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January 1954
KANS,
Changing Financial Conditions
in Farm Communities . . . . . . . . . . . . . page 3
Exports, Surpluses, and
Diverted Acres . . . .
. . . . . • . page 9
Employment and Labor Market
Conditions . . . . . • . . . .
• page 12
Current Charts and Statistics . .
• page 15
JEDEll .4 IJ llESERVE BANK
1
0}1
?
ANS~!S CITY
prices of agricultural commodities since early in 1951 have produced a variety of a<ljustments in this basic industry
with significant effects upon farm communities and the larger centers that sell equipment, operating supplies, and consumer goods
to farms. Variations among the pric<'s and
yields of i11dividua] products ~111d in the volume of livestock and crops market('d have
1e<l to <lifferences in the extent to which
various farm communities have been affected
by the weakness in prices.
The trend of cash receipts from farm marketings illustrates how the readjustment in
agriculture has varied recently among states
which are '"'holly or partly included in the
Tenth Federal Reserve District. The figures in
the accompanying table should be read with
the fact in mind that between 1951 and 1952,
Kansas, Oklahoma, Colorado, ancl New Mexico had increases in cash receipts, while Nebraska and especially Wyoming sufferc<l reductions.
Such a measure of the changed economic
position of farmers does not indicate the manD
ECLINING
CASH RECEIPTS FROM FARM MARKETINGS
In thousands ol dollars
State
Colorado
Kansas
Missouri
Nebraska
New Mexico
Oklahoma
Wyoming
I Jan.-Aug. 1952
344,784
765,711
605,801
717,044
94,531
417,039
49,306
Jan .-Aug. 1953
Per Cent
Change
299,472
704,023
576,225
709,927
95,008
359,968
42,995
- 13.15
- 8.06
- 4.89
- 1.00
+0.50
- 13.69
-12.80
ner in which net income has been narrowed
as farm costs have failed to readjust in step
with prices. Nor can it indicate how farmers'
cash and debt positions have been affected.
In order to examine fully the change<l financial position of farmers, it would be necessary
to know all of the facts about th ·ir total asset
holdings and indebtedness, in ]ll(.ling credits
granted by merchants and nonbank lenders.
Since commercial banks are estimated to hold
about 40 per cent of the nonreal-estate debt
owed by farmers to all creditors in the U nitecl
States, as well as the largest part of their cash
balances, the financial statements of these
institutions reflect certain of the financial adjustments farmers have made in response to
adverse income developments.
In order to obtain for examination a group
of hanks whose conJition and earnings statements would he most likely to be dependable
in reflecting agricultural developments, member banks in the Tenth District were classified according to the percentage of their total
loans represented by loans to farmers. An
arbih·ary decision was made to select banks
having a minimum of two thirds of their
loans in farm credits, and 315 banks were
found to meet this standard. Moreover, since
agricultural readjustments have cliff ere d
among various type-of-farming regions, four
such regions were recognized in choosing the
sample of banks- grazing, wheat, corn, and
cotton. Banks within each of these regions
were then chosen in such a way as to be well
distributed geographically.
3
Changing Financial Conditions
A total of 105 banks were selected from the
list of 315 banks. Their dish·ibution among the
states of the Tenth District is shown in the
accompanying table. No banks in New Mexico
were used because none of the banks located
DISTRIBUTION OF BANK SAMPLE
Type-of-farming Total
Region
Banks Colo. Kans.
Grazing
Wheat
Corn
Cotton
Total
35
30
25
15
15
3
0
0
105
18
Mo .
Nebr. Okla. Wyo.
6
4
0
0
7
0
15
0
34
4
22
8
20
0
0
0
7
0
15
5
0
0
0
22
5
there hcl<l a s11Hicicntly high proportion of
agricultural Joans. On September 30, JU.S:3, the
proportion of total loans rcprcscntc<l by agricultural loans in the four bank samples ranged
from 80 per ceut in the corn region to go.5
per cent in the cotton region.
