Full text of Review (Federal Reserve Bank of St. Louis) : December 1956

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Volume X X X V I I I

___ m

___ ___ ' tf*,.

N um ber 12

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Postwar Devempments in




BANK CREDI7 FOR AGRICULTURE
i l ^ W T W A R ' FA RM A D JU STM EN TS in the Eighth Federal Reserve District
,
td exert pressure for hank credit. Eighth District commercial hanks play a
le in supg|lyi»g the district’s farm production credit needs.
mm-

#•

...

A recent survey of bank credit for agriculture provided data on purposes of loans
outstanding, security, maturity terms, length of continuous indebtedness of farm
borrowers to banks, and renewal status of loans outstanding.
Interest rates on loans outstanding were found to be related to size and purpose of
loan. The size of loan is related to loan purpose, type of farm, net worth, the age
of fartlftter borrowers, and tenure of borrow ers.
A,.idgpj®.ca^i||Qrtion of farm machinery and equipment loans were purchased from

retailers andotfaBRs.
Most of the district fai:n debt is held by smaller banks, but loan participations en­
able banks to serve tlv- credit needs of large-scale farms.
The survey deriionst rated that banks have adjusted lending practices to meet farm­
ers’ changing cred it needs
v —

edera

sejrc; B an k
St. Louis

Survey o f C u rren t C o n d itio n s—p . 116

Postwar farm adjustments in the Eighth Federal
Reserve District continue to exert pressure for
bank credit.

E i g h t h D ISTRICT FARMERS are making progress toward more efficient farming operations. They
are increasing aggregate farm output and output per
worker employed, as well as releasing large num­
bers of workers from agriculture to other industries,
Increased efficiency has resulted from major farm re­
source adjustments. These adjustments range in com­
plexity from the simple quantitative type such as the
application of increased quantities of fertilizer per unit
of land, to major shifts from crop to livestock farming,
animal to tractor power, or changes in the ratios of
land and machinery to labor. Such changes are essen­
tial to progress.
Both the adoption of major resource changes and
improvements in production practices usually involve
increased capital investment per worker and addition­
al managerial and technical skills. Greater use of cap­
ital and higher costs of equipment and supplies are
reflected in increased credit needs on district farms.
Thus, a dynamic agriculture is exerting increased
pressure on credit institutions for larger amounts of
credit and more flexible types of credit to meet ex­
panded capital requirements resulting from postwar
farm resource adjustments and generally rising prices.
Eighth District commercial banks play a major role in
supplying the district’s farm production credit needs.
Historically, co m m ercia l banks have su p p lied
Eighth District farmers with most of their production
credit requirements. In the seven district states, banks
held over three-fourths of all such credit outstanding
by institutional lenders on January 1, 1956. The per­
centage is somewhat above that for the nation as a
whole, and the relative gain in amount held by banks
in the district states since 1945 has been greater than
for banks in the rest of the nation. Other principal
institutional suppliers of non-real estate credit to dis­
trict farmers are the Production Credit Associations
and the Farmers Home Administration, holding ap­
proximately one-sixth and one-twelfth, respectively, of
the total outstanding.
On June 30, 1956, Eighth District banks had out­
standing $496 million in loans to over 300,000 farmer
borrowers. This represented an increase in amount
outstanding of 5 per cent over that held in mid-1955,
and was more than double that held in mid-1947. Al­
though these loans constituted only a small portion of
all loans outstanding at insured commercial banks in
the district, the aggregate figures obscure the import­
Page 138




ance of farm credit to many banks. Loans to farmers
are the largest single category of loans in most Eighth
District banks.
A recent survey o f bank credit for agriculture . . .
To gain insight into the ability and willingness of
banks to provide funds for agricultural purposes,
more than routine information is needed. Data are
required on specific characteristics of bank loans: ma­
turity, interest rate, purpose, security, and borrower
characteristics. In 1947 a survey designed to supply
such data was undertaken and the results were report­
ed in this Review. During 1947 farm income was near
a record high following the large war and immediate
postwar demands for American farm produce. At the
same time bank loans to farmers were near the post­
war lows, reflecting the limited amount of machinery
available to farmers and the highly liquid position of
farmers.
Since that time a number of major developments
have influenced the volume and characteristics of
farm loans in the district. Although gross farm in­
come has declined substantially, income per farm fam­
ily has remained fairly steady. The number of work­
ers in agriculture has declined, and the investment
per worker has increased, reflecting technological im­
provements. Capital needs of farmers have been ex­
panded by increased use of irrigation facilities, fer­
tilizer, machinery, and by adjustments in the size and
type of farms.
Another farm loan survey was made as of June 30,
1956. The survey was conducted by the Federal Re­
serve System in cooperation with the Federal Deposit
Insurance Corporation and the American Bankers As­
sociation.1 Analysis of the survey results throws light
on the field of bank credit to agriculture.
. . . provided data on purposes of loans outstanding, . . .
Information obtained on the purpose of each loan in
the mid: 1956 survey showed, once again, that loans
for “current operating and family living expenses”
constituted the largest group. Yet over half the total
credit outstanding was for other purposes. Significant­
ly, intermediate-term credit accounted for more than
one-quarter of the total amount. These intermediateterm loans often extended to facilitate changes in
farming systems were used, for example, to purchase
non-feeder types of livestock, machinery, trucks, irri­
gation and other equipment and to improve land and
buildings (see Table I).
i The survey was on a stratified sampling basis. In the Eighth District
143 banks cooperated by reporting details on all or segments of their loans to
farmers. These sample results were then expanded to previously reported
totals for all commercial banks in the district. The accuracy of the estimates
diminishes, of course, as smaller and smaller parts of the aggregate loan
totals are considered.

TABLE I
FARM CREDIT OUTSTANDING, MID-1956 , AT INSURED COMMERCIAL BANKS IN THE EIGHTH DISTRICT
BY PURPOSE AND SECURITY OF LOAN
(Dollar amounts in thousands)

Unsecured

Endorsed
or
Co-maker

Purchase feeder livestock. ....................... ...............
Purchase other livestock. .........................................
Buy machinery, trucks, irrigation equipment, etc..
Current operating and family living expenses . . .
Purchase auto or other consumer durables...........
Consolidate or pay other debts................................
Buy farm real estate. . . . . .................. ....................
Improve land and buildings....................................

$14,084
9,705
5,650
50,859
908
3,926
5,088
3,810
3,361

$ 1,477
2,618
6,442
10,317
1,621
1,847
2,018
1,227
2,432

$ 14,054
18,142
50,995
89,603
8,077
7,699
1,444
2,453
2,677

$

Total outstanding. ............................................

$97,391

$29,999

$195,144

$153,676

Major Purpose

Chattel
Mortgage

Farm
Real Estate
Mortgage
3,004
2,099
3,992
10,489
1,105
20,742
85,934
20,566
5,745

Government
Guaranteed
or
Insured
$

18

Other

Total

—

264
2,707
1,514
3,833
33
1,119
161
585
1,445

$ 32,901
35,271
70,103
165,169
11,744
35,333
101,186
28,833
15,660

$8,329

$11,661

$496,200

—

1,510
68

—

6,541
192

$

Percentage distribution
Purchase feeder livestock....................................
Purchase other livestock. .........................................
Buy machinery, trucks, irrigation equipment, etc*.
Current operating and family living expenses. . . .
Purchase auto or other consumer durables............
Consolidate or pay other debts............................. ..
Buy farm real estate..................................................
Improve land and buildings.......... ........................
Total outstanding. . . . . . . . . . . .

