Full text of Review (Federal Reserve Bank of St. Louis) : February 1955

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F e b r u a ry , 1955

Volume X X X V II

Number 2

TJ L H E ANNUAL TRANSMITTAL
^
^ ^
^
^
to Congress of the Budget Message always raises
the question of which type of budget best serves the purposes of fiscal decision-making.
The administrative or traditional budget contains estimates, for the ensuing and
current fiscal years, of receipts and disbursements of Federally-owned funds. By vari­
ous means of authorization, Congress is asked to grant an amount of new obligational
authority, which does not coincide with expenditures for a particular year.
To estimate the impact of fiscal operations on the economy, it is necessary to com­
bine budget and trust fund transactions in a consolidated cash statement. The “cash”
budget yields information on money flows between the Federal Government and the
public and furnishes the basis for short-run estimates of the effect of fiscal operations
on bank reserves.
A “capital” budget, not used by the Federal Government, would distinguish be­
tween “capital” and “current” outlays. Opponents of such a budget consider it a way
of concealing chronically unbalanced budgets; proponents advance it as a means to
public acceptance of large and necessary outlays by the Federal Government on durable
goods.
The three budget types are not alternative, but rather supplementary, control
mechanisms to aid in the management of Government affairs.




The annual transmittal to Congress o f the Budget
Message always raises the question o f which type of
budget best serves the purposes of fiscal
decision-making.

I n TH E M IDST OF HIS ANNUAL BOUT with
the Federal taxgatherer, a citizen may be forgiven for
putting aside the broader aspects of Federal fiscal
problems. Yet current discussions of such matters
intrude themselves upon his consciousness. The Fed­
eral Budget for 1956, after nearly a year in process of
formulation, was sent by the President to Congress on
January 17 of this year. Since then the general press
and the financial journals have treated at length such
subject as the effects of the proposed expenditures on
different Government programs, the effect of a con­
tinuing budget deficit on the performance of the econ­
omy, and the prospects for a balanced budget in en­
suing years.
Another, perhaps more fundamental, question has
elicited a flurry of journalistic comment. Economists,
Government officials, and economic research organi­
zations have argued that a “cash-consolidated” budget
gives a more accurate picture of the impact of fiscal
operations on the economy than does the “administra­
tive” budget in present use. Others have suggested
that a system of “capital” accounting be incorporated
in a cash budget to permit separation of items of cur­
rent expense from asset acquisitions. The average cit­
izen finds it difficult enough to make his way through
Page 14




the present administrative budget, which is presented
to him in a volume about the size of the St. Louis tele­
phone directory. When he contemplates the complex­
ities suggested by other types of budgets he is likely
to despair of comprehending his Government’s finan­
cial operations. A solution to his intellectual difficul­
ties lies in the realization that different types of budg­
ets yield information useful for different purposes of
decision-making.
The administrative or traditional budget contains
estimates, for the ensuing and current fiscal years, o f
receipts and disbursements of Federally-owned funds
To understand the various proposals for presenting
budgetary information it is first necessary to become
familiar with the elements of the conventional or ad­
ministrative budget. By the Budget and Accounting
Act of 1921, as amended, the President is required to
present to Congress in January of each year an esti­
mate of government revenues and expenditures for
the ensuing fiscal year, a revised estimate for the cur­
rent fiscal year, and an accounting of receipts and ex­
penditures for the fiscal year which ended on the pre­
ceding June 30.
On the receipts side of the budget are included
funds owned directly by the Government and paid
into the Treasury to the credit of the general and spe­
cial funds. Excluded from budget receipts are money
obtained by borrowing, money paid into revolving
funds such as those of Government corporations and
the Post Office, and money earmarked for one of the

trust funds. In general, then, budget receipts consist
of the income taxes, excise taxes, and custom duties
which people and businesses pay into the United
States Treasury.

By various means of authorization, Congress
is asked to grant an amount . . .

TABLE I
SUMMARY OF THE BUDGET
(Fiscal years.

In billions)

1953
actual

1954
actual

$ 80 .3

New obligational authority;
Under existing legislation
Under proposed legislation
Total new obligational
authority ....................

1955
estimate

1956
estimate

$ 62.8

$ 57.2
.1

$ 53.1
5.5

8 0 .3

6 2 .8

5 7 ,3

5 8 .6

Budget receipts:
Under existing legislation
Under proposed legislation

64.8

6 4.7

5 8 .8
.2

5 7.7
2.3

Total budget receipts

64.8

6 4 .7

5 9 .0

6 0.0

Net budget expenditures:
Under existing legislation
Under proposed legislation

7 4 .3

6 7 .8

6 3 .5

60.5
1.9

7 4 .3

67.8

63.5

62.4

Net budget expenditures
Budget deficit .........................

9.4

3.1

4 .5

2.4

Public debt at end of year

266.1

2 7 1 .3

2 7 4 .3

2 7 6 .0

Balances of appropriations carried
forward at end of year. . .
78.4

6 8 .0

5 3.9

4 9 .6

Budget expenditures are outlays of Federallyowned funds on the national security program, inter­
est on the public debt, Federal services and benefits,
agriculture and agricultural resources, and so on. E x­
penditures of the general fund are stated on a gross
basis, receipts not ordinarily being deducted from
expenditures. Expenditures of the so-called “publicenterprise” revolving funds are reported on both a
gross and a net basis, but in the main budget state­
ment receipts are deducted from expenditures to get
a net figure. For example, it is estimated that gross
expenditures for agriculture and agricultural re­
sources in the fiscal year 1956 will be $7.6 billion. But
receipts, consisting mostly of collections on loans and
sales of commodities, will amount to about $5.4 bil­
lion. Thus, the net estimated expenditures for the
programs will be about $2.2 billion.1 Net budget ex­
penditures are estimated on a “checks issued” basis—
i.e., the date of a check or cash payment determines
the fiscal year in which the expenditure falls. How­
ever, interest on the public debt counts as an expen­
diture in the year in which it becomes payable even
though the coupons (or savings bonds) may not be
presented for payment in that year. Retirement of
Government debt and investment in United States
Government securities by Government corporations
1 On a gross basis budget expenditures for 1956 will be $73.3 billion, but
after receipts of Government corporations and the postal service of about
$10.9 billion are deducted, net expenditures amount to $62.4 billion.




are always excluded from expenditures. Certain pay­
ments from one Government fund to another are elim­
inated from both the receipt and expenditure side.

Federal agencies cannot commit themselves to ex­
penditures or pay bills until Congress authorizes
them to do so. Usually authorization takes the form
of an appropriation, which permits an agency to incur
obligations and pay bills as they come in. Sometimes,
though, Congress will grant a contract authorization,
which gives authority to incur obligations but not to
spend money; such an authorization requires a subse­
quent appropriation to liquidate contract authoriza­
tion to allow the actual expenditure of funds. Occa­
sionally reappropriations and reauthorizations are
necessary to continue available balances of prior ap­
propriations or authorizations which would otherwise
expire, though for a few purposes, such as interest on
the public debt, Congress grants permanent authori­
zations under which sums become available year after
year without further legislative action. Finally, au­
thorizations to expend from debt receipts may be nec­
essary to make borrowed funds available to an agen­
cy or to enable a Government-owned corporation to
borrow directly from the public.
. . . of new obligational authority, which does not
coincide with expenditures for a particular year.
Whatever form Congress may use, the sum of the
various types of authorization, less the part of appro­
priations which is to liquidate previous contract au­
thorization, constitutes new obligational authority.
The amount of new obligational authority granted
will not be the same as expenditures for a particular
year. There will ordinarily be a time lag between
authorization and the receipt of goods and services,
and in the case of such capital goods as an atomic
energy installation or an aircraft carrier the interval
between incurring an obligation and making final
payment may be several years. Thus it happens that
expenditures in any year come partly from new obli­
gational authority granted for that year and partly
from authority granted in previous years. For ex­
ample, in fiscal 1956 about 40 per cent of the estimat­
ed expenditures of $62.4 billion will be from obliga­
tional authority granted in previous fiscal years, and
about 60 per cent of the expenditures are to be from
authorizations requested for 1956. Finally, it is antici­
pated that $20.8 billion, or about one-third, of the
Page 15

