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HILE unemployment has recently increased, district employment re mains above its pre-Korean level. The St. Louis area build-up in employment began in 1950 even before the Korean War, and continued into 1953, turning down shortly after mid-year. Louisville employment also fell off in the last half of 1953, but was still considerably higher than in 1950. Manufacturing employment in the Evans ville area dropped sharply from its peak in 1953. In contrast, employment receded only slightly in Memphis in late 1953 and increased in Little Rock. Three district areas have substantial labor surpluses resulting from the long-run decline in coal mining and recent declines in manufacturing employment. In the period of expanding demand, 1950-1953, the added labor supply came from both local reserves and other areas. The district's out-migration, however, continued. In the recent downturn of demand, unemployment increased and people withdrew from the labor force and returned home, increasing the need to expand job opportunities in this district. B ank St. Louis liir ft-prik o f 1*1. ta m i* in I-Vfl ora l p, o f liu rr^ u t O u u liliu M *— j*. 2 2 ■ While unemployment has recently increased, dis trict employment remains above its pre-Korean level. I N recent months layoffs and other signs of de clining business activity have won front-page space in the newspapers. Labels applied to this new development in our econom y range from that old favorite of the brokers, “ a mild shakeout” ; through the more novel “ rolling readjustment” ; to “ ortho dox recession.” The term “ readjustment” is a useful one because it reminds us of the sharp adjustments which were made in the econom y during the defense expansion. In that period employment rose sharply in the big cities and in some smaller centers. This article re views those changes in employment in several Eighth District areas during the past four years, and brings together the latest available information on the growth in unemployment here. Taking the two parts together puts the recent decline in em ployment in proper perspective. Follow ing the Korean outbreak, defense produc tion increased in some of these areas. In others, demands increased sharply for civilian goods, and basic commodities needed in peace or war. A ll of them were required to make adjustments of one kind or another to the rapid changes taking place in the national econom y. A t the same time, em ployment gains were not uniformly spread over the district. Considerable expansion occurred in the larger industrial centers, but employment in those areas plagued by the long-run decline of coal min ing did not expand sufficiently to absorb the unem ployed and new entrants into the labor market. Employment opportunities in many other rural areas and small towns in the district also failed to expand enough to hold all of those seeking jobs. From these areas of limited opportunity, large numbers migrated in search of higher incomes. Some moved to the industrial centers of this district, but many left the district in their quest for greater income. The St. Louis area build-up in employment began in 1950 even before the Korean War, . . . As 1950 began, the 1949 recession was fast sliding into memory. The old mainstays of St. Louis, the nondurable goods industries, which provided more than half of manufacturing employment, were busy. But the heavy industries were boom ing. Area employment was steadily increasing in steel, auto mobiles, and machinery. A s can be seen on the chart, employment in manufacturing especially of durable goods, increased rapidly in the St. Louis area throughout 1950, although very little of the Page 14 increase was connected directly with defense con tracts that year. The year follow ing was one of preparation, ad justment, and expansion of capacity in St. Louis. Employment in a i r c r a f t production increased through 1951, primarily at M cDonnell Aircraft Cor poration. There also was an increase in em ploy ment in St. Louis area steel mills and foundries. Reactivation of the St. Louis Ordnance Plant, which was the largest single plant built by Government in this district during W orld W ar II, proceeded more slowly than originally expected. Other con cerns with defense contracts were retooling and expanding. Offsetting the increases in defense employment in 1951, employment in production of civilian goods declined. Production of consumer durables, par ticularly automobiles, was restricted by materials shortages. Shoe and apparel production, among the nondurables, was depressed for a time by large inventories or consumer resistance. In 1952 defense production shifted into high gear and, at the same time, civilian durable goods out put was stepped up. Employment in ordnance plants and aircraft factories increased rapidly. Autom obile employment gained somewhat, after larger steel allotments made possible an increase in production. Shoes and apparel, however, em ployed fewer people than in the previous year. The rapid gain in St. Louis area employment in production of durables was interrupted in July by the national steel strike and a local truckers’ strike. By September employment was skyrocketing again. At this time there was a noticeable tightening of the labor supply with unemployment falling to 2 per cent of the labor force. There was a considerable increase in the hiring of women. St. Louis A re a Em ploym ent in M an ufacturing . . . and continued into 19 53, turning down shortly after mid-year. From September, 1953, through January, 1954, manufacturing employment in the St. Louis area receded, with most of the reduction concentrated in durable goods. Many of the layoffs accounting for the decline were defense-connected. Ordnance plants, aircraft plants, foundries, and electrical equipment plants have laid off part of their help because of defense contract completions, cancella tions, or stretchouts in delivery schedules. Other layoffs have resulted from lack of orders for civilian goods or plant closings. Unemployment in Jan uary was estimated at 46,000, an increase of 73 per cent from a year earlier. The bulk of the recent reduction in employment has taken place in the durable goods industries— the sector that had experienced the greatest growth. Louisville employment also fell off in the last half of 1953, . . . A s in St. Louis, employment in the Louisville metropolitan area fell off in the last half of 1953. The decline centered in