The annual survey of deposit ownership
made by the Federal Reserve System also
provides information on the ownership of demand deposits at some of these banks. Fortytwo of the 105 banks voluntarily submitted
such reports for January 31, 1952, and 59
banks furnished this information for January
:31, 1953. On each of these dates, farmers were
reported to own 50 per cent of the demand depo ·its of individuals, partnerships, and corporations in accounts of $3,000 or more.
crops also were an important source of income
in these areas.
Nonguaranteed, short-term loans to farmers
were expanded rapidly from June 30, 1950,
to June 30, 1951, while the demand and time
deposits of individuals and businesses remained about stationary. The working capital
requirements of farmers probably increased
more rapidly in this period than they could
he satisfied through savings from higher income. Ban ks accommodated these demands
by reducing their balances with other banks
and hy sales of Treasury securities. In the ens11 i ng y<'ar, nonguarantec<l loans to farmers
<·onli1111C'cl lo incr asP-, reaching _a level 55
per <'<'nl above the amount outstanding on
J1111e 30, 1950. However, cash balances in
these farm communities increased about as
much, and thus it appears that a number of
DEPOSITS AND LOANS, GRAZING
AND CORN REGIONS
INDEX
JUNE 30~ l95Q" 100
180
GRAtrNG i~151QH
.......
'-0411& ·· lU:f'Os-tri .....,._
GO'A.N Rfi'.~ I.ON
\-()4~
-160 - · . l)~J:1'()1!!• '"~":":
160
140
Observations by Type-of-Farming Region
':.J.:..)'20
Grazing
The banks selected to represent grazing
are located in Wyoming, Colorado, western
and northwestern Nebraska, and the bluestem section of Kansas. These banks held
30.2 million dollars of agricultural aud 7.3
million dollars of other loans on September
30, 1953. Of the former, about one fourth were
loans guaranteed by the Commodity Credit
Corporation, indicating that price-supported
.c
120
•
•.·
_.. --.
100
•• . . . .
.WA
•·• ··• .
.,,..,--~~ ... - -~....
~
; #ti-
~+-,,,-;-;~~-: 100
•.
. :··.. ::·:.- .i· .
,...;,.•,•.
.
,••·
····.· •··....·: ...
:-
so
JUNE
1950
:
.
.
I
DEC .
1950
JUNE
1951
80
DEC .
1951
JUNE
19 52
DEC .
1952
JUNE SEPT.
1953 1953
Note: Loans are short-term advances to farmers, excluding C.C.C.
Deposits are demand and time balances of businesses and
individuals .
In Farm Communities
farmers reached a stage where they preferred
increased cash balances to additional investment in real capital.
The period from June, 1952, to June, 1953,
witnessed the rapid decline of cattle prices
and it could be anticipated that adjustments
at hanks in the grazing sections would be
marked. Sales of an increased volume of
cattle in these 12 months were not sufficient
to offset the fall in prices, and cash receipts
diminished accordingly. Nevertheless, farmers
retired 3.2 million dollars of their nonguar:mtced hank deht. Tn the following thr('('
months, extending to Scptcml)('r .10, 19.r:51.
they paid off an aclclitional 2.1 million, al
which point th sc loans were 24.5 per ('<'nl
above the volume on Jmw 30, 19,50. With the
sharp drop in cattle prices, loans paid as they
came due probably were not offset by the
volume of new loans for investment in the cattle business. While there was a moderate upward trend in the demand deposits of individuals and businesses in this 15-month period, the grovvth of time deposits was more
conspicuous. Thrift deposits increased about
14 per cent henvc>en Jnne 30, 19.51 , and J11nf'
30, 1953.
lf the proportion of d eman<l and time deposits held hy farmers was maintained in the
year ended June 30, 1953, it appears that the
short-term asset position of a majority of
farmers was improved by increased deposits,
as well as by debt repayment, during the period of adverse price trends. That this condition was not characteristic of all fanners in the
grazing areas is indicated by hank experience
on loans.
