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APRIL, 1950

Volume X X X I I

Number 4

Drifting Dollars
At the end of January, 1950, demand deposits of
individuals, partnerships and corporations* at all
Eighth District banks totaled $4.2 billion, or vir­
tually the same as a year earlier. But while the
district total remained unchanged, the year pro­
duced changes in demand deposit volume held in the
different regions of the district and held by different
types of owners. In general, banks in the district's
metropolitan centers gained funds and those in rural
areas lost funds. Holdings of nonfinancial busi­
nesses and of farmers declined, while those of finan­
cial businesses and of individuals (other than farm­
ers) increased.
In broad outline, these are the principal findings of
the most recent survey of demand deposit owner­
ship, conducted by the Federal Reserve Bank of St.
Louis with the cooperation of some 200 commercial
banks in the Eighth Federal Reserve District.
FACTORS IN DEPOSIT CHANGES

Previous articles on deposit changes, in geographic
location and in ownership, have noted that the total
amount of bank deposits in the United States
changes mainly in response to changes in (1) bank
loans and investments, (2) the amount of monetary
gold or silver, and (3) the amount of currency out­
standing.
But without any change in the total amount of
deposits in the nation, there can be shifts of funds
from one location to another or from one owner to
another. Or, if the national total varies, different
regions or owners can experience greater or smaller
variation than that occurring nationally.
*U nless otherwise noted, “ demand deposits” or “ private demand de­
posits*’ will be used throughout this article to denote “ demand deposits
of individuals, partnerships and corporations” (reported in line 13 of
Call R eport).




There are two principal factors behind these geo­
graphic or ownership shifts. First, and probably
more important, is the income-expenditure pattern
in the different regions or different owner classes.
Second, is the preference of individuals and busi­
nesses for particular forms in which they hold their
liquid assets.
The first factor— income-expenditure pattern—
influences deposit holdings in a region, or by a cer­
tain type of owner, as follows. Over a period of
time, the people of a particular region receive a
certain amount of income, which is available for
taxes, for spending, and for saving. If tax pay­
ments and expenditures are less than income, the
balance goes into savings and a part of these savings
is held in the form of liquid assets. If taxes plus
expenditures exceed income, some previously
acquired liquid assets may be used to make up the
difference.
Liquid assets are usually defined as currency,
bank deposits, and U. S. Government securities. It
is possible, of course, to have income exceed expendi­
tures plus taxes and have no change occur in liquid
assets— in other words, to have all savings flow into
other uses than building up liquid assets. Or, it is
possible to have an increase in liquid assets and to
have no change in deposits— the addition could be
in currency or Government securities.
Ordinarily, however, if there is a difference be­
tween income and expenditures (including taxes),
there will be a change in liquid assets and a change
in that portion of liquid assets that are bank deposits.
And since demand deposits of individuals, partner­
ships and corporations constitute a substantial and
a volatile portion of total bank deposits, changes in
the income-expenditure pattern tend to be reflected

in somewhat similar changes in such deposits. The
variation in private demand deposits will not parallel
fully the variation in income relative to expenditure,
but the correlation ordinarily will be fairly good.
One additional point should be noted in consider­
ing geographic and ownership changes in demand
deposit levels. There are seasonal factors that influ­
ence deposit levels both geographically and by type
of owner— in other words, the flow of income and
expenditure varies over the course of a year among
different regions and among different types of own­
ers of funds. For example, in the Eighth District,

where agricultural income constitutes a much more
important part of total income than it does in the
entire nation, the flow of income to farmers has a
pronounced seasonal movement and is much heavier
in the periods when the big cash crops such as
cotton, tobacco and livestock are marketed. Farm­
ers* expenditures also have some seasonal character­
istics, although probably not as pronounced as in­
come. As another example, crop harvests in the
South usually come earlier in the year than those in
the North. This seasonality also extends to other
lines of business.

Deposit Ownership Surveys
HISTORY AND DESCRIPTION OF THE SURVEYS—The Federal Reserve System began this series of
surveys of demand deposit ownership in 1943. A number of
member arid some nonmember banks participate in the
surveys on a voluntary basis. Nearly all large banks and
enough smaller banks participate to provide a satisfactory
sample of ownership of all private demand deposits. The
result, districtwise and nationally, is a breakdown of individ­
ual, partnership and corporation demand deposits—com­
prising 80 per cent of all demand deposits—into five broad
categories: Those owned by domestic business, by individ­
uals, by nonprofit institutions, by foreigners, and the trust
funds of banks. The first two of these are still further
subdivided. Personal accounts are separated into deposits
of farmers and others, and the business deposits group is
divided into six classifications plus the indication as to
whether or not the owner is a corporation.
REASON FOR THE SURVEYS—Deposits are clas­
sified in call reports—and for many of the larger banks, in
weekly reports—in two ways: by type of owner—Govern­
ment (United States and state and local), bank, or individ­
ual, partnership and corporation—and by availability—
demand and time. However, no information is provided
about the make-up of the major item—demand deposits of
individuals, partnerships and corporations. The deposit
ownership surveys attempt to fill this gap, at least partially,
and to measure, the changes in ownership from year to
year. This information may be used along with other
known and measured economic facts to make more precise
judgments as to future deposit movements.
USE OF SURVEY RESULTS—Obviously, information
on private'demand deposit ownership is most useful when
it is combined with other data relative to banking. But,
by itself, the data are some real use. From the basic
information obtained it is possible to measure the dollar
and per cent change in the volume of deposits owned by
each of the 11 groups for the period covered, to measure
the same type of changes in deposits as between corporate
and noncorporate business in each of the six business
classifications, arid finally to compare the changes for any
classification or group with changes for preceding periods
of time back to 1944 and in some cases to 1941.
Deposit survey facts, recording the cash balance posi­
tions of the 11 groups of owners, may be used to confirm
and make more exact tentative conclusions drawn from
other data. For example, from January, 1948 to January,
1949 depbsits of unincorporated firms declined more rapidly
than deposits of corporations, not only in the aggregate
but also for nearly every category of business. This evi­
Page 50




dence tended to set forth more exactly what had been
developed independently from other data, viz., that the
small enterprise had been appreciably affected by the
business readjustment. As another example: the drop in
net farm income in 1949, coupled with continuing com­
mitments to pay on machinery and land purchased, sug­
gested that demand deposits held by farmers were being
reduced. The 1950 deposit survey affirms this, and, further,
provides a more precise measurement of the reduction.
It is useful to know that in a free market supply will be
“greater than last year'*, but it is still more useful to know
that supply will be “ 10 per cent, or 20 per cent, or 30 per
cent greater than last year”. So with the deposits of
farmers—measurement of the change provides anyone who
uses the data in any connection with a sharper tool—and
every business, every banker, and every prudent individual
weighs present evidence in order to come to some conclu­
sion as to future events.
Also, the surveys enable those interested to explain better
any shifts in deposits from region to region.
The Board of Governors of the Federal Reserve System,
each of the Federal Reserve Banks, many banks and .busi­
ness research organizations, and students—high school and
college level—use the information developed in the surveys.
The survey data are being found useful by an increasing
number of banks as a market research tool, gauging the
volume of deposits in any one of the 11 categories in the
individual bank against the volume available to other banks
in similar economic situations and with similar over-all
deposit volumes. Further, because the rate of turnover
tends to differ among the deposits of various types of hold­
ers, banks have found survey data useful in measuring
their probable gain or loss of deposits and, therefore, they
have found it valuable in formulating their investment
programs.
The question of getting information on a particular sub­
ject usually comes down to consideration of getting all of
the detail that would be useful regardless of effort and
cost, and getting the optimum detail consonant with rea­
sonable effort and cost. The surveys represent compromise
between further detail as to ownership than is now provided
and the effort and cost of providing even more detailed
data. The 11 principal classifications were developed
because the economic factors affecting changes in any one
of these categories tend to be different from the factors
affecting another category. As noted, information provided
by the surveys on deposit ownership will not provide all
of the answers to all of the questions in banking, but it
throws more light on an important area.

TABLE I
DEM AND

D E P O S IT S

A L L B A N K S IN

OF

IN D IV ID U A L S ,

P A R T N E R S H IP S

AND

C O R P O R A T IO N S

E IG H T H F E D E R A L R E S E R V E D IS T R IC T B Y A R E A S
Indexes 1 9 4 1 = 1 0 0
D ec. 31,
1941

D ec. 31,
1945

D ec. 31,
1948

D ec. 31,
1949

1945

1948

1949

$

558.2
137.4
89.4
30.5
29.9

$

891.2
271.0
194.0
74.6
75.6

$1,138.3
323.9
258.8
84.8
91.6

$1,181.4
311.6
264.8
88.0
92.3

160
197
217
245
253

204
236
289
278
306

212
227
296
289
309

Total— Metropolitan A reas.................................

$

845.4

$1,506.4

$1,897.4

$1,938.1

178

224

229

$

$

$

XI
X II
X III

B ast Mississippi’ Tennessee..............................
Kentucky-Indiana......................................... .........