the defense industries. In addition, cutbacks in the production of farm ma chinery and in construction activity further reduced employment. Because of temporary additions at retail stores for the Christmas season, the full im pact of the decline was partially obscured in D e cember. But in that month, total employment fell below the year-earlier level for the first time in 1953. The drop in employment between the peak in July and the end of the year was only 6,000 workers, or about 2.5 per cent of all employment in nonfarm establishments. In December, 1953, the number of weeks of un employment insurance claims in the metropolitan area was 2y2 times larger than a year earlier. The rates of claims in relation to the number employed in nonfarm establishments in December, 1953, was even slightly larger than in December, 1949, a period of recession when national unemployment reached 3.5 million. If the number dropped from the payrolls between December, 1953, and January, 1954, was as much as the year before, employment in the latter month would be off about 11,000 from the July, 1953, peak. W hen the data are in for Jan uary, the decrease this year may prove even more extensive than normal, as more-than-seasonal lay offs occurred in considerable numbers. The reduction in defense requirements was re flected in the lowered employment at the Indiana Arsenal in the Louisville area. Em ploym ent in the production of ordnance dropped by 2,000, or 20 per cent, from the peak in September, 1953, to Gains in manufacturing employment in Louisville .. . Thousands and the machinery and equipment industry. Thousands y ■ ^ ................... 1 1951 1952 1953 December, and further cuts were scheduled in January. Production of explosives was reduced also and about 1,000 fewer were employed in chemi cal production in Decem ber than at the peak in August. Rehabilitation of this facility at the cost of $21 million was completed in the latter part of 1953, with consequent reduction of construction employment. Declining farm income, especially in the area served by Louisville plants producing farm equip ment, sharply reduced the sales of tractors. W ith inventories larger than normal and sales off, pro duction was reduced substantially after June with layoffs continuing into January, usually a month when production is stepped up. Employment in this industry at the end of January was less than one-half that in June, 1953. The lumber and furniture industry employed about 1,400 fewer workers than a year earlier. Em ploym ent in the primary and fabricated metal Page 15 industries declined through 1953, continuing a trend evident since 1951. In Decem ber, 1953, about 10.000 were employed in the latter industry, com pared with a peak of 13,000 in March of 1951. . •. but was still considerably higher than in 19 5 0 . From July, 1950, employment in Louisville es tablishments increased from 201,000 to an estimated 225.000 in January, 1954. A bout two-thirds of the increase was in manufacturing employment, with most o f the remaining advance in construction em ployment. M anufacturing employment rose sharply in 1950, declined slightly to July, 1952, and then moved steeply upward to a peak in September, 1953, before receding. There was a marked in crease in ordnance employment. W ith the re activation of the Indiana Arsenal, employment in ordnance, manufacture of explosives, and construc tion at that facility increased rapidly, reaching a peak of about 20,000 in May, 1953, then declining somewhat. A m ong the civilian goods industries in which employment increased over the 1950-1953 period were farm tractors, automobiles, household appli ances, and cigarettes. Em ploym ent in the distilled liquor industry, however, declined slightly after 1951 when stocks were built up in anticipation of controls and bottling activity .was stepped up to meet the upsurge in demand prior to the increase in excise taxes on N ovem ber 1, 1951. The tobacco manufacturing plants employed more workers in 1953 than the year before, despite a small decline in cigarette production in the nation. This increase reflected the trend toward king sized and filter tip cigarettes, production of which is relatively larger in Louisville than in other cigarette production centers. from 10,900 in October, 1952, to 6,400 in D ecem ber, 1953. Layoffs of about 1,600 workers at the automobile assembly and body plants occurred in January, 1954, and employment in refrigerator pro duction was about 6,500 under the seasonal peak. Thus, in Evansville the reduction in employment since the peak of 1953 has been fairly wide-spread and has not been limited to defense activities, which were responsible for the bulk of the growth in employment opportunities from 1950 to 1953. In contrast, employment receded only slightly in Memphis in late 1953 . . . The tide of employment ebbed only slightly in the Memphis metropolitan area during the latter part of 1953. The wave of extra workers in retail stores during the Christmas season pushed em ploy ment up temporarily at year-end, then subsided in January. But, allowing for seasonal fluctuations, the high tide of employment had been reached in 1953 with 171,000 on payrolls at nonfarm estab lishments. Government employment reached a high mark of 24,000 in August, 1952, then receded 2,000 by November, 1953. Construction employment also declined from a peak of 12,000 in August, 1952, to 10,000 in November, 1953, as large projects were completed. M anufacturing employment continued to rise until September, 1953, and then declined 2,500 to a level of 43,000 in December. M ost of the decrease in manufacturing was in durable goods industries, with farm equipment and ferro alloy production curtailed especially sharply. In Evansville, where manufacturing is concen trated on the production of durable goods, em ploy ment responded sharply to increased consumer and defense demands. T he recent adjustment on the downside was also sharp. W hile employment declined in Memphis during the latter part of 1953, it remained substantially higher than in June, 1950. H ow ever, unlike other areas which made large gains in the last half of 1952 and the first part of 1953, most of the gain in Memphis employment came in the year after June, 1950. In that year, employment at military installations and other Government facilities rose 5.000, wholesale and retail trade firms used 2,000 additional, and manufacturing plants about another 2,400 workers. In the succeeding twelve months, Government