Tn the first half of 1952, losses and chargeoffs on loans, inclnding transfers to valuation
rc>serves, ( nncorrcctecl for rccoveries) at the
grazing hanks ,vcre $47,000, or a rate of $] .89
p<'r $1.000 of loans having an exposnre to
C'redit risk. During the first half of 1953, snch
losses and charge-offs increased to $133,000,
or to $4.10 per $1,000 of loans. In banks'
statements of earnings, expenses, and dividends, losses and charge-offs include, in addition to actual losses, transfers to valuation
reserves against loans, and thus they do not
indicate beyond question the total amount of
loss<'s actually incurred. However, the as sumption that losses increased between these
two periods is supported by several facts:
recoveries on loans previously written off decJined; banks in widely separated parts of the
grazin~ region reportccl a common <'xpcrif'nc<':
the sharp decline in cattl<' pricC's could have
h<'<'n expcct<'cl to 1mcovc'r th<' wc-ak financial
positions of some farmers.
1n summary, hanking data rdating to th<'
grazing areas of thc District indicate that
farmers as a group used the decline in cattle
prices as an occasion to strengthen their shortDEPOSITS AND LOANS, WHEAT
AND COTTON REGIONS
INDEX
JUNE 30, 19!10 • 100
INDEX
180
180
Wt1(~t R:UIQH
.LQ&HS
--
l>f;PQIITI-.-C<)'tT◊N
160
RiQHHf
J+OAN4"
Pe-..ci••r• ......
?
2•,::: . ::·::_ ··:::·:
:·
._.., __ : : ·
140 -..:::~
[ . - .. = · .
~
.=:=:-=-···
.
.
r
; l·
120
-
/
·"::J ~-.
··t. -::::.r
-<;~z
·
..
li i'
}
...-.,...
~
;
;r - -~~..,
r~~~*-
1'
I
100-:,,,.-,
......
,__ _ ___,
....
~ .....
-
.
·...
ab
I
.-,oo
.
I ·• I.·. I ' . :.
JUNE
DEC.
JUNE
DEC .
JUNE
DEC .
19!10
1950
1951
1951
1952
1952
I
so
JUN[ SEPT.
1953 1953
Note : Loans are short-term advances to formers, excluding C.C.C.
Deposits are demand and time balances of busines~es and
indi vidu als.
5
Changing Financial Conditions
term net asset position, although other farmers
in the same areas were weakened to the point
of default. The effect of losses upon banks'
loan policies cannot be determined, but it is
possible that a more conservative practice
would be induced by the change that occurred between the first halves of 1952 and
1953.
Wheat
The sample of 30 banks representing the
wheat-growing region of the District was
selected from east cenfral Colorado, Kansas,
and northwestern Oklahoma. On September
30, 19.53, these banks helcl 27.7 million dollars of agricultural loans, divide(l about
equally between loans guaranteed hy the
Commodity Credit Corporation an<l nonguaranteed loans. Loans of all other types totaled
5.3 mi1lion dollars. Total demand and time
deposits of individuals and businesses were
76.2 million dollars.
In the two years following June 30, 1950,
the operating capital requirements of farmers
in the wheat areas were quite heavy. In spite
of favorable income conditions, total demand
and time deposits of individuals and busin sses were lower at the end of the period
than at the beginning. Savings out of income
therefore appear largely to have taken the
form of additions to physical assets. Funds
available from this source did not fully satisfy
farm needs and short-term nonguaranteed
Joans increased 66 per cent, while total agricultural loans expanded 86 per cent in the
two years ended June 30, 1952. These capital
needs were met by the banks through sales of
United States Government secnrities in the
market and through reductions of balances
with other banks.
The large cash income resulting from the
exceptional wheat crop in 1952 enabled
farmers to retire nonguaranteed loans and to
6
increase their cash balances. Between June 30,
1952, and June 30, 1953, these loans were reduced 22.7 per cent, while deposits increased
13.3 per cent. Banks in the wheat-growing
areas supplied the funds which farmers used
to improve their current net asset position, for
the rise in guaranteed loans was more than
enough to account for these changes. As the
current net asset position in these farm communities has improved, time deposits have
represented an increasing share of total deposits. From June 30, 1950, to September 30,
1953, time deposits increased a total of 70
per CC'nt , with all of the gain occurring after
June', H);>J.