124.5
36.6
92.6
58.3
67.5
132.5
37.9
118.0

$

x

St. Louis O utlyin g...............................................
Louisville O utlying...............................................
N orth Missouri............................................... .........
O zark............................................................................
South Arkansas......................................................

424.8
113.4
319.5
223.0
233.3
415.2
140.9
454.2

298
290
314
386
333
260
398
362

349
333
350
390
366
332
416
404

341
310
345
383
346
313
372
385

Total— Rural A reas..............................................
Total— D istrict.............................................. ..........

$ 667.9
$1,513.3

$2,324.3
$4,262.4

321
241

364
286

348
282

D ollar Am ounts (in millions)
I
II
III
IV

v

VI
V II
V III
IX

St. Louis....................................................................
Louisville.....................................................................
M emphis......................................................................
Little R ock................................................................
Evansville....................................................................

If the timing and extent of the seasonal move­
ment were just the same each year, it would be
possible to compare demand deposit levels in any
one region on a certain date with the same date a
year earlier and get a close measurement as to
whether the region was tending to gain or lose funds
in that period. Actually the timing is not that exact;
the cotton harvest, for example, may be a little
earlier or a little later than usual in any given year.
And also the crop may be larger or smaller than
usual.
This may be illustrated by demand deposit be­
havior in the Eighth District in the past three years.
Private demand deposits at the end of January were
lower than a month earlier in 1948, 1949 and 1950,
but the apparent seasonal drop varied being $180
million, $135 million and $78 million, respectively.
Because of this variation, comparing demand de­
posits on January 31 in each year shows the 1950
level above that of 1948 and only $7 million below
1949. Using December 31 totals shows demand
deposits at the end of 1949 below those at the end of
1948, which in turn were lower than at the close of
1947.
Against the background noted above, the most
likely conclusion to be drawn about district demand
deposit changes over the past year is that the
district as a whole lost a small amount of such
deposits but probably the decline was less than 1 per
cent. This fractional loss reflects in the main the
weakness in farm prices and the greater-thannational-average decline in farm production in 1949.
The demand deposit decline, slight as it was,
probably overstates the decline in total liquid asset
holdings in the Eighth District. Despite lower farm
income, total Eighth District income in 1949 appar­
ently came within 1 per cent of the 1948 amount,
and income after taxes was about the same in both




371.5
106.0
291.0
225.3
224.6
344.2
150.8
427.5

$2,140.9
$3,647.3

434.2
121.7
324.5
227.1
247.0
440.5
157.6
476.7

$2,429.3
$4,326.7

years. Currency holdings evidently dropped a little
and U.S. Government security holdings (outside
banks) went up a little— in both cases, the district
change was in line with the national change.
Time deposits at district member banks, however,
rose about 2 per cent in 1949, in contrast to no
change in such deposits nationally. Increased inter­
est rates paid on time balances in some areas of the
district presumably has led to some shift in funds
from a demand to a time basis.
REGIONAL DEPOSIT SHIFTS

While the district as a whole at the end of 1949
showed little change in demand deposits relative to
a year earlier, there were shifts in funds among the
various areas of the district. The map and Table I
give data showing the extent of such changes among
thirteen district areas. The dates shown in Table I
correspond roughly to the beginning of active par­
ticipation in W orld W ar II for the United States
(December, 1941) ; the deposit peak just after the
close of the war (December, 1945) and the two most
recent year-end dates. Taken together, the map and
table point up the fact that the metropolitan areas
gained demand deposits in 1949 while the rural areas
lost funds— reflecting the developments in farm
income noted earlier.
Another way of emphasizing this is to show
deposit changes by size of bank. Table II groups
the district's 1500 commercial banks into four size
classes— size being determined by the amount of
private demand deposits held in December, 1945.
Of the 1386 banks with less than $5 million in
demand deposits, 1281 are located in the rural areas.
Deposits at banks in these areas were off 4 per cent
from their level at the close of 1948 and each area
showed some loss.
Page 51

DEPOSIT

MOVEMENTS

IN

1949

DEMAND DEPOSITS OF INDIVIDUALS,
PARTNERSHIPS AND CORPORATIONS.
ALL BANKS IN EIGHTH FEDERAL RESERVE
DISTRICT.
BY AREAS

ROMAN NUMERALS INDICATE
AREA. ARABIC NUMERALS
SHOW PER CENT CHANGE
FROM DECEMBER 1 9 4 8
TO DECEMBER 1949.

T A B L E XI
D IS T R IC T D E M A N D D E P O S IT S
B y Size of B ank*
D ec. 31, D ec. 31,
Dollar
(D ollar amounts in millions)
1949
1948
Change
Under $1 million..... .(6 5 2 banks)
$ 407.1
$ 435.5
$— 28.4
$ l - $ 5 million................ (734 banks)
1,694.6
1,765.3
— 70.7
$ 5 -$ 1 0 million..............( 6 6 banks)
495.9
499.2
— 3.3
$10 million and over..( 37 banks)
1,664.8
1,626.7
+ 3 8 .1
E IG H T H

Total District

$4,262.4

$4,326.7

$— 64.3

Percent
Change
--6 .5 %
— 4.0
— 0.7
+ 2 .3
— 1.5

*Size of the reporting bank as of December, 1945 is used in grouping
the banks according to volume of deposits in order to improve the com ­
parisons of one year to the other, despite the fact that some shifting into
different groups has taken place.
The number of banks will vary slightly from the customary count of
bank facilities because branch offices and the Arkansas exchange offices
are included in the deposit survey tabulations.

Page 52




Rural banks received the lion’s share of the de­
mand deposit growth in the war period. In the first
two postwar years, they received diminishing shares
of the expansion in such deposits and, in the last
two years, suffered losses in demand deposit volume.
In the rural areas, the percentage declines in 1949
were greater than in 1948 when the decreases ranged
from 2 to 4 per cent. The area of greatest loss in
1949, Area X II, showed an 11 percent decline for the
year.

Some of the variations in the loss of demand
deposits by the banks in the eight rural areas can be
explained, in part, by the different types of agricul­
ture practiced in each and by the variation in relative
importance of farm income and labor income to total
income among the eight areas.
The Delta region, heavily dependent upon cotton
production, showed a 6 percent loss in demand de­
posits for the year 1949 as did the South Arkansas
area. A 5 percent decline in area X III (amounting
to slightly over $22 million in deposits) was occa­
sioned primarily by losses at the smaller banks in
western Kentucky. The small banks in Indiana lost
some demand deposits but generally fared better
than those in western Kentucky. The shrinkage in
demand deposits in area V II was likewise attributa­
ble to losses at banks under $5 million in deposit
size. The banks in the St. Louis Outlying region
and the Ozark region reported relatively less decline
than the other rural areas, reflecting less dependence
upon one crop and probably somewhat greater diver­
sification of industry. Northwest Missouri fared the
best of all the rural areas, being off less than 2 per
cent. Agricultural income in these counties, em­
phasizing livestock rather than crop production,
suffered less than in the Delta region.
In contrast with the loss of demand deposits in
these rural areas, the metropolitan areas (I through
V ) gained 2 per cent during the year. The growth
in deposits at the banks in the metropolitan areas—
for the most part, the larger banks— reflects the
steadiness of noncorporate business incomes and
wage and salary incomes in 1949 in comparison with
these incomes in 1948. For the country as a whole,
despite the recession in the first half of 1949, total
wages and salaries paid in the year remained virtu­
ally unchanged from 1948. Likewise, business, pro­
fessional and rental income of individuals showed
very little decline in 1949.
Corporate profits after taxes were off in 1949, but
corporate bank balances might have been expected
to stay up despite this, since requirements that would
absorb liquid funds were not so large. For example,
adjustments could be made in inventory valuation
and in actual physical inventory held. Also tax
liabilities were smaller.
While the income factors pointed generally to
gains in demand balances at city banks, and such
occurred, the differences in income-expenditure pat­
terns led to variation in demand deposit growth in
the district’s five urban centers. Gains were most
pronounced at St. Louis, Little Rock and Memphis.
Evansville showed a small increase and Louisville
a decrease, reflecting the greater impact of the 1949




DEMAND
DEPOSITS
EIGHTH DISTRICT BANKS

AT

OWNERSHIP

PATTERN,

1946-1950

Billions of Dollars
5

Billions of Dollars

MANUFACTURING
AND MINING

OTHER NONFINANCIAL
FINANCIAL (Including trust
funds and foreign)
NONPROFIT
PERSONAL * FARMERS

PERSONAL * OTHER
THAN FARMERS

FEB.
1947

JAN.
1948

JAN.
1949

downturn in those cities’ industries and employ­
ment.
SHIFTS IN DEPOSIT OW N ERSH IP

Table III presents data on demand deposit owner­
ship in the Eighth District. Such changes as
occurred bear out the broad analysis noted earlier.
Farmers’ deposits were down as were those of non­
financial business as a group. The major declines
were in public utility and trade balances. Financial
business accounts were up as were those of individu­
als other than farmers. Trust fund balances de­
creased but those of nonprofit organizations rose
somewhat.
TABLE

III

O W N E R S H IP O F D E M A N D D E P O S IT S O F IN D IV ID U A L S
P A R T N E R S H IP S A N D C O R P O R A T IO N S
Eighth Federal Reserve District
(D ollar amounts
in millions)

Change in
Jan. 31, 1950
Jan. 31, 1949 R
Ownership
Am ount Percent Am ount Percent Am ount Percent

Total Business ........... $1,889.2
Nonfinancial ........... 1,647.0
Manufacturing and
M ining ................ .
528.3
Public Utilities......
143.1
Trade .......................
747.9
Other nonfinancial
227.7
Financial ..................
242.2
Insurance Companies 66.1
A ll Other Financial
176.1
Trust Funds of banks
50.5

Other

............................

