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Monthly Review F E D E Volume X X IX R* A L R E S E R V E B A N K JANUARY 1, O 1947 F S T . L O U I S Number 1 The Year Ahead By CHESTER C. DAVIS, President Federal Reserve Bank of St. Louis The new year opens upon a world in which more sober but more purposeful attitudes are replacing the emotionalism of the immediate postwar period. After sixteen months of peace, there is a growing realization that permanent attainment of the worth while goals of world cooperation, high production, high employment and high income requires con siderable planning and work, much more than many had anticipated in the period immediately following the war. These goals can be reached. At least that has been demonstrated with regard to employment and income in this nation. Perman ence, however, is another matter. Disturbed relations marked international politics throughout the first full calendar year following Japanese surrender. At times it has seemed that misunderstandings were cultivated deliberately. T o many people it was a year of disappointment. Some progress has been made toward better international understanding, however, and the year’s end brought renewed hope that the nations of the world will learn how to live peacefully together. The United Nations Organization is functioning, albeit some what haltingly, and there is more and more indica tion that it will function on a broader scale in the future. As long as the representatives of the various nations are willing to sit down and talk over their common problems, peaceful solutions to those problems are possible. Despite the urgent need, it probably was unrealistic to expect that a world which had gone through several years of the most terrible war in history could pull itself to gether overnight and present a picture of perfect understanding within a few months after the cessa tion of actual hostilities. It is to be hoped that 1947 will see much greater progress toward mutual understanding and coop eration. The world has shrunk sharply in relative size since 1939. Further growth of dangerous maladjustments in international affairs might well be fatal to the future security of organized human society. In certain parts of the international field, notably financial and trade relationships, 1946 saw con siderable progress made. The International Bank for Reconstruction and Development and the Inter national Monetary Fund became going concerns and were in the immediate pre-operating stages as 1946 drew to a close. Preliminary meetings looking toward the formation of an international trade organization resulted in agreement on general principles. Also on the economic front, the re construction and redevelopment of war-devastated nations made real progress; at the beginning of 1947, the world economy was in much better physi cal shape than a year earlier. The coming year should see further improvement. In domestic economic affairs, 1946 was character ized by fitful progress. For a good part of the year maladjustments in relationships between labor and management retarded the reconversion effort of the economy. Other factors, such as the inevit able difficulties of reabsorbing millions of veterans in the civilian labor force, the countless not-fullyanticipated bottlenecks of an economy shifting from wartime to peacetime activity, the uneven flow of materials, and cost-price distortions, also acted to produce jerky stops and starts during the transition. Despite all these difficulties the American economic machine moved toward a much higher level of activity during 1946. In January, the Federal Reserve index of industrial production, adjusted for seasonal variation, stood at 160 per cent of the 1935-39 average, total civilian employ ment amounted to 51 million people, and income payments were at an annual rate of $157 billion. By November the index of industrial production had risen to 182 per cent, employment was at 57 million and income payments were at an annual rate of about $170 billion. As we look toward 1947, the outlook is not any too clear. There are factors of underlying strength which would .lead one to be optimistic about the future. There are factors of weakness which give substance to the arguments of those who are pessi mistic about the future. Probably the period im mediately ahead can best be characterized as one of troubled prosperity. The outlook is loaded with “ ifs” and one cannot be dogmatic about the future until some of the “ ifs” become resolved into reason able probabilities. Economic events of the coming year will demand close and constant appraisal. T H E B U SIN ESS O U T L O O K A year ago I wrote that one of the principal problems the country would face in 1946 was the danger of inflation, and pointed out that there were three major lines of attack on that problem. The first was to obtain as much production as possible, the second was to preserve price ceilings as long as demand was substantially in excess of current production, and the third was to encourage the public to continue its wartime self-restraint in buying scarce goods. Production increased sub stantially but not enough to satisfy demand. For all practical purposes price control was abandoned after midyear. Finally, the public so increased its demand for goods that spending has reached all time high levels. The result has been that we hav£ had an appre ciable amount of inflation, and prices have risen substantially. Most of the rise occurred in the. last part of the year. In January, the over-all wholesale price index cjf the Bureau of Labor Statistics stood at 107 per cent, wholesale prices of commodities other than farm products and foods were at 101 per cent, and wholesale prices of farm products were at 130 per cent of the 1926 average. The consumers'retail price index (formerly called the costof-living index) was;at.J3Q per.cent oi the 1935-39 P a g e '2 >•’ ' average with the index of retail food prices at 141 per cent of the same base period. By November, the general wholesale price index had reached 140, the index of wholesale prices of commodities other than farm products and foods was at 133 and that of farm products was 170. The cost of living index had moved to 152 and the cost of food index to 188. In other words, between January and N o vember there was a rise of 31 per cent in whole sale prices and 17 per cent in retail prices. Between 80 and 90 per cent of these increases occurred in the second half of the year. The price situation is one of the principal danger spots in the current outlook. Most people believe that prices are too high now. But the pressure of heavy buying power has not yet been offset by sufficient supplies of goods and the retarding effects of high prices. Sooner or later, the balance point will be reached. There are several indications that it will be attained within a very few months. Even present prices are curtailing demand to some ex tent, and some people are being priced out of the market. Remaining demand, however, is still strong enough to continue movement of goods at present prices and probably even at somewhat higher ones, but increasingly larger segments of the population will be priced out of the market as prices move up. Theorists argue that after the balance point is passed, prices would have to fall only slightly to maintain demand. Actually the economy does not have the well-balanced flexibility required for such nice adjustments. Price move ments ordinarily are much more pronounced. The danger of the price situation is that the inevitable break may go too far, and initiate a strong even though