employment was increased another 5.000, trade and construction each rose by 2,000, but manufacturing employment stood still. A fter June, 1952, the increase in manufacturing em ploy ment was partially offset by declines in construc tion and Government activities. By January, 1954, curtailment o f production of aircraft parts, motor vehicles, and refrigerators in Evansville had reduced em ploym ent about 12,000, or one-fourth, from the March, 1953, peak. Em ployment in the production of aircraft parts declined M ost of the gain in manufacturing employment since June, 1950, has been in the paper, apparel, and machinery industries. The grow th in Govern ment employment of about 9,000 is largely due to increased defense activities. The hiring of production workers at the new electrical appliance plant of General Electric Com pany continued during 1953. A bout 2,400 workers were added. Manufacturing employment in the Evansville area dropped sharply from its peak in 19 53 . Page 16 . . . and increased 7n Little Rock. In recent months when some district areas had declines in employment, Little R ock employment continued to increase, reaching an all-time high in December, 1953. Little R ock total nonagricultural employment increased steadily through the last four years, rising 7 per cent from an annual average o f 64,700 in 1950 to an average of 69,400 in 1953. In the State of Arkansas, by contrast, nonagricultural employment rose from an annual average of 285,000 in 1949 to 316,000 in 1951, and then declined to an average of about 313,000 in 1953. A good part of the rise and subsequent slight decline in employment in Arkansas can be explained by changes in construction activity. Reactivation and expansion of the Pine Bluff Arsenal and the Camden Naval Ordnance Depot, a housing boom , and m ajor projects such as new aluminum plants, Bull Shoals Dam, and others, boosted construction employment almost 50 per cent from 1949 to 1951. As the projects were com pleted and the housing activity slowed, construction employment declined about to its 1949 level again. M anufacturing employment in Arkansas rose from 1949 to 1951, but has remained at about the same level since. Average annual manufacturing employment in Arkansas was 70,000 in 1949, 82,500 in 1951, and about 80,800 in 1953. The decline after 1951 is surprising to anyone who has seen the new plants goin g up in the state in the last tw o years. The explanation lies in the decline of em ployment in lumber and w ood products manufac turing, the state’s largest industrial group. Em ploy ment in this industry dropped from an average of 30,700 in 1951 to 24,300 in 1953, concealing gains made in almost all other manufacturing industries. Three district areas have substantial labor surpluses resulting from the long-run decline in coal mining • • • In the H errin-M urphysboro-W est Frankfort area of southern Illinois, the Vincennes area of Indiana, and the Madisonville area in west-central Kentucky large pools of unemployment have been formed in recent years by declining coal production and lack of increase in alternative employment oppor tunities. Coal production in Illinois has dropped sharply in the past three years and last year was 40 per cent low er than during the recent peak output in 1944. On top of the declining output of coal, labor requirements in the mines have been reduced by use of more efficient machinery. Em ploym ent in bituminous coal mining in Illinois, shown in the accom panying chart, dropped from about 31,000 in January, 1950, to about 21,000 in January of 1953, and 18,000 in the fourth quarter. And the average number of hours worked has dropped substantially, from 44 hours per week in the fourth quarter of 1950 to 32 hours in the first and third quarters of 1953. Similarly, m i n i n g employment in K nox County, Indiana (around V incennes), dropped from 1,500 in 1950 to about 700 in 1953. . . . and recent declines in manufacturing em ployment. In the H errin-M urphysboro-W est Frankfort area, manufacturing dropped about 2,500 in the last four months, primarily at area plants producing elec tronic equipment, automotive parts, and plastic products. A large shoe plant in the Vincennes area employed fewer persons producing for civilian consumption in 1953 than it did when producing military shoes in 1950 and 1951. U nemployment in the H errin-M urphysboro-W est Frankfort area in January, 1954, was estimated to be about 15,000, or approximately one-fifth of the total labor force. The Vincennes area pool of un employed was about 1,700 in June, 1953, or 10 per cent of the labor force, and has grown considerably since then, as indicated by unemployment insurance claims. W hile part of the increase from June, 1953, to January, 1954, was seasonal, claims were substantially larger than in January, 1953. In the week ended January 16, 1954, 662 claims were filed in Vincennes compared with 485 four weeks earlier and 427 in the week ended January 7, 1953. Some of the recent increase in claims reflected the return of residents laid off by plants in other areas. Both employment and the work week have been reduced in Illinois coal mines. Page 17 In the period of expanding demand, 1950-1953 , the added labor supply came from both local reserves and other areas. District manpower resources were more than adequate to fill the increased need for labor during the Korean emergency. W hen the Korean W ar began there was considerable concern over the prob lems of re-directing our national manpower into the new tasks required by the emergency. There was no large reserve of unemployed such as existed at the beginning of W orld W ar II, so the main problem o f adjustment was believed to be one of inducing people to shift from one employment to another. As the industrial centers of the district expanded production, women, older workers, and school-age workers were drawn into the labor force. In addi tion, workers from surrounding rural areas and small towns migrated to the larger cities looking for work. A s a result of this in-migration, Louis ville, for example, had an estimated gain in popu lation of 50,000 people between 1950 and 1953. Other workers commuted to industrial centers. Construction o f the huge A tom ic Energy Com mission project and related electric generating plants near Paducah caused a tremendous increase in the local area population. Population of M c Cracken County jum ped two-thirds, from 49,000 in April, 1950, to an estimated 82,000 on July 1, 1952. M