1,489.0

4 5 .2 %
39.4

$1,983.7
1,763.9

4 7 .3 %
42.1

12.6
3.4
17.9
5.5
5.8
1.6
4.2
1.2
**

535.9
179.6
821.2
227.2
219.8
58.0
161.8
54.8

12.8
4.3
19.6
5.4
5.2
1.4
3.8
1.3

3.7
49.9
14.3
35.6

154.8
1,998.3
622.0
1,376.3

3.7
47.7
14.9
32.8

$— 94.5 —
— 116.9 —
—
—
—

7.6
36.5
73.3
0.5
22.4
8.1
14.3
—
4.3
0.1
2.3
89.2
— 23.5
112.7
—

7.2

5«
7

—1
— 20
— 9
*
10
14
9
— 8

—

1
4
4
8
#

R — Revised
*— Less than 0 .5 %
* * — Less than 0 .0 5 %

Page 53

to business accounts in banks in the sanie areas. The
1950 survey points to a different conclusion. Farm­
ers’ deposits at the rural banks declined, but so did
business balances— the latter by a greater percent­
age and more dollars than those of farmers. In
other words, the flow of funds from the rural regions
was general and not confined to farmers.
Corporate Deposits— Demand balances, due to cor­
porations were off slightly at* the end of January,
1950 relative to a year earlier. Manufacturing and
mining corporation accounts were up 1 per cent and
miscellaneous business deposits (mainly those of
service industries) were up 16 per cent. Corpora­
tions doing a wholesale or retail trade business
experienced a 10 per cent decline, and public utility
balances were off 15 per cent-—the latter probably
reflecting the very extensive building program
underway by these industries. Demand deposits of
financial business corporations were up appreciably.

Farmers’ Deposits— The decline in farmers’ bal­
ances in the year was more moderate than the drop
in farm income would indicate— in fact, was smaller
in per cent and in dollars than the decrease a year
earlier. It was concentrated in the small banks
(under $1 million in demand deposits).
On the basis of such evidence as the survey de­
velops on ownership by size of account, the decline
in farmers’ demand balances seems to indicate that
the smaller owner-operator has suffered more from
the farm income decline than has the larger-scale
operator. Or perhaps the income decrease has hit
larger, medium, and small farm operators with about
equal intensity, but the larger operator has been
better able to balance his income loss with curtailed
expenditures.
In 1949, the ownership survey indicated that most
of the funds transferred from farmers’ and other
personal accounts in the rural banks in 1948 shifted

DEMAND

DEPOSITS AT EIGHTH DISTRICT BANKS
MAJOR

JANUARY

TOTAL

$138

CHANGES

31, 1950

COMPARED

INCREASE
MILLION




O W N E R S H IP
WITH

JANUARY

TOTAL

$145
NET

Page 54

IN

DECREASE $7 MILLION

31, 1949

DECREASE
MILLION

In contrast to this experience, unincorporated
businesses, in general, showed demand deposit de­
clines—-January, 1950 against January, 1949— the
total being off about 9 per cent. Most of this drop
was in the rural banks, reflecting some of the factors
noted earlier.
Individuals’ Deposits— Demand deposits of indi­
viduals (other than farmers) increased about $113
million in the year ending January 31, 1950, about
half in the rural banks and half in the urban institu­
tions. W ith nonfarm personal income up in 1949,
some modest growth in such accounts was to be ex­
pected.

TABLE IV
O W N E R S H I P P A T T E R N F O R D E M A N D D E P O S I T S O P $1000
A N D O V E R IN B A N K S W I T H D E M A N D D E P O S IT S O F
L E S S T H A N $1 M I L L I O N
January 31, 1950
Percentage Distribution
Area Area
Area D is V I V I I I X I I I trict
T otal Business............................ ............................................ 26.3
16.3
24.2
15.5
Nonfinancial Business...... .............................................
M anufacturing and M in in g..............................
3.3
0.6
Public Utilities........................... ...................................
1.6
0.5
Trade....................... .........................................................
16.7
9.0
Other Nonfinancial ..................................................
2.6
5.4
Financial B usiness...................... ...................................
2.1
0.8
Insurance Companies .............................................
0.9
0.4
A ll Other Financial....................................................
1.2
0.4
Trust funds..........................................................................................................
Nonprofit.......... ............... ............... .>...... ......................... *....
2.5
.0.6
Personal...................................................................................... 71.2 83.1
Farm ers..............„ . . . . . . ^ ..................................................... 31.8 4 4:6
O ther....................................................................................... 39.4 38.5
Percent of total classified...................................................

76

75

21.1
2 0.4
4.5
1.2
12.8
1.9
0.7
0.1
0.6
0.3
3.8
74.8
32.3
42.5
71

24.1
22.6
4.7
1.3
13.4
3.2
1.5
0.4
1.1
0.1
4.3
71.5
28.9
42.6
76

REGION AL DIFFERENCES IN OW N ERSH IP

The pattern of demand deposit ownership in the
Eighth District differs appreciably from that for the
country as a whole. For example, business balances
in Eighth District banks represent less than half of
private demand deposits in contrast to almost 60 per
cent of the total for the nation. Generally speaking,
all types of business deposits, except those of trade
establishments, are relatively more important in the
national deposit structure than in that of the district.
Farmers’ deposits here are about one-seventh of all
demand deposits while nationally they are less than
10 per cent of the total.
Ownership patterns also vary among the different
regions of this district and among the different sizeclasses of banks. T o get a complete picture of own­
ership in each of the thirteen regions of the district
and for each size-group of banks in each region, how­
ever, would require a much more extensive sample of
reporting banks than currently used. But it is pos­
sible to show some data on ownership by size of
bank for a few regions.
Tables IV and V present ownership patterns for
some of the rural areas for the two smaller sizeclasses of banks. Not all private demand deposits
are classified as to ownership in the surveys. The
smallest banks (less than $1 million in demand
deposits) classify by owner-type all balances of
$1000 or more. The next size-class ($l-$5 million)
classifies balances above $3000. The tables show the
ownership pattern just for the deposits classified.




TABLE V
O W N E R S H I P P A T T E R N F O R D E M A N D D E P O S I T S O F $3000
A N D O V E R IN B A N K S W I T H D E M A N D D E P O S IT S O F
$ l-$ 5 M I L L I O N
January 31, 1950
Percentage Distribution
Area Area Area Area Area Area
DisV IV III IX
X X I X III
trict
Total Business----------- ------------------ 4 6.2 36.8 41.8
42.5 40.3
39.0 44.7
Nonfinancial B usin ess..............42.6
33.3
38.6 39.8 35*3
35.9 39.9
M anufacturing and M ining. 10.6
6.0
6.2 17.0 3 .6
7.1
8.3
Public Utilities....................... .. 3.9
2.1
5.3
2 .0 3.4
2 .4
3.1
T rade............................................2 0 .8
19.1
23 .9 18.8 2 4.3
19.6 22.0
Other nonfin ancial............... 7.3
6.1
3.2
2.0 4.0
6.8
6.5
4 .8
Financial Business.................... - 3 .6
3.5
3.2
2.7 5.0
3.1
0.4
0 .6
0.9
0.4
0.1 0.2
0.2
Insurance Companies...... .
4.4
A ll Other Financial............... 3.0 2.6
2.8
2.6 4 .8
2.9
0.3
T rust funds........................................... 0.2
0.2
....
0.1 0.1
0.7
3.4
5.9
1.9
3.5 2.7
2.1
Nonprofit............................................... 3.6
Personal...................... ...........................50.0
57.1
56.3 53.9 56.9
58.2 51.6
Farm ers............................................. 16.0
2 3 .6
19.6 10.1 21.3
2 4 .9 17.4
Other............................ .....................34.0
33.5
36.7 4 3.8 3 5 .6
33.3 34.2
Percent of total classified...............59

53

49

53

68

47

59

It would be more useful to have this data for all
areas and all size-classes and with all deposits classi­
fied. But the patterns given in the table, even with
their limitations, should be more useful to banks in
general than totals for the entire district or for the
nation as a whole. W ith such patterns, the indi­
vidual bank can more closely compare its pattern
against the average for banks of the same size-class
in the same area. In future surveys, more effort will
be devoted to building up these regional patterns by
size of bank.
W m. J. Abbott, Jr.
Norma B. 'Lynch