The improv<.'mc nl in the cash balances and
hank debt position of farm communities in
the wheat-producing areas apparently <lid not
prevent hanks from incurring losses on loans.
In the first half of 1952, losses and chargeoffs, including transfers to valuation reserves,
were equal to $ .99 per $1,000 of loans
having a risk exposure, while in the first half
of 1953, the figure was $2.07 per $1,000 of
loans exposed to credit risk. Thus, while
losses apparently increased, they still were
well hc>low the> rate in the grazing areas. Moreover, recoveries on Joans previously written
off more than doubled between 1952 and
1953. This also points to less difficulty in the
wheat than in the grazing areas.
Corn
The bank sample used to examine financial
trends in the com-producing areas of the
District included 25 banks located in Nebraska, northeastern Kansas, and western Missouri. On September 30, 1953, these banks
held total agricultnral Joans of 12.4 million
dollars, about one fourth of which were guaranteed by the Commodity Credit Corporation.
Loans of all other types represented about one
fifth of all loans outstanding. Demand and
In Farm Communities
time deposits of individuals and businesses
aggregated 48.2 million dollars.
In a number of respects, agricultural trends
have been more favorable to the corn-producing area than to other regions in the District
since June 30, 1950. Much of the corn grown
in this area is fed to hogs and, while the price
of hogs was comparatively unfavorable in
1950, the price has been strong in recent
months.
Nonguaranteed loans to farmers in the
corn-producing areas increased 65 per cent
hetwccn June 30, 1950, and Dccemher 31,
1951, when the demand for credit rc-achC'd a
sC'asonal peak. Loans ~11arantccd hv 1hc Com moclity Credit Corporation clediI;cd in thC'
period and the net increase in credit requirements was easi1y met by banks since deposits
also increased in these months. A combination
of increased loans on price-supported crops
and a large volume of nonguaranteed loans
produced a peak in total loans at these banks
at the end of 1952. In the following nine
months, loans were retired rapidly, and on
September 30, 1953, they were only 7.4 per
cent above the pre-Korea volume. On the
other hand, demand and time deposits of
individuals and husin<1'sscs at these banks haw•
shown a slow upward trend throughout the
period since mid-1950. By September 30,
1953, they had increased one sixth, the greatest part of the growth occurring in demand
balances.
Further evidence of the comparative financial strength of farmers in the corn-producing
areas is indicated by the loss experience of
banks. The sample of banks in this crop area
showed losses, charge-offs, and transfers to
valuation rescrv<"s of $2.91 p<"r $1.000 of Joans
exposed to credit risk in the first hn 1f of 1952
and $1.95 per $1 ,000 in the Rrst half of 19.53.
The latter figure was the lowest for the period
in the four type-of-farming regions.
Cotton
The sample of 15 banks chosen to reflect
changes in the cotton-producing area of Oklahoma, while smaller than the other samples,
represents a larger percentage of the banks
in the area producing this crop. On September 30, 1953, this group of banks held 8.2
million dollars of agricultural loans, divided
about equally between guaranteed and nonguaranteed loans. Loans to all other borrowers
were only 10 per cent of total loans outstand ing. Demand and time deposits of individuals
and businesses amounted to 18 million dollal's.
Judging on the hasis of hanking <bta alo11<',
the farm communities in the cotton-producing
area have shown Jess economic growth since
June 30, 1950, than the other areas examined.
Nonguaranteed loans to farmers reached their
peak for the dates examined on June 30, 1951,
a gain of 36 per cent in the year. This peak
was relatively lower and occurred earlier than
in any of the other type-of-farming regions.
Since that date, these loans have shown a
moderate downward trend. Similarly, the demand and time deposits of individuals and
businesses, after declining 12 per cent in the
year ended June 30, 1951, rose to their maximum for the period on December 31, 1951,
where they were 8.8 per cent above June,
1950. After this peak was reached, these deposits slowly declined until, on September
30. 1953, they were 2.3 per cent below the
volume in mid-1950.