BUDGET AUTHORIZATIONS

re la te d t o

e x p e n d itu re s

FISCAL YEAR 1956, ESTIMATED

$ BILLIONS

37.9
NEW

O B L IG A T IO N A L

20.7

To be spent

To be spent

in 1956

after 1956

58.6

AUTHORITY

24.5
From ^

^

EXPENDITURES

37.9
From

New O b liga tio n a l
Authority For 1956

new obligational authority will not be spent until
fiscal 1957 or later. The above chart will help the
reader to get these relationships in mind.
In periods when Congress is making huge appro­
priations for the purpose of building up the military
machine, new obligational authority in any year may
greatly exceed budget expenditures. Table II shows
how the conflict in Korea affected unexpended bal­
ances of appropriations in the early 1950’s.
In fiscal 1955 and 1956 payments for military
equipment authorized in previous years will exceed
the dollar value of new equipment ordered, with the
result that cumulative unspent balances of appropria­
tions will decline. By July 1, 1956, these balances will
be down nearly $30 billion from their peak at the end
of fiscal 1953.
The administrative budget thus provides a means
lor closely estimating receipts and expenditures of
Government-owned funds in any year and for keep­
ing track of congressional authorizations over time.
The primary function of the traditional budgetary
Page 16




62.4

statements is to furnish a system of easy accounting
controls to prevent overspending of appropriations.
TABLE II
BUDGET A U T H O R IZA T IO N S, EXPENDITURES, A N D UNSPENT
APPRO PRIATIO N S 1950-1956
(In Billions of D ollars)
C um ulative
Am ount brought
unspent
forw ard into
balances of
the year
appropriations

Fiscal
Y ear

New
obligational
authority*

1950

4 9 .3

3 9 .6

1 1 .5

1 4 .1 e

1951

8 2 .9

4 4 .0

1 4 .1

5 0 .3 e

Expenditures

1952

9 1 .4

6 5 .4

5 0 .3

6 8 .8

1953

8 0 .3

7 4 .3

6 8 .8

7 8 .4

1954

6 2 .8

6 7 .8

7 8 .4

6 8 .0

1955 e

5 7 .3

6 3 .5

6 8 .0

5 3 .9

1956 e

5 8 .6

6 2 .4

5 3 .9

4 9 .6

e

Estim ated

*

Included authorizaLions to co n tract and to m ake expenditures from
borrowed m oney, as well as appropriations to m ake expenditures
from the general revenues of the G overnm ent.

**

Includes reappropriations of spending authority w hich w ould lapse if
not used in a given fiscal year, as well as continuing and new
appropriations. Does not include authorizations to co n tra ct or
spend from borrow ed m oney.

Source:

T h e B u d g et o f th e U n ited States G ov ern m en t fo r th e F isc a l Y ear
E n din g Ju n e 30, 1956.

To estimate the impact o f fiscal operations on the
economy, it is necessary to combine budget and trust
fund transactions in a consolidated cash statement.
The administrative budget does not, however, per­
mit an accurate measurement of the impact of fiscal
operations on the economy. In order to have some
notion of what that impact may be within a particu­
lar year it is essential to have an estimate of the total
amount of money which will be collected from people
in taxes and the total amount which will be turned
back as cash expenditures. The orthodox budget does
not accurately describe cash flows to and from the
public, for it does not include receipts and expendi­
tures of the trust funds, such as old-age and surviv­
ors insurance, unemployment insurance, railroad re­
tirement, and the like. Moreover, the customary
budget counts as expenditures certain payments
which do not find their way into the hands of the
public. Chief items in this category are interest on
the Government securities in which the trust funds
are invested and accrued interest on savings bonds,
which is counted as a budget expenditure at the time
of accrual. In Special Analysis A of the budget doc­
ument is found a summary of Federal Government
receipts from and payments to the public, here pre­
sented in somewhat simplified form as Table III. The
Federal Government includes budget transactions,
TABLE III
RECEIPTS FROM A ND PAYMENTS TO THE PUBLIC
(In Millions of Dollars)
Fiscal Year 1955
Estimated

Description
Budget receipts .................................................................................

$60,0 0 0

Trust fund receipts .........................................................................

11,283

Intergovernmental transactions ..................................................

— 2,455

Seigniorage on s i l v e r .......................................................................

—

35

Total receipts from the pu blic....................

$68,793

Budget expenditures .......................................................................

$62,408

Trust fund expenditures ...............................................................

8 ,845

Intragovemmental transactions ..................................................

— 2 ,4 5 5

Net accrued interest and other noncash transactions. . . .

—

Total payments to the pu blic.......................
Excess of receipts over payments.............................................

Source:

563

$68,2 3 5
$

Consolidation of budget receipts and expenditures
with trust fund transactions yields helpful informa­
tion. In fiscal 1956 receipts of the trust funds will be
about $2.5 billion more than expenditures from them;
the excess cash will be invested in Treasury securities,
payment to the public of these trust fund expendi­
tures is postponed, and the excess cash received from
the public by the trust accounts is available to the
Government. Of the transactions between Govern­
ment agencies and trust funds, interest paid on
United States securities held by trust funds amounted
to about $1.7 billion.2 Of the noncash transactions, ac­
crued interest on savings bonds will amount to more
than $500 million in fiscal 1956. This amount plus
the $2.5 billion excess of cash receipts in the trust
funds changes a $2.4 billion deficit in the administra­
tive budget to a $500 million surplus when only the
money flows between the Federal Government and
the public are considered.
If present estimates hold, the impact of Federal
taxing and spending in fiscal 1956 will be almost neu­
tral. No one would pretend, of course, that the cash
deficit or cash surplus is the only thing to be consid­
ered in assessing the effect of the budget on the econ­
omy. The kinds of taxes levied play a part in deter­
mining the level of economic activity, and the debt
managers, by tapping alternative sources of borrowed
funds, may encourage or discourage business expan­
sion. As the budget document itself points out, “. . .
not only cash flows, but also many other Federal
financial activities have important economic effects.”
For example, a large increase in new appropriations
will likely stimulate economic activity before the
funds themselves are actually paid out. The repeal
or modification of a tax law may affect business deci­
sions to invest or disinvest before cash flows between
the Federal Government and the public have been
influenced.

558

T h e Budget fo r the Fiscal Y ear 1956, p . 1131.

trust fund transactions, and the transactions of those
Government corporations carried on the books of the
Treasury. The public includes household units, busi­
ness firms, the Federal Reserve and Postal Savings
Systems, state and municipal governments, and inter­
national organizations.




The "cash” budget yields information on money
flows between the Federal Government
and the public, . . .

. . . and furnishes the basis for short-run estimates
o f the effect o f fiscal operations on bank reserves.
Incidentally, familiarity with the consolidated cash
statement as presented in the budget document is of
help in day-to-day monetary analysis. Treasury oper­
ations have an important effect on the reserves of
2
Presently United States Government securities held by the trust funds
amount to about $50 billion, or close to one-fifth of the public debt.

Page 17

commercial banks as may been seen from an inspec­
tion of Table IV. In the first two business days of
1955, for example, changes in Treasury deposits in the
Federal Reserve banks added $177 million and $103
million to bank reserves.
TABLE IV
FACTORS AFFECTING MEMBER BANK RESERVES
(Sign indicafes effect on member bank reserves)
(In Millions of Dollars)
January 3, 1 9 5 5

January 4, 1955

Treasury Federal Reserve Deposits. .

+ 177

+ 103

Currency

—

2

+

39

Gold and Foreign Federal Reserve
Deposits ................................................

— 21

—

17

Federal Reserve Bank C redit...............

+ 355

+

4

Other Factors ...........................................