Page 55

Member Bank Earnings
The year 1949 will be entered in the pages of
banking history as a very profitable year for Eighth
District member banks. Gross earnings (before
payment of any expenses) reached an all-time high.
Operating costs also reached their peak but the
rate of increase was smaller and banks had left
larger net current earnings than before. After pay­
ing income taxes, setting up reserves for bad debt
losses on loans, and taking care of charge-offs (or
recoveries), they still had left a larger amount as
net profits than in 1948, although not as much as
in the peak year 1946.
The all-time high in gross earnings of $113 million
reached in 1949 topped by $6.9 million the previous
peak reached in 1948.1 It was more expensive to
operate a bank in 1949 than in 1948 and $3.2 million,
or 46 per cent of the increase in gross earnings, was
absorbed in higher operating costs. But despite
increased costs, net current earnings were larger
than in 1948— by $3.7 million-^-and, when nonoperat­
ing income was added in, profits before income taxes
showed an increase of $5.4 million. The banks paid
$1.4 million more in income taxes and thus finished
the year with net profits after taxes that were up
$4.0 million from 1948.
The chart shows total earnings, total expenses,
net current earnings, and net profits for the period
1939 through 1949. Total earnings and expenses
both climbed during this period but expenses in­
creased by a smaller amount. As a result, net
current earnings show a steady gain. Profits (after
net charge-offs or recoveries, income taxes and
reserves) increased through 1946, dipped in the next
two years but moved up again in 1949.
Changes in Earning Assets—-Total assets held
by Eighth District member banks increased each
year from 1939 through 1946. After declining some­
what in 1947, they rose again in 1948. On the basis
of the average of the three call reports used in this
study, total assets in 1949 apparently were slightly
smaller than in 1948—$5,067 million as against
$5,085 million.
Earnings of banks depend upon the amount of
total assets, the proportion of these assets used to
produce income, and the rate of return earned by
1 F i g u r e s and percentages used throughout this article are taken from
the study of member bank operating ratios, an annual report issued by
this bank. In computing the aggregates and the ratios, the asset and
liability items used represent averages of figures from the call reports of
December 31, 1948, June 30, 1949 and Novem ber 1, 1949. learnings and
expense items are those reported for the calendar year 1949. Ratios are
arithmetic averages of individual ratios of 492 member banks grouped in
eight deposit-size classes. Ratios computed in this way differ in some
instances from ratios computed from aggregate dollar amounts. A copy
of the study may be had by writing the Research Department.

Page 56




them. During the war years Eighth District mem­
ber banks, like other banks, invested heavily in
Government securities. By 1946 more than half
of their total assets was held in this form. While
these holdings were increasing, the proportion of
total assets in loans was shrinking, and at the low
point in 1945 only one-eighth of the banks’ assets
was in loans. Since 1939, cash assets have repre­
sented a fairly high proportion of the total. At
their peak in 1942 they accounted for 39 per cent
of member bank assets.
Since the end of the war, there has been a
pronounced shift in the proportion of Governments,
loans, and cash assets held by the district’s member
banks. Loan demand increased steadily and at the
same time the Treasury’s debt retirement program
reduced the volume of securities eligible for bank
investment. As a result, the proportion of assets
held in the form of loans increased but the propor­
tion held as investments decreased. There was also
a shrinkage in cash assets relative to the total.
The shift continued in 1949. Last year the aver­
age Eighth District member bank had 42 per cent
of its assets in Governments, 7 per cent in other
securities, and 25 per cent in loans. Cash assets
represented 25 per cent of the total, and miscel­
laneous items accounted for the remaining 1 per cent.

SELECTED
EIG H TH

EARNING
D IS T R IC T

REPORT ITEMS

M EM B E R

BANKS

1 9 3 9 -1 9 4 9

Millions of Dollars

Millions of Dollars

PERCENTAGE DISTRIBUTION OF ASSETS
BY DEPOSIT SIZE GROUPS
EIGHTH

D IS T R IC T

MEMBER BANKS

1949
Per Cent

Per Cent

1

3

2

4

6

5

DEPOSIT

mn
B SS
B

GOVT. SECURITIES
OTHER SECURITIES

MWM
LOANS

E3

CAS*

□

OTHER

ASSETS

7
S IZ E

8
GROUPS

UNDER
$ 5 0 0 ,0 0 0
i.
$ 5 0 0 ,0 0 0
TO *1
1
$1 MILLION
TO $2
4
*2 MILLION
TO $5
& *5 MILLION
TO $10
6 $10 MILLION
TO $25
7. $25 MILLION
TO $50
. OVER $ 5 0 MILLION
9.
DISTRICT

2
.

8

9

MILLION
MILLION
MILLION
MILLION
MILLION
MILLION

ASSETS

On the average, banks in all deposit-size groups
had a higher proportion of total assets in the form
of earning assets in 1949 than in 1948, although
the proportion varied among the different depositsize groups. Banks with the largest proportion of
total assets held as earning assets were those in the
group with deposits between $10 million and $25
million, and those with the smallest proportion of
earning assets were in the group having less than
$500,000 in deposits.
All groups of banks, except one, had a smaller
proportion of total assets in the form of Government
securities and a larger proportion in loans to cus­
tomers in 1949 than in 1948. The exception was
the group of banks with average deposits of more
than $50 million; these increased their share of
total assets held in Government securities and
reduced the share held in loans. Despite this shift
in proportions, in 1949 the large banks still held
less of their total assets in Governments and more
in loans than any other group except the very small
banks.
In dollar amount, security holdings last year were
roughly twice as large as loan volume, but earn­
ings from Governments provided less income than
that from loans. The average interest rate on




Government securities tends to be lower than the
average rate of return on other securities, which
in turn is lower than it is on loans. The average
rate earned on Governments last year was 1.8 per
cent; on other securities it was 2.7 per cent; while
on loans the return averaged 5.5 per cent.
Because of the higher rate of return, loans con­
tributed slightly more than one-half of total earnings
in 1949, although they represented only one-fourth
of total assets. The lower rate of return on Gov­
ernments and other securities resulted in just 37
per cent of total earnings coming from such assets.
Earnings from service charges, income from trust
departments and real estate divisions, and all other
earnings accounted for 11 per cent of total earnings
in 1949.
Disposition of Earnings — Operating expenses
absorb the largest proportion of total earnings of
district member banks. Last year they totaled $3.2
million more than in 1948— but because earnings
increased more, operating costs took a slightly
smaller proportion of total income.
Out of each dollar of earnings last year, 60 cents
was required to operate the banks. Of this amount,
29 cents was used to pay salaries and wages to offi­
cers and employees— a slightly higher proportion
than in 1948.
Interest paid on time deposits took another 8
cents— about the same as in 1948. In dollar amount,
interest payments rose last year as a number of
banks liberalized their policies relative to time
deposits. In most size-groups, however, the increase
was smaller than the gain in gross earnings. The
only exceptions were banks in the two groups with
average deposits under $1 million and thpse in the
$10 million to $25 million group. In these instances,
time deposit interest payments took a larger pro­
portion of gross earnings last year than in 1948.
The remaining 23 cents of operating expense per
dollar of gross earnings covered fees to directors
and committee members, interest on borrowed
money, taxes other than those on income, recurring
depreciation, and miscellaneous operating expenses.
These costs took a smaller part of total income last
year in all groups of banks except those with deposits
of $500,000 to $1 million.
After paying operating expenses, the district’s
member banks had left, as net current earnings,
almost 40 cents out of each dollar of grass earnings.
This was a little better than in 1948. Banks with
average deposits of $1 million to $10 million con­
verted more of their gross into net current earnings
than those in other size-groups did. On the other
hand, banks with deposits under $500,000 showed
Page 57

SOURCES AND DISPOSITION OF THE INCOME DOLLAR
OF EIGHTH DISTRICT MEMBER BANKS IN 1949
HOW

IT

WAS

OBTAINED

the smallest proportion of total earnings after
operating expenses. This group of very small banks,
however, was successful in making major reductions
in operating costs during 1949.
When measured against total assets, net current
earnings of district member banks increased from
0.94 per cent in 1948 to 1.02 per cent in 1949. Com­
pared with total capital accounts, they were off
slightly— from 16.0 per cent to 15.9 per cent in 1949
— but this decline reflected an increase in capital
accounts.
Banks1 net current earnings, of course, are not
net profits available to stockholders. Out of these
earnings banks make charge-offs for loans and
securities (or recoveries, as the case may be), set
aside valuation reserves on loans, and pay income
taxes. Last year these deductions were equal to
12 cents of each dollar of total earnings. Chargeoffs took nearly 5 cents— as against almost 6 cents
the year before—-and taxes on net income absorbed
a little more than 7 cents of each dollar of gross
earnings. Taxes took fractionally more of each
Page 58




HOW

IT WAS USED

dollar earned in 1949 than in 1948* but the 1948
figure was lower than it normally would have been
due to the large reserves established in that year.
On the surface, the 5 per cent charge-off rate in
1949 and the 6 per cent rate in 1948 give the impres­
sion of substantial losses in these two years. Actually
this was not the case. The high percentages pri­
marily reflect a change in accounting procedure in
setting up valuation reserves on loans.
For years, banks were permitted by Federal tax
law to set up “ reasonable reserves” for bad debt
losses on loans. It was not until December, 1947,
when “ reasonableness” was more clearly defined,
that interest in this method of tax accounting became
active. Under the accounting method used, trans­
fers to valuation reserves on loans are included with
charge-offs and transfers from the account are
included with recoveries. In 1949, district banks
increased reserves for bad debt losses by $4 million.
The following table shows additions to valuation
reserves by deposit-size groups for the years 1948 •
and 1949.