any o f those m oving into the area were construction workers and their families, and can not be considered permanent additions to the popu lation. In fact, large numbers have already left the area as work on the projects was reduced. The district’s out-migration, however 9 continued. Despite the expansion of employment within the district, out-m igration continued from 1950 to July, 1952, as indicated in recently published estimates of population. O f the seven states, all or parts from which the Eighth District is formed, only tw o— Illinois and Indiana— gained population in that pe riod. Estimates indicate that in the neighborhood of 300,000 civilians left the Eighth District in the two-year period ending July, 1952, more than off setting the natural increase by about 70,000. This rate o f out-m igration is apparently higher than the one of the 1940-1950 decade, in which population of the Eighth Federal Reserve District grew only 3 per cent while the nation as a whole gained 14 per cent. In the recent downturn of demand9 unemploy ment increased . . . In response to the recent shrinkage in job op Page 18 portunities, there has been a rather obvious and well publicized rise in district unemployment. All five m ajor labor market areas in the district are now classed as areas of “ moderate labor surplus” by the Department of Labor and three smaller areas are classified as having “ substantial labor surpluses.” In addition, one area on the border of our district, Texarkana, Arkansas-Texas, has a substantial labor surplus. and people withdrew from the labor force and returned home , . • . In addition to the rise in unemployment, another adjustment has o c c u r r e d . There have been withdrawals from the labor force as job opportuni ties have diminished in the district. A particularly good example of this development is found in the major industrial cities of the district. In the Evans ville area, for example, the recent decline in em ployment reduced com m uting to the city for work and caused some people to return to surrounding small towns and rural areas. Similarly, in L ouis ville and St. Louis, those most recently hired tended to be the first to be laid off when payrolls were cut. And, with few and tenuous attachments to the area, they often pulled up stakes and returned home. Many returning home and generally finding no job opportunities in their home districts, with drew from the labor force. Further, many of those recently laid off were women, some, particularly from families with other bread winners, may have withdrawn from the labor force. The return of workers from the large industrial centers to their former homes has worked in the direction of at least slow ing the tide of out-m igra tion from rural areas and small towns of this district to metropolitan centers here and elsewhere in search of better job opportunities. Unfortunately, the re turning population is merely seeking to avoid the high cost of living in large cities rather than migrat ing again to an area of expanding jobs and income. • • • increasing the need to expand job opportu nities in this district. These adjustments to the downturn in demand for labor have, in one sense, augmented the labor reserves in this district. A t the same time, these adjustments represent less income and purchasing power for individuals— even hardship in some cases — and a reduction in consumer demand. They focus attention on the immediate econom ic problem in the Eighth District of expanding job opportuni ties to utilize more fully the district’s most im por tant resource: human skill, aptitudes, and energy. . • • W iu u a m H. A. M e ig s Jam es K ester Operations of the FEDERAL RESERVE BANK OF ST. LOUIS 1953 in H E activities of the Federal Reserve Bank of St. Louis were at a higher average level in 1953 than in 1952. The volume of operations was larger at all four offices and the staff departments maintained busy schedules throughout the year. The story of the record operations during the past year, however, is far more than a list of facts and figures. It is the very human story of the suc cessful efforts of the Bank’s men and women to do their jobs well. A wide variety of jobs are performed by Reserve Bank people. Some are directly connected with the discharge of the Bank’s share in the System’s major responsibility: adjusting the supply, cost, and avail ability of money and credit. A m ajor portion of research staff time, for example, is devoted to gathering, processing, and interpreting data to as sist officers and directors of this Bank and the System in carrying out this responsibility. Educa tional activities of the field service and other departments contribute to an understanding and acceptance of the central banking function. By far the greatest number of jobs, however, are those having to do with daily operational con tacts with banks, businesses, and individuals— jobs which arise from or implement the regulation of m oney and credit, or jobs arising from other statu tory responsibilities. Still another group are those concerned with providing help and services for other employees. Comparative data on the physical volume of work for 1953 and 1952, presented in the table opposite, show that more checks were handled, more cur rency counted, sorted, and shipped than in any previous year, and more Government securities issued, exchanged, and redeemed this year than in any year since W orld W ar II. Previous records were broken in almost every operating department. In part the higher level of activity reflected the peak year in the econ om y ; in part it was attributable to additional duties performed, and in part to trends in Reserve Bank operations not directly related to econom ic activity in the district. But, reciting statistics on volume of bank opera tions does not tell the story of the Bank’s progress during the year or give credit to the many individ ual em ployees who helped achieve the record. In several departments the record or near-record T Volume of Operations in 1953 and 1952 (Number and dollar amounts in thousands except as specified) 1953 1952 Number of Pieces Handled Checks (Total) .......................................... City Checks ............................................ Country Checks .................................... Checks on this Bank............................. 182,954 24,689 97,811 174 180,073 23,632 92,986 210 Government Checks ............................. Postal Money Orders (cards).......... Currency ....................................................... Coin ................................................................ Transfer of Funds.................................... Non-cash Collections ............................... U. S. Government interest coupons.... Discounts and Advances (actual number) .................................... Safekeeping of Securities: 43,239 17,041 223,371 329,937 115 46,198 17,046 217,907 332,845 106 429 723 378 721 1,388 1,491 Securities received and released...... Coupons detached ............................... Fiscal Agency Operations: U. S. Savings Bonds (issue, exchange, redemption)...... Other Government Issues................... Withheld Tax depository 163 297 147 278 6,450 248 5,939 195 514 496 131 123 Checks handled (T o ta l)......................... $60,697,045 City Checks ............................................ 37,728,457 Country Checks ...................................... 14,062,546 Checks on this Bank............................. 2,392,953 Government Checks ........................... 6,222,225 Postal Money Orders........................... 290,834 Currency ....................................................... 1,373,108 Coin ............................................................... 29,416 Transfer of Funds.................................... 39,792,037 Non-cash Collections ............................. 368,797 Discounts and Advances......................... 5,792,385 Safekeeping of Securities— $56,670,422 34,508,923 13,424,700 2,494,404 5,953,989 288,406 1,288,793 28,821 28,066,885 365,480 6,427,879 receipts processed ............................. Treasury Tax and Loan Account transactions ........................................ Amount Handled Coupons detached ................................ Fiscal Agency Operations: U. S. Savings Bonds (issue, exchange, redemption)...... Other Government Issues................... 25,102 20,107 651,243 8,038,132 594,338 6,808,507 v o lu m e w a s h a n d le d w ith fe w e r e m p lo y e e s . F e w e r p e o p le w e re a b le t o h a n d le th e v o lu m e o f c h e c k s b e c a u se n e w a n d m o r e effic ie n t p r o o f m a c h in e s w e r e in sta lle d and in th e o u tg o in g s e v e r a l la r g e r c o u n try c a p a c it y check m a c h in e s d iv is io n , w ere to th e in c o m in g p r o o f s e c t io n s . In c r e a s e d added e ffic ie n c y Page 19 in the fiscal agency division was achieved partially by simplification of certain Treasury Department practices and by streamlining operating procedures, particularly in the savings bond reissue division. Here reductions in personnel requirements more than offset additions resulting from adding two new fu n ction s: currency destruction and handling deposits of Federal excise taxes. In July a new automatic teletypewriter communications network having greater capacity and using less manpower than the old was installed throughout the System. W hile new records and new procedures were being established in these operating departments, the staff departments also were being kept busy. During the past year, a full-time audit staff made periodic audits in all operating departments to check accuracy of books and compliance with laws and regulations and departmental policies. Legal coun sel was available to assist in the interpretation of any rules or regulations affecting Bank operation. Personnel department, which moved to modernized quarters during the year, met employment needs and administered the Bank’s merit review, wagesalary, cafeteria, and other personnel programs. The accounting department not only recorded all internal expenses and income, but also kept track of transactions with other Federal Reserve Banks and those between this Bank and member banks in the district. Further, operations in all departments ran more sm oothly because of the efficient work of two other g ro u p s: the protection and maintenance depart ments. Security measures were maintained; physi cal facilities— lights, heat, water, air-conditioning, and so on-—were kept in good working order, the buildings clean and pleasant to work in, and several improvements were made to permit more effective operations. Total employment at the end of 1953 was 1,286 at the head and branch offices, only 38 higher than at the beginning of the year. The personnel de partment found it necessary to hire 563 people to maintain the w orking force. Although this reflects a continued high turnover of employees, it is im portant to note that about one-third of the employees have been with the Bank ten years or longer. In Decem ber the follow ing appointments and designations were announced: By the Board o f Governors of the Federal Reserve System e s e r v e B a n k o f St. L o u i s Mr. M. Moss Alexander President, Missouri Portland Cement Co. St. Louis, Missouri Appointed as Class C director for a three-year term beginning January 1, 1954, and designated as Chair F ederal R Page 20 man of the Board and Federal Reserve Agent for the year 1954. Mr. Caffey Robertson President, Caffey Robertson Co. Memphis, Tennessee Appointed as Class C director, effective January 1, 1954, for the unexpired portion of a term ending December 31, 1955. L it t l e R o c k B r a n c h Mr. Sam B . Strauss President, Pfeifers of Arkansas Little Rock, Arkansas Reappointed director for a three-year term beginning January 1, 1954. L o u is v il l e B r a n c h Mr. David F. Cocks Vice President and Treasurer Standard Oil Company (Kentucky) Louisville, Kentucky Appointed director for a three-year term beginning January 1, 1954. M e m p h is B ranch Chancellor John D. Williams University of Mississippi University, Mississippi Appointed director for a three-year term beginning January 1, 1954. Mr. A . E. Hohenberg President, Hohenberg Bros. Company Memphis, Tennessee Appointed director, effective January 1, 1954, for the unexpired portion of a term ending December 31, 1954. By the Board o f Directors of the Federal Reserve Bank of St. Louis L it t l e R o c k B r a n c h Mr. Donald Barger President, Peoples Exchange Bank Russellville, Arkansas Appointed director for a three-year term beginning January 1, 1954. L o u is v il l e B r a n c h Mr. Noel Rush President, Lincoln Bank & Trust Co. Louisville, Kentucky Reappointed director for a three-year term beginning January 1, 1954. M e m p h is B ranch Mr. John K. Wilson President, First National Bank W est Point, Mississippi Appointed director for a three-year term beginning