Full text of Review (Federal Reserve Bank of St. Louis) : August 1951

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Frederick L. Deming

Monthly Review
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Volume X X X III

REGIONAL
INTERDEPENDENCE

AND

DISTRICT
DEVELOPMENT




R

V

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B A N K

AUGUST, 1951

Number 8

Growing interdependence is characteristic
of the modern world economy. This fact has
led to establishment of comprehensive meas­
ures of economic activity. Such measures
are useful but conceal regional and indus­
trial variations. The Eighth District repre­
sents a low income region which needs fuller
economic development. To define the prob­
lems of district development and to gauge
district progress more accurately new meas­
uring devices are needed particularly to trace
interregional relationships. Income studies
can be extended to provide more adequate
information for guidance in carrying out
economic development here. Input-output
analysis offers a promising approach.
Interregional relationships are of key
importance to this district. District66exports99
are a major income source for the district, as
illustrated by the examples of Arkansas and
Missouri• Industries producing these “ ex­
ports” are strategic for the region. Data
on commodity flows for strategic industries
in Missouri and Arkansas indicate the areas
with which they have close economic ties.
Income growth in those areas has a direct
effect on economic development in this
district.
Regional interdependence is the net effect
of underlying industrial interdependence.
The chemical industry illustrates industrial
interdependence which exists throughout the
United States economy• Economic develop­
ment can be understood better in the light
of this interdependence•

G row in g in t e r d e p e n d e n c e is a c h a r a c te r is tic o f th e
m o d e r n w o r ld e c o n o m y .
The history of the first half of the Twentieth
Century has made increasingly clear the growing
interdependence of the modern world. The past 50
years have seen the United States become a great
world power— with the wide responsibilities that
accompany that position. This nation’s political and
economic power results on the one hand in events
here having worldwide impact, and on the other
hand in increased United States sensitivity to
events occurring abroad. For example, the possi­
bility of a major depression in the United States
following W orld W ar II strongly conditioned W est­
ern European and Russian political and economic
policy. And in contrast, the North Korean crossing
of the 38th parallel had a quick and profound impact
on St. Louis manufacturers and Mississippi cotton
planters.
This interdependence is characteristic not only
of the world economy but also of national econo­
mies. Thus agricultural prosperity in the United
States depends in large measure upon high level
activity in the nonagricultural segments of the econ­
omy. And the impact of the present defense pro­
gram spreads throughout the nation, affecting the
various geographic areas of the United States. The
Eighth District is influenced strongly both by na­
tional economic developments and by developments
originating in other Federal Reserve districts.

T his fa c t h a s le d to es ta b lis h m e n t o f c o m p r e h e n s iv e
m ea su r es o f e c o n o m ic a ctiv ity •
Recognition of the need to approach the eco­
nomic problems of the day in terms of the economy
as a whole has led to the creation of a number of
comprehensive and easy-to-understand measures of
economic activity, measures which help appraise
the broad problems of economic policy without the
analyst becoming lost in a maze of facts and figures.
Today such economic concepts as Gross National
Product and National Income and their component
parts are widely used, not only by professional econ­
omists, but by many businessmen, farm and labor
leaders, political representatives and others. These
measures provide periodic and current checks on
the level of economic development in the nation and
the rate of economic growth. Their analysis often
provides indication of what to expect in the future.

S u ch m e a su r es a r e u s e fu l b u t c o n c e a l r e g io n a l a n d
in d u stria l v a ria tio n s .
But useful as they are, these broad aggregates
and averages tend to conceal important deviations.
The United States economy is geographically widePage 106




CHART I
income

patterns

UNITED

re fle c t

STATES

the

resource

base

8th

DISTRICT

spread and its several areas contain different
amounts of basic resources and people. It is equally
important to recognize that these various areas
have attained different levels of development, that
there are differences in types of economic problems
as between regions. Particularly to those who live
and earn their livelihood in a given area, local devia­
tions from national averages are of great impor­
tance.

T h e E igh th D istrict r e p r e s e n t s a lo w in c o m e r e g io n
w h ich n e e d s fu ll e r e c o n o m ic d e v e lo p m e n t .
The Eighth Federal Reserve District is one
which deviates on the minus side from the national
income measures. Average income per person in
this district is running at just about three-fourths
of the national per capita income figure. And within
the district proper there are pronounced differences
among various areas in income level. In Eighth
District Missouri income per person is about 90
per cent of the national average, in Eighth District
Mississippi it is only half the national average.
Investigation and analysis of the various com­
ponents and sources of Eighth District income
throw considerable light on the factors responsible
for the lag in per capita income here. In brief, the
relatively low level of district income reflects the
facts that a large segment of district population is
engaged in relatively low productivity agriculture
and that there are not sufficient opportunities to
shift into higher productivity jobs within the dis­
trict. It is encouraging to note, however, that over
the past decade income growth in the district has
been at a more rapid rate than nationally, a develop­
ment which indicates rising productivity per person
as additional opportunities open up.

In agriculture, a smaller labor force is applying
more productive methods to the land, and the trend
toward mechanization and diversification is rising.
With decreased reliance on single cash crops and
with growth in livestock farming, the rural areas
of the district are improving their relative income
positions. This development illustrates the fact that
the district’s basic resources can be made to yield
higher returns if combined with more capital and
technical skill. A long-run movement from farming
into nonagricultural lines, preferably to new indus­
trial opportunities developed as integral parts of
the district economy, would continue the trend
toward higher average productivity and higher
average income.

To d e fin e th e p r o b le m s o f d is tr ict d e v e lo p m e n t
a n d to g a u g e d is tr ict p r o g r e s s m o r e a c c u r a te ly 5
n ew m e a s u r in g d e v i c e s a r e n e e d e d . • .
The essential point in connection with this brief
discussion of the Eighth District economy is that
the national measures do not give sufficient indica­
tion of the nature and scope of the district’s prob­
lems. A body of economic data relating to the
district is necessary to bring out the facts about
the district’s deviations from the national totals and
averages. T o be sure, some vague generalizations
can be made about the district without comprehen­
sive district measures, but to get reasonably precise
information requires district data which can be
related meaningfully to other economic intelligence.
In other words, what is needed for a region, as
for the nation, is a body of information which will
serve as a sort of combined measuring stick and
divining rod— a measuring stick to indicate level and
rate of growth, a divining rod to indicate problem
areas or segments. This bank has been developing
a considerable amount of information on income
levels, sources and components for the district as
a whole and for many small areas within the dis­
trict. These data are proving most useful in lending
precision to definition of the district’s position and
problems.
. . . p a r ticu la r ly to tr a ce in te r r e g io n a l r e la tio n ­
sh ip s .
So far, the income data developed for this district
have been applicable primarily to analysis of rela­
tionships within the district proper— intradistrict
relationships. These are of major importance, of
course, but they (and other data on resource use,
productivity, etc.) do not give the whole picture of
the district’s economic problems. There are two
other sets of basic relationships that need to be
understood and measured with reasonable accuracy
to get this whole picture. The more important set




is concerned with relationships of the district, or
one of its areas, with the other regions of the United
States. The other set concerns relationships with
the rest of the world. Of course, it should be rec­
ognized that all three of these sets of relationships
are simply different views of an interdependent
economy from a particular geographic or industrial
reference point. But to give depth to the picture
the three views have to be put together.

I n c o m e s tu d ies ca n b e ex ten d ed to p r o v id e m o r e
a d eq u a te in fo r m a tio n • . .
By extending the scope of the income study it is
possible to get a clearer view of these other rela­
tionships and thus set out the district’s problems
and potential developments in bolder relief. And it
should be stressed again that the major purpose of
this kind of project is to produce a better and more
accurate measuring stick and divining rod. With
this it should be possible to indicate the fields in
which efforts to get more income and better living
for the district’s people can be made most effec­
tively, and to see areas where there needs to be
more development of resources.
. •. f o r g u id a n c e in c a r r y in g o u t e c o n o m ic
d e v e lo p m e n t h e r e .
With this kind of information, plus intelligent
leadership, many of the hit-or-miss aspects of eco­
nomic development can be avoided. For example,
there is little point in indiscriminate search for
manufacturing industries simply as the result of a
general idea that industrialization is good for a
region. Location here of industry which is chron­
ically unstable or ill suited to the resources of the
district could well create as many or more problems
as our present low income level. The essence of
proper analysis and adequate data is to provide good
guides for the people of this district in their search
for more industry of the kind that fits best into this
region’s economy.