A D D IT IO N S TO V A L U A T IO N RESERVES ON LOANS
EIG H TH DISTRICT MEMBER
BANKS
1948-1949
(Thousands of Dollars)
B anks with A verage D e p o sits1
$ 1,000,000 or less...... ..............................................................
$1,000,000 to $ 2,000,000.................... ................... ..........
$2,000,000 to $ 5 ,000,000............ . ............................ .........
$5,000,000 to $ 1 0,000 ,000 ................................................ .
$10,000,000 to $ 2 5,000 ,000................................................
$25,000,000 to $ 50,000 ,000......................... .....................
$50,000,000 and over.................. .....................................
A ll District M em ber B anks................................... .........

1948
14.8
103.5
390.2
531.3
626.0
537.2
3,583.6
$5,786.6
$

1949
10.0
112.7
324.7
353.3
428.2
445.4
2,376.2
$4,050.5

$

1

Deposits were averaged from three call reports made on December 31,
1948, June 30, 1949* and N ovem ber 1, 1949.

After paying operating expenses and income taxes,
making charge-offs on loans, and setting aside
reserves, a little less than 28 cents out of each
dollar of gross earnings remained as net profit. This
represented earnings of 10.9 per cent on total capital
accounts and 0.70 per cent on total assets last year.
O f this amount, 8 cents was paid to stockholders
as dividends while 20 cents was plowed back into
the capital structures of the banks.
The policy of retaining a large part of net profits
in order to strengthen capital structures has been

followed rather consistently by banks in the district.
The retained portion of profits last year was equal
to 7.9 per cent of total capital accounts. This
strengthening of the capital structure increased the
ratio of capital accounts to total deposits from 6.5
per cent to 7.3 per cent. The ratio hks been as
high as 15.5 per cent in 1939 and as low as 6.0 per
cent in 1946.
Earnings in future years may be higher but 1949
will be remembered by Eighth District bankers as
a very profitable year. The banks paid substantial
income taxes, more than met increased operating
costs, and set aside reserves for possible losses on
loans. 1949 will also be remembered as a good year
for stockholders who received their usual dividend,
and for depositors whose funds were backed by
increased capital acounts.
E. Francis De Vos
Marie Wahlig

Survey of Current Conditions
The economic outlook for the nation improved
with the settlement of the coal strike and the resump­
tion of operations in that industry. As fuel supplies
are restored, production schedules in industries that
had been forced to cut back operations are being
restored to levels approximating those which pre­
vailed prior to the strike. In some instances, notably
in the steel industry, the recovery has been sizable.
Nevertheless, it is likely that several months of highlevel activity will be required to compensate for the
production that was lost during the strike.
In the Eighth District, this recovery problem prob­
ably is less serious than it is in many other parts of
the country—principally because cutbacks were less
abrupt here. Even so, industry in the district no
doubt will feel the effects of the strike for some
time. This is particularly true where operations are
dependent upon steel shapes that are in limited
supply.
The setback in steel and other heavy goods indus­
tries pretty much obscured the fact that total pro­
duction of nondurables in February was close to the
all-time peak for these industries. The value of new
orders received by manufacturers of nondurables in
January was about 4 per cent larger than in Decem­
ber and a little larger than in January, 1949. The
backlog of unfilled orders also moved up in January.
In the heavy industries, too, bookings increased in




January. In part, this reflected a more favorable
near-term outlook for business, but much of the busi­
ness was placed in anticipation of probable shortages
resulting from the coal strike. The total value of
new orders received by manufacturers in January
was about $1.5 billion more than the value of sales
during the month; in December as well as in January
last year, sales were larger than new orders.
Employment in some manufacturing industries
dropped in February, but total nonfarm employ­
ment held at the January level, according to the
U. S. Bureau of the Census, and was larger than it
was last February. It is becoming increasingly
apparent, however, that even the present high level
of economic activity is not sufficient to provide work
PRICES
W H O L E S A L E P R IC E S IN T H E U N IT E D S T A T E S
Bureau of Labor
F eb., *50
compared with
Statistics
F e b ., 50 Jan., ’ 50 F eb., *49
Jan., ’ 50
(1926 = 100)
F eb ., *49
+ 0 .7 %
A ll Commodities.. ....152.7
151.6
158.1
— 3 .4 %
155.3
168.3
+ 2.4
— 5.5
Farm Products ....159.1
— 2.9
154.7
161.5
+ 1.4
Foods ........... .. ....156.8
— 3.9
145.8
151.8
+ 0.1
Other ............. .... ,...145.9
R E T A IL F O O D
Bureau of Labor
Feb. 15, Jan. 15, Feb. 15,
Statistics
1950
1949
1950
(1 9 3 5 -3 9 = 1 0 0 )
196.0
199.7
U . S. (51 cities).. ,...194.8
204.6
207.1
St. Louis........... ,,..202.9
197.2
196.4
Little R o c k ...... ,...194.5
189.2
183.7
Louisville ......... ,...183.1
203.1
212.2
Memphis ...........

Jan.
—
—
—
—
—

Feb. 15, *50
compared with
15, *50 Feb. 15, '4 9
0 .6 %
— 2 .5 %
0.8
— 2.0
1.0
— 1.4
0.3
— 3.2
0.5
—- 4.7

Page 59

for all those who are seeking jobs. In February,
total employment held at the January level but the
number of unemployed persons increased by some
200,000, reflecting an increase of that number in the
labor force. As a result, total unemployment
climbed to the 4.7 million mark, which was the
highest it has been since early in 1942.
There apparently was a rise in unemployment in
this region in February, according to the available
data. The number of unemployment compensation
claims in the seven district states was larger than it
was in January or in February of last year. Three
of the nation’s “ critical areas” are in this district—
Mount Vernon, Grab Orchard and Cairo, Illinois.
However, this condition is not general in the district.
In St. Louis, the claims load declined slightly in
February.
Consumers in the nation and in this district con­
tinue to maintain their expenditures at a high level.
Total retail sales in the nation were larger in January
than they were a year ago. The increase was due
almost entirely to a gain in automobile sales which
totaled only a little below the peak month last year,
on a seasonally adjusted basis. Sales of other items
in January again were less than in the same month
a year earlier. There has been an upward trend in
consumers' expenditures for goods other than auto­
mobiles since the third quarter of 1949, but a sizable
amount of total retail sales continues to be concen­
trated in automobiles.
Personal income receipts in January were up
about $1 billion, on a seasonally adjusted annual
basis, even excluding the G. L insurance refunds
received during the month. Wage and salary re­
ceipts were about the same as in December but pro­
prietors* and rental income increased $2.7 billion on
an annual basis.
EM PLOYM EN T

There was little change in employment between
mid-January and mid-February in either the nation
or this district. A small gain in factory jobs about
offset seasonal losses in nonmanufacturing jobs.
Unemployment moved upward, however, as the mid­
term school graduates began to hunt work.
Employment conditions, except in agriculture,
W H O LE SA LIN G
Line of Commodities
N et Sales
D ata furnished by
February, 1950
Bureau of Census,
compared with
Feb.,’ 49
Jan.,’ 50
U . S. Dept, of Commerce *
Autom otive Supplies ................................
— 5%
— 5%
— 6
+ 6
Drugs and Chemicals................................
- 0- 0D ry Goods ....................................................
— 2
— 1
Groceries ........................................................
— 8
Hardware ........................................................
4
— 3
Tobacco and its Products......................
— 10
Miscellaneous ...............................................
— 1
— 7%
**T o ta l A ll Lines..................................
+ 2%
"Prelim inary.
**Includes certain items not listed above.