+

—

7

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

35

+ 122

+ 544

Change in Member Bank Reserves

Additions to, or subtractions from, bank reserves
by the Treasury are the net result of a complex of
transactions. The Daily Statement of the United
States Treasury presents in a table of “Cash Depos­
its and Withdrawals” a consolidated cash statement
of Treasury operating transactions." The Treasury
cash statement is a convenient way of grouping
Treasury transactions so as to show their effect on
member bank reserves (see Table V.)
TABLE V
SOURCES A ND USES OF TREASURY FEDERAL RESERVE DEPOSITS
(Signs indicate effect on member bank reserves)
(In Millions of Dollars)
January 3, 1955

January 4, ;

Individual income taxes ....................
Corporate income taxes ....................
Other cash receipts ............................

— 33
—
2
— 31

— 99
— 11
— 62

Total deposits ...................................

— 66

— 172

Defense Department expenditures. .
Foreign aid programs .......................
Other cash exp end itu res....................

+ 199
+ 14
— 17

+ 265
—
2
+ 102

Total w ith d ra w a ls..............................

+ 196

+ 365

Net withdrawals ................................

+ 130

+ 193

Net cash borrowing .........................

— 25

—

Change in other cash balances. . . .

+

72

— 84

+ 177

+ 103

Treasury Federal Reserve Deposits. .

6

Cash income of the Treasury reduces commercial
bank reserves, for individuals and business firms
draw checks on their accounts to make tax remit­
tances or other payments. But the Treasury may de­
ss Although figures for Treasury cash deposits and withdrawals differ some­
what from Federal receipts from and payments to the public, the differences
are small (about 1/10 of 1 per cent) and can for many purposes be neglected.
For a reconciliation of the two statements see T h e Budget fo r Fiscal Y ear
1956, p. 1132.

Page 18




posit funds in its Federal Reserve account, from
which nearly all withdrawals are finally made, or it
may temporarily leave funds in the Tax and Loan ac­
counts of commercial banks.4 Insofar as tax receipts
are left in Tax and Loan accounts there is no imme­
diate effect on bank reserves, and in Table V an ad­
justment for Tax and Loan account changes is made
under the heading “Change in Other Cash Balances.”
And, of course, net cash borrowing (or repayment)
affects bank reserves. Treasury cash withdrawals
from its Federal Reserve deposits normally go into
private accounts in commercial banks and thus add to
bank reserves.
A "capital” budget, not used by the Federal
Government, would distinguish between "capital”
and "current” outlays.
Traditionally, Americans have applied one princi­
ple of private financial practice to governmental
budgets and rejected another. They have felt that
the budget should be balanced within the annual ac­
counting period, that outgo should not exceed in­
come. Yet, except in the budgets of certain munic­
ipalities, no distinction has been made between “cap­
ital” and “current” outlays.5
Capital goods, whether those of a business firm or
a household, are ordinarily defined as goods which
yield their service flows over a period of time longer
than the annual accounting period. A manufacturing
firm does not charge off the whole cost of a new plant
in one year, nor does a family consider the purchase
of a house as a drain on a single year’s income. But
under present Federal practice all expenditures,
whether on plant and equipment which may last for
decades or on the current pay of soldiers and sailors,
are financed in the same way.
For a half century or more writers in public finance
have discussed the pros and cons of adapting a capital
budget to governmental accounting. Both Denmark
and Sweden have adopted budgetary systems which
distinguish between the operating budget and the
capital, or investment, budget, and other countries,
notably Canada, have separated the “ordinary” from
the “extraordinary” budget. Under a system of capi­
tal accounting, durable goods may be entered in the
4 In fact, the purpose of Tax and Loan accounts is to cushion the with­
drawal of bank reserves as a consequence of tax and other payments. The
Treasury closely gears its withdrawals from the Tax and Loan accounts to
its expenditures.
5 Special Analysis D distinguishes between investment and operating ex­
penditures but is not intended to be a capital budget. See T h e Budget fo r
the Fiscal Y ear 1956, p. 1153-1164.

capital budget whether the expenditures are selfliquidating or non-income-yielding, or the capital
budget may contain only remunerative enterprises.
Whichever system is adopted, the original cost of the
durable goods is met by borrowing, by transfer of
amortization or depreciation allowances from the op­
erating to the capital budget, or by receipts from in­
heritance or gift taxes. It is essential to the notion of
a capital budget that losses on income-earning proj­
ects, after depreciation and interest charges as well
as operating expenses, be carried by the operating
budget. Similarly, nonincome earning assets, such
as schools, parks, or roads must be a charge against
the operating budget to the extent of interest and de­
preciation charges plus operating expenses.
Continuing international tensions, a rapidly grow­
ing population, and increasing urban congestion have
brought demands for vast capital outlays which in
turn have suggested the separation in the Federal
budget of asset purchases from current expenditures.
About two-thirds of Federal spending today is for the
national security program. The reasons for quickly
increasing the rate of school-and-road-building are
compelling. The question arises whether in the inter­
est of efficient allocation of resources a new type of
budgetary procedure should not be adopted.
Opponents o f such a budget consider it a way o f
concealing chronically unbalanced budgets; . . ,
Opposition to a system of capital accounting at the
Federal level has historically been based on a number
of grounds. Some writers have insisted that the bor­
derline between “capital” and “current” outlays is too
fuzzy to permit a useful distinction between the two
types. Others have contended that a multiple budget
makes, at best, for an “incomplete budget and, at
worst, for an evasion of fiscal responsibility by con­
cealing chronically unbalanced budgets. And stu­
dents of the problem, unconvinced by either of these
objections, have remarked that private businesses dis­
tinguish capital outlays from others because capital
expenditures are ordinarily financed by the issue of
securities, whereas government borrowing should
largely be determined by current levels of income and
employment.

. . . proponents advance it as a means to public
acceptance o f large and necessary outlays by the
Federal Government on durable goods.
Proponents of capital budgets rejoin that a projec­
tion of outlays over several years is necessary to intel­




ligent decision-making concerning the allocation of
the tax dollar. They point out, moreover, that the
pressure for financing by direct borrowing of the
responsible agencies will grow.6 Public acceptance of
elaborate schemes for building roads and school
buildings may well depend, they insist, upon provi­
sion for the amortization of necessary outlays over a
carefully estimated period of useful life and the inclu­
sion of interest and depreciation charges in a mean­
ingful operating budget.
The three budget types are not alternative, but rather
supplementary, control mechanisms to aid in the
management o f Governmental affairs.
Presently the three budget types just described
should not be viewed as alternative but rather as sup­
plementary tools to aid in the management of big
Government. For the purposes of exercising control
functions the administrative budget, with its stress on
accounting for each period’s income and outgo of
Federally-owned funds, is not likely to be superseded.
There will probably be some shift in emphasis, how­
ever, toward analyses which yield more information
of economic significance.7 People who would be in­
formed will come more and more to rely upon the
consolidated cash statement, which helps to assess the
role of Government in maintaining business stability
and influencing the reserves of commercial banks.
Finally, the possibility of adopting a capital budget
will doubtless receive serious consideration as people
increasingly sense the need for greater insight into the
related problems of allocating tax monies among Fed­
eral activities and balancing the cost of capital out­
lays against the benefits of resulting service flows.
Ross M.

R o b e rtso n

° The issue of securities which are the obligation of the issuing corporation
and not directly guaranteed by the Government enable the corporation to
obtain funds without adding to the public debt. Certificates of interest
issued by the Commodity Credit Corporation and notes of the Federal
National Mortgage Association are examples. The lease-purchase method
of obtaining public buildings is another device for obtaining the benefits of a
capital good without additions to the public debt.
7 There have been repeated requests, for example, for changes in the form
of the budget so that more information will be available concerning whole
programs and less concerning details of expenditures by departments.