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

42.8 %
27.5
8.1
30.8
7.7
11.1
5.0
13.2
21.5
19.6

4.5%
7.4
9.2
6.3
13.8
5.2
2.0
4.3
'

155
6.0

42.7%
51.4
72.7
54.2
68.8
21.8
1.4
8.5
17.1

9.1%
6.0
5.7
6.4
9.4
58.7
84.9
71.3
36.7

39.3

31.0

0.1%

—

2.2
*
—

—

6.5
0.7

. ,
1.7

0.8%
7.7
2.1
2.3
0.3
3.2
0.2
2.0
9.2

100.0%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

2.4

100.0

*Less than 0.05 of 1 per cent.

... security, ...
In conventional credit practice, collateral pledged
has been closely related to loan purpose. Machinery
has been the primary security used for machinerypurchase loans, farm mortgages for farm-purchase
loans, and so on, and substantial cash down payments
have usually been required. But there is evidence that
the practice of relating collateral to purpose of loan is
changing. Collateral not directly related to purpose
may often secure loans. Moreover, the pledge of addi­
tional diverse forms of collateral may be in lieu of
large down payments.
The survey developed no data on the diversity of
collateral supporting the loans. It required that only
one major type of security be designated for each note;
other security sources of lesser importance were un­
listed. Among those listed as major collateral, chattel
mortgages were the most significant, such mortgages
being used to secure almost two-fifths of all farm loans
outstanding. They were the principal source of secu­
rity for loans to purchase non-feeder livestock,
machinery, autos, and other consumer durables.
Next in importance as security for farm credit were
farm real estate mortgages. Mortgages were the major




security for over half of all loans made to consolidate
or pay debts, for almost three-fourths of the credit
advanced to improve land and buildings, and for over
four-fifths of the real estate purchase loans.
The use of farm mortgages as security for other
than real estate purchase loans has increased in the
district both in absolute number and relative to the
total number since the mid-1947 survey. About onethird of the number of such loans held by district
banks on the above date were made for purposes
other than to finance the purchase of farm land,
whereas in mid-1956, 54 per cent of farm mortgage
loans held were made for other purposes.
Unsecured loans continue to make up a large share
of the farm loan portfolio at district banks, despite the
recent decline in farm income. Such loans are espe­
cially important in connection with livestock pur­
chases and current operating and family living ex­
penses. The endorser or co-maker type of note,
although declining in importance, still accounted for
6 per cent of the loans. Many of the endorsers were
fathers helping their sons obtain credit in order to get
established. Government guarantees and stocks, bonds
and other types of security were relatively unimportant.
Page 139

TABLE II

Term of Loan1

FARM CREDIT OUTSTANDING, MID-1956, AT INSURED COMMERCIAL BANKS IN THE EIGHTH DISTRICT
BY MATURITY AND PURPOSE OF LOAN
(Dollar amounts in thousands)
Buy Non-feeder
Purchase Feeder
Livestock,
Livestock,
Machinery,
Current Operating
Consolidate
Consumer Durables,
and Family
or Pay
Buy Farm
Improve Land
Living
Other
Real
Other
and Buildings
Expenses
Debts
Estate
Purposes

All
Purposes

loans Not Secured by Real Estate
Demand.........................
1 month-6 months. . .
9 months-1 year. . . .
15 months-3 years___
4 years and over. ..
Tot al. . . . . . . . . .

$

9,253
39,061
32,790
34,221
1,160

$ 19,988
106,245
54,712
3,366
180

$ 2,566
7,507
4,101
418
-—

$ 1,207
3,708
3,473
321

$2,092
4,249
2,528
874
173

:.^.^tllfc

$116,485

$184,491

$14,592

$ 8,709

$9,916

"I

$ 35,106
160,770
97,604

mm

Percentage Distribution
D e m a n d . . . ................
1 month-6 months. .
9 months-1 year. . . .
15 months-3 years. . . .
4 years and over. . .
Total....................
Demand.......................
1 month-6 months. .
9 months-1 year. . . .
15 months-3 years. . .
4 years-5 years.........
Over 5 years..............
Total.........................

$

7.9%
33.5
28.2
29.4
1.0

10.8%
57.6
29.7
1.8
0.1

17.6%
51.4
28.1
2.9
—

13.8%
42.6
39.9
3.7
—-

21.1%
42.8
25.5
8.8
1.8

10.5%
48.1
29.2
11.7
0.5

100.0%

100.0%

100,0%

100.0%

100.0%

100.0 %

$ 3,522
8.444
24,794
11,294
18,296
26,126
$92,476

$ 653
525
1,624
257
1,104
1,582
$5,745

3,8%
9.1
26.8
12.2
19.8
28.3
100.0%

11.4%
9.1
28.3
4.5
19.2
27.5
100.0%

1,968
3,047
10,140
3,359
6,003
4.947
$ 29,464

$

1,215
2,128
6,603
2,268
950
415
$ 13,579

Loons Secured by Real Estate
$ 2,295
3,312
6,098
2,057
4,384
2,597
$20,743

$

9,653
17,456
49,259
19,235
30,737
35,667
$162,007

Percentage Distribution
Demand.......................
6.7%
8.9%
11.1%
1 month-6 months. .
10.3
15.7
16.0
9 months-1 year. . .
34.4
48.6
29.4
15 months-3 years. . .
11.4
16,7
9.9
4 years-5 years.........
20.4
7.0
21,1
Over 5 years..............
16.8
3.1
12.5
T o ta l..................
100.0%
100.0%
100,0%
i Loans with maturities not listed are classed under the nearest figure shown
— e.g., 5-month and 7-month loans are included in “6 months/

. . . maturity terms, . . .
The survey indicated that approximately 5 per cent
of the non-real estate loans outstanding in mid-1947
had a final maturity beyond twelve months from the
date made, whereas in mid-1956 12 per cent of all such
loans matured in excess of a year from the date made.
At the earlier survey date 21 per cent of all non-real
estate loans matured within three months, but in mid1956 only 18 per cent matured within 4*2 months.2 The
trend toward longer terms was not as pronounced for
farm mortgage loans as for production loans held by
district banks.
Maturities on both real estate and production loans
to farmers in the Eighth District were related to loan
purpose. For example, of the loans for short-term
purposes (current farm operations, family living, and
purchase of feeder livestock), 65 per cent matured
within six months and only 4 per cent had maturity
- Because of differences in processing the responses of the two surveys, the
data do not permit exact comparison of loan maturities.

Page 140




5.9%

10.8
30.4
11.9
19.0

22.0
100.0 %

terms exceeding a year. For intermediate-term pur­
poses (land and building improvements, machinery,
consumer durables, or non-feeder livestock pur­
chases), 37 per cent of the loans were made to mature
within six months and 34 per cent were for over a
year (see Table II).
Maturity terms on bank loans to district farmers
were also related to the type of security. Of the loans
secured by real estate to buy other livestock, machin­
ery, consumer durables and to improve land and
buildings, approximately 37 per cent matured four
years or over from the date made. Only one per cent
of loans made for the same purposes without real
estate mortgage security had maturities as long as
four years. In both cases most of the longer-term
loans were probably made to finance land and build­
ing improvements.
All other purpose groupings
secured by real estate mortgages had a higher portion
maturing after one year than the same groupings
secured by other means or unsecured.

... length of continuous indebtedness
of farm borrowers to banks, ...

Interest rates on loans outstanding were found
to be related to size and purpose of loan.

Although a large percentage of district bank loans
to farmers are still written to mature within twelve
months or less, many farmers' obligations are in prac­
tice carried by banks for relatively long periods. In
mid-1956 approximately one-fifth of the farmer bor­
rowers using non-real estate credit at Eighth District
banks had been in debt to the banks over a period of
at least three and a half years. More than one-half
of the number of borrowers using real estate mort­
gages in mid-1956 had been in debt continuously dur-

In analyzing the patterns of interest rates paid by
farmers, it must be remembered that the effective
rate is higher on a discount basis than on a straight
interest basis. Moreover, an instalment repayment
method may sharply affect the actual rate paid. To
avoid confusion and to make more meaningful com­
parisons, interest rates used in the survey were uni­
formly computed as the effective annual rate rather
than the stated rate of interest or discount.