temporary deflationary movement. Another danger spot in the outlook is the in ventory- situation. The dollar value of stocks of goods has been growing at a substantial rate in the last few months. At the end of November, 1946, the total value of inventories of manufac turers, wholesalers and retailers was estimated at $35 billion as compared with, $27.6 billion in N o vember, 1945. Much of this increase reflects merely higher prices but-some represents a gain in physical volume. Viewed against the. current level of production and sales, present inventories in the aggregate not only are not excessive but would have to increase substantially ;to, becpme adequate. In physical volume inventories are. billy about 15 per cent above the immediate: pre-war level, while retail sales and industrial, output(bbt.h,irt physical .terms), are 60 and 80 per cent, respectively,. above that level,. , The danger in the inventory picture is that if demand slackens because of satisfaction of wants or resistance to high prices, many inventories now apparently inadequate would become ample. Thus continuation of inventory accumulation could very quickly lead to excessive stocks of goods, which might force liquidation and result in fairly large losses. It might be noted here-also that regardless of what happens to demand the present rate of inventory accumulation cannot be maintained in definitely, and when it slackens an important stim ulus to business activity will be moderated. On the favorable side there is the tremendously high level of potential demand both for'consum p tion and for investment. * This factor makes the long-term outlook good. There is sufficient demand for housing, for new plant and equipment, for consumer goods and for export to maintain a highlevel of production and employment for many years if that demand can be made effective. It will be effective if prices are reasonable, for it is backed up by substantial purchasing power coming from high levels of current incomes and a very large volume of savings. These are being reinforced by increased private borrowing. Another favorable factor which appeared gen erally in the second half of 1946 and may be ex tended into the future is the gradual smoothing of the production process resulting from more regular materials flow. This has permitted more efficient utilization of workers. Labor productivity is show ing some signs of increasing after the very low level reached in the early part of 1946: Real progress in that direction is possible in 1947 if the nation can avoid crippling strikes such as slowed down pro duction in early 1946. The test will be determined by the way labor and business management an swer the two most important “ if” questions that confront them. The nation’s economy can improve and maintain its rate of business activity only if : (1) Organized labor recognizes in practice the truth that higher real wages can only come from increased worker productivity which makes lower prices possible; and (2) business management shares the fruits of increased productivity promptly and fairly with, workers in increased wages, and with consumers in lower prices. If these principles are followed, the factors of strength appear to outweigh those of weakness in the 1947 outlook. With rational behavior, 1947 might then be marked by a rise in activity in the first part of the year, followed by a cdrrective re adjustment in the latter part. The long-run out look at present is for a high level of activity for several years. The readjustment that seems prob able, however, could become a major deflation ary movement. Whether it does depends in large measure upon how far the upswing carries us and how badly adjusted the economy is at the peak. T H E P O S IT IO N O F A G R IC U L T U R E One of the most vulnerable segments of our economy is agriculture. The immediate outlook is for a much sharper readjustment in agriculture than in the balance of the economic structure. Over the longer pull agriculture is in for fundamental and far reaching shifts if it is to maintain a condition of prosperity. During 1946 the farmers of this nation produced the greatest amount of food and fiber in history in response to worldwide food scarcities. In a sense the American farmer continued on a war footing throughout the year. He worked long hours and his production was as vital to the public welfare as it was in the years of actual fighting. He also reaped great benefits. Farm income has never been higher, for along with record-break ing output have gone very high prices. At the close of 1946 farm prices were two and one-half times their prewar level. The parity' ratio, calcu lated by the Department of Agriculture for all crops and livestock, stood at 124 on November 15. The current high price structure of agriculture and prospective shifts in demand make it vulner able to sharp readjustment. Continuance of heavy production is almost inevitable unless the weather is unfavorable. Traditionally the output of Amer ican farms has been close to capacity year in and year out, with weather accounting for most of the deviation from the long time upward trend in production. The substantial rise in output during the war years represented in large measure the fruition of efforts to build up capacity in the inter war period aided by particularly favorable weather. If the pattern of history is followed, agriculture will continue to produce in the future (allowing for the weather factor) considerably more than it turned out in the immediate prewar years. Both domestic and foreign demand for farm products should be at a very high level in 1947, but probably not at the point to hold the present price structure unless crops are short because of weather. Much of the rise in prices last fall stemmed from temporary factors, and even con tinuance of current demand hardly will hold prices at their recent high level. Any falling off of demand Page 3 then would weaken further the farm price level, which is very sensitive to changes in demand. This does not necessarily mean that farm prices would fall below the point where farming in gen eral would become unprofitable, although readjust ments in farm prices always seem to run too far. It does mean, however, that a substantial decline is likely to take place. to replace itself. Population growth from this source, supplemented by the numbers of farm workers released by increased individual produc tivity on the farms, might result relatively soon in another era of low per capita farm income, socalled “ overproduction’*, and farm product sur pluses that could only be absorbed at prices un profitable to fanners. This is the immediate situation confronting American agriculture. The farmer is also faced with the necessity for making longer term adjust ments upon which his whole future turns. The farm problem in many areas and in many crops has been one of overcrowding; too many people have been concentrated in regions devoted mainly to one-crop farming for the bulk of them to earn a standard of living comparable with that enjoyed by workers in other lines. Such a condition in evitably means low productivity per worker and low per capita income. R E G IO N A L D E V E L O P M E N T In the war years about 5 million people left the farms for military service or nonagricultural pur suits. This draining off of surplus population plus the higher output at higher prices raised per capita farm income in 1945 to three times the amount in 1940, and brought it into better balance with non farm per capita income. Average farm per capita income still remains, however, only half as large as nonfarm per