I n p u t-o u tp u t a n a lysis o ffe r s a p r o m is in g a p p r o a ch .
One very promising method of approach to the
measurement of relationships of this region (or of
a part of this region) to the rest of the national
economy is through what is called “ input-output
analysis.” This type of analysis has been developed
mainly at Harvard University under Professor
Wassily W . Leontief. While its operational method
is a rather complicated mathematical process, the
basic principle is fairly easily understood. Like
most analytic procedures in economics it involves
an arrangement of numerically expressed data in
such form that relationships can be seen clearly. Its
basic requirement is adequate data to be put into the
Page 107

analytic form. So far the technique has been
applied primarily to analyzing interindustry rela­
tionships on a national scale. It can be used for
interregional analysis, however, and some indica­
tion of what can be accomplished through this
approach is given in the following sections of this
article.

CHART II
"Export"

income — im portant

to

sm all

a reas .

Per Cent

Per Cent
35

AG R ICULTURE

MANUFACTURING

30

I n te r r e g io n a l r e la tio n s h ip s a r e o f k ey im p o r ta n c e
to th is d is tr ict •

25

The importance of analyzing interregional rela­
tionships can be recognized more clearly perhaps
if we note that this district has both “ exports” to
and “ imports” from other sections of the nation.
The smaller the area under consideration the more
important “ exports” are as an income source and
the more important “ imports” are in the area’s
expenditures. At present, there is not sufficient
information to give a completely reliable estimate of
the volume of Eighth District employment directly
dependent upon district “ exports”— goods produced
here but sold to users outside the district. Such
data as are available suggest that not less than
one-third of our total district employment depends
on this “ export” business, however. For particular
segments of the economy— for example, cotton
farming— that figure would be much higher. Simi­
larly, it would be higher for a particular area within
the district.

20

D istrict “ e x p o r ts ” a r e a m a jo r in c o m e s o u r c e f o r
th is d is tr ict as illu stra ted b y th e ex a m p les o f
A rkansas a n d M issou ri .
About 32 per cent of Arkansas income and about
17 per cent of Missouri income is earned in agricul­
ture. For each state almost four-fifths of this farm
income is earned by the export of agricultural com­
modities outside the state. Thus with respect to
agriculture alone about 25 per cent of Arkansas’ and
13 per cent of Missouri’s total income is attributable
to the out-of-state export of farm products.
Manufacturing income in Arkansas accounts for
approximately 10 per cent of total state income.
About 71 per cent of this, or roughly 7 per cent
of total state income, is earned by direct export of
manufactured products. Manufacturing activity
earnings account for 20 per cent of Missouri income,
and 83 per cent of Missouri manufactures are trans­
ferred across the state boundaries. Thus roughly,
17 per cent of Missouri income comes from the man­
ufacturing production for out-of-state export.
Mining income represents a small proportion of
total income in both Arkansas and Missouri (2 and
1 per cent, respectively). Most of Arkansas’ mining
income is attributable to the export of mineral prod­
ucts. Bauxite and alumina constitute a principal
Page 108




10

ARK.
N ON

ARK.

MO,
“E X P O R T "

•E X P O R T S "

TO

IN C O M E

M ID -A M E R IC A

I

“E X P O R T S "

|||fl||j" E X P O R T S "

MO.
TO

W EST

TO

EAST

item of which a large portion is shipped to the State
of Washington. By way of contrast Missouri’s
mining income is principally due to consumption
of its own mineral products (63 per cent).

I n d u stries p r o d u c in g t h e s e “ ex p o r ts99 a r e s tr a te g ic
fo r th e re g io n .
The importance of “ exports” as sources of Arkan­
sas and Missouri income is not fully expressed, by
any means, by the foregoing examples.
Chart I
showed that 59 per cent of total district income orig­
inated in the three categories: Trade and Services,
Government, and Unclassified. Examination of
these groups and their role in the district economy
throws additional light on the significance of
“ exports” as sources of district incomes.
The service industries earn directly a large ele­
ment of “ export” income. Income from these
“ invisible exports” is earned through the perform­
ance of services in the district for residents of other
areas. For example, a principal export item is
tourist trade. Visitors to Missouri spend annually
about $200 million on food, lodging and entertain­
ment. About 7 per cent of Arkansas’ total income
is earned by providing services to tourists.
In addition to these direct “ invisible” export
items, the service industry group depends indirectly
upon “ exports” for a large share of its income. As
the term implies, these lines service other industries
and households in their relatively immediate area.
Thus service industries sometimes are called “ resi­
dentiary” or “ tertiary” industries (as distinguished

from the extractive or “ primary” industries and the
manufacturing or “ secondary” industries). The
level of employment and income in the service
industries is directly related to the level of employ­
ment and income in the primary and secondary
industries located in their service areas. Conse­
quently, anything that increases mining, agricultural
and manufacturing incomes within the area is also
reflected in increased tertiary incomes. And in
return, increased tertiary incomes provide to some
extent an increased local market for products of
local primary and secondary industries. Thus, to
the extent that “ exports” of primary and secondary
products out of the district provide more incomes
in these industries than would otherwise be avail­
able, this income is “ multiplied” by the pattern of
income flows within the district to the substantial
benefit of the service industries.
The same general remarks apply to the groups
of activities classified as Trade, as well as to those
grouped in the Unclassified category. The latter
group is primarily composed of the construction,
communication, transportation, and public utilities
industries, all of which are essentially residentiary
or tertiary activities.
The Government category deserves special com­
ment. As classified in Chart I, this consists of local,
state, and Federal Government payments to indi­
viduals. Incomes received from state and local
governments are quite similar to incomes from the
other tertiary industries. As the wealth, income,
and population of an area grow, the need for gov­
ernmental services also grows. T o the extent that
incomes earned by “ exports” to other areas contrib­
ute to the area growth, the state and local govern­
ment sector is affected by these “ exports.”
Of the total income in the Government category,
a substantial portion represents payments by the
Federal Government to residents in this district.
Some of this reflects payments for services per­
formed in this area. In that sense it is in the same
class as the non-Federal Government service income
noted above. Some payments, however, represent a
transfer of income earned in other areas to this area
via the United States Government. T o the extent
that these represent a transfer of income from high
to low income areas, economic progress in this
region presumably would lead to a decrease in such
payments. But as long as these payments continue,
they represent inflows of income from outside the
district, and have a “ multiplier” effect on district
incomes.




Thus it may be seen that a substantial portion
of district income is indirectly generated by income
inflows from other areas. The problem of economic
development is in part that of increasing the earning
power of these important industries. A general pol­
icy of combining district resources with more capital
and technical skill provides the foundation for this
development.

Data o n c o m m o d it y flo w s f o r im p o r ta n t in d u stries
in M issou ri a n d A rkansas in d ica te th e a rea s
w ith w h ich th e y h a v e c l o s e e c o n o m ic tie s .
The accompanying maps summarize in broad out­
line certain estimated income relationships between
Arkansas and Missouri and other states in the
nation.
As indicated by Map 1, approximately 83 per cent
of Missouri manufactures are shipped out of the
state and flow in substantial amounts to all but four
states in the nation. Illinois takes the largest single
portion, with Texas, Kansas, and Arkansas follow­
ing next in order of importance. Since these
“ exports” produce income for Missouri residents,
the maps also indicate the relative importance of the
several states as sources of Missouri income from
manufacturing activities.
Of the total volume of manufactured inputs to
Missouri industries and households, approximately
84 per cent are “ imported” from other states (Map
2). Missouri expenditures on these goods provide
income flows in varying degree to every state. Illi­
nois is the largest single recipient of these expendi­
tures, and Kansas, Oklahoma, and Texas follow as
the most important sources of manufactured prod­
ucts for Missouri.
The differences in resource base and industrial
structure between Arkansas and Missouri give rise
to contrasting patterns of commodity flows. Lessindustrialized Arkansas “ exports” only 71 per cent
of its manufactured commodities and to a fewer
number of states than Missouri (Map 3). Thus
Arkansas receives not only a smaller proportion of
its manufacturing income from out-of-state sources
but from a fewer number of sources as well. Louisi­
ana, Tennessee, Mississippi, and Missouri make up
the most important out-of-state market for Ar­
kansas’ manufactured goods.
Similar contrasts are evident with respect to
inputs of manufactures into Arkansas industries
and households (Map 4). Predominantly agricul­
tural Arkansas purchases about 67 per cent of its
consumption of manufactures from out-of-state
sources as contrasted to Missouri’s 84 per cent. This
Page 109

Less industrialized Arkansas has
m arket for its products. . .

a more limited

Arkansas agricultural products move
the south and east___

mainly to

M aps 1, 3, and 5 show the geographic distribution of “ exported” m anu­
factures and agricultural commodities from Missouri or Arkansas. M aps
2, 4, and 6 present the same information for sources of “ imports” .
One dot = 0.1 per cent of total Missouri or Arkansas production or

Page 110




___ and purchases less

.-im p o rts come largely
and west.

from other

from

states.

states to the

north

consumption of specified products.
M ap 1, for example, reveals that Missouri “ exports” about 83 per
cent of its manufacturing output.
The 21 dots in California indicate
that M issouri “ exports” 2.1 per cent of its manufactures to California.

is explained principally by the difference in indus­
trial structure and income levels between the two
states. Around 80 per cent of total value added
in Arkansas is represented by industries processing
materials native to the state. These industries
require relatively small amounts of manufactured
or semi-manufactured inputs to support their opera­
tions. In addition, the relatively low per capita
income of the state (61 per cent of the national
average) sharply curtails the Arkansas market for
manufactured consumer goods.
As would be expected, the data with respect to
income relationships with other areas via agricul­
tural products present a pattern somewhat different
from that of manufactured products. The most
striking features (Maps 5 and 6) are: 1) Agricul­
tural production gives rise to income relationships
with a fewer number of states in general than man­
ufacturing production. This is characteristic of most
states, not only Arkansas. 2) Agricultural products
typically move in an easterly direction. Arkansas
agricultural output is exported largely to states to
the east and south. Agricultural inputs in Arkansas
originating outside of the state come mainly from
the west and north. 3) Agricultural states “ export”
relatively more of their agricultural production than
of their manufactures but “ import” substantially
less.