__

Page 60




Stocks
Feb. 28, ’ 50
comp, with
Feb. 28, *49
— 20 %
— 3
+ 6
— 1
— 8
— 6
— 15
— 4%

were generally more favorable this February than a
year ago. At that time there was a substantial drop
in nonagricultural employment which was accom­
panied by a sharp increase in unemployment due to
nonseasonal industrial cutbacks. This year employ­
ment remained relatively stable between January
and February and the rise in unemployment was
much less than last year. On the other hand, the
number of workers on the farms expanded less than
last year and was well below the 1949 level.
The mid-February estimates, however, did not
fully reflect the impact of the coal strike on employ­
ment in other industries. Subsequently, there were
some scattered layoffs throughout the Eighth Dis­
trict, but with the end of the strike most of the
affected workers were recalled.
The upward trend in unemployment is causing
increasing concern. Nationally, the February un­
employment rate (the proportion of the labor force
seeking work) was higher than at any time since
early 1942. Although more people were working in
nonagricultural industries this February than last,
unemployment was almost half again as large as a
year ago since the number of new entrants into the
labor market exceeded the number of new jobs.
Unemployment apparently increased in the dis­
trict states in February, as measured by the change
in the volume of unemployment compensation claim­
ants. In the seven district states, the claims load
during the first half of the month was about 4 per
cent higher than in January and 2 per cent higher
than a year ago. The increase from January was
considerably larger than that for the nation, but
relative to the claims load a year ago the increase
was smaller in the district states than nationally.
Nonagricultural employment in the five major
district cities was below the year-ago levels in Jan­
uary. The declines ranged from 1 per cent in
Memphis and Little Rock to 5 per cent in Louis­
ville, with St. Louis off 2 per cent and Evansville
4 per cent. Most of the drop was in manufactur­
ing but other industries also employed fewer work­
ers.
Manufacturing employment was off in all the
major district cities except Little Rock, where there
was a minor gain from January, 1949. Memphis
had the smallest loss (2 per cent), followed by St.
Louis and Louisville (5 per cent) and Evansville
(8 per cent).
INDUSTRY

The level of industrial activity in the district
in February was little changed from that of January.
Construction outlays continued to be the leading
factor of support. Coal production remained at

about the low January level for most of February
and became even more acute when the Progressive
Mine Workers went on strike. They had been sup­
plying a good portion of the fuel requirements,
particularly of the St. Louis area. Basic steel out­
put, not particularly hampered by coal shortages
in this area, was at a fairly high level but, due to
maintenance shutdowns, averaged slightly below
the January rate. Basic lumber production, upheld
by construction activity, increased over January.
Manufacturing production, in the aggregate, was
lower than in the previous month but on a daily
average basis activity showed a slight increase.
Total electric power consumption by manufac­
turers in the district's leading industrial areas was
3 per cent below the January level but on a daily
average basis showed an 8 per cent increase. Aver­
age consumption in each of the reporting cities
showed gains over January, ranging from 2 per cent
in Evansville to 11 per cent in Little Rock. Com­
pared to a year ago, total consumption was up 5
per cent but Evansville and Louisville reported
decreases, the latter being only slight.
Manufacturing—Aggregate output of the district’s
manufacturing plants in February probably was
lower than in January because of the shorter work
month. However, the rate of activity remained
high, apparently slightly higher than the January
level. In the case of the coal shortage, the dis­
trict’s operations were affected less than those in
many of the nation’s other manufacturing areas.
Steel— Basic steel operations in the St. Louis area
in February were not particularly affected by the
coal strike which curtailed production in most of
the nation’s steel centers. The slight drop in per
cent of capacity operations in this area was due
to shutdowns for maintenance and relining of sev­
eral of the area’s open hearth furnaces. Operations
were scheduled at 76 per cent of capacity, three
points lower than in January, and four points below
February, 1949. Demand for sheet steel climbed as
outside consumers sought supplies to replace those
curtailed elsewhere by the coal shortage.
Lumber—W ith the demand for all kinds of lumber
continuing strong, the district’s lumber industry
in February operated at a slightly higher level
than in the previous month and considerably higher
than a year ago.
Southern pine production in February averaged
5 per cent higher than in January, and operations
of reporting southern hardwood producers were
up 3 per cent— to 80 per cent of capacity. Both
hardwood and pine operations were nearly 16 per
cent higher than a year ago.




Whiskey—At the end of February, 32 of Ken­
tucky’s 60 distilleries were in operation. This was
three fewer than a month ago and seven less than
a year earlier. There has been relatively little
change in output for the past five months. Opera­
tions have been held at a reduced rate primarily
because of increased inventories in warehouses.
Whiskey production in Kentucky in January
totaled 6.2 million tax gallons, a 5 per cent decrease
compared with the 6.5 million gallon output in
December, but 26 per cent lower than the 8.3 mil­
lion gallons produced in January, 1949. Nationally
output was not quite 4 per cent below that o f the
previous month, but the year-to-year 4rpp was the
same as in Kentucky.
Shoes— District shoe production in January
totaled 7.9 million pairs, according to preliminary
estimates. This was 2 per cent lower than the 8.1
million pairs produced in December and only 1 per
cent below the January, 1949 output. Production
in the nation as a whole fared somewhat better.
Output in February was estimated at 38 million
C O N S T R U C T IO N
B U IL D IN G PERMITS
Month ci February

N ew Construction
N um ber
(C ost in
Cost
thousands)
1950 1949
1950
1949
61
12
Evansville ..... ...
$ 190 $ 144
83
59
624
Little Rock... ...
1,038
1,091
Louisville ..... ... 129 162
733
507
...1,795
2,624
1,285
... 243
153
2,448
1,273
Feb. Totals.,2,311 893
$4,473
$6,977
$5,885
707
Jan. Totals. ...1,661
$2,723

Repairs, etc.
N um ber
Cost
1950 1949
1950
1949
~ 4 3 ~57
30
$
59 $
197 147
159
81
54
57
40
63
116 134
176
78
171
168
473
1,038
581 563
$1,290
$ 907
480 445
$ 958 $ 640

IN D U S T R Y

C O N S U M P T IO N O F E L E C T R IC IT Y *
F eb.,
Jan.,
F eb.,
F eb ., 1950
( K .W .H .
1950
1950
1949
compared with
K .W . H .
in thousands)
K .W . H .
K .W . H .
Jan., *50
Feb., ’ 49
Evansville .......
12,535
11,949
— 2%
+ 3%
Little Rock ... ........ 5,227
5,210
4 ,768
- 0 +10
69,925
Louisville ............. .. 68,853
£ 9,4 3 2
— 2
— 1
Memphis .......... ....... 27,676
28,595
25,722
— 3
+ 8
6,389
Pine Bluff ..... ........ 6.157
4,669
— 4
+32
80,221
St. L o u i s ..........
— 3
+12
69,629
186,169
Totals .......... ....... 198,367
202,875
— 2%
+ 7%
* Selected industrial customers.

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

F O R 25 R A I L R O A D S A T S T . L O U I S
First N in e D ays
Feb., ’ 50
Jan. ,* 5 0 F e b ., *49 M a r., *50 M a r., *49 2 m o 9.’ S0
2 m os.v
49
95,531
99,462
102,274
31,542
194,993
210,329
33,216
Source: Terminal Railroad Association of St. Louis.

C R U D E O IL
(I n thousands
o ! bbls.)
Arkansas ......
Indiana ........... .........
Kentucky ...... _____
.......
Total ..... ..

P R O D U C T IO N — D A IL Y

Feb.,
1950
80.0
27.0
25.2
312.5

Jan.,
1950
77.2
178.7
27.7
26.5
310.1

Feb.,
X949
82.7
176.9

22.8

23.6
306.0

AVERAGE
February, 1950
compared with
Jan., 1950 F e b ., 1949
+ 4%
— 3%
+ 1
+ 2
— 3
+18
— 5
+ 7
+ 1%
+ 2%

Page 61

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

IN D E X

F eb., '50

Unadjusted
Jan., ’ 50

Feb., ’ 49

Feb., ’ 50

57*

105*

165

50*

Adjusted___________
Jan., ’ 50
Feb., ’49
90*

144

SH O E P R O D U C T IO N IN D E X
1935-39 = 100
Unadjusted
Adjusted_______________
Jan., ’ 50
D ec., ’ 49
Jan., ’ 49
Jan., ’ 50
D ec., ’ 49
Jan., ’ 49
152
154
160 R
149
158 R
157 R
* Preliminary.
R — R evised..

pairs, 3 per cent above the December total and 12
per cent higher than in January, 1949.
Meat Packing—Meat packing operations in the
St. Louis area in February declined a little more
than seasonally from January to the lowest total
since August, 1948. There were 343,000 animals
slaughtered under Federal inspection as compared
with 475,000 in January and 357,000 a year ago.
Again, hog, slaughter accounted for most of the
month-to-month decline with a 31 per cent decrease.
Slaughter of other animals declined also, ranging
from a 7 per cent decrease in killings of calves to
a 28 per cent decrease in sheep killings. Compared
with a year ago only calf slaughter increased.
Coal— District coal output in February dropped
to 3.4 million tons as the United Mine Workers’
Union defied the baclc-to-work order. The situation
was further aggravated by a strike of Progressive
Mine Workers in the latter part of the month.
The district suffered relatively less than the
nation as a whole, however, due largely to the out­
put of nonunion mines. Compared with January,
output in the district areas dropped 48 per cent,
whereas national production was off 57 per cent.
Western Kentucky was the one district area with
only a small decline. Production there was just 3
per cent below the January total and was 1 per
cent larger than in February, 1949.
Oil— Crude oil output in the district’s producing
areas continued the general upward trend begun
in the middle of 1949. Daily average production
totaled 313,000 barrels, a 1 per cent gain over the
310,000 barrel January output and 2 per cent higher
than the 306,000 barrels produced daily in February,
1949. Output in Illinois and Arkansas, the district’s
leading producers, increased over January, offset­
ting decreases in Indiana and Kentucky. On a
year-to-year basis, increases were registered in all
states except Arkansas. Nationally, crude oil out­
put in February increased slightly over January but
was 8 per cent lower than a year ago.
Construction— On-site construction activities in
February were hampered somewhat by weather,
although conditions probably were better than aver­
Page 62




age. In some areas, steel shortages also interrupted
on-site work. The backlog of construction, as indi­
cated by building permit authorizations and contract
awards, continued high with February another big
month. Building permits authorized in the major
district cities were valued at $7.9 million, the largest
since 1939. This was a gain of 15 per cent over the
January value and 38 per cent over a year ago.
The dollar value of contracts awarded in the
district for new construction and repairs in Feb­
ruary remained at a high level, according to F. W .
Dodge reports. Awards totaled $37.9 million, 16
per cent below the high January level but 27 per
cent higher than in February, 1949. The;re was a
considerable drop (22 per cent) in the dollar value
of residential awards from the record high January
level, and nonresidential awards also were lower
(11 per cent). However, both were substantially
higher than a year ago. In the St. Louis territory
(which includes a large portion of the district)
there was an increase in the value of nonresidential
contracts due largely to a substantial gain in the
value of social and recreational building. The
lower value of residential awards reflected a sub­
stantial decline in contracts for apartment dwell­
ings and for two-family dwellings. Single-family
dwellings built for speculation continued at a high
level, totaling slightly above the January volume.
TRADE