capita income. The current trend, and probably the future trend, is toward a high level of production achieved by relatively fewer farm workers who on the average will command the use of increasing amounts of capital in the form of more and better machines and a larger acreage per worker. Better balanced farm ing, better soil use, increased use of fertilizer and lime, and particularly the advance of mechaniza tion on the farm point to the possibilities in this direction. But these developments will call for cor responding adjustments in our industry, commerce and services. The surplus farm population, as it becomes available, will need to find occupation in productive nonfarm pursuits, which emphasizes the importance of a high level of nonfarm activity, and of a high degree of industrial decentralization to avoid excessive population shifts. Since the war, some 2 million people have re turned to agriculture. Some of these were needed to replace women and older men who had been carrying on during the war. However, there is danger if the movement back to the farm is over done. The reproduction rate of the farm popula tion traditionally has been far more than adequate Page 4 Since the Eighth Federal Reserve District is pre dominantly agricultural, whatever happens to agri culture in the year ahead will strongly affect the general welfare of the district as a whole. There fore the problems that face farming over the long pull are also very real problems for this region. For the immediate future there is little the dis trict can do to alleviate the effects of the probable decline in agricultural prices and the attendant drop in farm income. At the same time those effects will not be as pronounced in 1947 as they would have been earlier. During the war years consider able advancement in industrialization took place in this region and a sizable share of new industry went into areas that previously had been almost exclusively agricultural. Since the war ended, a great deal of work has been done to promote new peacetime industry throughout the district. A re cent article in this Review called attention to the progress made in the three southern states of Arkansas, Mississippi and Tennessee. Other sec tions have also been at work and have attracted new enterprises. This increase in nonfarm activity should prove to be an important cushion for any unfavorable de velopment that may occur in agriculture. In ad dition, the considerable advance toward crop and livestock diversification and toward better balanced farming in general should lessen any shock that tended to be concentrated upon only a part of the farm production front. In the long run there is a great deal the district can do to stabilize its economic life. There is no thought of course, of attempting to insulate the district from nationwide economic developments— the economy is too interdependent for that—but there is the possibility of better balance within the district which will make economic shocks less un settling here. The movement already under way in this area to balance agriculture with industry holds great promise for the future. The Federal Reserve Bank of St. Louis is deeply interested in this program of regional development and hopes to aid in its promotion. During the past year, the bank, acting with state bankers’ associations, state universities and Government agricultural agencies, sponsored a number of meet ings aimed at promoting a balanced farm program. In the future it would like to increase its extension activities to cover the whole field of regional de velopment. Its research program is already geared to this ideal as recent articles in this Review have indicated. It should be stressed that this concept of a pro gram of regional development is based upon the ideas that a fruitful approach to national problems can be made at the regional level, and that the national economy can do no better than the sum of regional attainments allows. In other words, na tional stability is not possible without regional stability for the same reason that a chain is no stronger than its weakest link. B A N K IN G IN 1947 The major factor affecting banking during 1946 was the Treasury redemption policy. Between March and December the Treasury retired about $23 billion of maturing Government securities, most of which were held by the banking system. The funds used for this debt retirement came largely from drawing down the very high W ar Loan balances that had been built up in the Victory Loan Drive at the close of 1945. The retirement of this volume of debt led to a reduction in total deposits of the banking system. This action reduced the supply of money and hence technically reduced inflationary forces. Actually it merely eliminated inactive deposit balances which were not going to bid up prices anyway. It did, however, have a deflationary effect through exert ing pressure on bank reserves and reducing the short term holdings of the commercial banks. The deposit decline resulting from the debt re tirement program was offset in part by an ex pansion in bank credit to private borrowers. During the year total loans of the commercial banking sys tem increased by about $5 billion. The rise in total loans occurred despite a substantial decline in loans on securities. Because of this loan ex pansion and also because some of the retired debt had been held by nonbank investors, deposits of individuals and businesses increased during the year. At the close of 1946 total commercial bank deposits amounted to about $135 billion as com pared with $150 billion a year earlier. All of the decline came in Government balances— non-Government accounts were higher at the end of 1946 than at the end of 1945. During the coming year, if there is further debt retirement it will have to come from budget surplus rather than from existing W ar Loan balances which now are just about at a normal working level. There is some indication that receipts of the Gov ernment will exceed expenditures, but the surplus for 1947 will be smaller by far than the volume of W ar Loan accounts at the beginning of 1946. Most of the bank deposit expansion which occurred during the war years resulted from in creased bank holdings of Government securities, and any major decline in deposits in the future must come from a reduction of the outstanding Government debt held by banks. The decline in bank-held securities could be larger than the net decline in the debt since funds derived from sales of special Treasury issues and other nonmarketable securities (particularly savings bonds) can be used to retire maturing issues largely owned by banks. The total decrease in bank-held securities, however, undoubtedly will be much less than in 1946. Any reduction from this source could well be offset in large degree by further private credit expansion and by the action of other factors that tend to raise deposits. Despite the reduction of about $15 billion in total deposits during 1946, bank earnings apparently were at a record level. Most of the earning assets that were retired were % per cent certificates of indebtedness and the new earning assets that were added were higher yielding bank loans. Despite rising expenses, net earnings after taxes in 1946 were higher than in the previous year. Roughly the same situation with regard to earn ings assets seems likely to obtain in 1947, and reduction in deposits, as noted, is likely to be very small. In other words, bank earnings during the coming year should not be much different than in 1946. Expenses seem likely to increase further, however, so that net current earnings, while still