I n c o m e g r o w th in th o s e a rea s h a s a d i r e c t e f f e c t o n
e c o n o m ic d e v e lo p m e n t in th is d is tr ict .
The maps on page 110 serve to give a general
impression of the diversity of income relationships
these states have with other states in the country.
Grouping states into somewhat arbitrary areas
serves to clarify the impression created by the maps.
For purposes of illustration we might divide the
United States into three large regions, Mid-America,
all states to the west, and all states to the east.
Mid-America includes the following states from
north to south: Minnesota, Wisconsin, Iowa,
Illinois, Indiana, Missouri, Kentucky, Tennessee,
Arkansas, Louisiana, and Mississippi. Chart II
summarizes the income relationships of Arkansas
and Missouri with these areas with respect to agri­
culture and manufactures.
It is through the “ import-export” patterns lying
behind such income relationships that developments
in the rest of the economy are transmitted to this
district. If industries in the district transfer most
of their “ exports” to growing prosperous areas, this
will imply increasing incomes here. Changes in
resource utilization in other areas which open new




markets for the products of the resources in this
district will likewise be reflected in increased levels
of living.

R eg io n a l in t e r d e p e n d e n c e is th e n e t e f f e c t o f
u n d e r ly in g in d u stria l in t e r d e p e n d e n c e .
For purposes of specific policies for economic
development such observations need to be sharp­
ened. The data so far provide only very general
indications of the importance of external income
relationships for the area. To understand how
developments in other areas may affect district
incomes we need not only more specific informa­
tion on the kinds of goods produced and “ exported”
by the district but the role played by the produc­
tion of such goods in this region’s economy. An
increase in the demand for aluminum implies
increased shipments of alumina from Arkansas to
Washington, not of mineral products in general.
Increased alumina production in turn holds quite
different implications for district incomes than in­
creased activity in some other line of production
using different resources.
Interregional income relationships are the prod­
uct of the exchange of a wide variety of goods and
services. This interregional exchange is simply a
manifestation of an underlying industrial inter­
dependence— an interdependence which in many
cases is national in scope. Goods produced and
“ exported” by this district represent inputs to
industries and households in other areas. Simi­
larly district “ imports” which serve as inputs to
industrial and household consumers in this area
represent outputs of industries in other regions.
Consequently we may better understand interre­
gional income relationships in the light of a knowl­
edge of the regional industrial structure of the
economy.

T h e c h e m ic a l in d u str y illu stra tes in d u stria l in te r ­
d e p e n d e n c e . •.
The phrase “ industrial interdependence” is
descriptive of a very complicated set of circum­
stances. The interrelation of each activity with all
others in the economy is partly observable in the
budget of each enterprise and household. An indus­
try (as used here, this simply means any group of
economic activities including government and
households) is directly connected with the econ­
omy as a whole by its purchases on the one hand
and its sales on the other. Systematic classifica­
tion of these inputs and outputs by industrial groups
gives a clearer picture of the position of an indus­
try with respect to the rest of the economy.
Page 111

P u rch a ses a n d sa les link e a c h in d u s tr y to a ll
o th ers...
C H E M IC A L

IN D U S T R Y ,
( 1)

Industry Group

Distribution
of Chemical
Industry Sales
to Other
Industry
Groups

Agriculture ......................... .......
8 .6 %
Food Products ................
Ferrous M etals ................
M otor Vehicles .......................
1.0
M etal Fabricating ......... ......
3.2
......
0.1
Nonferrous M etals .........
0.5
Nonmetallic Minerals ...........
Fuel and Power..............
Lumber and Paper........
9.6
Textiles and Leather.... ......
Rubber .................................
1.2
Other Manufacturing .. ......
Construction ............................ 10.9
Transportation ....................... 0 .6
Trade ...................................
Foreign Trade .......................
6.0
Services ..............................
Government .......................
Other Industries ........... ...... 18.4
Household .................................. 28.9
Total ........................................ 100.0 %

I N P U T -O U T P U T

(2)

Distribution
of Chemical
Industry
Purchases
From Other
Industry
Groups
4 .8 %
1.4

0.1
0.9
2.1
3.6
5.5
1.8
0.4
0.1
0.1
0.6
6.6
3.5
2.5
5.7
3.6
25.3
31.4
100.0 %

(3)

Chemicals
Per cent of
Consuming
Industry
Costs
2 .8 %
0.9
1.3
0.7
1.5
0.2
0.8
0.1
1.8
5.2
3.4
2.4
3.4
0.2
5.1
0.2
0.1
2.5
1.2
1 .4 %

Table 1 depicts the chemical industry in terms
of its inputs (purchases) and outputs (sales). T o
simplify the accounts, all economic activities in the
economy have been consolidated into 21 industrial
groups.
The wide distribution of both inputs and outputs
for this industry is noteworthy. Partly this is
the result of a rather wide classification system, but
more importantly it reflects the importance of
chemistry in our modern technology. Chemical
industry output is a direct input to a large number
of industries and consequently is directly influenced
by a wide range of activities in the economy. Chem­
ical producers in turn transmit these influences to
a wide range of other industrial groups, but in
varying degree.
Column 1 of Table 1 shows the distribution of
output of the chemical industry to other industries
as percentages of total chemical sales. As only
about 29 per cent of the industry’s product entered
directly into household consumption, the remaining
71 per cent of the output was subject to what might
be called derived or indirect demand. Some of this
derived demand comes through very many indus­
trial processes before it reaches the chemical indus­
try— a sort of modern day parallel to the childhood
story about the war that was lost for want of a
horseshoe nail. This derived demand can be under­
stood and anticipated if we understand the compli­
cated chain of transactions which lies between the
industry and the original source of the demand.
Column 3 presents the same information on sales
in a different perspective. Chemical industry sales
are shown here as a cost item to consuming indus­
tries. In other words, column 3 illustrates the imPage 112




portance of chemicals as cost items to the several
industrial groups consuming chemicals. Thus, 1.2
per cent of household expenditures were directly
for chemical products, while to the textile and
leather industry, chemicals represented 5.2 per cent
of the total cost of manufacturing.
Column 1 and column 3 provide some interesting
comparisons on the nature of interindustry rela­
tions. Sales to the rubber industry amounted to
only 0.9 per cent of the total output of the chemical
industry, while the food products industry pur­
chases of chemicals amounted to 3.7 per cent of
chemical output. Yet a $10 million increase in food
products output would have resulted in less than a
$100 thousand increase in the output of chemicals.
On the other hand, a similar increase in rubber
output would have resulted in $340 thousand incre­
ment to chemical output. A similar increment to
output in each of the other industries would also
have had widely different effects on the chemical
industry. Thus, it is important for an analysis of
income and development in an area to know not
only what is produced there and in what areas it is
sold, but to what uses the products are put. These
relationships underlie the income relations of this
district with other areas.
Column 2 shows the purchases of the chemical
industry from industries listed as a percentage of
total chemical output. This serves to illustrate how
part of the impact of change in the economy is re­
layed back to the economy by the chemical indus­
try. It also shows how in the process the effects
vary among the industries supplying inputs to the
chemical industry. The effects of increased output
in this industry will be passed on to the rubber
manufacturers to a much lesser degree than to fuel
and power producers, the transportation industry,
services (industries important to the generation of
local incomes), agriculture and others.
However, Table 1 shows us only the direct ef­
fects of change in the rest of the economy on the
chemical industry. There are a great many indirect
effects (operating through the derived demand dis­
cussed above) which may be more important in
total than those plainly implied by sales and costs
accounts. If we construct a similar table for each
industry and view them all together we can trace
out the total implication of economic change on
resource allocation among industries. For example,
Table 1 indicates only 6 per cent of chemical output
was dependent upon export trade. If we consider
the industries consuming chemicals whose products
also enter foreign trade, this figure becomes 9 per
cent. If, however, we examine all of the inter­

industry relationships, we find that approximately
15 per cent of chemical output depended upon
American exports.