Page 19

1 9 5 4 OPERATIONS
OF THE FEDERAL RESERVE BANK OF ST. LOUIS
A HE TOTAL VOLUME of work handled by the Fed­
eral Reserve Bank of St. Louis again increased in 1954. In
the accompanying table showing the volume of selected
operations at the St. Louis office of this bank and its
three branches, 11 of the 17 items are larger than in 1953.
Furthermore, only three of the six categories showing
some slackening in activity were in the areas where sizable
numbers of items are normally handled each year.
As usual, the dollar volume of work done in 1954
reached striking proportions. Over $58 billion worth of
checks were cleared, almost $38 billion in funds were
transferred at the St. Louis office of this bank and
its branches, over $10 billion of United States securities
were issued, exchanged and redeemed, approximately $1.5
billion worth of advances (including renewals) were
granted banks, and over $1 billion in currency and coin
were processed. Dollar volume was down from last year
in a number of cases, reflecting among other things the
lessened business activity generally.
While the figures in the table give a rough idea of the
size and scope of operations during the year, there are
numerous activities not represented there and several
interesting developments that deserve further comment.
Operational Activities
Check collection operations continued as the largest
single function of the bank in terms of number of em­
ployees and volume of work handled. Productivity was
increased, a factor being the addition of more floor space
in improved quarters. A continued gain in use of the
check routing symbol program was also experienced.
About 92 per cent of the checks drawn on Eighth Dis­
trict banks bore the routing symbol at the end of the year,
ranking the district in sixth place among the 12 Federal
Reserve districts in this respect.
In the Money Department, a change in the method of
sorting fit Federal Reserve Notes (those in condition for
re-issuance) accounted for the slight relative drop in
volume during 1954. Up to July 19, the law forbade a
Reserve bank putting into circulation in its district any
notes ftut its own. Consequently, the fit notes of all
other Reserve banks received by it had to be sorted out
and returned to the banks of issue. With a change in the
law, the Reserve banks were given permission to pay out
notes of other banks and in late July, discontinued the
Page 20




practice of returning fit notes to the banks of issue. In­
stead, they began paying such notes out in their respec­
tive districts. In the past, this bank had consistently
received from other Reserve banks more of its own fit
notes—in number and in dollar volume—than it had sent

COMBINED VOLUME OF OPERATIONS
AT THE ST. LOUIS BANK AND THE LOUISVILLE, MEMPHIS
AND LITTLE ROCK BRANCHES IN 1954 AND 1953
Number of Pieces Handled
Checks ( T o t a l ) ....................................
City Checks .................................
Country Checks .........................
Checks on this B a n k ..................
Government Cheeks ..................
Postal Money Orders (cards). .
Currency ..............................................
C o i n ........................................................
Transfer of Funds .........................
Non-cash C o lle c tio n s.......................
U. S. Government Interest
Coupons ........................................
Discounts and A d v a n c e s .............

1954

1 953

1 8 4 ,4 0 2 ,0 0 0
2 5 ,3 0 4 ,0 0 0
9 8 ,9 6 3 ,0 0 0
182,000
4 3 ,0 5 7 ,0 0 0
1 6 ,8 9 6 ,0 0 0
2 1 5 ,1 9 8 ,0 0 0
365,974,00.0
120,000
4 7 0 ,0 0 0

18 2 ,9 5 4 ,0 0 0
24 ,6 8 9 ,0 0 0
9 7 ,8 1 1 ,0 0 0
174,000
4 3 ,2 3 9 ,0 0 0
1 7 ,041,000
2 2 3 ,6 4 0 ,0 0 0
3 2 9 ,9 4 1 ,0 0 0
115,000
4 2 9 ,0 0 0

6 7 3 ,0 0 0
612

7 2 3 ,0 0 0
1,388

Safekeeping o f Securities:
Securities Received and
Released ....................................

173,000

163,000

Coupons Detached ....................

2 9 6 ,0 0 0

29 7 ,0 0 0

Fiscal Agency O perations:
U. S. Savings Bonds Issued,
Exchanged, and Redeemed

7 ,0 9 7 ,0 0 0

6 ,4 5 0 ,0 0 0

Other Government Issues . . . .

3 0 9 ,0 0 0

2 4 8 ,0 0 0

W ithheld Tax Depository
Receipts Processed ...............

5 3 1 ,0 0 0

5 1 4 ,0 0 0

Treasury Tax and Loan
Account Transactions ..........

1 40,000

131,000

$ 5 8 ,5 2 7 ,8 0 4 ,0 0 0
3 4 ,1 1 1 ,5 4 0 ,0 0 0
1 4 ,3 1 6 ,6 6 3 ,0 0 0
2 ,8 2 7 ,0 5 4 ,0 0 0
6 ,9 8 6 ,4 7 9 ,0 0 0
2 8 6 ,0 6 8 ,0 0 0
1 ,2 8 4 ,3 3 5 ,0 0 0
3 2 ,2 5 0 ,0 0 0
3 7 ,9 9 2 ,6 9 9 ,0 0 0
3 4 1 ,6 8 5 ,0 0 0
1 ,4 7 8 ,3 4 0 ,0 0 0

$ 6 0 ,6 9 7 ,0 4 5 ,0 0 0
3 7 ,7 2 8 ,4 5 7 ,0 0 0
1 4 ,0 6 2 ,5 4 6 ,0 0 0
2 ,3 9 2 ,9 5 3 ,0 0 0
6 ,2 2 2 ,2 2 5 ,0 0 0
2 9 0 ,8 3 4 ,0 0 0
1 ,3 7 3 ,1 0 7 ,0 0 0
2 9 ,4 1 6 ,0 0 0
3 9 ,7 9 2 ,0 3 7 ,0 0 0
3 6 8 ,7 9 7 ,0 0 0
5 ,7 9 2 ,3 8 5 ,0 0 0

2 6 ,7 7 2 ,0 0 0

2 5 ,1 0 2 ,0 0 0

Dollar Volume
Checks Handled (T o tal)...............
City Checks .................................
Country Checks .........................
Checks on this B a n k ..................
Government Checks ..................
Postal Money Orders ...............
Currency ..............................................
Coin .....................................................
Transfer of Funds .........................
Non-cash Collections ....................
Discounts and A d v a n ce s...............
Safekeeping o f Securities:
Coupons Detached ....................
Fiscal Agency O perations:
U. S. Savings Bonds Issued,
Exchanged, and Reedemed

8 0 9 ,6 4 4 ,0 0 0

6 5 1 ,2 4 3 ,0 0 0

Other Government Issues . . . .

9 ,8 2 7 ,6 3 6 ,0 0 0

8 ,0 3 8 ,1 3 2 ,0 0 0

Figures are rounded to the nearest thousand except for the number of
discounts and advances.

back to the other eleven Reserve banks. Thus, with the
discontinuance of the practice of returning fit notes to
banks of issue, St. Louis began to show a reduction in the
total volume of currency received from banks and a com­
pensating increase in the volume of new currency put
into circulation. Another activity not shown by the table is
the wrapping of coin, which involved about 163 million
pieces.
The handling of deposits of post office funds received
from postmasters was undertaken by this bank on May 1.
These deposits consist of currency, some coin, paid money
orders, checks and redeemed United States Savings
Stamps. By the end of the year, over 4,000 postmasters
were forwarding remittances to this bank for processing.
During the period, this bank received 252,780 remittances
aggregating $181,766,000.
Noncash collections, consisting of such items as drafts,
promissory notes, stocks, bonds and coupons, increased in
1954 except for the number of United States Government
interest coupons handled.
During 1954 the discount rate was lowered in two
steps (February and April) from 2 per cent to 1/2 per
cent. However, since member banks’ reserve positions
generally were much easier and other methods of adjust­
ing reserve positions were available, there was a very
sharp drop in the aggregate amount and number of
advances to member banks from 1953. There were no
applications for industrial loan financing under Section
13b of the Federal Reserve Act in either 1953 or 1954.
Safekeeping of securities was provided by this bank for
476 of the 490 member and 514 of the 969 nonmember
banks in the Eighth Federal Reserve District during 1954.
Use of these facilities by nonmember banks is limited to
the holding of savings bonds or of securities pledged either
as collateral for the Treasury Tax and Loan Account or to
secure deposits of public funds.
Fiscal operations constituted in 1954, as usual, the
second largest related group of services of this bank from
the standpoint of number of employees required. The
bulk of the work of Fiscal Agency Department continued