high, probably will be lower than in 1946. This outlook applies to the entire banking sys tem. There may be some shifts in deposits within the system so that a particular bank will be in better or worse position than the average in the coming year. Even here, however, the change does not seem likely to be of any great magnitude. In 1946, shifts in deposits were fairly small, al though there was a gradual movement from the rural banks to the urban institutions. As goods become more available, this shift is likely to con tinue but it may be offset to some extent by the drawing down of bankers* balances, a development that occurred in 1946. Page 5 On balance, then, the outlook for banking during the coming year is for stability, and banks should be able to strengthen further their capital posititpns and in general make themselves better able to meet such problems as do occur in the years that follow 1947. In addition to this, banks can perform a signal service to the economy as a whole by scrutinizing carefully the demands for credit that come to them. Credit to finance productive enterprise is desirable and will aid in easing the current price situation. Credit to promote speculation will merely add fuel to the fire already raging under prices and should be discouraged. By so doing the banks will serve both their communities and themselves, for credit expansion in speculative fields could lead to unten able positions from which inevitable adjustments would produce losses to the economy in general and to the banks. The fields in which banks should be particularly careful in their appraisal of loan applications are those for inventory accumula tion, real estate and consumer credit. Other ways in which banks can be of service to the nation in the coming year are to provide wise counsel to the financial authorities and to avoid in so far as possible further monetization of the public debt by bidding up security prices and shifting se curities from nonbank to bank investors. This movement, which was fairly pronounced in the early part of 1946, largely has subsided as the re demption program put pressure on bank reserves. It should continue dormant in the year to come. In summary, 1947 begins with many questions about its developments unanswered and for the moment unanswerable. It may be a year troubled in itself but decisive for the future. Its course will depend largely upon the amount of good sense and hard work the people of this nation and the world are willing and able to apply in their respective fields. Survey of Current Conditions The immediate effects of the coal strike late in November proved to be less serious, in terms of lost production, than had been anticipated at the time the miners walked out, but only because the duration of the coal strike was considerably shorter than was originally expected. Although production schedules in most industries were cur tailed to some extent, the full impact of a lpng strike upon the industrial structure fortunately was avoided. Resumption of operations in the soft coal fields removed, temporarily at least, the major existing barrier to further gains in over-all industrial output. The fundamental issues involved however were not resolved and the problem was merely projected into the future. A solution to these and other industrial issues, economically feasible and mutually accept able to labor, management and the general public is still to be found. As has been pointed out previously in this Re view, labor-management disputes are far from being the only factor which has prevented smooth func tioning of the economic system in the past year. Correction in all of these factors is necessary to maintain uninterrupted production, The con sequences of operating an industrial system, which depends on close coordination between all its pa,rts Page 6 for its effectiveness, on a stop-and-start basis, are apparent. They are evident in the spotty character of inventories, in all stages of production and at all levels of distribution. They are reflected in distorted price relationships and in the productivity of employed workers. They are to be seen in un finished houses and reflected in housing plans that canncrt be put into operation. To a considerable degree, the maladjustments in the economic system tend to feed upon themselves and. produce further maladjustments. This makes it all the more necessary to correct existing distor tions in so far as possible before they become worse, which would make the inevitable readjustment more severe. EMPLOYMENT The general level of nonagricultural employment in the Eighth District rose in November, largely in'response to seasonal requirements o f trade and service establishments and to increased activity in the meat packing and other food processing in dustries during the month. Although some manu facturing workers were k id off late in November as a result of the coal strike, most of these reductions in working forces proved ’ to be temporary and in only ;a, relatively; few cases lasted longer . than a day or two. In the two months ending November 15, approxi mately 7,000 workers were added to manufacturing payrolls in the St. Louis area, according to United States Employment Service estimates. Increases occurred in the iron and steel, electrical machinery, nonelectrical machinery and nonferrous metals groups, as well as in the food processing industry. While many of these additions occurred in the first part of the reporting period, employment continued to increase in November. There was a further decline in regular unemploy ment compensation claims and Servicemen’s Re adjustment Allowance claims in all major indus trial areas in the district except in the Evansville area. This decline reflects not only the increase in employment, but in the case of veterans’ claims, the withdrawal of a large number of veterans from the labor market in order to enter the veterans edu cation program. In addition, increasing numbers of former servicemen have exhausted their benefit payments. Nationally, it was estimated that in Oc tober, 15 per cent of the veterans who filed claims a year earlier fell within this group. INDUSTRY Operations in most of the more important in dustries in the Eighth District, when adjusted for the shorter work month, averaged somewhat higher in November than in October, despite some curtail ment of output late in November as a result of the coal strike. Thus, daily average consumption of electric power by large industrial customers in the major district cities was almost 7 per cent more than in October, with increases reported in each city except Evansville. The largest gain, percent agewise, was in Memphis where industrial consump tion of electric power increased 36 per cent over October. Compared with a year earlier, power consumption in the district cities was 11 per cent larger than; in November, 1945. Manufacturing— Although many district manu facturing plants made extensive plans in November for curtailing operations in the event of a prolonged coal strike, the relatively short duration of the work stoppage, plus temporary conversion to other fuels and the availability of such coal supplies as existed, prevented any serious disruption of district manu facturing output. Increases over October were indicated in the food processing industry as well as in the finished lumber products, machinery, textile and apparel, and stone, clay and glass industries. The basic steel industry in the St. Louis area operated at an increased rate during November, averaging 63 per cent of capacity as compared with 57 per cent in October and 52 per cent in