TABLE III
TERM OF INDEBTEDNESS TO BANKS BY FARM
BORROWERS AS OF JUNE 30, 1956
Indebtedness
began

1956
1955
1954
Before 1954
Unknown
Total

Borrowers with
Borrowers with
No Real Estate
Real Estate
_____ Loans_____
Loans
Percentage
Percentage
Distribution
Distribution
of
of
of
Borof
BorLoans
rowers
Loans rowers
37.0% 45.2%
13.3% 13.1%
25.0
25*8
23.4
21.1
7.0
11.4
13.7
6.6
19.9
29.1
51.9
52.1
1.5
2.9

A11 Borrowers
Percentage
Distribution
of
of
BorLoans rowers
31.5% 41.7%
24.6
25.2
7.8
7.7
23.3
34.4
1.2
2.6

100.0 % 100,0 %

100.0% 100.0 %

100.0 % 100.0%

ing the same period. A number of renewal notes
resulted from unanticipated carryover of production
loans beyond original maturity dates, but the most
frequent cause of continuous indebtedness was ap­
parently the use of renewable short-term notes to
finance intermediate or long-term credit needs. Some
district banks appear to have a preference for notes
made to mature within a year, regardless of the time
required by the borrower to liquidate the debt from
earnings.

... and renewal status of loans outstanding.
Further evidence of the use of short-term notes to
finance intermediate and long-term investment is
found in the large percentage of planned note renew­
als. The largest percentage of renewals occurred in
the case of single-payment loans. Approximately twofifths of such loans made to purchase real estate were
renewed, and almost all the renewals were planned
at the time the loan was made. A high percentage of
renewals occurred in the case of intermediate-type in­
vestments involving the purchase of non-feeder live­
stock, machinery, consumer durables, or the improve­
ment of farm land and buildings. Almost one-fourth
of the credit was renewed where it was originally ex­
tended for short-term purposes such as the purchase
of feeder livestock, current operating expenses, and
family living. The practice of renewing notes was
much less frequent, regardless of the loan purpose,
when repayments were set up on an instalment basis.




The average interest rate paid by Eighth District
farmers to finance their operations was 6.4 per cent,
and the most prevalent rate was 6 per cent. Rates on
loans secured by farm real estate averaged 5.9 per
cent, compared with 6.6 per cent for other loans to
farmers. The effect of size of loan on interest rate was
evident throughout the loan portfolios regardless of
collateral or purpose. With one exception, each con­
secutive grouping of larger sized loans carried an
average interest rate somewhat lower than that of the
preceding size.
Interest rates also were apparently related to net
worth. In addition, interest rates were probably relat­
ed to loan purpose, although not as closely as they
TABLE IV
PERCENTAGE DISTRIBUTION OF OUTSTANDING FARM LOANS
AT DISTRICT BANKS IN MID-1956 BY PURPOSE
AND RENEWAL STATUS
All Loans
Boy other livestock, machin­
ery, consumer durables,
improve land and build*

ings............................

Buy Feeder livestock, current
operating and family liv­
ing expenses.........................
Consolidate or pay other
debts. . . . . . . .......................
Buy farm real estate................
O ther........................................
Total. . . ..............
Single Payment Loans
Buy other livestock, machin­
ery, consumer durables,
improve land and build­
ings........... .........................
Buy feeder livestock, current
operating and family liv­
ing expenses.........................
Consolidate or pay other
debts......... ........................
Total........... ....................
Instalment Loans
Buy other livestock, machin­
ery, consumer durables,
improve land and build­
ings .......................................
Buy feeder livestock, current
operating and family liv­
ing expenses.........................
Consolidate or pay other
debts....................................
Buy farm real estate................
Other.........................................
Total................................

Other
Net
Planned
Renewed Renewals Renewals

65.7%

22.3%

12.0%

Total

100.0%

73.5

15.8

10.7

100.0

52.4
61.4
60.3
66.8

21.7
33.3
27.3
22.1

25.9
5.3
12.4
11.1

100.0
100.0
100.0
100.0

54.7

30.0

15.3

100.0

73.4

15.9

10.7

100.0

53.3
44.4
57.8
63.1

22.2
49.0
29.0
24.6

24.5
6.6
13.2
12.3

100.0
ioo.o
100.0
100.0

83.5

9.9

6.6

100.0

75.2

14.2

10.6

100.0

50.2
76.6
73.0
77.4

20.3
19.2
18.5
14.9

29.5
4.2
8.5
7.7

100.0
100.0
100.0
100,0

Page 141

TABLE V
AVERAGE INTEREST RATE CHARGED ON BANK LOANS TO FARMERS BY PURPOSE AND ORIGINAL SIZE OF NOTE
Loans Secured by Farm Heal Estate
Purpose

All Loans

Buy other livestock, machinery,
consumer durables, improve
land and buildings..............................5.98%
Buy feeder livestock, current opera­
ting and family living expenses. . . . 6.37
Consolidate or pay other debts........... 5.78
Buy {arm real estate............................... 5.78
Other. .
......... .................................5.95
Total................ ...........................5.87

Under $250

*250-499

7.34%

7.80%

7.06%

8.47
8.39

8.27
6.83
7.61
6.33
7.77

7.08
6.72
6.31
6.98
8.80

6.00
6.26
7.93

$2,0004,999

$5,0009,999

$10,00024,999

$25,000
and over

6.63%

5.90%

5.69%

4.65%

5.00%

6.37
6.22
6.34
6.00
6.41

6.24
5.87
6,08
6.50
6.04

6.00
5.44
5,43
5.33
5.50

6.00
5.58
5.28
6.00
5.37

$500-999 $1,000-1,999

10.001
7.97

Loans Not Secured by Farm Real Estate
Buy other livestock, machinery,
consumer durables, improve
. 6.98%
land and buildings..................
Buy feeder livestock, current opera­
ting and family living expenses.. . . 6.42
6.72
Consolidate or pay other debts.........
Buy farm real estate............................. 5.53
Other....................................................... . 6.01
Total......................................... 6.60
Average rate all loans by size
grouping...........................................

6.36%

7.84%

7.66%

7.43%

7.10%

6.87%

6.68%

5.69%

3.93%

7.25
7.54
8.00
7.40
7.41

7.12
6.72
6.46
6.82
7.27

6.99
6.93
6.14
6.49
7.14

6.69
6.60
6.18
5.89
6.86

6.28
7.09
5.82
5.97
6.54

6.15
6.16
5.22
5.61
6.22

5.79
6.00
4.92
5.49
5.70

5.65

7.43%

7.30%

7.11%

6.77%

6.35%

5.84%

5.53%

5.71%

$10,000$24,999

$25,000
and over

Total

2.6%

100.0%

8.6

100.0
100.0
100.0
100.0
100.0%

—
—.
5.40

i Represents one unusual loan multiplied by district blow-up factor.

TABLE VI
PERCENTAGE DISTRIBUTION OF OUTSTANDING FARM LOANS IN MID-1956
BY SIZE OF ORIGINAL NOTE AND PURPOSE
Under
$250
Buy other livestock, machinery,
consumer durables, improve
land and buildings..................
Buy feeder livestock, current
operating and family living
expenses......... .........................
Consolidate or pay other debts. .
Other.
Total.