• . • which exists throughout the

United States economy.

For the United States as a whole, examination of
the distribution of output for each industry reveals
that about 2 per cent of total employment was
directly involved in American export trade. Con­
sideration of the secondary employment raises this
to 4 per cent. An estimate of the total (direct and
indirect) importance of exports to the economy
raises this to the significant figure of 10 per cent.
The foregoing remarks have all been made with
reference to the nation. It can readily be seen, how­
ever, that they are directly applicable to smaller
areas. If an economy with only a small per cent
of its employment directly generated by exports
actually has 10 per cent in one way or another
dependent upon export markets, imagine the im­
portance of “ exports” to a region where 30 per cent
of the employment is directly engaged in such
industries. Consequently, if we are to fully com­
prehend the significance of regional income relation­
ships with other areas we need information on the
industrial structure of this area and its industrial
input-output links with the rest of the nation.

Economic development can be better understood
in the light of this interdependence.
Research is currently under way which will pro­
vide detail on the interindustry and interregional
flow of commodities and services for major regions
in the United States. These commodity and service
flows also represent income flows. This informa­
tion will be of major value in analyzing both short
and long run problems of economic development.
In fact, of course, the short and long run consid­
erations for economic development are not really
separable. The essential need for long run consid­
eration is that it permits better selection of various
short run alternatives. W ith adequate information
it should be easier to pick the correct short run
policies.
In any event the facility with which district re­
sources can be adapted best to changing conditions
in the rest of the economy is likely to be a measure
of its successful development. In part, this adapt­
ability will depend upon a skilled and productive
labor force working with adequate tools and capital
equipment. In part, it will depend upon diversifi­
cation.
It should be stressed that diversification means
something different from a wide variety of classi­




fiable income sources. It simply means that the
resources of this district should be developed to the
point where they are capable of efficiently supplying
a wide range of industrial and household needs,
directly or indirectly. Thus, a highly developed for­
est products industry, although operating with a
specialized resource, may provide the kind of diver­
sification the district needs. Forest products find
their way into a great variety of industrial uses
and if this district’s forest resources could be fully
developed, their products would be able to serve an
increasing number of uses. Agriculture, leather,
and many other of the extractive and manufactur­
ing industries for which this area is ideally suited
could be developed toward more diversification in
this sense.
In all of these cases there is the problem of priori­
ties. The question inevitably turns to the specific
from the general. Which resources should be de­
veloped most extensively? In which industries
should capital formation be most encouraged ? The
answers to these and similar questions rest partly
upon an assay of district resources and partly upon
the way in which we envisage the impact of eco­
nomic change in the rest of the nation on this
region. It is for purposes of this latter estimate
that we may perhaps most fruitfully speak of the
short and long run.
In the short run, economic development of this or
any area must be cognizant, to the degree possible,
of the effects of current and anticipated changes in
the country as a whole. There is small value, for
example, in undertaking development programs
which may run directly counter to adjustments
likely to be forced on an area by the rest of the
economy.
For the longer run, we are interested in questions
such as the following. Which types of capital ex­
penditure are most likely to (a) provide the greatest
impetus to income growth within the region, and
(b) provide the focal point for the greatest develop­
ment of industries strategic for interregional income
flows? What will be the effect on the region of long
run developments in other areas? What adjust­
ments to these will most facilitate this region’s
ability to share in such developments? W e are
really asking: How can this district make the great­
est contribution to national economic development?
By so doing we will insure maximization of our own
rate of growth. To this end the extension of income
studies along the lines indicated can provide much
needed information.
Guy Freutel
Page 113

Survey of Current Conditions
Beset by floods and excessive rains, disappointing
consumer spending, and military expenditures be­
low anticipated rates, the economy of the Eighth
District slowed down somewhat during July from
the high levels of activity reached earlier this year.
Flood damage to crops and businesses along the
river was heavy. In addition interruption of trans­
portation and normal living patterns slowed pro­
duction in some businesses not directly hit by high
waters. Nevertheless, the material cost of the flood,
in this district, while immeasurable in terms of
distress to those affected, will not be large in terms
of total District income this year.
Several factors, along with the flood, contributed
to the slowing down of activity in the Eighth D is­
trict. During June and early July, consumers and
businesses continued their policy of cautious buy­
ing. Prices at retail were generally steady and at
wholesale eased off some. Beef slaughter and
whiskey production were dawn sharply in June
from the previous month. Bank loans to business
decreased. Agricultural prospects in several im­
portant district farming areas were not too bright
at mid-July.
On the other hand, district manufacturing activity
as indicated by electric power consumption re­
mained at the high level of previous months. Steel,
coal, and crude oil production were virtually un­
changed in June.
Nationally, both employment and unemployment
were up in June, when increases are normally expePRICES

rienced. Manufacturers’ inventories have been in­
creasing (up $1 billion from April to May to $39
billion) but so have their unfilled orders. Manufac­
turers sales were up slightly. Consumers have pur­
chased goods in sizable volume, but not fast enough
to prevent retailers’ stocks from increasing, and not
as rapidly as might have been anticipated on the
basis of expanding personal income alone.
The index of industrial production declined more
than seasonally in July. Wholesale prices— except
for foods— moved downward somewhat in June
and early July and consumer prices showed greater
stability than had appeared for many months.
Some indicators suggest that activity in the
private sector of the national economy is easing
downward. In such a situation large and growing
business inventories, softening wholesale prices, and
disappointing sales might be regarded as sources
of potential economic difficulty. Balanced against
this picture, however, is the large and growing de­
fense program, with expected government deficits,
which will exert a two-fold influence in coming
months. First, the growth in defense production
will tend to maintain employment and income. The
bulk of the defense program lies in the future.
About $42 billion in defense orders have been placed
since Korea. Some $10 billion in military goods
have been delivered and industry now has $32 bil­
lion in contracts on its books. In addition, contracts
are still being let. Second, a program of this size
may divert materials from civilian markets to the
extent that cumbersome inventories may become
comfortable stock piles of needed consumer goods.
E M PLO YM EN T

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
June, 1951
Statistics
compared with
ne/51
(1 9 Ju
26=
100)
Ju ne/50
M a y /5 1
June,’ 50
M a y /5 1
A ll Commodities....
181.7
157.3
182.8
— 0 .6 %
+ 1 5 .5 %
198.6
199.6
165.9
— 0.5
+ 1 9 .7
Farm Products...
186.3
187.2
F oods..................... .
162.1
— 0.5
+ 1 4 .9
170.5
Other......................
148.8
— 0.6
+ 1 4 .6
171.5
C O N S U M E R P R IC E




W H O LE SA LIN G

IN D E X *

Bureau of Labor
Statistics
June 15, M ar. 15,
June 15,
(1 9 3 5 -3 9 = 1 0 0 )
1951
1951
1950
185.2
United States..........
170.2
184.5
St. L ou is...............
185.0
168.8
185.2
187.8
M em phis...............
172.7
186.5
* N ew series.
R E T A IL F O O D *
Bureau of Labor
Statistics
June 15,
M ay 15,
June 15,
(1 9 3 5 -3 9 = 1 0 0 )
1951
1951
1950
226.9
U . S. (51 cities).....
227.4
203.1
St. Louis...............
238.2
238.4
210.2
Little R ock..........
225.2
225.1
200.1
Louisville.............
215.5
192.0
213.7
233.0
234.6
208.3
* N ew series.

Page 114

Total employment in the nation rose somewhat
during June, largely as a result of the seasonal ex­
pansion of agricultural activity and construction.

June 15, 1951
compared with
Mar. 15 /5 1 June 1 5 /5 0
+
—
+

0 .4 %
0.1
0.7

+
+
+

8.8 %
9.6

8.7

June 15, 1951
compared with
M ay 1 5 /5 1 June 1 5 /5 0
— 0 .2 %
+ 1 1 .7 %
— 0.1
+ 1 3 .3
-0 + 1 2 .5
+ 0.8
+ 12.2
— 0.7
+ 1 1 .9

___________Line of Commodities___________

N et Sales

Data furnished by
June, 1951
Bureau of Census,
compared with
_______ U . S. Dept, of Commerce*______ _ M a y /5 1
Ju n e/50
D rugs and Chemicals....................................
— 3%
+ 22%
D ry Goods............................................................
— 3
+22
Groceries ..............................................................
— 2
+ 8
Hardware ............................................................
—- 2
■— 2
Tobacco and its Products............................
— 2
— 2
Miscellaneous .....................................................
— 10
— 3
**T o ta l A ll L i n e s ......................................
— 5%
+ 5 %
* Preliminary.
**Includes certain items not listed above.