There is no way immediately available to
account for the differences between the trends
of farm communities in this and other type-offarming regions. It is possible that financial
and cash balance requirements in the cotton
area differ from those in othC"r farming areas;
therefore, a relatively adverse condition cannot be assnmcd to have developed in this
area on the hasis of these dat<1. The statistics
7
Changing Financial Conditions
on bank losses on loans suggest that some
deterioration of financial position has taken
place in the later part of the period examined.
In the first half of 1952, stated losses on loans
having an exposure to credit risk were $.71
per $1,000, which was the lowest rate in any
of the areas. In the first half of 1953, however,
the rate increased to $3.36 per $1,000, while
recoveries on loans previously written off
diminished.
Summary and Conclusions
The examination of financial tr nds in farm
communities through th . use of omm r ial
bank data an affor<l information on only on
aspe t of the omplex adjustment which declining farm prices have required. While the
findings are not conclusive, they appear to be
in agreement with other available information.
In the grazing region of the District, the
expansion of herds until 1953 probably led
to increased requirements for working capital
which could not be satisfied by savings from
current income. This condition produced a
demand for bank loans and arrested the
growth of deposits. Sales of livestock in 1953
are believed to have been sufficient to prevent a further increase in cattle on farms;
therefore, funds that otherwise would have
been required to expand physical stocks of
supplies were diverted to retiring loans and
increasing cash balances. The fact that farmers
could achieve this improvement of their current position suggests that the financial capacity of farmers to maintain operations at
present levels has been sustained. This does
not imply that either his standard of living
or his net worth has been unaffected.
The hank data drawn from wheat- and cornproducing r .gions also indicate that farmers
have improv cl their credit position at hanks
by rC'liring thc-ir debt and incr asing their
deposits. It seems probable that this change
was accomplished through a reduced rate of
real investment. Accumulated depreciation on
equipment in use also probably played a part
in this change.
Farm communities in the cotton-producing
area of Oklahoma have not shared in the
countrywide growth of bank deposits since
Korea. Information available does not indicate
whether this condition resulted from distinctive characteristics in the need for cash balances or from an unfavorable trend of income.
Member bank credit, bank debits, and department store trade
tables previously carried in the Monthly Review will no longer
appear in this publication. Individual releases containing these
tables will be issued separately and are available upon request.
Address Research Department, Federal Reserve Bank of Kansas
City, Kansas City 6, Missouri.
8
EXPOR TS, SURPLUSES, AND DIVERTED ACRES
Declining exports, increasing surpluses, and marketing quotas
have created a farm problem - how to use the diverted acres.
0
NLY about one tenth of the total demand
for agricultural products in the United States
during the past decade was accounted for by
foreign demand. Yet, this demand is of crucial
importance to many farmers in the Tenth District and of considerable consequence to both
farm and nonfarm people.
During the fiscal yC'ar ended June 30, 1953,
agricultural exports from the U. S. were
valued at 2.8 billion dollars. This was 30 per
cent below the value of agricultural exports
for the previous year and 20 per cent below
the preceding five-year average. A decline of
this magnitude in export demand, while agricultural production is at record levels, could
cause agricultural prices to decline and stocks
of several of the principal farm commodities
to accumulate. Furthermore, it now appears
that agricultural production will remain high
during 1954, and it is unlikely that export demand for agricultural products will recover
significantly during the current fiscal year.
In recent years, wheat and cotton exports
have accounted for roughly one half of all
agricultural exports. Both crops are important in Tenth District agriculture. During the
fiscal year ended June 30, 1953, cotton exports were only about one half those of the
preceding fiscal year, and wheat exports were
approximately one third less. Declining exports of these two crops accounted for about
three fourths of the 1.2 billion dollar decline
in the value of agricultural exports from the
U. S. during the last fiscal year. These dedining exports also have been quite influ-
ential in causing the rapid increase in stocks
of wheat and cotton during recent months.
The large carryover of wheat and cotton,
along with the expectation of continued high
production, has made the imposition of marketing quotas for these crops mandatory
undc'r pr s nt legislation. Ace ·ptancc of
quotas by produ ers will result in considerable acreage becoming available for other
uses. How this diverted acreage will he used
is of interest to everyone, not just wheat and
cotton farmers.