February’s “ unusual” weather combined to make
this winter one of the warmest and wettest in years.
In the St. Louis area, merchants have had to combat
what is reported by the Weather Bureau as the
warmest winter since 1931-32. Sales promotions of
seasonal merchandise have been washed out by
heavy rains. Unseasonably warm weather helped
little in selling heavy winter wear in spite of sub­
stantial markdowns. Promotions featuring spring
merchandise have been stymied by snow and sleet
storms. Not all of the decline from the sales level
of 1949 was the result of the weather. Part of the
drop in dollar volume reflects lower prices this year.
Despite these difficulties, sales volume reported
by most district retailers, except in men’s wear
stores, was higher than in January. Sales generally
were smaller than last February, with furniture
stores being the only line to show an increase.
District department store sales moved up season­
ally from the previous month but were slightly less
than in February last year. Seasonally adjusted
sales in February were 300 per cent of the 1935-39
average in comparison to 282 per cent in January.
Last February, daily sales averaged 310 per cent of
those in the base period.

St. Louis department store sales declined 4 per
cent from January in contrast to the district gain
of 5 per cent. St. Louis sales declined from last
February by slightly more than the district decline
of 3 per cent. The largest drop from last year’s
volume occurred in Little Rock, but in Fort Smith
and Louisville the decline also was somewhat more
than that for the district as a whole. In Evansville,
sales were 2 per cent less than last year. An increase
from last year’s volume was reported in Springfield,
Memphis and Quincy.
In the first two months of 1950, district depart­
ment store sales totaled 3 per cent less than in the
same period last year. In Fort Smith and Little
Rock the decline was considerably larger and in
Louisville and Evansville the decrease was slightly
more than the district average. Siales in St. Louis
were off, but by a smaller percentage than in the
remainder of the district. In Springfield and Quincy
sales gained from last year.
Department stores’ inventories moved up in Feb­
ruary, in part reflecting an earlier Easter this year,
and were unchanged from those at the end of Feb­
ruary, 1949. The value of outstanding orders at the
end of the month was slightly less than a month
earlier but was 8 per cent larger than last year.
W om en’s specialty store sales in the month were
unchanged from those in January but were 12 per
cent less than in February a year ago. Men’s wear
store sales were off one-eighth from the previous
month and dropped 9 per cent under the volume in
February, 1949. Inventories at the end of the month
in both types of stores gained from January 31. In
comparison to a year ago, inventories were down
6 per cent at men’s wear stores and 8 per cent at
women’s specialty stores.
Furniture store sales were larger than in the
previous month or in February, 1949 but the increase
from last year was not as large as that in comparable
divisions of department stores. Furniture store
sales gained 3 per cent while housefurnishings
divisions of department stores gained 16 per cent
from last year. Inventories on February 28 at fur­
niture stores were higher than a month earlier but
were 3 per cent under those a year ago.
A G R IC U L T U R E

Cash farm income in Eighth District states de­
clined from $6.2 billion in 1948 to $5.5 billion in
1949. The 11 per cent drop was fractionally larger
than the national decrease. Larger-than-district or
national average declines occurred in Missouri, Indi­
ana and Tennessee (13, 13 and 15 per cent, respec­
tively). Farm income in Mississippi was off 10




TRADE
D E P A R TM E N T STORES
Stocks
on H and

N et Sales
F eb., 1950
compared with
~

Stock
Turnover

2 m os. *50
to same Feb. 2 8 /5 0
period comp, with
1949
Feb. 2 8 /4 9

Jan. 1 to
Feb. 28
1950
194?
8th F . R . D istrict..... . . + 5 %
.56
.56
-0 - %
— 3%
— 3%
.53
— 3
.57
— 8
... + 12
— 6
.56
.61
— 12
+ 9
— 8
.44
.41
— 3
...+ 6
+ 1
+ 2
_
2
.49
.45
— 4
— 7
3
.58
.59
...+ 7
— 5
— 4
— 1
.58
.57
•St. Louis A r e a 1..
...— 3
— 4
— 1
- 0_
4
.58
.57
...— 4
— 2
-0 .43
— 8
... + 24
+ 5
+ 2
. .39
— 3
.59
.63
. . . + 16
+ 3
+ 2
— 8
— 4
.38
— 11
. . . + 17
.37
*
E l Dorado, Fayetteville, Pine B lu ff, A r k .; Harrisburg, M t. Vernon,
111.; N ew A lbany, Vincennes, I n d .; D anville, Hopkinsville, M ayfield,
Paducah, K y . ; Chillicothe, M o .; Greenville, M is s .; and Jackson, Tenn.
1 Includes St. Louis, M o . ; A lto n , Belleville, and E ast St. Louis, 111.
Outstanding orders of reporting stores at the end of February, 1950
were 8 per cent greater than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding February 1,
1950 collected during February, by cities:
Instalm ent E x cl. Instal.
Instalm ent E xcl. Instal.
Accounts
Accounts
Accounts
Accounts
Fort Smith .................. %
46%
Q uincy .................
18%
54%
Little Rock ........
16
43
St. Louis ...........
18
53
20
48
Other Cities ....... 12
50
Louisville ...........
Memphis '.............. 20
39
8th F . R . D ist... 18
48

IN D E X E S

OF

DEPARTM ENT

8th

STORE

SALES

AND

STOCK S

Federal Reserve District

Feb.,
1950
Sales (daily average), unadjusted 9..................... 252
Sales (daily average), seasonally ad ju sted2.... 300
Stocks, unadjusted 8 ..................................................... 289
321
2 D aily Average 1935*3? == 100.
* End of M onth Average 1935-39 = 100.

S P E C IA L T Y

Jan.,
1950
232
282
248
288

D ec.,
1949
504
330
259
309

F e b ..
1949
261
310
282
313

STORES

Stocks
Stock
N et Sales
on H and
Turnover
F eb., 1950
2 mos. ’ SO Feb. 2 8 /5 0
Jan. 1 to
compared with
to same comp, with
Feb. 28
J a n ./5 0
F e b ./4 9 period *49 Feb. 2 8 /4 9 1950
1949
M en’s Furnishings...,— 12 %
— 9%
— 7%
— 6%
.37
.39
Boots and Shoes...... + 2
— 2
— 5
— 5
.56
.55
Percentage of accounts and notes receivable outstanding February 1,
1950 collected during February:
43%
B oots and Shoes..............,............. 4 1 %
.M en’s Furnishings..................
Trading d ays:
February, 1950— 2 4 ; January, 1950— 2 5 ; February,
1949— 24.

R E T A IL F U R N IT U R E

ST O R E S **

N et Sales
Inventories
Feb., 1950
Feb., 1950
R atio of
compared with
compared with
Collections
J a n ./5 0
F e b ./4 9 J a n ./5 0 F e b ./4 9 F e b ./5 0 F e b ./4 9
22 %
+ 11 %
+ 3%
+ 6%
— 3%
25%
+ 4
+ 5
42
44
+ 17
+ 5
43
+ 19
+ 4
+ 5
+ 5
46
— 2
14
16
+ 28
+ 20
+ 1
— 3
14
15
+ 27
+ 20
+ 1
— 9
— 4
— 17
12
17
+ 9
Memphis ........
— 5
+ 7
17
20
- 0 + 7
Little Rock ....
— 14
16
+29
17
+ 12
+ 5
Springfield ....
#
*
*
*
— 16
Fort Smith ----------- — 2
*
N ot shown separately due to insufficient coverage, but included in
Eighth District totals.
1 In addition to following cities, includes stores in Blytheville and Pine
Bluff, Arkansas; Hopkinsville, Owensboro, K en tu ck y; Greenwood, M is­
sissippi; Hannibal, M issou ri; and Evansville, Indiana.
2 Includes St. Louis, M issou ri; and A lton , Illinois.
3 Includes Louisville, Kentucky ; and N ew Albany, Indiana.
* * 40 stores reporting.