January 1, 1954. Member o f Federal Advisory Council Mr. W . W . Campbell President, National Bank of Eastern Arkansas Forrest City, Arkansas Appointed as member of the Federal Advisory Coun cil to represent the Eighth Federal Reserve District for the year 1954. Also during 1953, five official appointments were m ade: Darryl R. Francis, V ice President; John J. H ofer and V ictor M. Longstreet, Assistant V ice Presidents; Orville O. W yrick, Assistant Chief Examiner, and Gerald T. Dunne, Counsel. Earnings of the Federal Reserve Bank of St. Louis were $25,448,000 during 1953. Expenses totaled $6,468,000. Out of the $18,907,000 net earn ings, dividends totaling $537,000 were paid to the stockholding member banks and $1,837,000 was transferred to surplus. The difference was paid to the Treasury as interest on outstanding Federal Reserve notes. The many employees of the Bank can look back with justified pride at their accomplishments of 1953. However, long before the close of that year these same people began looking ahead to 1954. The planning and budget division, in cooperation with each department manager, prepared plans and cost estimates of the next year’s operation. Changes in physical facilities were projected and detailed drawings prepared. Last, but not least, consider able thought by employees at every level was given to how this Bank could render even more effective service more efficiently in the year ahead. DIRECTORS AND OFFICERS OF THE FEDERAL RESERVE BANK OF ST. LOUIS February 1, 1954 Directors Officers M v Moss Alexander, Chairman Delos C. Johns, President Frederick L. Deming, First Vice President Caffey Robertson, Deputy Chairman Phil E. Chappell Joseph H. Moore J. E. Etherton Ralph E. Plunkett William A . McDonnell Louis Ruthenburg William E. Peterson, Vice President Howard H . Weigel, Vice President and Secretary Joseph C. Wotawa, Vice President Dale M. Lewis, Vice President G. O. Hollocher, Assistant Vice President Earl R. Billen, Assistant Vice President John J. Christ, Assistant Vice President Willis L. Johns, Assistant Vice President Stephen Koptis, Assistant Vice President Woodrow W . Gilmore, Assistant Vice President Victor M. Longstreet, Assistant Vice President John J. H ofer, Assistant Vice President William J. Abbott, Jr., Director o f Research George E. Kroner, Chief Examiner Orville O. Wyrick, Assistant Chief Examiner Gerald T. Dunne, Counsel and Assistant Secretary LIT T L E ROCK BRANCH Donald Barger Shuford R. Nichols C. M. Stewart, Vice President and Manager Stonewall J. Beauchamp Thos. W . Stone M. L. Bennett, Assistant Manager Harvey C. Couch, Jr. Sam B. Strauss H. C. McKinney, Jr. Clifford W ood, Assistant Manager W . J. Bryan, Assistant Manager LO U ISVILLE BRANCH Smith Broadbent, Jr. M. C. Minor Fred Burton, Assistant Manager David F. Cocks Noel Rush L. K. Arthur, Assistant Manager Magnus J. Kreisle Ira F. W ilcox L. S. Moore, Assistant Manager Pierre B. McBride MEMPHIS BRANCH Henry Banks Ben L. Ross A. E. Hohenberg John D. Williams C. E. Martin, Assistant Manager John A . McCall John K. Wilson S. K. Belcher, Assistant Manager William B. Pollard Darryl R. Francis, Vice President and Manager H . C. Anderson, Assistant Manager Page 21 OF CURRENT CONDITIONS U SIN E SS activity in the opening weeks of 1954 was in sharp contrast to its performance at the beginning of 1953. Then, production was soar ing toward a new peak as efforts to catch up from the effects of the 1952 steel strike reinforced the stimulus of grow ing defense and civilian demands. This year, many indicators pointed downward. And, while others were displaying some strength, the record clearly showed the economy to be operating at a slower rate than existed at the peak of the boom around mid-year 1953. Industrial production in both the Eighth D is trict and the nation during the beginning weeks of 1954 appears to have continued the moderate downturn that characterized most of the last half of 1953. And reflecting this downturn as well as seasonal layoffs, unemployment increased again in January of this year. However, notwithstanding the readjustment in production and employment, wholesale and retail price averages remained re markably steady, as they have over the entire pe riod of production decline, and construction activity and consumer spending continued in substantial volume. B Inventory reduction . . . Inventory trimming has been a major factor in the moderate decline in output. The Department of Commerce reported that, seasonally adjusted, inventories stopped grow ing after September, 1953. By the end of N ovem ber they had been cut one per cent. A lm ost all the decline was accounted for by lower retail stocks of durable goods and lower manufacturing stocks of nondurables. Despite the progress made in the last quarter, further efforts toward liquidation were apparent in January. A cut in allowable crude oil production in Texas was announced for February with the com ment that gasoline inventories were very high. Large stocks at steel fabricating plants were given as a major reason for the failure of steel output to rise in January from its relatively low December level. In the district’s major steel producing area around St. Louis, the steel ingot rate fell to 71 per cent of capacity in January. Retail stocks also remained above year-earlier Page 22 levels despite recent improvement. Department store stocks nationally averaged 128 per cent of the 1947-1949 average for October and N ovem ber of 1953— 5 per cent higher than a year earlier. An indication of high inventories at furniture stores was the conservative purchasing by retailers at the recent annual winter furniture market show at Chicago. In the district, department store inven tories were at 118 per cent of the 1947-1949 average at the close of the year, off 16 points from the 1953 peak in September but still close to the rela tively high level of a year earlier. Furniture and specialty store inventories, likewise, were little changed from a year ago. Reflecting high stocks and other factors, district w oodw orking and textile production declined. In December according to the sample of industrial use of electric power in five major district centers, textile manufacturing dropped to 4 per cent below its level a year earlier. New and used automobiles in dealers’ hands have been another troublesome item. W hile gen erally across the nation, dealers were believed to have fairly well disposed of 1953 car stocks, on the average each entered the new year