November, 1945. Open-hearth furnace operations were un affected by the coal strike which occurred late in the month, but in some plants schedules in the fin ishing departments were curtailed sharply. No vember production of basic steel products was at the highest rate since June, 1945, Lumber output in the district states declined slightly in November, according to preliminary re ports, reflecting in part the normal seasonal trend but largely due to the shorter work month. South ern pine production was estimated at about 4 per cent less than in October, while the southern hard wood industry operated at an estimated 90 per cent of capacity as compared with 95 per cent in Oc tober. In each line, however, November production was substantially larger than a year earlier. In the third quarter, district states’ lumber output totaled 1.7 billion board feet, equal to 17 per cent of total United States production, or an increase of 21 per cent over the second quarter when pro duction amounted to 1.4 billion board feet and was equal to 16 per cent of the national output. At the end of November, 34 whiskey distilleries were in operation in Kentucky as compared with 37 at the end of October and 46 at the close of November, 1945. Removal of all restrictions on the use of lower grade corn as of December 1 is ex pected to result in some increase in whiskey pro duction. The gain probably will be small, however, since the use of lower quality corn results in a more expensive operation. Shortages of charred oak bar rels, as well as remaining restrictions on quantities of rye available to the industry, continue to retard production of bourbon whiskey. Livestock receipts^ at district stockyards con tinued in greatly expanded volume in November. At St. Louis the number of animals slaughtered under federal inspection increased 42 per cent over October to the highest level since November, 1944. Mining and Oil— Total production of coal in the district states in November was sharply reduced as a result of the work stoppage in the latter half of the month. The decline in output from: October was slightly largeif than in the nation as a whole, being 35 per cent as compared with 33 per cent in total United States production. In this district, the strike was most serious in Indiana and Illinois, where output dropped 80 per cant and 38 per cent, respectively, as compared with declines of 31 per cent in Kentucky and 27 per cent in the other dis trict mine fields. Total production amounted to 11.4 million tons as compared with 17.5 million tons Page 7 in October and 15.8 million tons in November, 1945. Daily average production of crude oil in the dis trict was only fractionally less than the amount produced in October and was 4 per cent larger than in November, 1945. District fields in November pro duced 333,000 barrels per day as compared with 334,000 barrels in October and 323,000 barrels in November, 1945. Output in Indiana and Arkansas rose slightly during the month, while in Illinois and Kentucky daily average production was less than in October. The number of completions reported in the dis trict was substantially less than in October. Only 70 per cent as many completions were reported in November as in October, with the sharpest decline occuring in Illinois. A slightly smaller proportion of the November completions resulted in oil-pro ducing wells. Construction— The total value of building per mits awarded in the major district cities in Novem ber was $4.3 million or 9 per cent less than the $4.8 million reported in October and 31 per cent below the value of awards in November, 1945. Most of the decline was in new construction awards with all of the decrease in this classification re ported from Memphis and Little Rock. The value of new residential permits generally was lower than in October, except in St. Louis where new residential awards rose almost 44 per cent in No vember. In all other cities, except Memphis and Little Rock, however, the decline in residential awards was more than offset by gains in non residential permits. The value of new construction permits in the five major district cities amounted to $3.7 million in November as compared with $4.0 million in Oc tober and $5.5 million in November, 1945. The de cline of 8 per cent in the value of new construc tion awards is considerably larger than the de crease in private construction activity in the na tion as a whole during November, which was only 4 per cent lower than October. TRADE * During November, dollar sales at reporting dis trict retail stores registered somewhat less than seasonal gains over the previous month. Changes in sales volume as compared to November, 1945 varied considerably among the different lines. Once again sales of durable goods showed much greater increases over the comparable period of last year than did sales of nondurable goods. The volume of sales at reporting department stores in November showed an increase of 11 per cent over October and was 24 per cent greater than in November, 1945. Preliminary reports in dicate that the year-to-date increase of 29 per cent was maintained d u rin g D e ce m b e r. As noted in last m o n th ’ s R e v ie w , m ark ed gains are being recorded in the durable goods departments, with home fu r n is h in g s showing increases of 9 per cent and 56 per cent, respectively, for the month and over the same month last year. Men’s wear divisions registered larger increases than women’s wear due to an increasing supply of men’s wear and to the leveling off of demand for women’s clothing reflecting partly resistance to high prices. During the war years men’s wear divisions ac counted for a smaller than normal proportion of INDUSTRY PRICES C O N S U M P T IO N O F E L E C T R IC IT Y N ov., 1946 N ov., N ov., O ct., N o. of compared with 1946 1945 ( K .W .H . Cus1946 K .W .H . O ct., 46 N ov., ’ 45 in thous.) tomers* K .W .H . K .W .H . C O N S U M E R ’ S P R IC E IN D E X Bureau o f L abor N ov. 15, *46 Comp, with Statistics N ov. 15, O ct. 15, N ov. 15, O ct. 15, *46 N ov. 15, *45 1946 1945 (1 9 3 5 -3 9 = 1 0 0 ) 1946 148.4 146.5 # 129.3 126.8 R * + + 2.2 % 2.4 • + 1 7 .3 % + 1 8 .3 7,752 3,681 34,476 4,255 1,569 65,116 4,601 R 3,590 14,971 5,492 2,008 53,455 R — 16% + 2 -4- 3 +21 -0 — 11 + 41% + 5 +138 — 6 — 22 + 9 U nited States.... 151.7 St. L o u is ........ 150.0 M em phis ........ * R — Revised *— N o t available T otals ...... 300 110,832 116,849 * Selected industrial custom ers. R — Revised. 84,117 R — 5 + R E T A IL F O O D P R IC E S Bureau o f L a b or N ov. 15, '46 Comp, with Statistics N ov. 15, O ct. 15, N ov. 15, O ct. 15, *46 N ov. 15, *45 1946 1945 (1935-39 = 100) 1946 E vansville .... L ittle R ock.. L ouisville .... Mem phis .... Pine B luff .... St. L ouis .... 40 35 79 31 19 96 6,486 3,768 35,589 5,157 1,564 58,268 32 L O A D S I N T E R C H A N G E D F O R 25 R A I L R O A D S A T S T. L O U I S First nine days N ov., *46 O ct., *46 N ov ., *45 D ec., *46 D ec., *45 11 m os. *46 129,661 132,959 117,257 S o u rce : Term inal Railroad 35,962 34,669 1,358,985 A ssociation of St. Louis. l l m o s . *45 1,602,265 U . S. (51 cities) St. L o u is ........ L ittle R ock.... Louisville ...... M em phis ........ 187.7 191.8 186.3 184.9 207.3 180.0 183.6 172.3 167.4 191.0 140.1 141.4 138.8 134.2 148.8 + 4 .3 % + 4.5 + 8.1 + 1 0 .5 + 8.5 + 3 4 .0 % + 3 5 .6 + 3 4 .2 + 3 7 .8 + 3 9 .3 C O A L P R O D U C T IO N (I n thousands of tons) N o v ., *46 Illinois ............................ ...3,943 Indiana .............................1,501 K en tu cky ..................... ... 4,835 O ther D istrict States.. 1,154 T otal .......................... 