Stocks
June 30, 1951
compared with
June 30, 1950
....%
+26
+58
+ 2 6 ____
+33%

Due largely to the influx of students and graduates
into the labor market during June, the labor force
increased by nearly one million persons over May
and swelled the number of persons seeking work.
However, unemployment in June was 41 per cent
under the June, 1950 level.
Manufacturing employment in the nation held
steady in June, with seasonal layoffs in textile and
apparel plants, and declines in television, furniture
and automobile industries offset by increases in
defense plants and metal working plants. Slacken­
ing demand for some products and curtailed use
of steel and other metals in nondefense production
caused the declines. The layoffs affected mostly the
unskilled workers and did not have an appreciable
effect in easing the shortage of skilled workers.
In June total employment in the five major indus­
trial areas of the Eighth District was up less than 1
per cent from May but was 4 per cent greater than
June, 1950. Total nonagricultural employment was
unchanged from May.
In the St. Louis metropolitan area, employment
was about the same as in May but about 4 per
cent higher than it was in June, 1950. Seasonal
layoffs in the shoe and apparel industries caused
unemployment to increase in June. Continued
claims for unemployment compensation for the
week ended June 23 in St. Louis city and county
were up 18 per cent over the week ending May 26.
Total employment in the East St. Louis area also
showed a substantial decline during June. Layoffs
in meat packing, fertilizer plants and one defense
plant which had to retool were the main causes of
the decline.
In Evansville total nonagricultural employment
decreased slightly in June from May but was 1 per
cent over the June, 1950 level. Employment de­
creases in refrigerator and automobile manufactur­
ing plants were the chief cause of the decline and
further decreases were announced in early July.
Nonagricultural employment in Little Rock dur­
ing June was off less than one per cent from May
but was still higher than a year ago. Manufacturing
employment dropped slightly, and trade employ­
ment somewhat more. These declines were almost
offset by an increase in construction employment.
At Louisville there was a slight increase in non­
agricultural employment as a result of increases
in construction and government, which more than
offset the decline in manufacturing employment.
The total employment picture in Memphis was
about the same as in May with declines in trade
and increases in construction. Total nonagricul­




tural employment in Memphis was up slightly from
May and was higher than a year ago.
INDUSTRY

Eighth District manufacturing activity in June
was about equal to that of May, but remained well
above the level of June, 1950. Daily average indus­
trial consumption of electric power was slightly
greater in June than in May, and steel, coal and
oil production was maintained at about the same
level in June as in May. However, some lines—
lumber and whiskey— reported decreased activity
and easing prices. Rail transportation decreased
somewhat reflecting, in part, the flood conditions in
Missouri.
Leading district cities used 4 per cent more indus­
trial electric power in June, on a daily average basis,
than in May and 15 per cent more than in June a
year ago. Increased total amounts of power were
used by the rubber, food, leather, and paper and
paper products industries in June compared with
May in the five major district cities. Power con­
sumption decreased in that period in the lumber and
wood products, textile, primary metals, and trans­
portation equipment lines.
The district steel industry operated at 93 per cent
of capacity in June, a rate one point higher than in
May and 11 points above June, 1950. In the first
four weeks of July, operations were scheduled at
an average rate of 87 per cent of capacity, with
part of the decrease relative to the June rate ac­
counted for by the Independence Day holiday.
In June, 116,000 load interchanges were reported
by the St. Louis Terminal Railroad Association,
INDUSTRY

( K .W .H .
in thous.)
Evansville...
Little Rock. ...
Louisville.... ..
M emphis..... ...
Pine Bluff.,,
St. Louis........
Totals..... ...
r— R evised.

C O N S U M P T IO N O F E L E C T R IC IT Y
June, 1951
June,
M ay,
June,
1951
1951
1950
compared with
K .W . H .
M ay, ’ 51
June, ’ 50
K .W . H .
K .W . H .
16,039
+ 2 .5 %
+ 3 .6 %
16,440
15,862 r
— 3.7
+ 1 9 .2
12,497
10,093 r
12,035
- 0 + 1 1 .5
82,724
82,746
74,171
29,265
28,446
27,763
+ 2.9
+ 5.4
+ 5.9
+ 3 4 .5
9,079
7,149
9,615
— 3.3
+ 7.6
101,602
105,011
94,410 r
229,448 r
— 0 .9 %
+ 9 .7 %
251,681
253,818

L O A D S IN T E R C H A N G E D
June,’ 51
116,421
Source:

F O R 25 R A I L R O A D S A T S T . L O U I S
First N ine D ays
J u ly /5 1
J u ly /5 0
6 m o s .’ 51 6 m os.’ 50
118,122
110,339
30,032
29,561
700,140
641,200
Terminal Railroad Association of St. Louis.

M a y ,’ 51

J u n e/50

C R U D E O IL
(I n thousands June,
1951
of bbls.)
Arkansas.... ........ 77.4
Illinois.........
29.9
Indiana.......
K e n tu c k y - ,, , 27.9
Total....... ....... 304.0

AVERAGE
June, 1951
compared with
M a y /5 1
J u n e/50

P R O D U C T IO N — D A IL Y
M ay,
1951
77.9
167.0
28.8
26.9
300.6

June,
1950
79.1
172.0
30.2
26.1
307.4

—
+
+
+
+

1%
1
4
4
1%

— 2%
— 2
— 1
+ 7
— 1%

Page 115

2,000 fewer than in May. There were 6,000 more
interchanges this June, however, than in June, 1950.
In the first nine days of July, 30,000 loads were
interchanged at St. Louis, 3,700 fewer than in the
corresponding period in June but 400 more than in
the corresponding period of July, 1950. Interchange
figures for St. Louis for the nine-day period and
the remainder of July may vary considerably from
normal, however, because of flood conditions which
impeded rail traffic in Kansas, the two Kansas
Cities, central Missouri, and parts of the St. Louis
area.
Inspected meat slaughter in the St. Louis area
in June totaled 390 thousand head, about the same
as in June 1950, but 8 per cent less than in May
of this year. The total slaughter this June was
10 per cent less than the average slaughter in that
month for the past five years. Cattle slaughter,
a subject of much attention since the imposition
of the beef price control order, was 31 per cent
smaller in June than in May, and was 42 per cent
less than in June, 1950. June cattle slaughter this
year was 46 per cent less than slaughter in that
month on a five-year average basis. June slaughter
of calves was off 17 per cent but the hog kill was up
4 per cent, compared with the five-year average.
The St. Louis shoe industry continued to operate
at seasonally low levels in May and June. In June
and early July shoe manufacturers’ prices were
placed under the same type of “ pre-Korea plus”
price regulation previously given other manufac­
turers. This regulation had little immediate effect,
however, for shoes were then selling at less than
ceiling prices and by mid-July some producers had
announced price reductions.
The index of average production per mill of
Southern pine for June was 204, compared with 216
for May and 206 in June, 1950. Southern hardwood
production was scheduled at 107 per cent of capacity
in June, compared with 102 in May, and 93 in June,
1950.
PROD UCTION INDEXES
COAL

P R O D U C T IO N IN D E X
1 9 3 5 -3 9 = 1 0 0
______________Unadjusted_____________
________________Adjusted_______________
June,’ 51
M a y ,’ 51
June,’ 50
June, ’ 51
M ay,’ 51
June,’ 50
140*
131*
136
149*
127*
145
S H O E P R O D U C T IO N IN D E X
1 9 3 5 -3 9 = 1 0 0
______________Unadjusted_____________
_______________ Adjusted_______________
A p r .,’ 51
M a r.,’ 51
A p r .,’ 50
A p r .,’ 51
M ar.,’ 51
A p r.,’ 50_
137
154
141
134
151
138
*— Preliminary.