with better than two cars more than he had on January 1 last year. The effect of the auto inventory situation on production is obscured by the rapid seasonal out turn of new models which nationally will approxi mate 460,000 in January in comparison with 402,000 in December. Districtwise, the auto production pattern is mixed. One large plant cut off 1,500 workers, eliminating a night shift, but tw o other assembly plants were operating at rates only slightly below the peak. Outstandingly high inventories in the coal and whiskey industries continued to restrict output. Latest figures showed coal production in the district running about 5 per cent below a year ago, while the drop was 18 per cent nationally. O nly about half of the total number of distilleries was operat ing in Kentucky on December 31. and defense cutbacks . • • As has been well publicized, another major factor in the business activity decline has been the reduction in defense spending. Industrial elec. . . trie power consumption in the district retiects these cutbacks. Manufacturers of nonelectrical machinery (w hich includes refrigeration and farm machinery as well as aircraft parts and ordnance) used 13 per cent less power this past Decem ber than a year earlier. Primary metals, electrical machinery, and chemical manufacturers also used less power. • . • have been reflected in employment . . . One principal result of the downturn in pro duction in recent months has been a decrease in employment and a rise in unemployment (discussed in the preceding article in this Monthly Review). Another result has been lessened demand for rail transportation. Nationally, weekly car loadings so far in January have been running about 10 per cent below year-earlier levels. And a number of railroads have announced employment reductions, including at least tw o large roads with headquarters in the Eighth District. • • . and banking figures. Changes in business loan volume from midDecem ber to mid-January at member banks in the district and in leading cities of the nation gave further indication of the slowing rate of business activity. Business loans at the district’s weekly reporting banks dropped over $30 million— more than is usually expected in the four weeks. Nation ally the trend was similar. In addition to seasonal reductions in borrow ing by trade concerns and processors and distributors of agricultural products, a few firms found borrow ing less attractive follow ing the expiration of the excess profits tax and some repayments reflected the large volume of capital market offerings in December. Pressure on the money market was not nearly as pronounced in December and the first few days of January as it had been at the turns of the previous tw o years. Seasonal drains on bank reserves were prevented from causing undue strain in the market by System purchases of securities. From December 8 to January 7, the repurchase rate to nonbank dealers in Government securities was reduced from 2 per cent to 1 per cent in order to facilitate yearend money market adjustments. But consumer spending and other factors were encouraging. W ith so much attention being given to the down turn, it should not be forgotten that business gen erally is still at remarkably high levels and that there are several encouraging factors. Some ob servers believe much of the inventory adjustment will be accomplished by the end of the first quarter this year. Other elements of strength include: the steadiness of price averages; the currently general consumer and business confidence as to the months ahead as expressed in the relatively high levels of department store sales in the first three weeks of January; a substantial volume of construction ac tivity which, favored until recently by mild weather, has remained at near-peak levels, and— particularly important in this district— some relief from the drouth for agriculture. W inter rains and snows finally brought much needed moisture to many farms in the district. Nearly the entire “ drouth belt” recently received precipitation in varying amounts. Further, agricul tural prices have continued to rise and the parity ratio edged up from 91 in December to 92 in Jan uary. Far outweighing any other factors during the month past in its ultimate effect upon this dis trict’s econom y is the announced program of the Administration for farmers, labor, national defense, and foreign aid. N o one can confidently predict the outcome, but it appears clear from the new $65.5 billion budget that Government spending will con tinue in fiscal 1955 to provide a major bulwark to business activity. Gross national product turned down in 1953. V A R IO U S IN D IC A T O R S O F IN D U S T R IA L ACTIVITY Percent Change* N ov., 1953 D ec., 1952 D ec., 1953 Industrial Use of Electric Power (thousands of K W H per working day, selected industrial firms in 6 district citie s)........................................................... ........................... Steel Ingot Rate, St. Louis area (O perating rate, per cent of ca p a city )................... Coal Production Index— 8th Dist. (Seasonally adjusted, 193 5 -1 93 9 = 10 0 ).............. Crude Oil Production— 8th Dist. (D aily average in thousands of b b ls .)..................... Freight Interchanges at R Rs— St. Louis. (Thousands of cars— 25 railroads— Terminal R .R . A ss n .)................................................................................................................. Livestock Slaughter— St. Louis area. (Thousands of head— weekly average— first 4 w eeks).................................................................................................................................. Lum ber Production— S. Pine. (A verage weekly production— thousands of bd. ft.).. Lumber Production— S. Hardwoods. (O perating rate, per cent of ca p a city )............ ,157 80 144p 311.6 — 8 — 13 + 7 -0 - + — — + 1 17 14 1 100.2 — 1 — 6 106.1 169.5 88 — 19 — 8 — 11 — 22 — 4 - 0- * Percentage change figures for the steel ingot rate, Southern hardwood rate, and the coal production index, show the relative per cent change in production, not the drop in actual percentage and index points, p Preliminary. D E P O S IT ACTIVITY D ebits1 Percent Change from D ec., N ov., 19522 1953 Dec., 1953 .(Tn m illions) FARM (In thousand of dollars) N ov., 1953 $113,388 .. 174,820 92,697 Kentucky...... 35,303 Mississippi.. .. 138,956 M issouri.... 113,972 Tennessee.... .. 68,109 • $737,245 8th D ist...... $403,307 A rkansas.... 