11,433 R .— Revised. Page 8 O ct., *46 6,394 2,583 6,973 1,591 17,541 N ov., '45 6,051 2,192 5,931 1,614 R. R. R. R. 15,788 R . N ov., *46, com p, with O ct., *46 N ov., *45 — 38% — 42 — 31 — 27 — 35% — 32 — 18 — 29 — 35 — 28 W H O L E S A L E P R IC E S IN T H E U N IT E D S T A T E S Bureau o f L a b or N ov., ’ 46 Com p, with Statistics O ct., *46 N ov., '45 (1926 = 100) N o v . ,'46 O ct., *46 N ov.,*45 A ll Com m odities Farm Products F ood s ............ Other ............... 139.6 169.8 165.4 132.8 134.1 165.3 157.9 115.7 106.8 131.1 107.9 100.2 + 4 .1 % + 2.7 4 - 4.7 + 1 4 .8 + 3 0 .7 % + 2 9 .5 + 5 3 .3 + 3 2 .5 total department store sales but the above-average increase in sales is now tending to restore the prewar pattern. In those department stores reporting stocks by departments very large increases are being regis tered among the various lines in the home furnish ings divisions. Inventories in men’s and women’s wear divisions also are considerably higher than those held at the end of November, 1945. The unbalance in inventories, noted frequently here, is continuing and there are wide variations be tween stock increases among the different lines within a major department store division. Total inventories at reporting department stores showed little change from the previous month but were 62 per cent greater than at the end of November, 1945. Sales at women’s apparel stores in November were not much changed from October and were 5 per cent less than in November, 1945. Appar ently, increasing consumer resistance is being en countered in sales of women’s wear. Inventories which were 3 per cent less than at the end of October, were 16 per cent greater than at the end of November, 1945. Sales volume at men’s wear stores in November was 15 per cent more than in the preceding month, but only 6 per cent over the relatively high vol ume of November, 1945, when the buying of re turning servicemen began to be a major sales factor. Inventories at men’s wear stores were 5 per cent greater than at the end of October, and 86 per cent higher than at the end of November, 1945. At district furniture stores the volume of sales AGRICULTURE ______O ctober______ 1946 1945 Arkansas ............ $120,823 Illinois ................... 206,077 Indiana ................. 99,218 K entucky ............ 36,621 Mississippi .......... 90,497 Missouri ............... 138,833 Tennessee ............ 66,175 T otals .............. $758,244 R E C E IP T S A N D $487,252 314,574 $ 1,067,405 597,507 304,473 256,238 628,151 289,725 $3,458,073 233,788 $ 245,927 952,052 965,443 554,993 564,469 323,418 276,316 244,312 247,908 563,633 579,258 247,299 250,172 $3,119,495 S H IP M E N T S A T ^ N A T IO N A L Receipts N ov., 1946 Cattle and C alves..l69,623 H o g s ....................... 212,678 H orses and Mules 3,392 Sheep ....................... 50,665 T otals .................436,358 $3,129,493 STOCK YARDS Shipments O ct., 1946 N ov ., 1945 N ov., 1946 O ct., 1946 N ov., 1945 231,160 139,726 4,770 97,984 181,093 213,788 3,423 74,880 78,550 48,614 3,392 8,370 150,662 38,642 4,770 27,087 90,067 72,791 3,263 12,650 473,640 473,184 Net changes in total earning assets and total deposits of Eighth District reporting banks during the last four weeks were relatively small, but such movement as there was continued the downward trend evident since last March. The increase in loans was not sufficient to offset the decrease in investments, the result being a still further de crease in total earning assets. Total deposits in creased $5 million as the expanding effect of loan increases and the cash redemption of Government securities held by nonbank investors more than offset the sharp contraction in W ar Loan accounts withdrawn to redeem for cash nearly $4 billion of the Treasury securities maturing in December. This loan expansion and redemption of Govern ment securities, plus Christmas buying, are all re flected in changes of various types of deposits at Eighth District reporting banks during the last four weeks. Time deposits registered the sharpest decline for any similar period since the beginning of the war as members of Christmas savings clubs (I n thousands of dollars) Cumulative for 10 months 1946 1945 1944 $ 68,274 $ 136,927 72,724 21,272 69,134 79,075 39,846 BANKING AND FINANCE DEBITS TO DEPOSIT ACCOUNTS C A S H F A R M IN C O M E (I n thousands o f dollars) was 5 per cent less in November than in Octo ber, but was 26 per cent greater than in November, 1945. Furniture stores registered the largest gain over the comparable month last year of any re porting retail line. Supplies of home furnishings are increasing but demand is still so high that there is no noticeable consumer resistance to high prices and unknown brands of merchandise. Inventories at the end of November were unchanged from the previous month, but were 84 per cent greater than at the end of November, 1945. 138,926 221,161 178,771 N ov., 1946 O ct., 1946 N ov., 1945 El Dorado, A rk ...........$ 15,857 $ 15,861 $ 11,415 F ort Smith, A rk ....... 33,946 35,342 33,448 Helena, A rk................. 8,310 9,112 7,941 Iyittle R ock, A rk ....... 104,131 113,966 92,587 Pine Bluff, A rk ......... 25,966 34,148 30,315 Texarkana, A rk.-T ex. 9,071 10,328 9,110 A lton, 111...................... 18,763 18,274 15,134 E .S t.I,.-N a t.S .Y ., Ill,. 98,397 98,784 83,483 Quincy, 111.................. 23,135 25,636 21,433 Evansville, In d ........... 84,283 84,978 71,860 Louisville, K y ............ ., 417,389 418,760 358,501 Owensboro, K y .......... 23,389 23,691 21,878 Paducah, K y ................ 12,121 12,766 9,648 Greenville, M iss......... 15,218 18,707 14,492 8,618 Cape Girardeau, M o. 8,987 6,337 6,936 7,589 Hannibal, M o ............. 5,395 32,770 Jefferson City, M o... 43,658 23,882 St. Louis, M o ........... 1,242,753 1,255,264 1,077,348 8,955 9,239 Sedalia, M o .................. 7,172 54,005 56,880 Springfield, M o .......... 38,578 20,303 21,246 Jackson, T enn............ 14,763 543,352 Memphis, T enn........... 465,333 376,817 Totals .....................$2,729,649 $2,866,568 $2,331,537 N o v ., ’ 46 com p, with O ct., ’ 46 N o v ., ’ 45 - 0 -% — 4 — 9 — 9 — 24 — 5 — 19 __ 4 — 9 — 25 — 1 — 3 — 5 — 4 — 14 — 39% 4- 1 ■4- 5 + 12 — 14 - 0+24 +18 4- 8 + 17 + 16 + 7 +26 4- 5 +36 +29 +37 + 15 +25 +40 +38 +23 — 5 +17 —12 4- 3 - 0—10 — 1 - 0— 1 Page 9 R E T A IL T R A D E D E PA R TM E N T STORES Stocks on N et Sales Hand Stock Turnover 11 mos. 1946 N ov. 30, 1946 to same com p, with Jan. 1, to period N ov. 30, N ov. 30, 1945 1945 1946 1945 N ov., 1946 com pared with O ct., N ov., 1946 1945 Ft. Smith, A rk ..... ...4- 1% Little R ock , Ark., ...4- 7 ...4- 1 Evansville, Ind.. ...4- l Louisville, K y . ... ...4-14 ...4-15 +62% 4.27 4.52 — 4% + 11% +22 5.05 5.17 4-19 +61 +27 +86 ,+ 2 1 4.74 4.80 +20 +28 +24 3.67 3.17 +30 5.39 5.41 +30 +53 +26 +30 +66 4.47 4.52 +30 +66 4.53 +25 4.47 +72 +50 ,..4- 4 4.9*8 4.16 +24 +39 +53 .,.— 11 4.92 +22 +30 +60 4.98 Memphis, Tenn... ...4- 9 4.68 +33 + 18 4.55 *A11 other cities.. , — 4 +60 +62 4.70 4.72 + 2 9. 8th F. R . District.....4. - n . +24 . *E1 Dorado, Fayetteville, Pine B luff, A r k .; A lton, Harrisburg, Jacksonville, M t. V ernon, Ill. ; N ew A lbany, Vincennes, I n d .; Danville, Hopkinsville, M ayfield, Paducah, K y . ; Chillicothe, M o .; and Jackson, Tenn. iln clu d es St. L ouis, M o., East St. L ouis and Belleville, 111. T rading d a ys: N ovem ber, 1946— 2 5 ; O ctober, 1946— 2 7 ; November, 1945— 25. Outstanding orders of reporting stores at the end of Novem ber, 1946, were 16 per cent less than on the corresponding date a year ago. Percentage t»f accounts and notes receivable outstanding November 1, 1946 , collected during N ovem ber, by cities: Instalm ent E xcl. Instal. Instalment E xcl. Instal. A ccoun ts A ccoun ts A ccounts A ccounts Ft. S m ith ...... L ittle R ock.... Louisville .... Memphis ...... 