$250-499

$500-999

$5,000$9,999

5.4%

14.2%

26.2%

33.3%

11.9%

4.0%

4.9
0.8
0.1
2.9
2.8%

7.9
2.3
0.3
4.5
5.1%

13.1
7.5
1.8
8.2
10.5%

15.8
13.1
7.9
11.8
17.0%

23.0
40.0
34.2
33.1
29.9%

14.3
24.1
30.8
24.1
18.0%

12.4
12.2
23.3
15.4
12.2%

The size o f loan is related to loan purpose, . . .
As of mid-1956 farm loan holdings by Eighth Dis­
trict insured banks averaged $1,608 per borrower and
$1,135 per note. These relatively low averages re­
flected the large number of borrowers having small




$2,000$4,999

2.4%

were to loan size or credit worthiness of borrower.
However, loans granted farmers to purchase farm real
estate, whether secured by real estate mortgages or
not, were generally written at a lower interest rate
than loans for other purposes within each size group­
ing. Intermediate-term loans for the purchase of
'other” livestock, machinery, consumer durables, and
to improve land and buildings were written at about
the same effective interest rate as other loans, except
those to purchase farm land. This is true despite the
fact that many farm machinery loans are drawn on
an instalment-repayment basis as in the case of auto­
mobiles and other consumer durables.

Page 142

$1,000$1,999

—
1.6

__

4.5%

debts; for instance, two-fifths of the borrowers owed
less than $500. However, when the original notes are
analyzed by volume about 35 per cent were to bor­
rowers owing $5,000 and over, 30 per cent to bor­
rowers owing $2,000-$5,000, and 35 per cent to bor­
rowers owing less than $2,000.
A larger volume of intermediate and current-oper­
ating loans fell in the smaller size of note groupings,
whereas loans for such purposes as the purchase of
real estate, consolidation of debts and other non-classified purposes, were predominantly in the larger size
groupings. More than four-fifths of bank credit out­
standing for purchase of non-feeder livestock, machin­
ery, and consumer durables and to improve land and
buildings consisted of notes of less than $5,000 in
size. In contrast, only about 45 per cent of the out­
standing credit for the purchase of farm real estate
was in this same note size grouping.

. . . type o f farm, . . .
Although nearly half of the bank credit outstanding
to district farmers was extended to operators of gen­
eral farms (farms having less than half of total in­
come from any one source), the average size of debt
per borrower was smaller for this group than for any
other type of farming group. Meat animal farms had
the largest average bank indebtedness per farmer.
Next in order were poultry farms and cash grain
farms. District dairy farms had a relatively small
debt per farm, possibly because of a smaller need for
seasonal production credit than is required by other
types of farming operations.

TABLE VII
OUTSTANDING FARM LOANS OF DISTRICT' BANKS
IN MID* 1956 BY TYPE OF FARM
Amount
Percentage
Out­
Dis­
standing
tribution
(Thousands)
Meat animal............. . $ 56,500
11.4%
29,571
6.0
Poultry. .......................
8,300
1.7
61,222
12.3
Cotton....................
99,384
20.0
Other major product.
10,093
2.0
224,001
45.2
Unknown....................
7,129
1.4
$496,200
100.0

Type of Farm

Number
of
Borrowers

Average
Size
of Debt

22,539
20,854
3,638
27,576
57,132
5,349
162,351
9,226
308,663

$2,507
1,418
2,283
2,220
1,740
1,887
1,380
773
$1,608

TABLE VIII

. . . net worth, . . .
The average size of farm debt held by Eighth Dis­
trict banks is probably more closely related to net
worth than to any other factor. From an over-all
average debt to district banks of $1,608 per farmer
borrower, the average size varied from $410 per bor­
rower having net worth of less than $3,000, to $12,849
per borrower with net worth of $100,000 and over.
More than one-sixth of all farmer borrowers at dis­
trict banks had a net worth of less than $3,000, and
well over one-half had a net worth of less than
$10,000 (see Table V III).
. . . the age o f farmer borrowers, . . .
One criticism often leveled at farm credit institu­
tions is that it has been difficult for a young farm op­
erator to borrow sufficient capital to purchase a farm.
It has, nevertheless, been profitable for many young
operators to whom credit was available to make such
investments. However, the recent drop in farm in­
come, coupled with higher land values, has increased
the risk of such credit. Moreover, experience has
shown that farmers with a limited amount of capital
make higher net returns if their total credit capacity
is used to obtain operating capital. Leases made for
a few years with assurance of adequate amounts of
intermediate credit, may prove to be the most feas­
ible route to farm ownership.
District banks are making loans to a large number
of young farm operators. Nearly 47,000 farm opera­
tors under 34 years of age were extended credit by
district bankers in the amount of $61 million. The
average size of debt increased from $647 for farm
operators under 25 to- $1,788 for the 35-to-44-year age
group. It declined for those 45 years of age and




OUTSTANDING FARM LOANS OF DISTRICT BANKS
IN MID-1956 BY NET WORTH OF BORROWER
Amount Percentage
OutDistriNet Worth of Borrower standing
bution
(Thousands)
Under $ 3 ,0 0 0 .----$ 25,761
5.2%
$3,000-$9,999.........
119,678
24.1
$10,000-$24,999. . .
166,926
33.7
$25,000-$99,999. . .
133,950
27.0
$100,000 and over. .
41,812
8.4
Unknown..................
8,073
1.6
T o tal..............
$496,200
100.0%

Number of
Borrowers
62,852
118,882
83,643
30,832
3,254
9,200
308,663

Average
Size
of Debt
$

410
1,007
1,996
4,345
12,849
878
$ 1,608

TABLE IX
OUTSTANDING FARM LOANS OF DISTRICT BANKS
IN MID-1956 BY AGE OF BORROWER
Per­
centage
Amount
DistriAge of Borrower
Outstanding bution
(Thousands)
Under 25 years.................. $ 3,680
0.7 %
25-34 years. ....................
57,340
11.6
35-44 years......................... 168,726
34.0
45 and over......................... 252,823
51.0
Unknown.................." . . . .
13,631
2.7
Total......................... . . $496,200
100.0%

Number Average
of
Size
Borrowers of Debt
5,684
41,366
94,364
152,826
14,423
308,663

$ 647
1,386
1,788
1,654
945
$1,608

over. The number of borrowers was largest in the
latter group, which contains a larger number of farm
operators than any of the other age groupings.3
. . . and tenure o f borrowers.
The average size of debt of tenants and sharecrop­
pers was about one-third of that for landlords and
less than one-half that for owner-operators. Tenants
generally need less credit than owner-operators or
landlords, who often require credit for farm purchases
or for farm improvements not usually made by ten­
ants. Approximately 23 per cent of the total of far­
mer borrowers from district banks were tenants or
The 1950 Census of Agriculture shows over two-thirds of the nation’s
farm operators in the age group of 45 years and ove-\

Page 143

TABLE X
OUTSTANDING FARM LOANS OF DISTRICT BANKS IN MID-1956
BY TYPE OF FARM AND TENURE OF BORROWER*
Type of Farm

Owner-Operator

Meat animals.........................
Dairy................................ ..
Poultry............. .............
Cash grain.............................
Cotton. . — , .......................
Other major product . .........
General................................ .. . . . .
Total. . . . . . ..............

Amount Outstanding______________
Tenant or Cropper
Landlord
(Thousands)

$ 49,928
24,275
8,226
41,080
71,502
9,005
179,452
$383,418

$ 3,553
2,374
74
15,538
14,496
757
23,783
$60,575

$ 3,019
2,923
—
4,654
13,386
331
20,758
$45,071

18,824
15,031
3,230
16,950
34,697
2,932
119,302
210,966

Average Size of Defat
Owner-Operator
Tenant or Cropper

Type of Farm
Meat animals....................... . . . .

$

Poultry. .................. ..
Cash grain......... ................
Other major product.........
General. . . :; . . ................ ..
Total. . . . . . ............

______ Number of Borrowers
Owner-Operator Tenant or Cropper

....