PIECES HANDLED— 1954 ,
M i ! l i ons

Millions

1954




1953

CHECKS

1954

1953

CURRENCY
a COIN

to be the handling of Public D ebt securities, with United
States Savings Bonds requiring the largest proportion or
employees’ time. In addition, the department continued
the verification and destruction of unfit United States Sil­
ver Certificates, handled subscriptions for new security
offerings for the Commodity Credit Corporation and the
Reconstruction Finance Corporation, and served as an in­
termediary in the collection of funds, particularly with re­
gard to Federal Taxes.
Central Tabulating Department, a newly formed de­
partment, began operations on May 1, 1954. The first
task of this department was to tabulate deposit tickets
covering deposits of surplus funds by Postmasters in cer­
tain areas of the Eighth District. Also, the machine
processing of records on securities held in safekeeping
was taken over by this new department. The next major
job given the department was the integration of a tabulat­
ing installation to help Fiscal Agency Department process
Federal taxes and savings bonds for the United States
Treasury. In addition, various statistical analyses for use
of the Research Department were prepared. During its
eight months of operation, the work of this department
has already involved the handling of millions of items.
A large part of the work of the Accounting Department
during the year dealt directly with member banks. At
the close of the year there were 490 member banks main­
taining reserve accounts and 37 nonmember banks carry­
ing accounts for settlement of check clearings with this
bank. Throughout the year banks were furnished with
daily transcript of entries that arose from collection and
clearing of checks, noncash collections, transfers of funds,
money shipments and receipts and other deposits and
withdrawals of bank funds. The Accounting Department
also recorded all internal expenses and income and kept
track of transactions with other Federal Reserve Banks.
During the course of the year, under established policy,
the Examination Department made examinations of State
member banks in the district.
The Auditing Department made the customary internal
audits of operations of this bank and its branches during
1954. In addition, the annual examination of the Federal

1953 (Selected Activities)
Millions

Thousands

8 r

500 r

1954
1953
BONDS

1954
1953
SAFEKEEPING

Page 21

DESIGNATIONS AND APPOINTMENTS ANNOUNCED IN DECEMBER

By the Board of Governors of the Federal Reserve System.

Federal Reserve Bank of St. Louis

M. M oss A l e x a n d e r , President
Missouri Portland Cement Co.
St. Louis, Missouri

Mr.

M r . C a f f e y R o bertso n ,

President

Caffey Robertson Co.
Memphis, Tennessee

Redesignated Chairman of the Board and Federal
Reserve Agent for the year 1955.
Redesignated Deputy Chairman of the Board for the
year 1955.
Reappointed Class C director for a three-year term
beginning January 1, 1955.

M r . J o seph H . M oore

Charleston, Missouri

Little Rock Branch

R. N ic h o l s
Des Arc, Arkansas

Reappointed director for a three-year term beginning
January 1, 1955.

A. H o w a r d S t e b b i n s , J r ., President
Stebbins and Roberts, Inc.
Little Rock, Arkansas

Appointed director for the unexpired portion of a term
ending December 31, 1955.

M r . Sh u f o r d

Mr.

Louisville Branch
M r . P ier r e B. M c B rid e , President
Porcelain Metals Corporation
Louisville, Kentucky

Reappointed director for a three-year term beginning
January 1, 1955.

Memphis Branch

A. E. H o h e n b e r g , President
Hohenberg Bros. Company
Memphis, Tennessee

Mr.

Reappointed director for a three-year term beginning
January 1, 1955.

By the Board of Directors of the Federal Reserve Bank of St. Louis.

Little Rock Branch

H. C. M c K i n n e y , J r ., President
The First National Bank of El Dorado
El Dorado, Arkansas

Reappointed director for a three-year term beginning
January 1, 1955.

E. C. B e n t o n , President
Fordyce Bank and Trust Company
Fordyce, Arkansas

Appointed director for a three-year term beginning
January 1, 1955.

Mr.

Mr.

Louisville Branch

C. M i n o r , President
The Farmers National Bank of Danville
Danville, Kentucky

Reappointed director for a three-year term beginning
January 1, 1955.

W. S c o t t M c I n t o s h , President
State Bank of Hardingsburg
Hardinsburg, Indiana

Appointed director for a three-year term beginning
January 1, 1955.

Mr. M.

Mr.

Page 22




Memphis Branch
M r . J ohn A. M c C a l l , President

The First National Bank of Lexington
Lexington, Tennessee
M r . W m . B. P o l l a r d , President

National Bank of Commerce in Memphis
Memphis, Tennessee

Reappointed director for a three-year term beginning
January 1, 1955.
Reappointed director for a three-year term beginning
January 1, 1955.

Member of Federal Advisory Council
M r . W. W. C a m p b e l l , Chairman of the Board

National Bank of Eastern Arkansas
Forrest City, Arkansas

Reserve Bank of St. Louis and its branches was made in
December by the Chief Federal Reserve Examiner and
his staff for the Board of Governors of the Federal
Reserve System.
The general efficiency of operations throughout the
year was aided by improvement in work scheduling and
equipment and thorough maintenance of all property.
Security measures also continued to be emphasized. New
office space and floor plans that helped streamline opera­
tions were put into effect at St. Louis for Check Collec­
tion Department, Accounting Department, and the Sav­
ings Bond Division of Fiscal Agency Department.
Developments at Branches
While the general activities of the branches are com­
bined with parallel activities at the St. Louis office in this
report, several branch developments not covered in the
over-all picture deserve special note. At the Louisville
Branch, a new site was acquired and preliminary plan­
ning for a new building was begun. At Memphis, a
major space realignment of departments was carried out
and a new cafeteria was established. At Little Rock, the
interior of the branch building was redecorated.
Other Activities
Besides the contacts maintained with banks in the
Eighth District in carrying out actual banking operations,
the Federal Reserve Bank of St. Louis continued to keep
in touch with the financial and business community
through other visits, conferences and meetings. Over
1,400 bank visits were made during the year. Over 350
meetings were attended and bank personnel directly par­
ticipated in more than half of these. Programs in which
the bank took part included a number of talks on busi­
ness and banking, over 80 presentations of an educa­
tional lecture on banking and the money supply, and 15




Reappointed member of the Federal Advisory Council
to represent the Eighth Federal Reserve District for
the year 1955.

conferences on agricultural credit. Many of the meetings
were jointly sponsored with other groups such as bank­
er’s associations and colleges.
A seminar in central banking for Eighth District college
and university specialists in these subjects was conducted
at the St. Louis office in February. Over 3,000 visitors
toured the bank’s premises, at either St. Louis or one of
the branches, and the bank was host to a number of spe­
cial guests and international visitors. Films on the work
of the Federal Reserve Bank and the System were made
available for showing to numerous groups during the year.
Research continued during the year on a wide variety
of problems of interest to the Federal Reserve Bank of
St. Louis and the System as a whole. The department
continued its regular data collection throughout the year
and published certain results of its analyses and interpre­
tations of the data in the Monthly Review. Also, a num­
ber of unpublished special studies were completed and
new projects begun in 1954 in the fields of central bank­
ing and the Eighth District economy.
Total employment at the St. Louis and branch offices
at the end of 1954 was 1,209 compared with 1,288 at the
end of 1953. There was about the same relative reduc­
tion at all offices, accounted for in part by increased
efficiency as a lower turnover was experienced. A total
of 31 employees entered the 10-year club during the year
and 9 entered their twenty-sixth year of service. Nine
employees retired upon attainment of age 65.
Designations and appointments in December by the
Board of Governors of the Federal Reserve System and
the Board of Directors of the Federal Reserve Bank of St.
Louis are shown above and on page 22.
There were also the following additional official ap­
pointments during 1954: Victor M. Longstreet was
appointed Vice President and designated Manager of the
Louisville Branch, replacing Charles A. Schacht, who
Page 23

retired; Fred Burton was appointed Vice President and
designated Manager of the Little Rock Branch, replacing
Clarence M. Stewart, who retired; Donald L. Henry was
appointed Assistant Manager of Louisville Branch.
Earnings
Total current earnings of the Federal Reserve Bank of
St. Louis were $18,352,000 during 1954, compared with
$25,448,000 in 1953. The decline was attributable to a
reduction in this bank’s holdings of securities in the Sys­

tem Open Market Account, a lessened volume of loans to
member banks and a lower average yield on both securi­
ties and loans. Also, despite lower net expenses, net
earnings before payments to the United States Treasury
were substantially below 1953. Out of net earnings,
$10,381,000 was paid to the United States Treasury as
interest on Federal Reserve notes, $568,000 was paid to
member banks as dividends and $1,154,000 was trans­
ferred to surplus.