63% 65 61 55 35 48 48 79% 69 67 65 Q u in cy ...............37% St. L o u i s ...........45 Other cities .. 40 8th F. R . Dist. 44 IN D E X E S O F D E P A R T M E N T S T O R E SALE S A N D STOCKS 8th Federal Reserve District Sept., N ov., O ct., N ov., 1946 1945 1946 1946 Sales (daily average), U nadjusted2................. Sales (daily average), Seasonally adjusted2 Stocks, U nadjusted3 ........................................... Stocks, Seasonally adjusted3.............................. 371 294 293 274 313 293 295 263 2 D aily A verage 1935-39 = 100. 3 End of M onth A verage 1935-39 = 100. S P E C IA L T Y STO R ES Stocks on Hand N et Sales N ovem ber, 1946 compared with O ct., N ov., 1946 1945 316 313 266 240 303 241 175 163 Stock Turnover 11 mos. 1946 N ov. 30, 1946 to same com p, with Jan. 1 to period N ov. 30, N ov. 30, 1946 1945 1945 1945 M en’ s Furnishings....4-1 5 % 4- 6% 4 -2 6 % 4 - 86% 5.26 3.94 -j~12 +23 -j-144 7.47 9.34 B oots and Shoes........— 4 Percentage of accounts and notes receivable outstanding Novem ber 1, 1946, collected during N ovem b er: M en’ s Furnishings ..................... 65% B oots and Shoes..................... 54% T rading d a ys: N ovem ber, 1946— 2 5 ; October, 1946— 2 7 ; Novem ber, 1945— 25. R E T A IL F U R N IT U R E STO RES N et Sales Inventories N ovem ber, 1946 N ov. 30, 1946 Ratio of com pared with compared with Collections O ct., O ct. 31, N ov. 30, N ov., N ov., N ov., 1946 1945 1946 1945 1946 1945 St. L ouis Area1 — 9 % + 36% + 82% 57% 57% — 1% St. L ou is........— 9 + 39 — 1 + 82 56 56 L ouisville A rea2— 1 — 2 + 70 49 35 + 8 - 0L ouisville + 11 — 1 + 70 50 34 M em phis . + 5 34 29 4-17 + 4 + 45 L ittle R o ck ........4 - 2 + 27 + 114 38 34 + 5 * * * * Springfield ........— 30 + 6 * * * * F ort Sm ith........— 4 + 25 8th D ist. T otal3— 5 + 26 -0 + 84 47 43 * N o t shown separate r due to insufficient coverage, but included in Eighth District totals. iln clu d e s St. L ouis, M issou ri; and A lton , Illinois. 2Includes Louisville, K en tu ck y ; and N ew A lbany, Indiana. 3In addition to above cities, includes stores in Blytheville, Pine Bluff, A rkansas; Henderson, H opkinsville, Ow ensboro, K en tu cky; Greenville, G reenwood, M ississippi; H annibal, M issou ri; and Evansville, Ind. 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 SALE S N ov., *46 O ct., ’46 N ov., *45 Cash Sales .................................................... Credit Sales ................................................ 2 6% 74 T otal Sales .............................................. 100 Page 10 23% 77 100 27% 73 100 and others began to withdraw their deposits. The decrease during the last four weeks totaled $3.2 million as compared to decreases of $1,7 million and $1 million during the comparable periods of 1945 and 1942, respectively. The upward trend in time deposits was sufficiently strong in 1943 and 1944 to offset the usual pre-Christmas withdrawals, with the result that increases were registered in both years. Data so far available indicate that, people drew down their time deposits for Christ mas b u y in g instead of ca s h in g their savings bonds. Cash redemptions of all issues of savings bonds in the St. Louis area (St. Louis City, St. Louis County and Madison and St. Clair Counties, Illinois) were less (in dollar amount) in November than in October, in contrast to an increase during the same period in both 1944 and 1945. Demand deposits of individuals and business firms were up $43 million as compared to a decrease of $61 million during the same period last year. A continued expansion in loans is one of the prin cipal factors tending to maintain the level of private deposits. Government deposits dropped $67 million, reflecting the heavy withdrawals from War Loan accounts in preparation for the cash redemption of the $3.2 billion issue of 1^2 per cent Treasury notes maturing December 15. This de crease brought Government deposits at district re porting banks down to $50 million as compared to the year’s high of $503 million reached near the end of February. Loan expansion continues with total loans of district reporting banks being up $33 million for the month and $127 million for the year. Security loans was the only category showing a decline in the month. Continued high levels of trade and production and the marketing of agricultural prod ucts resulted in another gain of $29 million in com mercial, industrial and agricultural loans, most of the increase being at reporting banks in St. Louis, Louisville and Memphis. Such loans amounted to $429 million at mid-December as compared to $338 million for the same date last year. Real estate and other loans, mostly consumer loans, also registered gains, the former being up $2.3 million and the latter $7.8 million. AGRICULTURE The year 1946 has gone down in history as an all-time record breaker in over-all agricultural out put. With the notable exception of cotton, most major crops produced in volume in this district were of bumper or near-bumper proportions. With the harvest completed and fall preparation of lands about over, the major developments of in- terest on the farm front last month came in prices. At mid-November the index of prices received by farmers was 263 per cent of the 1910-14 average, off 10 points from a month earlier. The decline resulted mainly from the sharp drop in cotton, corn and poultry products prices, offset in part by increases in prices of oil-bearing crops and dried beans. The index of prices paid by farmers for goods and services rose further in the last month and on November 15 was at 224 per cent of the 1910-14 average. Since the index of prices received declined and that of prices paid increased, the parity ratio declined to 124 as of November 15, down 8 points in the month, but still 7 points ahead of a year earlier. For the year as a whole, however, farm prices were high and gross farm income in 1946 appar ently was at a new record level. Following the elimination of price controls, farm prices rose very rapidly and remained at a very high level through out most of the heavy marketing period. The U. S. Department of Agriculture recently announced the production goals for 1947. The table below summarizes the acreage goals for the principal crops produced in this district. A C R E A G E G O A L S F O R P R I N C I P A L C R O P S I N 1947 (A crea ge figures in thousands) E ighth D istrict States U nited States 1947 1947 goal as % of 1947 goal as % of goal 1937-41 1937-41 Crop (acres) 1946 average 1946 average Corn .................................. 27,360 Cotton ................................ 5,925 Oats .................................. 8,830 R ice .................................... 300 Soybeans ......................... 6,395 W heat ................................ 