If markets cannot be expanded for these
crops, farmers may use their diverted acreage
for producing forage crops to support an expanded livestock production. Such an adjustment could be desirable if per capita consumption of livestock products remains high and
population continues to expand. The use made
of these diverted acres also is of interest to
business and labor since such use will influence farm incomes, the types of farm commodities available for marketing and processing, and the kinds and quantities of supplies farmers purchase. In subsequent portions of this article, an effort will be made to
analyze the wheat and cotton situations in
Tenth District states and to indicate alternative uses that can be made of the acreage divertP-d from the production of these crops.
Wheat
Since the end of World War II, annual
wheat production in the U. S. has averaged
9
Fxports, Surpluses
1,168 million bushels. During the same period,
annual domestic disappearance has averaged
696 million bushels. Thus, domestic production
has exceeded domestic requirements by an average of 472 million bushels annually since the
end of the war. Imports of wheat have averaged about 10 million bushels since the end of
World War IL These imports have consisted
chiefly of low grade wheat for feeding and
certain types of wheat which have been scarce
in the U. S. In order to prevent the carryover from increasing, it would have been
necessary to export an average of 482 million
bushels of wheat annually since the war. Exports, inclucling miJitary procurc-mcnl and
shipments to U. S. posscssio11s, have averaged approximately 417 miJJion bushels an nuaJly since the end of World War II. Con sequently, the carryover has increased an
average of about 65 million bushels annually
since the beginning of the marketing year
commencing July 1, 1946.
Thus, production surpassed utilization even
during the period of huge postwar export demand for U. S. wheat created by disrupted
world production, military procurement for
civili.an relief feeding, and provision of Economic Cooperation Administration fund~.
With this huge export demand for wheat now
subsiding, adjustments in the indusb-y are
impending. Acceptance of marketing quotas
by wheat farmers will result in an acreage
reduction of approximately 20 per cent this
year. In Tenth District states, the acreage
planted to wheat for harvest in 1954 will be
about 5.9 million acres less than was planted
for harvest in 1953.
Cotton
Production of cotton since the end of World
War II has averaged about 13.4 million running bales per year. Annual imports have av10
eraged about 200,000 bales. Hence, an average
of about 13.6 million bales of cotton has been
produced and imported annually during the
postwar period. Domestic requirements during the same period have averaged 9.3 million
bales annually, while an average of 4 milJion
bales has been exported. Thus, total annual
utilization of U. S. cotton has averaged 13.3
million bales, while production and import~
have averaged 13.6 million bales. Although
these figures appear to be almost in balance,
exports were high from 1948 through 1951.
During 1952 and 1953, exports averaged morn
than one third less than for the prior four
years. On the other l1and, production has hc>en
cm1sidcrah]y higher than average during t]w
last three years . Consequently, the carryover
of cotton has increased rapidly in recent years.
Considering cun::ent supplies of cotton and
likely domestic and export demand, the carryover of cotton on August 1, 1954, is expected
to be 8.9 million bales. This compares with a
carryover of 2.3 million bales on August 1,
1951. The large supplies of cotton available
for this marketing year, in relation to anticipated requirements, made it mandatory for
the Secretary of Agriculture to proclaim marketing quotas on cotton. Under present lC'gislation , the quotas must be established at l 0
million bales of upland cotton and 30,000
bales of extra-long staple cotton. Acreage
ailotments for both types total almost 18
million acres, which compares with 24.6
million acres in cultivation on July 1, 1953.
It is anticipated that Congress will revise
present legislation increasing marketing quotas and acreage allotments for cotton. Private
sources are predicting that these revisions will
permit about 21 million acres to he planted.
If this forecast is correct, it still would be
necessary to divert some 3.6 million acres
from cotton production. In Tenth District
states, approximately 300,000 acres would he
and Diverted Acres
released for other uses under these conditions.
Significance
In Tenth District states, about 5.9 million
acres of wheat land and 300,000 acres of cotton land will be released for certain other uses
hy marketing quota and acreage allotment
legislation. How these acres are used in both
the long and short runs will be of considerable
significance to agriculture in this area. Although more .severe limitations on the use
of these diverted acres may exist in future
years, considcrahlc freedom wi11 he a11owcd in
1951.