Page 116




Recent price trends in the lumber industry have
been downward. This price movement reflects
sizable inventories resulting from continued volume
production of pine and hardwood in the first six
months of 1951, a period in which shipments and
orders decreased. Some firming of pine board prices
in late June and early July was reported, due to
general rains in the South which hampered produc­
tion and slowed drying time enough to cause some
shortages.
At the end of June, there were 27 Kentucky dis­
tilleries in operation, 15 less than at the end of May
and 2 less than in June, 1950. This sharp curtail­
ment of operations reflected high inventories and
the low level of bulk sales. It is reported that some
distilleries now in operation may curtail operations
or close down in the near future.
Total coal production in the district increased
about 2 per cent in June, compared with May, but
was 17 per cent less than in June, 1950. Output
in June was somewhat greater than in May in all
district states except Missouri, where production
decreased.
District crude oil production in June on a daily
average basis was one per cent greater than in May,
but one per cent less than in June, 1950. Daily
average output decreased slightly in Arkansas in
June compared with May, but the three other oil
producing states of the district reported increased
production.
CONSTRUCTION

Expenditures for new construction put in place in
the nation totaled $2.7 billion in June, an all-time
high for that month, as a result of the substantial
increase in construction projects begun last year
and earlier this year. It should be noted, however,
that expenditures this June gained less than the
usual amount over those for May and the seasonally
adjusted rate of new construction spending for June
declined, extending the downward movement from
the March, 1951 peak.
CONSTRUCTION
B U IL D IN G

P E R M IT S

M onth of June
N ew Construction
(C ost in
Num ber
Cost
thousands)
1951
1950
1951
1950
Evansville..........
178
64 $
680 $
223
Little R ock.......
51
135
392
1,211
Louisville..........
217
215
1,256
1,611
M em phis............
1,721 2,429
2,815
5,170
St. Louis...........
281
391
2,122
3,050
June T otals......
2,448 3,234 $ 7,265 $11,265
M ay Totals......
2,414 3,767 $17,443 $18,587

Repairs, etc.
Cost
Num ber
1951
1950
1951 1950
78 $ 188
127
82 $
98
437
273
205
98
76
90
90
252
128
219
226
430
831
348
276
924 1,012 $
956 $ 1 660
1,056 1,008 $ 1,693 $ 1,553

Compared with a year ago, the amount of public
construction during June has increased but private
construction has decreased. Largely as a result of
the mobilization program the chief gains have been
in public construction of military, naval, and indus­
trial facilities and in private industrial, commercial
and public utility construction. Private residential
construction outlays, on the other hand, have fallen
to 23 per cent below those of June, 1950.
F. W . Dodge reports of contracts awarded for 37
states were up 5 per cent over June, 1950, but were
only about one-half of the May, 1951, total, which
included the Atomic Energy Commission’s projects
valued at $980 million. Excluding the AEC proj­
ects from the May total, June was off 12 per cent.
New private housing units started in June were
off 7 per cent from May and were about 40 per cent
less than June, 1950. Due to the rush by public
housing authorities to get projects under way before
the end of the fiscal year, 42,000 new public dwell­
ings were authorized in June. Residential contracts
awarded in June, both public and private, were off
14 per cent from last year, while nonresidential
contracts were up 25 per cent over June, 1950.
In the Eighth District $95 million in contracts
were let in June as compared with $122 million in
May (excluding the Paducah AEC project) and
$80 million last June. Nonresidential contracts in
June were less than in May by 17 per cent but
exceeded the June, 1950 level by 44 per cent. Resi­
dential awards were off 23 per cent from May and
9 per cent lower than June, 1950.
In the St. Louis territory, as defined by the F. W .
Dodge Corporation, including most but not all of
the Eighth District, the number of dwelling units
included in contract awards in June was 2,113 as
compared with 2,747 in June, 1950, a decline of 23
per cent. However, over the first half of this year,
awards were made for approximately as many dwell­
ing units as in the first half of 1950. About 14,000
units were begun in each period.
TRADE

Retail sales in the district during June generally
failed to top those in either the previous month or
the same month of 1950. Over most of the district,
unseasonably cool and wet weather cut sharply into
the sale of seasonal merchandise. Uncertainty as to
developments, both in Korea and on the home front,
plus heavy consumer buying earlier this year were
among other reasons advanced by store executives
for the decline.
At reporting district retail outlets June sales were
down, more than seasonally in some lines, from
those in May. The decline in sales in June com-




TR A D E

DEPARTM ENT

STORES
Stocks
on H and

N e t Sales
June, 1951
compared with
M a y /5 1 J u n e /5 0
8 th F . R . District...
Ft. Smith, A rk .1.....
Little Rock, A rk ....
Quincy, 111................
Evansville, Ind........
Louisville, K y ..........
St. Louis Area2..... *
St. Louis, M o .....
Springfield, M o .......
Memphis, Tenn.......
A ll Other Cities*....

6 m o s /5 1
to same
period ’ 50

Stock
Turnover

June3 0 /5 1
Jan. l ,t o
comp, with
June 30,
June 3 0 /5 0 1951 1950

1.91
+ 30%
1.57
— 2%
+ 6%
+ 34
1.59 1.83
+ 2
+ 13
— 7
+ 19
1.52
1.86
+ 2
+ 19
+ 7
+ 12
1.55
1.58
+ 39
1.74
+ 13
1.46
+ 3
+ 1
+ 7
+ 16
1.83 2.07
1.92
— 3
+ 6
+40
1.50
1.87
— 3
+ 5
+ 40
1.45
1.67
+ 29
1.39
+ 4
+ 5
__ 4
1.93
+21
+ 5
1.78
+ 3
1.50
+ 10
+ 11
1.33
rkansas; Harrisburg, M t. Vernon, Illinois;; Vincennes,
Indiana; ^ Danville, Hopkinsville, M ayfield, Paducah, K en tu c k y ; Chillicothe, M issouri; Greenville, M ississippi; and Jackson, Tennessee.
1 In order to permit publication of figures for this city, a special sample
has been constructed which is not confined exclusively to department
stores. Figures for any such nondepartment stores, however, are not used
in computing the district percentage changes or in com puting department
store indexes.
2 Includes St. Louis, Clayton, M aplewood, M issouri; Alton and Belle­
ville, Illinois.
Outstanding orders of reporting stores at the end of June, 1951, were
1 per cent greater than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding June 1, 1951,
collected during June, by cities:
—
—
—
—
—
—
—
—
—
—

11%
15
22
6
7
10
7
8
022
4

Instalm ent Excl. Instal.
Instalm ent E xcl. Instal.
Accounts
Accounts
Accounts
Accounts
Fort Smith................. %
48%
Q uincy................... 2 3 %
64%
Little R ock.......
17
49
52
St. L ouis............ ...20
Louisville........... 20
47
Other Cities..... ... 13
51
M emphis............ 18
40
8 th F .R . D ist... 19
48

IN D E X E S O F D E P A R T M E N T ST O R E SA LE S A N D STO C K S
8th Federal Reserve District

Sales (daily average), unadjusted®...................
Sales (daily average), seasonally adjusted 8..
Stocks, unadjusted* ............................................. ..
Stocks, seasonally ad ju sted 4 ...............................
3 D aily average 1 9 3 5 -3 9 = 1 0 0 .
* End of M onth Average 1 9 3 5 -3 9 = 1 0 0 .

June,
1951
282
313
389
389

M ay,
1951
323
330
403
403

A p r.,
‘ 1951
304
320
437
437

June,
1950
293
326
299
299

S P E C IA L T Y ST O R E S
Stocks
on H and

N et Sales

Stock
Turnover

June, 1951
6 mos. ’ 51 June 3 0 /5 1
Jan. 1 to
compared with
to same comp, with
June 30,
M a y ,*51 June,*50 period *50 June 3 0 /5 0
1951 1950
M en’ s Furnishings.... — 1 6 %
-0 -%
+ 4%
+49%
.96 1.28
Boots and Shoes...... — 8
+12
+ 8
— 20
2.07 2.18
Percentage of accounts and notes receivable outstanding June 1, 1951,
collected during Ju ne:
M en’s Furnishings....................... 4 5 %
B oots and Shoes.......................... 4 3 %
Trading da ys: June, 1951— 2 6 ; M a y , 1951— 2 6 ; June, 1950— 26.
R E T A IL
N et Sales

F U R N IT U R E

STOR ES

Inventories

Ratio
of
June, 1951
June 30 ,. 1951
Collections
compared with
compared with
_ _ _ _ _ _ __________
M a y /5 1 June,*50 M a y 3 1 /5 1 June 3 0 /5 0 Ju n e/51 J u n e/50
8th D ist. T o ta l1. — 8 %
+ 22%
,2 0 %
23%
— 15%
— 3%
St. Louis A rea2.. — 14
26
30
— 18
— 4
+ 15
—
4
St. Louis......... — 13
26
+
15
— 18
30
Louisvile Area*. + 1
15
— 5
— 7
+ 37
15
—
4
—
3
Louisville.......
— 7
+ 36
14
14
M em phis............. + 2
13
— 12
15
— 5
— 8
+ 16
16
Little R ock........
+ 8
21
— 16
— 5
— 13
— 4
+ 57
17
Springfield.......... — 12
15
*
*
*
*
Fort Smith.......... — 13
— 16
*
N o t shown separately due to insufficient coverage, but included in
Eighth District totals.
r i n addition to following cities, Includes stores in Blytheville, Pine
B luff, A rkansas; 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.
8 Includes Louisville, K en tu c k y ; and N ew A lbany, Indiana.