$

2,652
1,615
2,547
2,421
2,061
3,071
1,504
1,817

$ 1,270
591
182
1,760
814
414
703
$ 872

Landlord
917
1,807
—
1,800
4,634
590
9,184
18,932

2,798
4,016
407
3,826
17,800
1,828
33,817
69,492

Landlord
$ 3,292
1,618
—
2,586
2,889
561
2,260
$ 2,381

* Unclassified types of farms and borrowers omitted.

sharecroppers. Eighth District sharecroppers, who
are included in the totals with tenants, usually look to
their landlords for credit needs. Thus, most borrow­
ers in the tenant-sharecropper classification were ten­
ants. The ratio of tenant borrowers to owner-operators was nearly the same as the proportion of ten­
ants to owner-operators in the Eighth District states.
Tenants accounted for 25 per cent of the borrowers
for the two groups and constituted 29 per cent of the
total operators in these tenure classes.

A significant portion o f farm machinery
and equipment loans were purchased from
retailers and others.
Larger commercial banks have for many years fi­
nanced farm equipment sales indirectly through loans
to the manufacturers who, in turn, have financed the
sales to farmers. The manufacturers customarily bor­
rowed on an unsecured basis and carried a large
volume of farmers' obligations. During the past two
decades, however, local banks have moved from mak­
ing only farm production loans into a broader farm
credit program involving direct financing of farm
equipment purchases. The recent trend has been
toward direct dealer-lending agency agreements, giv­
ing more banks an opportunity to participate in this
type of credit.
Page 144




In mid-1956 district banks held approximately $70
million in loans for financing farm equipment pur­
chases, over 50 per cent of which were notes pur­
chased from dealers and others. More than one-third
of district bank credit to farmers for financing the
purchase of automobiles and other consumer durables
was accounted for by notes purchased from dealers
or other banks. Purchases of loans representing farm
credit used for other purposes were relatively insig­
nificant.

TABLE XI
OUTSTANDING FARM LOANS OF DISTRICT BANKS
IN MID-1956 BY PURPOSE AND METHOD ACQUIRED
Loans Made Direct
to Borrower
Loans Purchased
Amount
Per cent
.
Major Purpose
standing of Total
i n
(Thousands)
(Thousands)
Purchase feeder livestock. . .
$ 206
0.5%
Purchase other livestock. . . , .
35,104
7.8
0.4
167
Buy machinery, trucks,
irrigation equipment, etc.. .. 33,704 LT W C
36,399
80.3
Current operating and
family living expenses. ,
163,338
36.2
1,831
4.0
Purchase auto or other
consumer durables...........
7,179
1.6
10.1
4,565
Consolidate or pay other debts 35,194
7.8
139
0.3
Buy farm real estate . . . . . . .
100,535
22.3
651
1.4
Improve land and buildings. .
28,461
6.3
372
0.8
Other. ............................
3.3
. . 14,681
979
2.2
Total............................... . $450,891

100.0%

$45,309

100.0 %

Most o f the district farm debt is held
by smaller banks, . ..
The survey showed that small banks supplied the
bulk of all bank credit to farmers. Banks with less
than $3 million of deposits held the obligations of
over 50 per cent of the farmer-borrowers and almost
one-half the volume of farm debt to banks outstand­
ing. Ninety per cent of the debt, owed by about ninetenths of the borrowers, was held by banks with less
than $10 million deposits. Approximately 53 per cent
of the loan volume of borrowers having net worths of
less than $25,000 was held by banks with less than
$3 million deposits.
. .. but loan participations enable banks
to serve the credit needs o f large-scale farms.
Although participation loans as a group represent­
ed only about 2 per cent of the total volume of farm
debt held by district banks, participation arrange­
ments have been an important development in sup­
plying credit to farmers with large seasonal needs.
Approximately 90 per cent of such loans were made to
cotton farmers. An average of 40 per cent of the vol­
ume of participation loans was retained by the banks
originating them. There are two principal reasons for
the development of participation arrangements in the
district, particularly in the Cotton Belt. First, statu­
tory limitations based on the size of a bank's capital
and surplus accounts put a ceiling on the amount that
that may be loaned to one individual or business and
prevent many banks from handling some large loans
generated locally. Second, seasonal fluctuations in
deposits, and thus availability of funds to lend, are
pronounced for many banks in the cotton-producing
areas. Local banks have met this problem by offering
to city correspondents large loans on a participation
basis.
The survey demonstrated that banks have adjusted
lending practices to meet farmers’ changing
credit needs.
A comparison of the data reported in the two sur­
veys suggests that during recent years district banks
have changed the policies governing their lending to
farmers. The volume of agricultural loans has rapid­
ly expanded. The wide variety of collateral pledged
for loans of each purpose has departed from conven­
tional credit practice. The terms of loans have be­
come more flexible and appear to be more nearly
designed for each specific borrower need. Further­
more, through planned note renewals many loans to
farmers written with short-term maturities are in prac­
tice carried by banks for relatively long periods.
Students of agricultural credit have often pointed to
a gap between the amount of intermediate-term credit




TABLE XI!

OUTSTANDING FARM LOANS OF DISTRICT BANKS
IN MID-1956 BY TYPE OF CREDIT AND SIZE OF BANK
(Dollar amounts of loans in thousands)
Type of Loan

______ Deposit Size of Bank
Under
$3 to 10 $10 Million
$3 Million JVIillion and Over All Banks

Intermediate-term
loans........................
Loans for current
expenses.................
Loans to purchase
farm real estate. .
Loans to consolidate
debts and other
purposes.................

$ 69,131

Total..................

$ 62,697

$14,122

$145,950

94,433

80,547

23,089

198,069

4 8 ,675

43,042

9,469

101,186

24,166
$236,405

2 1 ,5 0 7
$207,793

5,322
$52,002

50,995
$496,200

TABLE XIII
OUTSTANDING FARM LOANS OF DISTRICT BANKS IN MID-1956
BY NET WORTH OF BORROWER AND SIZE OF BANK
Deposit Size of Bank

Net Worth of Borrower

Under $ 3 ,0 0 0 ___
3 ,0 0 0 -9 ,9 9 9 .........
10,000-24,999 . .
25,000-99,999. . .
100*000 and over.
Unknown.................
T otal...................

Under
$3 Million

$3 to $10
Million

$ 13,364
66,699
85,158
58,370
12,689
125
$236,405

$

8,971
4 2 ,619
71,263
62,138
18.486
4 ,316
$207,793

$10 Million
and Over

All Banks

$ 3,427
10,359
10,505
13,443
10,636
3,632
$52,002

$ 25,762
119,677
166,926
133,951
41,811
8,073
$496,200

supplied and the amount required to finance resource
combinations essential to efficient farming units. The
success of credit for such purposes hinges primarily
on increased productivity rather than on the present
value of security. For this reason banks and other
agricultural lending agencies were once slow to adopt
lending programs to meet intermediate-credit needs.
More recently, however, it has become clear that able
borrowers almost unfailingly do increase the produc­
tivity of themselves and their land through judicious
use of credit, and greater emphasis has thus been
placed on “ability to pay debts” as a criterion of farm
credit extension. Banks are apparently bridging the
once serious gap in the agricultural credit market,
A large percentage of farm loans outstanding are
being made for adjustments in resource use. Loans
of this type have encouraged desirable changes in
farming systems, and it seems certain that a more
efficient agriculture is the result. Nor will technically
more efficient farm units be the only outcome of re­
source transfers. Farmers will produce more and
more of the kinds of food and fiber for which demand
is strengthening relative to supply and less and less of
the old staples for which demand is decreasing rela­
tive to supply. In this way a step toward solution of
the American farm problem will be taken.
C l if t o n

B.