No acreage allotm nts will he in effect on
grain sorghums, barley, or oats during 1951
and prices will be supported at 85 per cent
of parity for these crops. In the major wheat
and cotton areas of the Tenth District, grain
sorghum is a well-adapted crop. In the limited
areas where grain sorghum is not adapted,
barley or oats can be substituted on the diverted acreage. Any of these can be used as
substitute cash crops during 1954. Although
this is an easy solution to the diverted acreage
prohlem for 1954, more drastic adjustments
prohab]y wi1l he necessary in the long run not
only for wheat and cotton but also for other
cash crops that presently can be planted on
the diverted acres.
In the case of wheat, the diverted acreage
also can be used for fallowing for the 1955
crop. This is a desirable use of the land on
those farms where an additional acreage of
fallowed land results in increased efficiency
of production. In the long run, increased
rather than decreased total production may
result from falJowing. Therefore, this practice
will not solve the surplus problem.
With population increasing quite rapidly
and meat consumption being maintained at
high levels, the long-time demand for roughage-consuming livestock should be favorable.
If large numbers of roughage-consuming animals are to be maintained, it will be necessary
to increase pasture and roughage production.
The acreage diverted from cotton and wheat
production can be used for pasture or roughage production. This would appear to be a
desirable long-time use for the diverted acres,
but would tend to reduce incomes in the near
future. Consequently, many farmers will be
reluctant to lx-gin this type of readjustment
during 1954.
Fina11y, another Jong-nm solution to the'
prohlem would he to work tmvard increasing the exports of wheat and cotton. H large
enough quantities of wheat and cotton could
be exported, it would not be necessary to divert acres from the production of these crops.
However, unless domestic and world attitudes
change considerably, it will be extremely difficult to increase exports.
Su rnary
The preceding discussion points out a few
of the ways in which changing export markets
for agricultural products influence Tenth District farmers. Some of the major adjustments
currently facing District farmers can he attributed to changing export markets. Although
several rather easy solutions to these adjustment problems are immediately available,
these solutions have the disadvantage of not
solving the fundamental problem for agriculture as a whole. A long-run solution for
the entire industry will require further study,
and the necessary adjustments will need to
be made slow1y over a period of years.
11
EMPLOYMENT AND LABOR
MARKET CONDITIONS
THE
Bureau of Labor Statistics reported a
drop of 300,000 in manufacturing employment
in November, the fourth consecutive monthly
decline. The drop was larger than the usual
seasonal dip, as declines occurred in the
metals, machinery, textiles, rubber, and transportation equipment groups. This resulted
in a decrease of 160,000 factory workers
dming the Jast year; total nonagri cull11ral cm ployment declined 104,000. Nonman11fact11ring employment still was slightly above a year
ago, as gains were scored in state and local
government, trade, and finance. Seasonal
factors accounted for the recent increases in
trade and state and local government.
The decline in manufacturing employment,
accompanied by a seasonal decline in agriculture, caused unemployment to increase
300,000 in November, according to U. S. Department of Commerce reports. The N ovemher unemployment rate was 2.3 per cent, and
although the number unemployed in November remained at the low level of 1,400,000,
other indicators point to a slackening in business activity. For example, initial claims for
unemployment compensation under the state
employment programs were 74 per cent higher
in November than a year ago. Job applications
also have increased substantially. Furthermore, inter-area job openings listed for outof-area recruitment in October again fell
slightly from their level a month earlier. This
dec1ine brought such listings to a 32-month
low and represented a drop of more than 30
per cent in the past year.
The number of hours in the average manufacturing workweek, as reported by the U. S.
12
Department of Labor, has declined throughout 1953. In November, 1952, the average was
41.1 hours, indicating that overtime was a11
important factor in the weekly paycheck. By
November of this year, the average had
dropped below 40 hours and was 3 per cent
under the level of a vear earlier. Census Burcau reports indicated that the number reccivin g ove rtime also has dropped. Tn Nowmher, only 20 per cent rcporlcd that they
worked more than 40 hours , compared with
28 per cent in November, 1952. Despite the
decrease in the workweek, average weekly
manufacturing earnings in November were l
per cent above the level of a year earlier.