1

PERCENTAGE

D IS T R IB U T IO N

O F F U R N IT U R E
Ju n e/51
M a y /5 1
Cash Sales.....................................................................
17%
16%
Credit S a le s................................................................. 83
84
Total Sales.............................................................. 1 0 0 %
100%

SALES
J u n e/50
14%
86
100%

Page 117

pared with last year was smallest in the soft goods
lines. At department stores and apparel stores,
sales were slightly less than last year. Furniture
store sales were about one-eighth under those in
1950 and appliance sales were even more disap­
pointing. Dealers in both new and used automo­
biles reported sales drops in a period that normally
shows high activity.
Inventories showed some decline from those at
the end of the previous month but remained at a
level substantially higher than last year, except at
women’s specialty stores. Despite a level of inven­
tory considerably larger than a year ago, the value
of department store outstanding orders was slightly
larger than last year. In most hard goods lines,
commitments for future deliveries were very small.
Department Stores— Nationally, June sales vol­
ume dropped slightly below that in May but was
about equal to that during June, 1950. In contrast,
June sales throughout the district, down more than
seasonally, totaled about one-tenth less than in
May and were 2 per cent below those in June, 1950.
On a seasonally adjusted basis, daily average sales,
in June, were 313 per cent of the 1935-1939 average.
They were 330 per cent in May and 326 per cent in
June, 1950. For the first half of the year, district
sales were 6 per cent larger than in the same period
of 1950.
With the exception of Springfield, major cities
reported sales declines from May. In Springfield
sales were about the same as in May. Declines
in other cities ranged from 4 per cent in several
small district cities to 22 per cent in Little Rock
and Memphis. Compared with last year sales de­
clined in June in the St. Louis area, Memphis and
Little Rock. Elsewhere in the district sales gains
ranged from 2 per cent in Fort Smith to 7 per
cent in Quincy.
The retail value of inventories held by district
department stores on June 30 dropped 7 per cent
from that on May 31, but remained more than onefourth larger than on June 30, 1950. Although
inventories were large, the value of outstanding
orders on June 30, advancing seasonally, were about
one-half larger than on May 31 and were slightly
larger than last year. Part of the gain in both
the value of inventory held and orders placed com­
pared with last year is the result of the currently
higher price level.
Apparel Stores — St. Louis women’s specialty
store sales during June were about one-fourth less
than in May and were 3 per cent less than in
June, 1950. The retail value of inventory held on
June 30 was slightly above that on June 30, 1950.
Page 118




At district men’s wear stores, June sales volume
was 16 per cent less than in May and was equal
to that in June, 1950. Inventories on June 30,
down 10 per cent from a month previous, were 49
per cent larger than a year ago.
Furniture Stores— District furniture store sales
in June totaled 8 per cent less than in May and
15 per cent less than in June, 1950. In some major
district cities, sales gained slightly from those in
the previous month. Compared to June, 1950, how­
ever, the decline in furniture store sales was general
throughout the district. The retail value of inven­
tories held by district stores on June 30 was slightly
less than on May 31 but was about one-fifth larger
than a year ago. Of the major district cities only
Memphis stores reported inventory under that on
June 30, 1950.
AGRICULTURE

Weather in most of the Eighth District was too
dry in May, but too wet in June and the first two
weeks of July. In contrast to relatively favorable
conditions nationally, crop prospects on July 1 were
not bright in several important district farming
areas and weather during the first two weeks of
July gave little cause for optimism.
Floods have caused major damage to property
and crops in the Missouri River lowlands and sev­
eral tributary streams. Some areas along the Missis­
sippi River also were flooded. Accurate data on
areas flooded are not available, but estimates in­
dicate nearly one-half million acres were flooded
in Missouri with a crop loss valued at a minimum of
$25 million. Although this amount alone is a rel­
atively small part of Missouri or district farm in­
come, the loss is severe in the affected counties.
Not only were spring-sown crops lost, but in many
AGRICULTURE

C A S H F A R M IN C O M E
5 month total
M ay. 1951
compared with
April, M ay,
(In thousands
M ay,
of dollars)
1951
1951
1950
1951
, $ 26,547
$ 140,811
+ 5% + 1 6 %
155,781 — 1
+ 18
753,083
86,900 — 2
+ 17
415,314
33,432
+ 19
+ 21
214,661
18,151
+ 22
124,262
+ 36
88,091
+ 6
+ 24
407,231
31,271
+ 22
159,093
+ 23
T otals............. $440,173

+

4%

+20%

$2,214,455

Jan. to M ay,
1951
compared with
1949
1950
+
+
+
+
+
+
+

3 1% — 10%
+ 18
9
16
+ 21
+ 6
3
— 27
67
+ 19
26
20
+ 11

+ 17%

+ 11%

S H IP M E N T S A T N A T IO N A L S T O C K Y A R D S
Shipments____________
Receipts__________
June,’ 51
Ju ne/51
compared with
June
June,
compared with
M a y ,’ 51 June,’ 50
1951
1951
M a y ,’ 51 June,’ 50
+ 41%
-0 -< #
34,999
Cattle and calves.... 78,067
— 7%
— 24%
— 3
+ 4
101,575
H o g s ............................ 288,787
— 13
+21
— 20
— 16
_
l
— 29
37,571
Sheep........................... 56,286
—
2%
—
2%
174,145
— 11%
- 0- %
T otals..................... 423,140

R E C E IP T S

AND

areas the wheat crop had not been harvested before
the fields were flooded. Farmers in these areas will
have little chance of realizing any income from crops
for the entire year.
Some other district areas, although not flooded,
were too wet up to mid-July. W et and cool weather
had been unfavorable for tobacco growth in Ken­
tucky, although weather in the main burley pro­
ducing area in the Bluegrass was more favorable
than in outlying areas. Similarly, weather had been
unfavorable for cotton. Dry weather earlier had pre­
vented germination or had produced poor stands.
W et weather in June and July caused many lateplanted fields to become grassy, and kept them too
wet for chopping. Considerable abandonment had
taken place before July 1 and was taken into account
in the July 1 acreage report. Some abandonment
has occurred since then. Scarce chopping labor,
rapid grass growth, boll weevil and thrips were
making an expensive crop.
Generally, cotton fields in hill country and in the
lighter soils of the Delta by mid-July were clean,
however, and the crop was making fair to good
progress. In the heavier soils, conditions were less
favorable.
Nationally, a cotton crop of 29.5 million acres was
in cultivation July 1, exceeding the announced goal
by one million acres. Acreage planted in district
states is about one-third more than was planted in
1950, compared with a 59 per cent increase nation­
ally. Largest increases in acreage occurred in Texas
where 13.1 million acres were planted in cotton, an
86 per cent increase. California acreage is 1.3 mil­
lion, an increase of 129 per cent. Acreage in Arizona
doubled and equals the Missouri cotton acreage.
In the Southwest, there are 17 million acres of
cotton (8 million more than in 1950) and the
weather has been relatively favorable.
COTTON

ACREAGE

IN

E IG H T H

D IS T R IC T

STATES

Acreage in cultivation July 1
Per cent change
(I n thousands)
1951
1950
___ from 1950___
Arkansas
................................................................ 2,350
1,728
+ 36%
Mississippi ..............................................................2,625
2,084
+ 26
Tennessee ................................................................ 835
629
+ 33
Missouri ................................................................... 560
438
+ 28
United
Source:

States

.................................................... 29,510

18,613

+ 59

U SD A

Despite unfavorable crop conditions in Missouri
and Iowa, the first estimate of the corn crop was
3.3 billion bushels, a near record, and more than
the 1950 crop of 3.1 billion bushels. Yield prospects
in uplands and in the southern part of the Corn Belt
generally were good.
Prices received by farmers declined for the fourth




consecutive month during the month ending June
15. On that date farm prices were 1 per cent below
a month earlier, but 22 per cent above a year earlier.
Prices of cotton, truck crops, oil bearing crops, feed
and food grains all declined and were only partially
offset by higher prices for hogs, veal calves, butterfat, and turkeys.
Prices paid by farmers remained unchanged. As
a result of lower prices received, the parity ratio
declined to 106 compared with 108 in May and 111
in March.
BANKING AND FINANCE