M

a h l ig

a r ie

W

L

uttrell

Page 145

QF C(JRRENT CONDITIONS
B u s i n e s s ACTIVITY in the Eighth Federal Reserve District in November held close to the Octo­
ber rate. Industrial activity showed largely sea­
sonal changes. But construction contracts awarded
continued to decline, and bank loans rose less than
usual. Department store sales, on the other hand,
improved somewhat more than seasonally from the
reduced October level.
Comparison of several indicators with their yearearlier levels also suggests that the district economy
has recently shown little increase in activity. Em­
ployment during October in three of the five largest
metropolitan areas of the district was less than a
year earlier. Construction contracts awarded and
power consumed by industries were also below last
year's level. Notwithstanding the more than sea­
sonal increase in department stores sales in the first
four weeks of November, they were only about on
a par with a year earlier.
Industry
Industrial activity in the Eighth District showed
largely seasonal changes from October to Novem­
ber. St. Louis area steel mills, which have lagged
behind the strong national steel production rates in
the poststrike period, made up the difference in
early November, operating at weekly levels up to
105 per cent of rated capacity. District coal pro­
duction continued its winter pickup; operations in
October were at the highest rate for that month
since 1951. Crude oil output was close to 390,000
barrels per day in November, 4 per cent over a year
ago and not far from the postwar record rate of 392,900 barrels per day set in September this year.
Sharp seasonal gains occurred in automobile as­
sembly plants during November in both district and
nation.
Despite extra hours on Saturdays, how­
ever, national automobile output in November was
scaled down to an estimated 570,000 cars from an
earlier schedule of 650,000. This volume represents
considerable gain from October's 389,000 but falls
far short of the 748,500 cars assembled in November a
year ago. Farm implement makers in the district
began limited rehiring in November after inventory
reducing shutdowns since late September.
Page 146




Operating rates at reporting southern pine lum­
ber mills continued to exceed year-ago levels in No­
vember, though the usual winter slackening oc­
curred. Hardwood mills in the south showed greater
seasonal drops; after operating at 98 per cent of capac­
ity in September their rates dropped to 96 per cent in
October and to about 90 per cent in November.
Livestock slaughter at district meat packing plants
continued strong. Slaughter at eight district meat
packing centers in October totaled 885,000 head this
year compared to 765,000 a year ago, largely reflect­
ing an increase in hogs processed.
Shoe production at district plants in October was
at about year ago levels on a daily average basis;
November production, estimated for the nation at 46
million pairs, maintained the October rate but was
ahead of the strike-reduced rate of November 1955.
Construction
The gradual tapering in construction activity con­
tinued in October. Construction contracts awarded
in the nation during the month declined more than
usual, and on a seasonally adjusted basis were substan­
tially lower than at the beginning of the year. Reflect­
ing the decline in awards in recent months, new con­
struction outlays rose less than seasonally from June
through October. Most of the decline has been in
private construction, as outlays by Federal, state and
local governments continued close to peak levels.
Private housing starts have continued their general
downward trend during recent months, and on a sea­
sonally adjusted basis in October were at an annual
rate of close to 1 million units. In the first 10 months
of this year the seasonally adjusted annual rate of
private nonfarm housing starts averaged approxi­
mately 1.1 million units, about one-sixth less than the
actual number started in 1955.
In the district, the value of contracts awarded
for new construction in October was somewhat less
than a year earlier, and on a seasonally adjusted
basis substantially less than at this year s peak reached
in February. This trend evidently continued in
the first half of November when the value of awards
in the St. Louis territory of F. W. Dodge Corpora­
tion, which contains most but not all of the Eighth
District, declined from the October rate and was

substantially less than a year earlier. Residential
building awards in the district dropped about onehalf from the first quarter to the three months end­
ing in October. Contracts awarded for other than
residential construction fell 23 per cent in the same
period.
Trade
District department store sales in the first two
weeks of November lagged somewhat, but in the
following two weeks jumped ahead of the year
earlier level. Retailers were hopeful that the im­
provement at mid-month signalled the end of the
October lull in consumer buying at department
stores. In that month sales failed to rise the usual
amount and, on a daily average basis, were 3 per
cent less than in October 1955. Furniture store
sales were equal to sales in October 1955 on a daily
average basis.
Inventories at reporting furniture and department
stores in the district were 4 per cent larger than a year
earlier at the start of November.
Employment
Employment trends in the nation during October
were generally favorable. Nonagricultural employ­
ment rose more than seasonally from September to
October and reached an all time record of 52.4 mil­
lion, 1.2 million above a year earlier. Employment
in manufacturing rose more than usual as automo­
bile plants and their suppliers stepped up hiring,
radio and television plants increased activity and
employment in nondurable goods industries dropped
less than usual. Rising manufacturing activity in
recent months has been accompanied by some in­
crease in the average work week. In October the
average work week of manufacturing production
workers was 40.6 hours compared with a low of 40.1
reached in May and July. Wages continued to rise.
In October average hourly earnings of factory work­
ers reached $2.02, an increase of 11 cents in the past
year. Insured unemployment in the week ended
November 3, although higher than a year earlier, was
about the same as four weeks earlier.
In contrast to the strong demands for labor in
the nation, employment in some of the district’s lar­
ger metropolitan areas was not as high as a year ago.
In St. Louis, Louisville and Evansville the number
of wage and salaried workers in nonagricultural es­
tablishments was less than a year earlier. Employ­
ment in St. Louis was steady from September to
October as gains in manufacturing employment were
about offset by declines in nonmanufacturing activ­
ities, but remained about 1 per cent less than a year
earlier. Employment in Evansville rose in October
about the usual amount following seasonal cutbacks




in manufacturing operations in September, but re­
mained 8 per cent less than a year earlier. In Louis­
ville employment declined slightly from September
to October reflecting net cutbacks in both manufac­
turing and nonmanufacturing activities, and was
a little less than a year earlier. In Memphis and
Little Rock, however, nonfarm employment was
greater than a year earlier.
Banking
Total loans at weekly reporting banks in the dis­
trict rose $16 million or 1 per cent during the five
weeks ended November 21, reflecting an increase in
business loans, offset in part by net reductions in the
other loan categories. The business loan expansion
was somewhat less than seasonal. Some firms ap­
parently did not experience a normal contraction in
activities and indebtedness in the summer, and, with
large amounts of funds on hand, were able to main­
tain a high level of activity during the fall with some­
what smaller bank borrowing. Certain other bor­
rowers reportedly were not able to obtain all the
funds requested since the demand for bank loans
exceeded the supply of funds flowing into the banks.
At banks reporting information by industry, food
processors made heavier than normal net borrow­
ings for this time and sales finance companies and
public utilities increased their indebtedness. On the
other hand, the expansion of borrowings by com­
modity dealers was less than average for this period
and contractors made net repayments,
Loans to brokers and dealers for purchasing or
carrying securities were reduced $4 million and real
estate loans fell $3 million. “Other,” largely con­
sumer, loans were down moderately in the period.
Agriculture
Moisture conditions on most district farms im­
proved during November. Late October and No­
vember rainfall combined with relatively mild tem­
peratures contributed to better grazing prospects.
Small grains also showed general improvement, al­
though some stands were hindered by lack of rain
at planting time.
District farm income continued to improve. The
1956 January through September total was thirteen
per cent above that for the same period of last year
and 1 per cent above that for 1954. Income from
both crops and livestock was running ahead of last
years levels. However, only income from crops ex­
ceeded that of 1954.
Most district farm commodity prices increased for
the four-week period ending November 23. Hogs,
eggs, and all major crop prices were above those of
October 26. A decline in the prices of cattle, milk,
and broilers partially offset this increase.
Page 147

Monthly Review I n d e x — 1956
FEDERAL RESERVE BANK OF ST. LOUIS
PAGE NUMBER GUIDE
Month of Issue
Pages
Month of Issue
January............................................ ..
.............. 1-16
July....................... .......................................................
February.......................................... .................................17-28
August........................................ .......................................
March.................................................. .............................29-44
September..........................................................................
April..................................................................................45-56
October..........................................................................
May..........................................................................
57-68
November. . ....................................................................
December......................... .................. .............................
June................................................................................... 69-80

Agriculture51

Pages
81-88
89-100
101-112
113-124
125-136
137-148

Pages

Agriculture in 1 9 5 5 .....................................................