DIRECTORS AND OFFICERS OF THE FEDERAL RESERVE BANK OF ST. LOUIS
February 1, 1955

Directors

Officers

M. Moss Alexander, Chairman

Delos C. Johns, President
Frederick L. Deming, First Vice President

Caffey Robertson, Deputy Chairman
S. J. Beauchamp, Jr.
Phil E. Chappell
J. E. Etherton

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
John J. Hofer, Assistant Vice President
William J. Abbott, Jr., Director of Research
George E. Kroner, Chief Examiner
Orville O. Wyrick, Assistant Chief Examiner
Gerald T. Dunne, Counsel and Assistant Secretary
George W. Hirshman, General Auditor

William A. McDonnell
Joseph H. Moore
Louis Ruthenburg

Leo J. Wieck

LITTLE ROCK BRANCH

Shuford R. Nichols, Chairman H. C. McKinney, Jr.
A. Howard Stebbins, Jr.
Donald Barger
E. C. Benton
Harvey C. Couch, Jr.

Fred Burton, Vice President and Manager
M. L. Bennett, Assistant Manager
Clifford Wood, Assistant Manager
W. J. Bryan, Assistant Manager

LOUISVILLE BRANCH

Smith Broadbent, Jr. Chairman W. Scott McIntosh
M. C. Minor
David F. Cocks
Magnus J. Kreisle
Noel Rush
Pierre B. McBride

Victor M. Longstreet, Vice President and Manager
L. K. Arthur, Assistant Manager
L. S. Moore, Assistant Manager
Donald L. Henry, Assistant Manager

MEMPHIS BRANCH

Henry Banks, Chairman
A. E. Hohenberg
John A. McCall
William B. Pollard
Page 24



Ben L. Ross
John D. Williams
John K. Wilson

Darryl R. Francis, Vice President and Manager
C. E. Martin, Assistant Manager
S. K. Belcher, Assistant Manager
H. C. Anderson, Assistant Manager

<*S

r

OF CURRENT CONDITIONS

A gradual rise in business activity, . . .

. . . continued in January as the
automobile industry, other m anufacturing, . . .

T

he

GRADUAL RISE in economic activity in

district and nation which began last fall continued
in January. Increasing production in the automobile
and steel industries accounted for much of the rise
in activity, but important support came also from
a number of other durable and nondurable goods
manufacturing industries and the continuing con­
struction boom. Activities which usually decline at
this time of year, such as outdoor work, apparently
declined no more than seasonally. Department store
sales, after reaching record levels for the month of
December, were considerably higher in January than
a year ago. Despite the upswing in business activity
the general price level remained fairly steady.
. . . evident in D ecem b er, . . .
Data recently available confirm the rise in activity
which was evident in December. The Federal Re­
serve Board index of industrial production, at 130
per cent of the 1947-49 average in December, was
one point above November and four points higher
than in December, 1953. The increase at that time
was greatest in durable goods industries, largely
because of the increase in auto production.
A similar rise in durable goods output was shown
by use of electric power at selected industrial firms
in major Eighth District cities. Total use of electric
power rose 1 per cent in December from November
and was 6 per cent better than a year ago. Power
use at primary metals plants in the district advanced
17 per cent above a year ago, at fabricated metals
factories, 15 per cent, and at transportation equip­
ment production facilities, 6 per cent.




The rise in industrial production continued in
January with a national rate of automobile produc­
tion 3 per cent higher than in December and 44 per
cent higher than a year ago. District auto plants
were also operating at a high rate and a second shift
was added at one plant in mid-January. Steel ingot
production both in district and nation flowed at more
than 80 per cent of capacity after a slight dip during
the holidays. Lumber production, after a better
than usual December, was down about the customary
amount in early January.

Support for the market is

expected from an increase in furniture manufac­
turers’ orders, a British announcement that restric­
tion on imports of hardwoods from the United States
would be relaxed (thus opening a market that has
been almost completely lost since the W ar), and con­
tinued high rates of construction. District crude oil
output in early January was at a daily average rate
of 341,000 barrels—almost reaching the wartime peak
of 347,000 barrels, set in 1943.
However, reductions in defense production and
some inventory adjustments continued.
A large
ordnance plant announced a reduction in ammunition
production. And one large district producer of con­
sumer’s durables closed a plant for the month of
January to reduce finished stocks. Coal producers,
although increasing mine output slightly in Decem­
ber, were unable to maintain production as high as a
year ago as warm weather stifled household demand.
. . . and a high rate o f construction
supported the advance.
Construction contract awards and housing starts
in recent months give an indication of the unusually
Page 25

high volume of construction underway as this year
began. The number of housing starts in December
in the nation was an all-time high for the month. In
the Eighth District construction contracts for about
$306 million were let in the final quarter of 1954,
projects on which a major part of the actual work
will carry over into 1955.
Residential contracts
awarded in the district reached a record level in
dollar value, about 50 per cent greater than a year
earlier.
Prices rem ained fairly steady, . , .
With activity increasing in the United States and
continuing at a high level in Europe, demand for
goods strengthened. However, the price level has
remained remarkably stable. Some industrial ma­
terials, such as steel scrap, aluminum pig, and copper,
have increased in price since December but others,
such as finished steel, have remained stable. Prices
of farm products recovered somewhat from the sea­
sonally low level of mid-December.
Prices of important Eighth District farm products
advanced moderately in January, largely reflecting a
rise of approximately 20 per cent in broiler prices.
Tobacco prices, on the other hand, declined 15 per
cent. Prices for all other major commodities changed
only moderately.
Farm real estate prices in district states for the
twelve-month period ending November 1, 1954,
varied from declines of 1 or 2 per cent in the four
southern district states to a 1 per cent increase in
Missouri and a 6 per cent rise in Illinois and Indiana.
For the district the dollar value of farm land ad­
vanced 2 per cent, as did the national average.

especially in trade, without the major layoffs in manu­
facturing which were occurring at this time last year.
According to a mid-January survey of employer in­
tentions in major labor market areas made by the
Department of Labor, continuing job gains in manu­
facture of automobiles, aircraft, iron and steel prod­
ucts, farm machinery, furniture, and equipment for
trade and service establishments are expected for the
next two months.
. , , and consumers continued to spend
at a high rate.
For the first three weeks of January, 1955, depart­
ment store sales volume, both nationally and for the
district, was substantially above that a year earlier.
Seasonal promotions and more favorable shopping
weather were factors in the increase. Traditional
“white” sales, of both durable and nondurable goods
met with success.
In the nation and in the district department store
sales during December, on an adjusted daily average
basis, advanced more than seasonally from Novem­
ber. December sales were at record levels for the
month in the St. Louis, Little Rock, and Memphis
areas. But in the Louisville and Evansville areas
volume failed to gain seasonally from November and
was somewhat below previous December peaks.
At district reporting furniture stores December
sales volume was substantially larger than in Novem­
ber, and totaled slightly larger than in December,
1953.