In the period from mid-June to mid-July of this
year, Eighth District bankers continued to exercise
caution and restraint in their lending operations.
Business loans at the weekly reporting banks de­
clined, investments showed virtually no change and
deposits were down. Tight bank reserve positions
the last two weeks of the period and the Voluntary
Credit Restraint Program were major factors in the
shrinkage in business loans. At the same time, cau-*
tious inventory policies and some price declines may
have eased the demand for bank credit. Rate of use
of bank funds, although high, is down considerably
from the peak last January.
District Banking Developments— According to
weekly condition reports from the larger banks in
the Eighth District, commercial loans declined $14
million from mid-June to mid-July with each report­
ing center showing a drop. In comparable periods
of the five preceding postwar years, commercial
loans averaged no change. In the current four-week
period, net repayments came principally from com­
modity dealers, sales finance companies and food
manufacturers. On the other hand, new loans to
finance construction exceeded repayments. Loans
outstanding to finance defense contracts rose over
$1 million in the period. Loans to finance both de­
fense and defense-supporting activities amounted to
8 per cent of total new loans made by reporting
banks in the four weeks.
Despite the decline in commercial loans, total
loans rose $15 million in the four-week period.
Loans to banks which increased $25 million in the
period were primarily responsible for the rise. Loans
secured by real estate and securities expanded
slightly in the four weeks while consumer loans
showed little change.
Investments rose only slightly from mid-June
to mid-July at the larger district banks. A decrease
of $5.1 million in Government securities was more
than offset by a $5.6 million increase in “ other”
securities.
Page 119

DEBITS TO DEPOSIT ACCOUNTS

From June 13 to July 11 total deposits fell $38
million at the city banks in the Eighth District.
A large decline in deposits of individuals and busi­
nesses was partly offset by an increase in deposits
of the U. S. Government and banks. To meet the
outflow of funds, these banks drew on their re­
serves at the Federal Reserve.

—
I
June 1951
June,
compared with
June,
M ay,
( I n thousands
1950
M a y ,’ 51 June, 50
1951
1951
of dollars)
25,728 — 4 %
26,450 $:
25,519 $;
— 1%
E l Dorado, A r k ............... $
+ 14
39,383
+ 1
44,382
44,736
Fort Smith, A r k ............
+ 12
6,122 — 7
7,346
6,827
H elena, A rk ......................
130,005
+ 4
+ 11
138,676
143,997
Little Rock, A rk............
+ 15
24,430
+ 2
27,681
28,205
Pine B luff, A r k ...............
+ 23
10,447
+ 6
12,811
12,043
Texarkana, A r k .* ..........
+ 13
28,291
26,750
+ 6
30,115
A lton , 111............................
+ 7
121,041
131,407
112,995 — 8
E -S t .L .-N a t .S .Y ., 111....
+ 13
31,547
+ 1
35,512
35,274
Quincy, 111........................
2
+ 4
138,141
136,187
+
141,007
Evansville, In d ...............
+ 14
563,995
617,398
644,293
+ 4
Louisville, K y .................
31,856
+ 36
41,028
43,327
+ 6
Owensboro, K y ...............
+ 54
16,566
+ :12
25,520
22,705
Paducah, K y ....................
— 1
18,474
22
23,217
18,233
Greenville, M iss..............
+ 12
13,632
12,201
13,037
+ ‘5
Cape Girardeau, M o .....
+ 13
8,758
9,859
9,141
+ 8
H annibal, M o ..................
39,368 — 19
+ 2
40,338
49,785
Jefferson City, M o .........
+ 12
1,904,851
1,800,110
1,704,070
+ 6
St. Louis, M o ..................
—
10,148
2
+
3
10,430
10,596
Sedalia, M o ......................
+ 16
61,641
71,462
68,877
+ 4
Springfield, M o ...............
—
8
18,305
+
5
19,259
20,876
Jackson, Tenn.................
13
+ 1
524,088
609,163
530,559
M em phis, Tenn...............
+ 1 % + 10%
Totals............................. $3,921,533 $3,875,624 $3,553,064
*
These figures are for Texarkana, Arkansas, only, Total debits for
banks in Texarkana, Texas-Arkansas, including banks in the Eleventh
D istrict, amounted to $30,526.

S E L E C T E D IT E M S O F A S S E T S A N D L IA B IL IT IE S
Eighth District W eek ly Reporting Member Banks
(M illions of Dollars)
Dollar Change in
July 11, 1951 4 W eeks
Year
Business and Agricultural L oans...........
619.4
— 14.0
+ 147.5
248.9
+
2.6
+
37.5
Real Estate L oans........................................
Loans on Securities......................................
31.2
+
1.0
- 0 Loans to Banks................................................
27.7
+ 25.1
+
26.2
Other (largely consumer) L oans...........
262.7
—
0.2
+
24.8
T O T A L L O A N S (G r o s s ).................. 1,189.9
+ 14.5
+ 236.0
T otal Investm ents........................................... 1,130.9
+
0.5
— 167.7
Tim e D eposits.............* ...................................
486.3
+
0.3
—
7.7
Total Demand D eposits............................... 2,480.8
— 38.5
+ 151.6
Demand Deposits A d ju s te d ..................... 1,524.9
— 27.1
+
88.3

Banking Developments Nationally—Weekly re­
porting member banks in leading cities in the
country expanded earning assets and deposits in
June and early July. Total earning assets rose
$800 million in the period. Nearly half of the rise
was in loans. Both Government and “ other” se­
curity holdings were increased. In the comparable
periods of 1948-50 the growth in earning assets
averaged only $250 million.
Total deposits increased $1.5 billion at the large
city banks in June and early July. The increase
was the result of expansion in United States Gov­
ernment deposits, interbank deposits and time de­
posits, partly offset by $800 million decrease in
collected deposits of individuals and businesses.
As funds flowed into these banks during the period,

they were used to reduce borrowings and build
up cash assets.
Debits— The rate at which bank funds were used
was high in June. Debits to deposit accounts at
22 cities in the Eighth District were $3.9 billion in
the month, 18 per cent above the 1948-50 average
for the month of June. However, debits were down
considerably from January, the peak, when debits
were 34 per cent above the 1948-50 average for that
month. By comparison, May debits were 25 per
cent above the May, 1948-50 average.
Nationally, the rate of use of bank funds in lead­
ing cities remained high in June, but like the dis­
trict was down somewhat from the peak.

E IG H T H D IS T R IC T
M E M B E R B A N K A S SE T S A N D L IA B IL IT IE S
B Y SE LE CTED GROUPS
A ll Member______________
Change fro m :

(I n M illions of Dollars)
Assets
1.

Loans and Investm ents...................................
b. U .S .

2.

Government Obligations................

Reserves and Other Cash Balances...........
b. O ther Cash Balances 3.................................

June, 1951
$4,000
1,813
1,823
364
1,288
671
617
47
$5,335

M ay, 1951
to
June, 1951
$ + 12
— 21
+ 22
+ 11
— 18
+
6
— 24
— 11
$— 17

June, 1950
to
June, 1951
$ + 134
+ 315
— 175
—
6
+ 137
+ 108
+ 29
+
5
$+276

________Large City Banks 1__________
Change fr o m :
M ay, 1951 June, 1950
to
to
June, 1951 June, 1951 June, 1951
$ + 109
$2,341
$ + 17
+ 241
1,195
— 22
972
— 117
+ 32
174
+
7
— 15
812
+ 100
— 17
434
—
5
+ 68
+ 32
378
— 12
—
2
29
+
3
$3,182
$+212
$—
2

_________ Smaller Banks 2
Change fr o m :
M ay, 1951 June, 1950
to
to
June, 1951 June, 1951 June, 1951
$ + 25
$1,659
$—
5
+ 74
618
+
1
— 58
— 10
851
+
9
190
+
4
476
—
1
+ 37
237
+ 11
+ 40
239
—
3
— 12
18
—
9
+
2
$2,153
$— 15
$ + 64

Liabilities and Capital

7.

Borrowings and Other Liabilities.............

9.

T otal Liabilities and Capital Accounts....

$3,967
590
3,377
981
45
342
$5,335

$—
—
—
+
—
—
$—

8
2
6
1
9
1
17

$ + 254
+ 27
+227
—
9
+ 17
+ 14
$ + 276

$2,458
557
1,901
491
34
199
$3,182

$+
—
+

10
3
13
- 0— 11
—
1
$—
2

$ + 197
+ 27
+ 170
—
9
+ 13
+ 11
$ + 212

$1,509
33
1,476
490
11
143
$2,153

$—
+
—
+
+

18
1
19
1
2
—0—•
$— 15

$+

57
—0—
57
- 0+
4
+
3
$ + 64
+

in c lu d e s 15 St. Louis, 6 Louisville, 3 Memphis, 3 Evansville, 4 L ittle R ock and 4 East St. Louis-N ational Stock Y ards, Illinois, banks.
2Includes all other Eighth D istrict member banks. Some of these banks are located in smaller urban centers, but the m ajority are rural area banks.
3Includes vault cash, balances with other banks in the United States, and cash items reported in process of collection.

Page 120