5

Agriculture's position in time of industrial ex­
pansion ...............................................................

4, 5

District Farmers Prospects and Purchases in
1956 ...........................................................................

17-21

Farm employment and population changes.........

69-73

Farm income in 1955 ...................................

52

Farm Loan Survey, 1 9 5 6 ............................................ 137-145
Farmer's expenditures, 1947-1953.........................

20, 21

Ground-water resources for agriculture................

32. 33

Banking and Finance*
Bank Debits and Economic Activity....................... 125-133
Branches of Federal Reserve Banks.......................

89-97

Business Loans: A Summary of the Eighth Dis­
trict Member Bank Business Loan Survey. . . .
57-65
Consumer credit growth at commercial banks .117, 118
District Member Bank Earnings in 1 9 5 5 ..............

40-41

Directors and officers of the Federal Reserve
Bank of St. Louis.....................................................

25

Eighth District cities for which debit data are
available monthly—m ap..........................................

133

Eighth District cities with three or more banks
—m a p ...........................................................................

115

Pages
Monetary policy in 1955 .....................................

5, 14, 15

Postwar Developments in Bank Credit For Agri­
culture .........................................................................137-145
The Structure of Banking in the Eighth District:
Branches and Mergers ..........................................

45-51

The Structure of Banking in the Eighth District:
Chains, Groups and Interindustry Competition 113-121
Time deposit growth at commercial banks

119-120

Business Conditions, Income, Population"
Consumer spending in 1 9 5 5 .............. .......................

4

The Delta Area of Southeast Missouri: A Case
Study in Economic C hange...................................

81-86

District Income in 1 9 5 5 ............................................

52-53

Delta per capita income.............................................

84, 85

The Economic Meaning of 1 9 5 5 ..............................
Eighth District Business Conditions in 1955

1-15
.

7-15

Proprietor’s income in district, 1 9 5 5 .......................

52

Recent Population Trends in the Eighth District

69-77

District Business Statistics

Federal Reserve Policy in 1 9 5 5 ......................... 5, 6, 14, 15
Federal Reserve System m ap...................................

92

Gross national product and bank debits................

127

1955 Operations of the Federal Reserve Bank of
St. Louis ....................................................................




The District Record (monthly tables on district
agriculture,

banking, construction, industry

and trade)
22-25

. . . . 16, 28, 44, 56, 68, 80, 88, 100, 112, 124, 136, 148

*See, also, District Business Statistics and Survey of C urrent Business Conditions

MONTHLY REVIEW INDEX

Industry*

Page«

Survey of Current Business Conditions

Pages

Survey of Current Business Conditions as of:
Employment in five major district areas m 1955. .

11

Gross national product in 1 9 5 5 .................................

2, 3, 4

Ground-water Resources of the Eighth District. .

29-39

Index of Industrial Production in 1 9 5 5 ................

3

Industrial development in the D elta.....................

86

Industrial development and out-migration............

77

Water supply and demand, industrial......... ..

February 1 ........ ......26-27
March 1 ...................42-43
April 1 ..................... 54-55
May 1 ......................66-67
June 1 ......................78-79
July 1 .......................86-87

August 1 .............
98-99
September 1 . . . . 110-111
October 1 ............122-123
November 1 .. .. 134-135
December 1 ----- 146-147

Trade*

32-39

Retail trade and out-migration.................................
76
Retail Trade Trends in the Eighth District
101-109

ARTICLES
Title

Author

The Economic Meaning of 1 9 5 5 ...............................................

(Staff)
............Lawrence E. Kreider

District Farmers’ Prospects and Purchases in 1 9 5 6 .......................................
1955 Operations of the Federal Reserve Bank of St. Louis.......................................
Ground-water Resources of the Eighth District................................
............Harry B. Kircher
District Member Bank Earnings in 1 9 5 5 ........................................................................ ......... Norman N. Bowsher
The Structure of Banking in the Eighth District:
Branches and Mergers...................................................................................................... ......... Ross M. Robertson
District Income in 1 9 5 5 ......................................................................................................... ............Werner Hochwald

Business Loans: A Summary of the Eighth District Member
Bank Business Loan Survey............................................................................................. ......... Norman N. Bowsher
Marie C. Wahlig
............William
H. Kester
Recent Population Trends in the Eighth District..........................................................
The Delta Area of Southeast Missouri: A Case Study in Economic Change......... ......... A. James Meigs

Pages
1-15
17-21
22-25
29-39
40-41
45-51
52-53
57-65
69-77
81-86
89-97
101-109

Branches of Federal Reserve Banks.................................................................................... ........... Ross M. Robertson
Retail Trade Trends in the Eighth District...................................................................... ............William H. Kester
The Structure of Banking in the Eighth District:
113-121
Chains, Groups and Interindustry Competition.......................................................... ......... Ross M. Robertson
Bank Debits and Economic Activity................................................................................. ............Norman N. Bowsher 125-133
137-145
Postwar Developments in Bank Credit For Agriculture.............................................. ........... Clifton B. Luttrell
Marie C. Wahlig




"See, also, District Business Statistics and Survey o f Current Business Conditions

V A R IO U S IN D IC A T O R S O F IN D U STRIA L A C T IV IT Y

Oct. 1956*
compared with
Sept. 1956 Oct. 1953

Industrial Use of Electric Power (Thousands of KWH per working day, selected
industrial firms in 6 district cities).........................................................................................
Steel Ingot Kate, St. Louis area (Operating rate, per cent of capacity)...........................
Coal Production Index— 8th Dist. (Seasonally adjusted, 1 9 4 7 - 4 9 = 1 0 0 )......................
Crude Oil Production— 8th Dist. (Daily average in thousands of bbls.)
Freight Interchanges at St. Louis. (Thousands of cars— 25 railroads— Terminal
R. R. A ssn .)........................................................................................................................................
Livestock Slaughter— St, Louis area. (Thousands of head— weekly average)..........
Lumber Production— S. Pine (Average weekly production— thousands of bd. ft.)
Lumber Production— S. Hardwoods. (Operating rate, per cent of capacity)............

n.a.
+ 9
-0 -0 -

n.a.
— 1
+ 1
+ 4

+ 13
+ 12
+ 5
_
o

-0 + 4
+ 6
— 7

* Percentage change is shown in each case. Figures for the steel ingot rate, Sc
___ the coal
rate, and
production index, show the relative percentage change in production, not the drop in index points or in percents of
capacity.
p Preliminary, n.a. Not available.

B A N K D EB ITS1

CASH FARM INCOME

October
October, 1956
1956
compared with
(In
September October
millions)
1956
1955
Six Largest Centers:
East St. Louis—
National Stock Yards,
111................................... : 5 168.7
179.3
Evansville, Ind.
206.0
Little Rock, Ark. . .
Louisville, Ky.
. . . 958.5
1,049.4
Memphis, Tenn.
2,491.8
St. Louis, Mo.
Total— Six Largest
$ 5,053.7
Centers ................. <
Other Reporting Centers
$
AltonTlll.
Cape Girardeau, Mo.
El Dorado, Ark. .
Fort Smith, Ark............
Greenville, Miss.
Hannibal, Mo................
Helena, Ark. ............
Jackson, Tenn, ............
Jefferson City, Mo.
Owensboro, Ky. ..........
Paducah, Ky.
............
Pine Bluff, Ark..............
Quincy, 111. .................
Sedalia, Mo....................
Springfield, Mo.
Texarkana, Ark.