PERCENTAGE

D IS T R IB U T IO N
Feb., 1950

Cash Sales ...................................
15%
Credit Sales .................. ...............
85
Total Sales ............................... 1 0 0 %

OF

F U R N IT U R E
Jan., 1950,
15%
85
100%

^

SALES
F eb., 1949
16%
84
100%

Page 63

per cent for the year, but during December, 1949
was 58 per cent less than in December, 1948. In
only two states, Arkansas and Illinois, was the
decrease less than the national average.
Total farm income nationally was $27.5 billion—10 per cent less than in 1948. Prices averaged 13
per cent lower but increased marketings partially
offset the lower prices. Crop receipts were $12.6
billion, off 7 per cent, and livestock and livestock
product receipts were $14.9 billion, off 12 per cent.
Cash receipts in only five states were higher in
1949 than in 1948, and in three states were down 20
per cent or more.
Net farm income in the United States declined
from $16.7 billion in 1948 to $13.8 billion in 1949.
The 17 per cent drop in net farm income in 1949
brings the total decrease since the 1947 postwar
peak to 22 per cent. Even so, net realized income
in 1949 was higher than for other years except
1946-48, and triple that of a year as late as 1940.
But while current income is favorable compared
with most any historical base except 1946-48, the
25 per cent reduction over a two-year period un­
doubtedly has and will have an appreciable effect on
the rural areas.
More cattle, dairy cows, hogs and chickens were
on farms January 1, 1950 than a year earlier. Sheep
numbers, however, were down 3 per cent from a
year earlier. The percentage increase in cattle
numbers was larger in five district states than the
increase nationally, with numbers increasing more
relatively in Mississippi and Arkansas than in other
district states. The number of hogs in the three
important district hog-producing states (Illinois,
Indiana and Missouri) increased more than the
national average.

B A N K IN G
P R IN C IP A L A S SE T S A N D
FE D ER AL R ESERVE BAN K

L IA B IL IT IE S
O F ST. L O U IS
Change from
Mar. 15,
Feb. 15,
M ar. 16,
(I n thousands of dollars)
1950
1950
1949
Industrial advances under Sec. 13b...........$ ................. $
........... $
..............
Other advances and rediscounts..................
1,898 — 2,101
—
9,774
U . S. securities......................................................
981,379
+
539 — 180,518
Total earning assets....................................... .$ 983,277 $— 1,562 $— 190,292
Total reserves .......................................................$ 725,909 $— 3,256 $ + 19,559
Total deposits .......................................................
636,051 — 19,192
— 134,306
4572
— 42,132
F. R . notes in circulation................................. 1,062,112
Industrial commitments under Sec. 13b....$ ................ $—

500 $

. .........

P R IN C IP A L A S SE T S A N D L IA B IL IT IE S
W E E K L Y R E P O R T IN G M E M B E R B A N K S
E IG H T H F E D E R A L R E S E R V E D IS T R IC T
( I n thousands of dollars)
34 banks reporting
Change from
M ar. 15,
ASSETS
1950
Gross commercial, industrial, and agri­
cultural loans and open market paper..$ 531,659
Gross loans to brokers and dealers in
securities ...... .......................................................
7,949
Gross loans to others to purchase and
carry securities ................................................
19,946
Gross real estate loans........................................
196,573
Gross loans to banks...........................................
1,052
Gross other loans (largely consumer credit
loans)
...................................................................
218,880
Total ........................................................................$ 976,059
Less reserve for losses..............................
12,053
N et total loans.................................................. $ 964,006
Treasury bills .........................................................
55,968
Certificates of indebtedness............................
180,537
Treasury notes ....................................................
223,522
U . S. bonds and guaranteed obligations..
658,098
Other securities ....................................................
175,644
Total investments ...........................................$1,293,769
Cash assets .— .......................................................
781,495
Other assets ............................................................
26,597
Total assets .......................................................$3,065,867

Feb. 15,
1950
$— 10,685
+

M ar. 16,
1949
$—

57,010

+

1,403

1,974

4286
+ 3,031
— 15,798

—
1,617
4- 35,606
—
298

—
178
$— 21,370
4*
301
$— 21,671
4*
313
— 29,511
4 -42,463
— 21,573
4- 2,765
$— 5,543
4-20 ,0 3 7
-f
994
$— 6,183

48,958
$— 12,958
42,446
$— 15,404
+ 17,941
— 19,534
4 -171,990
— 35,258
4- 46,226
$ + 181,365
— 57,096
I
1,534
$ + 110,399

L IA B IL IT IE S
Demand deposits of individuals, partner­
ships and corporations................................... $1,528,150 $ + 4,415
Interbank deposits .............................................
656,548 — 10,722
U . S. Government deposits............................
66,165 — 8,573
Other deposits .......................................................
124,438
+ 6,375
Total demand deposits................................... $2,375,301 $— 8,505
Tim e deposits .......................................................
488,528
+ 1,889
Borrowings .............................................................
725 —
75
Other liabilities ....................... ............................
18,030 —
84
Total capital accounts........................................
183,283
+
592
Total liabilities and capital accounts...... $3,065,867 $— 6,183

$ + 68,381
+ 45,962
—
3,761
— 12,292
$ + 98,290
+
8,432
—
6,275
+
2,464
+
7,488
$ + 110,399

Demand deposits, adjusted*............................$1,409,199 $ +

8,930

$+

*
Other than interbank and government
items on hand or in process of collection

deposits,

demand

44,597
less

cash

D E B IT S T O D E P O S IT A C C O U N T S
A G R IC U L T U R E
( I n thousands
of dollars)
C A S H F A R M IN C O M E
Jan., 1950
12 month total Jan. to Dec-*
1949
compared with
compared with
Jan.,
D ec.,
1947
1949
1948
1949
1949

(I n thousands Jan.,
of dollars)
1950
Arkansas ..$ 23,613
Illinois ..... . 151,100
Indiana ..... . 67,926
Kentucky ... . 112,718
17,677
Mississippi..
Missouri ... . 69,914
Tennessee .. 46,522
T o t a l s ..... .$489,470
*Revised.
R E C E IP T S A N D

—
+
—
+
—
—
-

—

50%
17
6
7
45
13
0 5%

—
+
+
+
—
—

.. 80,181
..237,629
.. 29,053
,346 ,8 6 3

Page 64




527,607
1,702,943
916,022
527,920
481,312
944,357
426,914
$5,527,075

8

+
—

1
7%

S H IP M E N T S A T
Receipts
F eb.,
1950

$

47%
16
3
18
75

N A T IO N A L

Feb., 1950
compared with
Jan.,’ 50 F e b .,’ 49
— 14%
— 20
— 39
— 21%

+
+
+
+

1%
8
8
6%

Feb.,
1950
25,834
78,668
3,952
108,454

—
—
—
—
—
—
—
—

5%
9
13
11
10
13
15
11%

+ 6%
— 11
— 14
— 10
— 2
— 13
— 10
- 10%

STOCK YA R D S
Shipments
Feb., 1950
compared with
Jan.,'50 F eb.,’ 49
— 4%
__ 7
— 57
— 10%

— 7%
+ 18
+ 1
+ 10%

Feb.,
1950

Jan.,
1950

Feb.,
1949

19,419 $
22,096 $
E l Dorado, A r k ........... .$
18,651
33,343
40,204
Fort Sm ith, A rk .........
32,258
H elena, A r k ...................
5,840
6,726
7,159
105,849
Little R ock, A r k ......... ... 112,130
121,510
27,387
22,540
24,068
Pine B lu ff, A r k ...........
Texarkana, A r k .* .......
8,980
10,828
8,721
Alton , 111.......................
20,304
23,216
21,371
89,488
103,761
93,431
E- St. L .-N a t . S. Y ., 111. ..
25,934
27,806
24,932
Quincy, 111......................
104,892
113,537
91,133
Evansville, In d .............
493,199
477,813
Louisville, K y ..............
461,755
32,592
38,891
29,302
Owensboro, K y ...........
12,866
Paducah, K y .................
14,166
12,854
18,975
24,204
20,108
Greenville, M iss...........
9,805
Cape Girardeau, M o ..
10,924
9,506
7,456
7,928
H annibal, M o ................
6,276
Jefferson City, M o....
42,097
56,088
40,021
St. Louis, M o .............. . 1,318,815
1,532,231
1,299,750
9,112
9,219
Sedalia, M o ....................
8,5 68
46,310
52,258
Springfield, M o. ------44,488
16,078
Jackson, Tenn................
18,967
15,320
495,882
M em phis, Tenn............ .
583,172
464,858
T otals *......................... $2,914,613 $3,338,318 $2,856,437

F eb., 1950
compared with
Jan.,’ 50 F e b .,’49
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

12%
17
13
8
18
17
13
14
7
8
6
16
9
22
10
6
25
14
1
11
15
15

— 13%

4%
3
19
T 6
— 6
+ 3
— 5
__ 4
+ 4
+ 15
— 3
+ 11
- c l— 6
+ 3
+ 19
+ 5
+ 1
+ 6
+ 4
+ 5
+ 7
+
+

+

2%

* These figures are for Texarkana, Arkansas only,
Total debits for
banks in Texarkana, Texas-Arkansas, including banks in the Eleventh
District, amounted to $22,885.