138.8 171.4 163.4 798.8 740.2 2,263.1 + 10% + 9 + 6 + 14 + 3 + 16 — + — + — + 6% 5 4 2 2 2 $4,275.7 + 13% + 1% $ 37.7 15.6 32.2 47.4 30.5 9.7 10.4 23.5 52.1 44.1 39.8 46.6 37.3 13.5 71.9 20.4 + 16% + 13 + 34 + 10 + 2 + 6 — 9 — 1 -0 + 16 + 16 — 8 + 10 + 8 + 12 + 1 + 8% + 9 + 11 — 6 + 4 — 3 + 1 + 3 + 4 — 13 — 23 + 9 + 8 + 4 + 4 + 11 $ 532.7 $4,808.4 + 8% + 12% * 1 o 1 East St. L o u is -N a tional Stock Yards. Ill.......... a........................ . Evansville, In d ............... Little R ock, A rk ........... Louisville, K y ................ Memphis, T enn............. St. L ouis, M o................. . T otal— Six Largest Centers........................ . Other R eporting C enters: A lton, 111.......................... . Cape Girardeau, M o ..... El D orado, A rk .............. F ort Smith, A rk ............ Greenville, M iss............ Hannibal, M o ................. Helena, A rk .................... Jackson, T enn................ Jefferson City, M o ........ O w ensboro, K y ............. Paducah, K y .................. Pitie Bluff, A rk .............. Quincy, 111...................... Sedalia, M o .................... Springfield, M o ............. Texarkana, A rk ............ Total— Other Centers........................ . T otal— 22 Centers...... . CASH $ Total— Seasonally A d justed (1 9 4 7 -4 9 = 1 0 0 ) + LIA B ILITIE S O F (1 9 4 7 -1 94 9 = 10 0 ) Unadjusted 8th F. R. D istrict* XT , co N ov., 52 164.9 179.3 158.2 N ov., 53 O ct., a3 196.4P192.4“ T otal.................... Residential.......... 168.2P 175.3 A ll O ther........... 209.4** 200.4 Seasonally adjusted T otal..................... 229.0P 215.8 Residential.......... 197.9** 178.9 233.0 A ll O ther............ 243.5P * Based on three-month m oving value of awards, as reported by F. Corporation. p Preliminary. EIGH TH D ISTR ICT (I n Millions of D ollars) W eekly R eporting Banks Change from Jan. 13, ’ 54 Dec. 16, ’ 53 Assets $— 25 Loans ( N e t ) 1....................................... $1,402 753 — 33 Business and A gricultural........... 30 + 1 256 + 1 Real Estate....................................... 24 -0 + 6 357 Other (largely con su m er)........... + 39 1,073 U S. Governm ent Securities.......... 198 — 1 Other Securities.................................. — 21 947 Cash A ssets.......................................... - 036 $3,656 $— 8 Total Assets.................................... MEMBER 192.5 210.9 184.0 average ot W . D odge BANKS A ll M ember Banks Change from N ov. 25, ’ S3 Dec. 30, ’ 53 $- 0 $2,193 2,040 421 1,576 58 $6,288 — 25 — 2 + 83 — 2 $ + 54 $ 836 3,869 1,100 67 416 $6,288 $ + 68 + 31 + 4 — 52 + 3 $ + 54 1% + 1« 148.5 ASSETS AND INDEX O F C O N S T R U C T I O N C O N TRACTS AWARDED INCOM E Percentage Change Jan. thru N o v .,’ 53 \ compared with like period N ov., 1952 1951 1952 + 41% — 4% + 11% + 2 — 5 — 1 — 2 + 7 + 2 — 2 — 5 + 22 + 34 + 20 + 71 — 5 — 6 — 7 + 1 + 22 — 5 + 4% — 2% +16% — 6% — 8% + 6% 1 Debits to demand deposit accounts of individuals, partnerships and corporations and states and political subdivisions. 2 Estimated. Liabilities and Capital Demand Deposits of Banks............. Other Demand D eposits................... Time D eposits...................................... Borrowings and Other Liabilities.. Total Capital A ccou n ts..................... Total Liabilities and Capital....... $ 806 2,055 511 51 233 $3,656 $ + 31 — 36 + 5 — 9 + 1 $— 8 1 L oan breakdowns reported gross for weekly reporting banks, not available for all member banks. R ETAIL Louisville.. Mem phis....... Little Rock... Springfield.... Fort Smith.... FU R N ITU R E Net Sales D ec., 1953 com pared with N o v .,’ 53 D e c .,’ 52 .. + 2 5 % — 7% — 10 . +19 „ +24 - 0. +23 + 2 — 26 + 17 + 59 - 0+ 2 , +53 + 3 ,. + 3 5 Inventories Dec. , 1953 compared with N o v .,’ 53 Dec., 52 -0 -% — 11% + 5 — 8 — 9 + 1 — 9 + 1 * * — 29 — 14 — 2 — 7 * * * N ot shown separately due to insufficient coverage, but included in Eighth District totals. 1 In addition to follow ing cities, includes stores in Blytheville, Pine Bluff, A rkansas; Hopkinsville, Ow ens boro, K en tu ck y; Greenwood, M ississippi; and Evans ville, Indiana. -I n clu d e s Louisville, K en tu ck y; and N ew Albany, Indiara. P E R C E N T A G E D IS T R IB U T IO N Cash Sales Credit Sales Total Sales D ec.,’ 53 18% 82 100 % OF SALES N o v .,’ 53 16% 84 100 % Percentage of A ccts. and Notes Receivable, Outstanding Dec. 1, 1953, c o l Stock Stocks Net Sale s lected during Dec. Turnover on H and E xcl. Jan. 1 to 12 mos. 53 D ec., ’ 53 Dec. . 1953 Instal. Instalment Dec. 31, to same com p, with compared with 1952 A ccounts A ccounts 1953 N o v .,’ 53 D e c.,’ 52 period ’ 52 D e c .,’ 52 DEPARTMENT STO R ES STORES D ec.,’ 52 18% .. .............. 82 100% 8th F. R. District Total.. .. Quincy, 111.................... Evansville Area, Ind.. Louisville Area, K y., In d .................... St. Louis Area, M o., Ill...................... .. Springfield Area, M o.. Memphis Area, Tenn.. .. + 47% + 62 +49 + 52 + 32 — — + — — 2% 3 2 3 5 + — — + + 1% 3 1 1 6 — + — — 1% 3 3 10 3.80 3.66 3.66 3.71 4.02 3.86 4.03 4.04 14 18 50% 49 46 59 46 19% + 57 __ 2 -0 - — 1 4.11 4.23 21 +44 + 51 + 49 +56 ___ — — — 2 2 1 9 + — - 0 — - 0— 11 + 3 — 8 3.81 3.36 4.35 3.01 3.97 3.57 4.67 3.54 20 57 20 10 41 37 SALES AND I N D E X E S; O F 2 2 3 S T O C K S - 8TH D ISTR ICT Dec., N ov., O ct., D ec., 1952 1953 1953 1953 189 119 136 185 ) , unadjusted4........... . Sales 115 108 114 , , 113 :), seasonally adjusted4............... 104 138 132 104 Stocks, unadjusted5. 119 121 124 Stocks, seasonally adjusted5...................................................... 118 4 Daily average 1947-49=100. 5 End of M onth average 1947-4£*= 100. Trading da ys: Decem ber, 1953— 2 6 ; N ovem ber, 1953— 2 4 ; Decem ber, 1952— 26. 2 Fayetteville, Pine Bluff, A rkansas; H arrisburg, Mt. V ernon, Illin ois; 1 In order to permit publication of figures for this city (or area;, a special Vincennes, Indiana; Danville, H opkinsville, Mayfield, K en tu ck y; Chilhsample has been constructed which is not confined exclusively to department cothe, M issouri; Greenville, M ississippi; and Jackson, Tennessee. stores. Figtires for any such nondepartment stores however, are not used in Outstanding orders or reporting stores at the end of December, 1953, com puting the district percentage changes or in com puting department store were 24 per cent smaller than on the corresponding date a year ago. indexes.
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