6,390 98 118 97 92 116 116 100 94 113 157 239 87 99 126 95 98 119 100v 100 87 113 136 274 103 The total farm acreage goal for 1947 is larger than actual harvested acreage in 1946. The goal is set high in view of the level of domestic demand, foreign relief needs and the need to build up wardepleted stocks. Since crop goals are set in acres, some margin is also allowed for the possibility of less favorable weather and lower yields than have prevailed in recent years. In terms of actual pro duction of major crops, the 1947 goals call for somewhat less corn, wheat, oats and tobacco than was harvested in 1946, somewhat larger crops of rice and soybeans, and about 50 per cent more cotton than 1946 production. The increase re quested for tobacco is in crops other than burley, the district’s major tobacco Crop, which will have smaller acreage in 1947 than in 1946. Livestock and livestock product goals for 1947 shape up as follows relative to 1946: an increase in hog and turkey output, declines in chickens raised, production, and cattle and sheep on farms, and about the same output of milk. W H O L E S A L IN G Lines of Comm odities Stocks N et Sales N ov. 30, 1946 com pared with N ov. 30, 1945 N ov. , 1946 Data furnished b y Bureau o f Census, com pared with U. S. Dept, o f C om m erce.* O ct., ’ 46 N ov., ’ 45 A utom otive Supplies................................ — 10 % 6 D rugs and Chemicals........................ ..... — D ry G oods........................................... ......— 13 Electrical Supplies.................................. — 10 Groceries ............................................. ..... — 7 Hardware ..................... ..................... Plum bing Supplies.................................. + 14 T obacco and its P rod u cts............... ..... — 4 Miscellaneous ........................................... — 17 9 T otal all lines**............. .................. ..... — 4444444444- 5% 13 52 39 31 4- 8I *4-5*0 4-32 68 83 26 23 39 4- 6I 4-49 * Preliminary. **lncludes certain lines not listed above. C O N S T R U C T IO N B U IL D IN G P E R M IT S N ew Construction (C ost m thousands) N um ber 1946 1946 1945 54 63 221 494 200 23 73 55 422 200 N ov. Totals ....1,032 O ct. Totals .,...1,230 773 999 Evansville ......... Little R ock !... Louisville .... ... Memphis .... St. Louis .... ... C ost $ 153 295 883 957 1,492 1946 1945 58 360 330 1,918 2,818 44 97 45 148 192 107 183 48 216 217 5,484 5,214 526 786 771 905 $ 3,780 4,008 Repairs, ctc. Cost 1946 1945 1945 N um ber $ 30 34 27 75 378 $ 46 65 64 159 449 783 692 544 742 B A N K IN G CH AN G ES IN P R IN C IP A L A SSE T S A N D L IA B IL IT IE S F E D E R A L R E S E R V E B A N K O F ST. L O U IS Change from D ec. 19, 1945 ( I n thousands o f dollars) Industrial advances under Sec. j O ther advances and rediscounts.. U . S. securities................................ Dec. 18, 1946 N ov. 20, 1946 30,120 .. 1,087,372 4- 11,587 — 28,390 + 4- ’*1*37260 22,812 .. 1,117,492 — 16,803 + 36,072 4- + F. R. ... 640,257 .. 648,685 .. 1,122,169 543 33,220 59,298 ........ Industrial commitments under Sec 13b 4,265 4 - 11,178 — 21,605 4- 20,258 225 + -j- 4,265 P R IN C IP A L R E S O U R C E A N D L I A B I L I T Y IT E M S O F R E P O R T IN G M E M B E R B A N K S Change from (I n thousands o f dollars) D ec. 18, 1946 N ov. 20, 1946 Total loans and investments....................... $1,880,674 — 14,548 Commercial, industrial, and agricultural loans* .......................................................... 428,689 4 - 28,981 Loans to brokers and dealers in securities ...................................................... 6,114 — 1,165 Other loans to purchase and carry securities ...................................................... 48,692 — 4,078 Real estate loans.............................................. 100,060 4 - 2,315 Loans to banks................................................ 2,104 — 412 Other loans ....................................................... 146,117 4 - 7,846 T otal loans .................................................. 731,776 4- 33,487 Treasury bills .................................................. 15,071 4 - 8,493 Certificates o f indebtedness.......................... 99,551 — 9,633 Treasury notes ................................................ 138,014 — 40,405 U . S. B onds...................................................... 762,329 — 7,486 Obligations guaranteed by U . S. Government ................................................ 366 - 0> Other securities .............................................. 133,567 4 . 996 Total investments ............ ........................ 1,148,898 — 48,035 Balances with dom estic banks................... 107,709 4 . 7,117 Demand deposits— adjusted** ................... 1,174,910 4 . 44,516 Tim e deposits .................................................. 370,159 — 3,165 U . S. Government deposits.......................... 50,373 — 66,725 Interbank deposits ....................................... 613,935 4- 22,365 Borrow ings ...................................................... 23,900 + 10,400 •Includes open market paper. **Other than interbank and Governm ent deposits, less cash hand or in process o f collection. A bove figures are for selected m ember banks in St. Louis, Memphis, Little R o ck and Evansville. D ec. 19, 1945 — 328,720 4- 90,190 — 6,469 — 34,040 4 - 31,864 4841 4 - 44,475 4-126,861 — 32,973 — 158,697 — 222,301 — 33,354 44 — 8,260 — 455,581 — 15,762 4-112,551 4- 34,689 — 435,714 — 68,485 4- 8,650 items on Louisville, Page. 11 Index of Shoe Production in the Eighth Federal Reserve District totals. These monthly production figures are di vided by the number of working days in a month to obtain daily average output per month. From 1923 to September, 1933, allowance was made for a Sy2 day work week. Since September, 1933, Saturday and Sunday have been regarded as non working days. Six regular holidays (January 1, May 30, July 4, Labor Day, Thanksgiving, and De cember 25) are also treated as nonworking days. The period, January, 1935-December, 1939, is used as the index base. In that period, daily aver age shoe production in this district (as calculated above) was about 250,000 pairs. Daily average out put for each month since January, 1923 was divided by the base figure to obtain the unadjusted index of shoe output. This index then was adjusted for seasonal varia tion, using a technique very like that employed to smooth other indexes prepared by this bank. The method allows for changing seasonal adjust ment factors. The results are showrn in the chart below. For those who are interested, the adjusted and unad justed index series are available upon request to the Research Department of this bank. With this issue the Federal Reserve Bank of St. Louis introduces a new index of shoe production in this district. The production of shoes is one of the most important of district manufacturing ac tivities. More than 40,000 workers are employed in the 100-odd shoe factories located in this region. Most of these factories at present cluster in an area, roughly circular, radiating out some 125 miles from a center at St. Louis. About one-sixth of all shoes produced in the United States comes from this region. District output in 1946 will run be tween 85 and 90 million pairs of shoes. The index of shoe production presented here covers the period from January, 1923, to September, 1946. The index is on a physical volume basis — that is, it measures the output of shoes in terms of actual pairs of shoes produced. It is not adjusted for any changes in quality of output. The method of computing the district index of shoe production is very similar to that employed by the Board of Governors in computing its na tional index. Actual figures on monthly output in pairs constitute the primary data which are col lected by the Bureau of the Census, Department of Commerce and furnished in the form of district INDEX OF SHOE PRODUCTION - EIGHTH FEDERAL RESERVE DISTRICT. 1923-1946 Per cent Per cent 200 J |»£ 3 ^ n soo D J D J 1925 P*g* 12 D J D J 1927 D J D J 1929 D J D . J 1931 D J D 4 D 1933 J D J D 1935 J D J D 1937 J D J D 1939 J D J D 1941 J D J 1943
@FedFRASER