o m :

4

12
—0—
12
- 0+
2
—
1
+

13

N o v ., 195*
to
N o v ., 195
91
39
41
11
76
39
37
2

$ + 133
+
5
+ 128
+ 24
+
1
+ 11
$ + 169

1 Includes 13 St. Louis, 6 Louisville, 3 M em phis, 3 Evansville, 4 Little Rock and 4 East St. Louis-N ational Stock Yards, Illinois, banks.
2 Includes all other Eighth District member banks.
Some of these banks are located in smaller^ urban centers, but the majority are rural area banks.
3 Includes vault cash, balances with other banks in the United States, and cash items reported in process of collection.




Page 11

Revised Indexes of Eighth District Department Store Sales and Stocks
Indexes of Eighth District department store sales
and stocks have been revised to conform to the new
standard definition of “ department stores” and to
the benchmark data on all district department
stores made available by the 1948 Census of Busi­
ness. In addition, adjustments have been made for
changes in the seasonal patterns of consumer buy­
ing and retail business policies. Revised indexes
have also been prepared for sales in four cities:
St. Louis, Memphis, Louisville, and Little Rock.
A complete discussion of the changes which have
been made throughout the Federal Reserve System
is contained in the Federal Reserve Bulletin,
December, 1951.1
The revision of monthly sales and stocks indexes
was accomplished according to procedures devel­
oped by Reserve System representatives. The prin­
cipal features of the revision are:
1) The reporting store base of the index has been
1 Revised Eighth District indexes and a description of techniques used,
together with a reprint o f the Federal Reserve Bulletin article are avail­
able upon request from the Research Department, Federal Reserve Bank
of St. I^ouis, St. L,ouis 2 , M issouri.

Page 12




changed. Some stores have been dropped from the
sample to conform to the revised standard definition
of department stores; others have been added to
maintain the representativeness of the sample.
2) The sales indexes, based on sales reports from
a sample of department stores, have been adjusted
to agree with sales volume of all such stores as indi­
cated by the latest (1948) Census of Business.
3) The comparison base period for the sales and
stocks indexes has been changed from 1935-1939 to
1947-1949, and all of the indexes have been recalcu­
lated on this base. The change in base period is
considered desirable in connection with the Sys­
tem’s indexes mainly because comparisons with a
more recent period are probably more useful to
users of the indexes than are comparisons with
periods in the more distant past. In addition, ali
indexes published by the Federal Government prob­
ably will be converted to the 1947-1949 base and
uniformity will be helpful in making comparisons.
4) Seasonal adjustment factors have been re­
viewed for the period 1940 to date and have been
revised where necessary.