The BLS index of retail prices was down slightly
at mid-December from its November level, and Janu­
ary sales of white goods and clothing may have
lowered it slightly more since then.

Inventories of reporting district department stores
and furniture stores at the end of December, 1954
were considerably lower than a month earlier and
slightly under the level a year ago. Outstanding
orders on December 31, 1954 at district department
stores were substantially lower than on November
30, but somewhat larger than on December 31, 1953.

. . , m anufacturing em ploym ent im proved, . . .

Bank credit . , .

Although total employment in January was down
seasonally from its December level, there was prob­
ably some further improvement in the durable goods
industries which experienced the largest reductions
in employment during the recent period of inventory
adjustment and declining defense production. The
January increase in insured unemployment can be
attributed primarily to normal seasonal movements,

Bank credit contracted at weekly reporting banks
in the district during the five weeks ended January
26. The decline in loans was in large part occasioned
by a net reduction in advances to businesses and
farmers. The bulk of the reduction by businesses
reflected seasonal net repayments by trade concerns
and processors and distributors of agricultural prod­
ucts. Loans on securities also were off. Reportedly




the increase in margin requirements on stock pur­
chases from 50 to 60 per cent in early January had
only a slight effect on these loans. On the other
hand, “other” (largely consumer) loans rose in con­
trast to an average decline during the like weeks of
other recent years. And real estate loans rose mod­
erately compared with little change at this time
normally.
The weekly reporting banks reduced their invest­
ment portfolios $25 million, reflecting large net sales
of Government securities, primarily Treasury bills
and Government bonds.
Partially offsetting the
decline in holdings of Government obligations were
sizable net additions in other securities primarily at
the St. Louis banks in the week ended January 26.
. . . and total deposits declined . . .
Total deposits declined substantially (about $200
million), banks in all reporting centers sharing in the
loss. The decrease resulted in part from sizable
Treasury calls on tax and loan accounts, but in­
dividuals and businesses reduced their balances also.
To help meet the drains of funds, these banks re­
duced their reserve balances and other cash accounts
and increased their borrowings.




. . . and interest rates rose in January.
During the first three weeks of January most inter­
est rates moved upward. For sensitive yields, the
rise was fairly sharp. The average yield on Treasury
bills issued on January 20 was 1.41 per cent, which
was higher than any weekly rate during 1954 and
compares with an average of 1.05 per cent on bills
issued January 6 this year. Dealer rates on prime
4-6 months commercial paper were marked up U of 1
percentage point to a level of roughly 1% per cent.
Several factors tended to increase both short and
long-term interest rates. Demand for new capital
funds to finance construction by local governments
continued large. New capital placements by mu­
nicipalities in January were estimated at $750 million,
or about double the amount floated in the correspond­
ing month a year ago. Issuance of around $570
million of notes by the FNMA also added to the
demand for funds. Rates worked up in expectation
(since confirmed) of a long-term bond in connec­
tion with the Treasury’s February-March refundings.
The rate changes also reflected a tightening of bank
reserve positions and press reports of a change in
monetary policy.

O sT O

Page 27

V A R I O U S I N D I C A T O R S O F IN D U S T R IA L A C T IV IT Y

H kt

D ecem ber, 1 9 5 4
com pared with*
Nov. 1 9 5 4 D ec. 1 9 5 3

D ec.
1954

Industrial Use of E lectric Power (thousands of K W H per working day, selected
industrial firms in 6 district c itie s ).................................................................................................
Steel Ingot Rate, St. Louis area (operating rate, per cent of cap acity)
C oal Production Index— 8th Dist. (Seasonally adjusted, 1 9 3 5 - 1 9 3 9 = 1 0 0 ) ................
Crude Oil Production— 8th Dist. (Daily average in thousands of b b ls.)........................
Freig h t Interchanges at RRs— St. Louis. (Thousands of cars— 2 5 railroads—
Terminal R. R. A ssn .)............................................................................................................................
Livestock Slaughter— St. Louis area. (Thousands of head— w eekly a v e ra g e ).............
Lum ber Production— S. Pine (Average w eekly production— thousands of bd. ft.). .
Lum ber Production— S. Hardwoods. (O perating rate, per cen t of ca p a c ity )................

1 2 ,9 3 2
76
149 p
3 3 4 .1

+
—
+
+

9 9 .6
1 1 5 .0
1 9 5 .0
85

1%
12
7
2

+ 6%
—- 5
— 1
+ 7

+ 5
— 1
+ 8
— 4

— 1
+ 8
+15
— 4

* Percentage change figures for the steel ingot rate, Southern hardw ood rate, and the coal production index, show the
relative per cent change in production, not the drop in index points or in percents of capacity,
p Preliminary.

1 4 1 .9
1 7 3 .9
1 8 6 .9
8 9 1 .3
8 1 6 .8
2 ,4 1 4 .3

— 4%
+ 9
+ 10
+ 20
+ 2
+ 19

+ 2%
+ 1
+ 14
+ 12
+ 10
+ 7

$ 4 ,6 2 5 .1

+ 15%

Other Reporting Centers:
Alton, 111............................
$
3 9 .1
C ape G irardeau, M o ..
1 5 .8
El D orado, Ark.
3 0 .4
F o rt Smith, Ark.
5 6 .4
Greenville, Miss...........................3 8 .7
H annibal, Mo.
1 0 .0
H elena, Ark..................... ..............1 1 .6
Jackson, T enn................................2 6 .2
Jefferson City, Mo.
5 6 .3
Owensboro, Ky............... ..............5 1 .6
Pad ucah, Ky.
3 3 .4
Pine Bluff, A rk............................. 4 2 .1
Quincy, 111. .................................3 9 .1
Sedalia, Mo. ..............................1 5 .5
Springfield, M o............................. 7 8 .4
T exarkana, Ark.
_____ 18.1
T otal— Other
Centers
.....................

$

T otal— 2 2 Centers

$ 5 ,1 8 7 .8

5 6 2 .7

+
+
+
+
+
+
—
—
—
+
+
—
—
+
+
+
+

15%

8

19

3
12
12
18
7
6
30
18
13
1
16
8
4
5%

+ 13%

+
+
—
+
+
+
+
+
+
+
—
—
+
+

4%
1
6
19
27

CASH

Arkansas. . . .$ 8 5 ,1 1 7 — 4 (
Illinois.......... 1 7 3 ,0 7 7 + 7
Indiana
9 5 ,9 8 0
-0 Kentucky
3 6 ,9 6 9
+ 3
Mississippi
1 0 1 ,1 0 4 — 12
Missouri
1 0 0 ,4 2 0 — 8
5 0 ,4 9 4 — 13
Tennessee
7 States

15
9
— 11

+
+

6%

IN D E X O F BANK D E B IT S — 2 2 Centers
Seasonally Adjusted ( 1 9 4 7 - 1 9 4 9 = 1 0 0 )
1954
19 5 3
D ec.
Nov.
Dec.
1 6 0 .2
1 5 5 .9
1 4 8 .5
1 Debits to dem and deposit accounts of individuals,
partnerships and corporations and states and political
subdivisions.

.

8th District

$ 6 4 3 ,1 6 1
$ 3 3 8 ,1 7 6

(1 9 4 7 -1 9 4 9 = 100)
Nov. 1 9 5 4 O ct. 1 9 5 4 Nov. 1 9 5 3

5% —15%
02
—
1
- 0—6 — 6
— 24
—
8
—2 — 5
—12 — 18
5%
— 5%
9%
—
8%
-

Source: State data from USDA prelim inary
estimates unless otherwise indicated.