+
+
+
+
+
+

21%
17
11
20
34
14

+
+
+
+
+
+

26%
11
8
13
14
9

+ 19%

+ 11%

40.0
18.8
30.7
58.3
40.3
11.1
18.0
35.0
85.5
49.1
27.9
72 2
43.7
16.1
100.9
■22.5

+ 11%
+ 8
4- 5
+ 8
+ 28
+ 9
+ 46
+ 20
— 10
+ 9
+ B
+ 52
+ 17
+ 8
+ 13
+ 6

+ 7%
+ 22
+ 3
+ 7
+ 5
+ 8
+ 17
+ 12
+ 17
— 1
+ 8
+ 49
+ 4
+ 10
+ 17
+ 6

Total— Other
Centers . . . . . . .

$

670.1

+ 13%

+ 13%

Total— 22 Centers

$5,723.8

+ 18%

+ 11%

INDEX OF BANK DEBITS— 22 Centers
Seasonally Adjusted (1 9 4 7 -1 9 4 9 = 1 0 0 )
1956
1955
Oct.
Sept.
Oct.
170.3
155.5
152.8
1 Debits to demand deposit accounts of individuals,
partnerships and corporations and states and political
subdivisions.

Percentage Change
Jan, thru Sept.
Sept.’56
1S56
from
(In thousands
Sept.
compared with
1955
of dollars)
1956 Sept/55
1954
Arkansas.
$i 92,686
+ 38 % + 37% + 16%
Illinois . . 191,311
+ 15
+ 10
1
_
2
Indiana . . .
7
99,971
+ 5
— 9
Kentucky
29,140
15
+ 7
Mississippi
80,054
+ 17
+ 26
4 13
6
Missouri . . . 122,173
+ 24
+ 6
+ 16
Tennessee
56,066 . ± 1 1
-0 7 States . .
671,401
+ 19
1
+ 9
+ 13
8th District
349,930
+ 24
+ 1
Source: State data from USDA preliminary
estimates unless otherwise indicated.

174.3
186.3
168.7

204.9
223.3
196.4
* Based on three-month moving average
(centered on mid-month) of value of awards, as
reported by F. W. Dodge Corporation.

ASSETS AND LIABILITIES OF EIGHTH DISTRICT MEMBER BANKS
(In Millions of Dollars)

Weekly Reporting Banks

Assets

All Member Banks
Change from
Sept. 26,
1956

Oct. 31,
1956

Nov. 21,1956

Loans1 ..........................................
$1,652
$2,648
$ + 53
Business and Agricultural
879
Security ................. ............
57
Real Estate ...........................
272
Other (largely consumer) .
467
1,902
U. S. Government Securities
897
+ 67
219
Other Securities ......................
485
— 6
Loans to Banks ........................
51
1,514
Cash Assets ................................
933
48
Other Assets .............................
71
+ i 90 $3,800
$— 56
Total Assets ........................
$6,620
$ + 133
Liabilities and Capital
Demand Deposits of Banks
82
$ 742
$ 840
$+ 62
Other Demand Deposits ............
2,111
27
3,934
65
Time Deposits
......................
4
575
1,266
10
2
91
Borrowings and Other Liabilities
90
7
1
Total Capital A cco u n ts...............
281
490
+ 3
$3,800
Total Liabilities and Capital
$6,620
$— 56
$ +133
i For weekly reporting banks, loans are adjusted to exclude loans to banks; the total is reported
net; breakdowns are reported gross. For all member banks, loans are reported net and include loans
to banks; breakdown of these loans is not available.

Stocks
on Hand

Percentage of Accounts
Stocks- and Notes Receivable
Sales Outstanding Oct. 1, ’56,
Ratio collected during Oct.
Excl.
Instal. Instalment
Accounts Accounts

49
16
8th F.R. District Total . . + 12^
— 1%
+ 5%
43
Fort Smith Area, Ark.l
+ 2
— 3
+ 2
45
Monthly stocks and
13
+ 8
+7
Little Rock Area, Ark.. . , + 1 6
stocks-sales
ratio
data
5
Quincy, 111............................ + 1 6
+ 1
—2
not available in time
— 5
+
Evansville Area, Ind......... ..+ 6
46
19 ' "
for publication in the
- 0+ 5
Louisville Area, Ky., Ind. + 1 5
Monthly Review. Data
9
+ 8
Paducah, K y....................... — 3
60
will
be
supplied
upon
17
5
3
+
St. Louis Area, Mo., 111. + 1 1
10 ",
request.
+ 6
+ 7
Springfield Area, Mo. . . . + 9
33
5
— 1
+
Memphis Area, Tenn. . . + 1 4
10
+ 6
All Other Cities?................+ 1 2
1 In order to permit publication of figures for this city (or area), a special sample has been con­
structed 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 computing depart­
ment store indexes.
2 Fayetteville Pine Bluff, Arkansas; Harrisburg, Mt. Vernon, Illinois; Vincennes, Indiana; Dan­
ville, Hopkinsville, Mayfield, Owensboro, Kentucky; Chillicothe, Missouri; Greenville, Mississippi;
and Jackson, Tennessee.
OUTSTANDING ORDERS of reporting stores at the end of October, 1956, were 3 per cent lower
than on the corresponding date a year ago.

+

INDEXES OF SALES AND STOCKS— 8TH DISTRICT
Oct.
1956
131
119
n.a.

Sept.
1956
130
127
145
134

Aug.
1956
118
129
136
136

Oct.
1955
135
122
145
130

Sales (daily average), unadjusted3 ............................................
Sales (daily average), seasonally adjusted3 ................................
Stocks, unadjusted4 ..........................................................................
Stocks, seasonally adjusted4 ...........................................................
3 Daily average 1 9 4 7 -4 9 = 100
4 End of Month average 1 9 4 7 -4 9 = 1 0 0
n.a. Not available.
Trading days: October, 1956— 27 ; September, 1956— 24; October, 1955— 26,
for FRASER

Digitized


Seasonally adjusted
T otal............
177.2 p
Residential
167.2 p
AllOther . .
181.8 p

p Prelim inary

DEPARTMENT STORES
_________ Net Sales_________
Oct., 1956
10 mos. ’56
compared with
to same
Sept.,’56 Oct.,55 period *55

IN D EX O F C O N S T R U C T IO N C O N T R A C T S
A W A R D ED EIG H TH FED ERAL RESERVE D ISTRICT*
(1 9 4 7 -1 9 4 9 = 1 0 0 )
Sept. 1956 Aug. 1956 Sept. 1955
Unadjusted
Total
198.9 p
212.6
230.3
Residential
188.9 p
223.6
252.3
All Other
2 03.6 p
207.5
220.0

RETAIL FURNITURE STORES
Net Sales
Inventories
October, 1956
October, 1956
compared with
compared with
Sept. ’56 Oct. *55 Sept. ’56 Oct. ’55
8th Dist. Total* . + 12 %
+ 3%
+ 1%
+ 4%
_
2
+ 6
St. Louis Area . . + 12
4- 2
— 9
4-4
Louisville Area . + «
+ 8*
'k
— 28
Memphis Area . . — 4
+ 14
+ 17
Little Rock Area + 16
4-7
Springfield Area. ■+ 8
+ 9
+ 4
4- 5
* Not shown separately due to insufficient coverage,
but included in Eighth District totals.
1 In addition to the following cities, shown separately
in the table, the tot;T includes stores in Blytheville, Fort
Smith, Pine Bluff, Arkansas; Owensboro, Kentucky;
Greenwood, Mississippi; Evansville, Indiana; and Cape
Girardeau, Missouri.
Note: Figures shown are preliminary and subject to
revision.

PERCENTAGE DISTRIBUTION OF
FURNITURE SALES
Cash Sales
Credit Sales .
Total Sales

October '56
15%
85
100

Sept. ’56
14%
86

100';

Oct. ’55
14%
86
100 %