Increases in the hourly rate have tended to
offset the effect of shorter hours on the weeklv
paycheck.
As shown in the accompanying chart, employment trends in Tenth District states var)'
only slightly from the national pattern. Tn
Colorado, employment decreases were mainl:·
clue to losses of government an<l constructioll
workers. Manufacturing employment gained
seasonally as the sugar campaign started in
October. Kansas employment declined for thP
fourth consecutive month, with relativel)·
minor cutbacks in all industries except service
and government. Although manufacturing employment was down mainly due to cuts at defense establishments, the defense program still
is important, accounting for most of the 40,000
new manufacturing jobs in Kansas since thPstart of the Korean War. In Missouri and Oklahoma, manufacturing employment is up ancl
nonmam1facturing employment down in the
last :'car, resulting in slight nPt employment
~
Employment and Labor Conditions
EMPLOYMENT RELATIVELY STABLE DURING
LAST YEAR IN DISTRICT STATES
lWntEJ?.. . ::::•:/p•:•:=f~~i:r ~:.·;G~~:Jir;'~;~ : ~/;<rr/~~ . :-:'::W;:;:-:- ,:: ::: .::::'::: ::::::,.,: •
1"<):'l'Jl,;t._. ~(>ld,-GJf)·CU:t.1" UR4't..
~A:~U F'A(;tiJ Rl:jiti;
.{
\_ \
·'
I
COl.ORAOO
NEW "'1UOCO*
WYOMING
• September data .
gains. Manufacturing employment in Missouri
has declined in recent months, however, with
all of the durable goods lines except electrical
machinery showing losses. Recent declines in
ordnance and farm machinery have tended
to offset the yearly increases in Nebraska.
Agricultural machinery employment is down
in Columbus, Fremont, Lincoln, and Omaha.
In New Mexico, cutbacks in construction, accompanied by curtailment of production in
coal mines and zinc and lead operations, are
the main factors in the employment situation.
Some of the more dramatic changes in the
past year have occurred in those industries
closely associated with the defense effort. Employment in five ordnance factories located in
western Missouri, eastern Kansas, and Nebraska passed its peak this year and had declined 20 per cent by November. Further decreases in the ordnance group are scheduled
in 1954, barring any unforeseen tightening in
international tensions.
Insured unemp1oymcnt in October in the
District states continued at ]ow levels although the October rates were above the level
of a year ago in all of the states except Wyom-
iug. The Oklahoma rate of 2.2 per cent unemployed in October equaled the national
average, while all of the other District states
were below it. Kansas and Missouri showed
the largest increases in insured unemployment in the last year. Initial claims for unemployment compensation in the District in
September were double those of a year ago,
and the number of job applicants had increased 16 per cent in that period. Kansas
claims were up one half from August and
more than threefold in the past year, while
Missouri claims increased two fifths in the last
month and nearly doubled in the last year.
The average workweek for manufacturing
employ cs jn October, 1953, was below the
level at the end of 1952 in each of the seven
District states, although the average in Nebraska was up from October, 1952. The longer
workweek in Nebraska was attributed to
rather general increases in the machinery
and equipment groups and a seasonal rise
in meat packing. The average workweek in
New Mexico declined from 43.2 hours in
October, 1952, to 41.5 hours last September.
The workweek also was cut two and one-half
hours in the last year in Kansas, primarily
because of cutbacks in military aircraft procurement schedules. The reduction in Kansas
was of such a magnitude that the average
weekly earnings in that state also declined
in the last year. In the other District states,
the national pattern emerged and the decrease
in hours worked was offset by increased
hourly rates, with average weekly earnings increasing slightly.
The employment outlook in Wichita has
changed considerably in the past year. In
December, 1952, employment in the aircraft
indusb·y was 44,100, double the level that
existed two years earlier. The Department of
Labor had classified Wichita as one of the
few areas of labor shortage in the country.
13
@FedFRASER