Unadjusted
2 0 8 .6
1 9 6 .9
T o t a l .............
1 9 7 .3 p
2 4 6 .2
1 6 9 .7
Residential
2 5 4 .3 p
2 0 9 .4
1 91.1
All O ther
1 7 0 .8 p
Seasonally adjusted
2 2 9 .6
T otal
2 3 0 .5 p
2 4 5 .8
2 5 1 .2
1 9 9 .6
Residential
2 9 9 .2 p
2 2 2 .2
2 4 3 .5
All Other
1 9 8 .6 p
* B ased on three-m onth moving average
(centered on m id-m onth) of value of aw ards, as
reported by F . W . D odge Corporation,
p Prelim inary

ASSETS AND LIABILITIES EIGHTH DISTRICT MEMBER BANKS
(In Millions of D ollars)
W eekly Reporting Banks
All M em ber B anks
C hange from
Change from
D ec. 2 2 ,
D ec. 2 9 ,
Nov. 2 4 ,
___ 1 9 5 4
Jan. 2 6 , 1 9 5 5
1954
1954

Loans' ................................................................
Business and Agricultural
Security ........................................................
Real Estate ................................................
Other (largely consumer) ...................
U. S. Government Securities ................
Other Securities ...........................................
Loans to Banks ......................................
.
Cash Assets ......................................................
Other Assets ...................................................
Total Assets ..............................................

$ 1 ,3 9 7
711
39
276
391
1 ,1 7 7
238
15
867
42
$ 3 ,7 3 6

$— 4 8
—- 56
—■ 3
+
1
+ 1 1
— 42
+ 17
+
1
— 113
+
1
$— 1 8 4

$ 2 ,2 6 0

$ + 18

2 ,2 5 8
451

+40
—0—

1 ,5 0 0
59
$ 6 ,5 2 8

— 1
+ 2
$ + 59

Liabilities and Capital
Demand Deposits of Banks ...................
$ 752
$— 8 6
$ 847
$ + 25
Other Demand Deposits ...........................
2 ,0 9 5
— 111
3 ,9 7 8
+20
Tim e Deposits ...................................
538
—0—
1 ,1 6 8
— 1
Borrowings and Other Liabilities
.
97
+ 13
91
+12
Total Capital Accounts ..............................
254
_____ —0 —
444
+ 3
Total Liabilities and C apital ...........
$ 3 ,7 3 6
$— 184
$ 6 ,5 2 8
$ + 59
1 F or weekly reporting banks, loans are adjusted to exclude loans to banks; the total is reported
net; breakdowns are reported gross. F o r all m em ber banks loans are reported net and include loans
to banks; breakdown of these loans is not available.

DE P A R T M EN T ST OR ES

Percentage of Accts.
and Notes R eceiva b 1e
Outstanding
Stocks
Stock
D ec. 1, 1 9 5 4 , col*7
Net Sales
on Hand
Tum over lected during D ec.
D e c.,’54
12 mos. ’54 Dec. 3 1 , ’54 Jan. 1 to
E xcl.
com pared with
to same
comp, with
Instal. Instalm ent
Dec. 3 1 ,
Nov., 1 9 5 4 D e c.,’5 3 period ’5 3 Dec. 3 1 , ’53 19 5 4 1 9 5 3 Accounts Accounts
— 1
4 .1 2 3 .8 1
18%
51%
8th F .R . D istrict Total
+ 47%
+ 4%
— 1%
— 1
3.71 3 .6 6
+ 62
— 6
48
F o rt Smith Area, A rk.i
+ 4
— 4
3 .9 2 3 .6 7
13
46
L ittle Rock Area, Ark. .
+ 48
+ 2
+ 1
3 .8 4 3 .7 1
+ 25
Quincy, 111............................
+ 45
+ 3
+ 2
— 13
— 10
Evansville A rea, I n d .. . . + 3 3
— 1
— 3
4 .4 4 4 .1 1
21
+ 47
48
Louisville A rea, Ky., Ind.
— 21
— 12
+ 66
Paducah, Ky........................
3
.8
4
21
+ 44
—
5
4
.2
8
58
St. Louis A rea, M o., 111.
+ 1
3 .5 5 3 .2 6
+ 59
+ 18
Springfield Area, Mo.
+ 2
+ 9
+
14
4
.1
3
3
.9
7
16
4
0
Memphis A rea, Tenn.
+ 2
+ 8
— 11
11
— 4
2 .7 5 2 .8 7
+ 60
35
All Other Cities2 .............
+ 3
1 In order to perm it publication of figures for this city (or area), a special sample has been co n ­
structed which is not confined exclusively to departm ent stores. Figures for any such nondepartm ent
stores, however, are not used in com puting the district percentage changes or in com puting dep art­
m ent store indexes.
2 Fayetteville, Pine Bluff, Arkansas; Harrisburg, Mt. Vernon, Illinois; Vincennes, Indiana; D an ­
ville, Hopkinsville, Mayfield, Owensboro, Kentucky; Chillicothe, Missouri; Greenville, Mississippi;
and Jackson, Tennessee.
IN D E X E S O F SA LES AND STOCKS— 8T H D IST R IC T
Dec.
Nov.
Oct.
D ec.
1954
19.54
1954
1953
193
137
123
185
1 18
1 12
115
113
103
127
Stocks, unadjusted4
129
104
116
105
115
118
3 Daily average 1 9 4 7 - 4 9 = 1 0 0
4 E n d of Month average 1 9 4 7 — 4 9 = 1 0 0
T rading days:
D ec., 1 9 5 4 — 2 6 ; Nov., 1 9 5 4 — 2 5 ; D ec., 1 9 5 3 - -2 6 .
O UTSTAN D IN G O R D ER S O F R EPO R T IN G STORES AT T H E EN D O F D E C E M B E R , 1 9 5 4 ,
W E R E 18 PE R C E N T L A R G E R TH AN ON T H E CORRESPOND IN G D A T E A Y EA R AGO.




IN D E X O F C O N S T R U C T I O N C O N T R A C T S
A W A R D E D E IG H T H FEDERAL RESERVE DISTRICT*

Nov. ’5 4 Jan. thru Nov.
com pared
1954
with
com pared with
Nov. ’5 3
1953
1952

Nov.
1954

— - -

5

FARM I N C O M E

(In thousands
of dollars)

3
11
11
8
17
16
10

1^

$

00

Six L arg est Centers:
E ast St. Louis—
N ational Stock Yards,
111......................................
Evansville, Ind.
L ittle Rock, Ark.
Louisville, Ky.
Memphis, Tenn.............
St. Louis, M o...............
T otal— Six L argest
C e n t e r s .....................

D ec., 19 5 4
com pared with
Nov.
Dec.
1954
1953

+
00

Dec.
19 5 4
(In
millions)

e**

M

DE BI T S 1

B ANK

+

<0 ^

RETAIL F UR NIT URE ST O R E S
Net Sales
Inventories
D ec., 1 9 5 4
D ec., 1 9 5 4
com pared with
com pared wth
N ov.,’5 4 D e c.,’5 3 N ov.,’5 4 D e c.,’5 3
8th Dist. Total* .
St. Louis ...........
Louisville A rea2
Louisville . .

. +18%
•+ H
■+ 2 1
. +19
. +33
L ittle Rock . . . . . + 3 1
Springfield
. . . +45

+

4%

+ 10

+ 9
+ _ o7_
+

1

—
+
—
—

12%
16
16
17

—

•k
7

—
—
—
—

5%
5
6
6
*
*
+ 4

* Not shown separately due to insufficient coverage,
but included in E ighth D istrict totals.
1 In addition to following cities, includes stores in
Blytheville, F o rt Sm ith, Pine Bluff, Arkansas; Owens­
boro, Kentucky; G reenw ood, Mississippi; and E v an s­
ville, Indiana.
2 Includes Louisville,
Indiana.

Kentucky;

and

New Albany,

P E R C E N T A G E D IS T R IB U T IO N O F
F U R N IT U R E SA LES
Cash Sales . . . . . . . .
C redit Sales
T otal Sales .............

D e c., ’5 4
16%
84
“ 100%

N ov., ’5 4
14(

100 %

D ec., ’5 3
17%
83

100 %